New 5 Dollar Bill

I received a new 5 dollar bill when I went to get some coffee this morning. It is a lot more colorful than the old bills.

I was wondering why it says Series 2006 on it, instead of 2008. One of my coworkers speculated that the plate was made in 2006.

Anyways, I found an EBay listing for this bill – for 9.99 plus 3.50 shipping. This proves what PT Barnum’s statement’s_a_sucker_born_every_minute to be true – There’s a sucker born every minute.

Logan Expert Lane

Logan Airport, in Boston, is trying out new security screening techniques in Terminal B (Delta). Specifically, they offer an “Expert” lane, a “Casual Traveler” lane, and a “Special Assistance” lane. It seems like a great idea, and the it also seems to be working.

The shoe of choice for an expert traveler is a loafer, so I always look for lines which are loafer-heavy and without children. Also, I look for lines without couples and without carry-ons, since there is always a forgetful person who packed their liquids. Lastly, I look for lines without college students. For some reason they take an inordinate amount of time to get through security.

My security screening was the best I’ve ever had. I breezed through security. I asked the security guard if this was the norm, and he said that he still hasn’t seen an expert traveler. I think he was just bitter because he was working on a Sunday night.

A semi-related side note – I can’t wait to go see Harold and Kumar: Escape from Guantanamo Bay. The subject matter is something that every Asian-American has probably riffed about with their friends. Also, the chatter after the premiere at SXSW is pretty positive.

Bear Stearns Is The Goat

I have been reading The Histories(Herodotus) by Herodotus which was given to me a two years ago by my coworkers. I regret not having read it sooner.

I never knew the origin of “scapegoat” until I read Book II. Apparently, it was a pretty common occurrence in ancient Egypt.

Having poured libations of wine over the alter so that it runs down upon the victim and having called upon the god, they cut its throat, and having cut its throat they sever the head from the body. The body then of the beast they do flay, but upon the head they make many imprecations first…The form of the imprecation which they utter upon the heads, requires praying that if any evil be about to befall either themselves who are offering sacrifice or the land of Egypt in general, it may come rather upon this head.

This vision is fairly appropriate when considering the fate that befell Bear Stearns. I believe the market is currently praying that this fate does not befall the other financial institutions.

The Fed’s move today, though brutal and swift, was completely necessary. Rescuing troubled banks and providing cheap loans to floundering banks (“the discount window”) is the reason the central banking system exists.

If we are going to bail out banks and provide discount loans, let’s call it a bail out and a discounted loan. Let’s make it transparent. And furthermore, let’s make sure the culprits are held accountable and made to pay the costs in the long run. And lastly, let’s make sure the appropriate regulations are put into place so this doesn’t happen again.

Bailout Is Underway

Despite what the Republicans are saying, a bailout for the parties involved in the subprime mortgage crisis is already under way. The Fed Funds rate has been slashed. The discount rate has been lowered. The Fed also issued term repurchase agreements, totaling 100 billion dollars. It could be argued that these were all necessary to maintain liquidity in a market that is seizing up.

There is no excuse for the $100 Billion Term Auction Facility that the Fed has set up. One hundred billion dollars at 3.5% is a vast sum of money for cheap. To compare, the Abu Dhabi investment authority is getting 11% annually for investing in Citigroup convertibles. At the end, they will get a 4.9% stake in Citigroup which hopes to keep paying out a 6% yield.

I’d like to point out another absurdity. I am surprised that the sovereign funds bailing out Citigroup did not require them to eliminate the dividend. I guess someone figured that it would destroy the stock’s value. The stock is already worth half of what it was a year ago. In my opinion, there is a significant possibility of either a failure, breakup or a bailout.

Unfortunately, the Fed still isn’t able to instill confidence in the market. Perhaps the only remaining step is to drop the veil and start directly bailing out lenders. In fact, in this speech by Ben Bernanke, he seems to advocate principal write-offs backed by a reorganized FHA.

The market is expecting a big bailout. As a taxpayer, and someone who is fiscally responsible, I object to the government-funded bailout. If the government bails out the irresponsible borrowers and lenders, it will create the environment for another bout of rampant speculation.