Wednesday, June 20, 2012
Wednesday, June 20, 2012 1 comment
The stock market closed on a down note today showing their disappointment in the newest Federal Reserve actions. The markets were hoping for a massive new money printing scheme (QE3) to pump hot cash into the financial services ponzi scheme. The European Central Bank has pledged a trillion euros to prop up Spain and Italy, or more accurately they are trying to mitigate the damage done by the big transnational banks. In reality it’s just a band-aid on a severed limb. The end of the Euro and the return to a regulated banking system is the only answer, but Germany, who is currently the big winner, opposes this. The new Socialist dominated government in France sees things differently.
So Wall Street was hoping for something similar here, instead all they got was a six month extension of Operation Twist. It’s named after that contemporary dance step. (that was a stodgy old banker joker) Remember Chubby Checker? Give you a hint, him and Mike Malloy are contemporaries, Lincoln too I think. Anyway, the Fed did the same thing back then to deal with a recession at the time. What they did was buy up short term bonds using money they basically just printed, then they sold these short term bonds into the market. At the same time they bought long term bonds with the effect of driving down long term interest rates in the markets.
It sounds overly complicated, because it is. This is only necessary because we “believe” in the “free” market, but we don’t really “believe”, because we’re spending trillions to rescue the “free” market. The only thing that would be worse is if we took the libertarian view seriously, and really let them just go under. Were we to let the “free market“ deal with it by failing… well, can you say Armageddon? Seizing the big banks, liquidating their assets over time, and putting all the Republicans in prison would actually solve these problems. It will take a lot more Americans understanding these concepts for that to actually happen.
The Fed’s rock & roll bond program has driven down home mortgage rates to all time lows, even if most people can’t qualify for a mortgage. Just the same, there is actually some glimmer of hope in the housing market with new building permits at a four year high. This up tick is being driven by real growth in the blue states, but is being dragged down at the same time by the senseless austerity of the red states.
I’m conflicted between the realization of our potential in this age of fantastic scientific knowledge, and at the same time depressed to the point of despair by the ascendance of people who don’t believe science. (it’s not correct to say “believe in science”) They prefer to return to an age of feudalism and superstition, and I don’t mean the fun kind when nerds dress up in chain mail.
People like Mitt Romney don’t quite grasp that in a world of nobility and dragons, they would be the ones in black. Or, maybe they do and don’t care.