Ensimmäinen (“first” in Finnish)

the real translation of the above…Merkel Says US Government Partly to Blame for the Financial CrisisAccording to Angela Merkel, the US government’s multi-billion dollar rescue package comes much too late. The chancellor accused the United States of mismanaging the credit crisis: The Bush administration only fueled the crisis through its obstinacy.Washington/Berlin – The US government is, in its own words, lobbying “aggressively” for support for its multi-billion dollar rescue package – but until now, the plans from Washington to rein in the credit crisis are encountering mainly skepticism and unvarnished criticism.Unusually sharp language reached the White House from Germany: Chancellor Merkel accused the US administration of serious failures and logjams.”I criticize the self-control of the financial markets – unfortunately, they have long resisted voluntary regulations, supported by the governments in the UK and the US”, Merkel told the “Münchner Merkur”. During the German G8-presidency last year, she already pressed for greater transparency in financial dealings, rating agencies and hedge funds. The anglo-saxon countries, however, did not sufficiently support these proposals.At an event in Linz, Merkel made unmistakably clear that she means primarily the US: Merkel indirectly attacked the Bush administration, arguing that through its obstinacy it has drawn other industrialized nations into the credit crisis. Many EUropean countries imposed strict controls on the banking sector at an early stage – such as when granting loans. In doing so, everyone was counting on the cooperation of the US, Merkel said.”We, of course, properly did the right thing, implementing a nice EU directive into national law in the face of many complaints from small businesses – and and when the day arrived, the Americans said, “Not us”, the chancellor complained. “This cannot work in the international arena.” The consequences must now be borne far beyond the US and the UK, Merkel complained.The chancellor demanded stronger rules for financial markets. Europe must “now insist that we get more transparency in financial markets, that we get clear rules, and that crises such as the current one do not recur”. Finance Minister Peer Steinbrück also demanded stricter rules. In an interview with German television (ARD), he also did not rule out an international agency that fixes the rules.The EU Commission has already announced proposals for improved regulation of the financial markets …..”Failure and Arrogance” of the AmericansThe US government is making a total of $700 billion available in order to purchase bad loans from financial institutions in order to secure their existence. A law being negotiated this weekend under high pressure in Washington is supposed to be passed this week. As a result, the US national debt will increase to $ 11.3 trillion dollars.US Finance minister Henry Paulson on Sunday recommended that othercountries adopt a similar rescue package such as that proposed by the US government. “They should do this”, Paulson said, and he confirmed that the US plans to “aggressively” lobby for such a package. He was optimistic that several countries would follow the example of the United States.Germany, but also the UK, are resisting the US model. “I have doubts, whether this approach is the most intelligent”, CDU party vice chairman Michael Meister (CDU) told “Handelsblatt”: The US government, with its $700 billion rescue package is potentially laying the foundation for the next crisis, just as it did with the massive interest rate reductions by the Federal Reserve after September 11, 2001, which planted the seeds for the current turbulence.SPD vice chairman Joachim Poß (SPD) also rejected calls from the US for German participation in the rescue package. “The Americans cannot now make Germany pay for their failure and their arrogance. In Germany, no similar approach is planned nor necessary,” said Poß. He declined to speculate whether a rescue package is necessary for the US: this is a matter for the Americans, he said.

Gunisimmäinen (Third in Chinese English)

Hyperinflation ? YESProblem compounding ? YES The big theme is the dollar crash

SORRY GIORGIO ADMIRANTE

Follow the yellowbrick road. Stick it to the international bankers, buy precious metals. It is the only market they can’t control. But buy physical not paper. Otherwise you contribute to the manipulation

The american overconsumption must come to an end.All this depends on whether the financial system, which enabled this overconsumption, will be penalized sufficiently.If there wont be enough deleveraging and loss taking, the world will go long on commodities again.

If the financial system is about to cash what is the best option to park your hard earned savings? We have seen the fate of property. Is it gold???

Supply Side Marxism, my friend has called these bailouts…

Could this latest announcement mean that GS and MS are throwing in the towel? Did Wall Street end today (as we used to know it anyway)?WASHINGTON – The Federal Reserve said Sunday it had granted a request by the country’s last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.The change continued the biggest restructuring on Wall Street since the Great Depression.The request for the change to bank holding companies was granted by a unanimous vote of the Fed’s board of governors during a late Sunday meeting in Washington.The change of status means both companies will come under the direct regulation of the Federal Reserve, which regulates the nation’s bank holding companies. The banking subsidiaries of the two institutions will face the stricter regulations that commercial banks are required to meet. Previously, the primary regulator for Goldman and Morgan Stanley was the Securities and Exchange Commission.

Professor, I hope that you will advise Obama if he becomes president. You deserve the nobel prize in economics!What do you think will happen to the dollar?

In Hong Kong, it is said that Paulson now is able to do whatever he loves to do.I did not see such a powerful political player in 10 years in the world.

will the rating agencies down garde USA?

Our current administration is trying to cram a proposal down the throats of the American public that will bail out the rich at the expense of the middle class – to the tune of $700 billion. And that doesn’t count all the taxpayer dollars they’ve already thrown at this bad situation.While I understand the need for acting quickly and decisively, it feels like the goal of this plan is to rush it through before the election and a new administration takes over, which is insane. We are about to put this country into even more debt. Such action deserves careful thought and right now, we’ve been given very few details for how this will work except that Paulson will have unfettered authority to pick and choose who gets to play.Wall Street and the over-extended got themselves into this mess; let them fix it.If nothing else, the presidential candidates need to stop talking about tax cuts and Bush and the Treasury Boys need to take the smirks off their faces during photo ops. That goes for you too Barney Franks. If the feds and Wall Street get their way, we’re all going to be paying for this for a very long time.

Nouriel,For once you are entitled to say “I told you so!”

The Elephant In The RoomThere has been much deserved criticism of the actions of the investment banks, mortgage originators, commercial banks, the Federal Reserve, the Treasury, the Securities and Exchange Commission, and the current Republican Administration along with the Democratic Congress in their collective handling of the financial crisis now dubbed the Panic of ’08.Although we should expect better, we must realize the constraints that have led to the current series of bailouts and nationalization of the markets.First, the players with their hands on the levers of power and the knowledge of what was happening, the Federal Reserve and the U.S. Treasury, were constrained by their hidden agendas as well as their explicit ones.The Treasury is tasked with the strength of the dollar and the need to finance our massive public debt. However, a strong dollar hurts exports and increases imports, the trade deficit, and the outsourcing of American jobs. As part of the current administration, politically this is a balancing act at best. And to top it off, interest rates which enable the financing the public debt are totally out of their control.Currently, foreigners hold much of our public debt, and thus can dictate terms or refuse to buy more. Meanwhile, the Treasury has lowered the limits as to how many savings bonds U.S. citizens can buy. Down from $60,000 per year to $10,000 per year, thus increasing our dependence on foreigners.The Federal Reserve is not part of the government, it is a creature that is in essence a quasi-private central bank with immense power and owned by the banks who have access to the Fed’s discount window and whose excess profits are given to the treasury. They are tasked with a stable currency (value of the dollar within the U.S. but not overseas) and stable economic growth. But their real mandate is to maintain a stable banking system. Politically, as a creature of Congress, they are subject to political pressure, but the members are appointed by the Executive branch. Most politicians, both Republican and Democrat, don’t have a clue as to what they do.They have been much criticized for their failure in stemming inflation and maintaining reasonable levels of employment. However, increases in unemployment have often been necessary in order to halt run away inflation. Thus politically, politicians love it when they do the wrong thing by increasing the supply of money and credit and hate it when they raise rates and withdraw the free lunch of unlimited credit. In addition, when they do the right thing and raise interest rates, they reward savers and raise the cost of carrying the public debt. Again, another institution that cannot keep their masters happy by doing the right thing.It can be correctly argued that today’s crisis is the result of the Fed’s choice to attempt to prevent a recession in late 2001 and postponing the price we should have paid for the 2000 Dot-Com Bubble. As usual, though the roots of the crisis go way back: Phil Gramm’s green lighting an unregulated derivatives market, Reagan’s de-regulation, Nixon’s closing of the gold window, LBJ’s guns and butter, Kennedy’s fiddling with statistics, etc. The truth is we collectively have been taking the easy way out and postponing the day of reckoning for decades.The Securities and Exchange Commission, like the Treasury, is part of the administration. This administration has sponsored a light hand and minimal regulation. This is completely in line with the previous Fed Chairman, “Easy Al”. Thus, in the perp-walks of the recent past, it was the Attorney General of the State of New York that was in the lead and not the SEC.The current Administration and Congress are focused on November 4th, counting on the Fed, Treasury, and SEC to keep peace until they can again pay attention to these problems. But, last week they have been dragged in and told “the world is about to end”.You see, in all of the previous meetings between the bankers and the Fed, or larger meetings with the Fed and Treasury, there was an Elephant in the room. This Elephant is the market in derivatives, and precisely in it’s largest part, the market in Credit Default Swaps.This Elephant is larger than all other players combined. This Elephant is what causes fear. This Elephant is why the measures taken so far have been done the way they have been done.The CDS market is unregulated but is like insurance. Just like an entertainment company can buy a life or disability policy on an actor while the film is in production, or an actor could insure his nose, legs, or voice, the purchaser of a Mortgage Backed Security or a Bond, can buy insurance against the default of that security or bond. However, this is not a regulated insurance contract and what constitutes a default in one CDS contract is often different from another CDS contract. Thus only civil courts can clear these.These CDSs are contracts or betting slips, and the biggest bookie was AIG. AIG is not an insurance company but a holding company that owns regulated insurance companies, who do not write CDSs, and unregulated companies who do write CDSs.Furthermore, the value of these CDSs is what separates most banks from insolvency. That is, if the value of these contracts is in doubt, the FDIC has to take over the bank.These takedowns of Bear, Fannie, Freddie, and AIG ( and today’s morphing of Goldman and Morgan into banks) were all done in a way to avoid triggering these ‘default’ events and a cascade to oblivion in the CDS market.The Elephant is still in the room, and thus the danger is still with us.

Professor, why do you continue to include Moral Hazard in your statements. Haven’t the recent events, that you clearly foresaw, convinced us all that Moral Hazard no longer exists. It was killed as an ideal suitable for the past, but not needed in this modern age of No-Fault Theology. This new principle reigns in our markets, and our elected government. The Treasury of the United States and the Federal Reserve have voted NO-CONFIDENCE in the citizens of our country! It is plain to see. Why should we continue to ‘play’ in the markets? Who do we serve? What is in our best interest? Moral hazard?

“The Shorts” are not a new tribe. Joe Kennedy and Jessie Livermore are examples of this tribe back in the post WWI period.The Fed, created in 1913, made the situation worse. The Fed was created because of the Panic of ’07 (1907) and has created the Panic of ’08 (2008). But the roots as always are in the excessive creation of debt and our collective refusal to pay it off. We pass it off to the future.Bankers, in their greed, create new ways to lose monney. The new ways are evil in themselves, but we would be wrong to ignore the underlying cause, too much debt.

next week i will wrok out my ideas in saving US currency…next month i shoud be ready to say i have done my good job, we will be in a new world…

how can I tell myself that Paulson is trustworthy, as now GS is the biggest…

how can I tell myself that Paulson is trustworthy, as now GS is the biggest…

Here is the link to the article and post written by London Banker.

About the bailout:If the assets the goverment is going to buy is not already written off by the banks I think this bailout has a serious problem. If the price the goverment pay is to low the banks will not get any help. So thats why I think Paulson wants to become King. He is going to pay the original full value for these assets and then let the taxpayers do the writing off. This will not be popular in main streat. I guess this is the end of the bailouts.

@ Professor RoubiniI too had doubts about the failure of all the IBs, and am now chastened by the accuracy of your predictions – once again.You conclude today’s post with the eleven critical issues for reform. I agree with all of them, but cannot see how any can be resolved in the public interest in the current political and economic climate.The Reichstag Fire of the Lehman failure is being used to consolidate unreviewable authority and what remains of US Treasury credit in the hands of the same gang that engineered the impending catastrophe, and they have no interest in forwarding any of the reforms you suggest. Their interest is in restarting the liquidity pump which enabled their unworkable models to siphon prosperity to ever more concentrated pockets over the past two decades, leaving the poor taxpaying workers of the nation both privately indebted through mortgage/consumer credit and publicly indebted through federal/state/local deficits that are already approaching unsustainable levels.At this point, I see no way for the public interest, however defined, to find expression in the public policies being enacted. The system is too corrupt.The alternative is failure of the system. That is unpalateable, but also likely unavoidable.I have observed that it is usually creditors who have no dominant stake in a local system who bring in the liquidators or receivers. Being less exposed to influence by local authorities, they make a decision on expectations of recovery in the short term rather than preserving status and influence in the long term.I expect it will be the foreign creditors – who are even more disenfranchised than the poor taxpayers – who will call time and close the bar on US and UK corrupt credit games. A currency crisis that sees the end of BWII is likely inevitable when the credit stops.When that happens, it will be time for the taxpayers to once again assert an interest in their systems of political and economic governance through reforms.Your list of 11 reforms will still be valid then. But I fear it will not be effectual until then.

I think I just figured out a piece of the puzzle. All the Fed’s alphabet soup of emergency liquidity facilities were structured around repurchase agreements. Toxic waste securities were used as collateral for US Treasuries and dollar credit at 85 percent of face value. But as each facility expires, it has to be rolled over and increased to keep pace with the implosion of credit in the interbank markets.The Paulson plan will provide a one off opportunity for banks to take their toxic collateral back and sell it at a Paulson-determined price for cash. He selectively decides winners and losers, of course, creating arbitrage opportunities and survivor bias in the process.In the meanwhile, the removal of the toxic waste from the Fed balance sheet gets the Fed off the hook for having hypothecated all its Treasuries against worthless toxic waste at Enron-styled false valuations.Any views?

Have already wrote my representatives to vote this funding down. What are the chances that they (the representatives)will listen to the will of the American people ? Also, told them to read Andrew Jackson’s farewell speech as President on banking and try to find a moral backbone to fight for the freedoms we have enjoyed.

What will be the question on everyone’s minds with respect to RTC 2? I guess it would be the price at which the distressed assets are aquired. As well as accountability of the Treasurer and the Fed. We are at the cusp of a financial disaster, and ironically, a plan like the one Paulson is proposing will probably push the markets over the edge. The main issue cause of the problems has been and will be overleverage and the lack of bank capital for all these assets. Moving the leverage to the government just changes the source of the pain when the final deleveraging correction comes. It is up to the citizens of the US of A to decide for themselves as to whether it will be the tax payers, or the bank investors who will bear the price of the failure to regulate leverage. Letting Paulson have his way would lead to economic slavery for generations of Americans to come, and more likely than not, a default on payment by the US Government. The alternative is to let the investors and creditors of the banks who made the mistakes take the pain, where the government comes in AFTER the fact to clean out the banks and re-establish them as viable and regulated entities.Somehow, I fear that the latter is not an acceptable scenario for the major participants of the great bailout charade. They want to make the taxpayer pay for their mistakes and the complicit Congress and Senate will let the taxpayer suffer for this. Bernanke is relying on foreign investors to continue to lend to the USA to help finance this bailout but I am a firm believer in self-interest. The major reserve holders will have zero incentive to help the US of A because they can no longer afford to buy the goods that these countries produce. They certainly will not endanger their wealth which can be better used to shield them from the coming recession/depression. We will see the USA be destroyed to save the selected few bankers.Its up to the common American now to wake up and examine the situation without propaganda and deceit, It is your country at stake here, and if you want to make sure your children have a future, I seriously suggest you make the fact known to your elected official in no uncertain terms that you do not agree to this plan and that your vote is at stake. If not, the USA is gone, and it will drag the whole world with it.

Do repos mature at random intervals or are their maturities bunched at the end of quarters – like 30 Sep? It seems crisis modes are centered around past quarter closes. The curious rush to resolve this legislation before 30 September could be a coincidence or to avert a 30 Sep trigger.

Professor Roubini,One of the small provision of the Paulson plan is a 50B$ garanty for money market mutual funds investments.What does it mean? Have all of them have been transformed in Treasury funds? So, agressive managers have an incentive to search for high yields with the opportunity to get a higher management fee with no consequence as to the fund valuation.That is unreal. How far panic can push this deperate government?

Unfortunately you may well be right.The government is blackmailing congress in approuving it’s plan. They claim that they won’t encourage moral hazard for banks who didn’t see the looming risks, but this government wants to be saved from its own shortcomings.How wild!It reminds of Iraq-WMD situation.These people are irresponsible impostors.

Another viewpoint as to why the government is acting “punch drunk” (John Bogle’s recent term).IT’S THE DERIVATIVEShttp://webofdebt.wordpress.com/

MAKE NO MISTAKE ABOUT THIS BAILOUT. THIS ONLY BENEFITS WALL STREET. THE 70-80% OF THE REAL ECONOMY SUPPORTED BY MAIN STREET WILL CONTINUE TO ERODE WITH HIGHER PRICES, HIGHER TAXES ON THE AVERAGE AMERICAN IN SOME FORM, AND LESS SPENDING. THERE WILL BE MORE BAILOUTS TO COME FURTHER ERODING THE DOLLAR. SOONER OR LATER MORE MONEY WILL COME OUT OF THE MARKET AS MORE AND MORE AMERICANS WISE UP TO THE EROSION OF THEIR REMAINING WEALTH THROUGH INFLATION. THERE MAY BE DEFLATION IN SOME AREAS BUT NOT IN THE COST OF GOODS USED DAILY BY THE AVERAGE AMERICAN. AMERICA NEEDS TO WAKE UP AND VOTE EVERY INCUMBENT OUT OF OFFICE WHILE THE OPPORTUNITY IS OPEN FOR THEM. OTHERWISE THE GAME WILL CONTINUE UNTIL THEY WAKE UP AND DISCOVER THEIR LIBERTIES ARE A THING OF THE PAST.

Are you sleepwalking about the election? See the great angry comment by Juan Cole in which he calls Americans masochists if they elect a Republican this November:Below are two selected portions:The Republican Party came to Washington, DC, in 2000 with a solid majority in both houses of Congress and on the Supreme Court, allowing them to steal the presidency, as well. If you wanted to know what a pure Republican-Party government unhindered by the Democrats, Libertarians, Greens or Socialists might look like, this was the moment.So they came to power when there was a budget surplus bequeathed by a Democratic president.They immediately ran up a big deficit every year since, doubling the national debt from $5 trillion to $10 trillion. You don’t run big deficits of $300 and $400 billion a year in good times according to Keynes. You save the the deficit spending for a recession, when the economy needs a jolt. If you’re already racking up a big deficit every year in a good economy, you have no way of making a difference during a significant downturn except by then going for a truly mega-deficit, which risks destroying the value of your currency abroad. In a service economy like that of the US, a dollar with a declining value might not even help the economy via exports very much, since the manufactured goods are being made down in Mexico now, anyway.Note that Clinton had been talking about using the surplus to pay down the debt or to fix the looming crisis in social security.With the government encumbered with $5 trillion in new debt before September, and now with another trillion and a half (probably when it is all said and done with), how exactly will social security be fixed?******By their incompetence and cupidity the Republican politicians deeply damaged the relief effort for one of America’s great cities, New Orleans, which will never see the $33 billion pledged for its reconstruction. Not to mention that levies and bridges are breaking and falling down all around us because Cheney did not want to tax his billionaire friends to pay for the country’s infrastructural upkeep.And then they so radically deregulated and removed any oversight from the banking system that they came within hours of presiding over a 1929-style absolute meltdown of the entire financial and securities system. To cover the criminal activities of their cronies, they are now proposing to impose a fine of one trillion dollars on the middle class, to ensure that their partners in crime will receive their $25 million Christmas bonuses and be held harmless for their misdeeds.And in the wake of the greatest and most sustained act of systematic plunder since the Mongol hordes appropriated to themselves the riches of everyplace in Asia from Beijing to Isfahan, the reaction of the supine and slave-like American voting public is to scratch their heads and have a hard time deciding if they would like more of the same.for the whole commentary, which should be widely read abd disseminated:http://www.juancole.com/2008/09/nation-of-masochists.html

1)Krugman calls the plan CASH FOR TRASH, but doesn’t truly explain the mechanics to his readers!2)Bloomberg has a story about the total expansion of the asset categories for this plan! They are trying toget any debt to qualify.3)I was hoping the Professor would distinguish betweenhis HOME(HOLC) and what is being proposed, but he probably wants more information before he does.The clock is ticking and they will pass a new law thatwill benefit only the banks!

Same situation in Germany. Here is what I do:- Buy some physical gold- Hold some cash- Spread the money among accounts in different bank. Each account is insuref for €20000- Invest directly in government papers. In Germany we can get roughly 4%, daily available, from http://www.tagesanleihe.de (don’t think you can buy from outside Germany). This is a nice alternative to a money market fund.- Some German bank consortiums (like the Sparkasse) have their own protection funds, with much better insurance than the standard €20000.- Hold some stocks. If your bank goes bust, you still own the stock.This should keep the money safe, but of course all this will not protect me from devaluation of my money.

Link to Jackson’s speech?

Not sure anybody will benefit since it’s only trying to delay the inevitable… Misallocation of capital and of human resources = Wealth destruction. Can’t see much reform on this yet…

I’m closing all my financial stock positions including LEAP puts because the system is too rigged and the outcome too uncertain. I wish Ron Paul had more pull to inject some insanity into this chaos. I’ll just sit on the sidelines with my GLD, and SLV and DGP and watch it all unfold.

good questions for the Senator, as well!

With the government now getting involved in banking and insurance, would it mean that they can finally afford universal health care insurance for all of the citizens?

As usual-10:00 CST and the double bottom is in place for stocks…up we go! Stocks are the new sentiment pawn for HankNBen…If they were smart, they would tanks stocks all week to force the hand of congress…

Thank you PeteCA, for that post.All American readers should raise hell with their representatives and senators in Congress, NOW!

So Americans mortgaged themselves to the hilt to buy overpriced houses they can no longer afford and signed up for 401k programs that put money where, exactly? In the stock market! Where rich Republicans fleeced them.”Plenty of rich Democrats fleeced them as well.

Congress will screw this up just like they always do! A bunch of lawmakers trying to fix financial problems…give me a break!

For a long time “economists” complained about that a system where education and health care is universal and free (such as exists Sweden, Germany, or France) was too expensive for America. But since successive administrations of government have had nothing against increasing the national debt, surely it could have been increased for a cause that actually benefited the citizens? The government could also have reduced the defense spending to a minimum (like, say, 50 billion a year). At least there would now be far less people with large health care or school debts.What you have now is a population with a far worse employment security, health care, and time off from work than what is common in Europe. Yet even with all of these sacrifices from the U.S. workers, they are not ahead in pay compared to the Europeans. And the financial condition of the U.S. industries is far worse than the industries in afore mentioned European countries.

I fully agree. A true bipartisan effort:-)

Stocks down and Treasury yields up. Bad cocktail…

Thou hast spoken.

11:28 a.m.Short-sale ban list expanded to include GE, GM, 28 othersHELL, WHY NOT JUST OUTLAW SHORT SELLING ON EVERY STOCK IN THE US??? FRIGGIN IDIOTS!!!!!

The dollar volume of credit default swaps is so huge because they are highly leveraged. This massive credit expansion can be maintained if the players consider the notional dollars to have some real value. Once that belief is violated, defaults in the trillions of dollars become inevitable.Last spring’s dollar decline –which coincided with the shrinking of the real economy–was a signal that the fiction had become unsustainable. The balloon of credit expansion had reached its limit and the only unknown as its speed and breadth.None of the proposals currently being floated, and certainly not Paulson’s shock and awe,can alter this economic law of gravity. There aren’t enough dollars to plug this particular black hole. The taxpayer, the homeowner and even the entire value of the nation’s real capital stock would be inadequate even if they were seized and plundered outright.I don’t know who or what is holding these debt swaps, but one thing is for sure: God himself can’t protect them from infamy, let alone bankruptcy. Truly we would be better off by letting them just go bust in one massive convulsion and then picking up the pieces.

@ Guest on 2008-09-22 10:43:52As I indicated last week, the game plan is to guy the SEC of all powers in favour of the Fed as the unitary executive in fianancial regulation. Cox is the fallguy and the SEC will be “reformed” into a “principles based” regulator that poses no real threat to those in authority on Wall Street or in Washington.

The VIX is actually DOWN with stocks DOWN +2%!!! Cmplacency at its finest!

A mass refusal to pay debt for a month, credit card, mortgage, etc. is more appropriate, don’t you think? As a means to increasing bargaining power.

Guest,It’s true that most countries in Europe have not too expensive health care and education. But in many of those countries it’s rapidly changing and extra personal input or insurance is more and more required, because the social security systems are having increasing deficits.You borrowed as a country to spent on war as where we borrowed to spent it at keeping a bankrupt social security in place.We too used housing bubbles to make our GDP figures outrun our debtgrowth.We welcome(d) immigrants to keep pressure on the housing market and to increase the numbers.Don’t just copy a model because it seemingly looks good. That’s what we did when looking to the Anglo-American consumer debt, housing bubble model. And that’s what kept our systems going.Now that the tide is turning, we’ll see what will be left of it.

WHERE’S THE 2009 FEDERAL BUDGET FOR THE ADD ON $1 TRILLION ENTITY?It doesn’t exist, so I say this “pie in the sky” budget lie is just a phony prop to keep the stock market from collapsing some more in the short term.To add $1 trillion to the federal deficit, step one is getting someone to lend us tax payers the principle to pay interest taxes on it. The rest of the world is broke too and we aren’t buying so much of their stuff anymore.So who’s gonna lend us the money….the tooth fairy?

@ SoftwareengineerFrom the proposed legislation:Sec. 11. Credit Reform.The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.A former Treasury friend tells me this means there can be zero reported budget outlays for the purchase of up to $700 billion of loans under the act. “Credit Reform” indeed!

The collapse of Lehman also triggered a firesale in equities tied to Eastern Europe – because Lehman held a lot of assets in that sector. This caused two days of chaos in the Russian stock market. Imagine what Russian traders (and the Kremlin) must be thinking. The Fed has bailed out almost every US player that is in trouble – but not Lehman.

Funny some people might have thought that Russian stocks tanked because of something wrong with Russia or because of UK doing something (as they had threated that Russia would suffer economically because of that Georgia thing).

12:09 p.m.McCain ‘deeply uncomfortable’ with rescue plan

Correct. Core problem: U.S. financial sector invested huge amount, with leverage, in assets that had a negative return on investment. The entire country participated.Until we figure this out, as a country, downward into the spiral we go.Appropriate resource allocation means “invest in enterprises that generate wealth”.The financial sector, and our own good sense, failed us. We need a referendum on the question of “what do we base our economy on?”.

someday, all politicians will have to find a way to make peace with their own souls for what they have done-God speed to them…

@London Banker to Guest: “As I indicated last week, the game plan is to gut the SEC of all powers in favour of the Fed as the unitary executive in fianancial regulation. Cox is the fallguy…”Thanks for the reply: I was gone this weekend and I certainly agree with your point.The concentration of power is definitely on the side of tyranny but for those of us still able to speak, we need to remember that it may be easier to topple a concentrated target than a multitude of evils. As Sen. Dodd was being interviewed by National Public Radio this morning, the interviewer asked (as we all would like to know), “Isn’t it of some concern that so much power is being given to one man, the Secretary of the Treasury?”Sen. Dodd’s response is so convoluted that it’s unimportant. However, the point that Americans should start to realize is that this dangerous power is being handed to the largest investment bank that now also runs a private cartel (the Fed) in world history and that its solitary spokesman is Treasury-Secretary Hank Paulson. Ironically, this NPR newscast was headed by the news story of Goldman Sachs’ and Morgan Stanley’s newest central role in this financial event.And for those who would say this is a Republican administration power grab, would a Secretary of the Treasury Rubin or another Goldman treasurer that he selects, improve the situation?

I don’t understand how current politicians can look their own children/grand children in the eyes…they have ruined their futures.

Elephants are wise …I wish there was at least one in the room !

I Want My RTC(With Sincere apologies to Dire Straits)Now look at them yoyo’s,that’s the way you do it,You hide your bad loans in an RTCThat ain’t free markets,that’s the way you do it,get your money for nothing,take big risk for freeNow that aint workin thats the way you do itLemme tell ya them guys aint dumbMaybe get a bounce back in the DJIAMaybe stop another big bank runWe gotta pay for all their mistakesBillion dollar pay day’sWe gotta pay for their all their greedPay more taxes everydaySee the little faggot with the podium and the secretaryYeah buddy that his home in Bel AireThat little faggot got his own jet airplaneThat little faggot hes a BillionaireWe gotta pay for all their mistakesAll the Billion dollar pay day’sWe gotta pay for their all their greedPay more taxes everydayI should have learned, to lie for the cameraI should have learned to sell them loansLook at that mama, she got no job for eight yearsMan, she owns eight homesAnd hes up there, whats that? No need for capital?He’s Bangin on the podium like a chimpanzeeThat aint free markets, that’s the way you do itYou hide your bad loans in an RTCI want my, I want my, I want my RTCMoney for nothing,I want …

Then you would have to pay workers more within a country and share political power with them. That isn’t a favorite political system for large-scale private property. Hence: “export-led growth” and US finance capitalism.Darkie

Text of the Dodd counter-proposal is up. Hank won’t like it.The Dodd draft legislation includes multi-agency and independent oversight, audit, accountability, executive remuneration regulation, a GAO report and help for homeowners.http://www.politico.com/static/PPM41_ayo08b28.html

Then you would have to pay workers more within a country and share political power with them. That isn’t a favorite political system for large-scale private property. Hence: “export-led growth” and US finance capitalism.Darkie

“Plunder” is a new book out by Danny Schechter on the Paulson legacy. “It is time to understand the origins of the crisis,” he says, “and the need to fight for economic justice.” Here is an excerpt from an article by Schechter ~HAIL CEASAR: PAULSON IS THE POWER…Is this what a State of Emergency feels like?Make no mistake about: we have entered the era of a financial coup d’etat with the Treasury Department releasing a THREE PAGE document and then demanding $700 Billion dollars for a system “rescue” as a start and with unlimited and unchecked power. Welcome to another 9/11 with the Bush Administration in effect pre-empting the options of whoever becomes our next President with a measure likely to cost way over a $ trillion or more.GUEST INSERT [A little dishonest editorializing by Schechter here as the “Congress” has the responsibility for the nation’s monetary decisions, albeit that they have deferred…i.e. where does this Republican administration go to get its $700bn – to a Democrat-controlled Congress.]In fact, as Frank Rich reminded us in the NY Times, Johh McCain has asked for a “new 9//11 Commission to “get to the bottom” of 9/14, the day the illiquid Lehman went down. Never mind that the old 9/11 Commission did not get to the bottom of much about the original 9/11.For months, we have been expecting an October Surprise, perhaps an attack on Iran. Instead what we are getting is a September surprise, and an attack on American taxpayers who are being told they/we will now bail out criminally irresponsible bankers, the folks that Franklin Delano Roosevelt once denounced as “BANKSTERS.”The only thing missing are troops in the streets and, believe me, as I reported last week, that is coming. Troops are being shipped back from Iraq to be on standby for CIVIL UNREST. (The “authorities” don’t believe that the American people will take the strip mining of their lives without a fight. Surely more crime, and other dislocation is coming!)Some are saying that because of this dire emergency, the election could be “postponed.” That may be too unlikely and unnecesary, especially if it is fixed or if both candidates sign on to the PLAN, what ever it is. We don’t even know the details yet but both McCain and Obama are aboard as you may have seen on 60 Minutes Sunday night.This seems to follow the pattern layed out by Naomi Klein–create a shock and disorient the normal processes of government to impose emergency rules by fiat. It is shocking, but few in the media are even presenting the voices of critics who feel this way.This measure is being sold as a way to help everyday Americans but the first time that members of Congress wanted the bailout to apply to distressed homeowners, Tresasury Secretary Paulson’s predictable response was a big fat NO WAY.Thanks a lot.This power grab has a name—“the troubled assets relief program” or TARP. Gretchen Morgenson of the NY Times compares this tarp to others, “the kind of thing they spread over muddy fields so you don’t spoil your Guccis.” This is also a tarp they seem to be pulled over the eyes of the American people and its Congress as the fear weapon is used again as it was after the last 9/11.Then, they needed vast amounts of money to make war, mostly on people who had nothing to do with The World Trade Center attack. Now they need money to make themselves whole at our expense.WARNING OF A COMPLETE MELTDOWN…http://www.newsdissector.com/blog/

So they fix this mess but cause a dollar collapse in the interum which causes oil to got to $200 which causes a global depression…BRILLIANT!!

1:34 p.m. Crude futures hit limit price climb of $10/brlA limit price for RISING prices??? I thought only falling prices were illegal LOLOLOL

Cheaper for us, not for them.OK we all know this a crime in progress. Now how do we stop it?

How can the VIX still be down with stocks down approaching 3%????????

Obama said that Paulson might have a role in his administration, according to something I read.

If troubled assets do not include bridge loans for leverage buyouts then Mitsubishi will not buy 20% of Morgan Stanley.The whole idea is to launder out the totality of the troubled assets to the taxpayer before anybody will invest in a bank. They would also like to be overpayed for the assets, thereby shoring up the finances of the banks.Paulson is the Money Launderer in Chief. He will stick thetaxpayers so the banks can recapitalize. The banking lobbywill work hard to get everything they want.

“Take That: An answer to shock and awe”The “People’s Secretary of Treasury” Rufus T. Fernwell convenes congressinal leaders, scares the bejesus out of them, and then submits his proposal:1.Nationalize the banks, funds, insurance companies.The government holds them all as public fiduciary and issues enough new stock to own 51% of them. Investors face substantial dilution but that’s better than losing everything.2.Sanitize (read:void)the derivative holdings of the weakest firms; fire their boards of directors.3.Immediately dictate terms of a work-out of mortgages in foreclosure, financing across the board consumer debt reduction with confiscatory taxes on the rich.4.Seize and liquidate the houses and personal property of bankers and financiers indicted for malfeasance by duly constituted grand juries and…5.Use the proceeds to compensate those who have lost their homes due to unscrupulous and predatory lenders.Heh we can dream, can’t we?

2:09 p.m.Moody’s says U.S. government’s ‘Aaa’ ratings not threatenedOooohhhh, that makes me feel better! Especially with the job you did on rating subprime…

I think if Hank tanked, er, um…I mean the markets tanked 1,000 point sor so by Wednesday, that would make congress squirm….

Moral hazard? Forget moral hazard, that’s the possibility of theft in the future.This is enormous theft, right now! Just stop the theft & let the chips fall where they may. The sun will still rise, the birds will still sing, and freedom will have won a magnificent victory.

I read somewhere that Obama would consider a role for Paulson in his administration.Congress will be Democratic (unless they let this go through untouched, in which case all those Dem incumbents might be thrown out). So the President should be Republican. Besides, as an old man, McCain (like Arlen Specter, a Republican who is calling for hearings on this measure) may care more for doing what is right and less for earthly concerns.

From Economist Michael Hudson:My alternative solutions are as simple as Mr. Paulson’s, but of course are quite different. The public interest does indeed call for maintaining the economy’s basic credit, money-transfer, credit card and depository checking and savings functions. But not under the current venal and predatory management practices. It is this management that has lobbied so hard for deregulation, and whose industry representatives have insisted so strongly to place extremist ideological deregulators into the economy’s major positions. Therefore, the Treasury only should buy junk mortgages at current market price. The losses should be taken in order to re-even out the wealth pyramid that has become so much steeper under the Greenspan-Bernanke ploys. The banks knew full well that these mortgages lacked underlying value. The price of making use of this borrowing facility is to forfeit all equity stock to the government. The Treasury should prohibit any financial institution that sells or swaps securities to the Fed from paying any dividends to shareholders or stock options and bonuses to managers. It also should give the government priority over other creditors. Otherwise, firms that have negative equity will benefit purely at public expense, using the money to pay dividends, bonuses and exorbitant salaries.Second, we need to restore the Glass-Steagall separation of commercial banks from risk-taking investment banks, mortgage brokers and other financial-sector flotsam and jetsam. Break up the mergers between banks and casino sell-side financial and real estate institutions. Just the opposite is occurring: On Monday, Sept. 22, the financial universe was transformed by the announcement that Mr. Paulson’s Wall Street firm, Goldman Sachs, was transforming itself into a bank holding company. The casinos are to take over the banking system as big fish eat little fish in the present financial emergency. It looks like new giants are emerging, already larger than the government in terms of the magnitude of the debts they have run up – and certainly in their earning power. Indeed, who is to say that extracting interest from the U.S. economy will not emerge as the new form of taxation?Third, re-write the bankruptcy laws to favor debtors once again, not creditors. This means reversing the current bankruptcy code sponsored by lobbies from the credit-card companies. The interests of the five million mortgage debtors faced with foreclosure and expropriation this year should rightly be placed above the interest (literally) of predatory creditors.Fourth, sharply increase property taxes, shifting them back off labor and sales. We need to return to the classical idea of taxing unearned and unproductive income instead of adding to the price of labor and industry. What has been freed from the tax collector by the shift of taxes off property has not lowered the cost of housing and other real estate, or corporate costs of doing business. The income “freed” has ended up being paid to the banks as interest. The government still has had to raise money – but in the form of taxes that fall on labor’s wages and industry’s profits. So labor and industry now pay twice for what they formerly paid only once. They still pay the same overall amount of taxes, but also pay an equivalent amount of interest. The financial system is crowding out the government.In the fifth place, we need to start discussing whether we really need a banking system that behaves in the way the present one does. In recent decades banks have made loans mainly to inflate asset prices by loading real estate and industry with interest-bearing debt. What if all banks were to be organized along the lines of savings banks, with 100% reserves. This is the Chicago Plan from the 1930s (currently revived by the American Monetary Institute, which holds its annual meeting this week in Chicago, by the way). This at least would go back to basics to provide a foundation from which to re-begin to discuss just what kind of credit the economy needs and what would be the best terms on which to structure financial markets.Any solution does indeed need to be radical. But it can be much less radical than Mr. Paulson’s power grab for his Morgan Stanley firm and the rest of Wall Street in the closing days of the Bush administration just before the Republicans look like losing power. The indicated solution is to reverse predatory finance, not bail it out at permanent taxpayer expense. Government funds are not unlimited. Is it worth wiping out hopes for Social Security and public health care, for renewed national infrastructure spending and industrial restructuring in order to bail out a banking and financial system that has not contributed to economic growth but has weighed it down with reckless debt regardless of the economy’s ability to pay?http://www.counterpunch.org/hudson09222008.html

2:52 p.m. Crude scores biggest daily dollar price gain ever on Nymex

2:58 p.m.Fitch downgrades General Motors on diminishing liquidity

Right! Unpalateable to whom?These leeches, with their ever-increasing parasitism, want to start the game all over after a bailout.They not only want to start over, they want to go forward as bigger players with even more concentrated wealth and power.

More from BigPicture:The dollar has dropped the most versus the Euro since its inception, according to Bloomberg. And ddue to the collapse of the greenback, Briefing is reporting that COMDX Crude oil trades to new 2-month high of $130 per barrel.

I told you so!:))))

By NELSON D. SCHWARTZ and CARTER DOUGHERTYPublished: September 21, 2008PARIS The financial crisis that began in the United States spread to many corners of the globe. Now, the American bailout looks as if it is going global, too, a move that could raise its cost and intensify scrutiny by Congress and critics.Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.

NEW YORK (MarketWatch) — The U.S. Congress is likely to raise the cost of a $700 billion rescue deal for U.S. markets by adding a new economic stimulus plan to benefit taxpayers, according to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.Further, the cost of the latest government plan to stabilize the credit and lending market could cost up to $1 trillion dollars, said Sen. Richard Shelby, R-Ala., ranking member of the Senate Committee on Banking, Housing & Urban Affairs.That raises the specter of higher taxes under the next presidential administration.

The European housebust will soon give us the next creditcrisis. I cant see how the world economy will stand for this. Furthermore mot only the US consumer, the best in the world, but also the European cusin are both bust. My guess is that there will be a tsunami of profitwarnings q3 and q4.

Just think of all the banks that have to take the hit in Q3 on the wipeout of Phony & Fraudy preferereds!

Alan Blinder (professor at Princeton, former Fed vice chair) criticized the Treasury’s bailout plan and called for Paulson to be dismissed on a talk show on WAMU (an NPR radio station in DC) this morning.This is what he said in part (from the Chicago Tribune’s “The Swamp” website).“I’m speaking now as one of the earliest advocates of creating an institution like this, many, many months ago. And it’s a crying shame to see the way the Treasury has written this. I think the secretary of the Treasury should be dismissed, frankly. … Asking for the authority to buy anything, with no review, with no court review, with no limits practically as to quantity or scope, with almost no congressional oversight. We have something more precious at stake than our precious financial system and that’s our precious Constitution. And frankly, if I were a member of Congress, having advocated for this for nine or ten months, I would vote against this unless it’s changed, dramatically…”

This qutoe should be bombarded to all of our congressmen/women!! If this gets passed in its current state, there will be legal precident to just ignore the constitution and anarchy shall rule the day…

VOLATILITY200 point per day swings have morphed into 400 point per day swings. The end of this tawdry charade is days to weeks away.

Not true…especially for GS and MS exposures.Plus your assertion is trying to apply apples to oranges…a 3% default rate may have negative consequences for shareholders (depending on capital structure) but it most certainly would not cause the entire US financial system to implode.Also — HOW COME ROUBINI NEVER SUPPORTS HIS “ANALYSIS” WITH ANY NUMBERS???We are experiencing nothing more than a panic by fear mongers likes Roubini.

and they succeed (but only just…)

Than we have a problem: who to blame now?

4:02 p.m.[WM] Moody’s cuts WaMu preferred stock to ‘most speculative

4:08 p.m. Sen. Shelby: U.S. rescue plan may not be ‘workable’

Goldman Sachs has been a cancer since the 1920s. Looks like they are metastasizing.

Ryscamp?

C’MON…someone address the following with numbers/factsWHY IS IT THAT ROUBINI NEVER SUPPORTS HIS FEAR MONGERING WITH NUMBERS? HE NEVER ADDRESSES THE REALITY THAT 90%+ OF ALL MORTGAGES ARE UP TO DATE. HIS WHOLE ARGUMENT SEEMS BASED ON THE PREMISE THAT AMERICANS WILL STOP PAYING THEIR MORTGAGES EN MASSE IF HOUSING PRICES TEMPORARILY FALL ANOTHER 10%…THIS IS A HIGHLY QUESTIONABLE ASSUMPTION. MOST OF THE DEFAULTS REALIZED TO DATE HAVE STEMMED FROM SPECULATORS AND FRAUD NOT WELL INTENTIONED HOME/OWNERS, WHICH REPRESENTS THAT VAST MAJORTY OF HOMEOWNERS. 6 MONTHS FROM NOW THE PACE OF MORTGAGE DEFAULTS WILL BE ON THE DECLINE AND HOME PRICES WILL HAVE BOTTOMED AND BEGUN TO MOVE UPWARD ALTHOUGH SLOWLY. WAKE UP DRAMA QUEENS…THE US WILL ONCE AGAIN PROVE TO BE A HIGHLY RESILIENT ECONOMY.

Please go back to bed.

Yep, John saw the collapse that he repeated thrice occurred “in a day”

This is great news. Arlen Specter is holding out for hearings. Some of our more serious men are doing their best for their country, not rolling over to the banks.We should not modify it. We should throw it out and start over the right way. Do nothing until we know what the right thing is to do.

How about these numbers?$700 Billion$85 Billion$30 Billion$200 BillionHalf Fed’s Balance Sheet

$544 against a $14-15 trillion economy can easily be absorbed.you also write — “not including reference vehicles like CDS or CDOs of those securities (many which would be triggered into liquidation based on that scenario”…this is again hype, not supported by facts or numbers….you further write — “Not to mention the negative feedback loop of realized or mark-to-market losses, increasing cost of capital, asset fire sales, broad credit contraction, and further realized or mark-to-market losses.” ….more hype not supported by facts or numbers….I WILL NOW REVERT BACK TO CAPS NOT TO BE RUDE BUT BECAUSE THIS IS HIGHLY IMPORTANT:WHY DOESN”T ROUBINI SUPPORTY ANY OF HIS “ANALYSIS” WITH NUMBERS OR FACTS?????HIS KEY ASSUMPTION IS AS FOLLOWS — AMERICANS WILL DEFAULT ON THEIR MORTGAGES EN MASSE WHEN HOME PRICES TEMPORARILY FALL ANOTHER 10%…THIS IS ABSURD!!!!!HE ALSO REFUSES TO RECOGNIZE THAT THE VAST MAJORITY (75%+) OF MORTAGE DEFAULTS AND FORECLOSURES TO DATE HAVE RELATED TO SPECULATORS AND FRAUD NOT WELL INTENTIONED HOMEOWNERS WHO REPRESENT THE VAST MAJORITY OF ALL HOMEOWNERSWAKE UP PEOPLE!!!! YOU ARE BEING SCARED WITLESS BY A MAN WHO WOULD EXPERIENCE NO GREATER PLEASURE THAN SEEING USA FAIL.

My brother is an Exec. at a Major Bank which is dealing with significant REO Assets. In the past 30 days they have begun to receive multiple offers of their foreclosure sales. If financing doesn’t skew dramatically because of the crisis, we are on the bottom of the R.E. market in certain locations….California

Speaking of the coming Dark Age:”Contrary to popular belief, the rescue package cannot help the economy; it will only severely weaken wealth generators. (The larger the package, the more misery it will inflict.) Hence, once the massive rescue plan is implemented, it will not prevent an economic slump but, rather, runs the risk of plunging the economy into the mother of all recessions.”http://mises.org/story/3119Vivre la revolutioneHo humPeterJB

ya better get this key info out to Comrade Paulson, he seems to think there’s a spot of a problem with mortgages too.

aint this a oil short squeeze?

Au contraire. Roubini early on warned of this oncoming financial tsunami and suggested ways to thwart it.Wake up? I woke up long ago, to those who have used the Federal Reserve System and unchecked access to the U.S. Treasury to destroy the credit of the U.S. and the dollar as the world’s reserve currency, for personal gain. Just as frightening are their lap dogs in the Congress. This financial crisis is more explosive than mortgage default: it is of the magnitude of a hydrogen bomb or hell bomb with an explosive equivalent of 7,500,000 tons of TNT, or if things really get bad, that of a tritium bomb with a release force equivalent to the spontaneous detonation of more than 22,000,000 tons of TNT.If that doesn’t scare you, what will? China is certainly taking cover. It’s ironic that the only person who predicted what was gong to happen and with free advice, is accused of finding “no greater pleasure than seeing the USA fail.”

Sir, you should consider this resort for your precious brainhttp://www.buymyshitpile.com/With best regards

Why would Roubini experience “no greater pleasure than seeing the USA Fail?

Hey all caps mad person – where can I fact check your assertion that 75% of mortgage defaults etc are related to speculators and fraud? Your all caps logic seems to be influenced by a distaste for the messenger delivering a message that has been on target. And if the Professor turns out to be correct, will you promise to use lower case except for initial cap of proper nouns and the first word in a sentence? If you make that promise there will likely be a kind soul on this blog who will provide the numbers that you dearly seek. Or possibly, ignore your rants. In any event, we won’t know without testing that theory starting with the numbers to support your asertions. What do you think?

Wall Street’s Woes May Be Wall Street’s Fault, U.S. Chiefs SaySept. 22 (Bloomberg) — The U.S. financial institutions that will receive $700 billion of government rescue money may have been the source of their own undoing, say the people who pay the industry’s salaries: its clients.“At the end of the day we are here because we have moved from sound fundamentals of doing business to shady get-rich- quick programs,” Dan DiMicco, chief executive officer of steelmaker Nucor Corp., said in an e-mail Sept. 19. “It is very discouraging that we have come to this point through gross mismanagement and greed and the wrong kinds of regulatory rules changes over the last several years.”

yup

LOL! Are you going to sell yours, then? I mean, Cramer is on of the best contrarian indicators on earth.

Such self-confidence and conviction while oblivious to the basic issues at hand is impressive. Are you Sarah Palin? George Bush maybe?

It’s time for the Congress to get a backbone and call the bluff that is this false sense of urgency to ram more destabilizing legislation through.The best campaigning that each member of Congress can do at this point is to forget about the upcoming break and work this out with Integrity for as long as it takes.

Plus your assertion is trying to apply apples to oranges…a 3% default rate may have negative consequences for shareholders (depending on capital structure) but it most certainly would not cause the entire US financial system to implode.Apparently someone didn’t tell you that the system is predicated on EXPANSION. When the system is geared toward upper single digit and low double digit growth A NEGATIVE GROWTH RATE -e.g. CONTRACTION- IS BAD NEWS!As I’ve been saying for a long time now, growth is D_E_A_D. The markets -the SYSTEM- is recognizing that the Ponzi scheme is up.The big entities (financial to start with) are unable to generate returns.GAME OVER!

We’ll see. Often times our legislators just apply lip service knowing that whatever they say, which makes people feel good, won’t occur. They can look good to both sides of the deal: in this case explain to the financial sector that he knew that his position wasn’t going to win out, that his talk and vote was to garner him votes from his constituency in his next election.As PeterJB says “Ho hum”…

FED watch.Apparently the last standing bastion of Wall Street is starting to show serious cracks. Since the day of the Lehman collapse (only one week ago!) the Federal Reserve Bank of New York can barely defend the Federal Fund Rate target.http://www.ny.frb.org/markets/omo/dmm/fedfundsdata.cfmWe had a 2,80 the day AIG collapsed and 1,48 Friday. I’m not sure about the implications, but it adds to the “they have lost control” thesis.

Geoffrey Samuel, I smell a bingo… We will probably know shortly (By Friday looks like a conservative bet)

Consider the Moral Hazard created by the lack of political will of the DEM Congress to proceed with Impeachment in 2007.

@Guest: “Alan Blinder (professor at Princeton, former Fed vice chair) criticized the Treasury’s bailout plan and called for Paulson to be dismissed on a talk show on WAMU (an NPR radio station in DC) this morning…”If foreigners wonder what caliber of officials we have in this fast imploding banana republic of united states here are excerpts from “The Long and Short of It at Goldman Sachs” by Ben Stein of the New York Times on December 2, 2007. It zeros in on our trusted treasurer, Paulson, who is, frankly, a criminal. Notice that Stern mentions a former Goldman Sachs scandal from the Great Depression:http://www.nytimes.com/2007/12/02/business/02every.html?pagewanted=all…More thoughts came to me as I read a recent piece in Fortune by my colleague Allan Sloan, a veteran financial writer. Mr. Sloan traces the life and death throes of a Goldman Sachs-arranged collateralized mortgage obligation. He shows how truly toxic waste was sold to overly eager investors who now have major charge-offs, and he also points out that some parts of the C.M.O. were indeed safe and were either current or had been paid off.But what leaps out at me from this story is that Goldman Sachs was injecting dangerous financial products into the world’s commercial bloodstream for years.My pal, colleague and alter ego, the financial manager Phil DeMuth, culled data from a financial Web site, ABAlert.com (for “asset-backed alert”), that Goldman Sachs was one of the top 10 sellers of C.M.O.’s for the last two and a half years. From the evidence I see, Goldman was doing this for years. It might have sold very roughly $100 billion of the stuff in that period, according to ABAlert. Goldman was doing it on a scale of billions even when Henry M. Paulson Jr., the current Treasury secretary, led the firm.The Goldman spokesman would not comment on this except to note that other firms sold C.M.O.’s too.The point to bear in mind, as Mr. Sloan brilliantly makes clear, is that as Goldman was peddling C.M.O.’s, it was also shorting the junk on a titanic scale through index sales — showing, at least to me, how horrible a product it believed it was selling.The Goldman Sachs spokesman said that the company routinely shorts the securities it underwrites and said that this is disclosed. He noted candidly that Goldman is much more short in this sector than usual.From what I have observed over the years, Goldman has a fascinating culture. It is sort of like what I imagine the culture of the K.G.B. to be. You always put the firm first. The long-ago scandal of the Goldman Sachs Trading Corp., which raised hundreds of millions just before the crash of 1929 to create a mutual fund, then used the fund’s money to prop up the stocks it owned and underwrote, was a particularly sad example. The fund, of course, went bust…Here is a query, as we used to say in law school: Should Henry M. Paulson Jr., who formerly ran a firm that engaged in this kind of conduct, be serving as Treasury secretary? Should there not be some inquiry into what the invisible government of Goldman (and the rest of Wall Street) did to create this disaster, which has caught up with some Wall Street firms but not the nimble Goldman?…

That’s about it, PeterJB. More misery for the people. What the productive middle class really needed after war, recession, inflation and the decline in civil liberties, was to be forced to carry Wall Street on its shoulders.

Wonder where wobbly #4 bank Wachovia is at in their quest for survival? FDIC can handle this banking failure if it comes, right?

I am surprised we haven’t seen more posts such as the ones written by Mr. Caps. Attacking the messenger because the message doesn’t fit with a world view one would like, in spite of the overwhelming power of Professor Roubini’s predictive prowess and his courageous dissemination of the what has been proven to be the truth. In spite of this, Mr. Caps demands further proof, as if expressing numbers rather than words based on numbers, will somehow make the truth disappear and invalid information valid.Now I ask for proof. What proof have you Mr. Caps, that Professor Roubini wishes to see the economy fail, when he has thus far demonstrated the most responsible concern for the well being of this economy and this country’s citizens.

paulson and the likes holding $700million GS shares…

Let’s see if I got this right… One of the things that set the stage for this big blow up was the repeal of Glass-Stegall, which allowed banks and financials to intermingle. The SOLUTION(?) is now to make Goldman and MS into this very hydra?Am I right in asking WTF?

Unfortanately a lot of people don’t understand how credit driven inflation works they just use a vague sort of time reference to subjectively value things. They don’t understand that home values are based on phoney credit. Things look like a bargain to the average Joe right now because they don’t see the incoming job deflation that will take down asset prices much further.

I’m afraid I don’t understand your response. Please elaborate in lower case.

The Ones who are destroying American Financial System and Economy1) Mr. Phil Gramm, and Mr. James Leach – Repealer of the Glass-Steagall Act by Gramm-Leach-Bliley Act – allowed massive securitization by the Wall Street Investment Banks and other financial entities2) Mr. Alan Greenspan – Fed’s irresponsible Monetary Policy maker and bubble blower – made a massive tech stock bubble and the biggest housing bubble3) Mr. Ben Bernanke – Irresponsible Monetary Policy maker and stock market manipulator – is killing the dollar and tanking the stock market4) Mr. Hank Paulson – Irresponsible Bailout King – is destroying American financial system and tanking American economy by incompetence and causing substandard living for Americans and making rich for the Wall Street manipulators by bringing in socialism for the rich and fraudster5) Mr. Christopher Cox – Flagrant violator of Capital Market and manipulator of the US Stock Market – causing the demise of capitalism6) Mr. Barney Frank and Mr. Christopher Dodd – Incompetent Accomplices destroying sound American Monetary, Financial and Fiscal Policies – is taking American people to a poor house at the expenses of self interest of reelection7) Mr. Timothy Geithner – Market Manipulator – is destroy American banking system in the behind scene

Uh, okay. Assuming all your ideas on McCain are true, what about PALIN? If McCain gets in and then kicks off can we expect him to care more for doing what is right?

Avoid Paulson’s TRAP (Troubled Relief Asset Program)The Consumer is Too Big to Fail

A nice Hall of Shame.Let’s burn some cds!

WTF is the right question.I am afraid no Chinese Wall can withstand the amount of greed, recklessness and fraud GS & MS are planning to inflict on people’s savings deposits.Even a Berlin Wall would not do the trick.Soon, the difference between a CD and a CDO or CDS will be just a technical one.Poor Sheila, no, in addition to deposits, she is also insuring mutual funds, structured products and other derivatives.Let’s burn some cds (certificates of deposited securities)

http://online.wsj.com/article/SB122212703717165255.html WASHINGTON — The Federal Reserve, unleashing its latest attempt to inject more cash into the nation’s ailing banks, loosened longstanding rules that had limited the ability of buyout firms and private investors to take big stakes in banks.It marks the latest move by the Fed to rewrite the rulebook in response to the financial crisis. Regulators have grown worried about a shortage of capital at banks, in particular smaller thrifts and regional institutions. The Fed has been crafting this policy for at least two years, and private-equity firms have been aggressively lobbying for more lenient policies.Monday’s move should encourage private-equity firms, government investment funds and others to buy stakes in banks, transferring capital from those that have it to those that need it. Previously, if the Fed determined that a private-equity firm had a controlling stake in a bank, it could classify the investor as a “bank holding company,” directly supervise the parent firm and impose restrictions on outside investments. The rules were designed to prevent investors from abusing their bank stakes to benefit their nonfinancial investments.The Fed showed flexibility in three main areas: allowing certain investors to hold board seats, communicate with bank management and own larger amounts of stock. While the changes aren’t sweeping, banking lawyers and investors said they will spur investment.”I would think it would enable private equity to make investments in some bank holding companies where they had been reluctant to do so over the last few months,” said Ed Yingling, chief executive officer of the American Bankers Association trade group.”This is more additional flexibility out of this regulation than I had been expecting,” said Randal K. Quarles, managing director of the private-equity giant Carlyle Group and a former Treasury Department official.Significant DiscretionThe Fed has significant discretion in determining what is a controlling stake. Any investor that owns a quarter or more of a bank has been likely to be considered controlling, but sometimes a 10% stake has been enough to trigger the designation. Most private-equity investments are structured to avoid the designation.In its statement, the Fed said an investor can take as much as 33% equity interest, of which 15% can be voting common stock, without being deemed a controlling investor. This could pave the way for bigger capital infusions by private-equity firms and others.Since April, when Washington Mutual Inc. and National City Corp. received capital from private-equity firms, investors haven’t made any large investments in banks. During this period, buyout firms such as Warburg Pincus and Kohlberg Kravis Roberts & Co. have lobbied federal banking officials to loosen their restrictions. Private-equity firms are hoping to repeat the success some enjoyed after the savings-and-loan debacle in the late 1980s and early 1990s, when they snapped up S&Ls on the cheap and reaped big profits….Hank, Ben et al are changing rules by the second. Hard to keep up!!!

Here’s the future folks:US generals planning for resource warshttp://www.irishtimes.com/newspaper/opinion/2008/0922/1221998220381.htmlNo resources = no growth = game over!

Sign up for his paid subscription!Would you ask God for numbers? And when things are as clear as the end of your nose even?How about YOU tell us how things cannot but go in the toilet?What is your basic understanding of reality? Here’s reality for you:US generals planning for resource warshttp://www.irishtimes.com/newspaper/opinion/2008/0922/1221998220381.html

welcome to the real world

The sad reality is that we can no longer separate the corporation from the individual.Per wikipedia:Since the 1800s, legal personhood has been further construed to make it a citizen, resident, or domiciliary of a state (usually for purposes of personal jurisdiction). In Louisville, C. & C.R. Co. v. Letson, 2 How. 497, 558, 11 L.Ed. 353 (1844), the U.S. Supreme Court held that for the purposes of the case at hand, a corporation is “capable of being treated as a citizen of [the State which created it], as much as a natural person.” Ten years later, they reaffirmed the result of Letson, though on the somewhat different theory that “those who use the corporate name, and exercise the faculties conferred by it,” should be presumed conclusively to be citizens of the corporation’s State of incorporation. Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 329, 14 L.Ed. 953 (1854). These concepts have been superseded by statute, since U.S. jurisdictional statutes specifically address the domicile of corporations.People have become intermingled with corporations. They depend on corporations for survival. But given corporations’ dependencies on externalized costs (energy being perhaps the biggest), large corporations are nearing their end. People best get ready…

BRAVO !….Encore !

MARK AND GUEST HAVE OFFICIALLY GONE OFF THE DEEP END!JUST GIVE US SOME FACTS AND NUMBERS TO SUPPOER THE ANALYSIS.ON THAT FRONT, WHAT DO YOU MAKE OF THE FACT THAT 93.4% OF ALL AMERICAN HOUSEHOLDS ARE HAPPILY PAYING THEIR MORTGAGES ON TIME?STUDY UP ON MARK TO MARKET ACCOUNTING TO UNDERSTAND WHY PAULSON BELIEVES HE NEEDS TO ACT.AND NO NEED TO ATTACK ME — I’M JUST LOOKING FOR FACTS AND NUMBERS.SO WHY DOES ROUBINI NOT SUPPORT ANY OF HIS “ANALYSIS” WITH FACTS AND NUMBERS?WHAT DO YOU THINK ABOUT ROUBINI’S ASSUMPTION THAT US HOMEOWNERS WILL DEFAULT ON MORTGAGES EN MASSE WHEN HOME PRICES TEMPORARILY FALL ANOTHER 10%? THE ANSWER IS OBVIOUS — PURE ABSURDITY!

The last time I checked Bank Deposits are backed by the FDIC. If I were running a private equity firm and I had substantial ownership interest,I could probably get them to loan us FDIC guaranteed money cheap and we could take high risk and if it goes wrong and we bankrupt the bank, the FDIC pays. Didn’t we already see this movie already! Is this a replay of the Savings and Loan Crisis.The Fed will allow Private Equity Firms, Hedge Funds, and Sovereignwealth Funds to take up to a 33% non-voting equity position without trigerring regulaton. Is not the fed enticing them to bring money to the table knowing what they will do in the future. Every one of these entities will be very creative with the FDIC GUARANTEED FUNDS.

What is your problem CAPANON?I simply asked why it seems all of the’fixes’ appear to benefit the large corporationsat the cost of the individual, tax payer that is.How is that “GONE OFF THE DEEP END!”?This isn’t an ANALYSIS, it’s a question,so there no need for FACTS AND NUMBERS TO ‘SUPPOER’ it.AND THERE IS NO NEED TO ATTACK ME BECAUSE I’MJUST ASKING A QUESTION!!!

How is debts that cannot be paid having little market value a complete fabrication?That seems entirely reasonable, why would anyone want debts that cannot be paid or will not be paid?Also, provide a source for 93.6% of all mortgages are being paid on time, AND compare it with historical default rates AND provide projected default rates under normal circumstances as well as default rates in the current environment OR shut the hell up.

I second that comment. I read the news today that they had outlawed shorts on GM and GE and I couldn’t beleive it. Are they deliberately trying to tell the world how pathetic the US financial system is becoming … because if they are – they’re definitely succeeding!PeteCA

官商勾结

@ MASHIACH BEN CHANACOULD YOU PLEASE TELL MR. ALL-CAPS TO SHUT UP IN YOUR POLITE LANGUAGE, YOU WILL MAKE THIS BOARD A BIG SERVICE.THANK YOU,MR. ALL-CAPS IS COMINGWELCOME MASHIACH, GOODBYE ALL-CAPS

“pure absurdity”? Sir, there is a lot of absurdity going around these days, but I’m afraid that I disagree with the direction in which your finger is currently pointing.

NOW THOSE ARE SOME GREAT FACTS AND NUMBERS!!!! MORE ABSURDITY!

SO THE TRUE COLORS COME OUT. YOU WOULD PREFER A DICTATORSHIP THAT QUIETS ALL VIEWS DIFFERENT FROM YOUR OWN, REGARDLESS OF THEIR FOUNDATION IN FACTS AND REALITY.

Back to the original question, afterCAPANON puked all over it, is it abad assertion that all the fixes implementedand purposed, negatively impacts the individualto the benefit ofcorporations?

HILARIOUS! I AGREE WITH YOU — NO GOV’T INTERVENTION AS CURRENTLY PROPOSED.BUT YOU OBVIOUSLY DON”T UNDERSTAND THE CONSEQUENCES FOR “THE INDIVIDUAL” AS WELL AS THE “CORPORATION” OF NO GOV”T INTERVENTATION.NOW BACK TO MY ORIGINAL QUESTIONS WHICH YOU CAN”T ANSWER:WHAT DO YOU MAKE OF THE FACT THAT 93.4% OF ALL AMERICAN HOUSEHOLDS ARE HAPPILY PAYING THEIR MORTGAGES ON TIME?SO WHY DOES ROUBINI NOT SUPPORT ANY OF HIS “ANALYSIS” WITH FACTS AND NUMBERS?WHAT DO YOU THINK ABOUT ROUBINI’S ASSUMPTION THAT US HOMEOWNERS WILL DEFAULT ON MORTGAGES EN MASSE WHEN HOME PRICES TEMPORARILY FALL ANOTHER 10%? THE ANSWER IS OBVIOUS — PURE ABSURDITY!

Ok, you really want numbers? Pull out the Alt A portfolios of Washington Mutual. I can suggest you look at Mish Shedlock’s research on it. Look at the delinquency levels of these Alt-A bonds and see if it doesn’t scare you. Mind you, some of the data is still dated (ie before the recent price falls). The delinquency pattern is implying that as prices drop further, delinquencies increase. So it is probably conservative to say that mortgages will default en-masse. I am also looking a prime and jumbo delinquencies and already I am seeing a jump in a lot of these. If you have a bloomberg, look it up. If not, there is plenty of analysis online of some of the mortgage portfolios. Remember, FNM and FRE did not report losses on mark-to-market. Their losses came from defaults on the mortgages.If you are not willing to look up the data for yourself, instead of living in Lala land, then I suggest you not bother us with your lack of understanding of the depth of the problems.

Hilarious?!Understanding of consequences?!Roubini’s analysis?!Happy mortgage payers?!What the hell does that have to do with my question?

Low taxes, David Walker? Americans are taxed out, maxed out. Just ask California’s governor. There’s no more money to be had. I prefer the Mises.org viewpoint as posted here by PeterJB:”Contrary to popular belief, the rescue package cannot help the economy; it will only severely weaken wealth generators. (The larger the package, the more misery it will inflict.) Hence, once the massive rescue plan is implemented, it will not prevent an economic slump but, rather, runs the risk of plunging the economy into the mother of all recessions.”

Perhaps someone is on a bender, trying to denounce reality? In answer to your question, it does appear as you’ve observed, so it’s not just you.

Exactly. I fear for the future of this country and her people in the hands of these international bankers. America is not on the road to serfdom, she is on the highway to destruction.

Anonremember this date and time2008-09-22 23:29:41This was the time you deny the inevitableREMEMBER THAT

Must see video! At least Rep McDermott is on the job and speaking up:

Mr Speaker,The people in Washington State are very troubled by the fact that King George has been disposed of by King Henry.We picked up Newsweek magazine today and we have a new King… King Henry?We’re supposed to give him 700 billion dollars of our money. He doesn’t want any review. He wants to be able to do whatever he wants with it. He doesn’t want any Congressional oversight. And worst of all, the new king is just like the old king: He doesn’t want any sacrifice.He says, “Oh we can’t threaten the salares of the investment bankers who drove us into a ditch. We can’t get anyone to pay for this.” This is the third time we’ve done it with this bunch. First the war, that didn’t get paid for. Then the tax cuts, that didn’t get paid for, and now King Henry takes over to distribute 700 billion dollars. He’s going to be there for four months. And in four months he will make deals and then he’ll go out and he’ll be able to catch a pass he threw to himself.

HOPE YOU ARE ENJOY LIFE IN A STATE OF DELUSION. EVEN ROUBINI DOESN”T POSIT YOUR CRAZED VIEW.THE US ECONOMY WILL SHOW TO BE RESILIENT ONCE AGAIN.

One more question.Is that you Mr. Ballock?

And one more advice, that I never thought I would give:go watch/read some MSM

What’s wrong with Mark to Market? Is it not better than Mark to Model? If you purpose that it is more like Mark to Panic, is it not Panic that was initiated from Wall Street much before panic on Main Street.If the mortgage default rate is inline with historic averages, then why is there a problem.If the problem is panic, then who is the first thatpaniced, certainly it was Wall Street before Main Street?

MORE FEAR MONGERING WITH NO FACTS.THE DELINQUENCY RATES ON PRIME AND JUMBO LOANS ARE TINY — LESS THAN 3%.THE DELINQUENCY RATES ON ALT A LOANS ARE HIGH AND WHILE THIS MAY UNDOUBTEDBLY PROVE BAD NEWS FOR WAMU IT MOST CERTAINLY DOES NOT MEAN THE US FINANCIAL SYSTEM IS AT RISK OF IMPLODING. WHAT IS THE SIZE OF THE POOL OF ALL ALT A LOANS ISSUED OVER THE PAST 3 YEARS? IF YOU KNEW THE ANSWER TO THIS QUESTION, YOU WOULD REALIZE THE ABSURDITY OF YORU FEAR MONGERING.THE GOV”T (IE TAX PAYERS) WILL ULTIMATELY MAKE A FORTUNE ON THE CAPITAL ALLOCATED TO FNM AND FRE.

I always thought TPTB put Paulson in the treasury because he knew where all the explosives are buried and where to steal the money. He’s the guy who was CEO of Goldman Sachs while it engineered the biggest packaging of MBS toxic waste known to the investment world and then jumped off the train by shorting just before it hit the wall.

Thats the reason why they wont save itthey are already preparing before ARMAGEDDON hitsGold Sach/Morgan Stan = Banks, they will swallow all the small banks, these are the 2 survivors, Lehman wasnt one of em..See it Now??They will “bail out” as soon as their provisions are enoughThat’s why WE must stop em, let BRING EM DOWN together

Even Paulson and Bernanke are getting it now, go to ask them their numbers.

The whole concept of “Marking” assets to anything other than reality is a silly accounting game.The brutal reality is this: If a product has no buyer, it’s value is ZERO.You can mark it to fantasy if you like, but don’t confuse that with reality.If we’d kept this principle in clear view for the last twenty years things would arguably be better now.

@Mammon,I think energy is NOT the collateral. Lower Consumption is the collateral. No consumption leads to no demand for oil leads to no investment related to merchantilist exports. We just need to regulate consumption, which the invisible hand is already doing. I’ve said this before, lower consumption automatically leads to a stronger dollar.Best,P1AQL.

The Fed usually does not lead the federal funds rate but follows. Recent data shows why the Fed did not change the ‘Target Rate’.They are now ‘pressing on a string’ and thus one of their tools has been taken away. Thus, Paulson is up front and Bernanke is hardly seen.

As always in the course of human events we are punishing the innocent (shorts) and rewarding the guilty (Paulson).Paulson has his hands on the levers of financial power. His solution can be modified by the Congress, but he has us by the short hairs.

The Consumer is out of cash and the banks are cutting the Consumer’s lines of credit.

Besides Mish’s excellent site:http://globaleconomicanalysis.blogspot.com/For real in-depth numbers see Reggie Middleton’s site:http://boombustblog.com/

One thing I have always admired about the Mormons, a.k.a. the church of latter day saints, is they believed in buying stocks of food. That is, they would routinely in their pantry have 6 months of food. If they were ‘laid-off”, they could eat it. If their neighbor was , ‘laid-off’ they could share it.An admirable quality to say the least.If we all followed their dictum, no one would be hungry.Thus, I say, it is not gold coins you should horde, but rather cans of Chili.

Perhaps they should nick-name the alternative Voldermort after the bad guy in the Harry Potter series… that’s something even the kids can identify with

也在中华

Repost: It’s all gone down the middle; Time to fill ‘er up. Go get ‘em dollars.P1AQL.

The answer is: translate.google.com

http://online.wsj.com/article/SB122212703717165255.html?mod=googlenews_wsjDeregulation of Finance has brought us to this crisis today. So what does the Fed do? They have now made it easier for Private Equity Capital to harness FDIC deposit funds to do what they do best. The favorite target of Private Equity Capital is a well-run business that invests in research and development, workers and future investment. They take such a business private and load it up with debt, transactions fees and give themselves a dividend. Once the company is defiled, they set up an IPO to make it public again. Private Equity Firms can take a 33% non-voting stake in an FDIC insured bank and are being allowed to influence management. All rules are being relaxed according to the Wall Street Journal. This is Private Equity Capital’s Dream!!!! The Fed is goingto removed the “troubled assets” from Goldman and Morgan, and then turnthem into banks that use FDIC deposits to fund Private Equity Plunder.The same relaxation will come to Hedge Funds!INSTEAD OF CLOSING ALL THE REGULATORY LOOPHOLES ON PRIVATE EQUITY ANDHEDGE FUNDS, they are letting the FOXES into the FDIC henhouse.The Fed is going to use this emergency to pump up the Private EquityModel. The only problem is that the PRESENT PLUNDER WAS SO HUGE, thatthis will only work if Sovereign Wealth Funds go full hog into thePrivate Equity Model. Sowhere down the line, the FDIC will be plunderedfurther!

MORE HYPE AND FEAR MONGERING BUT NO FACTS.PLEASE ADDRESS THE FACTS AND NUMBERS

Yes, this is the future. Climate change scenarios point in the direction of a future of depleted resources: food, water and energy coupled with over population. It may not just be the US who is preparing or giving thought to this future. For example, Britain may conceive itself as an ‘island fortress’, fortified to keep the struggling hordes of hungry and homeless from gaining entry. (How can you be charitable when you are struggling to feed yourself.) Countries that have believed the globalization mantra and have been guided by cheap food policies through importation and in turn killing their local production will be caught short. Just think of all the housing developments that now occupy farmland. The future may only be 30 to 50 years away, just in time for some of the mortgages to be paid off!

The US Treasury is now arguably the biggest sovereign wealth fund.

Dearest CAPSANON,The data is on the net. You’ll see if you take your head out of the sand OR the sand out of your head, whichever works.How about refuting the following data: (Hat tip to Mr. Mortgage)http://mrmortgage.ml-implode.com/2008/09/22/august-ca-home-sales-foreclosure-report-national-existing-home-sales-preview/

In the month of August, the key stats are:37,988 Total Sales; down 3.9% from Julys June’s 39,507 and the slowest August for organic sales since DataQuick began reporting in 1988.46.9% of Total Sales (17,816) were Foreclosure Resales; up 2.1% from last month and 1100% from two years ago.21,172 ‘Organic Sales’ (Total Sales less Foreclosure Resales). This is down 1640 homes from July.$301k median price; down 5.3% in a single month and a whopping 37.9% from last summer. As expected long ago, prices are gravitating towards the most readily available financing: Agency 43,205 new Notice-of-Defaults, which will result in 34,500 new foreclosures 4-5 months from now.213,500 new Notice-of-Defaults in past 5-months= 171,000 new REO from 4-6 months out as they move through the system.25,309 homes went back to the bank as REO totaling $10.65 Billion…second highest of all time.Only 12,679 units left inventory (Total Sales less New Bank REO)

Ben and Hank are fighting to stop us from selfishly cutting off our collective noses and give our kids enough food now to let the future immigrants pay taxes later. Since we offer life saving services in 90 seconds flat, there’s a never ending queue of smart immigrants waiting to bail themselves in and bail us out on our tax obligations. After the Hank is done with the fisc, we’ll need help from the USCIS to get us some brains who are still smarting from the 50% crash on the SSE Composite and Sensex.See http://finance.yahoo.com/q/bc?s=000001.SSDon't ya just love the alpha in the US?Now go back to putting your head in the sand rather than worrying about what respected Prof. Roubini is saying without numbers OR go back to putting more sand in your head; whichever works.Enjoy the beach (sand)!Print First Ask Questions Later aka P1AQL.

ANOTHER PERSON WHO DOESN”T LIKE THE FACTS.

CAPSANON, Giving credit to people who need credit is a bad idea. But I’ll make an exception for you.740+ FICO’s like my Uncle don’t need credit. They have 30 cards in their wallet. As I’ve said before, they’re the most rational and sophisticated users of credit on the planet who will extract the last reward point from their credit card company. It’s a price the banks pay for asset quality. Present them Uncles an opportunity to pick their neighbor’s REO for 40% less and they will very rationally WALK from their current upside down mortgage. They’re the most powerful example of the invisible hand.With the independent Wall Street banks gone, the pipeline of the smartest $10 Million plus bankers that graduate to highly paid $40 Million plus CEOs is gone. They have the alpha. Your paycheck is not dependent on how much value you create but how much damage you can potentially do. Your paycheck’s an incentive not to do damage or else you’re out. Since the new generation CEOs will not be able to do much damage with all the regulations to follow, expect to take a big haircut on your paycheck next.Even you will walk when you’re neighbors house goes for half off and you can’t refinance or move because your job’s next on the line.P1AQL.

LOL!!! — MORE FEAR MONGERING.FACTS AND NUMBERS PLEASE.THE WHOLE PREMISE OF AMRAGEDDON IS BASED ON A MASSIVE SPIKE IN MORTGAGE DEFAULTS IF/WHEN HOUSING PRICES TEMPORARILY FALL 10% — PURE ABSURDITY.

94%? Is that a good number or a bad number? How does it look on a very long historic perspective? How has the US economy or stockmarket performed on a relative basis compared to the rest of the world on this last economic cycle? On relative basis I mean taking into account the drop in the us dollar. What do you think is the reason the broker dealers do not exist anymore? You are writting about mortgages, but how are all the other loans doing, car, creditcard? I also do not understand why they need this bailout if everything acctualy is ok., maybee I am missing something.I am no experts so just getting some information from all sides. Thanks in advance The Dane.

94% IS A VERY HEALTHY NUMBER.FIRST — THIS IS NOT A BAILOUT IN THE SENSE OF THROWING MONEY AWAY. THIS $700 BILLION WOULD BE INVESTED IN ASSETS THAT WOULD PROVIDE THE US GOV’T A RETURN…YES — THE TAX PAYERS WILL MAKE $ ON THIS PLAN.SECOND — THE REASON FOR THE GOV’T ACTION IS THAT THERE IS FEAR AMONG GOV”T OFFICIALS THAT AN ESCALATION OF THE CURRENT PANIC WOULD CAUSE A DESTABILIZING RUN ON THE SYSTEM. IF EVERYONE DECIDED TO WITHDRAW MONEY FROM A SOLVENT BANK AT THE SAME TIME, THE BANK WOULD FAIL REGARDLESS OF THE SOLVENCY OF THE BANK THE DAY BEFORE THE RUN. THIS PLAN WILL STABILIZE THE SYSTEM REGARDLESS OF ANY FUTURE PANIC — THIS REALITY IS WHAT IS INFURIATING THE ANTI-USA ESTABLISHMENT THAT WANTS TO SEE AMERICA FAIL. BUT GUESS WHAT — IT AIN”T HAPPENING FOLKS. THE US ECONOMY WILL PROVE RESILIENT AND PROSPER ONCE AGAIN.PERSONALLY — I DON”T BELIEVE PAULSON NEEDS TO TAKE THIS STEP. I AM AGAINST THE CURRENT PROPOSAL IN THE CURRENT FORM.

LOL! First CAPSANON thinks this $700 billion project has +ve NPV. Then s/he thinks Paulson doesn’t need to take this step and is even against the proposal!P1AQL.

YOU CITE AN DECLINE IN AGGREGATE $ VALUE OF BACKLOG WHICH NECCESSARILY REFLECTS A CORRESPONDING DECLINE IN AGGREGATE UNITS (I.E. QUANITY) IN BACKLOG. SUPPLY/DEMAND IN THE HOUSING MARKET IS VERY CLEARLY MOVING TOWARD BALANCE AND THIS WILL STABILIZE HOME PRICES.MORE FACTS AND NUMBERS PLEASE.THE $700B WOULD BE A NPV+ INVESTMENT.MY BELIEF THAT THE PAULSON PLAN IS MISGUIDED REFLECTS A PERSONAL/SUBJECTIVE OPINION — I DON”T THINK THE GOV”T SHOULD UNNECESSARILY STICK ITS NOSE WHERE IT DOESN”T BELONG. NOT EVERYONE WILL AGREE WITH THIS OPINION WHICH IS WHY WE SHOULD STICK TO FACTS AND NUMBERS.PLEASE — MORE FACTS AND NUMBERS.

THIS $700 BILLION WOULD BE INVESTED IN ASSETS THAT WOULD PROVIDE THE US GOV’T A RETURN…YES — THE TAX PAYERS WILL MAKE $ ON THIS PLAN.This $700 billion has to be financed. The US government is going to have to pay out for this. Let’s see YOUR numbers on this, how the government is going to recoup more money that the $700 billion plus interest (assuming that foreigners will continue to fund our deficits).Meanwhile:Washington must heed fiscal alarm bellhttp://www.ft.com/cms/s/0/85b5de5e-88b6-11dd-a179-0000779fd18c.htmlDavid Walker has LOTS of numbers for you

With the waiving of 23A do they even have to be all that creative?

A collapse of the shadow banking sytem must mean a substantial contraction of credit which will depress asset prices. Ultimately the end result of a non-regulated shadow banking system is much higher leverage. Therefore its collapse also means a contraction of leverage i.e. a contraction in credit. Arguably one result of the explosive growth of the shadow banking sytem has been a substantial increase in asset prices (houses, debt instruments, commodities etc.) A generalised decline in asset prices will deepen the recession. I would argue, as I have in the past, that the US really faces a substantial risk of an economic depression.

Amen

I’d be inclined to okay with you here. Which is not something I usually do! I love reading a post that will make people think. Also, thanks for allowing me to speak my mind!

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