Expletive Deleted-6/7/12 “WOR710.com” PodKast

Hour 1-Tonight’s show might as well be titled “Expletive Deleted”. LK is steamed. Students pay banks 3 to 10 times the interest rate that banks themselves pay when they borrow from the Fed.

Hour 2-A homeless girl from NC gets into Harvard. LK is moved, and temporarily, his anger is quelled. The Democrats punish candor, and “Expletive Deleted” returns.

Hour 1-Listen


Ben and the Little Blue Pill (PG-13)

Saw Ben Bernanke wearing a raincoat and baseball cap pulled way low over his face entering a Boston Medical office the other day.  That’s the place with the ubiquitous advertisements for methods and medications that deal with, um, well, impotence.

Seems that QE2 has identity issues and thinks it’s the Titanic.

Ben was pretty damn sure he could perform.  As he smugly relayed on 60 Minutes this past Sunday, print another 600 billion smackers and buy our own debt with it (get your head around that without getting big time dizzy) and at least two economy friendly conditions would ensue:

1.  Interest rates would stay down, way down, to prime the housing market and other big ticket purchases, while also driving money into equities (stocks in Main Street lingo) because the yields on savings accounts, CD’s and bonds would probably be zero or worse once inflation’s taken into account.

2.  The banks could borrow at those lower rates, lend more freely to businesses of all sizes, which might induce said businesses to find the courage to expand and get the unemployment rate out of its anemic state.

Ben’s coming up limp, which explains the brown rectangular paper bag he was carrying as he entered the clinic while looking furtively from side to side.

Interest rates are rising, as there’s a limit to the wool he can pull over the eyes of savvy money managers worldwide.  The buck’s getting weaker, so we’ve got to offer higher rates to lure domestic investors and foreign countries like China, who own us like Visa owns your next door neighbor.  Rates on home loans, although still low by historical standards, have risen 10-20% since Ben’s attempt to suppress them.   You know things are upside down when rising translate to impotence.

And on the front page of today’s Wall Street Journal, the front page headline reads: “Companies Cling to Cash”, with the sub-heading “Coffers Swell to 51-year high as Cautious Firms Put Off Investing in Growth”.

At least something’s swelling, but it’s not what Ben was looking for.  He’s batting zero for 2, and the stakes are a little higher than moving a runner into scoring position.

So Ben’s team, “The Feds“, aren’t, well, scoring, and since they want to score ever so badly Ben is seeking professional help.

Aunt Samantha (Uncle Sam’s sister) can’t get no satisfaction, and a frustrated Aunt Samantha may look elsewhere sooner than later if she doesn’t get it from Ben.

Rumor has it she’s got her eye on Ron Paul.

Wreckonomics; 5/27/08

The number of miles driven by Americans has dropped off precipitously in recent months. The repercussions will be dramatic. With toll revenues down, state deficits will be up, and funding for public schools and other social services will be reduced from their already tenuously low levels. Ironically, fast food sales, which initially were projected to rise due to strained family budgets, may also decrease, as you can’t patronize a drive-through if you’re not driving.

The Fed is out of ammo, having cut interest rates to dangerously low levels. The Fed also contributed to the rise in gas prices as producers don’t want inflation eating into their profit margins. The purchasing power of the monies collected by the federal government through their own gas tax will also be down, as both fewer dollars are collected, and the dollars that have been collected are each worth substantially less than they were a year ago.

This is but a small portion of the results of a failed economic policy, in which a free market economy was replaced by a neglected market economy. The type of painful but necessary recession that Paul Volcker induced in the early ’80’s may be the only thing to pull us out of this tailspin.

What I do about the above isn’t necessarily right for anyone else. That said, lately I’ve been investing my crumbs in the Brazilian economy and reading about Panamanian real estate.

LK Flip Flops and Waffles, Kind Of

Let’s forget for a moment that the Fed is using taxpayer money to bail out a private investment bank, usurping the free market that’s the foundation of our economic system, admittedly a massively imperfect system but the best that large groups of humans have come up with as long as they’ve been walking the planet. Let’s also forget that the fats cats whose irresponsible risk-taking precipitated this mess may no longer be obese (witness Jimmy Cayne selling out his BS shares for 61 mil rather than the 1 billion+ they were once worth) but the cats are still plenty husky.

That’s a lot to forget. But let’s do it for a moment.

Let’s suppose that, if BS (I prefer this nickname to “Bear”, for reasons that should be obvious) folded, it would have been the first in a line of well arranged destructive dominoes. In this case, the 30 billion dollars in possibly garbage collateral that we taxpayers are holding in exchange for the money we lent JPMorgan in order to entice them to bailout/steal BS, is a roughly $100/person insurance policy against the losses that might have resulted if BS imploded and led to a financial black hole in which assets beyond imagination were swallowed up.

Looking at it this way, my $100 portion of this risk ($30 billion divided by approximately 300 million US citizens) to insure against a possible economic catastrophe doesn’t look much different than a life or home insurance policy.

Accepting this as a valid reason for what looks suspiciously like a get out of jail free card is a stretch, but I’m willing to consider it if the Fed requires the irresponsible responsible parties at BS (and they and the financial community know who they are) to be stripped of their assets to the tune of retaining nothing more than the average American has saved.

If the Fed can usurp the system like a bunch of drunken super-delegates, then it has to work both ways. Rescue the institution, but punish the evil-doers. Iran and North Korea have nothing on these guys.