Can the Fed save the economy?

I am posting the following link because I believe Reich's analysis of the Fed's attempts to improve the economy is spot on: http://www.huffingtonpost.com/robert-reich/the-republican-recipe-for_b_779121.html

1. Lower the value of the dollar against other currencies: theoretically this action will decrease the cost of our debt and make our exports more competitive. Unintended consequences: other countries respond with attempts to devalue their currencies and neutralize the impact of the Fed's action on their imports and exports; the real cost of our debt is camouflaged by artificially maintained low interest rates.

2. Increase the money supply so banks will lend to business and individuals. Unintended consequence: inflation first of bond prices as investors seek a "safe haven" and then of stock prices as investors seek decent returns on their dollars no longer available in the over-bought bond market. Businesses won't borrow if their revenues are stagnant. Individuals cannot borrow when their incomes have decreased and their debt loads are high.

Evidently I am not the only investor that has opted back into stocks, particularly those with attractive dividends, as bond prices have risen and bond interest rates become anemic. When bond prices finally pull back (and they will) and their interest rates rise, debtor nations like ours are in for a very unpleasant surprise. The cost of debt will soar.

One peculiar side effect of the Fed's recent currency policies is we appear to be teetering on a tightrope between runaway inflation and devastating deflation - a neat trick that does not imply equilibrium.

At this point, the attempts of the Fed to "tweak" the economy back to solid growth could well be doing more harm than good.

Disclaimer: It is far easier to see problems than to provide their solutions. That is one reason I want policy makers and elected officials to be smarter than I am.

Foreclosure Moratorium Bad?

I hear the reasonable, soft-spoken voices of experts voice concern that a moratorium on foreclosures will prolong the housing crisis and delay the eventual recovery of the real estate market. They fear it will put the mortgage lenders in a difficult position. (Click on this post's title for a Wall Street Journal article on the subject.)

Just because these lenders forged paperwork when they could not locate the mortgage documents. Just because they attempted to streamline the foreclosure process with a tiny bit of perjury and skipping over a few minor details, like providing proof they owned the mortgages, surely is no reason for Draconian measures?

We all know they own these mortgages, right? Didn't they tell us so? Why should the lenders seeking foreclosures be tied up in red tape just to protect a few million homeowners and property titles for any new purchasers?

Ah, but wait. Wasn't it the mortgage lenders who tied up those mortgages in all that red tape to begin with?

Fraudulent Foreclosures

Click on the post title for the New York Times article.

Financing giants JPMorgan Chase and GMAC "robo-signed" thousands of foreclosure documents without personal knowledge of the facts. This calls into question the legality of many previous foreclosures and clouds the titles on subsequently purchased foreclosed properties.

Surprise, surprise. The esoteric financial instruments into which mortgages were bundled and sold and rebundled and resold makes finding the mortgage paperwork almost impossible. This is probably the reason so many lenders have adamantly refused to renegotiate mortgages that are in danger of foreclosure. They have no idea how to proceed! This has not, however, deterred them from initiating foreclosure proceedings, which they confidently processed without doing the arduous homework.

Ugly, ugly example how today's super-corporations conduct business. Make no mistake, to them we are not considered customers, we are "marks."

Perhaps it's not perjury unless you get caught?

Perhaps a Beamer?

So I went to the bank to roll over a CD. Could not force myself to lock in less than 1% interest for 9 months. Even if the rates are the same or lower in 9 months, what does it matter? Money sitting in savings accounts, money markets and CD's all over the country is languishing. I know it is important to keep cash on hand for emergencies, but when your banking fees exceed your interest on accounts, a stuffed mattress is more appealing.

What to do?
I could buy some real estate, but I don't know how to manage rental units and don't need (or want) a second home. Besides, I believe the real estate bust is far from over with more unpleasant surprises down the road.

I could invest in stocks. Some are offering dividends that are especially attractive compared with bank accounts. But I am already there as much as I want to be right now. I no longer trust the companies I invest in. They lie on their balance sheets, they lie to their shareholders, they gift wrap any company profits and lovingly bestow them on their risk-taking management teams, adamantly resist any temptation to reinvest profits back into their companies and thrill Wall Street by laying off experienced workforces that will be difficult to replace when (if) the economy recovers.

There are always U. S. Treasuries, a great favorite right now. So popular are they the interest rates are at historic lows and the opportunity for erosion of capital (known as risk to the more blunt among us) is uncomfortably high.

On the other hand...
That 328i in the BMW lot looked awful cute. I wonder how it handles? What harm could an little test drive do?