Well, well, well, isn't it a shame that an 85 year old "Investment Banking" firm who manages Billions of dollars for others, can't seem to manage their own business.  A shame yes, a surprise no. 

Does everyone remember:  how great they thought it was when the internet created the "information age"... how nobody needed brokers anymore because they could trade on their own for fractions of what their broker used to charge... how stocks began trading with spreads of pennies instead of..1/16's..1/8's..and 1/4's...how great all the day traders felt after making more in one month than they made in the prior 10 years...how all that extra volume made our markets appear to be more liquid...how later companies took themselves public via the internet instead of hiring investment bankers? 

Well if you do remember how great all that was do you also remember... how the bubble burst on the .com rage...how Greenspan tried to warn us of our "irrational exuberance" in reference to buying stock on margin and how the market crashed right before tax time...how all the day traders lost everything they owned including retirement funds and life savings...how somehow nobody thought it was a bad idea to allow amateurs to compete in a highly skilled professional industry until after they all got destroyed...how the government still managed to blame the broker dealers for allowing it all to happen?  

When the "information age" took hold it never occurred to anyone that maybe the general population wasn't qualified to manage their own accounts or that maybe they should have been subjected to the same restrictions that professionals were.  Anyone with $5,000.00 and a social security number could open a margin account and start a brand new career.  It compares to handing the keys to your brand new car to your 13 month old son as a reward for learning to walk.  Naturally the large investment banks had to either find other revenue streams or they had to bolster the ones they had.  After all,  there were a lot more shareholders out there trading their stock now and they didn't want to let them down. 

"Real Estate!!!  That's where the "big bucks" are, lets try that.  We have billions of dollars, what could possible go wrong." Well, investment banking firms are risk takers by nature, so they obviously weren't going to be satisfied with the puny returns that traditional lending provided so they focused on the "big buck".  That's right the "sub-prime mortgage market", and all the dirty dealings that goes with it.  Now anyone with a social security number and the willingness to claim they were employed, thought they could all of a sudden afford $200,000-400,000 homes.  They were probably the same group that thought they could day trade.  Bottom line.. they couldn't, so lets wack the mortgage companies for coming up with all these exotic ways to lend money.  Oops forgot what that was going to do the housing market.  We'll use the fed rate to fix that problem.

The government uses the fed rate like it's some type of magic wand.  They wave it over every little hiccup that pops up, expecting miraculous results.  Instead all it does is send the ripple effect down stream to another sector of the market place.  Somebody really needs to take that wand away, if not it should come with instructions.  They expect a charming prince and the wand spits out a nasty old toad, (no offense Bob).  Market manipulation doesn't do anyone any good but yet they keep on waving the wand.  The latest wand casualty...BEAR STEARNS, and believe me they will not be the last.  But hey it's easier to blame a few companies than the millions of  people that  benefited from their own "irrational exuberance".


There must be a lot of dead toads somewhere.