Tuesday, December 11, 2007

Moral hazard, fairness and other bullshit

I'm tired of it. All those talks about bailout, moral hazard, fairness, blah, blah, blah. Economy is not about morality or fairness. It's all about efficiency. Nothing more, nothing less. If Fed allows banks and other lenders to fail, it will punish everybody, not only irresponcible lenders. Just read about Great Depression. If banks stop lending, economy stops. Period. Bad for everybody, even permabears (where are they going to borrow shares to short if brokers are closed?)

We are closer to GD than anybody thinks. If we are in recession right now, Fed needs to pump huge amount of money into economy just to keep it running, never mind stopping recession. Couple of Fed mistakes (and they are probably made already) and we are no better than Japan in 1990. One more administration thinking that markets can fix everything, and we are deep in it. The biggest danger though if China's bubble is burst now (or soon). Then it's global. Buy the apple cart.

Just in: Fed cut .25. "They know nothing!" (Jim Cramer, you are great. And you know it). Where I can buy a good used apple cart?

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