| 04 October 2008
So Congress caved in to Wall Street's hissy fit and gave the Treasury carte
blanche to spend USD700bn on buying worthless mortgages. And just for good measure
it added 150bn of unfunded tax breaks.
That was quite an expensive day, even by Washington's standards, coming to
about USD4,500 for every US taxpayer. And what will it buy?
Well, how about a big steaming pile of moral hazard? Oh, and don't forget the
blank check that Congress now has to shoot itself in the other foot by passing
a whole raft of anti-investor legislation next year once there is a Democrat
in the White House and a rock-solid Democrat majority in both houses.
The most remarkable thing, perhaps, about this whole sorry mess is that it
has been instigated by a high priest of Wall Street who was himself at the top
of the capitalist pile. He is an honourable man, Secretary Paulson, so I'm sure
he didn't do it for his friends. But then who did he do it for? Not for you
and me, it's clear.
The markets showed how they would have reacted to the bill's failure on Monday
and Tuesday, after the House threw it out, and it wasn't that terrible. And
just in case you missed the message, they fell again after the bill was signed
into law on Friday afternoon.
It won't make any difference to what is going to happen, anyway; it will just
transfer a trillion of our money into the pockets of the owners and operators
of financial institutions once this is over and it all starts up again.
Meanwhile I for one won't be putting any money into the dollar or US stocks
or bonds. There's only one way they can go for the next few years, and it isn't
up! Perhaps I'll buy US bank stocks in 2010; they should be nice and cheap by
then, and I'll reap my harvest in 2020, just before the next crash.
You have been reading an entry on the following blog:
Penelope Wise
Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.
Penelope blogs on investment and financial services around the world: mainstream and alternative. Contact: penny@lowtax.net
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