Thursday, September 18, 2008

Panic in the Streets!

Some global financial news off the top of my head:

- Russia pumps $20 Billion into their liquidity pool to boost their economy
- China starts buying stock to keep its stock market level up
- UK BANS short selling until they revisit it in January
- Major central banks set up US dollar swaps in the billions just in case they need them
- Morgan Stanley maybe isn't as great as it claims and is looking to be bought
- Goldman Sachs still seems in pretty solid shape, but the stock's taking a beating due to panic
- Nobody in Congress has a clue what to do... neither does anybody else

Well, I do. Leave it all the fuck alone. Russia's doing the same thing the US Fed is doing, China's market is going to be a mess due to the government artificially inflating it, the UK ban on short selling will just kill liquidity in the market and will look nice short-term, but will smack them in the face down the road. Goldman Sachs will probably come out of all of this in fine shape.

Oh, and of course the US gubmint is now the biggest mortgage company in the world AND the biggest insurance company in the world after taking over Fannie, Freddie, and AIG. But don't elect the democrats, because they'll socialize everything! Oh... wait... umm... nevermind that argument.

This stopped being about bad mortgages a while ago. Now it's becoming apparent it's due to bad regulation enforcement. The 5 big investment firms were able to over-leverage due to ridiculous exemptions. So, now in an attemp to fix the crisis, more regulation is being suggested.

Fill a bowl with glue. Tell someone there is one rule - don't put your fingers in the glue. Every time they ask if they can touch the glue, say no. Finally, let them do it "just this once". Now they're stuck in the glue, and need to put their other hand in there to free the first. Now they're more stuck. They cry for help because they're stuck in the glue. Once you start mucking around trying to get them out, you get stuck too. The problem just gets worse the more you try to help and fix the problem.

Or think of Homer trying to free himself from the Springfield tar pits. "I'll just pull my legs out with my arms, and my arms out with my face.... glub, glub, glub." I don't think Stampy's gonna help here.

More regulation just complicates things more. They need simple, clear, and ENFORCED rules.

Funny, I thought I was going to write about something else entirely. Next time I guess.

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