The Dow, the Fed, and Wall Street

Wall Street showed its anger yesterday [11 December 2007]at the Fed's shaving a quarter point off the discount rate. The Dow had a fit, falling over 230 points.
The big Wall Street houses had wanted and expected more that a quarter point. They are looking for the soft money which the Fed had generously given them in the early 1990's to climb out of a banking scandal. Then the Fed's largesse had allowed these profiteers with easy money to come up with schemes and financial instruments which became CDO's and the like to float and slice and dice and sell off piecemeal to float the subprime mortgage ponzi scheme. These very banks are now writing off billions but they salivate greedily for the government to bail them at with hardly a slap on the wrist. But soft money and a drop in the Fed rate will bring more trouble. What's needed is regulated, a tight rein to pull these feral money dogs into line.
The 12 December 2007 issue of 'The Financial Times of London' has a good article on the bank co-ops that keep the US afloat. Yes, government sponsored bank co-ops founded during the Great Depression, under the watch of the much despised FDR, the man who betrayed his class, but saved American capitalism. These co-ops are pouring billions in the subprime mess which the Free Marketeer, free loaders created; they arre the cushion for the mortgage industry. Again the hated government which these Satanic princes of Wall Street and big business want off their backs, are coming to the rescue. These blowhards deserve long prison terms, but the American political system being what it is, will excuse such malice of forethought behaviour, sadly.
The time is for reform, but with Mini Mouse in the White House the sore will fester and infect more the US banking system and the economy and the dollar and the American first power place in the sun. Already foreign sovereign funds are buying big chucks of the system, and will flex muscles so that their investments won't go the way of all flesh. Translation, the American Moneybags are going to dance to foreign investors' tunes.