Senator Dodd: Do Not Eff With The Fed

Our central bank is a complex tool, that used correctly can maintain the integrity of the US Dollar and supply the economy with enough money (credit) to facilitate our economic growth. Too much money in circulation and you run the risk of inflation, while too little money can hold back the growth of the economy. Simple?

Now comes the Senate and Senator Christopher Dodd and his Senate Finance Committee. They are suppose to understand the basics of a central bank, our Federal Reserve Bank. The Fed, as it is known, is today the scape goat for the economic crisis of 2007-08 and the present. But, is it fair to make the Fed and its Chairman, Ben Bernanke, the scape goat for the actions of the Senate, the prior Fed Chairman, Alan Greenspan and prior administrations? Politics is not about being fair, politics is about taking credit and getting re-elected.

In 1999, with the "leadership" of Senator Phil Gramm, the Senate passed the Gramm-Leach-Bliley Act which gutted what was left of the Glass-Steagall Act that prevented commercial banks from owning brokerage firms and insurance companies. Later, under President George W. Bush's administration, Senator Gramm slipped in another Bill called the Commodity Futures Modernization Act. After doing all this "good work", Senator Gramm left the Senate and went to work for UBS (Union Bank of Switzerland), who bought Paine Webber, a brokerage firm due to the deregulation Bill of Senator Gramm.

The Fed's role in all of this is unknown to me, but to blame the current Chairman for the mess that was made by the US Senate seems to me a bit unfair. Perhaps Congress should make everyone working at the Fed wear a little yellow cloth bank sewn to their left breast pocket of their suit coats. In this way, we can make those people working at the Fed first-class scape goats for everyone to see.

The Fed is not the problem. The new legislation that is being crafted by Senator Dodd and his fellow senators will tie the hands of the Fed to operate and conduct monetary policy. The Fed has an assortment of tools it can use to conduct monetary policy and its three basic tools can not be taken away or else we will no longer have an independent central bank. Remember, there are other central banks and their governments around the world that understand how a central bank is suppose to operate. Fucking up our central bank with a bunch of stupid regulations will not go unnoticed by the central banks in the rest of the world. Politics is one thing, but fucking up the monetary system of the United States is a whole lot bigger.

Stay tuned.

Sunday: Time For Pro Football & The New York Times

The Cincinnati Bengals play the Cleveland Browns today at one o'clock at Paul Brown Stadium. How many states can have such a situation as two professional football teams playing each other, founded by the same man and in the stadium named after him? Is it any wonder that the Pro Football Hall of Fame is in Ohio. While the first pro team may have been the Canton Bulldogs, Paul Brown was one of the founders of modern football in America.

After that disappointing loss to the Oakland Raiders last week, which the coaches played to sit on a lead (stupid), let us hope that the players have some say in the game plan for today. The offensive coordinator of the Bengals needs to use the players he has to their full advantage. On paper, this game should not even be close. But, the Browns will give a lot of fight and try like hell to win their second game of the season. Bengals need to play to win, not sit on a few point margin.

Monday, I plan to talk about Senator Chris Dodd and the new legislation coming out off the Senate that will restrict the ability of the Fed to conduct monetary policy. Oh, I know everyone will be hardly able to wait to read that.

How about a picture of a level playing field for Sunday?

Stay tuned.

Saturday Is For Art

Well, I hope everyone had a nice Thanksgiving. I did not go out shopping on Black Friday. I went to the Cincinnati Art Museum to view the new Art Nouveau Jewelry & Glass exhibit and the Chinese scroll painting exhibit "Tigers and Carp". If you like beautiful Tiffany glass and beautifully designed jewelry, you will enjoy this exhibit. I haven't put up my gold fish paintings in a while, so why not go with them this Saturday. Nothing political, as we can all use a break from that stuff. On Friday the University of Cincinnati football team beat Illinois from the Big Ten, to take their season's record to 11-0. Next week they play Pitt at Pittsburgh. Good Luck Bearcats.

And now a word from our sponsor: SKI CINCINNATI t-shirts make excellent gifts for the Holidays. You can buy SKI CINCINNATI t-shirts at the following gift shops and store -- Contemporary Arts Center at 6th & Walnut and on-line from their web store; Cincinnati Museum Center at the old train station, Union Terminal; Cincinnati Art Museum in Eden Park; and Benchmark Outfitters in Blue Ash on Kenwood Rd.

Stay tuned.

Dubai's Dubai World Says Wait Six Months

Today is black Friday in America, and everyone knows what that means. Well, today is also Black Friday in Dubai and the world doesn't know what that means yet. Dubai's investment company Dubai World has asked its creditors, big banks around the world, if it can suspend paying on its debt for six months because it is out of cash. How much are the banks on the hook for? The people that know say $59 billion, with a "B". So, Europe and the United States now have to figure out what is the downside if Dubai World should default. When you owe $59 billion, believe me, the bankers will work with you. One small caveat, Dubai doesn't have any oil. This should be interesting to watch.

Stay tuned.

Happy Thanksgiving Everyone

Happy Thanksgiving to everyone.

If you want to check out some great photography, go to the web site pixelsbypaul.com I went to school with Paul about 50 years ago. So, if you like really nice photographs check him out.

Stay tuned.

A Hope For A Better Thanksgiving Next Year

There are so many issues to discuss that deal with the economy and our financial markets, but today is the day before Thanksgiving, so let us be thankful for what we have, and hope that others, less fortunate than us, will have a better Thanksgiving next year. All of us must keep spreading the word about the virtues of the "level playing field" and how more comprehensive regulations of banking and investment securities will give everyone an opportunity to have a piece of the pie. The turkeys at the top of the economic pyramid are, for the most part, oblivious to the fragile situation so many are now in as a result of the greed and utter contempt for the working class, shown by the actions of those that call themselves capitalists. Those that maintain the high ground do not give up their position of wealth and privilege without a fight. But, with the numbers on our side and the vote still in our hands, let us resolve that this Thanksgiving we will continue the struggle to bring the knowledge and courage to our leaders and representatives. Have a Happy Thanksgiving everyone.

Stay tuned.

Economics Is Easy: Politics Is Hard

Economics is easy. You know what's hard? Politics is hard. Without politics an economic system of regulations, transparency and enforcement would be no problem. But just as designing something on paper with a pencil is simpler to do than actually fabricating the object, so too is getting the Congress and the Administration to understand the importance of firm regulations a major problem to our economic recovery.

While I was not around in the early 1930s when the Great Depression hit this country, I believe that many feared that the future of this nation may very well have been at stake. The economic situation was very bad and politicians, I think, realized that serious regulation was in order. The Acts that came out of the Great Depression kept this nation moving forward for several decades, in my opinion. The train got off the track when a level playing field took a back seat to greed. The laws that came about, or the lack of laws that did not come about to deal with the new financial instruments like credit default swaps, lead to the financial crisis and the bond market meltdown of 2007-08.

Whether Congress or the Administration realizes that the level playing field needs to be restored in order for the movement of credit to once again pull our economy out of this recession is the question. We can not look to the banks and their leaders to ask the Federal Government to do the right thing. Their greed knows no bounds as is evident by the stupid remarks these leaders make about their role in the financial problems that have engulfed this country, and in some cases the world over the last several years. There were crisis all along the way until the water broke in 2007, but the politicians, perhaps due to their lack of knowledge, did not realize that the problem was just getting patched and getting bigger.

Perhaps, it will take a period of ugliness to fall across the face of this nation before the right things are done and the level playing field is restored. I hope I am not around if that is what it will take because it ain't going to be pretty.

Stay tuned.