The Binary Circumstance

While I’ve been pointing out the weaknesses in our financial system and housing market for some time, I’m a little overwhelmed of late by all of the Federal Reserve’s surprise, emergency actions to keep the financial house of cards from falling down.

This weekend they orchestrated the purchase of Bear Stearns by JP Morgan Chase for the bargain basement price of $2 share. Last year, Bear Stearns was selling for over $150.

Tomorrow the Fed is set to lower interest rates again and I’m expecting a full percentage point, if not more. All these emergency moves by the Fed are certainly not doing anything to give people more confidence in the markets. I don’t know how many more surprises we can handle.

The Fed, in a bold action on Sunday, agreed for the first time to let big investment houses get emergency loans directly from the central bank. The new lending facility — similar to one that’s been available to commercial banks for years — started Monday and will continue for at least six months. It marked the broadest use of the Fed’s lending authority since the 1930s.

Also Sunday, the Fed approved a $30 billion credit line to engineer the takeover of Bear Stearns.

Senate Majority Leader Harry Reid, D-Nev., was critical. “The Federal Reserve’s latest actions appear to shift large risks to taxpayers, who may find themselves on the hook for billions in worthless securities.”

Countered Paulson: “Bear Stearns had a liquidity crisis, and so we felt it was very important that this be resolved as a way to minimize impact on our economy … This is the right outcome.”

I have pointed out before that the job of the Fed is to protect the banks even at the expense of the taxpayers. In taking on all the securities of questionable value, they are taking the risk out of making bad loans and putting it on the taxpayers. But if they don’t, some of the huge financial institutions will collapse taking many sound, honest businesses with them. It seems no matter what they do, we’re going to pay.

The Federal Reserve, apparently not satisfied with dumping the bad debt held by banks on the taxpayers, has invoked a little-used law to shift the bad debt held by a non-bank to the taxpayers as well.

From Bloomberg.com:

March 14 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke invoked a law last used four decades ago to keep Bear Stearns Co. from collapsing after the securities firm approached the central bank for emergency funding.

The loan to Bear Stearns required a vote today by the Fed’s Board of Governors because the company isn’t a bank, Fed staff officials said. The central bank is taking on the credit risk from Bear Stearns collateral, lending the funds through JPMorgan Chase & Co. because it’s operationally simpler to accomplish than a direct loan, the staff said on condition of anonymity.

Bernanke took advantage of little-used parts of Fed law, added in the 1930s and last utilized in the 1960s, that allows it to loan to corporations and private partnerships with a special Board vote. The Fed chief probably sought to stave off a deeper blow to the financial system from a Bear Stearns collapse, former Fed researcher Keith Hembre said.

Just three days ago, the Fed promised up to $200 billion in loans to banks also agreeing to take their bad loans as collateral. That news sent the stock market soaring over 400 points. Today’s news sent the stock market and the dollar down and saw gold trading solidly above $1,000 ounce for the first time in history.

ABC’s Good Morning America did a segment on Barack Obama’s church and pastor this morning. They explained that Obama has belonged to the same church for over 20 years. I found it interesting because the church and the fiery, angry, racist pastor, Rev. Jeremiah Wright, seem to represent such a sharp contrast to Obama’s political persona.

Brian Ross’ ABC segment is worth watching as well as this video about the church, Trinity United Church of Christ in general, and Rev. Wright’s sermon comparing Obama to Hillary Clinton.

As anybody who read my blog knows, I’m always nervous when people start speaking for God especially when “God’s” message puts them above others because they see themselves as victims.

When God is on your side because you’re a victim, it pretty much guarantees that you’ll always want to be a victim so that God will love you more and keep you on His side.

There’s also this from the Washington Post:

Barack Obama is a member of Chicago’s Trinity United Church of Christ. Its minister, and Obama’s spiritual adviser, is the Rev. Jeremiah A. Wright Jr. In 1982, the church launched Trumpet Newsmagazine; Wright’s daughters serve as publisher and executive editor. Every year, the magazine makes awards in various categories. Last year, it gave the Dr. Jeremiah A. Wright Jr. Trumpeter Award to a man it said “truly epitomized greatness.” That man is Louis Farrakhan.

I can’t say whether Sen. Obama shares all of Rev. Wright’s views, I doubt that he does. But I think it says something about him that he’s remained loyal to the church for so many years. I also assume that like most members of churches, he has donated money to his church over the years providing financial support for the pastor’s message and actions.

According to Queerty, Sally Kern has a gay son who she has disowned, presumably because she thinks he’s worse than a terrorist.

Imaging being a gay child and being terrorized by that level of abuse and then being tossed out like a piece of trash on top of it.

It’s all so Christian!

Unfortunately, there are millions of gay children around the world who must endure it every day.