Tuesday, April 08, 2008

On Markets

As I watch "the Fed" scrambling to fix the current credit crisis a thought occurs to me. I wonder if providing credit to the characters that made many bad decisions is chasing good money after bad. I also wonder if such credit will be used to create jobs in China rather than in America.

It used to be that the economy slumped and credit flowed and jobs were created and there was more money to spend.

Are we at the point now, though, that the economy slows and credit flows but the infrastructural investments strengthen our competitors? To put it another way, is our tax money making China even more competitive?

How exactly does "the Fed" justify bailing James E. Cayne out of his Bear Stearns losses to strengthen America's economy?

If "the Fed" allowed me to get the 2.5% interest rate to refinance my house, rather than giving it to J.P. Morgan to gamble with, I could save myself $88,268.40 overall, or $2942.28 per year. This figure is even more generous than the Bush tax-credit, and it is a far longer lasting stimulus to the economy. From an investment point of view, I have never missed a payment and I'd be offering collateral. From what I gather in talking to people, many American homeowners stand to see gains far exceeding my own.

What makes J.P. Morgan a better investment than your average Moe?

Lobbyists, no doubt.

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Foot Quotes

"Ignorance more frequently begets confidence than does knowledge"

Charles Darwin