First

Let’s hope the interview has an impact on people in charge of rescue plans. In the media, it’s still either Paulson’s plan or disaster. There’s little or no interest in the content of the plan. For example on Bloomberg:”There isn’t any alternative, though. So let’s hope a majority of the Senate, and then in the House, can show enough courage to give it a shot”.(John M. Berry, Bloomberg News columnist). http://www.bloomberg.com/apps/news?pid=20601039&sid=aGIrxjMGU.B8&refer=homeThere isn’t any alternative, though? How is it possible to publish this on a sophisticated financial website? What media manipulation is behind this? Still the old Bush tactics of creating divisions: either this or disaster (remember rhetorics before the Iraq war?). These divisions automatically lead to an absence of discussions about pragmatic alternatives, setting people up against each other without holding creative dialogues. Must lead to conflicts of interests and crises.I can’t believe what I see and read these days, the shortsighted stupidity is overwhelming.

Strange that the people who did nothing over the past few years despite the warnings of Dr. Roubini and others, should now be trusted to solve this problem with $700 billion dollars and no oversight. Paulson’s plan, drawn up on 3 sheets of paper over a week-end with the help of the people who caused the problem and benefited from the bubble .. doesn’t impress. The U.S. government over the past 8 years seems to have followed the game plan: 1> scream that the sky is falling 2> convince congress to pass something (without proper consideration or discussion) 3> then pass as many tax dollars as possible to ‘friends’. Did anyone note that Rudy Guiliani’s law firm is advertising they are available for advice on how to profit from the bail-out?

HE IS EXECUTING A NEGOTIATION FOR HIS FRATERNITY!The Paulson approach has no basis except saving Goldman Sachs AND THE FRATERNITY before anybody else. He hopes to remove TOXIC debt without giving up equity preferred stock, in order to show the private equity capital and sovereign wealth funds that they should invest in this investment bank for the long run. I really don’t think they are thinking systemically. I CAN CLEARLY SEE WHY BUFFETT WOULD INVEST!!! They start with the premise: What is best for Goldman and JPMorgan. It is important to note that Paulson, when at Goldman, almost merged with JPMorgan at one point. HE HAS FRATERNAL ALLEGIANCES THAT OVERWHELM ANY OTHER CONSIDERATION. THIS IS A FINANCIAL MAFIA AND THERE IS NO OTHER WORD FOR IT!Josh Bolten(Goldman Sach)is the White House Chief of Staff. Rober Zoellick(GoldmanSachs) is the head of the World Bank. There are legionsof Goldman Sachs fraternal brothers throughout the government. We sit here and are amazed at the power theywield! Hank Paulson is analyzing this WITHOUT ANY MACROCONSIDERATIONS. HE IS MAKING A DEAL FOR HIS FRATERNITY.THERE ARE NO MACRO CONSIDERATIONS TO HIS MICRO NEGOTIATION PERCEPTION. THIS IS TOTALLY SOCIOPATHICAND CRIMINAL! THIS IS RACKETEERING! THE PROBLEM IS THATTHEY CONTROL IT ALL! THE FRATERNITY HAS USED THE LOYALTYBONDS OF ALL THE GOLDMAN SACHS ALUMNI PLUS THEIR ALLIANCECONTACTS TO DIRECTLY COUNTER THE PUBLIC GOOD. THEY KNOWWHAT IS COMING AND IF THEY PLAY THEIR CARDS RIGHT AND ELIMINATE THEIR DEBT WITHOUT DILUTING THEIR STOCK, THEYWILL HARVEST COMPLETE CONTROL FROM THE ENSUING CHAOS!IN THEIR MINDS THEY ARE JUST REMOVING COMPETITION ANDTHE ECONOMY IS JUST COLLATERAL DAMAGE!THE NEGOTIATING THEORY IS SIMPLE! GET THE MOST FOR YOURFRATERNITY ;AND THEN WHEN CHAOS ENSUES, PICK UP THEPROFITS CHEAP! THIS IS A SIMPLE CASE OF A SOCIALLY DARWINIAN CULL OF THE HEARD.ARE WE GOING TO ALLOW THIS????I DARE YOU TO COUNTER THIS WITH A RATIONALMACRO ANALYSIS THAT SHOWS A COHERENT PUBLICINTEREST POLICY!

I think a lot of the reason that economists aren’t being consulted about this situation is that in this country, intelligence is not respected. Science is not respected. Facts, when they are inconvenient, are disputed for political reasons. The good-old-days were when Kennedy had has group of “eggheads” in the White House, advising him. Now, they have been replaced by incompetent hacks that are political salesmen knowing what the people want to hear (because they tell the people what they want to hear), but totally lacking any deep understanding of Economics, Science or logic.

i am just an observer of things from India. despite everything what you say, what choice does any government have in the matter. they are bound to try all things till possible and finally give up.Ultimate solution is to devalue the dollar so that American economy can become self sufficient.Also required is tight regulation of the fed so no one can over leverage. till then try to patch up…

I just heard on the Today show Matt Lauer said the calls coming in to congress has totally reversed….now ….he says …people are overwhelmingly behind a bailout because they are scared about their 401Ks. has anyone else heard this????

You’re right, but please calm down and turn the caps lock off. Nobody will listen to an argument in this tone

Alessandro, are you saying that the financial situation in Italy has started to cause people to do the silent run on the banks as well?Do you have any knowledge if similar actions are being taken elsewhere in Europe?

I think you are correct – look at the Manhattan Project and the landing of a man on the moon in less than a decade as what could be accomplished. Instead trillions of dollars wasted on wars to secure access to a rapidly depleting resource,oil. Imagine if all that money had been directed at a project for energy self-sufficiency. Of course oil industry would not be too supportive of that.

Marc Faber has an excellent plan

…..here’s a plan for Washington DC, tell the banks to stop paying dividends to their shareholders. I went back and looked at just 20 of the top banks, including GS, MS and MER and saw that they are paying out $40 Billion per year out in dividends. The lending rule of thumb is $1 of capital can service $10 of lending. That is $400 Billion in lending capacity that can get freed up. That is more than half of the Paulson bailout plan and it costs the taxpayer ZERO.

In Belgium, 3% of Fortis bank clients were withdrawing deposits until government promised guarantees. Without these guarantees, there was a big chance for further devastating bank runs. Dexia would have been next, two of the country’s biggest banks would be victim, and this would only be the beginning. Devastating bank runs really were in the making.A golden parachute for the Fortis CEO who resigned, might be canceled by the government, now being a major shareholder.

George Soros today in the FT:Recapitalise the banking systemBy George SorosThe emergency legislation currently before Congress was ill-conceived – or more accurately, not conceived at all. As Congress tried to improve what Treasury originally requested, an amalgam plan has emerged that consists of Treasury’s original Troubled Asset Relief Programme (Tarp) and a quite different capital infusion programme in which the government invests and stabilises weakened banks and profits from the economy’s eventual improvement. The capital infusion approach will cost tax payers less in future years, and may even make money for them.Two weeks ago the Treasury did not have a plan ready – that is why it had to ask for total discretion in spending the money. But the general idea was to bring relief to the banking system by relieving banks of their toxic securities and parking them in a government-owned fund so that they would not be dumped on the market at distressed prices. With the value of their investments stabilised, banks would then be able to raise equity capital.The idea was fraught with difficulties. The toxic securities in question are not homogenous and in any auction process the sellers are liable to dump the dregs on to the government fund. Moreover, the scheme addresses only one half of the underlying problem – the lack of credit availability. It does very little to enable house owners to meet their mortgage obligations and it does not address the foreclosure problem. With house prices not yet at the bottom, if the government bids up the price of mortgage backed securities, the taxpayers are liable to loose; but if the government does not pay up, the banking system does not experience much relief and cannot attract equity capital from the private sector.A scheme so heavily favouring Wall Street over Main Street was politically unacceptable. It was tweaked by the Democrats, who hold the upper hand, so that it penalises the financial institutions that seek to take advantage of it. The Republicans did not want to be left behind and imposed a requirement that the tendered securities should be insured against loss at the expense of the tendering institution. The rescue package as it is now constituted is an amalgam of multiple approaches. There is now a real danger that the asset purchase programme will not be fully utilised because of the onerous conditions attached to it.Nevertheless, a rescue package was desperately needed and, in spite of its shortcomings, it would change the course of events. As late as last Monday, September 22, Treasury secretary Hank Paulson hoped to avoid using taxpayers’ money; that is why he allowed Lehman Brothers to fail. Tarp establishes the principle that public funds are needed and if the present programme does not work, other programmes will be instituted. We will have crossed the Rubicon.Since Tarp was ill-conceived, it is liable to arouse a negative response from America’s creditors. They would see it as an attempt to inflate away the debt. The dollar is liable to come under renewed pressure and the government will have to pay more for its debt, especially at the long end. These adverse consequences could be mitigated by using taxpayers’ funds more effectively.Instead of just purchasing troubled assets the bulk of the funds ought to be used to recapitalise the banking system. Funds injected at the equity level are more high-powered than funds used at the balance sheet level by a minimal factor of twelve – effectively giving the government $8,400bn to re-ignite the flow of credit. In practice, the effect would be even greater because the injection of government funds would also attract private capital. The result would be more economic recovery and the chance for taxpayers to profit from the recovery.This is how it would work. The Treasury secretary would rely on bank examiners rather than delegate implementation of Tarp to Wall Street firms. The bank examiners would establish how much additional equity capital each bank needs in order to be properly capitalised according to existing capital requirements. If managements could not raise equity from the private sector they could turn to Tarp.Tarp would invest in preference shares with warrants attached. The preference shares would carry a low coupon (say 5 per cent) so that banks would find it profitable to continue lending, but shareholders would pay a heavy price because they would be diluted by the warrants; they would be given the right, however, to subscribe on Tarp’s terms. The rights would be tradeable and the secretary of the Treasury would be instructed to set the terms so that the rights would have a positive value.Private investors, including me, are likely to jump at the opportunity. The recapitalised banks would be allowed to increase their leverage, so they would resume lending. Limits on bank leverage could be imposed later, after the economy has recovered. If the funds were used in this way, the recapitalisation of the banking system could be achieved with less than $500bn of public funds.A revised emergency legislation could also provide more help to homeowners. It could require the Treasury to provide cheap financing for mortgage securities whose terms have been renegotiated, based on the Treasury’s cost of borrowing. Mortgage service companies could be prohibited from charging fees on foreclosures, but they could expect the owners of the securities to provide incentives for renegotiation as Fannie Mae and Freddie Mac are already doing.Banks deemed to be insolvent would not be eligible for recapitalization by the capital infusion programme, but would be taken over by the Federal Deposit Insurance Corporation. The FDIC would be recapitalised by $200bn as a temporary measure. FDIC, in turn could remove the $100,000 limit on insured deposits. A revision of the emergency legislation along these lines would be more equitable, have a better chance of success, and cost taxpayers less in the long run.The writer is chairman of Soros Fund Management

Doesn’t raising the insurance level to 250k, make holding accounts free assets for big banks?Big banks (like Citibank) will purchase up dying banks(like Wachovia). Big banks can then making risky moves with all the money in those saving accounts, knowing that as long as the account balance is under 250k, the bank has free reign to use the equity as it sees fit without any real consequences.

1) Since when can you believe Matt Lauer? This is the same news machine that “missed” the coverage of protesters on the streets leading up to the denial of the aforementioned slush fund.2) Of course people are scared that their 401k’s are tanking, who isn’t concerned? I guess some people had no idea that the market goes up AND down. Lesson learned I hope. Whomever tied our retirement vehicles to this equity market was ingorantly ambitious, or someone very clever, I’m not sure which. We can go ahead and prop up these equity and housing markets artificially-and our optimism too-and then watch an even more spectacular fallout. Nice, huh? At least we live in interesting times.3) The Fear Machine, I mean the white house is almost out of time. And not for the lack of trying, they haven’t yet begun WW3. However, they have managed to literally cripple our economy for decades. Thankfully, an overdue change is coming one way or another.

This still doesn’t solve the underlying problem that main steet is over leveraged and has had serious wage stagflation and even deflation the past 20 years. Simply fixing banks balance sheets won’t stop the deflation that has to happen unless they start giving massive tax credits which will have equally destructive results. And when will foriegn investors start throwing in the towel if they ever figure out how to appreciate thier currencies without loosing thier dollar reserves then they can focus on thier domestic markets. Very strange times. At this point we’re living off of reputation as a nation, the tank is probably empty and we’re driving on fumes.

Wait till the political backlash for Globilization really gets going.

LB: thanks for posting this here.This is the core logic of my opposition to main bailout plans on the table:a. If investors really thought the banks’ stricken assets were going to come back to life, someone would have bought them already. The assets are not salable because the revenue streams which underlie them are in doubtb. The reason those revenue streams are in doubt is because the earning power of the Western economies has shifted downward due to globalization and increased input costs. We’re earning less revenue, and we’re paying higher costs. That means lower profits and less buying power.c. The bailout does nothing to direct capital into those sectors of our economy that have the potential to address the core problem set out in (b)d. Therefore, we are spending $700B to preserve the structure and the players of a finance system which has not and will not allocate capital effectivelyUntil the bill before Congress addresses item (d) above, I recommend to all that we oppose it.

global liquidity tightening very dollar supportive..like money supply in dollars shrinks making it more valuable..something like that am i rite alessandro?

letters to Congressmen/women and to the Senators running about 50-50:- 50% NO- 50% HELL NOwhat sort of special “incentives” are being offered to them to coax them to make them “offers they can’t refuse” in order to change their vote from NO to YES?

Alessandro,i do not understand the flow of global usdollar liquidity.. i find myslef asking the same basic question abt the USdollar swap lines :http://www.federalreserve.gov/newsevents/press/monetary/20080929a.htm- where has all the USdollars gone to?- why is USD needed at the first place (as opposed to local euros)?- don’t the foreign central banks carry a pile of reserves?- and can they just pump in their own currency (ie euros)?also, i recall prof roubini wrote a paper in 2005 saying that asian economies learnt all the wrong lessons from the 97 asian crisis and more importantly, another asian crisis is on the cards.. whats your take?your insight are much appreciate..mrskeptical

Lei e’ il mio eroe, Professore!Congress’s writerep.com site is pounded. Calling/faxing is the only way to reach your Congressperson.

MSM says americans divided. polls say even split. now big corporations are lobbying for it. I can’t find one person out here in the real world that supports it. This is a travesty. I’ve called the senate all morning. phones are jammed. barely get thru 25% of the time. phone fax email. STOP THIS BILL!!

I’ve seen 0.01% overnights!!! That’s a new low! (more typically 0.25%, has been the new recent low)Scary! It’s bordering on paying a fees to have someone else hold your money.Japanese-ish rates.MA

It is an excellent interview. Dr. Roubini states clearly that Congress has the wrong plan. He outlines clearly what is a correct plan. He makes the point that the recession will be severe with or without a plan (which proponents of the Paulson plan do not). He advises that the correct plan would avoid the L-shaped recession of Japan (which implicitly may suggest that the incorrect plan won’t). Failure to consult experts is highlighted. All of the critical points that anyone would want to make, are covered by the discussion. Bravo Professor!In reflecting on the panic that is causing the reaction of legislators, there is a belief by some legislators that any plan however flawed is better than no plan. The argument does have appeal until you apply it to yourself and how you hope you will react in a crisis. Rather than proceeding with just any plan as a first response, I believe that I would give thought as to the correct approach and then proceed. Legislators missed taking the first ‘thinking’ step. If they were uncertain of what to do, they did not even think to ask for advice. They failed to realize that the wrong plan could worsen the situation – like taking the wrong exit when the fire alarm sounds. These people are not worthy of your vote. They do not act in a manner in which they should continue to be your representative. During the next month, when they are at their utmost of being persuasive, do not let them ‘sweet talk’ you. They failed and they will continue to be a failure. Vote against them. (Thanks for listening to my ‘rant’; and, I apologize because I am certain that you have the same sentiments.)

ISM drops unexpectedly to 43.5%, lowest since Oct. 2001http://www.marketwatch.com/news/story/economic-report-ism-factory-sector/story.aspx?guid=%7B154120DB%2D1C5E%2D46C6%2D8657%2D483621B89419%7D&dist=hplatestPressure also coming from real economy now.

“I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” – Grover Norquist.Well, they did it then, didn’t they?

http://www.youtube.com/watch?v=GqIFoBXGizc

I hope no one is surprised by the fact that the real economy is plunging into the abyss.Over the past two decades, the financial sector mis-allocated a huge amount of the world’s savings in order to blow the real estate bubble.That money should have gone into redesigning a real economy that can cope with the effects of globalization and resource depletion.So, now we have enormous debt, assets deflating, no more credit, and a mal-functioning real economy.This is stupidity on a colossal scale. I know that’s a harsh word, but look at the scale of this blunder!How can anyone, with a straight face, suggest that we spend the last of our capital to bail out a financial allocation system that is this dysfunctional?

Yup, but I do not believe it! Matt was also talking to Cramer at the time and asked him why should Congress vote for a bailout if 150 something economists said it’s a bad idea. Cramer responds by going into his “They know nothing” rant. Then Matt asks Cramer what about how he mislead his viewers on Wachovia? Cramer replies, in so many words, that his “friend” Robert K. Steel (CEO of Wachovia) screwed him! Then…Then Cramer says: It’s every man for himself!So if Cramer is right why should we believe NBC (aka GE with debt burden) or any talking head. I called and emailed my senators again today to make sure they get the message.

Trichet says we must rescue “global finance” with the bailout!No, we must rescue the american economy!Our Senators must enact a plan that is designed for our economynot “global finance”.http://www.bloomberg.com/apps/news?pid=20601109&sid=awjusn9I2MWk&refer=homeTell our senators that “global finance” wants to be rescued and theyare under pressure, but if they do not rescue our economy, they willbe fired on election day!

Written in 1990check out these snips below. gee…see any parallels?Sam SmithProgressive Review, August 1990In the early days of the savings and loan crisis the joke was that in Texas if you bought a toaster oven they gave you a free S&L. It turns out not to have been much of a joke. The Resolution Trust Corporation – the government’s misnamed S&L caretaker that is neither producing a resolution nor inspiring trust — is engaged in a massive giveaway that may make Teapot Dome look like a demi-tasse cup.The RTC is already the nation’s largest operator of financial institutions and, according to the New York Times, “quickly becoming the biggest financial institution in the world, the largest single owner of real estate, the largest liquidation company and the largest auction firm.” This ungainly monster of America’s late empire period was established without meaningful public debate nor with any serious consideration of alternatives.But official Washington is not alone in its odd indifference to the nature of the S&L solution. The media – even the op-ed pages and Sunday feature sections – have largely ignored the question.Cost estimates continue to soar – as high as $500 billion if you believe congressional analysts or $1.4 trillion if you accept the calculation of a knowledgeable Wall Street Journal correspondent.Put rather neatly by one former FBI fraud specialist to the Village Voice, the S&L crisis is perhaps the largest criminal conspiracy ever created. The FBI currently has some 8000 cases of S&L fraud before it, 1300 of them gathering dust for lack of funds to pursue them. Another 13,000 tips haven’t even been followed up, according the Newsweek. According to Rep. John Conyers, to date the government has recovered less than 2% of the money lost through criminal fraud in thrift cases, even though fraud was involved in at least three-quarters of S&L insolvencies.The sum of money involved is staggering.Newsweek estimates that even at a conservative $250 billion cost, this is an amount that would pay for existing education programs for the next four years; or nearly pay for universal health insurance and long-term care for the next four years; or overhaul the nation’s water systems, repair all bridges and have money left over to start fixing highways. There are currently some 40,000 law suits over all this money and the figure is expected to double by year’s end.But recounting neither the sum nor the sin involved leads to a solution. After all, the broad scandal have been known for some time yet in its wake the president and the Congress have fashioned an extraordinarily shoddy, dangerous, expensive and corrupt jury rig to correct the matter.Not only is the government failing to solve the problem, it is creating massive new scandals, inequities and public deficits. Not the least of these is the likelihood that the major beneficiaries of the S&L bailout will be the very states responsible for it.Among the other clear beneficiaries of the bailout are the quick-rich financiers who, with their soul brothers, helped to create the scandal. Small business and ordinary citizens are not invited to the RTC’s extraordinary fire sales. You can’t get a catalog and order by mail. Yet The New York Times reported on July 3 that RTC owns 35,908 properties and “though no specific list has been released, the agency’s holdings include coal and uranium mines, ranches and pasture lands, 162 golf courses, oil fields, marinas and boat yards, athletic dubs, garages, parking lots and mobile home parks, 84% of the total inventory is residential – mainly in Texas.” Public Citizen notes that the assets include “a buffalo sperm bank, a Nevada bordello, a windmill farm, a share of the Dallas Cowboys, [and] an entire town in Florida.” With a few exceptions – such as the RTCs grudging, miserly and belated offering of housing to non-profit groups – the marketing of assets is what they call in the trade a private sale. As a result you may not heard about the satellite auction that will take place in September to sell 98 properties worth $341 million. The government reports that buyers in Japan, Britain and Canada are expressing the most interest. You won’t be able to get it on cable.Billions of dollars worth of assets are being traded at prices that challenge even Crazy Eddie’s Emporium in the midst of a recession Memorial Day weekend, – but for the benefit only a handful of huge corporations and redundantly wealthy financial bustiers.We know – or should know by now – that the crisis was created in no small part by the gluttony and stupidity of advocates of the so-called free market running rampant through America’s fiscal countryside. What you may not realize is how far the government’s acquiescence went. For example, until the deregulation of the 1980s, S&Ls had to have at least 400 shareholders. By 1981, the government had made it possible for there to be only one shareholder and that shareholder didn’t have to have any hard equity in the institution. It was also possible for a S&L to have only one borrower. Further, Congress raised the limit of federal insurance from $40,000 to $100,000 – and that per account rather than per individual depositor. As Rep. Charles Schumer put it, “The government behaved like a fire insurance company that said to its customers, go ahead, play with matches. We’ll cover you if anything goes wrong.”Although some Democrats are smugly blaming the Republicans for the S&L disaster, the truth is that this bill passed the House 380 to 13 and by a voice vote in the Senate. In another spate of misdirected bipartisanship, Senator Jake Garn and Rep. Ferdinand St. Germain introduced successful legislation which allowed S&Ls to get into such new activities as junk bonds, unsecured commercial loans and major real estate projects.Thanks to recent revelations we now have a better idea of why Congress didn’t look after our interests more assiduously. As just one small example, one study has found that S&Ls gave $45 million to congressional candidates during the past three elections, including more than $1 million to members of current congressional banking committees. The aforementioned St. Germain, according to the newsletter PACS & Lobbies, received nearly $150,000 in campaign contributions, over a six year period. In contrast, S&L and HUD prober Henry Gonzalez received only $1750 during the same time.Such facts blast huge holes in arguments that S&Ls were largely victims of changing world economics, regional recessions and other macroeconomic rationalizations. They were, in fact, victims of the avarice of their owners, licensed in their greed by the United States Congress and the executive branch. And the media hardly said a mumblin’ word.It is this same cast of characters that have given us – or are overseeing – the so-called S&L bailout. The same hidden agendas, the same fiscal fast shuffles, the same class of beneficiaries, the same lack of media concern for the import of public actions.The drama is reminiscent of corporate reorganizations described many decades ago by Thurman Arnold in The Folklore of Capitalism: “In reality the struggle which attended the ‘insolvency’ of a great organization could be nothing other than a struggle for political control of that organization. The symbols were debts and credits and sales, and men had to plan their practical campaigns in those terms. This created a situation in which the rules of debts and credits became like the platforms in a political campaign.”They didn’t mean anything. They were full of contradictions. . . The conflict could only be resolved by a public drama where the rules paraded in dress clothes, while a political machine directed the play from behind the scenes.”Behind the public drama of the S&L solution is the most egregious example to date of no-fault capitalism and lemon socialism. The former is the remarkable principle that – notwithstanding all the fawning over the “free market economy” – our largest business institutions are philosophically, fiscally and criminally exempt from the ultimate consequences of laisse faire. The latter is the equally inconsistent principle that to maintain the free market the government is responsible for anything out of which private enterprise can’t make a profit. It may not, however, help support this magnificent non sequitur through activities that might actually provide income for the government.No, the rules of the game are that a major industry is allowed to make whatever mistakes it wishes in pursuit of the holy grail of free enterprise, the costs of which to be fully borne by the taxpayer.Further, the S&L solution has the hidden goal of moving America towards increasing financial oligopoly. The government is prepared to guide, assist, regulate and tax to accomplish this goal.This sort of economic policy has been seen before in fully developed form and it has a name: fascism, described by Mussolini biographer Adrian Lyttelton as “the product of the transition from the market capitalism of the independent producer to the organized capitalism of the oligopoly.” As Italian fascist economic theorist Alfredo Rocco put it, such an economy “is organized by the producers themselves, under the supreme direction and control of the state.”What has taken place certainly involves fraud, malfeasance, misfeasance and nonfeasance. But beyond that, what we are experiencing approaches a fiscal coup. Using the not unreasonable cost estimate of $500 billion we are talking about a sum the size of the combined 1986 assets of General Motors, Exxon, Ford, IBM, Mobil, General Electric, ATT, Texaco, Dupont, Chevron, Chrysler Philip Morris and Amoco.Our last line of defense – the media – has been absorbed in the human interest and fraud aspects of the crisis, but woefully unskilled in reporting what is really going on. (continued at Prorev site, and worth the read.)

The Unicredit rumors came fast and furious and quite unexpected even by me, so I imagine others are completely spooked.I’m “Mr. Doom and Gloom” for my friends so everybody talks economy with me, but even unsuspecting people were aware of the Unicredit turmoil and were speaking about it even before I came.

Oh yeah, I see why the Dow just rallied hard:11:27 a.m.Corporate-layoff announcements up 33% in September

Boy, the cronnie media is sure trying to sell this Bailout is a good thing for Taxpayers, they are all out in full force.

even though cnn.com has a current poll (you can vote now) with results now 2-to-1 of NOs versus YESs – what kind of democracy?

Because it will make stocks go up and people will be happy ;^)

Dow headed for positive ground LOLOL.

http://www.cnbc.com/id/15840232?video=873682522&play=1

Yeah, relax mammon. It’s just capitalism.

Anyone able to translate this?

mammon, here it is: The name of the Fraternity is THE PILGRIMS, THE PILGRIMS SOCIETY. They are the oldest and richest and most powerful families in the world. It is deep, deep, deep history.Information on them is disappearing rapidly from the internet as I type – I’ve been trying all moring to bring you links. I hope this post doesn’t cause THIS site to become unavailable, too, but I really wouldn’t be surprised if it happened.If only people knew…

When will you Americans realize your CIA owns everybody who is anybody in the mainstream media???????

What just happened to stocks??? Running hard to green just like that!

Humans have brains. They just keep them away from their reality.

Translation:Putin Criticizes US in Creation of Financial Crisis. October 1, 2008Russian Premier Putin was quoted yesterday as saying that the US monetary system’s irresponsibility created the global economic crisis. Putin said that the matter stems from the US. This is not due to individual irresponsibility, but a result of the entire system’s irresponsibility. (Agence France Presse)

This Bill WILL BAILOUT FOREIGN BANKS ALSOmust watch this video and pass along. Includes Kudlow clip within the videohttp://www.youtube.com/watch?v=GqIFoBXGizc

Oh, please. First thing we do, let’s kill all the lawyers? No, thanks. Herbert Hoover was an engineer. Hardly a model of leadership.As for economists, most of them, including previously well-respected folks such as Irving Fisher, completely misread what was happening in 1929 and for several years thereafter, and lost fortunes for themselves and others. I have observed that as a group, economists tend to be great at interpreting history, but lousy at prognostication. Dr. Roubini has proven, of course, that there can be magnificent exceptions to this notion.Oh, BTW, you’ll please take anything I say with a grain of salt: I’m a lawyer with a science background…SWK

I am quite concerned as most Americans are about the Congress stating that the banking bailout bill is bad, but is the best we can do.This is the same Congress that is responsible for the legislation and oversight of Federal mortgage lenders of which the Office of Thrift Supervision is responsible for the Chartering of Savings Banks ,for example Countrywide Bank and Wa Mu and Indy Mac.The starting point of this crisis was the mortgage lending for the residential housing market which was being pushed by the Administration to put everyone in a home. This was the American Dream which has now been turned into the American nightmareThe Congress in its last housing bill and now in this rescue bill are protecting only the wealthy and the powerful that are well connected to the Congress.Here is what Nouriel Roubini said in part on 9-28-08(Note that Mr. Roubini predicated this crisis in 2002.) “Is Purchasing $700 billion of Toxic Assets the Best Way to Recapitalize the Financial System? No! It is Rather a Disgrace and Rip-Off Benefiting only the Shareholders and Unsecured Creditors of Banks“Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners.”I am one of 4 million homeowners that are in or have completed foreclosure.The American people have yet to realize that the mortgage borrower has no right to contest, object or to question their foreclosure within the same Federal Regulatory System that the Federally Chartered Savings Banks lends their money. There are basically no Federal Lending Regulations that pertain to the federal savings banks. These banks answer to no one and operate with absolute impunity. This federal lending system designed by the Congress that protects the wealthy and the powerful financial Institutions with no protection given to the mortgage borrower. This is called “Lynch Mob” lending. The bank forecloses the mortgage and hangs the borrower. The borrower has no voice.My federally Chartered Savings Bank ,Am Trust Bank, headquartered in Cleveland Ohio in 2007 paid 14 million dollars to settle a class action suit for unethical interest miscalculations. This same bank threatened to sue me with a frivolous lawsuit for fighting my foreclosure. This bank changed my loan purpose twice in order to prevent my refinance which I qualified for under federal regulation. This bank performed a flawed property appraisal which was the catalyst for my foreclosure. The State of Ohio confirmed and cited the flawed appraisal but then made a deal with the bank which was treated like a minor infraction instead of the 9 violations of law.The Media talks about the anger of most Americans who do not want these wealthy and powerful Banks along with Wall Street to be made whole with taxpayer money.The Senate Majority Leader Harry Reid stated that they were trying to protect the Banks from the bad loans. Senator Reid should have stated that he wanted to protect the American public from the Bad Banks that made the loans.Until the American public understands that these Banks like Wall Street do as they please without any fear from government or borrowers attorney that this crisis will continue to get worse without effective regulation controlling the banks aberrant behavior with their mortgage lending.The reality is that there are 4 million foreclosed homeowners now and the Brooking Institute states that there are 2 million more projected for 2009. Tell me that there are 6 million homeowners that cannot protect themselves and are at the mercy of these ruthless greedy politically powerful Banks. By the design of this American government these victims have no voice. Even a bank robber is titled to representation with an attorney.Based on the activities of the financial system in our country for the past 8 years with the Congress charged with the responsibility for legislation and the oversight the Congress as a governing body has committed malfeasance and misfeasance.We need to change the type of Politician that we elect to office. We need to change the way we elect our representatives to office.What about the friends of Congress, the well connected Bankers and the Wall Street that cheated the American public out of billions of dollars? What about the 4 million foreclosure victims who have no voice?This Congress went over the top when they said we have to pass something. That is criminal to spend the taxpayer’s money on” something”.It is not the rescue bill that stinks like year old fish; the bad smell is coming from the stench that this Congress created.6 Million foreclosure victims with no voice and this Congress does nothing. Billionaires and Millionaires complain about their cash flow and Congress can’t do enough..Michael LittleBigPOBox 16588Rocky River OH 44116-058810-1-08

None of this matters-stocks just about to turn green. They have wiped out a 200 point loss in less than 1 hour! Don’t you guy’s get it, they are going to blind the US taxpayer by making their 401K go up and then they will be calm and happy for the lube job they are about to take. The sheeple are now seen as suckers!

and maybe soon to be in positive territory!

It doesn’t matter, the bill will pass both the house and senate, stocks will rally 1000 points and the us taxpayer will give a sugh of releaf. BUT, this bill still does not solve the fundimental issue that ails us, falling home prices and a vicious recession (confrimed today with the ISM plunge)that will lead to more layoff, that lead to more foreclosures, that lead to falling home prices. THen stocks will tank pricing in a 2009 economic washout and it won’t matter, now the US taxaper has had $700 Billion shoved down their throat and their 401K’s will be 101K’s by the beggining of 2010!!!!!!!!!

not to mention the massive de-leveraging effect

Stocks GREEN!!!

“I guess the Europeans are pressuring the US according to a Bloomberg report to pass this bill, since it will be the US to bail out the European banks using the bailout funds provided by the Americans/US Treasury”Are you joking. 80% of the mortgage-related losses in European bank are in the US… WE ARE BAILING YOUR MESS OUT WITH OUR DEPOSITS.

1:03 p.m.[DAI] Mercedes-Benz U.S. Sept. sales drop 16.4% to 18,779 vehicles1:02 p.m. [DAI] Daimler U.S. September sales fall 8.5% to 20,557 vehicles

once again: your major media owners/personalities are CIA compliant, and CIA needs money-laundering capabilities. Can you guess where money gets laundered?

1:26 p.m.[GCI] S&P may downgrade Gannett ratings

marc faber on interview :http://www.bloomberg.com/avp/avp.htm?N=av&T=Faber%20Says%20Markets%20%60Oversold%2C'%20Bailout%20%60Deeply%20Flawed'&clipSRC=mms://media2.bloomberg.com/cache/vxsm5CV6HVxY.asf- global economy going into bad slump- american consumers less affected, just get a little slimmer- asians too dumb to understand cdos, so banks rock solidman, i enjoy his interivews.. of course ony second to roubini’s..:pmrskeptical

and this is the point drowned out by all the bollox from the politicos and wall thieves….HOW MANY AMERICANS ACTUALLY HAVE 401K’s OF ANY SIGNIFICANT VALUE?????

Boy-any selling is met with overwhelming buying! Can’t have a negative attitude into tonights opaque fraud!!

700 billion is chump change to the always rich. Privately owned nuclear-powered submarines are so popular they are on back order. Do you think these extraordinarily rich want a little more of your money?They want the money for its inherent power to influence because influence is control.Control of information, education, too – read John Taylor Gatto – control of culture-shaping to keep their advantage with your permission, your bovine un-objection to rich/poor worldwide.You are not fighting to keep them from getting control. You have begun the revolution to wrest control from them.They are desperate to cover crimes and pushed injustice too far.Justice bats last. Be brave. Be loud. Protect yourselves by keeping non-violent. Your first duty is to your own happiness. Knowing you are alive comes first for happiness.And – don’t let the blame get shunted to the Jews and the Catholics ‘theories’, or the biggest criminals will slip away under the distraction.

economists are thinking with their elbows

Well then I guess we’ll just have to use our phones…

Yeah, they’re planning to finance it with tax CUTS as a sweetener to get it through…

2:10 p.m.[HMC] Honda U.S. September sales fall 24% to 96,626 vehicles2:09 p.m. Toyota U.S. September sales fall 32.3%

GM sales only down 15.6%-looks like employee pricing worked!

Any pointer or just saying?BTW, I do agree that if Unicredit is in big trouble Italian government won’t be able to handle it. Fortunately UCG is also the second largest German bank, so we may count on some help from the rich neighbor.And they will reap billions out of the TARP if approved! (hint: do something now!)

http://www.bloomberg.com/apps/news?pid=20601103&sid=a2cjYB6hlDO4&refer=usBuffet was also on TV with Betty “Easy and” Quick, and she asked him if hewould buy some troubled assets and he said yes AT MARKET PRICE. CNBC immediatelyput up a Buffett approves of plan overlay, even though his terms don’tmirror the plan. He mentioned that he would have bought Merrill at 22 cents ondollar, but he failed to state that Merrill financed that deal. When you dothe math it worked out to 7 cents on the dollar for Lone Star. THE NORMALAMERICAN DOES NOT KNOW WHAT HE MEANT BY MARKET PRICE!It was a public relations call with Buffett mentioning twice he had the GE enginesworking very well and Betty was snickering!Every man has his weakness! Remember Spitzer!

Wow. What a tremendous letter, Michael. Your account of your experience has real power! This mostly-the-same nest of rats stole away with my family’s savings and opportunities decades ago – when Cheney and friends rigged the undermining of EDS, earning his group golden parachutes for trashing the company, of course, and leaving us, people who have always had sterling work histories, to never be able to catch up again after long unemployment stretches due to a huge glut of workers suddenly looking for limited jobs. Actively seeking work every single day became our full-time job. We’ve had to live on contract work since, health insurance costing 1000 a month til we could not afford it at all for past 10 years, paying this country’s very highest tax rates as the self-employed do, all along the way, no benefits, no vacations – just hard-working, good and decent people who played by all the rules and got robbed of everything. I can hardly get myself to believe I’m living through what’s going on today.(boy. i didn’t intend to write all that when i started replying to you. you really did touch a button with your letter!)My sincere condolences to you and yours, Michael. Keep your loved ones close, and I’ll be holding a good thought for you.

Read the Senate Billhttp://money.cnn.com/2008/10/01/news/pdf/index.htmThey threw in enough “popular” provisions to sell it!!section 132 is still there!!

Bank, Thrift & Asset ManagerKANAS WARNS OF ‘INSIDIOUS DRAIN OF DEPOSITS’ FROM SMALL REGIONAL BANKS The former North Fork executive said the bailout bill could make life “even more difficult” for the group.Referenced Tickers: NFB10/1/2008 9:09 AM ET

DETROIT (Reuters) – As many as 3,800 U.S. car dealerships could fail this fall and into 2009 — nearly one in five — because of weak sales, increased operational costs and the credit crunch, according to a forecast released on Wednesday.”An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines,” said Paul Melville, a partner with Grant Thornton LLP, which issued the forecast.”In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem because the economy is doing it for them,” he said.Bill Heard Enterprises Inc, one of the biggest General Motors Corp Chevrolet dealerships, filed for bankruptcy on Sunday, citing operating losses, decreased demand for vehicles and lack of credit.At its peak, Alabama-based Heard’s revenue was about $2.5 billion per year, according to the bankruptcy filing.With U.S. light vehicle sales predicted to drop to the 13.7-million-unit range in 2009, the study said that about 3,800 dealerships, about 18 percent of the total number of U.S. car dealerships at the end of 2007, will need to close.U.S. vehicle sales are expected to be flat next year with any recovery in demand expected only in 2010, as consumers struggle with tight credit, high gasoline prices and a housing market slump.The drop in demand has been particularly hard for Detroit-based automakers GM, Ford Motor Co and Chrysler LLC. GM’s sales were down 18.5 percent in the first eight months of 2008 while Ford’s sales declined 16 percent and sales at Chrysler, controlled by Cerberus Capital Management, dropped 24 percent.Thornton said apart from new car sales, other sources of revenue for dealers, such as used car sales and financing profits, are also falling.(Reporting by Poornima Gupta; Editing by Brian Moss )

Fund outflows mean tax hit for investorsShareholders could get ‘January surprise’ of big tax bill, portfolio lossesBy Sam Mamudi, MarketWatchLast update: 3:15 p.m. EDT Oct. 1, 2008NEW YORK (MarketWatch) — Mutual fund investors, facing large losses due to the market downturn, may also be hit this year with a high tax bill as redemptions create capital gains for their funds.As spooked investors pull their cash from stock funds — more than $110 billion so far this year, according to TrimTabs Investment Research — managers are forced to sell assets to pay them out. Often, the quickest way to raise cash is by selling high-valued stock, which creates capital gains liabilities for the fund that investors must pay at year’s end.”It’s going to be the January surprise for a lot of people,” said Larry Glazer, founder of investment advisory firm Mayflower Advisors. “You could have a loss [on your fund investments] and significant capital gains distributions in the same year.”

Here comes the late day miracle green close….

Paulson Rescue Proposal Is `Crazy,’ Predecessor O’Neill SaysBy Brendan MurrayOct. 1 (Bloomberg) — Former U.S. Treasury Secretary Paul O’Neill said the $700 billion bank-rescue proposal under negotiation in Washington is “crazy,” with potentially “awful” consequences for the world’s largest economy.“Doesn’t this seem like lunacy to you?” said O’Neill, who was President George W. Bush’s first Treasury chief, from 2001 to 2002, in a telephone interview today. “The consequences of it are unbelievably bad in terms of public intrusion into the private sector.”O’Neill’s objections mirror those of Republicans in the House of Representatives who rejected the plan in a Sept. 29 vote. The former Treasury chief said he’s lobbying for an alternative solution that would offer guarantees for troubled assets, stopping short of purchasing the debt.“Is anybody thinking there?” asked O’Neill, who also served as deputy budget director in the Ford administration. “It’s too late, it’s not going to make any difference and it’s aggravating as hell when there’s a better idea and you can’t even get it in play,” he said, recognizing little success so far in pitching his own proposal.

Professor Roubini and London Banker,Since you guys are exprt in these complex financials and economy, I would appreciate if you can shed any light on this topic — Will USA soverign or government debt be downgraded to AA/A, given the enormous debt taking over FNM/FRE/AIG/FDIC/Bailout Package?Or S&P and Moody will never downgrade their own mother??! Thanks

4:10 p.m.Micron sees losses deepen on inventory, pricing charges

Jonathan Weil at Bloomberg posted an alternative to the Paulson plan that comes more in the neighbourhood of Nouriels proposals:”Only after a company’s shareholders and debtholders have been flattened should taxpayers take a hit. And for a $700 billion investment, U.S. taxpayers should get a lot more in return than a gargantuan pile of toxic waste”.http://www.bloomberg.com/apps/news?pid=20601039&sid=aguOUred8Bjg&refer=homeIs common sense finally seeping in?

4:34 p.m.[NBR] Nabors sees significant investment income charges

4:26 p.m.Rescue plan appears headed for passage in Senate

So, let’s make a recap of the day:* ISM manufacturing index collapsed* auto industry collapsed* GE declare it’s desperate for cash (monster capital raise at multi year low stock price)All is well, just throw this $700bn into the Wall Street incinerator and you will avoid the recession! /sarcasm off

http://www.repubblica.it/2008/10/dirette/sezioni/economia/borse/ottobreborsa/index.htmlUniCredit said to be for sale, Santander potential suitor, shares trading at 2.94 euros, CEO Alessandro rumored to have resigned. Doesn’t sound encouraging.Banca Intesa Sanpaolo also in trouble.

Connecting the dots.Seems we pass a bill allowing the Chinese to sell us back our junk, or they revalue the RMB. Oh and remember Taiwan?Have I lost my mind?hlowe

Guest get you facts straight.In the Italian article you posted it is said that the CEO has no intention to resin (at least for today) and trading of Intesa shares has been just halted once and resumed, which is pretty common in Italy due to excessively restrictive price movement caps.Personally I don’t care about a Santander takeover, but Berlusconi has already signaled with his personal diplomacy style (the middle finger) that the government doesn’t like the idea.

Black swans are flocking and coming home to roost. Now would be a bad time to make predictions.

Yes, I see a flock over the Capital Builing right now!!

I caught this late last night on C-SPAN.It should have been aired on every network.I think you can see it from the C-SPAN Video Libraryfrom either of these links: Alternative Financial Markets Bill => U.S. House of Representatives, Radio and Television Gallery - OR - Alternative Financial Markets Bill(B) => U.S. House of Representatives, Radio and Television Gallery In case the video is not available, the following Reps.are driving this and they need our help to get throughto the DEM Leadership.Kaptur, Marcy U.S. Representative, D-OHDeFazio, Peter A. U.S. Representative, D-ORScott, Robert “Bobby” U.S. Representative, D-VADoggett, Lloyd U.S. Representative, D-TXCummings, Elijah U.S. Representative, D-MDHolt, Rush U.S. Representative, D-NJHirono, Mazie U.S. Representative, D, HawaiiEdwards, Donna F. U.S. Representative, D, MarylandI am informing my Reps. and Sens. to stop rescuingthe rescue and start anew with this alternative.

LET’S HEAR IT FOR ALABAMA-THE INTELLECTUAL CENTER OF THE UNITED STATES!!WASHINGTON – Sen. Jeff Sessions said he’ll vote against the $700 billion bailout of the financial industry tonight because it was cobbled together too quickly without enough public input and leaves too many questions unanswered.”The Secretary of the Treasury came to Congress with his plan, he threatened us that if we don’t pass it there will be dire consequences, and pretty much, with some retrenchment of his ideas, he’s gotten what he wanted,” the Alabama Republican said in an interview today at the Capitol.Even changes to the bill that was defeated Monday in the U.S. House were not enough to win Sessions’ support.”(Treasury Secretary Henry Paulson Jr.) hasn’t explained precisely what factors he will use in deciding who he will buy the poisoned assets from and who he won’t,” said Sessions.Sessions said he believed the threat of an economic crisis is legitimate, but that the Bush administration’s plan is too “Wall Street-centric.”Also Wednesday afternoon, the phones were ringing nonstop in the office of Sen. Richard Shelby, R-Ala. Both senators’ offices say calls from constituents are overwhelmingly urging them to vote against the legislation.Shelby, the top Republican on the Senate banking committee, did not participate in negotiations on the bailout and has called Paulson’s proposal “fundamentally flawed.” He will also vote “no” tonight.

mrskeptical, I reproduce here my answera to your 2008-10-01 09:12:31 post.first of all keep in mind what constitutes the money supply usable for trade, that is: banknotes out of the banking system and on demand credit from the banking system. Nothing else belongs to the money supply, no T-bills, no CDOs, no nothing. If you don’t get that, you can’t understand how the massive printing is not inflationary.Then in order:* where has all the USdollars gone to?* * this is a swap among CBs, as far as I understand this is just an OTC forex operation FED gets EUR, ECB gets USD, nothing fancy. I think this is just arranged in a way to not blow forex away. I may be wrong on this one.* why is USD needed at the first place (as opposed to local euros)?* * European banks have tons of USD liabilities and they fund them in USD to avoid forex risk. All retard banks that bought USD denominated crap are scrambling for USD on both sides of the Atlantic.* don’t the foreign central banks carry a pile of reserves?* * most of the reserves are not dollars, but dollar denominated debt. This is a huge difference. Long term debt is NOT cash. Even short term debt is NOT cash. You have to sell it to get real cash. You may consider it very close to cash (cash-like) because it is very easy to sell it at par, but is NOT cash. CBs has very low vault cash because they know perfectly well what inflation is (they print their own currency!).* and can they just pump in their own currency (ie euros)?* * they do. But the asset/liability denomination mismatch would raise the risk of the investment, and thus required additional reserves.My personal opinion is that a sizable part of Asia economy is really a house of card on the verge of the collapse. Currency crises are in the cards, even for currencies you will never ever suspect (CNY???).These are strictly my personal opinions, and remember that I’m a physicist with no formal training in economics and finance.

More Tax Cuts!!! what else do Republicans want?

Grow up, she’s the least of the nation’s worries.

they “don’t like it” – appeases the voters and constituentsthey “will vote for it” – appeases Wall Street, Europe, Bush Administration

I’m still laughing at what you wrote!!

I’m still laughing where the guy said “I’m going long on lube”!!!

Great quote!SWK

I guess UniCredit’s ownership of HypoVereinsbank is a problem, because talks with German banks on short-term credit arrangements for HVB have collapsed.

Wow. Bob Chapman’s take on all this is his best– and chilling. He also references Prof. Roubini’s plan as a viable alternative to the swill that’s being served up to us!http://www.theinternationalforecaster.com/International_Forecaster_Weekly/The_Bailout_Wont_Work_and_the_System_Will_Implode

Taxpayer to Wall Street: “You have been very, very bad and there should be a stern punishment for your behavior.”Wall Street to Taxpayer: “Very well then, take this!”

Here’s the whole thing.US Senate heads for bailout vote, Europe confronts its own crisis01/10/2008 21h29A trader rubs his eyes near the end of the trading day on the floor of the New York Stock Exchange©AFP/Getty Images – Chris HondrosWASHINGTON (AFP) – The US Senate girded for a crucial vote Wednesday on a revised 700-billion-dollar financial rescue package as Europe struggled with its own banking crisis and global markets remained on edge.Senate leaders raised hopes that the revised plan could be on President George W. Bush’s desk by the weekend and ease the panic sparked by Monday’s rejection of the plan by the House of Representatives.Bush urged lawmakers to promptly approve the package to “stabilize” volatile markets as experts warned that the credit crunch was beginning to seriously harm day-to-day running of the economy.”The Senate’s going to take this bill up tonight, I’m hopeful they’ll pass it, and then the House will have a chance to vote on it Friday morning,” Bush said.Jose Manuel Barroso©AFP – Dominique Faget”The bill’s different, it’s been improved, and I’m confident it’ll pass.”Democratic presidential candidate Barack Obama arrived in Washington and his Republican rival John McCain was also rushing back from the campaign trail in a bid to bolster the bill in the dramatic Senate vote.Senate Majority leader Harry Reid meanwhile said he believed the measure would pass, and upped pressure on the House to act quickly.”I would not move forward on this if I didn’t think the chance in the House was good,” Reid told reporters, and warned that a major US insurance firm, which he did not name, could go bankrupt without prompt congressional action.A trader works on the floor of the New York Stock Exchange©AFP/Getty Images/File – Spencer PlattIn another sweetener, the measure raises the ceiling on federal insurance for bank deposits from 100,000 dollars to 250,000 dollars, a move aimed at curbing a run on bank deposits by portfolio managers and businesses.It retains most facets of the original plan which gives Treasury Secretary Henry Paulson the power to buy up troubled mortgage-related assets in troubled banks and includes restrictions on “golden parachute” payoffs for executives.The proposal however has run into fierce grass-roots resistance by voters who see it as a reward for imprudent Wall Street money spinners, raising doubts about its passage.A flag waves at the US Capitol building on Capitol Hill in Washington, DC©AFP/Getty Images/File – Mark WilsonAmid growing fears about the impact of the crisis on Europe, the head of the eurozone finance ministers said the big four European powers would convene.The chairman of the eurozone finance ministers, Jean-Claude Juncker, insisted “there is no threat” to Europe’s banking system, but added the leaders of Germany, France, Britain and Italy would meet in Paris Saturday to deal with the crisis.The Italian government, following precipitous falls in shares of leading bank UniCredit, pledged to “guarantee the stability of the banking system and protect savers” as leading bank UniCredit struggled.Shares in UniCredit, which has the most foreign exposure among Italian banks, fell to their lowest level in 10 years earlier this week before rebounding Wednesday.The dome of the US Capitol is seen in Washington©AFP/File – Karen BleierGlobal stock markets were mixed in cautious trade.On Wall Street, the Dow Jones Industrial Average pared heavy opening losses and ended down 0.18 percent. The Nasdaq composite shed 1.08 percent and the broad-market Standard & Poor’s 500 index dipped 0.45 percent.The market action followed a record point drop for blue chips on Monday followed by a powerful rebound Tuesday that recovered more than half the losses.”It would appear that we are teetering between relief and despair at the moment and Congress will determine which way we tilt,” said John Wilson, equity strategist at Morgan Keegan.Despite European banking sector stress, the London FTSE 100 index of leading shares gained 1.17 percent to close at 4,959.59.In Paris, the CAC 40 index rose 0.56 percent to 4,054.54 while in Frankfurt the DAX fell 0.42 percent to 5,806.33.In Moscow Russian Prime Minister Vladmir Putin denounced the “irresponsibility” of US financial practices for the crisis.The US Treasury Department building in Washington, DC©AFP/File – Karen Bleier”This is not the irresponsibility of specific individuals but the irresponsibility of the system, which claimed leadership,” Putin said.Despite more heavy injections from European, Japanese and British central banks, aimed at keeping credit flowing on money markets, key short-term rates on European interbank markets rose Wednesday.That suggested banks remained reluctant to lend to one another, aggravating a credit squeeze despite renewed hopes for a US finance sector rescue deal.Analysts at BNP Paribas warned that any further delay in adoption by the US Congress of a bailout plan could “provide ‘opportunities’ for bankruptcies” both in the United States and Europe.They described the current liquidity situation as “the worst the markets have seen in decades.”The RGE Monitor’s Newsletter, published by New York University economist Nouriel Roubini, warned meanwhile “the risk of a total systemic meltdown is now as high as ever since the credit crunch is gripping European banks as well.”

just passed bill in Senate

Maybe I don’t understand the details of the bill, or maybe this is just really bad reporting:http://news.yahoo.com/s/ap/20081002/ap_on_bi_ge/financial_meltdown“preventing a recession” – It’s pretty clear we are in a recession already”buying bad mortgages from tottering financial companies” – Taxpayers will be mostly buying bad MBS and CDS, at ridiculously high prices, not really buying bad/defaulting mortgages, no?

Outerbeltway and Alessandro , I gotta hand it to ya! Looks like you pulled the rope and ended up in the abyss!See http://money.cnn.com/2008/09/30/autos/car_dealer_pain/index.htm?postversion=2008100115

If you want to see how America’s credit crisis is hitting the streets of your hometown, go to your local car dealer.

Now that you’re in the abyss, it’ll be easier for us with the Yea vote to pull the rope back up!Enjoy the fishies down there!P1AQL.

Typo there. The Without should read With.Changed Text: Watch the INR hit 60 if they devalue the dollar. With your sharply increasing current account deficit ’tis not a good idea to throw stones at others when you have glass towers in Gurgaon.P1AQL.

October 1, 2008: Kaptur and DeFazio Propose the No BAILOUTS ActRepresentatives Marcy Kaptur (D-OH), Peter DeFazio (D-OR), Rush Holt (D-NJ) proposed an alternative measure, the No BAILOUTS Act, to address the financial situation without bailing out Wall Street and corporate executives.”We want a good bill, not a fast bill. We want a bill that will really work,” said Kaptur, the senior-most woman in the House.A summary of the “No BAILOUTS Act” follows.Watch the C-SPAN Video => No BAILOUTS Act of the press conference.No BAILOUTS ActBringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.2) Require the Securities and Exchange Commission to restricting naked short sells permanentlyThis bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies “to protect the integrity and quality of the securities market and strengthen investor confidence.” This rule prevents market crashes brought on by irrational short term market behavior.4) “Net Worth Certificate Program”This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.5) Increase the FDIC Insurance limit from $100,000 to $250,000.The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.Link to entire page => Reps. Kaptur & DeFazio propose the No BAILOUTS Act

they are just lying to you, that’s all. they are the kind of liars who lie to themselves, so they don’t know the difference between truth and lies.

Novice,If they don’t bailout some “foreign investors” they won’t get in the future the capital that they need to run the government.Most “foreign investors” are actually getting screwed by these bankruptcies… why do think that they are so angry in Germany, Britain, Russia, China, elsewhere?There is already a big international political disaster from this mess, so you’d better wake up to the global problem and stop focusing on your American navel.

crony

The Michael Moore Plan

Friends,The richest 400 Americans — that’s right, just four hundred people — own MORE than the bottom 150 million Americans combined. 400 rich Americans have got more stashed away than half the entire country! Their combined net worth is $1.6 trillion. During the eight years of the Bush Administration, their wealth has increased by nearly $700 billion — the same amount that they are now demanding we give to them for the “bailout.” Why don’t they just spend the money they made under Bush to bail themselves out? They’d still have nearly a trillion dollars left over to spread amongst themselves!Of course, they are not going to do that — at least not voluntarily. George W. Bush was handed a $127 billion surplus when Bill Clinton left office. Because that money was OUR money and not his, he did what the rich prefer to do — spend it and never look back. Now we have a $9.5 trillion debt. Why on earth would we even think of giving these robber barons any more of our money?I would like to propose my own bailout plan. My suggestions, listed below, are predicated on the singular and simple belief that the rich must pull themselves up by their own platinum bootstraps. Sorry, fellows, but you drilled it into our heads one too many times: There… is… no… free… lunch. And thank you for encouraging us to hate people on welfare! So, there will be no handouts from us to you. The Senate, tonight, is going to try to rush their version of a “bailout” bill to a vote. They must be stopped. We did it on Monday with the House, and we can do it again today with the Senate.It is clear, though, that we cannot simply keep protesting without proposing exactly what it is we think Congress should do. So, after consulting with a number of people smarter than Phil Gramm, here is my proposal, now known as “Mike’s Rescue Plan.” It has 10 simple, straightforward points. They are:1. APPOINT A SPECIAL PROSECUTOR TO CRIMINALLY INDICT ANYONE ON WALL STREET WHO KNOWINGLY CONTRIBUTED TO THIS COLLAPSE. Before any new money is expended, Congress must commit, by resolution, to criminally prosecute anyone who had anything to do with the attempted sacking of our economy. This means that anyone who committed insider trading, securities fraud or any action that helped bring about this collapse must go to jail. This Congress must call for a Special Prosecutor who will vigorously go after everyone who created the mess, and anyone else who attempts to scam the public in the future.2. THE RICH MUST PAY FOR THEIR OWN BAILOUT. They may have to live in 5 houses instead of 7. They may have to drive 9 cars instead of 13. The chef for their mini-terriers may have to be reassigned. But there is no way in hell, after forcing family incomes to go down more than $2,000 dollars during the Bush years, that working people and the middle class are going to fork over one dime to underwrite the next yacht purchase.If they truly need the $700 billion they say they need, well, here is an easy way they can raise it:a) Every couple who makes over a million dollars a year and every single taxpayer who makes over $500,000 a year will pay a 10% surcharge tax for five years. (It’s the Senator Sanders plan. He’s like Colonel Sanders, only he’s out to fry the right chickens.) That means the rich will still be paying less income tax than when Carter was president. This will raise a total of $300 billion.b) Like nearly every other democracy, charge a 0.25% tax on every stock transaction. This will raise more than $200 billion in a year.c) Because every stockholder is a patriotic American, stockholders will forgo receiving a dividend check for one quarter and instead this money will go the treasury to help pay for the bailout.d) 25% of major U.S. corporations currently pay NO federal income tax. Federal corporate tax revenues currently amount to 1.7% of the GDP compared to 5% in the 1950s. If we raise the corporate income tax back to the level of the 1950s, that gives us an extra $500 billion.All of this combined should be enough to end the calamity. The rich will get to keep their mansions and their servants, and our United States government (“COUNTRY FIRST!”) will have a little leftover to repair some roads, bridges and schools.3. BAIL OUT THE PEOPLE LOSING THEIR HOMES, NOT THE PEOPLE WHO WILL BUILD AN EIGHTH HOME. There are 1.3 million homes in foreclosure right now. That is what is at the heart of this problem. So instead of giving the money to the banks as a gift, pay down each of these mortgages by $100,000. Force the banks to renegotiate the mortgage so the homeowner can pay on its current value. To insure that this help does no go to speculators and those who have tried to make money by flipping houses, this bailout is only for people’s primary residence. And in return for the $100K paydown on the existing mortgage, the government gets to share in the holding of the mortgage so that it can get some of its money back. Thus, the total initial cost of fixing the mortgage crisis at its roots (instead of with the greedy lenders) is $150 billion, not $700 billion.And let’s set the record straight. People who have defaulted on their mortgages are not “bad risks.” They are our fellow Americans, and all they wanted was what we all want and most of us still get: a home to call their own. But during the Bush years, millions of them lost the decent paying jobs they had. Six million fell into poverty. Seven million lost their health insurance. And every one of them saw their real wages go down by $2,000. Those who dare to look down on these Americans who got hit with one bad break after another should be ashamed. We are a better, stronger, safer and happier society when all of our citizens can afford to live in a home that they own.4. IF YOUR BANK OR COMPANY GETS ANY OF OUR MONEY IN A “BAILOUT,” THEN WE OWN YOU. Sorry, that’s how it’s done. If the bank gives me money so I can buy a house, the bank “owns” that house until I pay it all back — with interest. Same deal for Wall Street. Whatever money you need to stay afloat, if our government considers you a safe risk — and necessary for the good of the country — then you can get a loan, but we will own you. If you default, we will sell you. This is how the Swedish government did it and it worked.5. ALL REGULATIONS MUST BE RESTORED. THE REAGAN REVOLUTION IS DEAD. This catastrophe happened because we let the fox have the keys to the henhouse. In 1999, Phil Gramm authored a bill to remove all the regulations that governed Wall Street and our banking system. The bill passed and Clinton signed it. Here’s what Sen. Phil Gramm, McCain’s chief economic advisor, said at the bill signing:

“In the 1930s … it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets.”We are here today to repeal [that] because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth and we promote stability by having competition and freedom.”I am proud to be here because this is an important bill; it is a deregulatory bill. I believe that that is the wave of the future, and I am awfully proud to have been a part of making it a reality.”

This bill must be repealed. Bill Clinton can help by leading the effort for the repeal of the Gramm bill and the reinstating of even tougher regulations regarding our financial institutions. And when they’re done with that, they can restore the regulations for the airlines, the inspection of our food, the oil industry, OSHA, and every other entity that affects our daily lives. All oversight provisions for any “bailout” must have enforcement m
onies attached to them and criminal penalties for all offenders.6. IF IT’S TOO BIG TO FAIL, THEN THAT MEANS IT’S TOO BIG TO EXIST. Allowing the creation of these mega-mergers and not enforcing the monopoly and anti-trust laws has allowed a number of financial institutions and corporations to become so large, the very thought of their collapse means an even bigger collapse across the entire economy. No one or two companies should have this kind of power. The so-called “economic Pearl Harbor” can’t happen when you have hundreds — thousands — of institutions where people have their money. When you have a dozen auto companies, if one goes belly-up, we don’t face a national disaster. If you have three separately-owned daily newspapers in your town, then one media company can’t call all the shots (I know… What am I thinking?! Who reads a paper anymore? Sure glad all those mergers and buyouts left us with a strong and free press!). Laws must be enacted to prevent companies from being so large and dominant that with one slingshot to the eye, the giant falls and dies. And no institution should be allowed to set up money schemes that no one can understand. If you can’t explain it in two sentences, you shouldn’t be taking anyone’s money.7. NO EXECUTIVE SHOULD BE PAID MORE THAN 40 TIMES THEIR AVERAGE EMPLOYEE, AND NO EXECUTIVE SHOULD RECEIVE ANY KIND OF “PARACHUTE” OTHER THAN THE VERY GENEROUS SALARY HE OR SHE MADE WHILE WORKING FOR THE COMPANY. In 1980, the average American CEO made 45 times what their employees made. By 2003, they were making 254 times what their workers made. After 8 years of Bush, they now make over 400 times what their average employee makes. How this can happen at publicly held companies is beyond reason. In Britain, the average CEO makes 28 times what their average employee makes. In Japan, it’s only 17 times! The last I heard, the CEO of Toyota was living the high life in Tokyo. How does he do it on so little money? Seriously, this is an outrage. We have created the mess we’re in by letting the people at the top become bloated beyond belief with millions of dollars. This has to stop. Not only should no executive who receives help out of this mess profit from it, but any executive who was in charge of running his company into the ground should be fired before the company receives any help.8. STRENGTHEN THE FDIC AND MAKE IT A MODEL FOR PROTECTING NOT ONLY PEOPLE’S SAVINGS, BUT ALSO THEIR PENSIONS AND THEIR HOMES. Obama was correct yesterday to propose expanding FDIC protection of people’s savings in their banks to $250,000. But this same sort of government insurance must be given to our nation’s pension funds. People should never have to worry about whether or not the money they’ve put away for their old age will be there. This will mean strict government oversight of companies who manage their employees’ funds — or perhaps it means that the companies will have to turn over those funds and their management to the government. People’s private retirement funds must also be protected, but perhaps it’s time to consider not having one’s retirement invested in the casino known as the stock market. Our government should have a solemn duty to guarantee that no one who grows old in this country has to worry about ending up destitute.9. EVERYBODY NEEDS TO TAKE A DEEP BREATH, CALM DOWN, AND NOT LET FEAR RULE THE DAY. Turn off the TV! We are not in the Second Great Depression. The sky is not falling. Pundits and politicians are lying to us so fast and furious it’s hard not to be affected by all the fear mongering. Even I, yesterday, wrote to you and repeated what I heard on the news, that the Dow had the biggest one day drop in its history. Well, that’s true in terms of points, but its 7% drop came nowhere close to Black Monday in 1987 when the stock market in one day lost 23% of its value. In the ’80s, 3,000 banks closed, but America didn’t go out of business. These institutions have always had their ups and downs and eventually it works out. It has to, because the rich do not like their wealth being disrupted! They have a vested interest in calming things down and getting back into the Jacuzzi.As crazy as things are right now, tens of thousands of people got a car loan this week. Thousands went to the bank and got a mortgage to buy a home. Students just back to college found banks more than happy to put them into hock for the next 15 years with a student loan. Life has gone on. Not a single person has lost any of their money if it’s in a bank or a treasury note or a CD. And the most amazing thing is that the American public hasn’t bought the scare campaign. The citizens didn’t blink, and instead told Congress to take that bailout and shove it. THAT was impressive. Why didn’t the population succumb to the fright-filled warnings from their president and his cronies? Well, you can only say ‘Saddam has da bomb’ so many times before the people realize you’re a lying sack of shite. After eight long years, the nation is worn out and simply can’t take it any longer.10. CREATE A NATIONAL BANK, A “PEOPLE’S BANK.” If we really are itching to print up a trillion dollars, instead of giving it to a few rich people, why don’t we give it to ourselves? Now that we own Freddie and Fannie, why not set up a people’s bank? One that can provide low-interest loans for all sorts of people who want to own a home, start a small business, go to school, come up with the cure for cancer or create the next great invention. And now that we own AIG, the country’s largest insurance company, let’s take the next step and provide health insurance for everyone. Medicare for all. It will save us so much money in the long run. And we won’t be 12th on the life expectancy list. We’ll be able to have a longer life, enjoying our government-protected pension, and living to see the day when the corporate criminals who caused so much misery are let out of prison so that we can help reacclimate them to civilian life — a life with one nice home and a gas-free car that was invented with help from the People’s Bank.Yours,Michael Moore

We all have our own personal dogma that we have invested our whole life in validating,and this is good because the variety of approaches to economic problems are as diverseas there are deep thinkers. However, there comes a point where we must think metaphysicallyfor the common good and the public interest. We spent long years becoming highly educatedand we all deep down think that those who didn’t burn the midnight oil and slacked on educa-tion should not have access to the same things we do. We are self-centered and fail to seethat it is in our own self-interest for a centain minimum level of harmony to exist in civilsociety. We are all entrepeneurial and driven and expect others to be the same way.I ask you to suspend your dogma for just enough time to look at all the options that thiscrisis bring to the table. I know we live in a globalized financial milieu where capital canliterally fly at the digital speed of light, and this presents a threshold problem to thesolution of this Global Credit Deleveraging. Whatever we do here in the United States, therewill always be a jurisdictional forum where capital can dictate the terms of engagement. Weare always at the mercy of the Offshore Option of Corporate Tax Avoidance. This presents themost important problem for the Nation State to bring the International Financial Architectureto a sustainable long term solution. It is a fact that some among us, myself not included, areso financially creative that we can make angels dance on the head of a needle and that is fine.We must think of the common good of humanity and we must sacrifice our dogma to come up withGlobal Compacts that will tame the extreme of our own ingenuity. We have global problems andwe need Global Regulation. The Bank of International Settlement and the Basel Accords ofSELF REGULATION DOGMA do not work. There must be INTERNATIONAL ECONOMIC COMPACTS AMONGSTNATIONS that truly provide long term sustainability to our global economic system. We do nothave this now and we are suffering for it.Every proposal at the national level will have an international feedback mechanism that willhamper its effectiveness. However, we must start here and aspire to unite in common cause todevelop an effective democratic international economic architecture. The Bernie Sanders .25%tax on stock transactions will be anathema to some, but you know that we need it. The SwedishModel to resolve this crisis is contradictory to others but we need it. We either consider someheretical solutions or we will be standing on a corner selling apples instead of structure noteswith knockout provisions to unsuspecting clients. We must unite in being open minded. We musthave that skeptical empirical approach where all our fundamental base concepts must be testedconstantly. Obviously, something has gone wrong!The Professor provides a forum to even his most severe critics, and I respect him for it.All I am suggesting is that we take some time and see the big picture. We are being inconve-nienced by this Credit Dilemma, but there are others around the world that are not survivingthis Credit Frankenstein. Some of the effects are of Malthusian Proportions. We are betterthan this! We can all join to bring relief to the “least among us”, but that is going to requirethat we all suspend our most cherished fundamental concepts for just enough time to considerother heretical solutions. We must all sit down and listen to each other and analyze the commondenominators that will bring us to solutions.

TED SPREAD AT 350 BPS AND RISING

I have to take issue with you on this one, Dr. Taylor. While economics may be only a “social science,” its study clearly has practical value for society.The human condition, with respect both to Individuals and society as a whole, involves making choices about how limited resources are to be most effectively utilized and distributed. Economists have helped us to understand the myriad factors that influence the private and public choices we make every day. An understanding of these factors, in turn, creates a generalized, rational frame of reference that can be useful to individuals, businesses, and governments making these choices.Microeconomics is well understood, and very practical in terms of its application to business decision-making. Macroeconomics, on the other had, is far more complicated because it necessarily involves such a huge array of relevant potential interactive forces that it remains far less reliable as a tool for prognostication. Still, macroeconomics represents the best means of framing public economic policy at national and international levels, and even in helping individuals to make appropriate choices for themselves in the face of tsunami-like economic forces beyond their direct control.I could compare macroeconomics to, say, the law of contracts, in that its practical applications evolve over time with experience. If you’ve ever looked at several different written contracts, you may observe that they all tend to have certain common provisions, e.g., for the choice of law to apply to the agreement, to the venue for any litigation that may arise in the event of a dispute, as to the completeness of the agreement as the expression of what the parties have represented and what they expect, etc. These common provisions arose over centuries, each coming about with the advent of circumstances that the language of the contract of the day had failed to anticipate. A merchant will commonly include an exclusive venue provision in its contracts to ensure that it doesn’t wind up being sued in Timbuktu and every other jurisdiction but its own in the event of a dispute. Such exclusive venue provisions are common now because once upon a time, a merchant didn’t do that and it became very costly.Macroeconomics develops along the same lines. Ben Bernanke wrote a paper titled, Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment, which I once cited in a previous post. You can read it here: http://www.federalreserve.gov/Pubs/FEDS/2004/200448/200448pap.pdf. In a nutshell, he discusses what options for managing an economy in recession would be available when interest rates hit zero and couldn’t be lowered any further. He wrote this paper because once upon a time (e.g., Japan in the 1990s), those responsible for managing the economy were caught off guard when they dropped interest rates to zero but economic growth continued down a negative slope. Experience teaches, and forces the development of new and innovative, PRACTICAL means of addressing previously unforeseen problems.The way I see it, a congruence of unanticipated and, to some extent, unforeseeable events in the economy is now overwhelming those responsible for making and carrying out economic policy and for managing the economy. We are learning as we go, and we have a lot left to learn. Some, such as Dr. Roubini, appear to have had much keener insight into what was occurring and what was likely to occur well in advance of the crisis now unfolding. Being forewarned is being forearmed. My exposure to this blog, beginning last fall, has helped me to protect and preserve the financial resources of my elderly father and mother, and that, to me, is a most practical application of economics for which I shall remain very grateful to our economist host, Dr. Roubini.SWK

thanks!.. for clarifying,.. i thought i couldnt even get pass the first sentence.. haha..just 1 last question, why dun central banks just sell the dollar denominated debt for cash then?..yes naturally, the treasury rates will spike but demand seems to be there with rates dropping to near 0% at 1 pt.. no?mrskeptical

I draw the reader’s attention to the material presented a few posts down in this thread, excerpted here:

I think it’s very telling that in two days of hearings and two weeks of discussion we have yet to see *any* detailed mechanism for how Paulson’s plan will increase the supply of, say, inventory loans. It’s not that every economist in the world is an idiot, it’s just not going to help. I think people have fallen into the fallacy that if it costs a lot it must be valuable. Paulson’s plan falls into the category of very expensive way to hurt ourselves.Reply to this comment By oller on 2008-10-02 06:54:28

I’m so pleased to discover RGE Monitor and the solutions offered by Nouriel Roubini. I’ve been forwarding links to his articles to many people in the States over the last week. Hopefully the soundness of his perspective will illuminate some of my friends whose finances are in trouble.A request: Can RGE Monitor provide transcripts of Roubini’s TV interviews? I realize this entails more work for people at RGE, but it would be very helpful. I live in Peru where my Internet connection doesn’t permit smooth passage of embedded videos.

I keep seeing things that just don’t make sense. Our problem is a worldwide debt bubble. The idea is being blamed on the US, but the bubble is global. The US made the mistake in the mid 1990′s of letting its Government sponsored mortgage operations run rampant, then Robert Rubin decided to swing US trade overseas, enhancing the stock bubble in 1998. All policy makers are making the mistake that the way to solve a debt bubble is to keep it from collapsing. The problem following the healing of the debt bubble is we still have a debt bubble. They aren’t going to fix this thing because in order to keep it intact, we have to return to the era of subprime financing and lending money and capital to areas where it cannot ever be paid back. Keynes said in the long run we are all dead and we have reached the long run of this current economic system. The rich need to lose their assets, the poor and other rich need to default and the governments of the world need to concentrate on the structure of the next credit system. As much as I hate to admit it, the idea of insured private banks is probably a thing of the past. The gold standard worked on a national basis, but not on an international basis over the long run. Socialist governments are so pain adverse that problems in finance are never solved.The public needs to be educated as to how banks work. I believe that if they were, banks probably wouldn’t be allowed to exist as private, but public institutions. Mr. Soros knows how banking works, but gives not a hint in his article how it works. He is right that over the short term, the capital problem could probably be fixed with $500 billion, but banking would quickly consume the wealth of the world. Banking is as speculative as investing in stock and both are closer to zero sum games than their proponents propose. Generally the more speculative one becomes, the more speculative the other becomes. There is a huge link between the inflated level on the stock markets around the world (todays prices aren’t beaten down, but in regard to the US market, still at a long term record level in comparison to past markets, including 1929)and speculative lending. Mortgage lending was made speculative through the GSE’s then through Wall Street and hedge fund speculation. There were 25 people that made near $1 billion last year running hedge funds. Is there something wrong with that picture?The problem that isn’t being faced is we have created a modern Mississippi, John Law bubble. The only way to keep that bubble in one piece is to go back to the speculative lending we are passing the buck to in the first place. The problem wasn’t the speculative lending, but in reverse. The speculative lending was the solutioun to a system that had run out of collateral in the 1990′s. What we are trying to do now is pay ransom, but remain in the hands of the kidnappers with a promise from them that they won’t beat us up for a period of time, but only for that undefined period.I would like to say that I could pinpoint when this mess started. If one wants to look for an event, the Viet Nam war would probably be a good place to start, but it really only accellerated a process put into motion after WW II. The GSE activity and the Rubin bailouts around the world probably only accellerated the tech bubble and the subprime crisis. Any politician worth his salt knows that creating a financial bubble is the way to appear prosperious, but those that have had to clean up after the bubble remember the ramifications of a bubble. Our problem is that the politicians that had to do the cleanup are all dead. The S&L bubble of the 1980′s was blamed on crooks, but it was nothing more than an early echo of what we have now.

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