The Fed Has Gone MAD

OK, I have completely had it. I am going to spout off here and use some foul language so please accept my apology but right now, at this time in history I have never been so pissed off at what the Fed is doing.

I just read an article here at nearly 1:00 am on Saturday 20 December 2008 that starts with this headline: "Hedge funds gain access to $200bn Fed aid"

As pissed as I was when I read the Fed was lending to Wall Street firms before the Lehman collapse with the implicit understanding they would extend credit to their unregulated hedge fund clients they served as broker dealers to, this latest move has me fuming.

You can find the article in the FT here.

I am so pissed off I don't know where to start or how to structure this message. Suffice to say, the pigs that are running the Fed and Treasury right now are not only acting with reckless abandon with taxpayer money (they will bankrupt the Fed), they are also suggesting consolidating the ineffective regulatory structures they admit have COMPLETELY FAILED to do their job over the past 15-20 years and at the same time they are lending taxpayer dollars to the largest unregulated "financial" industry with the largest pool of unregulated money on the planet.

If you have read my writing until now will know I don't think unregulated hedge funds serve a useful, justifiable purpose to humanity in the connected and increasingly crowded and fragile financial world we live in. In fact they do so much harm to the human race they may be accurately labeled as "evil".

The article not only states they are going to make $200 billion available to hedge funds to borrow directly from the Fed to support consumer loans, the Treasury has committed $20 billion to cover potential losses!!

What the f*** are these guys thinking? If they are so damn sure they will need a 10% charge off from the get go then what in the hell does that tell you, me and any other person with half a brain who makes consumer loans? In order to turn a profit you have to charge an interest rate that will compensate you for potential losses. If you think you could have losses as large as 10% of your capital you better damn well be charging nearly double that amount or close to 20% just to compensate you for your use of capital at some kind of justifiable return.

And if this is the case, what does this say about the ignorance at the Fed right now? The Fed and Treasury are brow beating financial institutions to lend, lend, lend to re-inflate asset prices and "get the economy going again". They have even going as far as to propose doing everything possible to get lending rates on mortgages down to 4.5% by mid January. Who in their right mind would lend someone $250k for 30 years at 4.5% when the economy is in the tank and the government is printing money and lending with abandon. Any idiot would know the situation we have now is so bad, we are likely to be burning dollars to stay warm next winter instead of spending them on fuel. Lending with artificially low interest rates and high default rates doesn't work guys, not for homes, cars, boats appliances or any other damn thing.

I wrote many months ago, if the Chinese or any other country with an abundance of dollars had half a brain they would unload all their dollars by either a) spending them on hard assets in the US or elsewhere where they could get a rate of return that protects them from the absolute devaluation of the currency (which they tried to do a couple times only to be rebuffed by the idiots that run our government who also don't know a damn thing about economics) or b) converting them to other asset classes and out of dollars all together, by say buying the city of Vienna, Austria which will be be nothing more than one big out door museum run owned by the Chinese in the future anyway so why not start now?

So I digress, but you get my point.

This is a sentence from the article:

The Fed thinks risk premiums or “spreads” for consumer loans are much higher than would be justified by likely default rates, even assuming a nasty recession.

"The Fed Thinks" is the F***ing problem with this statement. Those ass***** are NOT CAPABLE OF THINKING any longer. They need to get their head out of the box that houses the business models of economic activity that just crashed and start working to see us through the crises NOT simply continue to prop up failed institutions, failed business models, failed investment strategies, failed usury practices, failed regulatory regimes and failed economic models!

Here is how Henny Sender ends the short article:

In effect, the Fed will now take on the role of prime broker – the lead bank that lends to a hedge fund – for specific assets.

What the F***?

You have no idea. I read a review of the many ways the Fed has interjected itself int he markets over the past 18 months or so and ALL OF THESE GUYS NEED AN EXTENDED VACATION. We need to get them the hell out of Washington like 8 months ago cause they have run amok. History will prove these guys, Mr. Paulson and Mr. Bernanke and all of their cronies as the worst bunch of people to ever head the Treasury and Fed in the history of the Republic and will one day be held personally liable for the destruction of our economy.

This program must be stopped and stopped NOW.