On March 31, 2008, the biggest question facing America is not who will be president, or will Congress actually wake up from its lobbyist-induced slumber, or even who will win the 2008 World Series. Nope, the biggest question is, will the built up imbalances in the macro-economy, structured by years and years of below-market interest rates and Fed-engineered easy credit, and their resulting failings, indeed pave the way for VASTLY INCREASED Federal Reserve powers? In a bout of sure insanity, Treasury Secretary Hank Paulson advocated such nonsense today. Many reporters working at CNN were noted as staring in befuddlement at their computer screens not having an ounce of intellectual capability to understand any part of this situation. Yet, many Americans read CNN.

1. States are taking a hit to their budgets due to running expenses up directly in line with tax revenues in spite of a clear bubble in such over the past five years. No surprise here.

2. The Economists asks “What went wrong?” A short answer includes a large financial bubble based on an over-leveraged, debt-saturated economy. This sort of thing has happened before folks.

3. In a bout of misguided reasoning, the city of Philadelphia has halted foreclosure sales. Friends, yes foreclosures are not good, and certainly should be minimized wherever possible, but the fact of the matter is, if you buy too much of a house and don’t pay your mortgage, there is no reasonable basis for concluding that you still deserve such residence. Maybe a better idea would be to live within your means. Somewhere along the way, Americans lost sight of the reality that living within ones means is the only path to long term happiness.

4. Of course Wall St. is nervous, they got in WAYYY over their heads due to greed, hubris and complacency. When you think you are such a genius that you don’t need to have any awareness of the historical context of what you are doing, it is easy to get into trouble. Especially when you are working with 30 times leverage. Talk about chickens coming home to roost.

5. Just as day begets night, loose credit maladjustments lead to down time ghost towns.

6. Just because Ben Bernanke is lowering short term interbank lending rates, absolutely does not mean mortgage rates will come down. With realistic risk perceptions re-entering the market, the cost of long-term borrowing for consumers will go up.

Filed under: Politics, Social Mood, Economics, Six Packs