...BACK HOME AGAIN...

Sorry, gang, I know it's been a long time. But the thing I discovered since I have been doing this is that there is a rhythm to this blog thing. One can't pull a Bernanke and parachute in and out; you have to stick with it otherwise you are just spouting disjointed rubbish. Well, there is now a new year in which to get jointed so let us begin

Since we went away, Harry the Crook and his mob in the Senate have passed something that may be a health care bill by bribing everybody except the tea lady in the Senate dining room. Come to think of it, she may have gotten her piece of the action as well. I'm old, who cares, but our kids are going to have a hell of a time. Regulatory action continues in mindless pace, the Dollar has resumed it's march into the toilet, Paul Krugman gets dumb and dumber and Congress in a remarkable piece of indolence removed all of the funding fetters on Fanny and Freddie in the dead of night on Christmas eve no less when everyone was paying attention to the health bill.

You might remember we have been saying that the beginning of the mortgage crisis was the Fair Housing Act that mandated (forced?) financial institutions to lend to what previously had been considered less than credit worthy borrowers thereby creating the first sub-prime loans in the mortgage business. In the forefront of this activity was of course Fan and Fred and they remained so until the Great Crash. They are still there with a TRILLION AND A HALF of crap on their books and God only knows how much in contingent liabilities in the form of guarantees for you see, both institutions have consistently lied about the nature their exposure and have been covered in their deceptions by a more than willing Congress led by Barney and Chris the Crook. By the terms of the TARP, Treasury support was limited to 400 billion, but now no more. As of Christmas eve, the support is now UNLIMITED and will be unknown because as can only happen in Washington and support extended will not be counted in the budget.

Now this rip-off of the U.S. taxpayer would be bad enough but it gets worse in a policy sense. Remember we talked about the actions of the Fed in supporting the issuance of Agency paper? Guess what's going to happen. Sometime early this year the Fed will proclaim that this activity will no longer be needed and begin withdrawing from the purchasing of the same. HUZZAH! will proclaim the market! The Fed is tightening, things are looking good. Uh, no. The Fed will simply be replaced by the unfettered Treasury, Fan and Fred will continue to lend to crap and renegotiate existing crap, Fan and Fred's portfolios will advance towards a possible loss of a trillion dollars of taxpayer money, the housing market will not stabilize and the deficit will grow by leaps and bounds but that fact will not be recognized as all of this will occur off-budget. If they can hold the thing together until Nov 7, 2012, The Leader might get re-elected; if not...a true Louis XIV moment. You have to hand it to this bunch; we have never seen anything like this in our history as a nation. Chutzpah? They invented it.

While all of this was going on, Helicopter Ben, keenly aware that a vote on his future was rapidly approaching, threw his organization (and his colleagues) on its/their swords and took all the blame for the past few years in the form of poor regulatory oversight. Where do we get such...men? It's not that he's stupid, or ill-informed, or lacking in vision. It's just that he's...small. He REALLY likes HIS job. I find it quite extraordinary that so many pundits can write (correctly, I might add) at how Wall Street and American business lost their sense of mission and purpose; how the public trust was forgotten when staring them right in the fact is the greatest total abandonment of the public interest by the members of the Congress of the United States and many of the employees of the same government. Shocking. Perhaps it is simply too hard to really try to understand; perhaps we have been so caught up in "immediacy" that depth of understanding has been abandoned; perhaps--dare I say it--we have forgotten how to think. We deserve better.

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You might remember me writing about my friend Joe, the son of my friend, Dick. Joe lost his battle jut before Christmas, with lung disease that required him to receive a double lung transplant. Joe wasn't much on formal religion, but he was a hell of a good guy, a great financial technician and a wonderful friend. If you have a moment, say a little prayer for Joe. As the man said, "it can't hurt."