Thursday, June 5, 2008

One Million Foreclosures

One Million foreclosures in the United States and Lehman Brothers needs to raise five billion dollars in capital to stay alive or go the way of Bear Sterns. Yes, these items are related. When Lehman Brothers raises five billion dollars for self preservation, that is money that does not circulate through the general economy, which means less loans for small businesses, less hiring, less spending and less economic growth. Over 380 billion dollars has been raised for the sole purpose of keeping wall street brokerage houses open. This is ultimately bad fiscal policy because it means less money flowing to main street.

My friend Ben is forgetting that small businesses are the growth engine of the economy. The Federal Reserves efforts are misdirected at this point in time.

The King
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