Dr. Housing Bubble 09/17/08

[Crewleader]

AIG Bailout: Federal Reserve Bails AIG out with $85 Billion -
World’s Foreclosing Balance Sheet:
The Myth of Decoupling, Moral Hazard, and American Dream Disappearing.

AIG is the next in line for the Federal Reserve food stamp program. As the Federal Reserve decided to stand steady on rates, the markets did an unusual move. It actually moved up on a no move when everyone around the world was expecting a cut. Now, it is obvious why the market dipped by triple digits briefly after the Fed announced the no cut and ended triple digits higher. The market was extremely volatile today given the Lehman Brothers bankruptcy over the weekend and the unknown factor with insurance giant AIG - well as it turned out it was only unknown to the vast public since the Fed was getting ready to put more taxpayer money at risk.

For the past decade, we have become accustomed to the market having a brief rally after every Fed rate cut. This became a Pavlovian conditioned response to a society addicted to easy credit. Our society needs a major 12-step program on how to get off debt and given the current market conditions, this is going to prove extremely difficult simply because Americans are saddled with enormous amounts of debt. Paulson just this weekend supposedly drew the line about allowing firms to fail. That line was barely drawn and the Fed was back to their usual antics. AIG will get a loan of $85 billion from the Fed. Another firm that is supposedly too big to fail. Haven’t we heard this story already? Moral hazard to the next dimension folks:

http://www.doctorhousingbubble.com/aig-bailout-federal-reserve-bails-aig-out-with-85-billion-worlds-foreclosing-balance-sheet-the-myth-of-decoupling-moral-hazard-and-american-dream-disappearing/