logic and proportion
Have fallen sloppy dead
And the White Knight is talking backwards
And the Red Queen's "off with her head!"
Remember what the dormouse said;
"Keep your head!"
- Jefferson Airplane
I had the typical childhood growing up, including time with most of the
classic fairy tales. However, I never read Alice in Wonderland,
nor did I see any film versions until just this past weekend.
In many ways, I'm sure Tim Burton's version took some departure from the
original, but I am assured by my wife the basic story is the same:
Once Alice falls down the rabbit hole, everything becomes quite wacky.
Our trip down the economic rabbit hole began in the summer of 2007 when
the first extendible commercial paper issues did something investors
were told could never happen: They actually extended. But when fickle
investors turn against a sector - especially one that depends on those
same investors for liquidity - financial violence ensues.
And boy, did it.
But enough reminiscing about the good old days when we were still
confident there were unmentionable "potential" actions the government
could take, rather than viewing these same actions as historical
precedents. Let's look forward to . well, to what?
Uncertainty has now reigned in the financial sector for too long.
Washington's focus on healthcare - which to my knowledge did not cause
any significant part of the current global financial crisis - has
allowed partisans of both sides to skirt the true issues facing our
economy for far too long.
I'm hopeful, with the recent healthcare legislation now signed and
moving forward, that Washington will refocus on what ails us.
And there are signs that is the case!
First Barney Frank finally opened debate on what to do with Fannie and
Freddie last Tuesday by holding hearings on the housing market.
Treasury Secretary Tim Geithner, who has promised a full proposed
solution in 2011, argued the federal government should continue to have a
role in the housing market. No doubt it will, but only clearing up the
details of their projected involvement will allow the private sector to
resume allocating capital (hopefully doing a better job this time
Second, of course, is Senator Chris Dodd's bill to reform regulation of
the financial industry. As written, it is quite unlikely to pass, but
who would argue regulatory reform isn't a necessity? The shocking lack
of preparedness on the part of regulators over the past two years must
be addressed, along with a few consumer and investor protections thrown
in for good measure! (Isn't it almost as shocking we haven't begun this
Let's declare the "shock" of the financial crisis over and get to work
repairing our economy (No, stimulus packages don't repair; they only
delay). Let's also lay the groundwork to help minimize the possibility
of such calamity in the future, without trading in the capitalist
inertia that has driven wealth in this country since the colonial days.
Durable goods orders rose by 0.5 percent in February, as expected, with
civilian aircraft orders up 33 percent. Stripping away the volatile
transportation sector, durables were up 0.9 percent, almost double the
rate expected. Over the past year, durables are up 10.9 percent, but
still remain some 20+ percent lower than the 2005 - 2008 run rate.
In testimony before the House Financial Services Committee, Fed Chairman
Ben Bernanke discussed the strategy for exiting from the Fed's historic
lending and monetary practices. There were no huge surprises in his
remarks as he reiterated comments that the "economy continues to require
the support of accommodative monetary policies."
FDIC Chairman Sheila Bair said in a speech Friday that they are considering extending the insurance program for deposit accounts. Approximately 6,900 banks originally signed up for the so-called TAG program and the concern is whether funding for regional banks will dry up without this extended insurance.
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