Vicious Rants of an Angry Yellow Man

The stock market is in a slump with no end in sight. The Federal Reserve is trying to improve the situation by decreasing the interest rate. It appears to work at least a little as there was a rally in the market on Friday. I doubt the rebound will continue. I think there will be more downward spiral into next year at least. Which brings me to something I never really understood. Why is it that the chairman of the Feds is so revered? Greesnspan attained rock star status in the economic world with his so-called deft handling of the economy for many years. I understand that anyone who becomes chairman of the Feds is a really smart guy. But what do they do anyway? They can only increase the interest rate when there appears to be inflation. If there is a depression looming they can decrease the interest rate. So basically they choose one of 3 alternatives: increase, decrease or do nothing. It seems like anyone who is good at multiple choice questions can do this job. I mean the SAT questions have 5 choices and lots of people get perfect scores. This economic business doesn't seem to be rocket science.

I tell you what is also not rocket science. Lending money to people to buy houses. It does not take a genius to figure out that you don't give risky loans to people with poor credit and without adequate income. Yet large institutions who can hire lots of accountants and actuaries were doing all these subprime loans. These idiotic deals are the main reason the stock market is going downhill right now. Some of these institutions which have made billions in the last few years are now in danger of going bankrupt. Angelo Mozilo is the president of Countrywide Financial, the largest mortgage lender. Mozilo was paid $48.1 million last year! He and others will argue that they deserve what they make because under a capitalist system a person who is most responsible for the profit should be best compensated. It is not surprising that Mozilo arrogantly said that other people in his industry were not as smart as he was because they were giving out risky loans. Yet now Countrywide is in the same situation as others, ie, in deep financial trouble from giving out too many risky loans. But Mozilo has not come out and take responsibilty. He has refuse to be interviewed. He did manage to cash out his stock options before the price went down. If he deserved to be paid that enormous sum when the company was prospering, shouldn't he has to give some of the money back for leading the company toward possible bankruptcy? It is likely that it will be the low level employees who will suffer the most by losing their jobs.

There will be those in the financial and business world who clamor for the government to bail out the mortgage lenders. This is something the government in China would do for their banks, not something our government should do here. Anyone who truly believes in the capitalist system knows that bailouts will only encourage businesses and individuals to make risky decisions. I guess we have not learned from the savings and loan debacle not long ago. Bailouts will make our economy less efficient in the long run. Basically it will be welfare for greedy rich people at taxpayers' expense.