Standard Mischief

I was trying to understand why the stock market went nuts with a rally yesterday. The talking heads weren’t saying anything new, it seems they report on the market movement and then make up a reason why. That’s not very helpful.

From what I can tell, the only thing that changed from Friday was that the Federal Government decided to guarantee bank to bank and bank to business loans. That was enough for a rally.  It seems the credit freeze exists because no one trusts anyone else enough to loan them money.

Remember Bear Sterns? They went from “we’re well capitalized” to bankrupt in three days. That means they were lying about their balance sheet and lying about how much they were leveraging. Who’s in jail today over the fraud that occurred?

So instead of forcing these artificial entities, (that exist solely because of permission from the government in the form of a business license), to not lie, to stop hiding their bad loans off their balance sheets so the free market can decide who is a good credit risk an who they should not loan to, they’ll just bail anyone out (well, anyone who’s not a natural person), when they go belly-up with money from our grandkids.

Let’s just keep hoping that the rest of the world keeps buying our paper.