Evening Ian. Sounds like more of “Privitize Profits and socialize the losses” Digg is open Pups!!

Do you think the decision will rest on the credit swap issues at Lehman?

Yep…. that house of cards are falling down….. what is that nursery rhyme …. Humpty Dumpty fell off the wall…..Humpty Dumpty had a great fall…… all the kings horses and all the kings men could not put Humpty Dumpty back together again…..

Wow, first on the Constitution and the rule of law, and now on the concept of free markets, conservatives and liberals are trading places again. I’m starting to get dizzy.

Until a bank or brokerage house is in danger of going under AND is not managed by major contributors to both political parties, expect them all to be rescued. With our money.

They are ALL broke. ALL of them. They have no capital, no prospects, just waiting for the gust of wind to topple them.

Well stated Ian. The obvious choice to the reasonable mind is # 2. Accountability must be brought back to the canyons of Wall Street, but from my perspective it has to begin with Congress. We can no longer live by two sets of rules. One for those who live within the rarified air of the ivory towers of Wall Street and a second for the common citizen.
The current administration has done evrything and anything in order to look the other way while rome was being pillaged and plundered and now it is crunch time. To those investors who rode this cash cow to the top, great. But you should have been smart enough to know as the song goes, when to hold them and when to fold them. You win some, you lose some abd now it is time to pay up, but not on the backs of an already burdened tax payer.
Printing more make believe monopoly money isn’t the answer. What is required for this economic addict is not another financial fix, but going cold turkey. One can begin by dumping the term commonly used in the financial press today and that’s ” to big to fail”. Without the fear of failure and a preconcieved thought that it is governments role to maintain at all cost a safety net in order to protect the “system” is idotic at best.
Now is the time for some tough love and the sooner the better for all concerned.

I tend to think of them more as lemmings heading for the cliff. There are zero contrarians in investment banking.

Come [some] Sunday [or other].

The elephant in the room is this one, and the possibility of a couple more like it; see the link at the end of the post to “How Big Is WaMu?” They might have to find a way to shrink these guys somehow before they’re even small enough merely to overburden the rest of us with their bailout.

Meanwhile, as stock price-altering rumors of Lehman et al. fly in the night, I wonder where our SEC commissioner and Attorney General are …

Will WaMu be Bear Stearns #3?

How many more will there be, anyway?

How deep is the pool of rescue money?

I wonder if WaMu will be tomorrow’s newsdump.

Here’s a WaPo story on the matter, saying government people are looking for a sale without public money. H/T Calculated Risk. This article and others are saying that the Fed is resisting supporting the deal.

Here’s Henry Blodget’s take:

Potential Lehman buyers aren’t stupid: They know the Fed and Treasury wouldn’t let Bear Stearns fail, so they won’t likely let Lehman fail. So all they have to do now is say, “If you don’t protect us, we’ll walk.” And that’s just what they’re doing:

Dancing on the ruins of multinational investment banking…

Cox from the SEC and the AG are probably hiding in their respective offices hoping that the days left to this administrations tenure is over sooner rather than later so that they can get out of town and slither back under their rocks.

Essentially infinite. Not free, but infinite. Whether you like paying for it or not.

Bernanke’s a very smart guy in a very toough place, and he knows it. If he bails out Lehman, every other bank — read Citi and Wachovia — are going to want the same favour, when their books don’t balance. But there’s another set of books to balance as well, the balance of payments. Foreign investors are watching, too, and though they like to have their stakes covered, they are getting less keen on having them covered in $US. This is the nightmare many of us who agreed with Roubini and Steve Roach had four years ago, when it was pretty clear it was going to happen. The worst is yet to come.

I sure wouldn’t take that piece of crap without guarantees. We’ll see if the Fed/Treasury blink. I’d love to be surprised by them not blinking.

What ever happened to that after Enron rule that Corporation’s CEO’s were suppose to certify their results, who if any of the big accounting firms does the books for Bear Stearns and Lehman brothers.
The Freddie and Fannie bailouts where it looks like the CEO’s are going to get a bundle were they covered by the same rules?
If assets can’t be valued at their previous face value anymore because of a bad market is that the accounting firms get out of jail free card?
Or should they just cover their own buts and down grade the financials to junk?
I think the second someone sues and accounting firm and Bush can’t make it go away the financials are toast?

Are we ever going to have a policy discussion in America about that, though? Is it impossible for Frank or Dodd to hold a hearing to find out what Helicopter Ben’s parameters for rescue are? This is kind of like the one topic every family has that they never talk about.

And it’s getting expensive, not talking about it.

Citi’s too big to bail and too big to fail. That would be a nightmare.

Bernanke’s a smart guy, but he’s also fundamentally wrong on a lot of things.

I do not think we have that kind of money even on credit.

Rachel’s on.

This is all about when the Chinese or oilarchies cut off the credit card. America has no adults left (both Obama and McCain’s economic policies exist in fantasyland) so when adults elsewhere decide that keeping America’s head above water is costing more than it’s worth, they’ll cut their losses. There are three scenarios:

1) significian raising taxes
2) significant cutting services
3) run deficits even higher.

3 only works if Mummy and Daddy don’t cut off the credit card. If they do, US interest rates have to go through the roof.

It seems like an unsupported sale really sets market prices for the big sh..pile.

all of this “bailing out” means the government prints more paper to pay the debt of these companies, that translates into our money being worth less, (worhtless), prices of everything going up, and the over seas companies that carry our debt insuring some kind of return on their investment buying assets as quickly as they can, overpaying if neccesary and creating even more inflation.

I will be amazed if oil does not skyrocket with this news

oil is now the international currency

Another S&L DEBACLE!

Another Bush in Office.

Free Markets. Free to Destroy themselves.

No rational person would say remove all the restrictions of citizens to act freely, doing anything they pleased.

But PhD Economists say this same disater in waiting philosophy is the ideal environment for corporations. They call it Free Markets.

Educated Dumbells.

Can’t they also just devalue the Dollar some more and keep printing money?

Yup, if they don’t raise interest rates, then the dollar crashes. Which will cause massive inflation.

I think I’m in the “it’s coming, lets get it on” camp, at this point. Actually, I’m in the bailout the right way camp – which is to say, you screw all the investors really hard and throw everyone out of positions of power, then you break up the pieces you have and reregulate the markets properly, disallowing leverage beyond a certain well controlled point and ending most types of derivatives beyond the basics.

That would require admitting, however, that financial markets completely and utterly failed and need to be completely reregulated.

Dancing on the ruins of multinational investment banking…

Sweet!

Hasn’t Citi been rescued by Dubai already?

Grover Norquist won.

Didn’t see you comment until I posted my own I think Bush planned to juice the economy with rate cuts done about 6 months ago which should be taking effect now through out the regular economy past the stockmarket, the economic stimulus joke and lower oil prices in time for the GOP convention.
The GOP was making some noise about lower gas prices and Bush despite everything he has said about opening the strategic petroleum reserve opened it up to help John but a Hurricane brought prices up.
The problems we have used to be fixed by a rate cut but now the problems are so big Bush and the Fed can’t juice things anymore.
This is BAD.

Yah the 70’s all over again!

He really should have been careful about what he wished for.

AZ gas is usually lower than some states…… before I went to Europe it was $4.11 and up…… today I saw it running around $3.39-3.49…… That is a drop of 60-70 cents in three months……. wanta bet that it will be below $3.00 before election day?

How to make an issue a non-issue…… the fix is in…..

Assuming that we don’t get another hurricane the fix is in.

No. They gave some money, but got burned. I think they’ll be leary of putting in more.

How much oil is Bush taking out of the Strategic Petroleum Reserve if he takes to much we won’t have any cushion if he attacks Iran after McCain loses in November to save his Presidency.
Bush can’t lose the WH there are way to many war crimes to stay buried those prisoners in Guantanamo ever get lawyers Obama might have them testify on c-span about what was done to them.
Jose Padillia is another case Bush does not want investigated.

I love how these “Pigs With Lipstick” squeal about “letting the market sort things out” and then when they’re getting gored, they’re all for “government intervention.”

They have NO shame!!!!

and Ian too.

coulda sworn a couple months back that Ian posted an $800 billion dollar pool figure with the Fed having already burned through $400 billion at the time of the post

but of course agree with Ian here – infinite

The first serious regulation of the financial industry came in response to the Great Depression. I hope that isn’t necessary this time.

Credit card companies have become increasingly devious in the terms they hide in the fine print of their cardholder agreements. Do those provisions now include something that says in effect, if interest rates “go through the roof,” the credit card company can unilaterally raise the rates on cardholders’ existing debt?

Those who know something about how these things used to unfold think not —a few weeks, maybe just after the election. That size factor really is relevant, because right now not only is it too big to fail, it’s also too big to save: 1) FDIC rescue fund has only about $45B in it, which even an optimistic scenario for WaMu’s losses that would have to be covered to make depositors whole would test; 2) just the FDIC agent-power that it would take to secure a nationwide system of branches would also test the system, even if they called on other agencies to help. Hence my remark that they might have to shrink themselves first. Of course, no one wants to buy a branch network right now, I’m thinking; maybe they’ll just consolidate those accounts, merge some branch-by-branch into local banks, etc. Ee-yuckie!!

The FDIC is hiring.

You mean the Drum Major, right?

Yes.

Lehman’s been hanging on for a while, but I think their moment of critical mass was when they were held partially liable for a mortgage fraud in Irvine, CA, aiding and abetting First Alliance Corp. If that was the sort of business they were doing, knowingly bundling mortgages that closed with fraudulent documentation, they were probably not going to wait out the storm.

Financial institutions have virtually no assets… sot there is nothing to certify. What they do is created financial instruments… assign enormous value to them and sell them / trade them and create “wealth” out of thin air.

Most of these instruments are not worth the paper they are written on, but who cares… it says X derivative is valued at $billion and sell they will even sell them at a discount. Accept transaction fees, get idiot firms to “rate them” and the kabuki went on for decades.

This BS has trashed the dollar because they print them like water.

All the big financial institutions and banks are guilty of the same and all will fail.

Remember the stimulus package? That sure helped out eh? hahahaha

Our economy has been taken over by the money lenders.. financial institutions and banks which do NOTHING to help the economy and make our lives better.

Fairly soon Americans are going to have to get a lesson about what their economy actually is.

You have to be sleeping to experience the american dream, because when you are awake it is a nightmare. Unfettered capitalism is fast consuming itself as the greedy corporations feed at the public trough.

Remember how the pukes were jonsin to give our social security trust fund over to Wall Street so we could make some serious cash in the market? hahahahaha… How much would have have lost if they had their way?

From what i can guess WaMU is going to take the hit. It’s regional (from Seattle) and big but not big enough to have the implications of a Lehmen Bros. That’s JUSt a guess

As of the last report to FDIC in July 2007, WaMu had 65 offices in AZ …

Btw, I do recall that WaMu has closed some offices in Illinois this year, probably elsewhere. But they’re still a pretty big puppy, and frankly it seems obvious at least in retrospect that they nor anyone should have been allowed to get so big in relation to regulatory capacity.

Bankrupt the private sector, the public sector at federal, state and local level. Punlic services shrink, buinesses close and we have to rebuild with a stable model?

OK, was having so much fun looking at the county distribution of WaMu’s offices (they tend to be in the metro area counties of the largest cities in the country except in CA where, surprise!, they’re everydamnwhere.) that only just now did I see that FDIC totalled for me: 2,180 offices in 15 states as of July 2007.

So if WaMu has reduced their number of offices by half uniformly across the country, which I think unlikely, there still are over 1000 of them to be managed in an orderly transfer of control to FDIC. By contrast, IndyMac had 31 offices, all in the Los Angeles CMSA.

True Ponzi scheme but Bush is backing their moron plays with our tax dollars. Me I want National Healthcare F the banks.

Unless you have been in a boilerroom sales environment you cannot possibly understand how this marketing works. Closest is the film with Tom Cruise “Wall Street”.
The “Boss” orders the ovepaid salespeople to make a market an investment vehicle so they talk their investors large hedge funds, pension funds, and the rest of the “Funds” as well as the little folks. They make the stock rise or fall and skim with profit taking every trading day. If the purchaser does not sell in the cycle they take the loss. The CDO’s backed by upside down mortgages are traded like a game of “Hot Potato”. Then the big boys line up at the fed onernight windpw for the corporate dole until the day they are insolvent or can’t make their reserve or margin call. So recieverdhip is one option. Bail out is another or put ouy stock issues to raise capital. That is drying up very fast.

This was the kind of thing that brought Ronald Reagan and Margaret Thatcher into power. And these guys call themselves Republicans? Haven’t seen such brutal attacks on the free market in decades. Those [insert scathing characterization here] are using the taxpayers’ badly needed money to finance the safe landing of bankers who don’t know how to run their own banks but know how to mess up our lives.

The capitalist establishment is using the taxpayers’ money to continue ruling over them.

We are truly seeing new levels of financial lunacy this past year. It’s now impossible for a bad company to fail. What used to be Seventies Socialist tactics has become the cornerstone of Bushonomics.

Perfect. I never thought I’ll live to see this…

You don’t do it FDIC style. You take it’s lousy debt onto the Feds books and keep it on life support so it never officially goes under. It can be done. The Fed can, in effect, print money, remember.

Not to say you /should/ do it that way, mind you.

All the big financial institutions and banks are guilty of the same and all will fail.

Does this mean Phil Gramm, George Bush and Wall Street (the financial market which is in fact world-wide) work for Osama bin Laden and Al Qaeda?

I don’t see anything ObL has done which has ruined America financially, but these other folks have really found lots of ways to hurt us.

Democrats in Congress have limited power and time, so they should probably just get on with their work and let the Republicans take the blame for ruining the economy — after all they have.

Bernanke will try to limit the damage and he will get some advice from Paulson, so I wouldn’t criticize him for whatever he decides. It’ll probably be an attempt to save some assets, but the government is in the bathtub and the water is running, so some private assets are likely to get spanked.

It’s Bushonomics and Phil Gramm as John McCain’s economics adviser who should be in jail for this crap.

This morning the dollar was trading $1.40 per Euro, last night it was $1.39. What is happening to support the increase in value of the dollar is invisible, no obvious fundamental change. It is contrary to what should be expected with interest rates set by central banks for both United Kingdom (5.0%) and the Euro Zone (4.25%) with the US at 2.0% (figures are from memory). With most major EU governments in the hands of neocon believers, it would not be surprising that there is hidden central bank support for the dollar so as to influence the elections in the US, much the same way as the oil barons are doing with the price of oil. FWIW the dollar has gone from a bottom of $1.60 to $1.40 within six months (up 12.5% off the low, a significant change). Have fun speculating!