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Welcome to the "Wolf Creek Pass" School of Monetary Policy

I don’t know if you folks remember that hit ditty: a humorous tune about two truckers attempting to manhandle an out-of-control 1948 Peterbilt down the “other side” of Wolf Creek Pass – a death-taunting section of U.S. Highway 160 where the elevation drops a hefty 5,000 feet in a relatively short distance.

The song’s two characters – a truck driver named Earl and his brother, who’s his partner as well as the song’s narrator – are taking a flatbed load of chickens on a speedy trip down this winding, two-lane Colorado highway. After the narrator gives Earl the above-mentioned warning, the ancient semi’s brakes fail.

From there on down, the narrator tells us that the brothers’ trip “just wasn’t real pretty.” The truck careened around hairpins and switchbacks, and then raced at an uncontrolled 110 mph toward a tunnel with “clearance to the 12-foot line” – with chicken crates sadly “stacked to 13-9.”

The drivers and the runaway Peterbilt “went down and around and around and down ’til we run outta ground at the edge of town… and bashed into the side of the feed store – in downtown Pagosa Springs.”

Believe it or not, I started thinking about this funny old country tune the other night – right after I’d read a piece about QE3 and the U.S. Federal Reserve.

As zany as it first sounds, the parallels are striking.

  • Featured Story

    AIG and the New Victim Mentality

    I'm hurt.

    Some of you made harsh comments about what I wrote about AIG. I said that AIG should sue the U.S. government and the Fed for saving it when it could have (more likely would have) gone under during the peak of the crisis in 2008.

    Insights & Indictments reader Darrell said, "Enough. This is the most vile piece... I have ever read. Those people SHOULD have been allowed to fail. FULL bankruptcy! To borrow from the taxpayers to compensate the "managers" who steered us into this mess with bonuses, and then whine [when] the terms of the loan were too extreme is beyond hypocritical. Capitalism without risk is NOT capitalism. Something you would do well to learn. I am unsubscribing form this service."

    Ouch!

    Matt chimed in, "I'm with you. Acting like AIG is a victim of the big, mean Fed is preposterous. Maybe Shah and Alex Jones should take their baloney show on the road."

    I'm shattered. I've been put upon. I feel victimized by these comments. Where's the safe harbor for journalists and bloggers? How can I be criticized so harshly and not feel victimized? Oh, the humanity!

    Of course I'm kidding.

    I subject myself to any and all comments when I exercise my freedom of speech. I keep a "Comments" section on my website so my readers can exercise their freedom of speech. I'm not a victim. I don't need any protection from free speech. Free speech is a two-way street.

    The point is that I'm sick of the victim mentality. Are you fed up yet?

    To continue reading, please click here...


    Read More...
  • American International Group

  • AIG Stock Sale Makes it a "Buy" (NYSE: AIG) The U.S. Treasury Department has sold off its remaining shares of American International Group (NYSE: AIG), acquired in a financial crisis bailout move.

    The Treasury had 234.17 million shares left, or roughly 16% of the insurance giant's outstanding stock.

    After unburdening itself from its mountainous holding, the Treasury will only own warrants to purchase additional shares of AIG.

    Monday's stock sale announcement follows the department's September sale of about 554 million shares to the public at $32.50 per share. That liquidation marked the end of the Treasury's majority ownership in the firm.

    This final stock sale is good news for AIG and its shareholders - and U.S. taxpayers.

    "The closing of this transaction will mark the full resolution of America's financial support of AIG-with a profit to taxpayers of $22.7 billion to date. It marks on of the most extraordinary-and what many believed to be the most unlikely turnaround in American business history. And you did it," AIG CEO Robert Benmosche penned in a company email to employees on Tuesday.

    After the news, Sterne, Agee & Leach, who give AIG a "Buy" rating, said the sale was good for investors.

    "With the U.S. Treasury now out of the stock and AIG once again a 100% privately held company, we expect management will be able to turn its full attention to managing the company to drive improved financial performance and higher return on equity," wrote analysts.

    To continue reading, please click here... Read More...
  • Obama Bank Tax No Reason to Flee Financials U.S. President Barack Obama plans to implement a tax on financial institutions to offset taxpayer losses stemming from the Troubled Asset Relief Program (TARP) and help reduce the deficit. But Obama's new bank tax is no reason to turn bearish on financials, which staged an impressive comeback last year.

    At a time when many financial companies are gearing up to announce fourth-quarter and full-year earnings, as well as details regarding employee compensation and bonus payments for 2009, the government is considering charging banks fees to recover as much as $120 billion in lost taxpayer money.

    While most of the big banks have started paying back their TARP investments, the government has yet to recoup large swathes of money that went to American International Group Inc. (NYSE: AIG), General Motors Corp., and Chrysler LLC. Last month, the Treasury estimated that the net cost of TARP to taxpayers would be $41.4 billion. Read More...
  • Investment News Briefs WSJ: Motorola to Sell Network Business; Macy's Shares Fall After Forecast Misses Estimates; China's Prices Fall, Trade Surplus Grows; Gold Price Records Continue; iPhone Posts Strong Sales After Debut on Second U.K. Carrier; Britain's Central Bank Open to More Asset Purchases; Geithner: U.S. Wants Strong Dollar, Lower Deficit; AIG CEO Threatens to Leave Amid Pay Frustration; H-P Buys 3Com for $2.7 Billion in Cash Read More...