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Sure, You Say That Now…

Ron Paul on Fannie Mae and Freddie Mac:

Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Of course, he said this in 2003.  The guy really is a kook, huh?

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Gas Prices Aren’t Too High

That got your attention, huh?

As evidence I submit my venture to Sundown in the City on Thursday.  Sundown in the City is a series of outdoor concerts put on each summer in Market Square.  There’s no charge for admission, and they draw insane crowds.  I haven’t been to Sundown in the City in a couple of years, but I went on Thursday to see Robert Earl Keen.  Huge crowd, and an unbelievable amount of smokers.

Before I go any further…I don’t care if you smoke.  You have every right to do so, and I think the ban on smoking inside is a bunch of crap.  It’s your body-trash it if you want to.  If I don’t want to be around it, I can (and do) choose not to be around it.  That problem is easily solved.

But I didn’t realize that so many people still smoke.  What is this, 1978?  Maybe they were smoking so much because they aren’t allowed to do it inside anymore?  Maybe they are all nervous about the fact that gas and food prices are so high?  Maybe they spent the money they would have spent on fuel for this years family vacation on cigarettes since they wouldn’t be able to go anywhere this year?

I don’t know.  But I started thinking that, while gases prices are high, they aren’t so high that people can’t afford the luxury of cooking themselves from the inside.  I mean, this is literally just burning money, and a lot of it.  To be fair, I didn’t hear anyone complaining about gas prices in between puffs, but I’d bet dollars to donuts that some of them had complained in the last 24 hours, probably the last time they filled up and bought a pack of smokes.

So as high as prices are, I think we’ll survive–at least long enough to demand in our old age that someone give us free health care to take care of all those problems caused by smoking.

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Luckily, We Have The Fed

Admittedly, I am more stupider than a lot of people when it comes to finances.  So someone please tell me how the stock market really works.  See, I thought the stock market reacted to what is going on in the economy.  I didn’t realize it was the economy.  

Apparently, I was wrong, because the Federal Reserve has announced an emergency rate drop to “fix” the stock market.

The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, slashed a key interest rate by three-quarters of a percentage point on Tuesday and indicated further rate cuts were likely.

…

This move is not an instant fix,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics

“Fix” is actually the perfect word.  Markets can be “fixed” kind of like a fight or the World Series can be “fixed”. 

So let me get this straight.  We (individually and as a country) have borrowed too much money, which has us headed towards a recession.  The obvious solution?  Lower interest rates to banks, which allows them to lower interest rates to consumers, which allows them to borrow more money.  Makes sense right?  Right?

“You can’t borrow your way out of debt”–Dave Ramsey

So rest easy tonight, all of ye lower and middle income Americans.  Though the cost of milk, gasoline, and Coors Light doth drift higher whilst thou income remaineth the same, panic disturbs not the slumber of bankers, barons, and brokers.  So long as the DJIA remaineth propped by policy, politicians, and ponzi schemes, you need not be troubled by the frightful prospect of competing on a level playing field and moving forward.

Ah, what the hell!  You can just put it on your credit card, right?  Rates have never been lower!!!