Judge's Gavel Slams Down on 'Victimized' Speculators

Further, Judge Pollack said, "Seeking to lay the blame for the enormous Internet bubble solely at the feet of Merrill-Lynch, plaintiffs would have this court conclude that the federal securities laws were meant to underwrite, subsidize, and encourage their rash speculation in joining a freewheeling casino that lured thousands obsessed with the fantasy of Olympian riches."

The People vs. Greenspan: However, if somebody wanted to start a class-action lawsuit against the Fed, I might be more sympathetic, since I believe the Fed is at the core of all our problems. While folks who speculated in Internet stocks were certainly not innocent bystanders, and the hunt for a scapegoat is best directed inward, a lot of innocent people who were not out speculating are genuine victims. Many, through no fault of their own, have lost their jobs as the aftermath of the bubble has persisted. Folks who abstained from the mania have been penalized for their prudence, in the form of minuscule yields. Those are the people who should be the most outraged. And the target of their outrage should be the incompetent management of monetary policy by the Fed.

Coughing Up for the State Coffers: Meantime, for all the Fed's chatter about deflation, the position that state and local municipalities find themselves in is pushing up the cost of nearly everything. This is what happens when money gets printed willy-nilly. It leaks out and causes the price of things to go up, even if certain assets are deflating. (At the moment, of course, assets aren't deflating, but the point will survive when they do.) State and local municipalities are basically monopolies, so they can raise prices, which is what they are doing. Along that line, I'd like to share a couple of brilliant observations from Joanie, which she prefaces with a quote from today's New York Times: