Are They Seriously Delusional?

By Chuck Butler, Editor of Currency Capitalist

This is getting ridiculous.

Reuters reported last night that the U.S. is close to extending billions more aid to Bank of America. And as I said yesterday, Citigroup is selling off units to raise capital, after the government already handed the bank US$45 BILLION worth of TARP money.

This all makes me wonder: Do you think Big Ben Bernanke and Hank Paulson drink more than seven cups of coffee a day?

I ask because researchers show that drinking more than seven cups of coffee a day may trigger delusions. And I personally think Big Ben and King Henry must drinking more than seven cups of coffee a day, if they believe their "stimulus"/TARP will get these two enormous banks back on terra firma!

Remember the Lone Ranger? Remember a couple of years ago, when nothing but Fed rate increases, and the tax amnesty for U.S. Corporations doing business overseas propped up the U.S. dollar’s value?

Slowly, these props dropped off one at a time. Over the next 2 1/2 years, the greenback fell flat on its face.

Well, the dollar found another prop this past summer. However, this time you can really put all the props for the dollar in one category – the safe haven prop. I’m going to call it “the Lone Prop,” from here on out. And it has done the dollar well since July.

But just like in early December when I smelled a Santa rally to year end, and it happened. I'm seeing chinks in the dollar's Lone Prop's armor. The Fed has just about run the course of things it can do to get this economic engine revved up again, to no avail.

At this point, Paulson and Bernanke are like the King's men, who tried to put Humpty Dumpty back together again. Their stimulus plans, their money supply injections, their guarantees on debt, the fact that they taking over the Commercial Paper biz, the fact they’re dipping into banks’ cookie jars.

Nothing has worked... And why? Because, it's not in the nature of the free market to interfere. It's nature's way of telling you something's wrong.

One of these days, these mental giants will figure out to leave well enough alone, and let markets take their course.

But that's not happening now, and I'm sure it's not going to happen any time soon, given the news that President-Elect Obama wants control of the remaining US$250 Billion in TARP money, and then wants to push through a stimulus package that will be anywhere between US$800 Billion and US$1 Trillion as soon as he takes office!

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