Sunday, March 16, 2008
The laws of unintended consequences!
What a remarkable 3 days in the market. Breathtaking. JPM acquired BCS in a Fed-Funded stealth bailout, via a $30b dollar non-recourse loan. There are bloggers out there who state that it was actually JPM being bailed out because they held the most counterparty risk at BCS. I have no information on this, but it will be interesting to see how this plays itself out. At this moment, world equity and futures markets have plummeted, the dollar is sinking faster than the Titanic, and Gold is $1020/oz. Hank Paulson made the Sunday talk show rounds today where he continues to say that the strong dollar is in our national interests, and that "in the long term", our economy and capital markets are sound. But it seems like the market participants have caught on to the Fed/Treasury deceit. This is the law of unintended consequences yet again rearing it's ugly head. Trying to soothe shaky credit markets by bailing out the world's 5th largest investment bank may very well backfire on the Fed/Treasury. People might believe in the law of cockroaches, along with the previously aforementioned rule. Printing money to bail out the cronies, Bernanke has gotten into his helicopter and will confiscate our saving by inflation, and redirect these freshly printed bills to the necessary Cronies. This is remarkable. Is this the start of The Great Recession?