The Fed will always be able to stop a crash. Just like how the prices of houses always go up?
They say “don’t fight the Fed.”
This has been especially true from an equities investment perspective since the Crash.
The question now though is how much fight is left in the Fed.
My colleague Hunter Lewis has this to say about Paul Volcker –
“Volcker really cares about the poor and the middle class. He is also scrupulously honest, not a scintilla of cronyism or corruption in him. And he has even admitted that the financial system was actually more stable before the creation of the federal reserve.”
Regular readers of ACC are aware of the current battle surrounding the reauthorization of the Export-Import Bank of the United States. We believe, along with many others, that Ex-Im is great example of crony capitalism which should be euthanized by a Congress which professes to be for free markets and small government. Whether this will actually happen is an open question however as the bank serves some of the heaviest hitters in corporate America, Boeing chief among them.
But for some, including the author of the attached article, the question is why even have this battle at all? Is cronyism really so bad? So what’s a little a public/partnership action? Who are these nuts anyway who want a separation of government and business. Free markets and economic freedom stink anyway.
We’ve documented why Ex-Im is bad from more than just a moral perspective. Taxpayer backed loans to one corporation often disadvantage other businesses. Free markets allow for opportunity and growth. Crony capitalism strangles growth and enriches established firms which get fat, inefficient, and tend to be slower to respond to the customer.
Still some still don’t get it. Jeff Spross at The Week clearly doesn’t.
The implications are not good that is for sure. As Bruce Fein says, we live in a Bailout State.
Iceland stands like a sentinel at the gates of the Arctic and astride the Mid-Atlantic rift. Part of Scandinavia but also the last stone hop to North America it is a place which breeds peculiarity. With a population of under 330,000, less than the population of Wichita, Kansas, this peculiarity is compounded. Throw in month long winter nights and communal hot spring spas and one can understand why the tiny country produces such weird (and often interesting) furniture, music, and economic ideas.
Attached Ash Navabi at the Mises Institute examines one of Iceland’s most recent idea exports, sovereign money.
There is always magma rolling and roiling under the financial plates of the world. Jamie Dimon, JPMorgan’s CEO commented on a rumble which occurred last October which he thinks is of particular import.
Many people wrongly believe that politics is to a large extent a battle between government and business. That the 2 represent opposite dispositions. This is a foolish notion. Business and government are more often partners than adversaries. Especially now.
But crony capitalism has a long history in this country.
It’s going to happen. We don’t know when, but it will.
Or maybe you think we are in a healthy and organic market. If so good for you and good luck.
Not to worry we are told however. (Is it ever time to really worry?) According to Morgan Stanley’s David Darst Squawk Box’s guest analyst this morning the market is just warming up. (Wow.) The bulls are still running and the matadors are nowhere in sight.
Strong words. In your face words. Fighting words.