Posted: December 18th, 2008 | Author: Wayne Weddington | Filed under: Opinion | Tags: federal funds, interest rates, intervention, policy | 
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Or Ree-dikk-you-leez. Same idea.
That is where the fed funds rate levels have descended. There is no other adjective that would apply. On December 17, the Federal Reserve lowered the fed funds rate to 0.00%. Thus the Fed has now made money available for free. Free money. The beneficiaries, banks, are lining up to apply… but they are not turning around and making the fire-sale available to businesses or to you, the borrower.
This is strong indication that the credit markets are still quite gummed up. Despite Congress’ valiant efforts to pump capital to the financial sector in order to stimulate lending (much of which is dutifully going out the back door by way of annual bonuses) the intended lubricant to the economic system has still not taken effect. One of the problems is that Congress forced the money upon the bank institutions but, “oops”, Congress did not actually require them to do anything with it. Opponents to regulation would point out that regulation though well-intended is often ill-executed and therefore ill-advised. Something should be done of course, but the current apparat has not had a great track record thus far.
- Wayne Weddington
Posted: December 12th, 2008 | Author: Wayne Weddington | Filed under: Opinion | Tags: Bernard Madoff, crime, hedge funds | Email This Post
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Bernard Made-Off. With $50 billion.
I have been a little surprised at the lack of coverage on Madoff’s devastating crime of fraud. The ripples from his crime will reach tsunami proportions for investors around the country and particularly in the towns of Long Island and Palm Beach.
I cannot not imagine how someone like Madoff can sleep at night. It was a scheme carried out with profound efficiency, hype and arrogance. Madoff even had a two-year waiting list to get exposure to his supposed performance. He created a ruse of scarcity value when all the while he probably “let” investors into the fund only to pay off mounting redemptions. Because of the relative “safety” of Madoff’s returns, there were many families who parked their entire life savings with the firm.
I am deeply suspicious of the rest of the family’s participation. It seems implausible that they could not have known or were not complicit. (This is a blog so I can make opinionated statements.) I have been told that Bernard’s brother, Peter, had the temerity to “show up at temple” this past Saturday, only two days after Bernard was arrested. As there were no incidents at the temple I can only applaud the restraint of his fellow congregants, many of whom, I understand, were clients. Perhaps at least one congregant might have thrown his or her shoes at Peter, as was infamously done to W this weekend in Baghdad.
Of my own experience, clients sometimes chafe at the rigor with which my Administrator scrubs a subscription for proper notary signatures, passports, character references and other identifying data. “I have invested in 20 hedge funds and no one else has asked me for this information,” they complain. But in the world of private funds, rigor, while it is cumbersome and tedious, is your best friend. I suspect that the SEC will also be found to have been negligent for not pursuing oversight of Madoff more strenuously.
-Wayne Weddington