Every person is entitled to his opinion. However, it’s always helpful to align your emotional thoughts with facts and circumstances. The Federal Reserve has a power to intervene in exigent circumstances under the Federal Reserve Act. Don’t like it? See if you can start the movement to get it repealed. In the meantime, deal with it. Sound insensitive? Well, it’s not and these recent interventions are good use of our money which gets abused every day for much more ridiculous adventures like Cheese Museums and paying Dianne Feinstein’s husband (I am having a lot of trouble finding perpetual, ad nauseum opines about those issues). Nonetheless, I am beginning to think Phil Graham was right; we are a nation of whiners.
The primary role of our beloved Federal Reserve is to control monetary policy and sagaciously act for the protection of this countries economic well being. I certainly am not a big government advocate and understand the passion involved when emotional catch phrases like “bailout” and “corporate welfare” are bandied about. Gee, I am just frothing at the mouth, rabies dog mad writing that. However, as one mode of anger management I suggest you visit the Trinity Church graveyard and yell at Alexander Hamilton’s grave. It works for me; just make sure your PBA card or some other law enforcement endearment tool is handy. Another might be actually reading The Federal Reserve Act or understanding the fundamental underpinnings of various deals our government has made with private companies? That way, we could all have riveting discussions about Federal monetary policy and how our FRB does a great deal of this every day albeit on a lesser scale and without the stigma of crisis (enter dramatic Obama pause here). Even better, how about we actually compare the current actions to past crises (oooh) for a really good look at FRB intervention done to protect our countries economic interests.
The AIG deal essentially rescues American consumers and protects our financial system. It also does something the approximately $26 billion dollars a year in federal gas taxes we pay does not do; it could turn a profit. The money is being lent at LIBOR, plus. The 79.9% stake is in something called equity participation notes or EPN’s.
What does this simply all mean? The financial market gets more stability (including investment vehicles that all those “rich” people own like mutual funds), overall market risk decreases and we move towards a more liquid financial situation which permits perdurable growth in consumer lending. This will allow us to move into a discussion of more interesting topics as to why Obama was the number three receiver of campaign contributions from Fannie/Freddie..
