The Fed and all their glorious wisdom..........

After the extra large rally yesterday after the Fed cut rates I feel the market was bound to sell off based on the fact that nothing has changed. The cut just shows that they are still behind the 8-ball and trying trying to make up for missed opportunity's. By cutting the rate to .25% shows just how desperate they are to stop the slide into a deeper recession. They really have no ammo left at this point, except using taxpayer funds to start buying assets off the balance sheets of banks. The very thing they should have done in the first place.
The Fed is really just as much to blame as the lending institutions and the security brokers for the current crisis. The Fed's excessively loose U.S. monetary policy in 2002-2005 was a factor contributing both to the housing boom and subsequent housing bust. The Lender's who ignored pertinent financial information from applicants were just as much responsible for aggravating an already bad situation as the Fed was for making the money so readily available. The case of the Security Brokers was much the same as the lender's. In an all out effort to keep up with rivals profits they continued their advancement into the realm of risky mortgage back securities. Actually there was only one risky aspect of bundling the mortgages and selling them in the form of bonds. Those who were left with the MBS on their books when the party was over were in a position of holding potentially worthless or at the very least hard to value assets on their books. In the day of Mark-to-Market this was a sure recipe for disaster should the market take a turn for the worse. Instead of being responsible enough to govern in their own best interest they were continuously looking to keep up with the profits of rivals and in the case of the Fed's monetary policy it was all to easy to over look the long term interest of the firms in favor of the short term profits that would boost stock prices and ensure a hefty bonus at the end of the year.

Are these three entities taking responsibility for the financial calamity that has ensued? It would appear that from all outward appearances that they have somehow delegated responsibility to the consumer who was caught up in the fever pitch ride that consumed all of America during the height of the house flipping preoccupation. The fact that The Fed, the Broker houses and the Lenders were making record profits was inconsequential when the bottom fell out. At this time it was reported in the media that it was because consumers, in all their glorious greed, had taken on more financial responsibility than they could handle and had somehow gotten us to a point where AIG, Lehman, Merrill, IndyMac, National City and Washington Mutual had collapsed. Also at this time Goldman, Morgan, UBS, Bank of America, and many others were in dire straits.

And This is all the fault of the consumer who had to, according to the policy makers, lie to achieve the realization of obtaining a mortgage. Never mind that these " lier loans " were products dreamed up by an industry aimed at taking advantage of the excessivley loose monetary policy of the Fed.


More Later..............