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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (162535)	3/8/2009 11:58:12 AM
From: illyia	Respond to of 361441

The Law of Unintended Consequences by John Mauldin Safe Haven March 07, 2009 Rules have consequences. And sometimes they have unintended consequences. If I told you that the US government was going to give multiple tens of billions of taxpayer dollars to hedge funds and private investors, you would justifiably not be happy. I think the word angry would come to mind. But that is exactly what is happening, as a result of rules that were written for a time and place seemingly long ago and far, far away. Further, we are looking at potentially much larger sums being lost in the bank bailout (can we say hundreds of billions?), a reduced lending capacity at banks and, in general, a worsening of the very problems at the core of the crisis. The good news is that it can be fixed, but the authorities need to get a sense of urgency. As Steve Forbes writes today in the Wall Street Journal, Obama is continuing with the worst of Bush's policies, making the crisis far worse than it should be. It is as if we are giving all 13-year-old kids a "F" in math because one kid failed. Today's letter will look at some rather obscure rules which are having major unintended (and negative!) consequences, and what can be done. Then, if we have enough time, we will look quickly at Japan, unemployment, and a few more statistical predictions of when the recession will end that you should be very wary of. It's a lot to cover, but it should make for an interesting letter. [edit: See link for rest of article. Also: Thus beware of a rally due to PPT-linked hedgies getting gaming money to pump the markets... making Obama... a collaborator??? Geez...] safehaven.com [P.S. I might add that I've picked up on the "giving money directly to hedge funds" story, running for about a week. I am cynically sure that the intent is not to "bail out" the hedge funds - but, rather, to allow for a covert "bull market" to be started. I guess the justification would be "no choice". However, the truth is, that no one in his or her right mind would pull savings out and plunge in right now. The best I can see is that those who left money in all-the-way-down would have an opportunity to get out with less loss. Of course, they probably would not and therefore lose even more on the next leg down. Might be good for a trade, if the hedgies get their money... for a while. And, no. I am no fan of Forbes...]