Curiously as I listen to our esteemed Treasury Secretary speak to the public media; it appears that as stock market conditions continually twitch at what was an emergency cut in the discount rate and the Fed. Funds rate, three recurring themes keep being repeated as if in mantra like fashion.
1.) In regards to this new Emergency Liquidity Enhancement Fund, that, “this is not a bailout”! (kind of reminds me of a quote Richard Nixon made when things got hot)
2.) That “the economy is strong and that the underlying fundamentals are healthy”.
3.) That the Treasury maintains a “strong dollar policy” for the U$ Buck.
O.K. well… as far as this new “Master Conduit Non-Bailout Fund” is concerned, why does the idea even exist and why are the Treasury’s fingerprint’s all over it from inception? I mean really! I don’t have enough info. on the operational guts of the program (still a work in progress seemingly at the government level) at this point, so I will not go into it much further, but if the Resolution Trust Corp. which was created purely to bailout the bankrupt S&L’s in the early 90’s, was operation bailout plain and simple, how is this much different? I’m sure someone can make a case on the surface that “this time it’s different” but how much really is it?
If the economy is strong and underlying fundamentals so healthy, how is it that the entire banking system is in need of this “Master Conduit” and emergency interest rate cuts? Why have S&P earnings overall consensus estimates again been revised approximately 80% lower, the same as they were revised from a “robust 16-18% in the first quarter” (emphasis mine) down to 3-5% after the second week in January of “07? That being the case… why does our president and all his “personnel” feel compelled to keep having bi-weekly news conferences so as to keep repeating such statements about the “strong economy”?
As far as “strong dollar policy” is concerned… why has our U$ Dollar has lost over -35% since February 2002, -12% since the current Treasury Secretary took office in mid 2006 and -9% so far for 2007? Mean while the S&P is up 6% for the year as of this date Oct. 22nd 2007. I don’t have the “official” government responses to these questions yet but if anyone hears anything, please let me know.
