The heat is getting turned up on the Federal Reserve. Congressman Ron Paul initiated a Bill, HR 1207, to audit the Fed. It has been gaining momentum and has 207 co-sponsors, but 218 is needed in order for it to move to the Senate. If this Bill somehow gets passed, the Fed will be exposed. One can only wonder what the consequences of a failed central bank would be like. I'm not saying this is going to happen, but questions are being raised and investors need to be aware of it. This is a video I posted a month ago today; dealing with the Inspector General.
There is much debate over the Federal Reserve's activity in the Vegas like marriage of BOA and Merrill Lynch this past December. Then Secretary, Hank Paulson, and Ben Bernanke, are said to have strong armed BOA CEO Ken Lewis, into the deal. After BOA discovered how much junk was on the balance sheets at Merrill, they didn't want in. Now, the House Oversight Committee has subpoenaed the Fed. I just read an article saying that BOA has e-mail evidence.
"WASHINGTON -- Internal Bank of America documents and e-mails among federal banking regulators show that federal officials leaned on the bank to seal the acquisition of Merrill Lynch in December or else face a management upheaval if the company wanted government assistance." - Miami Herald
Lewis was put in a jam and could have lost his job if he didn't seal the $50 billion deal. I'm all set with that choice. Anyway, the cracks are starting to be revealed in the Fed's model, both fundamentally and socially. This may have some pretty serious consequences. If they were to be shut down, then the economy would flourish, but that's a whole other subject. All in all, it's just another thing money managers need to keep in mind for their portfolios.
Finally, I found this video on another blog I read and found it interesting. Most of the stuff on CNBC during the day is garbage, but James Grant is a brilliant economist. He talks about the Fed throughout his interview, but it's very interesting to hear his thoughts on inflation and why he believes the velocity of money (how fast money moves around the economy) has little to do with inflation; it's the actual amount of money in the economy, that's going to cause inflation. It's another lens to look through, which can only help.
The market rallied pretty good from about 2:30 on today, but finished down. Tomorrow will be volatile as well with the 30-yr auction. Will Benny B start ramping up the presses again? Only time will tell but at this moment futures are up a bit now, Asian stocks are in the red, the dollar is down and oil is up to $71.89. It'll be interesting so get ready.
No comments:
Post a Comment