Monday, February 22, 2010

Volume 69 - "The Fed" - State of the Economy

I'm not sure anymore where 'sanity' starts and stops, but I'm pretty damn sure that what occurred this past Thursday rides the very edge of the logic abyss. It's either pronouncely insane or I discovered 'another' economics class that I must have (again) slept through!

The Heading for this latest 'manipulation' went something like this: "The Federal Reserve, taking its first step to normalize lending after more than two years of extraordinary actions to prop up the economy, on Thursday raised the interest rate it charges banks on emergency loans."

------STOP WAIT----"Taking its first step to normalize lending after two years of extraordinary actions to prop up the economy"----You gotta be shitting me!

This economy went into the 'shitter' in the second half of 2007. It went in that directions because of SPENDING and ENCOURAGEMENT from the Federal Government, BOTH DEMOCRATS AND REPUBLICANS, to lend money to people who could not afford the loan. Hello!!! It went into this economic cycle because Federal (and State and Local Governments) spend more than they bring in!!! and spend on programs that are totally dependant upon funding; in other words, on some type of Socialism, not on opportunities presented by a Free market, which has the opportunity to make money within itself and simply is not a 'money pit' for some segment of society that can't support itself. It did nothing other than attempt to cover the banking industry's ass for legislation that it forced or threaten to force upon the banks. Barney Franks, et al, screaming that EVERY AMERICAN MUST HAVE THE RIGHT TO OWN HIS OWN HOME (AT WHATEVER COST)..........THAT WAS THE "EXTRAORDINARY ACTIONS TAKEN" There were no other actions taken to assist the people and businesses of this country who are the ones that make money so that the stupid idiots in Government can find more ways to give it away!

It continued..."The Fed emphasized that the increase in the discount rate, to 0.75 percent from 0.50 percent, which will take effect on Friday, did not represent a broad tightening of credit. Instead, officials said, the change was intended to discourage emergency borrowing by banks and other deposit-taking institutions when other financing is available. The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change i the outlook for the economy or for monetary policy..."

-----STOP WAIT-----Why is it that when 'Government' (Fed or whatever) makes a decision to enact a policy, such as the decision described above, it immediately announces it in a 'negative connotation' as this "did not represent a broad tightening of credit"? Probably because IT DOES represent a broad tightening of credit which seems impossible considering that there IS NO CREDIT! The Banks are flush; their balance sheets look great! I wonder why? Could it be due to 700 billion dollars of our money? What incentive is there for the banks to lend this money out? Even with 90% Government backed guarantees, SBA 7A programs, the banks aren't interested.

So, to cover past lending practices to people who couldn't pay back money the banks now are taking it to the opposite 'side of the table' and simply aren't lending (of course, after they got their 'Bail-out' money) and people in Washington wonder what it will take to get this country out of the worse economic depression since the thirties or at least since the latter part of the 70's when interest rates were at 21% and Carter was President.

Small Business employs over 95% of the people in this country; yet, we seem to take care of the 5% 'Too Big To Fail Guys'. Small Business employs over 95% of the working people in this country but we are insistant to pay for and take care of the unemployable, illegals, and every other foreign government's castastrophe.

Stupid is as Stupid does.