Perception and reality.
The illusion of a sound economy - or even an economy that makes sense - is being stripped away. The Fed "saved" Bear Stearns over the weekend and will drop the base interest rate that it now dumps money into the system by 1%. I don't know much about economics - but I know this - the problem WAS cheap money. The problem IS a massive amount of bundled bad debt that banks are holding. Debt even they can't figure out. Money being a little cheaper is not going to wipe those bad debts out. It may make the markets rise a bit but does nothing to address the problem. In a frenzy of psychotic borrowing over the past five years everyone from the busboy who was bought a house in the burbs up to largest banks in the country is holding the hot potato. The passing has stopped.
What even cheaper money means now is not houses for those with bad credit - but inflation for all of us. The Fed has decided that in the fight between the dollar and the perception of an economy that works - the dollar loses. The game is not pass the buck - it's kill the buck. On Saturday I wrote that one or two large banks could fail soon. The Fed could keep printing cash to stave off bank collapse. But with every worthless dollar it prints every dollar in your pocket is rendered more and more meaningless.
Another "perception catching up with reality" note: Obama's overnight poll numbers sank by a record amount according to Rassmusen. On Friday the head to head Clinton/Obama number was 54% Obama 42% Clinton. By Monday is was Obama 46% Clinton 45%. This is a remarkalbe slide even in this crazy year. Rev. Wright's sermon on Christmas, finally widely seen, was clearly a swift punch in the gut to many.
Clinton now has the opportunity to drive a stake in the heart of Obamamania. Will she?
What even cheaper money means now is not houses for those with bad credit - but inflation for all of us. The Fed has decided that in the fight between the dollar and the perception of an economy that works - the dollar loses. The game is not pass the buck - it's kill the buck. On Saturday I wrote that one or two large banks could fail soon. The Fed could keep printing cash to stave off bank collapse. But with every worthless dollar it prints every dollar in your pocket is rendered more and more meaningless.
Another "perception catching up with reality" note: Obama's overnight poll numbers sank by a record amount according to Rassmusen. On Friday the head to head Clinton/Obama number was 54% Obama 42% Clinton. By Monday is was Obama 46% Clinton 45%. This is a remarkalbe slide even in this crazy year. Rev. Wright's sermon on Christmas, finally widely seen, was clearly a swift punch in the gut to many.
Clinton now has the opportunity to drive a stake in the heart of Obamamania. Will she?
Labels: bear stearns, Clinton, dollar, Fed, Obama, Rev. Wright
posted by John: south of Melrose at
Monday, March 17, 2008
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