1929: Fed relatively prudent.2008: Fed foolhardy to extreme.http://www.prudentbear.com/index.php/BearsLairHome

It’s a bloodbath

I just read that Benny said the fed governors expect 1 – 1.6 growth in the US economy this year! Are they on crack? No wonder nobody believes anything the Fed or the Treasury says anymore. They are constantly inconsistent.I hope the crash comes and let’s get it over with.

bottom in?

Bernanke Signals Growth Risks for Economy, `Intensified’ Inflation Danger — bloomberg The old fool. Do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are headed for a future of debt and poverty? – hazlitt

A firend of mine was in N.Y. last two weeks and visited a former Bear Stearns employee.Someone who takes about 1,2 million/y.She and her fellows dont get it even now.They are all so convident of themselves, unbelievable.Next she is gone run a hedge fond an will buy a house at the Hamptons.As long as all these Idiots believe they can go on with this game nothing will change.This whole Caste must disappear.

With today’s retail sales number, my estimate for Q2 GDP is -.23. Her comes your first official negative quarter of growth…

Stocks are gonna go green!!!!!

11:06 a.m. [WM] Washington Mutual shares rise 14%, to $3.6811:06 a.m. [LEH] Lehman Bros. shares rise 12% to $13.9311:06 a.m. [FHN] Fist Horizon shares jump 32%, to $6.62

in 12 minutes they took USO from 117ish high to 110ish !

11:21 a.m.Crude slumps more than $9 as Bush, Bernanke talk11:21 a.m. GSE rescue ‘amateur socialism:’ Republican Sen. Bunning

The 1980 inflation adjusted price of oil is $93! The US economy is dead above that price. Oil dropping to $139 today is NOTHING!

unbelievable! the DOW has just gained over 150 points in 30 minutes…mostly banking stocks. I guess the PPT is buying calls in the BKX!!!!!!!!If the DOW does not go down significantly in the next week or so, I’m selling all my shorts at my current profit and getting out before I get screwed by Benny.

So we beat on, boats against the current, borne back ceaselessly into the past. – F. Scott FitzgeraldIt is common for our self-dealing elites to speak in terms of abstractions to confuse the public while they’re busy divvying up the treasury; they willfully ignore that the collectivity, the “nation” whose money they are divvying, is made up of individuals who give the nation meaning.Opening wide the discount windows into the treasury for their nefarious friends – GSE the junk dealer and SPV the fat banker, TAF the repackager and TSLF and PDCF the primary dealers – is legal plunder. Hopefully, Fannie and Freddie, those partners in crime, are too fat to get through.And they call this a “reserve” system.

According to Ben: Helping financial markets return to more normal functioning remains “a top priority,” Bernanke said in semiannual testimony on the economy to the Senate Banking Committee. There are “significant downside risks to the outlook for growth,” and “upside risks to the inflation outlook have intensified,” he said.He forgot to add, “So what?”If Bernanke doesn’t say the financials are “priority,” the boys will get somebody who will.

CHANGED MY MIND ABOUT GETTING OUT. I THINK I’M HANGING IN TO THE END. I’VE GOT TIME. F^%&K BERNANKE ET AL.

There it is, in a nutshell. “It’s a vicious circle between a contracting economy and greater credit and financial losses feeding on the economy.” (NR)This it is, The Breakup, and only Roubini saw it coming. It’s happening – history in the making

12:28 p.m. Banks fall to five-year lows in sharply lower Europe12:28 p.m. Bank worries send Europe stocks to three-year lowsfunny how all other indexes trade freely…

Green.

THATS IT! From now on, I am just loading up at every 3 digit sell-off low and I will be rich in no time!

Maybe the PPT is not alone.Europe has also one.

you can bet your ass that Europe and Asia have their versions of the PPT. All these central banking crooks conspire to screw the average working man.I’m so disgusted with the USA. If I didn’t have kids in HS, I’d move somewhere else.I now agree with the "guest" above, on the next early morning three digit drop, I’m loading up and probably will sell when the PPT makes it all go green! Why not profit from it! They are!

1:01 p.m.[FNM] SEC proposes limits on shorting Fannie, Freddie shares: CNBCLOLOL go long all you want but don’t your dare short stocks!!!!!!!!!

USFR (US FASCIST REPUBLIC)

CNBC now reports SEC Chairman Cox to place new limits to short sales on FNM and FRE !Talk about blatant intervention in "free" markets. What a disgust. Now the government is selectively deciding winners.Maybe they will agree to limit short sales on my holdings. More likely, they will instead place limits on long buys on commodities. Goodbye capitalism, hello socialism.

@ Guest on 2008-07-15 12:09:31it is only Banananke Republic.

What about shorting OIL? Let’s all go long…

OIL AND THE MARKETI only caught a bit of Bernanke’s testimony on CNBC, but they briefly interupted it to report oil had dropped $10. According to oil traders, banks were liquidating everything they could find in order to raise cash this morning, dumping huge amounts of oil and gas contracts. So the market cheers this fall in energy prices, without realizing the profoundly negative implications for financials.

@Guest on 2008-07-15 12:22:55only ‘naked’ shortsMarket regulator limits shorting of Fannie, Freddie, primary dealersSEC Chairman Cox announces an emergency order restricting practice of shorting key institutions without first borrowing the shares sold.

This is the first hearing where Paulson and Bernanke get really ‘interesting’ questions from some of your representatives. There’s still hope…

This is going to be a severe depression not just a recession!

@ Guest > CNBC now reports SEC Chairman Cox to place new limits to short sales on FNM and FRE!Coxes Markets is a roulette game of chance where the house controls the wheel.Be sober, be vigilant; because your adversary the devil, as a roaring lion, walketh about seeking whom he may devour. 1 Peter 5:8

Ha…Lehman Brothers Chief Executive Richard Fuld is considering ways to take the Wall Street investment bank private, the New York Post reported on Tuesday.They are offended, nobody want my stocks, wawawawawah.

That was good Dr.. You pulled no punches.Time for someone to tell the truth.

THE RACE IS ONFreddie is down 25% today. Fannie is down 18%. Will Congress take action before the stock is less than $1? Place your bets ladies and gentlemen!!

I wish NR would address how the PPT is influencing the markets and how, over the long-term, they are just delaying the inevitable crash and, of course, making it much worse.

SEC Chairman Cox announces an emergency order restricting practice of shorting key institutions without first borrowing the shares soldI thought naked shoring has been illegal all along!!! SO they are admitting they don’t enforce it but for companies they deem "key institutions"! WHat about my stock I own where the total shares shroted is greater than the entire float!!!!!????? Who is gonna protect me???? Friggin SCUMBAGS!!!!!!!!!!!

Question for Prof. Roubini:what about Gold?Gold is recommanded as a protection against inflation, so Gold should increase for a few coming months before the commodity price decrease. but will the gold decrease also? there are so many bailout that such an increase in the monetary mass M3 should increase the gold price for a long time no?thanks for the answer if you have time.

350 point reversal for th eDow, once again saved at 11,000. This is criminal in any other country on earth….

LOLOLOL New highs on the NYSE today, 24, new lows 1139!

Wild roller-coaster on monster volume and we close down. Is the PPT still in control?Miss America I’m dieing to hear your opinion

Meredith Whitney Cuts Wachovia on `Bleak’ Prospects (Update3)July 15 (Bloomberg) — Oppenheimer & Co.’s Meredith Whitney, the analyst who correctly predicted Citigroup Inc. would reduce its dividend this year, said the earnings outlook for Wachovia Corp. has “dramatically diminished” and bank stocks will keep falling until asset prices “get real.”Wachovia fell as much as 13 percent in New York trading after Whitney said prospects for shareholders of the Charlotte, North Carolina-based bank are “bleak.” Mortgage assets are still priced too high on U.S. banks’ balance sheets, she said. “Historically, financials have not shrunk well,” the New York-based analyst said in an interview with Bloomberg Television. She said Wachovia last week released charge-off figures that didn’t correspond with portfolio values, meaning the bank might be shrinking its balance sheet. “Your revenues go down dramatically. Effectively, you’d be eroding capital.”The world’s biggest financial services companies have posted more than $416 billion of losses and writedowns tied to the mortgage-market collapse…

Great post Mr. Roubini again.There is one point where you are wrong. The oil price will not go down. The coming energy crises will have much worse effects than the credit crunch. The current crises is only a warm up.

"Thus, equity prices will fall by about 40% relative to their peak."I don’t understand this point insofar as you stated in your interview that prices will fall another 20% this year alone.

You guys will love this, I primise you. Just look at Paulson’s face and Bernanke’s body language.http://video.msn.com/video.aspx?…&fg=rss& from=34

Point #6 from Prof. Roubinis article above:The FDIC that has already depleted 10% of its funds in the rescue of IndyMac alone will run out of fundsThis will likely lead to more bank runs in the U.S. But of course the majority of the people may not know about the situation at FDIC…

As we are now entering the very beginning of the global economic, monetary and financial collapse. demographically speaking, I believe that it is becoming potently clear that not only was my analysis technically correct, back in 2006, but my stated identified reasons for the cause of this calamity was also spot on: namely, a total lack of understanding of the science of economics, a arrogance and false pretense by academic and bureaucratic economists (professional – HaH!)in general, in their belief of economics as a religious dogma (a dogma always needs support), self-agenda (moral hazard) and just plain fundamental incompetence.It is predictable that the incompetent true-believers will always revert to uber-control mechanisms when their station is in jeopardy – from "USA good old Democracy" (which everyone must have or face death) onto communism, socialism, fascism etc., etc., onward christian soldiers, blah blah, blah, to war and destruction.The middle-game has just begun; this week.Now we will face the judgement of the incompetent in all its glory; it is called "hell".Professor: I knew you had it in you so congratulations but really the story and the "end-game" were predictably visible back in early 2005.Ho humPeterJB

@KJ Foehr: >Do you really think ex-baseball player Jim Bunning knows better than Bernanke and Paulson what this economy needs now?I think I know better than Bernanke and Paulson what this economy needs now.

Guest on 2008-07-15 20:09:27“I think I know better than Bernanke and Paulson what this economy needs now.”Well we are all entitled to our opinion.Care to share yours?

Socialism is fine, if socialism is to follow capitalism and the orgy of greed.But shouldn’t the benefits go to normal people in our country rather than international investment banks? The government is protecting investment banks (constraining short selling of their stocks) that have no allegiance to our country! The only involvement of the normal citizens is to pay.I’ve not been a fan of Bunning, but here he has the right view. Let the chips fall where they may. At least the normal people won’t take all the pain that way.

@KJFoehr: Well we are all entitled to our opinion. Care to share yours?This is Hayek’s crash, what always happens to a planned economy. We’ve headed into it now. The people behind the Fed stage, the shadow central planners, will not except anything less than that they get theirs’ before it collapses. That’s what’s happening. When Greenspan was put into office as Fed chair, it was the end of his independent ideas. From then on out he was a messenger. Bernanke now has no thoughts of his own; he’s on stage carrying out orders. When Ben was a college professor, he allegedly looked at both sides. When he became Fed chair, he became a soldier.As for Paulson, I believe we are dealing directly with a member of the banking cartel.That’s how I see it.

Check out the, in plain site, obvious take down of gold this evening. Look at the last 1 1/5 hours, you tell me if this at all looks normal. Banking Cartel at it’s finest,. as they got their asses handed to them today in the market, which was something Senator Bunning was telling Pauson, as he ripped this asshole apart in todays hearings.

amazing isnt it,the invisible hand is now in plain sight..

[Richard] Benson’s Economic & Market Trends"Is Your Money Safe?"July 15, 2008 — Clearly, individual investors should have been asking whether their money was safe time and time again over the past year, rather than listening to the pundits on CNN. Many investors thought they had invested their money wisely and relied solely on the advice of their brokers. But now they’re emotionally distraught because they realize they were misled big time. But how were they misled? First, many investors over the past four years invested in some real funky hedge funds that were heavily into mortgage and asset-backed securities, CDO’s, CLO’s, and long-term illiquid assets. They were led to believe they would be able to get their money out in as little as three to six months if they needed to. But instead of ready-access to cash, the Bear Stearns funds (as one example) delivered losses of almost 100 percent. Presently, there are a number of hedge funds in total “lock down” where the money checked in, but it won’t be checking out for a very long time. Like a roach motel! (At least the asset managers will continue getting their fees!)Over the past five years, Wall Street introduced Structured Investment Vehicles (SIV’s) to the world. These SIV’s were a way for major banks to fund hundreds of billions in asset-backed and mortgage-backed securities with short-term commercial paper off the banks’ balance sheet. In the past year, SIVs basically collapsed. Some investors in SIV’s were lucky because they cashed out when banks brought the assets back on-balance sheet. Others were lucky, but it was bad luck. Worse yet, over the past several years, Wall Street brought Auction Rate Securities (“ARS”) to Main Street. They were sold as a higher-yield substitute for safe money market funds. Small investors were stuffed with over $330 billion of ARSs invested in longer term tax-exempt municipal bonds, preferred stock, and student loans. They were told they would have ready-access to their money without loss, for a small pick-up in yield. But when the auctions failed, many unsuspecting people (who thought they had a simple money-market fund) found out their money was locked away and couldn’t be touched. Who knows how long they’ll have to wait before they can get their cash. Main Street has met Mean Street. The moral of the story is you just can’t always fund long-term assets safely with short-term hot money. I estimate that investors in the Hedge Funds, SIVs and ARSs, mentioned above, have already been denied access to close to $1 trillion dollars that they thought was readily available cash they could withdraw on short-notice. Total losses have yet to be determined, but being denied access to your cash can feel devastating even if there is a chance you can make some of it back in the future. Holding cash is like having an umbrella for a rainy day. For those misled by a trusted broker, the umbrella is now broken just in time for monsoon season. Unfortunately, what’s done is done and you can’t look back and undo what has happened, but the government taxpayer bailout of Fannie Mae and Freddie Mac, and the government takeover of IndyMac Bank, should be a wake-up call. The worst problems in the financial markets aren’t over; they’re just getting started. These failures are huge events, and the smoke signals they created suggest there are many more financial fires around. Many banks will fail! Some large and medium-sized broker/dealers and finance companies are likely to be merged out, or file for bankruptcy. So, what can you do to protect your money? The FDIC offers iron-clad insurance up to $100,000 per account. If you have a lot of money, spread it around between different banks. For individuals and companies with a lot more than a few hundred thousand dollars, a large portion of the cash should be held in a money-market fund that only invests in short-term US Treasuries. If you are a small investor and like to keep money safe for a little longer – and don’t particularly like the rates offered on bank CDs – think about buying I-Bonds from the US Treasury. The Treasury is now limiting the purchase of I-Bonds to only $10,000 a year per person. It used to be that the Treasury allowed you to purchase $30,000 per year per person, but they now want to try and keep money in the banks. I-Bonds pay the CPI which, of course, underestimates the true rate of inflation and guarantees you will be robbed by the government, but you’ll receive a better rate of return than on a bank CD for the time being. (The current rate for an I-Bond is 4.84% through October 31 (Go to http://www.savingsbonds.gov). Most of us probably have our money safely tucked away, but don’t get caught napping in the middle of the afternoon. The failures tend to come in slow motion, and there are signs you should be watching for, such as: 1) if a bank shows up on a list of troubled banks, move fast (it only took 10 days for IndyMac Bank to fail); 2) if a bank, brokerage firm or finance company has a stock price of $10 a share or less, try and cut your exposure; 3) if the stock price is $5 or less, proceed as if the company’s’ days are numbered and get your money out; 4) if a bank or brokerage firm has publicly denied rumors more than three times, consider them desperate and run; and 5) if you ever hear a government official come out and say that an institution is fine, you know it’s time to get your money out because history shows they’re likely lying. Look what happened with Fannie and Freddie. The government said everything was fine right up to the day the US Treasury dropped the biggest government bailout of all time on the American taxpayer. The bill for Fannie, Freddie and the bank failures could cost the taxpayer over $400 billion. (That’s your money, of course.)http://www.sfgroup.org/Is%20Your%20Money%20Safe.htm

"This financial crisis may end as it did in Argentina, when we had a complete run on our banks"It’s getting quite easy to see how that could happen. First, we have some US banks that have taken on a high number of questionable mortage assets (WaMu is one example right now). Then a bunch of hedge funds pile on the shares of these banks and take large short positions. Then, as the stock price plummets, more investors take short positions. Finally, as the stock gets to a low value people rush into the bank in a panic and withdraw all their money – because they fear the worst. It’s a bank manager’s worst nightmare. And it is playing out right now. In addition, there is a big problem in America today. Many people do not have much in savings. Families are living paycheck to paycheck. So … if someone decides to go down to the bank and take out all the dollars they have – it’s a practical thing to do. They may only be taking out a few hundred or a few thousand dollars. People may feel quite comfortable keeping a sum like that in a safe place at home. On the other hand, if most people had much larger savings then such a withdrawal would be more of a security problem (where could they put all the money)? So the fact that the US public has the worst savings rate in decades could actually add significant risk to bank runs occurring. As I said .. all of this is a bank manager’s worst nightmare.PeteCA

I’m looking to take my profits for shorting the S&P, and putting them outside the USD. What is the best bet this late in the game? Gold, Intl bond funds?

Sorry, that got messed up. Lets try again:When the house is rotting from the inside and was already falling down, and every few years you had to put massive amounts of money into it just to keep it standing, maybe you just watch it burn down and then build something new. Especially when the firemen are trying to put out the flames with gasoline.

At least, the rotting house should not be used successfully as a fake charity pitch (more accurately a required donation!), getting people to send in what is left of their wealth to the fund to patch the house back up, while the charity’s managers steal the money and keep making the pitch …

@garyalanOne of the major bondholders of these GSE’s are the chinese. If this is not High Treason, I do not know what is.

@ KJ Foehr 19:57:32For what it’s worth, as I’ve stated in previous posts, I think we’re lucky to have Bernanke in charge. He is doing his best to try to deal with a most difficult, if not unprecedented, situation. Again, it’s easy to criticize from the sidelines when you’re not the one with the fate of the American economy in your hands. That’s not to say that we should not be free to challenge Bernanke’s policy decisions, but only that we should refrain from personal attacks on him that he plainly does not deserve, given the awesome responsibility of his office.SWK

SWK: agree regarding Bernanke. I suspect he’s a reasonably good man. But there is little to be done, at least from his standpoint. Or maybe he didn’t account adequately for the massive proliferation of information which makes this round different from the 1930′s.I think we’re in for a protracted, agonizing decline. But there’s not much light at the end of the tunnel, unless the untenable existing web of contracts is somehow nullified. This is what the senior members of the system (including Bernanke) are resisting, but there is no possible renaissance until that occurs.

@SWKI beg to differ. Any government apparachik, especially one in as powerful a position as Bernacke who bold face lies to the American people repeatedly about the state of the economy and the true nature of these bailouts because his masters require him do so is a co-conspirator and deserving of our wrath. He is to the economy what "Brownie" was to Katrina

@ Peter JB 00:04:13Why do you assume socialism to be incompatible with the Constitution (including the Bill of Rights, which are simply the first ten amendments to it)? SWK

@ Anonymous 00:42:09If you think I need help, then why don’t you try to provide it to me? Why don’t you respond by demonstrating why my statement is wrong, rather than with a logically fallacious ad hominem argument? I’m all ears…SWK

SEC issues emergency rule to curb short saleshttp://news.yahoo.com/s/nm/20080716/bs_nm/sec_shortselling_dcWASHINGTON/NEW YORK (Reuters) – U.S. securities regulators issued an emergency rule on Tuesday to limit certain types of short selling in major financial firms, including Fannie Mae (FNM.N) and Freddie Mac (FRE.N).…The rule will go into effect on Monday, July 21, and last through July 29, although it could be extended to last up to 30 days. The SEC said it will consider rules to address short selling issues across the entire stock market.The emergency rule applies to 19 financial firms including Lehman Brothers (LEH.N), Goldman Sachs (GS.N), Merrill Lynch (MER.N), Morgan Stanley (MS.N), JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N).The SEC said that a loss of confidence in markets can lead to panic selling, which may be further exacerbated by certain types of short selling.…Short sellers arrange to borrow shares they consider overvalued and sell them in hopes of making profit when the price drops.With financial stocks dropping dramatically over the year, lawmakers have been calling on the SEC to investigate whether short sellers and speculators are behind the move.…The agency’s rule change would prevent investors from making "naked" short sales of the biggest financial stocks. A "naked" short sale occurs when an investor sells stock that has not yet been borrowed.Broker-dealers will sometimes accidentally fail to deliver stocks to investors who have arranged to borrow a stock. If it is done intentionally, it is illegal.…Short sellers say they prevent stocks from becoming overvalued and are an essential feature of the market."While no one in Washington did their job, now they are trying to blame short sellers," said William Fleckenstein, president of Fleckenstein Capital, which manages a Seattle-based hedge fund."Short sellers don’t make stocks go down. If a short seller was trying to push a stock to a price where it didn’t belong, it would come back right away," said Fleckenstein, who is not currently short the investment banks or Fannie or Freddie. He had a short position on Fannie, which he covered on Tuesday.…

@ Anonymous 01:02:48That’s better. Now my response to the assertions you have raised:>Definition of Socialism:>social and economic doctrine that calls for public rather than private ownership or control of property and natural resources. Well, assuming this definition to be true for the sake of argument, the U.S. government owns a heck of a lot of property and natural resources, as to the respective governments of the 50 states. In fact, the U.S. Constitution, and that of virtually every state (if not all of them), recognizes the power of eminent domain, that is, the power of the government to seize property as long as just compensation is provided. That is a fundamental, organic feature of our constitutional form of government that fully supports the notion of collective ownership of property. I would suggest that the U.S. Constitution is not the pure guardian of private property rights that you imagine it to be.>According to the socialist view, individuals do not live or work in isolation but live in cooperation with one another. Surely you don’t disagree with the assertion that individuals do not live or work in isolation but live in cooperation with one another. That is the very essence of society.>Furthermore, everything that people produce is in some sense a social product, and everyone who contributes to the production of a good is entitled to a share in it. Don’t you feel entitled to share in some way in the benefits of the products or services you are called on to provide through your gainful employment? I fully expect that, myself. But I also expect to be taxed for the public welfare so we can have roads, bridges, water utilities, etc.>Society as a whole, therefore, should own or at least control property for the benefit of all its members.There are many varieties of socialism. Not all advocate absolute and unbridled collective ownership of all property whatsoever. To the extent that’s what you’re talking about, I would agree with you. The U.S. Constitution and the constitutions of many or all or our states expressly recognize and broadly protect the right to private property, though that right is not, as I’ve pointed out, absolute either.___As for your analysis of the Bill of Rights, allow me to point out that each of these ten amendments to the Constitution merely delimits the powers delegated to the federal government by the People and the States. The Bill of Rights is a document of reservation, not a document that grants anything. None of these amendments states or implies that socialism — or as you have characterized it, the "public rather than private ownership or control of property and natural resources" — is in any way prohibited from being exercised by the federal government. If the government takes your property (or for that matter, your life or liberty), of course, it has to afford you due process of law and equal protection of the law, but take from you it can nonetheless. Interestingly, the tenth amendment, which reserves to the States powers not delegated to the federal government, actually preserves the right of individual states to practice socialism.If I were you, I would not be disparaging the French, either. Without their intervention at Yorktown, we likely would not have won our independence and the right to promulgate the Constitution and establish the Republic. I will not "be gone" simply because you don’t care for what I have to say. I am an American, and like you, I say what I damn well please, as is my right under the First Amendment.SWK

im not into the tinfoil hat community,but something strange happened today in the internet have you ever/seen a whacky conspiration website named RENSE, its a very popular website for crazy Cons-theories,the website is now offline/closed!!its strange,i believe the site is full of disinfo,but why shut it down

Terrifying! Four horsemen of the Apocalypse: inflation, asset implosion, unemployment, recessionhttp://www.cnbc.com/id/15840232?video=794289610&play=1

"@ Guest 00:11.12That’s just silly. Bernanke, like many others, may have failed to perceive the danger early on, but accusing him of lying is simply over the top. He’s certainly no Brownie. His comments must be carefully circumscribed to avoid instigating panic and exacerbating an already bad situation.SWKWritten by kilgores on 2008-07-16 00:33:17"one might think that replying to somebody’s argument "That’s just silly" is neither necessarily the most constructive approach nor the basis for a polite exchange of views…IMO not agreeing with somebody doesn’t give the right to label his opinion as silly especially when the subject in question is debatable and subjective(Bernanke’s attitude). that’s how you start a flame…

I think that the discussion about socialism is totally misplaced. I surely have nothing against socialism and, given where we are now, I think it is an ideal. I hate to argue about ideologies because they are just a waste of time, you cannot be right or wrong and a good reason for unwarranted personal attacks.Now to Bernanke and Paulson. They are, and the administration that they represent, are either blatant liars or completely incompetent, there is no other choice. And either of these two means they do not deserve their positions. It is unimaginable to me that the head of the central bank did not see the upcoming crises long after it all started while others, disposing of much less information, predicted this outcome for years. It is unimaginable for me that a treasury who is calling for "strong dollar" is not doing ANYTHING to support it (hell, they are doing everything that can push it down). I can understand that both men are in a very difficult spot where any decision has tremendous negative effects, and that they just inherited the situation. But for God sake, their mission is to make sound and long term policies not day trading the country. I am focusing on these two first because they are unelected officials whose decisions impact our lives more than those of the president himself, and second because this is what we are debating (Congress and US bear a larger responsability)"Puting moral hazard aside". We cannot possibly put moral hazard aside under any pretext, even for emergency of action. Besides, what kind of emergency does buying equity provide? Roubini provided the OPTIMAL solution to nationalize the GSE’s and significantly reduce moral hazard. A solution that might be implemented faster than Paulson’s plan. Why not adopt it? Is he the only smart man around here? So we go back to the first question, they are either lying (and have a different agenda) or incompetent.Puting all this aside. We have a secretary of Treasury whose mission is to "keep" a strong dollar and "manage" the country’s finances (treasuries). And we have a head of Central Bank whose mission is to promote economic growth and price stability in addition to an oversight over the banking system. Both know (as anyone who ever opened an economics book does) that providing unlimited liquidity to banks and throwing bailout after bailout (none of which is their mission) destroys the dollar, puts the country’s finances (treasuries) in jeopardy, unleashes a global inflationary spiral and, more importantly, which they (should) know does not solve the problem they are fighting; credit crunch caused by reckless lending (where was the Fed before yesterday?) and insolvent banks, instead of forcing them to deleverage and mark-to-market when appropriate. Bernanke is talking about the increasing risk of inflation, but he should have known what was waiting before starting his rate cuts. He is again talking about how there was no much downside risk for the economy and refuses to raise rates (well, everybody knows that he said that only to fight rising ‘inflation expectations’). He also said before he started all his alphabet soup, that all was ‘temporary’ and then extends it for one more year. I am forgetting many more. As the saying goes, if we put a monkey deciding for our economy, it would have a much better track record in this relatively short period.But that is not what I am worried about. I am worried to see what a few sour vintages of ‘subprime’ mortgages have done to the global economy, and try to imagine what other prime and commercial RE, auto loans, student loans … will have as an effect. I am worried about the tons of government liabilities that are soon coming due. I am worried about millions of retired people who will soon realize they do not have a dime in their savings and would not receive any Security or Care they were counting on. I am worried about billions owed to foreigners. I am worried about the quadrillion dollars of derivatives. I am worried about Lehman who goes to cry for bailout at the Fed and then plans to open a global unregulated stock exchange …It is not about moral hazard anymore. It is about the fact that any additional dime the government adds to its liabilities and every treasury the Fed "lends" to so-called liquidity strapped banks to finance our misery and everyday that goes without the SEC and FDIC ENFORCING regulations and forcing banks and companies to come clean, just pushes us closer to the day of reckoning. I am not sure that day will come, or at least, that these days will come at once, but there is something called risk management and contingency planning. USA is a very poor country now, it cannot afford anything as it did before. How can we possibly think that we are taking a ‘cost/benefit’ approach to judge any plan without taking into consideration the imapct of that plan on the ‘yield curve’. We are worrying about equity markets (after a mere 20% drop) and we forget where treasuries are heading (even without any bailouts). Treasuries on which everything else is priced, so even if they don’t collapse, they will make everyone upside down on their mortgages. We are worrying about few banks/agencies going bust and we don’t worry about dismantling that collossal dinosaur of derivatives.I am afraid Equity (in its original meaning) cannot be bailed."Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction." "Weakness of attitude becomes weakness of character.""Sometimes one pays most for the things one gets for nothing.""We can’t solve problems by using the same kind of thinking we used when we created them.""Two things are infinite: the universe and human stupidity; and I’m not sure about the the universe.""In order to form an immaculate member of a flock of sheep one must, above all, be a sheep." [out of context]Alber Einstein

that’s how the wizard of Oz got his free lunch…he inflated his hot air baloon, did some sleight of hand tricks and paid the bill for the goodies with the taxpayer’s credit card.carefull though, the wizard might still get an indigestion even if the meal is all paid for with somebody else’s money…what if the bank (i.e. the rest of the world) decides to cut the credit on the card?

The deepest risk, and the most hidden -The darkest, ultimate, most unspoken risk, is that of the corrupt US legal system, and legal ruses increasingly being used to confiscate assets.The parallel to the 2.3 million US prisoners (1 out of every 45 working-age US males behind bars!), is the case-by-case confiscation of individual assets via the US mafia of lawyers and judges.There is nothing like it elsewhere in the world. These asset confiscations are hidden by the US mass media, and by the destruction and silencing of independent bloggers who try to expose this. Victims are always smeared and slandered as ‘disgruntled litigants’, and those who try to expose specific cases are shut down by intimidation of US lawyers tied to the judges.I came to know many victims of the US system, and almost no one ever helped them – no lawyer, no media – while they lost life savings and homes to the legal mafia. Meanwhile, most US people are blind, unless they personally know a victim. Most believe in the Hollywood movie myths of ‘lawyers’ and ‘justice’, which turn out to be a fraud if you see a US courtroom at work.The US judges are the deepest partners of the banksters, and even more corrupt. The mass seizure of US assets via the legal mafia is the next phase. – Everyone should consider getting yourselves out of the USA, your assets ahead of you.When I drove across the US border the last time, I had a few gold Maple Leaf coins in my pocket, but my yellow Swiss bank card was the best ‘gold’ of all.

@ Alessandro 06:37:21Thank you, Alessandro. I always enjoy reading your posts.I think you’ve hit the nail on the head here. They are in a crisis and are just doing what they can to keep the cork from blowing off the champagne bottle. I continue to maintain that they are not lying, but very carefully choosing their words so as to avoid exacerbating the crisis by precipitating a panic. Imagine what would happen if Dr. Bernanke and Mr. Paulson came on camera and said something like, "Things are far more serious than we ever imagined and we’re very scared that we may be unable to contain this crisis. I wish we had listened to Dr. Rounini!" I can’t think of a faster way to cause a stampede to the bottom globally than to have the two guys who are more or less responsible for overseeing and managing the world’s largest economy spew their guts in public. They have to be circumspect, less they become the catalysts for chaos and lose any prospect of keeping the financial system from falling over the edge of a cliff.SWK

@ PeterJB 02:39:24> I didn’t understand the question >Perhaps I’m the one who didn’t understand what you were saying in the first place. You said in an earlier post:>The problem is that you sacrifice your magnificent Constitution and Bill of Rights (USA) for "a little socialism" and then a little bit more and then something else and then a little bit more and then something else until what? and when?>When does it stop and where does it lead to? Why not defend what you have been given by your founding fathers, known to be the greatest system of government ever constructed?>Read The Gulag Archipelago (Russian: Архипелаг ГУЛАГ) by Aleksandr Solzhenitsyn because this is where the USA is being eagerly taken today.Hence, it appeared to me that you were suggesting socialism was somehow inherently incompatible with the Constitution and its Bill of Rights. As the interim posts following my question to you make clear, some folks apparently take umbrage with the mere suggestion that socialism and the Constitution may not necessarily be incompatible. I found interesting your comment about reaction to crisis:>It is predictable that the incompetent true-believers will always revert to uber-control mechanisms when their station is in jeopardy – from "USA good old Democracy" (which everyone must have or face death) onto communism, socialism, fascism etc., etc., onward christian soldiers, blah blah, blah, to war and destruction.That is very insightful. An unstable economy makes everything else unstable (e.g., Germany in the 1920s, Zimbabwe today) . Excellent admonition.SWK

Prof. Roubini wrote: But over time inflation will be the last problem that the Fed will have to face as a severe US recession and global slowdown will lead to a sharp reduction in inflationary pressures in the U.S.Dear Prof. Roubini, Thank you for the fact-based bleeding edge insight all along. There is a tone of finality in your post. Game Over. I win! A few posters like KJ and SWK are begining to realise that we should not cut off our own nose. Here’s what he writes:KJ Foehr on 2008-07-15 19:57:32 wrote: Well guess what, our house in on fire, and if you don’t let the firemen do their job there may be nothing left but a pile of ashes where the world’s sole superpower once stood.KJ,Glad you finally get it. We’ll end up having half a house while Rest of World will be rendered with ashes. That’s Alpha! Cheers to Alpha. Cheers to US. No country will dare play currency based human resource arbitrage games with US again! As long as the US does not default we are OK. That’s why the US Government stands behind the GSEs. You would need to militarily defeat a country to give it a greater than zero probability of default. Argentina, Germany and France have previously attained that infamy.@kilgores on 2008-07-16 01:54:17 wrote:I am an American, and like you, I say what I damn well please, as is my right under the First Amendment.Ditto.Print First Ask Questions Later.

@SWKI (respectfully ) disagree. Sure they are choosing the words carefully and we can argue wether they actually lied or just let the other misunderstand, and you are a lawyer so you are probably going to beat me on the head.But still, Marvyn King said that things were tough long ago and went on with a stright nationalization when one of his bank blew off. Great Britain didn’t collapse on his words and on his acts.What Hank and Ben are doing instead is IMHO morally criminal, they choose their words in the way that make as much people as possible leave their pension money as long as possible into the collapsing financial system. And this is done intentionally to let their friends position themselves (IMO).And they are clearly not addressing any real problem of the real economy. Not a single one. They just try to move the pain to come one day into the future every day.As you can guess I’m sick of TPTB.

LOLOLOL Global markets plummet overnight, CPI come out at its worst level in 26 years, Phony and Fraudy cut dividends to save cash and somehow, miraculously, US futures markets turn positive!!!!

@ Anonymous 06:56:07>The darkest, ultimate, most unspoken risk, is that of the corrupt US legal system…>Most believe in the Hollywood movie myths of ‘lawyers’ and ‘justice’, which turn out to be a fraud if you see a US courtroom at work….What is corrupt here is not the legal system, but the ideas you have expressed about it. This is the most ignorant post I have seen on this blog in a long time. It is the sort of childish rant typically made by self-righteous persons destitute of knowledge and education sufficient to appreciate and respect our institutions of law, in the absence of which personal liberty would have no defense. The legal system you criticize so freely is the sole check that protects the minority from the potential tyranny of the majority in a democracy. This sort of nonsense has plagued Anglo-American jurisprudence since the time of Shakespeare: "The first thing we do, let’s kill all the lawyers." (Henry VI, Part II).When I read comments such as yours, I am reminded of this scene from A Man for All Seasons:Sir Thomas More– There’s no law against that.William Roper– God’s law!Sir Thomas More– Then God can arrest him.William Roper– While you talk, he’s gone!Sir Thomas More– Go he should, if he were the Devil, until he broke the law.William Roper– Now you give the Devil benefit of law!Sir Thomas More– Yes, what would you do?William Roper– Cut a road through the law to get after the Devil? Yes. I’d cut down every law in England to do that.Sir Thomas More– And when the last law was down, and the Devil turned on you……where would you hide, Roper, the laws all being flat?This country is planted thick with laws from coast to coast……Man’s laws, not God’s, and if you cut them down……and you’re just the man to do it……do you really think you could stand upright in the wind that would blow then?Yes. I give the Devil benefit of law for my own safety’s sake.____When you find your perfect society beyond U.S. shores, I hope you will remember to check back in with us and let us know just where that place is…SWK

Dear Dr. Roubini:You have really created one of the best, most intellectually stimulating blogs around. There are so many interesting perspectives expressed here. I continue to learn so much here, even from those with whom I disagree and even from some expressions of views that I find absurd and baseless. This is a wonderful public service, and I feel compelled once again to offer you my deepest appreciation for providing this forum to us.Kindest personal regards,SWK

LOLOL the SSO-2X long S&Plevered ETF is actually UP while the S&P is down!!

Anyone notice the miraculous positive Industrial production revisions from January forward that just happens to reverse YOY production to positive once again??

The bank index $BKX, is up 7.25% this morning…

Brian Wesbury was on CNBC last night saying his estimate of Q2 GDP was "well over 3%". The official numbers are not allowed to be negative anymore so sayeth teh USSR (United States Socialist Republic)

Real 10 year treasury yields are at their 3rd worst negative spread since 1953. The only other periods worse than today wer 1974 and 1980…

10 yr. 3.88% Oil $133Which one is right and which one is wrong?

The US Treasury is running out of time before foreign patience snaps, writes Ambrose Evans PritchardMerrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.Draining away: The US may struggle to plug its capital gap The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors."Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill’s head of international economics."It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."

US stocks going verticle!

Shares of Wells Fargo (WFC: 25.66, +5.15, +25.1%) rose 22.4%, rallying after the San Francisco-based bank raised its dividend as it reported a 23% decline in second-quarter profit, milder than analyst had been anticipating.I cant hear this better than expected shit anymore.Who is buying this crap?Pension funds or what?All this "Investors" propably total idiots.

Gold down almost $20/oz.!!!!!

http://www.ft.com/cms/s/0/2cc4291c-52a2-11dd-9ba7-000077b07658.htmlYear of living dangerously

@ PRW 10:02:57Well, right, he didn’t resign, but he did advocate letting Northern Rock go. Perhaps he figured his resignation would be less beneficial than trying to continue to work within the system after he was overruled. Often resignation would be the better way to go.My feeling is that Colin Powell would have had a greater and more constructive impact on the course of U.S. involvement in the Iraq war had he resigned in protest, but good soldier that he was (never quite got the hang of transitioning to civilian status), he elected to stay on and, in my view, was more or less ineffectual after that, if not becoming an enabler for the misguided policies of the Administration. By contrast, Admiral Fallon recently resigned as head of CENTCOM, I suspect, due to what I imagine to have been his opposition to the Bush Administration’s approach to Iran. So far, at least, we haven’t gone to war around the Straits of Hormuz.SWK

Dear Professor:Nicolas Burns is coming to Geneva this weekend, and his mission is to restate the precondition of Stopping Uranium Enrichment. We already know that Khamenei will not accept this precondition. Will his return with this restatement by Khamenei be a green light for the Israeli? Is the SEC action to limit naked shorting from July 21 to August 20 on all investment banks and GSEs related?

This shows you just how perverse things have become:12:22 p.m.Investors cheer billion-dollar losses at AMR, Delta

@LB, others who criticize the USA for currently being number one on the rate of prisoners list, and Anonymous on 2008-07-16 06:56:07“The parallel to the 2.3 million US prisoners (1 out of every 45 working-age US males behind bars!), is the case-by-case confiscation of individual assets via the US mafia of lawyers and judges.”There is nothing like it elsewhere in the world.”If you lived in the USA during the 1970s and 1980s, then you surely can appreciate how bad crime was during that time. If you weren’t then do a little research and you will find that in the ‘70s and ‘80s violent crime was so rampant that people were afraid to walk on city streets after dark, rape in parking garages in large cities was commonplace, muggers operated with impunity in NYC, no one dared park a car on NYC streets for even five minutes with any package or even a marginally valuable item visible inside the car, crime was so bad on NYC subways that Curtis Sliwa formed the Guardian Angels* and they patrolled the subways trying to keep people safe. Contributing to the high crime problem, judges routinely released on probation those convicted of robbery and burglary to the extent that criminals no longer feared punishment for their crimes. Prisoners were so commonly released on parole, only to commit other crimes, that it gave rise to some jurisdictions implementing laws like the famous “three strikes and your out” law in Washington and California, and other laws providing harsh punishment for crimes committed with a gun. Crime became the number one issue during many elections around the country. The situation became untenable and to change it serious consequences for criminal action had to be implemented within the justice system.Because of the high probation and parole situation in the ‘70s and ‘80s, I doubt that the USA was number one on the prisoner list, if such a list even existed then. IMO, the current high number of prisoners in the US is not the problem, it is a symptom. The real question is why do we have such a high rate of crime?A related issue: how reliable are these prison statistics?** For example, how accurate do you think the numbers are for China? Burma? Saudi Arabia? Zimbawe?And the numbers alone do not answer the important social questions: What is the rate of crime in a country? What social and cultural factors contribute to a country’s crime level? What is the strength of the rule of law that deals with those crimes? How fair is the judicial system in determining the guilt or innocence of those arrested? How many executions are committed and for which crimes? Etc.* The Guardian Angels is a non-profit, international, volunteer organization of unarmed citizen crime patrollers. The Guardian Angels organization was founded February 13, 1979 in New York City by Curtis Sliwa and has chapters in 11 countries (in over 100 cities) around the world.Sliwa originally created the organization to combat widespread violence and crime on the New York City subways. The organization originally trained members to make citizen’s arrests for violent crimes. The organization patrols the streets and neighborhoods but also provides education programs and workshops for schools and businesses.http://en.wikipedia.org/wiki/Guardian_Angels** From the World Prison Population List (fourth edition)The List has a number of weaknesses. It lacks information on 17 independent countries and figures do not relate to the same date. Comparability is further compromised by different practice in different countries, for example with regard to whether all pre-trial detainees and juveniles are held under the authority of the prison administration, and also whether the prison administration is responsible for psychiatrically ill offenders and offenders being detained for treatment for alcoholism. People held in custody are usually omitted from national totals if they are not under the authority of the prison administration.http://www.homeoffice.gov.uk/rds/pdfs2/r188.pdfHaving said all that, I strongly agree that the recent uptrend in confiscations by police is outrageous, inexcusable, and all citizens should be alarmed and demand that the practice be closely monitored and tightly regulated. IMO, it is the latest example of a country that has become consumed by greed and degraded by a general decline in values and loss of respect for the basic right and wrong that any four-year-old knows.

Yup, shoudl be worth another 100 on the sow:1:00 p.m.All 3 components of home builders index hit record lows

I guess oil and the government taking over everything and making it illegal for things to go down or for people to be depressed or for people to lose trumps a housing depression…

i actually witnessed the Guardian Angels in action last year on the subway train in Chicago coming back from a Sox game (free tickets – i am Cubs fan). i had seen the Angels wearing their shirts walking back and forth in between cars. all of the sudden, a man started yelling at a woman who was with her children in the car. i thought it was domestic in nature and they were related. the Angels showed up and a full train car watched as they confronted him, he would not listen, then pop right in the face cracked open the lip and bleeding. other angels rolled into the subway car and they pinned him in the corner by the door. the man said don’t beat me, you are gonna beat me. we stopped, they took him down at the next stop and what appeared to be a pummeling took place. it was very uneasy to see this. out of curiosity, i asked the woman a few stops later if she knew the guy. she said no, they had done a good thing and that guy had been smoking crack… i was nearly mugged personally on my front porch a few months back EARLY one morning after being out. Thanks for inflating crime into society again you greedy, ruthless bastards ! have fun keeping your own family and friends safe when they are in public ! a friend in NYC told me he keeps mug money ready at all times, somebody comes up to you, just hand it over and move on with it. it is an additional insurance or tax on people complements of the world’s banking cartel, the self-serving greedy wall street elite and perhaps most of all the DEBT gamers who have leveraged the world into near financial chaos through their hyperleveraged deals to generate their "wholesome," "pure profits." This has happened before. Why are we here again ?

WTF is making the stocks go up today????????????So wells Fargo lies about the profit and everyone actually believes it? Come on!!!!!!

2:00 p.m.FOMC, Fed staff less optimistic about ’09 outlook

2:00 p.m.Some on FOMC want rate hikes "very soon:’ June minutes

I mean should be very embarrassing for the FED to have such hawkish minutes circulate right in the middle of the first bank run in years! LOL!@SWK, you are right on one point, the guys sit hot chairs.

@anybody with enough time in his handsI was tempted to compile a sort of a time table with public forecasts made by the FED and the Treasuries (with source) and one or more same-time comments/forecasts made on the usual suspects in the financial blogshpere (our NR, Mish, CalculatedRisk, Hellasious, and others). And then what actually happened.I gave up due to time constraints, but I think it would be a great public service. Anybody has seen something like that on the web?

@ Alessandro 13:10:06>SWK, you are right on one point, the guys sit hot chairs.You bet. I’ll bet Dr. Bernanke is longing for a pair of asbestos underwear right now…SWK

"FDIC should be abolished"stupidest thing i ever heard. man, where you people come from?

A little humor (very little)…___So Dr. Roubini and Dr. Bernanke wind up sitting next to each other on a plane to Washington, D.C. Dr. Roubini leans over to Dr. Bernanke and says, "Hey, I have a great joke for you about Chairmen of the Federal Reserve." Dr. Bernanke replies, "Wait a minute! I’m the Chairman of the Federal Reserve!" To which Dr. Roubini responds, "That’s O.K. I’ll tell it to you slowly…" SWK

Gloomy – we should not abolish the FDIC; the FDIC should have done its job as a regulator which it failed to do. Congress likewise failed to oversee the FDIC.Small depositors do not have the time or expertise to analyze the safety of banks. Before deposit insurance, a bank run on one bank could turn into a general run on banks. Scared depositors would withdraw their money from all banks and put it under their mattresses, withdrawing it from circulation, shrinking the money supply, and worsening the economy.The FDIC was supposed to insure that banks were not lending recklessly. Instead it appears to have been captured by banks it was supposed to oversee.Congress is supposed to oversee the FDIC. It was asleep.Who is to blame for the FDIC and other failures?The House Financial Services Committee is a good place to start:http://financialservices.house.gov/who.htmlBarney Franks is the chairman. There is blame to share in both parties. Ron Paul is also on the committee.Yes, I know counting on Congress for protection when the large banks are funding their reelection campaigns may be a vain hope. But we can vote some of these people out of office.

@Forensic economistas we have under our eyes, incompetence and corruption are defining traits of regulators, FDIC, FED, SEC, all of them, and Congress above all.Without the FDIC we get bank runs.With the FDIC we get bank runs.I’d go without.

More people to recall. Here is the Senate Banking Committee membership. Chairman is Dodd of Connecticut. Former chairman (before 11/06) was Shelby of Alabama.http://banking.senate.gov/public/index.cfm?FuseAction=Information.MembershipFrom last September press release:"Dodd has …advocated that the Administration raise the portfolio caps for Freddie Mac and Fannie Mae in a manner that is safe, sound, and targeted to consumer-friendly mortgages.""consumer friendly" sounds like low interest rate, low down, low doc — Dodd wanted more of it.

Fannie, Freddie Debt Continues To Weaken Amid Uncertainty By Prabha Natarajan excerptJuly 16, 2008 15:14 ET NEW YORK (Dow Jones)–Freddie Mac (FRE) and Fannie Mae (FNM) debt continued to slide on Wednesday, as ongoing concerns about the financial system and the broader economy caused many investors to shy away from the agency debt market. This is the third consecutive session that risk premiums on the debt have risen, and comes despite the U.S. government’s proposal to support the two mortgage giants and subsequent testimony by top policy makers reiterating the Bush Administration position. Smaller investors unaccustomed to such volatility in a market that has been historically calm continue to pare back their exposure to this market, said market participants. Hedge funds have also been sellers, they said. Risk premiums on Fannie Mae’s 3.25% issue due 2010 were up 6 basis points against comparative Treasurys on Wednesday at 87 basis points. The note priced at 74 basis points over Treasurys a week ago. Meanwhile, the Freddie 4.875% note due June 2018 was up 6 basis points at 84 basis points. Before concerns about the two housing agencies become widespread, risk premiums on agency debt typically moved by one basis point on any given trading day. Another indication of how little conviction there is in the market is the difference between what sellers are asking and what buyers are willing to pay. On Freddie Mac’s 4.875% 10-year note, the so-called bid/ask spread is two basis points, which is unusually large. This is the issue that Freddie Mac added $1 billion to in its private placement announced Wednesday. …

This should add another 100 points or so to the sow rally:3:18 p.m.[IDMC] FBI probes IndyMac for possible fraud in loans: report

trillions of hours of analysis done by millions of highly educated financial professionals tossed right out the window as the government says f’ it. let’s just make it illegal for the market to go down… ha ha ha there are still new lows being put in every single damn day in the the level of integrity of the financial system and markets of the world charted over time – new lows everyday. all efforts to shore up integrity have become so preposterous and laughable that any rational human being (perhaps including monkeys) sees through the efforts immediately.Here is a headline for you:Karachi exchange in Pakistan leads SEC implementing US market guidelines HA HA HA LOL the sad joke is on everyone. "why not ban short selling entirely like they did on the Karachi and the index went up 15% in one day ! so the SEC is taking a page out of Pakistan’s market plunge management ?Written by Capone on 2008-07-15 13:40:03"BKX +7.15 or 14.75% ha ha haremember this is not gambling, speculation or even gaming – it is investing. watch out for times when they change the rules in the middle of your "investing"

The bank index has wiped out 4, count ‘em, 4 days of selling in ONE DAY!!

Unbelievable! Soon TPTB will make a stock you buy a binding agreement and you will have to go to court to divorce it. Stocks will never again go down. It’s great to be an American.

Don’t worry boys. The next round of bank failures is right around the corner.

Last update: 3:59 p.m. EDT July 16, 2008 NEW YORK (MarketWatch) Thailand’s central bank raised its key interest rate by 25 basis points to 3.50% on Wednesday in a move aimed at fighting soaring inflation.

I am Sorry.Sorry Dr. Bernanke. Sorry Sir Paulson. Sorry Mr. Cox. Sorry Lehman. Sorry WaMu. Sorry Sorry Sorry for not believing in you when you said everything is OK … What a fool I was and what a fool I am!Time did come when the index is up 3% because a bank did not lose as much as it was expected to do. I was a fool to forget that markets do not fear Fed hawkishness anymore even in the face of a runaway price index. I feel stupid now that continuous detertioration in the housing market does not matter any more.Sooo, can you lend me few bank shares so I can short them? No!? What about the index? No!? So I am going.

US government introduces equity card the card will require payment for all goods and services to be made in fractional shares of their equity positions. all paychecks formely paid in cash will be invested 100% into financial shares. wait a minute, the equity card was a joke. outside of the card joke, that is effectively what is, has and will continue to occur through inflation – purchasing power of cash completely and totally erased to support banks.

BULLETIN DOW INDUSTRIALS SURGE 278 POINTS; S&P FINANCIAL-SECTOR GAUGE ENJOYS BIGGEST DAY EVER

This has been a depressing day!I cannot believe that the market could rally on such light information!I am thankful that all my shorts are longer term and I can weather the storm. I do not trust the wall street boys like GS. I think they pulled this to reign in the shorts. Now the market can tank like hell and GS can get rich! Remember, nothing fundamentally has changed. The market will go down again.!!!!!!!

So which one is it???!!!!!! Friggin obfuscation once again!4:17 p.m. [EBAY] EBay Q2 gross merchandise volume $15.68 bln 4:16 p.m. [EBAY] EBay Q2 gross merchandise volume $14.46 bln

4:18 p.m. S&P financials post bigest percent jump ever

This market is truly the twilight zone. These banks are with few exceptions technically insolvent and the index has biggest gain ever! Maybe the Fed cut a deal with WFC to subsidize their dividend in addition to taking their toxic crap in exchange for treasuries.

"Yes, it’s here. Welcome to the Depression. No, don’t drop whatever it is you’re doing. Don’t get up. It’s not going anywhere. It will wait. It’s just going to sit over here in the corner and read a magazine while you do whatever it is you need to do. A Depression doesn’t run hot and fierce like some crazed meth burner. A Depression is methodical, purposeful, patient. It will build a shelter out of tree branches and newspaper, light a small, well-contained campfire and wait you out, brother. While you feed on the empty calories of denial and popcorn, it will quietly gather shards of broken dreams and fashion them into a terrible weapon of blunt force reality."http://www.minyanville.com/articles/time-mortgage-housing-california-depression/index/a/18055

@AfADamn, I wish I’d said that!!

Calculated Risk’s posting of “Roubini on Bloomberg TV” gives several of Roubini’s points establishing "that this will turn out to be the worst financial crisis since the Great Depression and the worst US recession in decades …" and has received 223 comments, ending to date with this one:Michael LittleBig writes: It is absolutely unbelievable that the entire Government composed of elected officials and bureaucrats watched this economy unfold and did nothing until the economy was at a 911 crisis. If we think that the economy is a at crisis stage, I would suggest the negative quality of this government is beyond human imagination. These wealthy and powerful self-serving types of politicians have to be dealt with as our first priority or we will never end this downward spiral of the American economy. The phrase “when the government lives better than its people” is the politician’s creed. The American people are overwhelmed with the unnecessary pain that has been inflicted on them by the greed and the narcissism of people who continue to practice “me”. It is inconceivable that the mortgage lenders in this country through deceit have many Americans convinced that it is the mortgage borrowers fault for this foreclosure crisis because they are flippers and credit scumbags.The wealthy and powerful have just screwed several generations of their fellow man. Was it not the wealthy and the powerful that said, “Let them eat cake”?http://calculatedrisk.blogspot.com/

@ AfA on 2008-07-16 05:54:56Now, isn’t that just the honest analysis of what is going on. That is indeed hard for anyone to refute unless they have another agenda (as far as I am concerned). And so, that we are clear, I lean towards them being liars. They have more information and resources at their disposal than most and if they were incompetent they would have sought help from the likes of the professor (their big ego’s not withstanding). So, my verdict: Liars.

Not having a go at you @SWKBut Benanke and Paulson knew their role and how hot the position is. They accepted the position and the pay and perks that go with it. So, IMO they are accountable for their actions whether they are little marionettes. If what they are saying is not true, they have the option of saying nothing with comments like analysis into solutions are being sought etc (if that is true). whether they can save anything or not is something else and they will not have lied about it. But to cause people to continue losing their money/savings/investments through the words that they say which are not true is to lie. A lie is a lie is a lie is a lie.

Previously in “The Young and the Reckless”The old twin witches from Desperate Housewives lost their virginity last week and are suing Marko for “rape with consent”. Marko denied and declared to journalists “It wasn’t me!” and while pointing then giving a finger back towards the sisters he added “these ^$(#^$ have no Reserve whatsoever, they were leveraging me to do it”Indy, which had stroke, died of a heart failure after a run. Witnesses said the victim was heard whispering some incomprehensible words and repeating “ … ballot …why not … me …” The autopsy revealed that the victim was suffering from a contagious virus. Some people who knew the victim told reporters that the victim was part of a gangbang club.As planned, Bernando opened the Window to help his Gang of New York homies escape with all jewelry and gold after spilling fuel and oil all over the house while homeowners were asleep. He then yelled while lighting up a match “the Helicopter is two blocks from here, hurry up”Warren, aka “The Exorcist”, failed to deliver Munis from its evil spirits. The body, while taken by a sudden trembling, said in a hollow voice “credum defalli souapum” or something like that.MBA just applied for a BBA.Ambak announced it was left stuck with a whole stock of cds, ranging from Hard Rock to House Trance, and stated it is hoping to convince Sony’s BMG to rate them.A dwarf was found guilty and sentenced for 2 years of jail after he has been arrested by the Federals who received an anonymous call claiming “the man’s short”.The Pope, Jean Paulson, decreed it is blasphemous to disagree with him.

Stop, Look, and Listen to RoubiniAs I watch the bear maul those jumping in and out on the ups and downs of this downward market, I turned back today to re-read Roubini. Why he bothers with us I’m not sure, but this is the mother of all posts. He nailed this economy with a million square hits.It is hard to fatham the genius of the man and I am sure that without him we would all be more badly mauled than we are. Each of his bullets lays bare the dangers ahead for us in this economic crisis – the landmines, the potholes, the damage.To proceed forward, without heeding these warnings, is a foolhardy journey. As for me, on this downward trek in the “worst financial crisis since the GD,” I’m keeping my eyes trained on Roubini.Until I hear otherwise from Roubini, in the days and months ahead I’m looking out for the probability of “hundreds of small banks” and “dozens of large regional/national banks” to go bust; the risk of a “bank-like run on the very short term liquid liabilities of the major independent broker dealers”; FDIC bailouts of the major money centers; Congress to eventually have to re-capitalize FDIC; the corrupt Fannie and Freddie continuing their system whereby “profits are privatized and losses socialized”; financial crisis credit losses of “at least $1 trillion and more likely $2 trillion”… in “the most severe U.S. recession in decades with the U.S. consumer being on the ropes”… and where “equity prices will fall by about 40% relative to their peak…”Where, “over time inflation will be the last problem that the Fed will have to face” as US recession and global slowdown eventually lead to, among other things, “a fall in commodity prices of the order of 20-30%” with “US twin deficits, recession, financial crisis and rising commodity and goods inflation in emerging market economies” eventually unraveling “the Bretton Woods 2 regime of fixed exchange rates to the US dollar and/or heavily managed exchange.”

@AfAI never thought I’d laugh at the end of this day. But I couldn’t help it. Thanks!

How was that again, the consumer is all shopped out and up their ears in debt? This could be the start of a trend…However, the investigation showed that at the time of his death, Mr. Hickman’s life was in turmoil. Lisa Hickman, his wife of 29 years, was ill, and he had been caring for her for some time. Mr. Hickman had also recently lost some money in the stock market, Lt. Anglada said.Mr. Hickman worked for Red Lobster for 32 years and oversaw restaurants in the chain from North Richland Hills to West Texas. He started as a manager trainee, company officials said. In 1977, Mr. Hickman was promoted to general manager and headed operations at restaurants in Wisconsin, Illinois, North Carolina and Florida. He became director of operations in 2003 when he took over restaurants in parts of Texas.http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/071608dnmethickman.3d76e7d.html

i wonder how the current chaos and sentiment compares to the days of prior financial crises ? were people making things up and changing rules at such a clip everyday to stave off the inevitable when prior atomic busts took place ? i don’t know, i mean could you leverage 40 to 1 to speculate on Dutch tulips during the peak of the craze through derivatives ? well, no. could you substantially leverage against any asset throughout the financial history of mankind in the way it has been done now. well, no. to say, this will be a deep recession is the financial understatement of the last 500 years if not of all recorded history since Unga traded a sharp rock with Imba in a cave for the promise of berry after the sun went down and rose the next day 20,000 years ago IMHO. this extremely simple analogy, all others before it and all others that will follow it are my gratitude towards Bernanke and Paulson for fed rate cut machine gunning me down over the past year destroying me while igniting an inflationary fire that makes the 1,000 fires started by lightning in California look like a single match being lit to light a cigarette…

I just bought a couple bags of pre-1965 US quarters. 90% silver, at a discount to spot price. They look different, fell different, sound different than today’s quarters. It was an early sign of the inevitable decline . . .

JLC on 2008-07-16 22:22:37 – I just bought a couple bags of pre-1965 US quarters. 90% silver, at a discount to spot price. They look different, fell different, sound different than today’s quarters.I am buying mine through Northwestern Territorial Mint http://bullion.nwtmint.com/silver_bags.php, but they are slower than Christmas. They want a month after the purchase to rustle up the coins. Who do you use? Are you happy with them?

oops, I meant South America not North America. Sorry

@ptmI know what you mean about NWT Mint. They are slow as molasses, but have a smaller markup on their bullion than the other dealers I could find.I got my "junk" quarters from Bulliondirect.com. Took about 2 weeks. And I think they had better prices than NWT Mint. The only problem – a couple of bags were short one quarter, and one bag had 3 1974 Canadian Quarters! I am working with them to fix that, I’ll let you know how it goes. I only got them yesterday.

@AfA on 2008-07-16 23:10:06Wow, Fadesa is bankrupt? Fadesa is to Spain what Fannie and Freddie is to the US.Fannie and Freddie in US are mortgage purchases of last resort in the US, while Fadesa is a developer in Spain. A bit different but still important. Besides, a lot of the property woes in Spain and countries in the eastern Europe was fueled by people from other EU countries, such as UK that for some years ran the same sort of GDP-inflating scheme as the US (and which is now collapsing). They are not exactly in the same situation as the US because in the US the housing bubble was fueled by domestic borrowing.In the Spain you have a collapsing housing market, but the speculators could mostly be in the UK.

Speaking of credit spreads: some ABXs are at new lows, and CMBX BBs are higher than the March highs.http://www.markit.com/information/products/category/indices/cmbx.htmlAnd the TED spread is rising, again. It was at 1.43 on Wed.

CORRECTION FOR THE ABOVE POSTEASTERN AND WESTERN EUROPE.

Mish asks why Goldman is on the shortlist but not WB and WM. Good read:http://globaleconomicanalysis.blogspot.com/2008/07/tossed-to-dogs.html@MASHIACHWhat drugs are you takin. RelaxEverything calm here. Greets from Moscow

"Pakistani Investors Stone Karachi Exchange as Stocks Plunge By Farhan SharifJuly 17 (Bloomberg) — Pakistan stock investors threw stones and smashed windows at Karachi’s stock exchange to protest the worst losing streak in at least 18 years, prompting intervention by the police and paramilitary officers. Restrictions Lifted Trading restrictions, including a ban on short-selling, were lifted with effect from July 14 by the Securities and Exchange Commission of Pakistan after the exchange announced a 50 billion rupee fund to buy stocks. Short sellers borrow shares and sell them, hoping to replace the stock at a lower price and pocket the difference. The curbs had been introduced to halt a plunge in the Karachi Index" Ummm, sound familiar ? Will ban on short selling in US financials yield the same result ? Sorry, I had not been following this one since I saw the headline the other day that the market had gone up 15% in one day when they banned short selling… exactly as the BKX went up yesterday following a ban on short selling. In summary, the US implemented strongly related if not identical measures as the regulators of Pakistan on financial companies. The US action FOLLOWED Pakistan’s move. Pakistan’s market popped on the initial ban of short selling and rolled back down within days. Shortly after the ban on short selling was lifted the market was plummeting severely again. A brief review on short selling – it was around at least since 1929 so 80 years and the SECs of Pakistan, first and now the SEC of the United States of America banned the activity. http://stockcharts.com/h-sc/ui see chart it looks like 6/24 was the ban on short selling and July 14th was when the ban was lifted…

Prof. Roubini, your fame is spreading.I heard you on Australian radio yesterday.It is slowly dawning on us here in the Antipodes that this is not just a temporary downturn and your quotes play a part in delivering the media message.Until now the media have been insisting that it was just a glitch.It will probably be a few more months before we twig that we are sitting on a volcano.

Guest on 2008-07-16 23:59:36 – *My figures adding $15,000,000,000 each for taxpayer purchase of shares, $300,000,000,000 each for taxpayer lines of credit, and creditors/bondholders current annual taxpayer subsidized debt spread relative to US Treasuries of $50,000,000,000.Could you explain your rationale in more detail? What is taxpayer purchase of shares, taxpayer lines of credit, and taxpayer subsidized debt spread? Thanks.

10:30 a.m.IMF: Fed, ECB don’t need to hurry to hike rates10:30 a.m.IMF: Developing countries must focus on inflation risk10:30 a.m.IMF: G7, global growth to slow in second half of ’0810:30 a.m.IMF report: Global economy in a ‘tough spot’10:30 a.m.IMF: U.S. economy has nearly stalled but hasn’t stalled yet

The stock market, waking from a dream of a bottom in financials, returns to the nightmare of the current reality: there is no real bottom in sight.

at least the Spanish have the guts to tell their equivalent of freddie and fannie to take a hike. What do we do…………remove their loan limits, open the discount window……..and say keep going your well capitalized!!!!!!I can’t believe have we come to this in this country. A bunch of crooks on wall street and in Washington…….Power corrupts and absolute power corrupts absolutely!

maybe I should shutup too……..I don’t want to be one of the first rounded up when/if martial law is instituted and end up in one of those FEMA camps I’ve read about online.

See the Chinese government is not to ‘adjust" the stock markets, but you can see how the socialist american government is managing the stock markets.No news under the sun!

What do you think the government will do next to try to contain their mess?

Written by randy on 2008-07-17 11:00:08http://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGIC,GGIC:2006-46,GGIC:en&q=rex+84

New thread

I wish that woman interviewing him would stop interrupting him. Does she think she is more interesting than he is? I want to hear what he has to say, not what she does.

amusing tale, that is what it is all about i quess.