Congress

How Is The Economy Doing?

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congress blame game

When it comes to the U.S. economy there are a lot of opinions. Many of those opinions have motivations behind them that tend to skew their analysis. So, who should you listen to about the economy? Well, you could do a lot worse than the Chairman of the Federal Reserve. The Economy Is Weak The U.S. recovery is weak, very weak. Although jobs are recovering, they are still lower than they were when the pandemic started. The opinion of the Fed Chairman is that the economy needs more help in the form of government stimulus. Of course, the politicians in Washington care more about Dems vs. Repubs than they do about America, so we are caught in petty fights while the economy sputters. Why The Economy Needs Help While politicians, especially the President, love to point to the stock market as proof the economy is doing well, most investors are very skittish right now. Any bad news at all, and they’ll turn into sellers, and take the market with it. Stimulus in the form of extra unemployment benefits has proven particularly helpful to the economy. Why? Because people on unemployment spend that money, and that stimulates the economy. Save money …

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Warren Buffet Wrong About Moody’s

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Warren Buffet testified before Congress that Moody’s rating agency should not be blamed for its enormous role in the financial collapse that occurred following the blow up in the real estate market and the subsequent implosion of collateral mortgage options, or CMOs. These securities eventually became the so-called toxic securities that continue to weigh down the balance sheets of many financial companies. Buffet is not dumb nor is he being led to say certain things by Berkshire Hathaway’s large stock holding in Moody’s. Rather, Buffet is saying that Moody’s and the other rating agencies including Standard and Poors and Fitch can’t be held responsible since what they missed is the same thing that everyone else missed. In other words, they weren’t any worse than anyone else. The problem with this line of thought is that the whole point of Moody’s business is that it knows MORE THAN EVERYONE ELSE. Otherwise, what is the point of paying them to rate securities. If Moody’s role in the securities industry is nothing more than the corroboration of information that others have already figured out, then what is the point of what they do exactly? Don’t forget that numerous investment concerns including pension plans, …

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