The Triple-A Rating & "Kosher Light": Not In My World

Two short items for this Friday as I am already getting excited about the Northside Holiday Art Sale tomorrow. (See yesterday's post for more info.)

First, this issue about bonuses for Wall Street workers, to me this is just so much crap. Taking them away doesn't get people back to work. In fact, it does nothing because they are now giving the bonuses in stock that can not be sold for five years. Big deal. Fixing what needs to be fixed, Congress can not find its ass with both hands tied in back. Clean up the credit rating agencies and that would go a long way towards restoring confidence in the system. As I have written many times, all triple-A rated paper must be approved by the Fed before the rating can be given. Only the triple-A credit would need to be checked over by the Fed. The lesser credit ratings can be left alone. There is no money in fudging those ratings, although I am old enough to remember how Abe Beem got Moodys' to give back New York City's A-rating in the early 1970s. The Triple-A rating, unlike other ratings does not have a "+" or a "-" after the rating letter. Triple-A is like kosher. It is or it's not. There is no such thing as "kosher light".

Without the TARP money there would be no bonuses either, even for Goldman Sachs. Without the AIG bailout, they all would be looking up to see bottom. To me, it is like a batter that strikes out and then the man from the government standing behind him hits the ball over the fence with a fungo bat and tells the guy he hit a Home Run and that he should now run the bases. That's not a Home Run, that's a bunch of crap. The same is true with the bonus money Goldman now wants to pass out.

Second, I disagree with Krugman today about the Fed needs to do more to fix the unemployment rate. Yes, the Fed could buy more securities to put more reserves in the banking system, but that doesn't mean that the banks will lend the money. Don't ask the Fed to do the job that the administration and the Congress should be doing. I know there are millions of families out there suffering, but asking the Fed to fix the problem is the wrong tool. The Fed can get credit moving again if they would take the responsibility for giving a credit the triple-A rating. Then, in my opinion, a triple-A bond would once again mean something. Remember, tonight is the first night of Hannukah and there is no such thing as "kosher light". Chairman Bernanke knows I am right, he just needs a little push.

Stay tuned.