Primero!

ProfessorBravo to you !

“this is more akin to the creation of a corporatist state (like the Italian fascism or the Germany Third Reich) where private sector interest are protected (gains privatized and losses socialized) where the government is taken over by corrupt and reckless private interests”A B S O L U T E L Y T R U EBravo Professor Roubini(ahem… and what about the neocon cabal, its trotstkist roots, and 80-90 % jew-(oops!)-component?)

This “New World Order” as defined in H.G.Wells 1939 book and espoused by George H.W.Bush is making unrelenting progress towards it’s desire to destroy the freedom generating machine of the former United States before this president leaves office. Read the book!. It is the plan of attack from Sirs Huxley,Wells and Madame Sanger to Money masters of the world today.

Once upon a time the US made widgets and now the widgets are made in China. The US became a financial services economy and does not seem to be doing too well at that task. The winners are “too big to fail” and well-connected with the political establishment. The losers are “too little to make a difference.” The end result will be a worthless dollar and a banana republic.

while other countries sovereign funds create wealth, the U.S. counterpart creates debt. Debt, debt, and more debt.

THE JAPANIFICATION OF THE AMERICAN ECONOMYThe ramifications: An 80% drop in the stock market and 20 years without the market recovering. Actually its probably worse than that.

and all of this in good time before the President is out of the office, talk about good timing. This whole crisis was probably purposely created by some folks somewhere in the upper echelons of the current administration.

I’d take a bet that one or more of the big investment banks or clearing banks would collapse because of AIG’s (w)reckless derivative portfolio. Also likely money market funds have AIG short term paper. And the insurance policy holders capital backing claims may not be as ‘safe’ as folks suspect.A stay on claims and DIP financing seems to be best, but I suggest the latter reasons prevailed for now. This is election time. AIG can well likely have more liabilities at this point than assets. I don’t buy that it is mark to market acctg that got them here. Classic long illiquid and short cash squeeze.The ‘hold to maturity’ mantra cry entails hoping for lots of inflation to bail my sorry !@#!@ out…

what a moron you are!

sorry it is 80%, not 85%. In fact it looks like they nationalized AIG.

Could tax payers require Bernanke and Paulson to checked for gambling addiction?

no, you are

Oh, sure, let’s engage in Jew-bashing now. Please keep stupid anti-semitic comments like that to yourself.SWK

I agree, this has more of a fascist tint to it than Marxist, especially when taken in total with the “patriot act” and “homeland security”. Regardless they’re both different sides of the same coin.

Dear Prof. Roubini,as usual I read your posts with great interest, and your opinion seems every day more reliable, because you correctly predicted all of this crisis.The similarities with what is currently happening in my country (Italy) are startling. And I’m sure you know them well. Alitalia, our “flagship” airline, being split into two corporations: the GOOD ONE will inherit all assets (the few good airplanes and the 30,000 employees’ skills, minus some “workforce reduction”) and will be merged to its only national competitor, Airone, with financing from some of the largest banks; whilst the BAD ONE will acquire all debts, which will be paid by the State (aka our taxpayer money).In essence, our recently elected right-wing government, which campaigned heavily against a deal with AirFrance-KLM, is now socializing losses and privatizing profits. It is salvaging a private company, Airone, which was also on the brink of bankruptcy. It is downsizing Alitalia to a tier 2 airline that will monopolize the Milano-Roma route, but have an anemic role in the international passengers and freight market. Customers will pay three times: for the bad company through taxes, for monopolistic pricing, for the lack of direct connections with foreign markets and tourist destinations.The size of the Alitalia crisis is nowhere near the one of Freddie, Fannie, Lehman, AIG…, but it clearly shows an inclination of right-wing laissez-fair freaks for shaping our economies the wrong way. At least the Chavez, Putin and Morales of this world have nationalized (or are about to) corporations dealing with natural resources, and, even when factoring-in heavy corruption in those countries, their citizens will eventually get a slice of those profits. We only get the debts and give the message to corporate hawks that all safety nets are there for them to do whatever they want.John Maynard Keynes, John Kenneth Galbraith and even Adam Smith (to anyone that has read The Wealth of Nations, it is crystal clear that the invisible hand was craftily tweaked by Friedmanites) would not be proud of us!Thank you for your great job.Max

A man of Genius!

“The paradox is that this this whole mess was created by a bunch of zealot fanatics who believed in the laissez faire ideology of free markets unbound by proper rules, regulation and supervision.”Regulation will only get us so far, the present tragedy is evidence of that.Regulation has its place but can never be the whole answer, it tends to be prescriptive, complex and inflexible.Not a good combination for a dynamic entity like a market.Consideration of the nature of this entity we call the market is necessary if we want to do better next time.One could argue that the market is a commons, that is a resource that we have access to.Treating the market as one might yield improvements in its function and utility.A market is subject to the same pitfalls as any other commons, it can be mismanaged and cease to be productive.However is possible to utilize a commons in a way that amounts to something more than a plundering free for all.The traditional remedies to abuse are management principles that take into account the sustainable yield limits of the common in question, we call it husbandry.Regulation takes its place among the other tools in the managers bag.Management of a commons also involves some limits on what an individual can take from the commons.The contemporary remedy for over exploited commons is privatisation and domestication where over exploitation becomes a liability for the owner.Who takes responsibility now when the market fails?If no one puts their hand up that means have neither effective communal management or responsible private owners.The commons is left to the ravages of nature including our own and no use to man or beast.Practices that might distort how the commons functions need attentive monitoring.Speculation and derivatives could be considered to be among those things that make the market commons dysfunctional

Professor Roubini:I particularly enjoyed your blog entry for today. Very interesting analysis of the bankruptcy alternative.You wrote:>It is likely that AIG’s shareholders (both preferred and common) may be substantially wiped out; but then why does the government take only a 80% equity share in AIG? Why not 100% as it should? So, if by miracle, AIG is not liquidated, such private shareholders instead of being fully wiped out get any upside benefit from this government action.I imagine this to be the product of a quest for plausible denial: by taking only 80% of shares in connection with a conservatorship, rather than 100% in a receivership, the government can disclaim any suggestion that it has socialized/nationalized anything. I can see no other rational explanation from a legal or business standpoint.As for the reasons to pursue this $85 billion loan for equity plan in lieu of allowing AIG to declare bankruptcy as any ordinary business corporation in its position might be obliged to do, it seems to me that there must have been concerns that a bankruptcy filing would have been worse from a public relations standpoint that a prop-up by the Fed and the Treasury; that is to say, perhaps there was a fear that a traditional bankruptcy filing by AIG would alone have precipitated a global panic and collapse, particularly with respect to the concentration of credit default swap paper in AIG. Again, everything the Fed and the Treasury do in response to each new adverse financial event seems to be as much about managing worldwide public perception — however misguided the public relations “solutions” they concoct may be — as anything else. I agree with you that it would have made more sense from a legal and business standpoint for the Fed to have loaned money to AIG only AFTER a Chapter 11 filing had been initiated.SWK

The most stunning thing I have ever read in the Wall Street Journal appeared in the lead to a first-page article yesterday:”More than 200 years after it was born at the base of a buttonwood tree, Wall Street as we have known it is ceasing to exist.”Now, you don’t see something like THAT every day in the WSJ!SWK

“The Markets They Are A-Changin’”(to the melody by Bob Dylan)Come gather round ‘bankers’Wherever you roamAnd admit that the watersAround you have grownAnd accept it that soonYou’ll be told to go homeIf your job to youIs worth savin’Then you better start swimmin’Or you’ll sink like the DOWFor the markets they are a-changin’.Come hedgefunds and bear tradersWho prophesize and sell shortAnd keep your eyes wideThe chance won’t come againAnd don’t speak too soonFor the markets still in spinAnd there’s no tellin’ whoThat it’s namin’For the markets they are a-changin’.Come senators, congressmenPlease heed the callDon’t stand in the doorwayDon’t block up the hallFor he that gets hurtWill be he who has stalledThere’s financial meltdown outsideAnd it is ragin’It’ll soon shake your windowsAnd rattle your wallsFor the markets they are a-changin’.Come Central BankersThroughout the landAnd don’t criticizeWhat you can’t understandThose derivative booksAre beyond your commandThe old road isRapidly agin’Please get out Bernanke and PaulsenIf you must bail them out outFor the markets they are a-changin’.

Please get a good night’s sleep -you’re one of the few honest observers brave enough to speak outdon’t stress the mothers of all bailouts -you can do anything so long as you have your healthso take a “staycation”

If the loan is senior to other debf (not the ‘if’) this is no bailout of anybody. AIG sure has $85bn of good assets amon their $1tn so this is could be a bridge loan. The only who are bailed out are short term creditors. All other creditors could be behind the government in a BK liquidation. This is completely different from the Mac & Mae preferred stocks. Remember the ‘if’.Hell! I should not understand this things, I’m a physicist!

that is good to know. Who knows how bad the situation gets, one day there may be no food left, only billions upon billions of worthless dollar bills from the government printing presses.

Sec tightens short sale rules

The professor is a one man Reform Party. In the age of the Internet, his clarity could spark clear thinking in the land of Obfuscation. Hiscontribution to Democracy is the land of “Feaux Television Democracy” is priceless. He drawssustinence from his honesty. He is not “stressingthe mother of all bailouts”. He is warning us tobecome active participants in the democratic process, or we will lose our livelihoods and freedom. More important! Our children’s future is in jeopardy. He is in a good spiritual place and there is no stress there!

What’s up with gold? Up $15 in a few minutes and nothing happening with the dollar or oil!?!

Alessandro, yes but the professor is no doubt right that it won’t stop the run. So, what’s the point?I was about to ask him to take my post down as it doesn’t add anything to his already thorough analysis.

First, I flipped on Yahoo News and the first line item I read was … “Fed bails out troubled AIG with $85 billion of taxpayer money”.My reaction – you’ve got to be kidding.Second, the situation in the markets right now reminds me a lot of the time back in 1987 before the big October crash. At that time, during Sep and Oct there were some big swings in volatility in the Dow. The swings came about because investors were very nervous about a possible collapse, then every so often the market would decide that “everything is alright” and bounce up again. We’re seeing that phenomenon again now. Back in 1987 one of the big drivers of the crash was “portfolio insurance”. Brokers had implemented a scheme whereby stock portfolio’s were supposedly insured in value through hedging transactions in the futures markets. Of course, the whole scheme only works if losses can be kept modest and predictable in nature. The market tore apart initially in the Chicago futures markets when the scheme began to break down. This time in 2008 the issue is not stock insurance … it’s bond insurance. The market is now very nervous about a possible collapse in the CDS market. Different asset – but the same underlying issue. The insurance on bond values just can’t be paid up when losses become large and unpredictable in the system.Moral of the story. Watch out.PeteCA

ptm: “What’s up with gold? Up $15 in a few minutes and nothing happening with the dollar or oil!?! “And by the way … gold is diverging from oil and the dollar. No need to explain why. Uncle Sam really is going to print money now.PeteCA

@ PeteCAThis is one of the best analogies I’ve read yet to put the current crisis in context. You are right that the reliance on derivatives to hedge equity risk in 1987 is much the same as the reliance on CDS to hedge fixed income risk today. The 1987 market crash spiralled downward as the feedback loop between New York and Chicago forced both markets to trade down in tandem. Similarly, a default in the CDS markets would lead to a massive sell off (or re-valuation) in fixed income securities markets – and mass insolvency in the financial sector.Thanks for explicitly linking the two eras so cogently.

Well, that explains the spike in gold.

Slowly but surely the Fed is consuming our financial system, like something out of The Blob.

Via FT Alphaville: The Fed’s Run Out of Money

Seriously. It’s broke. Here’s the statement from the US Treasury:

The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury’s current borrowing program, which will provide cash for use in the Federal Reserve initiatives.Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.’’

Related link:Treasury to provide cash to Fed market liquidity operations – MarketWatch

One more hint that Benny and Hanky are resisting the hyper-inflation siren. Let’s hope this plays out better than their ‘no more public bailout’ two-days mantra.

Are we talking another funeral this week? did I misunderstand?

Yeah…..that’s right this is all Barney Frank’s fault. It’s because he’s not a Christian and he’s gay!!! At least that’s what I heard yesterday on Right-Wing Radio……Hey Guest – come here. Just a little closer……that’s better…YOU ARE A MORON!!!!!! HOW DO YOU FIND YOUR WAY HOME IN THE DARK?!?!?!DO US ALL A BIG FAVOR AND DONT’T REPRODUCE YOU DUMB-ASS!!!!!!!There. I have done my good deed for the day…

Get your black suit and tie dry cleaned

This is it – mark this day as the beginning of money printing – hyperinflation looks like the ultimate course of action – the Treasury begins printing of money to help the Fed balance sheet which is now almost dried up due to the swapping of treasuries for toxic debt…:http://www.bloomberg.com/apps/news?pid=20601087&sid=aQ58hpS0fRH8&refer=homeGOLD UP OVER $50 PER OUNCE AND CLIMBING

throw out ur USDbuy swiss currency, Aussie and NZ dollar, physical gold and silver

if oil goes lower – likely to below 90 – gold will likely go lower in short-term but for the long-term it is extremely bullish

… Joshua, fortunately my relatives can’t be found in the one million killed and “n” million refugees of Irak … how do you spell h o l o c a u s t when the US is the author ?

Hey LB, My guess… same as yours. The FED will expand credit to the credit siezures that are swirling. (I’m shocked I haven’t seen a Crammer link yet, with him yelling to open the window)If the buck breaks for real… we’d be in an imediate death spiral! This break appears to be based on “hording”, so the Fed can ease the tension hear (of course at the expense of the USD value). My guess is they’ll be more support this time though? We’ll see.p.s. I liked that wife2k link. very cute.Miss America

This reminds me of Nixon’s last few months before resignation. One amazing event followed by a bigger amazing event followed by an even bigger amazing event. All of the events were unbelievable. I frankly believe that in this time of financial crisis it would be foolhardy to hold a national election. There is too much systemic risk and it is better for the banking cartel and the Treasury to finance a standing army to ensure domestic and economic tranquility. Of course, the measures would be temporary.

Is that a tip to go long Blackwater futures?I’m already on record saying that I expect bombs, assassinations and small wars all over the world to spur a flight to dollars and US markets. The bomb which killed 4 security guards at the US embassy in Yemen this morning fits all too well to the pattern already emerging over recent weeks.

By Chuck Jaffe, MarketWatchLast update: 9:40 p.m. EDT Sept. 16, 2008BOSTON (MarketWatch) As if the financial news wasn’t bad enough with the big-name, old-line brokerage and financial services business on the rocks, investors now have one more scary concern to deal with.After the market closed Tuesday, a money-market mutual fund called Reserve Primary did the unthinkable and “broke the buck.” Investors expecting a constant share price and consistent yield finished the day wondering why their shares were worth just 97 cents, and whether the loss could get worse.

I wish I could take credit for this 1 liner…”The bridge to nowhere, just ended up at AIG”MA

Prof. Roubini is critical of both Republicans and Democrats. However the blame lays with the current administration. Someone with conservative leanings (who may or may not be let politics color their vision) might say that it’s unfair to Reagan to blame the current meltdown on the Reagan administration, and that the current administration takes the heat since the generalized subprime crisis happened on Bush’s watch.

“Maybe the target of this game is, that President Bush is preparing to declare an ‘Economic Emergency’ during the week of October 5th and elections are history, forever.”so Bush will be the Chairman of USSRA.

So welcome to little Mexico! (Or is it big Mexico?)In an interview back in 1990, the Peruvian novelist Mario Vargas Llosa called Mexico the “perfect dictatorship.” It looked like a democracy, headed by a president who could not be re-elected, and was equipped with all the institutional bells and whistles usually found in democracies. But it was in fact not a democracy, but instead an oligarchy ran by a small, powerful elite.So what are the trademarks of a “perfect dictatorship”? They are numerous, but the four main features are:► There is the appearance of political competition, but in reality all political parties are financed by the same oligarchy. In the case of Mexico it was so blatant that at times the oposition parties received their funding directly from the dominant party (the PRI).► The media is owned by or bought off by the oligarchy. In Mexico’s case, instead of censoring the press, the oligarchy kept newspapers afloat- and loyal- with cheap newsprint, floods of government advertising, and generous gifts to journalists.► Government operations, especially those dealing with the economy, are totally opaque. Open meetings are not required, there are few open records laws and those that exist are not enforced.► There is no accountability. Nobody ever goes to prison. Nobody ever loses their ill-gotten gains. As the Mexican writer Carlos Fuentes puts it: “Yet the deeper reason for the crisis has simply to do with democracy in Mexico. The secrecy surrounding our economic realities is related to the absence of something well know in Anglo-Saxon law for which ther is not even a proper term in Spanish: accountability, checks and balances.”In other words, dectatorship is acheived through collaboration, and not coercion.And what are the fruits of the “perfect dictatorship?”► There is one economic crisis after another. Government becomes just one big soap opera.► When crisis strikes, there are always “emergency” measures, always ample talk of “reforms”.► Despite all the flowery rhetoric, nothing ever changes. In each crisis the net effect of the “emergency measures” is the decimation of the middle class and a reconsolidation of the monopolies and stanglehold of the economy held by the oligarchy.So welcome to little Mexico! The irony is that we thought it was the millions of undocumented immigrants from Mexico who posed a threat to the American way of life. But low and behold it wasn’t them at all. They were in fact fleeing the very system that America’s ruling elite is doing everything within its power to impose upon the United States.

Amen!

I believe I have touched upon a nerve or two. The absence of outrage makes the two epochs much different. Then (Nixon) people took to the streets. Now (Bush) people are content (with the exception of a simmering few). The deadening of disbelief in the general population is astounding. At least then, we had corageous people in Congress that took a stand and put country before the Imperial Presidency. Those were the good old days – at least for me.LB – I am aligned with your view of what could happen even if not as eloquent in delivery of the message.Morgan – Troops in the streets (remember Kent State?)is not a far-fetched scenario.

Oh, thank goodness. When the boogey man Bush leaves office all will be well…we littl’ folk just need to hold on to January. My savings will earn again, me wages will rise! I can stop bailin’ and money monopoly will be no more. Paulson and Bernanke and all those kind international bankers will hold me littl’ hand. Oh, Guest. I will sleep tonight. Thank you, thank you, from the bottom of me littl’ heart, good times is returnin’.

Banks that reported that they are fully hedged on their various exposures to US subprime, problem assets, and corporate defaults all had bought protection using CDS from companies like AIG, which itself is estimated to have sold some $500 billion in credit protection overall.

So what are you saying, that U.S. taxpayers should become the insurer of last resort and stand behind all that protection?

I wasn’t being facetious: my collaborator, the pseudonymous Christian Marx, and I believe the outcome will be troops in the street. Marx has been investing in gold and predicts a collapse of the dollar. We’re wondering now whether the outcome will be a hyperinflationary depression, or a deflationary depression…there are arguments either way.

12:18 p.m.Stock decline could force Morgan to pursue merger: report

LOLOL Banking index is in freefall, now down 9%! OUCH!

To listen to the presidential candidates talk about more regulation is pathetic, they are both too late!!!I want them to explain to me how they both plan on tax cuts, with all these bailouts! Do they think we are morons? They are so full of election rhetoric! There is no possible way that our taxes will not increase with all this nationalizing of debt. If it wasn’t so serious it would almost be comical to watch the leading candidates try to muddle their way through the mire, while assuring all of us that things are going to be better with them on the throne!maybe we should write you in Nouriel????

@anonymousI respectfully disagree with every single solitary word. These “greed dragons” are in the process of crashing the markets and causing much pain. They will take their lootlike vikings and leave the taxpayer with debt and no health insurance and social benefits. We will be in so much debt that social benefits may be curtailed severely.”tax payers will be thankful.”????????Please analyze the extent of asset inflation that has to be deleveraged. This is serious!

Diktator is the right word.

Except for one little nagging detail: usually, when a white knight takes over a company, it shares in the profits if it can turn a distressed venture around. Wouldn’t it be wonderful if, under the taxpayer’s stewardship, AIG suddenly makes a tremendous profit, and the taxpayers, being preferred shareholders, suddenly find themselves eligible to retire under social security at age 30 for the next million years, on account of the astronomical payoff of their investment. Also, the terms of their mortgages should be lowered. Anyone who argues that the masses should be happy just to keep their jobs has an interest in seeing that they continue to finance the outrageous debts they face without relief. That’s too bad, because the economy will not recover until the consumer at last faces relief from its debt. It cannot only be the upper classes that receive relief: if it’s not enough to tax only the wealthy, because they don’t generate enough tax revenue, then it’s not enough to rescue the wealthy.Rather than have the masses keep their lousy jobs, they should resolve not to work for anyone who earns more than an order of magnitude more money than they do. Let the upper classes clean their own toilets.

here come da rally hogs!!!!

Sono d’accordo. Meglio parlare in inglese così tutti potranno condividere le tue idee.Grazie.SWK

Don’t worry, it has never happened in the history of the U.S.

BE WORRIED IT WILL HAPPEN FOR THE FIRST TIME IN THE HISTORY OF UNITED STATES OF AMERICA.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDXSrZc6VWYw&refer=homeLawyers aren’t a very bright lot, legislators less so…so in the biggest financial crisis of our Republic, they dissemble, put their hands in their pockets, and make pretty.

Why, now that the gaurantee on Phony and Fraudie is “explicit” rather than “implicit”, aren’t banks now being allowed to risk-weight these bonds at 0 rather than 20? Think of how much risk-based capital this could free up in the banking industry! Nouriel, have you heard form anyone on this matter?

“They” got the dow back above 10,800. Lets see how agressive the “sell the rally” mentality gets today…

Priceless — in a nutshell. Our only hope is in the American People. They are always slow to react, but when they do, heads roll. And they are starting to stir…because of hard times and courageous men, such as Nouriel Roubini. Thank you for this lucid comparison.

Medic,How is the safety of even money market funds now in question?

“SEC issues rules against abusive short sales”http://biz.yahoo.com/rb/080917/shortselling_sec.htmlNO RULES FOR ABUSIVE LONGS?

PANIC!1:21 p.m.Gold ETF gains 8% on record trading volume

Reality is stupid, sir. Because most of the neocons are really of jewish origin.Of course, I don’t dismiss the component of re-bo(MB)rn christians, aka fanta-christians.

Gold up $68!!!

Looks like double bottom tim ein the dow!!

Hmm….Treasury just gave Bennie-boy another few billion to toss around.http://www.ft.com/cms/s/0/271257f2-83f1-11dd-bf00-000077b07658.htmlWonderful.We have Bush and Paulson practically reciting the speeches of Herbert Hoover with the “economy is fundamentally sound” nonsense. (My one degree culminates in a specialization in the social, political and economic history of the ’30s.)We have Berneke reaching back and using a statute pass in the July 1932 to nationalize or whatever AIG. A statue that was passed by a Rebpulican COngress at the behest of a Republican President who were all panicked by the financial collapse – and which did not work then.Odd how all the ‘free marketers’ screamed that the Great Depression regulation was passe and the first thing they do when in trouble is latch onto statutes passed to deal with the Great Depression in order to try to save themselves….

folks,3 months T-bills yield less than 0.025% annualized. For what I understand with spells panic.

PPT really working hard today to hold this double bottom…watch the S&P futures, you can see ‘em in there!

Dow roaring back now…

Thanks Dr. Roubini for your heroic work exposing this mess.But a question: I have trouble understanding how laissez-faire can be blamed for this — hasn’t it always been interventionist crony capitalism from the start?Where’s the laissez-faire when the Fed enabled the credit bubbles with absurdly low rates, and actively promoted destruction of underwriting standards e.g. wrt mortgages? In the end, isn’t the crackup due to 1) Fed driven credit expansion, and 2) federal encouragement of irresponsible behavior (along with implicit promises of support in the event of trouble? Not to excuse or deny the role of the financial “geniuses” that cooked up the toxic investment stew, but wasn’t there enormous amounts of aiding-and-abetting from the gov’t?It just seems to me that despite rhetoric, Bush and the Republicans have always been about corrupt crony capitalism, not true laissez faire. In this light, the bailouts socializations don’t seem to me to be an ironic reversal, but a predictable and logical step in this rigged game.

2:13 p.m. David Seiders of NAHB, Housing recovery still a year away

THE SHEOPLE ARE STARTING TO GET IT”Part of us assumes that somehow everything will work out, because it always has.But then there’s that nagging realization — we can feel it in the pits of our stomachs — that we might, just might, have to relive a version of the Great Depression.Things are really that serious.”http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20080917/COLUMNIST/809170340/2273/NEWS&template=printart

Productivity?!Come On, that’s only for the little people, you know the one’s who are too small to save, but not so small as to pay for the the choosen few who are too big to fail.

http://www.bloomberg.com/apps/news?pid=20601212&sid=a5NeeeEiuycQ&refer=homeSavings Bonds Face Ill Wind From Treasury“The government slashed the amount of money you’re allowed to invest in savings bonds. Formerly, you could put as much as $30,000 a year into paper Series I bonds and another $30,000 into the electronic version — $60,000 in all. In January, the Treasury dropped the maximum to $5,000 for each type of purchase.”This really bothers me. It’s almost as if the Treasury had deliberately taken away any and all ways for the American consumer to save responsibly and conservatively before the big bust this week. It’s like they saw it coming, and didn’t want to give recourse to anyone to gain even nominal growth.I keep hearing pablum from Bloomberg commentators about how the U.S. is still the most “stable” place to pack your investments . . . how could foreign investors really believe America is the place to park their money when not only the largest U.S. brokers, but even the government itself have done all they could to deliberately strip the average working person’s ability to safely save and invest? I would rather invest in Sweden or Switzerland or any of the European countries than this joke of a “financial haven.”

Wee problem. These “giants” (or anyother large company) haven’t exactly been generous with their employees. Wages and incomes have been flat or falling for years when adjusted for inflation. At this point the wage slaves have nothing more to left to pay taxes to help those unemployed or to rescue fools like the CEO of AIG and all the rest.Remeber Wall St Rule Number One: Cheer when a corporation cuts staff as it is lowering overhead and increasing profit.

Sept. 17 (Bloomberg) — Former U.S. Treasury Secretary John Snow said credit markets are almost “frozen” and called the government takeover of American International Group Inc. a “huge” failure of risk management and regulation.Snow, chairman of private-equity firm Cerberus Capital Management LP, said today in a telephone interview that capital markets are on the verge of seizing up.“Our debt markets are close to frozen” he said. “Unless we get this fixed pretty soon, we’re in for a big, big, deep slowdown.”

Dow on fire! up 150 points in seconds. Double bottom in place a nd a green close on the horizon? Never doubt the power of Hank…

Dow only down 190 now! WOW! USSRA! USSRA! USSRA!

AnnS,Don’t know if you’ve read Frederick Lewis Allen’s Since Yesterday: The 1930′s in America, but it’s certainly worth the read. It treats in detail of the things you speak, not only of their efficacy but of the moral and political implications as well.

If your savings can’t even keep pace with inflation, much less grow, then you have to work more and longer to make up for the losses.And if you work more and longer, you pay them more taxes, so they can enjoy more of your surplus and continue to make decisions thatbenefit themselves at your cost.Actually, it’s a pretty good deal.For them.

“up 150 points in seconds. “Sometimes the steam coming off the steaming pile is so thick it appears to be a rising solid mass.

More proof the idiots are running the asylum:Audit finds Bureau of Alcohol, Tobacco, Firearms and Explosives lost 76 weapons and 418 laptops over five years

I don’t know enough myself about the area of finance and economics to form a strong opinion one way or the other as to whether the bailout should have been extended. The people I respect, like Roubini, seem to be split.What I do know is that all these dire warnings about the economy come on the heels of other dire warnings, like those of “mushroom clouds.” And they come from the same source, from the same administration that seems to have no compunction whatsoever yelling “the sky is falling” if it fits its political objectives.So I have zero faith in this administration, in its judgment or in its honesty.And while I know that’s not the best basis for good decision making, it is nevertheless the only basis I have.So I’m throwing in my lot with Roubini.

Anyone else get the feeling that this is starting to unravel on a global scale? Just me? DIdn’t think so.

its global and its hard to know the extent – we are witneessing the deleveraging of 10-1, 30-1, and 100-1 derivatives on a massive domino-cascaded global scale…

The gold shorts are getting a golden shower!!!!

Don’t they usually leave work this time of day?

You wouldn’t know it by looking at US stocks today…Dow losses now cut more than in half!

Indeed you have. Thanks from me.

reverse sublimation?

I think what you/we are looking for/need is that which is not being said, explained, defined or clarified by those (very few) who are making these decisions –> just what the consequences would be, specifically, of not intervening in all/any of these failures. How can we honestly say that any of this is justified based on the supposition that is just might be worse otherwise.The one size fits all explanation that is constantly being repeated over every media outlet concerns systemic risk or risk of systemic collapse due to size or interconnectedness of the failing firm.Well, that is nowhere near sufficient yet it has become an apathetic mantra that everyone bends over and takes with pleasure.Call it what you will – crisis of leadership, incompetency, willful deceit/manipulation – but clearly it is reactionary, crisis management of the most flawed variety.If Prof/Dr. Roubini’s suggestions had ever made it to the table of the meeting room with those in charge of this mess, what do you imagine that scene to look like? On the other hand, how could these credentialed, pedigreed elite players overlook the common sense approaches that have been suggested for quite some time now?Be healthy, be well…

In Belgium, The Netherlands and France all finance ministers, prime ministers and financial regulators are claiming their banks and banking systems are sound and nobody should panic.Makes me feel rather nervous…

“So soon enough the transformation the USA into the USSRA (United Socialist State Republic of America) will be complete: we have defeated the USSRR to create a communist economy in the most advanced free market economy in the world. And calling it socialism (even socialism for the rich, the well connected and Wall Street) is giving a bad name even to a failed experiment like socialism; this is more akin to the creation of a corporatist state (like the Italian fascism or the Germany Third Reich) where private sector interest are protected (gains privatized and losses socialized) where the government is taken over by corrupt and reckless private interests.”Perhaps recent events also indicate that capitalism as such is “a failed experiment” , albeit of greater length and intensity than socialism? Roubini’s comment seems somewhat unbalanced and unempirical.Darkie

what is stopping these people from taking our savings and retirement funds and making the same kind of deals that have created this mess. Who’s is stopping them from taking this loans and doing it with them ?

Current lead article at ft.com:”The panic in world credit markets reached historic intensity on Wednesday prompting a flight to safety of the kind not seen since the second world war.Barometers of financial stress hit record peaks across the world. Yields on short-term US Treasuries hit their lowest level since the London Blitz.Andrew Brenner, co-head of structured products and emerging markets at MF Global, said: “It feels like no one wants to take anyone’s credit . . . it feels like we are on a precipice.”http://www.ft.com/cms/s/0/8058d308-84d3-11dd-b148-0000779fd18c.html?nclick_check=1

Here’s a link to a very insigtful interview:http://www.democracynow.org/2008/9/17/us_seizes_control_of_aig_withThe response of the Bush administration has been identical to that of the Hoover administration, and the outcome will, as the article linked asserts, likely be the same.

…no natural adjustment could be reached unless the burdens of debt could also be naturally reduced through bankruptcies. And in America, as in other parts of the world, the economic system had now become so complex and interdependent that the possible consequences of widespread bankruptcy to the banks, the insurance companies, the great holding-company systems, and the multitudes of people dependent upon them—had become too appalling to contemplate. The theoretically necessary adjustment became a practically unbearable adjustment. Therefore Hoover was driven to the point of intervening to protect the debt structure—first by easing temporarily the pressure of international debts without canceling them, and second by buttressing the banks and big corporations with Federal funds (via the Reconstruction Finance Corporation).Thus a theoretically flexible economic structure became rigid at a vital point. The debt burden remained almost undiminished. Bowing under the weight of debt—and other rigid costs—business thereupon slowed still further. As it slowed, it discharged workers or put them on reduced hours, thereby reducing purchasing power and intensifying the crisis.It is almost useless to ask whether Hoover was right or wrong. Probably the method he was driven by circumstances to adopt would have brought recovery very slowly, if at all, unless devaluation of the currency had given a fillip to the recovery—and devaluation to Hoover was unthinkable. It is also almost useless to ask whether Hoover was acting with a tory heartlessness in permitting financial executives to come to Washington for a corporate dole when men and women on the edge of starvation were denied a personal dole. What is certain is that at a time of such widespread suffering no democratic government could seem to be aiding the financiers and seem to be simultaneously disregarding the plight of its humbler citizens without losing the confidence of the public. For the days had passed when men who lost their jobs could take their working tools elsewhere and contrive an independent living, or cultivate a garden patch and thus keep body and soul together, or got West and begin again on the frontier. When they lost their jobs they were helpless. Desperately they turned for aid to the only agency responsible to them for righting the wrongs done them by a blindly operating economic society: they turned to the government. How could they endorse a government which gave them—for all they could see—not bread, but a stone?The capitalist system had become so altered that it could not function in its accustomed ways, and the consequences of its failure to function had become too cruel to be borne by free men. Events were marching, and Herbert Hoover was to be among their victims, along with the traditional economic theories of which he was the obstinate and tragic spokesman.–Frederick Lewis Allen, Since Yesterday: The 1930s in America

IMPOTENTWe have finally arrived at that moment when Fed action no longer matters to the market. It took many months, but we have arrived.

Country first! Country first! USA USA!(I just heard McCain appeal to “patriotism” as the solution to fixing the mess.)

This is simiar to the Vaterland,Blut und Boden shit of Adolf.You are on the way.

Having followed the slowmotion (well recently not quite so slowmotion) financial meltdown over the last 12 month on various blogs, today for the first time I find an innuendo of “Internationale Finanzjudentum” on several blogs. On one side this is a clear sign of desperation. People are looking for a scapegoat and up they come with the usual suspect. Prof. Roubine might as well have included this phenomen into his 12 steps toward financial meltdown.On the other side I think from now on one might consider people ridng this detour on this forum as trolls. Don^t let us be distracted from our debate by them. Let us ignore them. But let us be on the alert. History rhymes.BMH

$$$$$$$$$$$$$$$$$$$$$INSIDER$$$$$$$$$$$$$$$$$$$$This will require far more Patriotism than 9/11 did.A Financial war will erupt across the Globe.

I see the current scenario quite differently from most posters here. In my opinion, the last three days have been masterfully orchestrated by the Fed and the Treasury. Let’s review:a. Most IBs have big positions in asset-backed securities. The cash flows that underpin the value of those assets are based on the capacity of the middle class to make money and buy things. That capacity is being eroded by globalization and the lack of effective response by our society to that globalizationb. The government, and the “elite” understand this well. They realize that you can’t get people to work harder or lower their std of living willingly. That has to happen via coercionc. Everyone, and I do mean everyone, was in on the debt-bubble scam. Top to bottom. Europe, UK, China, everyone. And we all knew it wouldn’t last.d. Now we are at the end of the party. Assets are now being re-priced to accurate levels. The come-to-Jesus moment when the kimono fell away was Lehman’s BK.e. All the IBs are receptacles of the most egregiously mis-priced assets. These IBs, as the professor says, will fail. The only question is “in what manner do they fail?”.f. If they all fail at once, the market will seize, and panic will ensue. If the herd spooks, a lot of innocent people get destroyed.g. The Fed and Treasury’s responsibility at this time is to insure gradual and not sudden deflation, because it’s easier to rebuild an economy that’s been spanked .vs. one that’s been flattened. Gradualism.h. How can gradualism be accomplished?a. sequence the failures. Beat down the IBs until they’re ready to accept their fate, and then pair them off (match weaknesses to strengths) or run them into the chop-shop for dismemberment and piece-meal auction.b. identify a repository that is big enough to hold all the failing companies, and can hold them long enough to cancel out the cross-obligations (the counterparty relationships), and has the financial standing to handle the radiation until the markets return to normalcy. There is only one such repository on the planet, and that’s the US Govt., and more specifically a mechanism like the RTC. This is already a discussion item from the icon of the ’80s, Paul Volcker himself.The Fed and Treasury have done an excellent job so far of managing and sequencing the failures. It is obvious now to each IB what’s going to happen, and who is next in line for the chop-shop. The SEC’s rule to limit shorting is intended to keep the market from accelerating the rate of failures past the capacity of the gov’t to process the bodies. The “printing of money” is not (currently) creating money faster than it’s being destroyed; this is a non-issue at this time.The “expansion of the Fed’s balance sheet” is perfectly appropriate. The U.S. Treasury is funding the Fed chop-shop so it can take in the next body and keep it long enough to dismember it, and sell the parts to recover the money the U.S. gov’t puts up. The AIG chop-shop txn will probably end up being profitable to the U.S. taxpayer. Yes, I did say “profitable”.So let’s keep the freak-out, sky-is-falling talk to a minimum until it’s time for it. Remember, this is *your* economy that is at stake here.The fact that the short-term t-bill rate is going negative is perfectly normal; everyone wants to be in t-bills right now, because there’s lots of fear.Our main worry right now is that the Fed/Treasury gets overwhelmed by the pace of the failures, or that there’s a bank run. Dr. Roubini’s suggestion that the US Gov’t expand the FDIC funding is very appropos. We need to keep breathing deeply and calmly, and recognize that the most significant variable of all at this time is the composure and comprehension of the U.S. public.The stock market will go down more, maybe a lot more. This is going to be painful. But all of us were involved in the bubble-up, we’ll all be involved in the bubble-down.Once the fear subsides, and we are able to think more clearly, I encourage those of you that are capable of clear and deliberate thought to consider what we’re going to do as a society to build a stable and reliable economy that is *not* a bubble, but is instead based on a fundamental, reliable, and lasting competitive advantage.The normal stuff you’d build a business around.Dr. Roubini has told you in great clarity about what the path down to assets=reality looks like. What he’s not done, and maybe can’t do, is to describe what the path to rebuilding our standard of living is going to look like. That will be our job, and now is a good time to start working on it. Channel that fear into something useful.

That statement has terrible…no…horrific implications.

4:27 p.m.[WM] Washington Mutual puts itself up for auction: report

That’s not fear, it’s rage.

We all are not culpable for it.

4:46 p.m.[MS] Morgan Stanley mulling merger with Wachovia: report

Jay Dhru of S&P was on Bubblevision saying he wasn’t the analyst that put the AAA lipstick on the CDO pig. That AAA lipstick was toxic, started the whole mess and allowed Wall Street to sell the poisonous sausage crap. The rating agencies are the root cause of the problem and have a lot to answer for.Bubblevision asked with newly found character: If you put the lipstick on the pig previously, how can we be sure you’re right in removing lipstick from the AIG pig?Good questions!P1AQL.P.S. Gloomy, you might just get your wish. There was this post on Mish’s site once that talked about a poor disconsolate guy who lived in a hut near a gold mine and kept telling the prospectors there wasn’t any gold. The townspeople were busy selling picks and axes and chided the old man who depended on the townsfolk for food . Finally, it turned out to be true that the mine indeed had fool’s gold. The townsfolk lost their livelihood and the old man died of hunger. To that Mish replied, we’re damned either way. There, you have it.Enjoy the abyss.P1AQL.

I’d say the best thing to do for the economy is GUT the RETHUGLIKAN party the way Palin guts a moose – And start with the SOB Phil Graham, who slipped into legislation in the middle of the night back in’99 the seed that has lead to this f’n disaster – then outlaw the Rethuglikan party

A great post and it helps balance some of the over-eager — dare I say it? — ‘schadenfreude’ from those who revel just a bit too much in “we got what we deserve”. Personally, I think Roubini’s chapters in the WEF Financial Development Report 2008 is a great example of clear thinking for the road ahead (I wonder if Dr. Roubini, if he reads these posts, is really thinking: “Lord, save me from my followers!”(just kidding –Cheers,One-eyed Fiona#;>)

“today for the first time I find an innuendo of “Internationale Finanzjudentum” on several blogs.”First time ? “Internationale Finanzjudentum” ? Tell it to Mearsheimer and Walt.Who spoke about Finanzjudentum, sir ?I spoke about a political (not financial) cabal (neocons) who contributed to destroy US economy (did you ever heard of the three-trillion-dollar-war sir ?). And this cabal – it’s a matter of fact, sir – is for a great part made of persons of jewish origin. Sir, if you don’t like reality you should better read/watch/listen MSM.”Let us ignore them. But let us be on the alert. History rhymes.”You can guess that history rhymes, first time like tragedy, the second like a farce. Great depression was a REAL tragedy, what will like be this one?However my best compliments for your openmindedness.

Wrong! This is a terrible, condescending post. As Christian Marx has pointed out, Roubini has explained, briefly, that the consumer needs debt relief. This could be done equitably. It’s wrong for OuterBeltway to pretend that Roubini hasn’t considered the way out, and to suggest that he has a monopoly on clear thinking.Most taxpayers I know aren’t quants inventing impossible to value securities, they don’t sit on house and senate banking committees, and they don’t lobby the government for special privileges. [The term "quant" itself is a disparaging term used by MBAs to minimize PhDs, incidentally.]As I mentioned earlier: the conservative position that there aren’t enough rich people to tax for sufficient tax revenue has a flip side: there aren’t enough of them to bail out for there to be sufficient credit. If the wealthy get bailed out, and the middle class is still left in a credit crunch, then there still will not be enough credit for the system to function. The same arguments about the necessity to bail out the wealthy, on pain of the collapse of the financial system, apply with greater force to the lower socioeconomic classes regarding credit.

At this point in time, with hands that tremble: Why?It is my considered opinion that it is NOT the global economic, financial and monetary system that faces a systemic global collapse, but the Engine of that system – that has been intentionally systemically destroyed.In other words, that Constitutional Republic known as the United States of America, which grew nurtured by its most unique Constitution and Bill of Rights, that granted unqualified freedom to all humanity regardless of race creed or colour, has been progressively brought to a state of utter dysfunction and today, we witness the final stages of its demise.It is most ironic, that this great state which intentionally from its breaking out of its egg, was granted the unique opportunity to dismiss the imposition of the fractional reserve banking system that fettered the rest of the World, where this great evil of Central Banking, was removed from the course of American history by its Constitution; and indeed, the magnificence in the absence of this collar of servitude, allowed the United States of America to soar like the Eagle that was adopted as its symbol of greatness.This fractional reserve banking system having its origins in the ancient levant was banned at its earliest appearance but continued to make appearances in early Greece and later Greece, Southern Europe, Venician influences, through Napoleon era as Anglo-dutch logics, through the colonial states throughout the globe, with the singular exception, of the USA. Slowly and imperceptably, this system of manipulative stealth and deception by that political and the bureaucratic, finally arrived into the USA by the intense and focused influence of the global Banker Community at large, that community, which holds its keys.It is ironic then, that this ‘exception’ to the birth of the United States of America, the fractional reserve banking system, together with its Central Bankers, have finally succeeded in bringing this great Constitutional Republic to its death-moment knees; with full applause and eager anticipation for the incarceration and mediocrity, that will soon, be allowed, to be imposed, and played, like incest. Gone, will be the spirit, in death, we celebrate.Of course, the global economic, monetary and financial system will live on as it is the expressed innate energies of the peoples at large, but they shall be tempered and guided by the bureaucratic and political, those meek hands of fear, and cowardice; trembling under the stern, brutish and heavy hands of those that control the back-door; Central Banking system and its priests of ignorance and incompetence.In other words, the final essence of greatness is to be extruded in totality, from all men, and freedom lost (for now).Ho hum

Can somebody explain what kind of assets Morgan Stanley holds? How vulnerable are they? Is Morgan going to go bankrupt like Lehman? If so, why?

http://bigpicture.typepad.com/comments/2008/08/level-three-ass.html

One of the keys to great discussion is to filter out the emotional, and respond to the facts.Remember, I’m not posting to insult or degrade. Not the intention; the purpose of the post is to stimulate debate about “what’s next”, and to point out that the Gov’ts course is both rational and fairly effective (slow ramp down so far).Now, nowhere in my text do I address the topic of how to divvy up the diminishing pie. I advocate a mechanism to gradualize the conversation so that it can be done without wrecking the building the conversation is held within. The politics of that get addressed during the congressional hearings about the form and function of the next RTC.

Allianz, Flowers Said to Have Bid for AIG Before Fed TakeoverBy Zachary R. Mider and Erik HolmMore Photos/DetailsSept. 17 (Bloomberg) — Allianz SE, Europe’s largest insurer, made an offer to invest in American International Group Inc. that was rejected by the U.S. insurer two days before it accepted a government takeover, said two people with knowledge of the bid.Allianz teamed with J.C. Flowers & Co., the New York-based private equity firm run by J. Christopher Flowers, in an effort to help New York-based AIG stave off a cash crunch, according to the people who declined to be identified because the talks were private.Sabia Schwarzer, a spokeswoman for Munich-based Allianz, declined to comment. Flowers and Nicholas Ashooh, an AIG spokesman, didn’t return calls seeking comment.AIG, the biggest U.S. insurer by assets, accepted an $85 billion loan from the government yesterday in exchange for a 79.9 percent stake. Edward Liddy, the former Allstate chief executive officer, will replace Robert Willumstad as AIG’s CEO, said another person who is familiar with that situation. All three of the people spoke on condition of anonymity.The U.S. Federal Reserve said it offered the loan because of the risk that an AIG failure would threaten the stability of world financial markets.

This morons at CNN europe talked about Palins glasses.Poor America.This media is terrible.

On a lighter note – this classic Bird and Fortune sketch today is more true than ever http://www.youtube.com/watch?v=hXBcmqwTV9s

Amen!

Peter:Well said! and I agree. I’m reading about most of what you described in the book “the Creature from Jekyll Island”.The current incarnation of our central bank (federal Reserve) is the fourth “try” at central banking in the US. The first three were killed. WE NEED TO KILL THIS ONE!

“The Fed and Treasury have done an excellent job so far of managing and sequencing the failures.”1) Basically they are just throwing money at the failures.2) Are they sequencing the failures, or are they just reacting to them as they occur. Is the FED / government controlling the failures, or are the failures controlling the Fed / government.3) The Fed / government are largely responsible for this crisis and had plenty of time and opportunity to mitigate itvia regulation. Now they are usurping power as they try to do damage control. If they couldn’t fix it when it was in the beginning stages, who has confidence they can now during the critical stages?

Excuse Me, But… (from Hellasious)The stiff upper lip evident in the willingness to let Lehman fail lasted exactly 24 hours. Yesterday the Bush administration panicked (yet again) and agreed to “rescue” AIG by providing it with a $85 billion Fed loan. As a result, the US taxpayer is now the majority owner of the insurance company – further adding to his/her portfolio of problematic (to put it very mildly) FIRE industry assets.I won’t go into the legality or other bureaucratic issues surrounding such bailouts/nationalizations (yet another falling knife caught at enormous cost…), but I do have a very simple question:Excuse me, but who’s going to ultimately salvage the salvager?http://suddendebt.blogspot.com/

One-Eyed Fiona:What a lovely name. I haven’t read Dr. Roubini’s WEF 2008 report. I have read nearly all of his posts at this forum over the past year. My beef with the “financial sector fix” has two components:a. It’s about incremental fixes (more or less regulation, or transparency, etc.) instead of asking why the financial sector steered so much of our society’s resources into a black hole. Fin sector let down the entire economy – failed in its resource allocation functionb. The fixes don’t ask “Why was there no other more productive segment of our economy to channel resources into?”. Do you remember Warren Buffett saying “I’ve got all this cash, and I can’t find anything I want to invest in”. This is from Mr. Everyone Brings Their Deal to Me Buffett!Dr. Roubini doesn’t address either of those two basic issues, at least in what I’ve read. Remember, that is *not* a criticism of Dr. Roubini. He’s one person, who’s doing more than anyone else we know of to get the word out. I want to be one of the “followers” that tries to respond to Dr. Roubini’s lead with some creative thinking.

Good reposte. Here’s my go at it:1. LEH didn’t get any money. AIG is a secured loan, and much of the collateral is very, very good.2. Both. The gov’t can influence, but it can’t control. This is a multi-player event, with external uncertainties added in.3. Agree. But remember, I didn’t praise Congress, and I didn’t praise the public, which is Congress’ putative boss. I praised the Fed, and I praised the Treasury’s last-one-week play.They are not usurping power. The Fed’s charter gives them the right to make any investment they please in the interests of banking system stability. The Treasury has the authority to invest in the Fed. So far, they are executing within the law.So far as confidence is concerned, I have much more confidence in them today than I did a week or a month ago. If they continue to exercise the good judgment we’ve seen over the past week, I will be delighted. This is an extraordinarily difficult situation, and if I may, I’ll note that Alan Greenspan is not present, in any significant way, to address or advise. Furthermore, you’ll note that the PTB selected someone as Fed chairman that has significant academic background on the topic of managing Depression-era phenomena. This is not an accident.In something as sloppy and chaotic as a “government” and a “society”, there’s going to be a lot of warfare and vying for control, even within one administration. We are seeing a lifetime event – the passing of an era, and the people responsible for that transition are only human. I see them as humans in a very fluid, difficult situation.I say “good on them” so far.Your serve.

Speaking of MISH:Heading: Senate Majority Leader Reid: “No One Knows What to Do”Doesn’t this make you think that this is a “leadership” crisis?It’s time to “throw the bums out… ” elect leadership from the competent and those with some integrity, at least, and start again. And, get the fundamentals rights, as it was in the beginning (of the USA).Throw the FedRes out and turn the building into a bordello – it is anyway but this time legalize it and staff it with free-market entrepreneurs.The go to work on Congress, the Senate and the White House.Ho hum

I think HoHum Peter is on to the root cause, in essence- greed. Through usury- which is a subtle insidious form of slavery. The world is moved ever closer to the “New World” “New Age of enlightenment” Call me crazy if you like, but this is more than a monetary issue- it is a spiritual one. A battle being fought not only for the soul of a nation, but for the soul of each individual on the planet.The new world order for the new age of man, has a real agenda, with real players,very powerful ones who are working together to create what they believe is a Utopian society. In order to bring it about, the destruction of the current system needs to occur. To bring mankind to the point where they not only are ready to condemn it, but are also willing and ready to embrace a new system. One of so-called sharing, and tolerance. The world bank will be blamed for this crisis, and a new system will be born, and I will wager that the same world bankers will somehow be covertly involved. Do the research- you will be amazed at how far the rabbit hole goes. This systematic destruction has been going on since before WW1, in anticipation of a one world government and it’s leader. Yeah I know- you think I’m out on a limb, been reading to many conspiracy theories- maybe so. But I have followed the white rabbit for several years now, and I am more and more convinced that there is truth in it.The following quotes are from Share International archives July 1993″The Global Marshall Plan aims at a “World in Balance”. To achieve this we need a better design of globalization and the global economic processes – a worldwide Eco-Social Market Economy. This is a matter of an improved global structural framework, sustainable development, the eradication of poverty, environmental protection and equity, altogether resulting in a new global ‘economic miracle.’”"The communist system did not fail. It was never tried. We never saw communism in the so-called communist bloc. What we saw was a kind of state capitalism. What we are seeing now is a break-up of the totalitarian political system — which is not the same thing as communism — and the gradual transformation of capitalism. Maitreya says the symbol for the new economic situation, which will be neither capitalism nor communism, can be witnessed in the coming together of communist East Germany and capitalist West Germany. The reunification of Germany gives us the possibility for the creation of what he calls a social democracy or a democratic socialism — something which is neither classical capitalism nor communism. He says eventually this will be the norm in Europe and throughout the world.”"What we are going to witness is the creation, by Maitreya, of a world public opinion focused, galvanized, centred on sharing as a divine right. Maitreya says: “When you share, you recognize God in your brother.” He says the problems of mankind are real, but solvable. The solution lies within our grasp. He says: “Take your brother’s need as the measure for your action and solve the problems of the world. There is no other course.” He will galvanize and potentize world public opinion which, when so organized, no government on earth can withstand. It is that world public opinion which eventually will force all the governments in the world to accept the principle of sharing because it will be seen that we have no alternative. We either share or we die. It is as simple as that.”"We are also seeing the collapse of economic totalitarianism. The economic system, largely based on market forces, is approaching its death. There is a third totalitarianism yet to break up: religious totalitarianism. Religious totalitarianism is reaching the acme of its power. We see that in the rise of fundamentalist groups in all religions, even in the tolerant Buddhist and Hindu faiths. It is expressed in Islam very powerfully today and in Christianity too. It will be the last to disappear, but eventually totalitarianism in the churches will go. Then humanity will know freedom for the first time: political freedom, economic freedom and justice, and freedom of thought and belief.”The author Benjamin Creme- who may seem like an absolute crazy loon to most- claims to channel Maitreya- who he says is the next manifestation of the christ, who will appear after an economic crisis.Say what you will, but be aware of all the potential fallout from what is going on here- not just to your assets and bank accounts- but to your very soul- choose you this day whom you will serve.

What are the options at this point?1) Let the current financial system implode, andrebuild from scratch?2) Try to wind it down as orderly as possible andmaintain the system fundamentally the same, whichmay end up imploding anyways but cost 1) plus 2)3) OtherWhat are the costs associated with each?1) unknown2) ~1 trillion and counting3) unknownWhat are the probabilities of success?1) unknown2) unknown3) unknownWhat can we do?1)2)3)What entities were involved in creating this mess?Who profited from the mess?Who will have to pay for the mess?

it seems that the terms of the Fed loan is yet unclear. While Professor Nourini’s analysis is insightful, it is based on assumptions. Perhaps the Fed’s loan has provisions against short term creditors bailing out their financing… Its the Fed that is lending (and also managing) so why wouldnt the Fed state whatever loan conditions/terms they want, including a provision against AIG creditors leaving “scot free”?

Ken Rogoff, chief economist of the IMF gets it:”One of the most extraordinary features of the past month is the extent to which the dollar has remained immune to a once-in-a-lifetime financial crisis. If the US were an emerging market country, its exchange rate would be plummeting and interest rates on government debt would be soaring. Instead, the dollar has actually strengthened modestly, while interest rates on three- month US Treasury Bills have now reached 54-year lows. It is almost as if the more the US messes up, the more the world loves it.But can this extraordinary vote of confidence in the dollar last? Perhaps, but as investors step back and look at the deep wounds of America’s flagship financial sector, the public and private sector’s massive borrowing needs, and the looming uncertainty of the November presidential elections, it is hard to believe that the dollar will continue to stand its ground as the crisis continues to deepen and unfold.”http://www.ft.com/cms/s/0/dd9aa390-84d6-11dd-b148-0000779fd18c.html

YES, THE SHEOPLE ARE DEFINITELY GETTING THE MESSAGEIn the United States, the faltering economy and banking system have begun to dominate conversations at dinner tables, bars and online, not to mention seizing the campaign trail.One blogger, Michele Catalano of Long Island, posted this on Wednesday: “Dreamed about AIG and the stock market, woke up with the urge to stock up on canned goods and shotguns.”http://news.yahoo.com/s/ap/20080917/ap_on_bi_ge/financial_meltdown_94

These numbers are meaningless without context. If it were 418 out of 500, I’d be concerned. If it were 418 out of 12,000 and their IT department fixes them in house by swaping components and the technitions don’t understand the importance of tracking inventory, then maybe that’s not so bad.

I vote for 3) other. I want the system to do a “graceful implode”, and I want to be ready with ideas and consensus when the implosion is complete, so that the fools that screwed things up to start with can’t use their economic advantages to keep things the same.That’s the main reason I’m hoping to see the “what’s next?” debate get started without any additional delay. The implosion is accelerating, and I can’t really predict how long it’ll take. Remember, this isn’t 1932, and news, information, and money moves so dreadfully quickly. The “next reality” will not take 10 years to form like it did last time. It’ll be more like 2-3 years. Remember how the “world changed” after 9-11? That’s because we let fools frame the issues, and we had no political force in place to counteract their stupidity.

Great article! I have learned so much over the past few months regarding this credit crisis and now I know just enough to make me very scared.The one question I have is whether or not the government will begin printing out massive amounts of money in order to inflate our way out of this mess. Can anyone shed some light on this??? I keep reading that deflation will set in followed by massive hyperinflation.

Imagine there’s no countries…and no banks. Gold is money. It’s held by individuals in storehouses. At most, credit takes the form of contracts between individuals and the consequences of default are limited. A better system? Perhaps. If all individuals are self-sufficient, if all are farmers or craftsmen. The rub is this–under this arrangement the quickest way to accumulate wealth is simply — plunder. Stealing. Pre-modern systems of money and credit were as compatible with the Pharaohs and the Caesars as they were with the Republic.One day a bright person comes up with the idea of fractional reserve banking. It promises a concentration of capital, its employment in large enterprises that generate wealth; it expands the amount of money, the volume of trade. It becomes an idea whose time has come. Debt and subordination to debt become universal under this system, it’s true. Money becomes a focus of political power and credit crises become regular events, large in scope.Who stole the Republic? For every Andrew Jackson fighting against a central bank, there was an Alexander Hamilton. Jefferson had his John Adams. Before there was manipulation by the central bank, there was bogus credit and money panics on a smaller scale,by smaller banks. Before widespread slavery to debt, there was — outright bondage.Getting rid of the Fed is probably a good idea. Here’s a better one: get rid of money altogether. It corrupts

They are buying gold in Hong Kong. Gold is up almost $100 from this morning, now at $883.80 and climbing. Oil and the dollar are not moving. Amazing to see.

:/The Army Times is reporting the Army is dedicating a “BCT” Brigage Combat Team dedicated to Northcom’s mission for North American operations.excerpt;But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.—————————————————————–http://www.armytimes.com/news/2008/09/army_homeland_090708w/Brigade homeland tours start Oct. 13rd Infantry’s 1st BCT trains for a new dwell-time mission. Helping ‘people at home’ may become a permanent part of the active ArmyBy Gina Cavallaro – Staff writerPosted : Monday Sep 8, 2008 6:15:06 EDTThe 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.Now they’re training for the same mission — with a twist — at home.Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.“Right now, the response force requirement will be an enduring mission. How the [Defense Department] chooses to source that and whether or not they continue to assign them to NorthCom, that could change in the future,” said Army Col. Louis Vogler, chief of NorthCom future operations. “Now, the plan is to assign a force every year.”The command is at Peterson Air Force Base in Colorado Springs, Colo., but the soldiers with 1st BCT, who returned in April after 15 months in Iraq, will operate out of their home post at Fort Stewart, Ga., where they’ll be able to go to school, spend time with their families and train for their new homeland mission as well as the counterinsurgency mission in the war zones.Stop-loss will not be in effect, so soldiers will be able to leave the Army or move to new assignments during the mission, and the operational tempo will be variable.Don’t look for any extra time off, though. The at-home mission does not take the place of scheduled combat-zone deployments and will take place during the so-called dwell time a unit gets to reset and regenerate after a deployment.The 1st of the 3rd is still scheduled to deploy to either Iraq or Afghanistan in early 2010, which means the soldiers will have been home a minimum of 20 months by the time they ship out.In the meantime, they’ll learn new skills, use some of the ones they acquired in the war zone and more than likely will not be shot at while doing any of it.They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.

such kind of useless talk/comments need to be removed.People, if you don’t agree with the Prof. by all mean hit the keyboard and let us see your point of view also.

I found your comments suggesting this has all been tried before very interesting. As they say, however, past performance is no guarantee of future results.While I believe there is much we can learn from studying the Great Depression, I am not prepared to concede that there are not some substantial distinctions between the circumstances then present and those we find today, nor am I willing to grant that the means and methods being exploited by Mr. Bernanke and Mr. Paulson are so well tested that they can be described as anything other than “experimental.” It’s simply too easy to cultivate fallacies of faulty comparisons between the present and the past by reference to a few discrete similarities that distract from salient differences.Do you have a academic background in economic history, or do you keep up with this stuff for pleasure? I hope you’ll continue to post here regularly.SWK

want to weep more. Do a search on REX 84

>How can we honestly say that any of this is justified based on the supposition that is just might be worse otherwise.Well, you can’t really. It’s a manifestation of the classic existential absurdity of being responsible for the consequences of choices that must be made, but with imperfect knowledge as to what the precise consequences of those actions will be. If one acts and things go south, one faces blame for acting. If one does nothing and things go south, one is blamed for doing nothing. As a culture, Americans tend to prefer any action to inaction — their leaders are always expected to be seen to be doing something, anything to address a crisis — and that drives much of what we are witnessing now, I imagine.As Teddy Roosevelt said:”It is not the critic who counts, not the man who points out how the strong man stumbled… The credit belongs to the man who is in the arena, whose face is married by the dust and sweat and blood; who strives valiantly….. and spends himself in a worthy cause and.…. if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory or defeat.”Mr. Bernanke and Mr. Paulson, stumbling though they may be, deserve some credit for being the ones actually in the arena. I think it is fair game to criticize what they are doing and how they are doing it, but as I’ve said before, I’m thankful I am not the one who has to be making these monumental decisions that, one way or another, will impact not just the U.S. economy, but the global economy for years to come.SWK

Question: Many people here say that the US dollar may lose tremendous value (even become “worthless”). Please help me understand how this would affect the average American. Does it just inflate the prices of our non U.S. made goods and staples? And if we are connected in this global economy, wouldn’t the value of many other currencies also decline if American consumers can no longer afford to purchase their goods? I just don’t see how the dollar will become so worthless in America that it would no longer be accepted to even buy groceries! To me, a worthless dollar implies massive hyperinflation as it’s becoming worthless, but wouldn’t wages have to increase substantially to keep up with the eroding dollar? From what I see so far, people have much more fear of losing their jobs, not asking for wage increases. If a depression is to follow, the unemployed masses would riot if a loaf of bread cost $100.

FEMA concentration camps in americahttp://www.youtube.com/watch?v=6OG1GKPMdUAConcentration Camp In Texashttp://www.youtube.com/watch?v=TxYxTly-yo8&feature=relatedREX 84, FEMA BASE CAMPS, FEMA TRAINS, FEMA TRAILERS, FEMA OVENS, DETENTION BASEShttp://www.youtube.com/watch?v=GBeLtkiQUfs&feature=iv&annotation_id=event_286925

Anyone got GPS coordinates for Galt’s Gulch?

Hyperinflation has occurred many times before and in many places (http://en.wikipedia.org/wiki/Hyperinflation). And it’s happening now in Zimbabwe (http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe).See http://www.energybulletin.net/node/23259 for a personal tour of Russia’s economic collapse. Here are a few choice take-aways:Expect shortages of fuel, food, medicine, and countless consumer items, outages of electricity, gas, and water, breakdowns in transportation systems and other infrastructure, hyperinflation, widespread shutdowns and mass layoffs, along with a lot of despair, confusion, violence, and lawlessness. We definitely should not expect any grand rescue plans, innovative technology programs, or miracles of social cohesion.When faced with such developments, some people are quick to realize what it is they have to do to survive, and start doing these things, generally without anyone’s permission. A sort of economy emerges, completely informal, and often semi-criminal. It revolves around liquidating, and recycling, the remains of the old economy. It is based on direct access to resources, and the threat of force, rather than ownership or legal authority. People who have a problem with this way of doing things, quickly find themselves out of the game.Expect the transition to permanent unemployment to be quite abrupt for most people. Very little will be obtained for money which will be treated as tokens rather than as wealth and shared among friends. Many things, such as housing will be either free or almost free. Economic collapse tends to shut down both local production and imports, and so it is vitally important that anything you own wears out slowly, and that you can fix it yourself if it breaks. Old debts will never be repaid.Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their paper savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.

I believe this is the traditional mechanism many economists use to gauge the possibility of hyperinflation. Wages, and for reasons you stated, are under tremendous downward pressures and would not be able to follow price inflation.But we are not living in traditional times. There are so many conflicting forces set in motion currently that makes defining the outcome or the way to get to that outcome very difficult. Leverage and credit and (by consequence asset prices) are unwinding rapidly reinforcing a deflationary process. On the other hand, bailouts, losses and bankruptcies are weighting on currency flows and treasury issuance and purchase. Then there is international competition and hoarding and imported inflationary policies from countries such as China. Add to that the risk of a global recession especially a slowdown in critical dollar and US treasuries buyer countries and the possibility of a break up of the Bretton Woods II. One of the critical thing to put in mind is to know the time frame withing which each of these factors play out (a thing I am still undecided about)As I see it, I do not believe that we are about to see hyperinflation (a la Zimbabwe). However, one of the scenarios I envision is a big squeeze of consumers with effects similar to that of superinflation but with unnoticeable characteristics from traditional inflation metrics. As I explained sometime before, instead of prices going up 30% and your disposable income going up 10% and available credit up 10%, envision what would happen of prices go up 10%, your income stays the same and your credit lines are shut. You are much worse off in the second scenario even if the CPI is much lower.LET’S BURN SOME CDS!

Dear OuterBeltway :I have read with great interest and a sense of optimism your postings in many previous threads, and have even noticed/felt the absence of your postings recently, but this is the first time I am replying to you.As far as this particular forum goes, I must say, that you have really done a terrific job of raising the bar for all involved, especially during this very chaotic time. I believe that there are many people who are on your frequency and maybe even more forward in the process, in a very organic way.I think what is happening at this juncture is a rude awakening for many people who have lived/led a fairly privileged lifestyle/standard of living yet not realized it or perhaps taken it for granted. There are far greater numbers of our population who have not enjoyed this lifestyle (quite the opposite in fact) and they have already adapted/created a lifestyle that is in line with what many are postulating will be a lower living standard.While we all may have grand plans on how to move forward from here, what needs to evolve IMHO are the very basic behaviors that underlie this gigantic mess, systemic collapse, etc. I honestly do not know how severe things must get in order for many of us to abandon our ways and begin to move forward, but I do think there will be a direct correlation between the severity of these crises/ensuing fallout AND a general unwillingness to come to grips with the individual and group behaviors that got us here.The catastrophic and ongoing morass that is Katrina wasn’t enough, … I’ll just stop from alluding to any further examples as we all could build that long list and I think the point is made … but the the thicker the vale of denial and thus delay of the inevitable, the worse off it’s going to be. I have read all of the comments on this sub-thread AND I tend to think that MANDARIN has articulated a realistic viewpoint, yet I still see myself as a realist leaning towards optimist with large doses of healthy skepticism.Looking forward to viewing your plan if you are making it available.Cheers !

Let’s all acknowledge the prescient call about the the financial crisis by Professor Roubini. Also, can we agree to maintain an intellectual discussion as opposed to an emotional one? Anti-semitism is often and incorrectly associated with hostility towards Jews specifically. Semitic cultures are wide ranging and diverse and include Arabs among many other groups of people. What is important here is that I here only one voice in the media warning us about the probable depths of this crisis. That voice is Professor Roubini’s. I am not here to worship him per se, but to acknowledge him and thank him. Negligence and cronyism in Washington D.C. and on Wall Street is destroying our economy and we have to do something about it. Bailing out these corporations and FNM and FRE are not the right thing to do and will not solve the problem. It sends the wrong message, sets a terrible example, and illustrates our hypocrisy. How can we expect other countries to believe that free-markets and democracy are the best choice when we have become more socialist than they are?

I do agree that we have certainly tried to “shelter” the X, Y and Z generations, clearly not to their benefit nor ours. The herd mentality as you might imagine is difficult to combat. I mean really, do we all “need” an iPod? What is most difficult for me is all our leadership leading us all to the slaughter — better put your money into those 401ks, hurry up and “shelter” your income in that IRA, all of which went into the rathole of the stock market, with which I’ve been major-league uncomfortable for years, only to have the rug quite literally pulled out from under us all. An ownership society indeed–did I ever really “own” that money I socked into my Roth IRA? Sure doesn’t look like it–it’s lost at least 15% so far this year and it appears as though I am starting to lose my principal. And I still remember the crash of 2000 when one of my coworkers stated he lost fully half of his retirement plan and it took eight solid years to get it back up to where it was before the crash. He should consider himself lucky to have done even that. We were all told to “diversify” all the while seeing interest on simple savings accounts shrivel to near nothing. Consume, mighty consumer! Spend, spend, to keep the terrorists away!–says president Bush. And BTW, let’s put all your Social Security money into the hands of the Wall Street den of thieves. Arrrrgh! But thank you, outerbeltway, for your thoughts and good wishes. And one thing we should all try to remember: we the sheeple are, after all, the “government.” Aren’t we?

Thanks for hearing me, Afa. You’re one of my personal favorites of the People of this Blog. I’m in the legal field, by the way, and certain areas of the law are burgeoning–guess which ones? Think I might be safely employed (fingers crossed) given my litigation experience.

LETS BURN WASHINGTON MUTUAL

How right you are!I broach the next subject delicately. His accusers charge that he nearly single-handedly torpedoed the housing and financial market when he wrote the laws that took down the Depression-era barriers between investment and commercial banks. Was it a bad idea in retrospect?”The law has come under fire from the same people whose solution to every problem is always more and more government control of the economy,” he says. “Broadening the base of financial institutions had nothing to do with the subprime problem. There’s every evidence that the markets were made more stable by the diversification. J.P. Morgan could not have bought Bear Stearns and prevented a meltdown without Gramm-Leach-Bliley.” (laughter)http://online.wsj.com/article/SB121460589609712025.html

Nouriel says that in the current system, the stand-alone investment bank is unviable.This should not be surprising.Recall that the Glass-Steagall act forced the separation of these operations from commercial banks. The demise of Glass-Steagall allowed the reintegration of these operations, and indeed it is a better business model to be able to skim from retail customers to buffer an investment bank, and to have depositors to protect so that one is too-big-to-fail, than to have to stand alone. In very good times the stand-alone model is fine, but under stress the IB wants to shelter itself under a commercial bank.That is exactly what Glass-Steagall is meant to avoid, and it is why we have to be so careful now about the commercial banks. If Lehman fails, Main Street doesn’t really care. But if JPMorgan-Chase fails, watch out below. The combined model allows the extraction of protection from the government.We should re-institute Glass-Steagall. Also, ban non-insurance insurance like CDS. And don’t inflate the housing bubble by forcing banks to lend to those who are not credit worthy. Those are the proper lessons from this debacle.But instead it will be used as an excuse for further mucking up our system, I suppose, as LB predicts.

And you need to check with PeterJB, given that all the greed, incompetence, faith-based economics, leadership crisis … need to be sorted out firstly LET’S BURN SOME CDS!

Instead of selling the concepts of “More” and “Bigger” to people, why can’t they be sold on “Smaller” and “Better”? If Americans have demonstrated any particular talent as a people lately, it’s been consumption. Maybe it’s human nature, but maybe it’s because they’ve been “sold” on the value of non-essential CRAP. Let’s sell them something better. Maybe they’ll be willing to “Say YES to LESS” if it can be wrapped up in a righteous and patriotic wrapper? Alan Schumacher’s Small Is Beautiful?

Average Jane:I think you’ve provided an excellent summary of most of the scams that have been perpetrated on the U.S. citizen over the past century. Note that many of them didn’t emanate from Wall Street. Some came from the oil interests, some from the NeoCons, some from Defense industry, and of course all of them abetted by the Media Giants, for whom we shall all be forever grateful.It seems like the only thing they have in common is to convince us that we need something we don’t, and to get us to commit to buying it forevermore.One excellent defense mechanism we have is to find places where smart people congregate, and to exchange information. Wolves prey on the weak; we become stronger at places like this.Best of the evening to all.

Nouriel isn’t pessimistic enough! This crisis will be more severe than the great depression and last much longer.

Being “TREATED” to slower reduction of buying power’?The Middle Class was SOLD OUT by NAFTA, Globalization, inflation, government and corporate malfeasance and corruption.The dotcom crash could have long since played out AND the middle class would still be ahead. Instead of turning to credit to maintain a normal standard of living, the middle class could have benefited from their OWN increase in worker productivity instead of it being STOLEN by corporations in collusion with the government.The lesson has already been learned, but what kind of defeatest additude is “prepare ourselves so that it doesn’t occur so badly next time”? You are either going to be a victim or not.

Afa, I’ll let John Williams address this issue…JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS, A L E R T, September 17, 2008, Treasury and Fed Rev Up the Currency Printing Presses, Has a Run on the System Begun?, The Problem Remains Inflation, Not Deflation

… Recession and asset deflation are not at all inconsistent with price inflation, as was seen in the 1970s. There will be no price deflation without a sharp drop in the broad money supply (as in a year-to-year decline).Such a decline was not in the works, and current Fed and Treasury activity is promising even stronger money growth in the immediate future. Messrs Bernanke and Paulson tacitly have confirmed that they will create whatever money they have to create in order to prevent a systemic collapse.The various markets are about as volatile and dangerous as they can get. With extraordinary crosscurrents from the solvency crisis and various governmental and global central bank interventions in the markets and marketplace, volatility likely will continue, sometimes in directions that may seem irrational.

Guest:If I was wealthy, and could make an on-the-spot award of $1000 to the poster that made the most cogent, constructive, incisive comment of the day, you’d get it.I have to crash for tonight. Next time you seem me post, you challenge me with that one again. I’ll hammer it.

http://www.youtube.com/watch?v=7XrRyqses5U&feature=relatedPROTOCOLS ELDERS OF ZION

How can Roubini expect a recovery in 18 months if BWII collapses?

OutBeltWay:A compliment? Followed by inaction.It’s actually rather insulting.Are you only here for the entertainment value, polishing your debating skills.

@ Mark… I’ve recently been to Cuba for an international baseball tournament. (“Recently” while working 8-6 for the world’s largest custodian) I toured the country, and played their teams, and met their people.You can’t put a price on the spirit of these people! (The people love this country. I think their controlling parties would be very open to a mutually beneficial plan (even if on the global scope, this is small)With that said, aside from the US not wanting an enemy 90 miles away from our border… Cuba could become an international power station. The gulf winds, lined across that country by 2015 could power Florida. The solar exposure is abundant!When you want to halt this death spiral of bad economics… you don’t do it with a sweeping master plan. IT DOESN”T EXIST! This has gotten too complex.) You fix it with a lot of little plans… plans that are aimed at the future.Key words: “Mutually beneficial” Doing good for others will be a necessary moral code for the future.I’ve said my peace.Miss America

Fed Prepared to Take Bigger Role in Combating Financial CrisisSept. 18 (Bloomberg) — Federal Reserve officials are signaling they are prepared to take an even larger role in trying to contain the deepening financial crisis.A day after Fed officials seized control of American International Group Inc., the Treasury yesterday acted at the Fed’s request to fortify the central bank’s balance sheet with $100 billion in new cash. Fed officials can use the proceeds to pump money into financial institutions fearful of lending to each other, or to catch the next insolvent bank that’s unable to raise capital.

That was not the FINANCE I was referring to. Companies, entrepreneurs still need to have access to funding. They still need someone who knows how to assess their strengths, potentials and risks. Investors still want to make sure that their investments are being distributed to the most profitable businesses ….Not Some crappy speculative cds (in the name of financial innovation and engeneering) that we have to burn.

Holly SH!T, We are screwed.Run while you can.

Professor,Is it safe to say that we’ve progressed to the 4th inning now?

THE RUSSIANS ARE COMING

I hope they do not suffer from prostate .

http://www.torahohr.net/gogumagog/

http://video.google.com/videoplay?docid=-4855366667522101555&vt=lf&hl=en

http://video.google.com/videoplay?docid=526610792742881703&vt=lf&hl=en

Ain’t this a great spectacle? And all this for free? Lucky (or can I say prudent) us.

Yes,rule 1: keep the faithrule 2: any use of terms that may undermine rule one is considered capital sin

That is what I think as well.

hmmm. There was a faltering economy in Nazi Germany as well when Hitler came to power. Coincidence?

if DJIA do a move like thisi’ll have a heart attack

“Central Banks Offer Extra Funds to Calm Money”"The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a fresh coordinated bid to ease financial markets facing their worst crisis since the 1920s….”"Only two things are infinite, the universe and human stupidity, and I’m not sure about the former. ” Albert EinsteinAfter reading the above news about Central Banks’ action, you may replace “the human stupidity” part in Einstein’s quote with Central Bankers’ stupidity and see that it still perfectly works. It’s unbelievable to see what type of people running the whole system. I previously told that dollar will lose its reserve currency status in the medium run. I guess if liquidity injection goes in this manner, let alone the danger the dollar faces, metals will replace the paper money. Thus, we might end up going back to our origins and I contend you that I am not exaggerating the situation.This crisis may be incredible, unbelievable and inevitable. However, human actions may be credible, believable and evitable. But, some central bankers proved otherwise. It’s so sad that these people are not able to discern between liquidity and credit. The latter is not due to lack of money, it’s simply due to the lack of real production. Thus, the current crisis is not due to money, it’s due to the fact that a large amount of money went into a small group of people who simple have no reason to invest into real economy. That’s why, in order to save the system; (1) Governments need a fiscal policy to regulate the distribution of income to jump start the investment again, (2) Monetary authorities need to penalize those that caused this havoc when bailing out the financial system.

Alessandro, gloomy :have a look at this :http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htmToday, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets.can someone explain to me why is there a shortage in USD short-term funding?..banks hoarding cash or more sinister?? why must it e USD and not home currency?mrskeptical

Russian markets closed today but set to reopen tomorrow

Deregulation is the whole cause for this mess, starting with the repeal of the Glass-Steagel Act, enacted after the great depression, with the Gramm-Leach-Bliley Act eight years ago. Yes, Gramm is Phil Gramm, the head economist for McCain. Give them enough rope and they will hang themselves and us taxpayers in the process. It happened with Enron, it’s happening again here.

Here we go. Let’s see what $180b can do.Paulson needs a bigger bazooka.

Do you really think GE could go belly up? Can you tell me more about their level 3 assets? Where did they come from? their finance arm? Please give me some idea. This concept scares me a lot.

so far, not really doing too much, just stabilized and slightly higher a bit…could turn over and keel over soon…

Borrowing short term isn’t going to help anyone. If I had several hundred billion dollars of liabilities in the form of illiquid debt obligations, I would need to be able to borrow in the long term to invest somewhere safe, and I would still need funds to pay down the obligation. Only the safe investments aren’t known. So the short term liquidity isn’t enough. I need long term liquidity at negative interest rates to break even.Of course, helping out the consumer would be off the table: raping the consumer at extortionate interest rates is necessary for me to stay in business. I can’t just forgive debts and devalue my assets even further. The next guy will make more money than me by gouging the consumer at higher rates.

what impact will this “coordinated effort” have on the dollar? Is this another CB conspiracy to strengthen it, against all fundamentals?

…how many years ago was Dubai and Abu Dhabi a desert wasteland?Miss America

Bush on AIGhttp://cartoonbox.slate.com/static/51.html;-)

Still on the AIG bailout … which represents are enormous step for the Fed. I’m not going to lanuch a tirade here – largely because I fully expect that Dr John Hussman will do that in his commentary next Monday morning (www.hussmanfunds.com). If Dr Hussman was upset about the bailout of Bear, then he should be incensed that the Fed has now bailed out an insurance company. We’ll see what he says However, I will offer this piece of speculation. Besides asking some very fundamental questions about the Fed’s actions this week (e.g. who authorized the Fed to do this – do these people have carte blanche to take any emergency action now ???), we have to seriously ask why the Fed would put itself on the line this way. In effect, they have placed themselves on tap to drip feed liquidity directly into the CDS market. That is … if you can call injections of $85 billion at a time a “drip feed”.Here’s my specualtion. In spite of the utter seriousness of a failure at AIG, and a possible breakup in the CDS markets, I don’t think the Fed would have taken such an action unless vital interests were threatened at home. In other words, the Fed was scared by what they saw as a direct threat to US markets. But what exactly would that be? Well, it’s no secret that JP Morgan is holding an enormous piece of the entire derivatives transactions that have been negotiated and handled by Wall St. So could it be that the Fed made an assessment, and realized that the counterparty risk to JPM was real? If so, then we can possibly understand why they took such an enormous step. The death of JPM would mean the death of the US financial system at this stage. That is something the Fed will never allow to happen – at least while they are still breathing.Just some speculation.PeteCA

Any wiser bloger here this question is for you…please help me understand how the FRB injects $ into the banking system? How does it work and why isn’t this additional liquidity fixing the credit markets? What are the banks doing with the added cash? Are they just sitting on it?Please see story at:Central banks pump up the dollarsAs banks horde cash and lending dries up, Fed and 6 others announce joint action to pump $180 billion into system.Chris Isidore, CNNMoney.com senior writerSeptember 18, 2008: 10:34 AM EDThttp://money.cnn.com/2008/09/18/news/economy/central_banks/index.htm?cnn=yesKind Regards, Ken

Yes, but the Dubai’s (as in both) have had incredible cash flowing in. Cuba … well let’s just say that’s not a big problem there.Yes, I like the way you think. Yes, we would be better off with a friendly government at the tip of Fla. No, it’s not likely to flourish in any timeframe necessary to mutually help the US crisis.

KenCentral banks normally inject money into the system through the reserve banking system. Normally it’s as simple as regulating the buying and selling of US treasuries. The banks exchange these assets with the Central Bank and receive funds, with the understanding that they must pay borrowed money back within a certain timeframe (they pay the money back with interest). So the Central Bank can regulate these transactions by the amount of interest it charges.But these are not normal times. Under dire circumstances, the Fed has been accepting all kinds of collateral in exchange for injections of liquidity. The Fed has taken onto their books all sorts of securitires tied to bad mortgages – and we can really expect that the value of this mortgage junk will deteriorate badly in the future. Hence, the losses are really being transferred to the US Govt – and ultimately to the US taxpayer. But the Fed has even gone as far as recently accepting stocks in exchange for liquidity lately … an enormous departure for all previous accepted norms for the Central Bank.Injections of liquidity are NOT doing the job because the potential financial losses from the mortgage market are enormous. If you calculate the actual losses (in constant US dollars, adjusted for inflation), the loss in the US mortgage market now totals roughly $6 trillion dollars!!! Those huge losses have not been transferred to Wall St because many companies holding the assets tied to mortgages are refusing to value their assets at realistic prices (AIG is a classic example – they have been under no constraints to value their mortgage assets at fair market prices because they are an insurance company). So a large part of these losses have not been transferred into the system yet. And as you know – home prices in America are still falling. Foreclosures are still mounting, and so are deliquencies on many other kinds of debt – all adding to greater future losses.So what we have is a solvency problem – the financial system is essentially bankrupt. The Central Banks are trying to buy enough time for people to solve this problem. It’s far from clear that the attempts will work, and if they don’t then the USA will fall into major deflation – a huge collapse in asset prices. Also known as a Great Depression.PeteCA

Does a Morgan Stanley or a Goldman Sachs assess the strength of start-up entrepreneurs and fund their operations? I have not observed that in the industry. Perhaps you mean Angel funds and Private Equity. Or maybe Commercial Banks that lend money to businesses.

@ptm: “I’ll let John Williams address this issue…’Messrs Bernanke and Paulson tacitly have confirmed that they will create whatever money they have to create in order to prevent a systemic collapse.’”Without John Williams how would the people protect themselves economically against the manufactured numbers the government and banking cartel are using to distort economic perception?But, there is a greater risk to Americans than the “systemic” failure of a flawed financial plan drafted by self-dealing central planners at the Fed. And that is collapse of her once vibrant economy. In order for America’s economy to revive, the present financial “system” must be allowed to die a natural death. It is a financial scheme backed by fraud, extortion and paper assets, benefiting the few at the expense of the many, sucking the lifeblood out of this great land of plenty. We must save the economy.This economy is our sustenance — value based on the work and production, distribution and consumption of millions of hardworking individuals. To exist it must operate by voluntary exchange in a free market –not in a market deregulated to accommodate special laws legalizing plunder for the bankers and corporatists: try to start up a business against a monopoly and see just how “deregulated” the framework really is. America’s economy cannot breathe and grow and flourish under the iron-fist control and greed and deprivation caused by a centralized banking cartel that creates disequilibrium and legal plunder.How does one define legal plunder? Says Frederic Bastiat: “Quite simply. See if the law takes from some persons what belongs to them, and gives to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime…“Then abolish this law without delay… If such a law…is not abolished immediately, it will spread, multiply, and develop into a system…”That “system” already has occurred. The Federal Reserve System, owned by private bankers that print all US currency under the Fed’s name, is enriching the few at the expense of everyone else; it has made “plunder universal under the pretense of organizing it.”It is not too late to abolish the Fed: but to do so Americans must first abolish Congress and find one that will do the job.

PeteCA,I always enjoy your posts, and this is no exception. Two questions; 1. What exactly do you mean “…losses are really being transferred to the US Govt – and ultimately to the US taxpayer.”? Please diagram how the losses will be transferred to the US taxpayer as well as their likely effect. 2. What exactly do you mean “…buy enough time for people to solve this problem”? Who is attempting to quantify let alone solve the problem(s)? What problems have been identified, and what solutions are being considered?

actually I wasn’t referring to Mr Bush personally, although he is the main “character” in the current administration. What I did say is that this crisis was purposedly created by some folks somewhere in the upper echelons of the current administration. Hardly Mr. Bush. He is just a front face of the administration, sort of like a Muppet.In any case what is happening is not an event anyway, but a process. As such it was not purposely “created” by some group of persons but merely purposely started and/or fueled by such.The point with the good timing is that the crisis is used as an excuse for changes that could not be carried out otherwise and that are carried out by people who could be out of the office after the election. So if changes to be carried out according to a plan, they have to be carried out while the people with the plan have the power to carry them out.In this case the changes are such that they give more power to the U.S. government. Something that would be useful e.g. in a civil war type of a scenario.

Nobody said debt forgiveness would be a voluntary act by the creditors.

Why inflation still matters, depression is a heart beat away, and the future is going to show up with an empty gas tank.The FED is supposedly handling the various swap facilities by offsetting these injections with comparable withdrawals elsewhere. The problem is, this causes the FED to invest in the past (old money at old leverage). The money they withdrew was evidently eventually available to be used by someone to invest in the future (old money applied at new lower leverage).In short, the FED is sucking the future dry. If they win we get huge inflation via the short term facilities and bailouts. If they loose we get very great depression via all the enormous deleveraging. Either way, the future’s tank will be empty!The argument favoring the FED’s actions is basically that we can’t handle/survive a massive deconstruction today. The argument against the FED’s action is basically that we can’t handle/survive a massive deconstruction tomorrow either. So collectively our society is petrified of what might happen today, afraid of where we could end up tomorrow, and absolutely blind to any future.Of course, there are those who would argue that because we are so confident in our future we can slipstream it now and make life a little easier today.

Congress must retool the Federal Reserve Act ASAP!The only way to make this happen is to bring this to light.The only problem is that anybody with political aspirationscannot utter these words! Only Ron Paul and some ProgressiveDemocrats have stuck their neck out!It is up to the intellectuals to remove the leashes the acquisitorshave placed around their necks. There must be an intellectualrevolution of thought. The intellectuals must copy the professor andwrite viscerally, not cover their butts! I really admire some of thegreat minds that write here. I am just a student of your discussions!It is time to bring forth solutions with conviction!!!

The pieces are being moved into their places for that special event

Excellent thought. Just as Miss America called for reforms, let’s all join in the chorus.1)Remove the banking secrecy laws and replace them with TRANSPARANCY.2)Restore the Glass-Stegal Act and enforce REGULATIONS especially in the creation of credit.3)Return to the gold standard or require Congress to VOTE on manipulating the money supply.(MA also discusses dropping the loan principle to get mortgage holders above water and expanding trade with Cuba, but I think these are more peripheral issues.)

As Jim Bunning (Rep. KY) said: “The Federal Reserve is the problem” (to paraphrase). The Fed should be shut down. Sadly, however, 9 out of 10 Americans probably think the Fed is part of the US government.

exposing the fractional reserve banking as a ponzi scheme..http://video.google.com/videoplay?docid=-9050474362583451279mrskeptical

See link above.

1pm PPT on time?

A New Role for the Fed: Investor of Last Resort (NYTimes) cutdown version…The central bank has also transformed itself almost overnight into the Fed Inc. by essentially taking over American International Group after already taking on hundreds of billions of dollars in mortgage securities to help ailing financial institutions.Instead of just setting monetary policy in its Ivory Tower-like setting, the Fed now must wear several hats — that of insurance conglomerate, investment banker and even hedge fund manager…The Fed has often been described as the nation’s lender of last resort — the one institution that would lend money when everything else had failed. But by acquiring almost 80 percent of A.I.G. in exchange for lending it $85 billion, and holding $29 billion in securities once owned by Bear Stearns, the Fed is now becoming the investor of last resort as well…The Fed’s balance sheet, moreover, is being stretched in ways that seemed unimaginable one year ago. As recently as last summer, the central bank’s entire vault of reserves — about $800 billion at the time — was in Treasury securities.*By last week, the Fed’s holdings of unencumbered Treasuries had dwindled to just over $300 billion. Much of the rest of its assets were in the form of loans to banks and investment banks, which had pledged riskier securities as collateral.In a sign of how short the Fed’s available reserves had become, the Treasury Department sold tens of billions of dollars of special “supplementary” Treasury bills on Wednesday to provide the Fed with extra cash. The Treasury sold $40 billion of the new securities on Wednesday morning and will sell $60 billion more on Thursday. More money-raising is sure to follow…Indeed, the role of the Fed chairman, Ben S. Bernanke, almost seemed to unnerve a leading House Democrat.“He can make any loan he wants under any terms to any entity or individual in America that he thinks is economically justified,” said Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee.“I asked the chairman if he had $85 billion to bestow in this way. He said ‘I have $800 billion.’”“No one in a democracy unelected should have $800 billion to dispense as he sees fit,” Mr. Frank said.Fed officials contend that they have ample resources to handle all their new obligations. Unlike a company or a household, the Fed can raise as much cash as it wants by printing money and buying up Treasuries and other securities at will…The Fed has disclosed little about the securities it is holding, but the pool is believed to include billions of dollars worth of securities backed by troubled subprime mortgages…Beyond its foray into corporate management with A.I.G., the Federal Reserve is becoming an increasingly important force in the market for risky debt securities.Analysts say they believe that Lehman Brothers, the Wall Street firm that filed for bankruptcy on Monday, is borrowing tens of billions of dollars through the Fed’s six-month-old emergency loan program for big investment banks…[Lou] Crandall, of Wrightson ICAP, predicted that Lehman and other investment banks might have already tapped it for $50 billion since last weekend.If they did, Fed officials will be holding collateral that is even riskier than what they already have.http://www.nytimes.com/2008/09/18/business/18fed.html*Note: We must take the Fed’s word on its “assets” as Congress has no access to its “books” since its inception. Guest

1:11 p.m. British regulator bans short selling

hahahAHAAAAHAHAAAAAA…not according to plan and ppl lose their minds.. reduced to apes with rather flexible thumbs..mrskeptical

oh btw my site to Educate people about Obama’s foolishness is http://www.blogsomebody.com I just posted above, so please feel free to tell me what you think

WHAT JUST HAPPENED OT STOCKS? BOOM!

1:46 p.m.Money market funds see record $90 billion one-day drop

1:55 p.m.[GS] Calpers halts lending of Morgan Stanley, Goldman shares

Fox News: Dem VP candidate declares that paying higher taxes ‘to help get America out of the rut’ is patriotic thing to doWhy don’t all the politicians, regulators and wall street thieves who got us into this mess, pay 100% of their future earnings until we are out of this mess!! FU!

Just G.I.N for me thanks. German, Irish, Norwegian.

problem in US is that, other than agriculture, there is virtually no one making anything anymore – the fact is that 10x as many lawyers graduate as do engineers, the idea is for the lawyers to go after the little wealth that the engineers create…how can an economy be based on financial machinations of paper derivatives and legal cases?

Hmm, wasn’t Schumacher’s “Small Is Beautiful” and all the “going green” rhetoric right after the gas rationing of 1974 and the election of Reagan in 1980??

ECONOMIC REPORTHousehold debt grows at slowest pace in 56 yearsNet worth of Americans falls at 1.9% annual rate in second quarter

MSM Jim Kramer asks “Are Financial Terrorists Attacking America?” There’s your justification for Fed/Treasury intervention. Paulson is working with James Bond to save America from Middle Eastern Sovereign Wealth Fund short sellers. Heroes & villians…just the story line we need to get the public to fall in line with whatever actions the Fed decides are needed.

the 3pm spike right on time…

CNBC PAULSON IS FLOATING AN RTC TO RINGFENCE ALL “BAD BANK DEBT”

Can you say “US stock market intervention”?

Stocks are going straight up! I have never seen a one minute chart like this in my life!

How is the this going to solve credit crisis? Can somebody elaborate on this?

Assured Mutual Unilateral Destruction?

This is nuts! Dow is going to close up 600 points!

The Dow has a 625 point range today! Is this capitulation via manipulation?

Next thing that will happen is barring any transaction which isnt positive…lets give all the kids trophies or nobody gets to play, so much for capitalism.

It was capitulation via manipulation till today 2 PM. Not any more!

Well put …I think that we all know that this situation is complex, severe and getting worse, and that would make the present an excellent time to de-lever denial and start injecting integrity into the system.What I neglected to articulate above is simply this … (directed to those in charge) gives us a rationale for what you are doing. It doesn’t have to be a thesis, but have a little humility and tell it like you see it, whether or not others (critics) agree. If your time is such that you cannot take a break, then appoint an intelligent spokesperson who is directly familiar with the decision process that can can deliver the rationale to those of us that you are placing the burden on now and for the future.Even, if it turns out that the (re-)actions taken will have also failed or even made for a worse situation, at least the valiant effort that T. Roosevelt is talking about above, can be acknowledged.I do appreciate your reply, Sir, and look forward to additional enlightenment.

Thats exactly what happened.

interesting. But the Bush administration surely is acting like there is a serious situation that warrants the nationalization of Fannie and Freddy and the acquisition of 79.9% of AIG stock. So if things are not really that bad, what is it then? A government grab for more authority over the economy?Bush administration has been increasing the power the government has over U.S. citizens since 9-11 (right to retain people indefinitely, domestic spying, etc). Now they are also taking power over the economical system.

I really honestly HOPE this is only news manipulation to pop up the markets.If however the RTC crap is true, then get your passports and head to the closest consulate to your home and ask for a long-stay visa.LET’S BURN SOME CDS!

And you’ll get a free dose of rage every day from Karl’s pungent tickers.(And don’t worry, you’ll learn fast to ignore his BOLD-ALL-CAPITAL words)

RTCThis ia not a plan but an idea born of deperation which will prove to be an excercise in theoretical alchemy. The bad debt must go somewhere:1. Stay with the banks-financial meltdown, then armageddon2. Go to the government-hyperinflation, then armageddonLOL

Who the hell is going to protect the average US taxpayer in all of this? When did the US mantra change to “of the people, for the wall street elite, at the expense of the people, arranged by your US congress person”?

Now Schumer is now stating a different plan on CNBC! He is talking about the governmentbuying stock in the banks and letting them dispose of assets. There seems to be an assumption that the banks adjust the terms for the mortgagees and also that the Bankruptcy Judges can Cram down the balances in Foreclosures in Bankruptcy. He calls it RFC!Gasparino might think this is all the same, but I beg to differ!CNBC should be able to be more exact on their reporting!!RTC TYPE SOLUTION MAY NOT BE RTC LIKE!!!!!

Tomorrow open is option expiration. The bank owned government pulled one or more rabbits out of Uncle Sam hat every single time. Everybody was expecting a salve. Actually it was an unusually pathetically weak one this time.My guess is that the original plan was to spare the Mac & Mae nationalization for the OpEx week, but they were run over by the events.

This idea will solve nothing:1.”This new governmental body would be able to buy up the troubled paper at fair market values”-Guess what the fair market value of this stuff is:Maybe 10 cents on the dollar. If sold at that price, the banks will need to stop their charade and admit insolvency. Or the government can buy it at an unrealistic price and take on massive debt. I laugh because the whole idea is just silly.

Whats going to happen to the stock market? Is it going to continue to fall after this sucker’s rally?

The problem is the government is going to have to pay banks for this stuff-it will add to our national debt.

UNITED STATES – WASHINGTON (Reuters) – The U.S. Treasury Department and Federal Reserve declined to comment Thursday on any discussions Treasury Secretary Henry Paulson may have had with lawmakers about a Resolution Trust Corporation-style fix for a financial market crisis.“We’re not going to comment on rumors,” Treasury spokeswoman Jennifer Zuccarelli said.http://www.forbes.com/reuters/feeds/reuters/2008/09/18/2008-09-18T194334Z_01_WBT009743_RTRIDST_0_FINANCIAL-TREASURY-RTC-URGENT.htmlHard to know what is going on.

@ GloomyYou are right. Buy gold for the long term. when it hits $2500 or so I’ll sell it all! Also find some stocks you think will tank and buy the puts.

SOMEONE PLEASE ANSWER THIS. IF THE FED WILL NOT GET ALL THIS MONEY BACK, THEN WHO HAS LOST IT ?I AM JUST AN AVERAGE WORKER WHO IS TRYING TO UNDERSTAND ALL OF THIS BUT CAN NOT GET CONCLUSIONS.I HAVE READ MANY DETAILS BUT STILL NO CONCLUTIONS OF WHAT IS HAPPENING, WHAT IT MEANS AND HOW BAD WILL IT GET

These things actually exist. When they are disposed of to the RTC it will have to be at a stated price. What will that price be?

If they just hand it over, how will it not be accounted for as a loss?

http://homepage.mac.com/rcareaga/diebold/adworks.htm

It is hard to imagine whatever government is going to do with RTC-2 will be in the best interests of american public in mind.It seems to me more like passing off toxic debts owed by these irresponsible and reckless businesses on to the government, who in turn will pass it onto the taxpayers in the form of treasury debt. Only the word scam comes to my mind.

Josh Rosner on CNBC had a proposal with a quaint name. He proposed that theBanking Institutions show under their “Kimono” the level 3 assets that theyhave been hiding in exchange for government money to allow them to string out thedisposition. The problem is that everybody is highly insolvent under theKimono. Personally I think that Paulson showed the Congressional delegation his version ofthe abyss of reality, and now will ask them to stick the taxpayer or be blamedfor sending the country down the abyss! The supposed conference they are havingat 7 pm eastern, 4 pm pacific will be dragged out and we will have some kind ofpseudo-clarity after the market closes on Friday after quadruple witching. Thecongressional types better have independent advisors or the banks will get theirSocialist Total Bailout

MASo, if “Eventually, in round robin fashion, you will see the off balance sheet debt being paired off against other counterparty debt to eliminate overall debt. Debt will evaporate. It has already started. It is the only answer for a debt that can’t be paid. Sorta like Chapter 11, it’s a restructuring that’s going on.”Is all ok now? Is this dept not going to build onto the deficit? I can count on the disappearing man in the box????Still waiting for you to articulate the complete cycle.hlowe

We human beings excel at everything; there are no limits except those imposed on us by our own emotional selection of “leadership”.We need sound structure upon which to build our organizations; in order to fly.Each individual is a unique function; there is no need to concern ourselves about where to apply ourselves, however, we must build sound structure with at least a 50 to 100 years of vision and adjust continually.Structure; forward vision; adjustment (regulation sans ‘let’s do lunch’) – all in Physics.Actually the solution is simply; very simply.The reality will, I fear, be very different in the short term with the bureaucrat, politician et al, shutting down the human spirit as the Banks have closed down lending; reduction of risk(theirs’).People need to unemotionally get into the governments’ face – daily – and take a responsible attitude towards the actions of “leadership”.We could start by protecting those components of the “REAL” economy, as opposed to Wall Street and certain individuals and groups (those that lobby intimately and personally).Ho hum

Excellent analysis AfA! Thank you. In the past I focused on the oxymoron “positive inflation,” but you have shown many more dimensions of misunderstanding in this “student of the depression”!

Ten Russian warships have docked at Syrian portDEBKAfile Exclusive ReportSeptember 18, 2008, 11:08 PM (GMT+02:00)Israeli military and naval commanders were taken by surprise by Rear Adm. Andrei Baranov’s disclosure that 10 Russian warships are already anchored at the Syrian port of Tartus, DEBKAfile’s military sources report.Moscow and Damascus have worked fast to put in place the agreement reached in Moscow on Sept. 12 by Russian navy commander, Adm. Vladimir Wysotsky and Syrian naval commander Gen. Taleb al-Barri to provide the Russian fleet with a long-term base at Syrian ports. Israel was not aware that this many vessels were involved in the deal.What most worries Israeli military leaders is an earlier announcement by Adm. Wysotsky that Russia’s Mediterranean assets would subjected to its Black Sea fleet command, thereby placing Russia’s warships near Israel’s shores at the service of Moscow’s contest against the US and NATO in the Caucasian. It is feared that Israel will be dragged into another cold war.Rear Adm. Baranov disclosed that the warships in Tartus had brought engineering crews to widen and dredge the harbor to accommodate additional, fleet vessels. The crews were also working on expanding Latakia, another Syrian port, possibly for aircraft carriers or guided missile cruisers.The Russians are making no secret of their intention of using their naval presence in Syrian ports as a deterrent to a possible Israeli air strike against Syria.

Paulson Announces Plan for An RTC/HOLC-Type Institution to Clear the Bad Debt OverhangSep 18, 2008So, at last, Paulson has his super-SIV.L’état, c’est moi et mes amis.

“It is feared that Israel will be dragged into another cold war.”As if they are not already !?

As long as we are talking statistics…While there is clearly no “international economic Jewish conspiracy,” it is absolutely true that 40-50% of America’s billionaires are ethnically Jewish even though they are only about 2-3% of America’s population. See: http://zsidozas.wordpress.com/2008/05/12/the-deleterious-influence-of-america%E2%80%99s-jewish-billionaires/Additionally, the vast majority of the oligarchs/plutocrats who bled Russia dry during the post-Soviet era were ethnic Jews as well: this has been fully and empirically proven; if you don’t believe me, read WORLD ON FIRE by Amy Chua.So it is understandable that some people are highly suspicious of such an ultra-wealthy and influential ethnic minority and are looking for a scapegoat during these very difficult economic times. But again, there is no “Jewish conspiracy,” only the indisputable fact that Jews are disproportionately wealthy and involved in finance and economics in many countries.And before someone calls me anti-Semitic for staing facts, let it be known than I am ethnically Jewish.

The human species is either going to murder the diabolically stoopid and fundamentally unjust idea to allow unlimited personal fortunesorits members will succumb to the result of having the next and the next and the next wealthpower giants.(Write that down, poor suffering humanity)Say, does anyone know when the Global Atomic Harvest Of Humans Knowing What Aint So is scheduled to begin?Do I have time for a cocktail, first, Yiz think?

while were enjoying the stock market magic show,here’s an update on the real economy…..and they blame it on a hurricane!!!!hahahhaahahathe writer is craving for attention, guess its hard to sell your story in this environmentok back to our magic showhttp://biz.yahoo.com/ap/080918/economy.htmlAPJobless claims rise due to Hurricane GustavThursday September 18, 1:27 pm ETBy Christopher S. Rugaber, AP Business WriterJobless claims increase unexpectedly to 455,000 due to Hurricane Gustav’s impactWASHINGTON (AP) — New applications for unemployment benefits rose unexpectedly last week, largely due to Hurricane Gustav, the government said Thursday, adding further strain to the economy.The Labor Department reported that initial jobless claims rose to a seasonally adjusted 455,000, up 10,000 from the prior week. Wall Street economists had expected claims to fall slightly to 440,000.Layoffs can worsen the nation’s economic woes as newly unemployed workers and those that fear for their jobs cut back on their spending and fall behind on their debts. Consumer spending accounts for about two-thirds of the economy.Jim Chessen, chief economist for the American Bankers Association, said Thursday that banks have seen consumers increasingly falling behind on credit card balances, auto loans, and other credit.”The key to consumers’ ability to meet their obligations is whether they have a job,” Chessen said.Claims have now topped 400,000 for nine straight weeks, a level that economists consider a sign of a struggling economy. A year ago, the figure stood at about 320,000.

Honey, nobody knows who’s got title to these mortgages anymore. That’s the problem.

more on the REAL economyFrom record levels right back down to levels of 56 years ago.IF and that is a big if, they somehow (i give it 10% probability of success)managed to turn around the situation in the stock market, imagine their face seeing another set of S**T LOLWASHINGTON (MarketWatch) – The debt burden of U.S. households grew at the slowest pace in at least 56 years during the second quarter and American families saw their net worth fall for the third straight quarter, the Federal Reserve reported Thursday. Household debts increased at a 1.4% annual pace in the quarter, the Fed said in its quarterly flow of funds report. That’s the slowest growth since at least 1952, when the data were first collected. Borrowing for real estate mortgages grew at a 0.8% annual rate in the second quarter, also the lowest since the records began. Household net worth fell by $438 billion, or 1.9% annualized, to $55.99 trillion, the Fed said.

ops the linkhttp://www.marketwatch.com/news/story/household-debt-grows-slowest-pace-56/story.aspx?guid={46BB896B-F890-4554-9A9F-D835A2F3E41F}&dist=hplatest

right you are Guest, IMHO. Ass long as there is order, gold will trade as a commodity. If law of the jungle, then it really boils down to who has guns and can defend their land etc. Gold will have no more functionality than the useless paper fiat is it supposed to replace.

Also to the point … did you catch Joe Mason’s article in this site?

…The problem is that we really don’t know why we are bailing out all these institutions. In fact, this week we chose to bail out some but not bail out others that are nearly identical. While bailouts might engender moral hazard, and the lack thereof a widespread retreat from risk, random bailouts confuse markets so that investors have no idea what to do. Such policy will certainly draw out the economic effects of the crisis for far longer than would otherwise be the case…

Entire article => Crisis Policy is Redrawing the Boundaries of our Financial System – and not Necessarily in Productive Ways

RTC,Ban Short selling, this is all (nonsense) smokescreensand rumours about WAMU’s bank run..WAMU is going down BABY!!!i know someone here is happy to hear the newsmaybe the WANT WAMU to die!!!

@AfAgood stuff.Bernanke is a buffoon. It’s really hard to believe, but that paper is so full of flaws that it frightening. Bernanke has no clue.Up until now he didn’t use a single one of the academic policies he described, save for cutting rates. And now fe has the once in a century opportunity to demonstrate himself as totally and utterly clueless about the main subject of his life-long studies.

Easy question: the amount of money can change, and the Fed can change it most effectively by lending it to the Treasury, member banks, or an ever increasing number of other folks apparently. One thing going on here is that new ways of creating money have been invented to add to the old ones.So the Fed budget doesn’t have to balance. But in the long run everyone else’s does, possibly through a bailout or gift. If you’re not “connected” the Fed won’t give you those. Wonder if Schumer will.Hard question: How bad will it get? I dunno. In the ’30s a financial crisis and pervasive indebtedness led to a crisis in the general economy. The general problem then (imho) was that we had finished building railroads and had too much productive capacity. Now we have a financial crisis, pervasive indebtedness and an opposite problem in the general economy: too little productive capacity. We’ll see what happens …

I hope that this entry is part of a chapter in a book your are writing.One question for now please, which goes to my complete lack of understanding of the the bailout mentality … regarding your statement, “Those that cannot transfer value will follow the path of Lehman Brother’s…”What value was transferred in the Bear Stearns situation and how was Lehman different in that regard?Looking forward to your reply.

Do you think Reed,Pelosi et al. will do what Paulson-Bernanke wants them to do? To help McCain win the election??..This crisis is helping Obama according to the polls.What are the chances this will not materialize before the elections?

I see a stable $ and further interest rate cuts by FED.Bullish on the mkt in the short term.

I replied to this further up in the blog but will repeat myself here…I applaud you for your creativity, but when one carries this thought forward it hits the wall.The topic started off with opening up trade in order to benefit the US manufacturing sector- US auto sales. I pointed out that the Cubans aren’t exactly financially rich, that that is why they aren’t buying new cars now: I also stated that if they were really looking to blow money on newer fossil-fuel burners that they could do better by purchasing them from Korea.Then the topic shifted to Cuba selling the US power. Novel idea but… the US is broke!There could be an argument that the US could trade cars for power, but this would appear to be a pretty short-lived exchange: how many cars could Cuba absorb? When they were done with this trade (saturation) the US would be hooked on more foreign energy and will have lost some of its export revenue- net: increased trade deficits for US.Somewhere the US has to come out AHEAD in order to destroy its debt. And that debt is so huge that it’ll take a massive amount of increases in exports to overcome. And such ramping up of exports will only occur with increased energy use. Energy costs currently add up to about 40% – 45% of the US trade deficit. The ONLY way out is for the US citizens to work for cheaper than other workers in the world and for it to consume its own natural resources for such production (this over local consumption).It’s an equation that can’t be righted without the US turning into a third-world country…“The chief cause of problems is solutions.”- Eric Sevareid

China would have to be asleep at the wheel to permit serious external dependencies…and they are not sleeping.THE biggie is energy, and while they are not falling asleep at the wheel (they’re aggressively locking in contracts), they ARE, nonetheless, heavily dependent upon external sources.

Technically the Fed isn’t the government, in which case it’ll be the Fed passing along the bill to the US government (Treasury). But then again, I suppose that the mechanics of it all, the devaluation of the dollar as a result of the Fed’s actions that are, in effect, causing the US government increased debt. Am I close?

Thanks Alessandro and Afa for attempting to get clarification on this subject. The two of you are great at articulating that which I have difficulty with.hlowe

Am I missing something here? Isn’t it the Treasury who is responsible for the printing? The Fed cannot print money.

Nancy Pelosi left the meeting with an expectation of a plan from the White House within a couple of days..The most powerful member of Congress waiting for a solution from THIS President! Lord help us all, from these useless reprobates and nitwits.

LETS BURN SOME DVDS

talk about unintended consequenceshttp://www.marketwatch.com/news/story/money-market-funds-see-record/story.aspx?guid={E322BE61-F830-4B58-94D8-C207E14714D3}FUNDWATCHMoney funds see record $90 billion one-day dropPutnam closes fund; Columbia, Dreyfus act to save $1 a share net asset valueBy Sam Mamudi, MarketWatchLast update: 1:51 p.m. EDT Sept. 18, 2008NEW YORK (MarketWatch) — Money market funds saw nearly $90 billion of net investor cash pulled out on Wednesday, among the largest single-day drops in history.Figures from iMoneyNet show that assets dropped to $3.35 trillion from $3.44 trillion, a fall of $89.2 billion.Among the funds hit hardest by the redemptions was the $12.3 billion Putnam Prime Money Market Fund and needed support from their parent companies to maintain their $1 a share net asset value.Figures from iMoneyNet show that $130 billion left prime institutional money market funds Wednesday. This follows $61 billion of redemptions on Monday and $37.2 billion of redemptions on Tuesday.”This is the largest week of outflows that we’ve ever had,” said Connie Bugbee, managing editor of iMoneyNet. “It’s not even close.” She added that some of the outflows, perhaps as much as $20 billion may be due to companies moving money around because Monday was quarterly corporate tax day.

The market will cheat the Treasury and dump all irreparable toxic waste on its balance sheet, perhaps something every1 eventually wanted.

Why you think the DOW shoot up over 600 points today?Houston, we’ve got a problemBoston, we’ve got a serious problemPaulson, we’ve got ourselves in a ^(&$#)@&&@) problem.LET’S BURN SOME CDS … and some other stuff

Repost@ artichoke”1. Is not the current deflation caused by a slowdown of aggregate demand and spending? Demand is measured vs. a given price, i.e. he means a shift in the demand curve. Sure people still want to go shopping til they’re dropping, but they are too far in debt to do so now. Indeed aggregated demand at given prices has fallen, and deflation results in some categories.2. In the current situation, do you think that even if Bernanke printed like mad, we would not get inflation? I bet he could print enough to get the price of houses going up within a month or two. The result would be too much inflation in other categories, which might be called hyper-inflation, and our trading partners would complain. But that doesn’t contradict the thesis: if Bernanke printed enough, prices _would_ go up.”good points, to be brief:1.not yet, this mess was started by high debt burden reaching its physical extension boundaries. The debt ponzi-scam is based on an infinite and perpetual expansion or it is doomed to fail. The high demand/spending for the last few years is not the standard but rather the abnormally speculative state from which we are poised to fall/callapse to revert to the “mean” – a thing that we barely start to notice – whereas the credit crisis is reaching its apogee (unwinding of credit and deleveraging)2.Well we would, and that is one of the main reason I am worried about his reasoning. What much difference there will be if the house price is now $200,000 compared to an annual wage of $50,000 and when the house will cost $1,000,000 and your wage is $200,000?”if Bernanke printed enough, prices would go up” Yes, so would that solve any problem??????Forget about prices (in dollar terms) and think about them in terms of arbitrage pricing, comparative pricing or, if you wish, in terms of PPP (applied internally) across all classes of consumer products, commodities, wages, assets (productive and unproductive) to gauge whether any action taken by the FED would make things better or worse (from a consumer/saver/investor point of view)

Fascism here we come. A banana republic we shall one day be.

I answered slightly longer above but very briefly:1. The collapse from bubble-level demand function is a slowdown of aggregate demand and spending.2. Forgetting about nominal prices means you are now considering a question different from what Bernanke addressed in his paper.

I just want to add that the current credit crisis is Exibit A of the, sometimes, hollow distinction between Deflation and Recession. Professor is implicitly making a distinction between the two (when he talks about worse credit crisis since GD but with a recession lasting 18 months). A distinction that, apparently, Bernanke did not see in his speech (which I hope was very ad-hoc and contextual and do not reflect his deepest beliefs and academic and economic philosophy).Bernanke was afraid of the second (recession = reduction in demand/spending) but describing tools to fight the second one (deflation = a generalized unwinding of credit resulting in depressed selling and collapsing prices). Eventually, the first would lead to the second.@ Alessandro, I believe that Bernanke started implementing many of the ideas he expressed in his speach. In addition to driving FF rates down to minimum (more to come?) he also tried to use the Fed windows to extend loan swaps taking agencies and other private securities (MBS) as collateral. He then added equities to the acceptable collateral (equities for God’s sake: that is the lowest security in the financial food chain which means that any other security would be acceptable) He extended loans directly to private corporations (AIG). He also expanded the “scale and menu of securities purchased” from the private sector. He is buying billions of dollars worth of new treasuries… All that is left probably is trying to influence the long-term end of the yield curve, to which I say: Good luck/

Telegraph (the UK newspaper) calls short selling morally dubious. The next thing is it will probably be called unpatriotic, although on the other side of the ocean.Hedge funds clipped by short-selling banhttp://www.telegraph.co.uk/money/main.jhtml?MLC=/money/city_news&xml=/money/2008/09/19/cchedgefunds119.xml&CMP=ILC-mostviewedbox

As short-selling is banned to protect Britain’s banks, Gordon Rayner names the men who have made millions from the financial crisisAs 70,000 employees of HBOS wonder which of them will still have jobs this time next month, they will no doubt be looking for someone to blame for the extinction of their once great employer…. ……a select band of private fund managers who have made their money through the morally dubious practice of short- selling which, despite involving trading something you don’t own, is perfectly legal…. …Dodgy as this may sound, short- selling has been going on for hundreds of years, but the obliteration of HBOS – which has been squarely blamed on short- selling – forced the Financial Services Authority to take drastic action last night by banning short- selling of financial stocks.

By the way, as can be read above AIG is not the only company going belly-up. The British HBOS is another.

he’s a good dude… either that or he bought the wrong putsU.S. Should Stop Bailouts, Let Firms Fail, Says CLSA’s WoodBy Chua Kong HoSept. 19 (Bloomberg) — The U.S. government should allow firms to fail to allow markets to find a “natural bottom,” said CLSA’s Christopher Wood.“If the U.S. authorities continue to indulge in bailouts, they risk not only fanning moral hazard, but also contaminating the credit and good standing of America,” said Wood in his “Greed & Fear” newsletter dated yesterday.The former journalist, the top-ranked Asian strategist in Institutional Investor’s yearly poll, predicted this week that global credit losses will rise by a further $1 trillion. The crisis has caused more than $500 billion of writedowns and losses at financial companies worldwide.Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke pledged to work through the weekend on measures to ease the turmoil that prompted government takeovers this month of American International Group Inc. and mortgage lenders Fannie Mae and Freddie Mac.U.S. stocks surged the most in six years yesterday on prospects that the government will formulate plans to shore up financial markets.“The more that markets are allowed to correct, the more likely they are to find a natural bottom from whence a dramatic recovery can ensure,” Wood’s wrote in his newsletter.

You are free until your government decides what to do with you…

That which has now been entered is a trend; not a good trend but a trend that just may give life to the largest institutional monster that civilization has ever seen:The new Catholic (etymological definition) Order of civilization.Previous reference please see the birth of the Church of Rome based upon the removal of the Catholic Church in Egypt and its new location in ancient Rome. Later to be granted its own statehood and to become the first fascist organization in the entire World.The new relationships are eager membership by ECB, UK, Canada, Japan et al. More will eagerly follow as incompetence and stupid politicians urged on by the feral bureaucracy of insolent and lazy morons, seek to extend their irrelevance towards the holy grail of the FedRes. The model will be the same; almost identical. The effect the same; read your history.As I have stated the US Congress and all that hangs off it are irrelevant. The Office of the US President is also irrelevant as are the offices of all those Nations that permit their Central Banks to join the fellowship of the Catholic Order of the FedRes.One must ask: where is the engine of growth? Where is the engine of Production? That the Constitutional Republic of the USA is dead is no longer in question and nor is the matter of the free-market system; they are dead and gone: All will now be directed by the dogma of the FedRes:Long Live the Pope! Long Live Pope Benjamen!No growth;No productivity;Full nation-state subservience;Freedom lost;Mediocrity; the spirit be dead.Welcome 1984.Now the FedRes fights all investors cum speculators of the free-market and all profits will be given to the faithful (less commission). The new Catholic Order will absorb all the United Nations which will include the IMF, World Bank and Bank of International Settlements, ETC! In one gulp. John Bolton will be delighted.The bifurcation is almost complete.Profits for the holy faithful are guaranteed as are losses for the sinners!I must say, not even I thought I would see such insanity arise from and within the USA and never did I suspect that the final submission would be so easily accomplished. Are we all mad!I think so.Ho hum

Capitalisme / Democracy has evolved into what Orwell visioned it to be!!and youre right, the whole world is giving their nod of approvals, fearing for their own economy they assumed there is no other option but to bow down and give the kiss of lordship to?

this goes way beyond economics…where will the guiding light comes from??

Up 400 points. Looks like the FED knows what to do with $180B

Crisis averted ! Looks like all those people who said the u.s. economy is on its way to collapse were wrong. Time to get back to our lives. No world wide depression, No world war 3.Just a slow down that may last one more year.Everything will be even better if Obama wins.The worst is over

Woah. SorryYves Smith at NAKED CAPITALISM

What is the result of FSA and SEC’s banning of shorting in financial stocks? Ironically, they could well be confirming the fact that these financial institutions are insolvent. Why would I say so? The stock price of a financial institution has no relevance to it UNLESS IT NEEDS CAPITAL. It is prohibitive to short a bank share if the bank continues to pay dividends, issue bonus shares, increasing its own capital through profitability. That is a no win trade. A healthy bank won’t be worried about its share price. Its own perfomance will make shorts suffer. On the other hand, if a bank is truly insolvent, it cannot afford its share price to drop because that is the capital of last resort: dilution to raise capital. In trying to shore up stock prices of financial institutions, the authorities have tacitly told all investors that the banks are insolvent and would need more capital. So if you are long bank shares, I suggest you think very carefully about what the FSA and the SEC is telling you. And decide what to do with your shares.

“equities for God’s sake: that is the lowest security in the financial food chain which means that any other security would be acceptable”Good point.

“Crisis averted.”For how long? two weeks? into October? the traditional month of stock market crashes (psychology matters)?Keep an eye on short term T-bill rates. 0,5% at yesterday close doesn’t spell “The worst is over” to me.

Now that Paulson and Bernanke have proposed a Resolution Trust Company, consumers can take their distressed mortgage loans, credit cards, auto loans and student loans and remove them form their “balance sheets” so they can go about their business as usual. (I would urge consumers to attempt this en masse, once the RTC gets going, to see what happens.)Right. The RTC proposal is not going to help the shopped out, debt laden consumer. Instead, the shopped out, debt-laden consumer is going to have an even bigger tax bill and fewer public goods to show for it, since resources that might have been allocated to them will be used to pay off debts that much of the public had nothing to do with.

One imagines that the RTC will work on the assumption that businesses expect to buy from and sell goods to themselves, without involving the consumer. Consumption is 70% of GDP, but this amount is begrudged: businesses do most of the “important” spending–consumers have to be minimized at every turn.I’m doing what I can, in a one man protest, not to support this inequitable system: no purchases beyond basic necessities. No entertainment, no books (I already have a library enough to last several lifetimes), no dining out, no car, no travel (except for public transportation), no television, no CDs or DVDs, no luxuries.

I look forward to hearing what the MSM have to say. It tells me if I’m ahead or behind the bouncing ball. And since MSM tells the sheeple what to think, it tells me what the average person is thinking.

All of these machinations are just astonishing?Not at all.All of these machinations are simply:what overpowered wealthgiants DO.All you are looking at is the sorry history of humanity ON REPEAT.When all this is over, the humans left will re-erect overpowered wealthgiants to rule over them.Like humans do.Humans be dumb. That’s not an insult, it’s a fact.

You mean to see we have been hadding a sound night’s sleep?You may so.It is just, it is just about to, it is just about to rolywholy over.Of all the stranger things that ever not even in the hundrund and badst pageans of unthowsent and wonst nice…to be have happened!Phall if you but will, rise you must!(lovesoftfun at Finnegans Wake!) (apologies to our beloved James Joyce)

Greek grapes.

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