A Few Words on the Spitzer Issue
As a matter of keeping either politics or social matters off of this blog I am always hesitant to comment on certain news items. I have a couple of thoughts as it pertains to the Elliot Spitzer hooker headlines that I would like to put out there.
Up front, I must say I am in favor of the legalization of both pot and prostitution. Both should be legal, highly regulated, and taxed to high heaven. I do not use either product, but I am of the opinion that people should be able to do basically what they want as long as they do not hurt others. I am aware of the arguments like "prostitution cause family issues and marital discord" as being harm, but if that is your argument then online video games, a boat, or any other interest that consumes a man's time at the expense of his marriage then qualify as well. As far as pot, I simply do not believe it to be the magical "gateway" drug that it is claimed to be. That's my position up front.
My two issues with Spitzer are thus:
- When You Have Powerful Enemies, Be Mindful: Spitzer has made his career prosecuting all kinds of crimes, and yes, prostitution included. He has also been a vocal and strong opponent to many big players on Wall Street. The fact that Spitzer would partake in such a blatant crime shows he does not have the mental capacity to be in public office. When everyone is gunning for you, you don't run around yelling "here I am!". If he was just too arrogant to think he would be caught, then that is also cause for dismissal. Again i offer no commentary on the action itself, just what it represents.
- We Have No Idea What the Marital Arrangements of Powerful People Are: Some people are amazed that Spitzer's wife can stand beside him through this terrible time. Maybe she is very forgiving, maybe she is very understanding. And maybe they have an arrangement in their marriage that allows him such behavior. I have no idea, and neither does anyone else. Power couples operate under VERY different rules than regular folks. When the sitting president can get oral sex from an intern and stick cigars places that they do not belong IN THE WHITE HOUSE and he does not end up murdered by his wife means that there is no emotional connection there anyway. I would prefer power couples just put the true nature of their relationship out in the open for all to see instead of this pretend normal life.
The Burden of Proof is on the FED
Last night while discussing the latest FED plan on the Calculated Risk comments board, there were a few readers that took exception to my take that the FED was acting as an off balance sheet vehicle to hide losses. They argued that the FED was only taking "premium AAA rated paper" and would not allow such swaps to go on indefinitely. I got a bit riled up as I was basically called uninformed and a bit crazy.
Well overnight can be a long time, and I was heartened to see many financial sites I respect come down in the same way that I did last night on the FED. While I agree that it is still my opinion and not absolute fact, I feel the evidence clearly supports my position.
My response to the more bullish types, and those that think the FED is some kind of resurrected God is this; The burden of proof is on the FED to show us all what they are doing. The FED is still a government entity that SHOULD answer to the people that pay the bills. If I believe the FED is taking crap mortgage paper (crap can be rated AAA you know, perhaps some have missed the whole monoline story) and handing out treasuries (equals cash) they should have to show the risk they are taking on. I should not simply have to accept that the FED knows what they are doing without question.
The level of secrecy and lack of transparency of this whole process would be troubling even if it was just some small time issue going on. What makes it desperately worse is that this issue has the unique ability to thrash the financial system for good, and I think we are entitled to a little information at this point.
I repeat, the FED is going to take crap mortgage paper and issue cash for it. The swap will be extended to a more convenient time frame for the banks, like when the Sun goes Supernova or some such distant time frame. Think I am wrong? Think I am nuts? Fine, I have no problem with that. The burden is on those that think that and the FED to prove me wrong. I invite any and all to try.
Have a good night.