Ben has always preached that fighting inflation is the primary function of the federal reserve. On a side note bailing out Wall Street fat cats apparently is a secondary duty of the fed. Each time the wall street banks and brokers faced liquidity issues from their garbage loans, the fed pumped liquidity in to save them. Now that brokers and banks were on the verge of crisis, Ben comes swooping in with a new bailout…a cut of the Fed Discount Rate with assurance that a cut in the Fed Funds Rate is next.
When you are at a craps table and you have all your chips and odds lined up and the shooter keeps on hitting….everything is great. As long as the shooter is hot, you continue to collect and then you can leverage up your bets by increasing them. That is what wall street brokers and mortgage lenders did. They continued to take on more risk and for years they raked in the profits. Finally this year the shooter shot a 7…and now the players refuse to let their chips on the table be taken and they are seeking a bailout or a mulligan from the house. We know that’s not how the casino works (there’s no bailout) and that’s not how capitalism is supposed to work. You take on risk and often it reaps rewards. But if it doesn’t work out then tough luck, better luck next time.
But the Bush administration and the Federal Reserve is not letting them happen. Each time the shooter shot a 7 and the winning streak appeared to end, the fed kept pumping in more chips on to the table, not letting anyone lose. Then when 7s kept up coming, they eliminated one die, making 7 now an impossible number to hit. They’ve committed to make this game of craps a risk-free game for all the fat cats at the table.
Consumers are doing perfectly fine…home prices in Southern California where I live are still near all time highs and have barely gone down. Homes that used to be worth 300k in 2000 are still worth 700k (down from 800k) so a little depreciation is not hurting anyone. Homes in Las Vegas and condos in Florida are still way above 2003 prices and have just come down somewhat. So home prices aren’t going up anymore and in some places they’ve come down. So that’s a crisis in need of a massive bailout? This is a huge overreaction created by the media. So home prices are falling and foreclosures are increasing…that’s a normal real estate cycle.
The rich and middle class are doing as well as they’ve ever done. Only people who have suffered are the idiots who bought their homes with subprime ARMs/100% financing and the greedy bastards in wall street who made a killing giving out those loans. Those who rolled the dice and had chips on the table needs to take responsibility when the dice hits 7, you cannot win forever.
I don’t see why the Fed should bail them out. We need to learn about responsibility. We don’t get refunds from the casinos when we lose and neither should these people. They took a risk and it’s tough luck if they lose.
There’s no recession to worry about..unemployment is near all time lows and all the bumbling idiots I know all hold good jobs (including the presidency, vice presidency and attorney general) and those who get laid off have no problem finding good replacement jobs. This economy right now is as good as I’ve ever seen it in my lifetime. People are driving fancier cars, buying more expensive jewelry and buying bigger televisions. Nobody is suffering besides idiots who got into bad loans, mortgage brokers, loan processors and wall street brokers who enabled this so called credit crunch. I have no problem borrowing money, credit card companies continue to offer me 0% offers…so what’s the problem? I don’t own a home nor have debt issues, so now I should help bail out those that do?
A bailout will only encourage a future generation of idiot home buyers and greedy wall street fat cats. Why should we make our dollar become worthless and cause a massive inflationary spiral by cutting rates. Taxpayers are already paying for the stupid war in Iraq…there’s no reason why we should be giving money to Countrywide and Goldman Sachs. Angelo Mozillo (CEO of Countrywide) is rich enough…I could careless if his stock goes to zero and besides he’s sold most of it already. Boo hoo if he loses a couple of million dollars. I don’t care if foreclosures happen to those who bought 500k homes on a 30k a year salary using negative amortization adjustable rate loan. If they were under the assumption that home prices would rise by 20% every year…then they deserve to get what was supposed to come, now bailed out by Mr. Bernanke.
But it is apparently the job of the Federal Reserve to care about those rich fat cats of wall street and Angelo Mozillo who are getting reduced bonuses this year at x-mas time so he will cut rates and he will keep on cutting until they are happy. And the rest of us who are not suffering nor have contributed to this problem will get the shaft with inflation and reduced buying power.
Subprime loans will be back in no time thanks to this Federal Reserve and all the shady lenders will return in a few months. The fed fund rate will probably be back at 1% where we will repeat this whole cycle again.
Welcome to capitalism…where greed rules above all and there is no risk but all reward for those in power!
. Bigger better. 
John Against Bailout Nation 