Ian I read m,any of your posts. Still having a hard time getting my brain around all this. But that always stuck in that brain. An awful lotta $$$$ for asomething that might not work. Even assuming for arguments sake , that we had to go the bailout route, couldn’t it have been done in smaller increments so we could stop if we saw it wasn’t working? Or would “experts” just have screammed thatw as the reason it wsn’t working and gotten more $$$ anyway? Sorry if you’ve addressed this already.

If I was Obama I’d drop out. I’d say “Fuck it. It’s all yours John.”

FWIW The Euro this morning buys $1.358. It is a big comedown from $1.61+ when oil was $140+/bbl.

Should alleviate inflation in imported goods w and w/o melamine. /s

Ian, has the value of the dollar been placed on futures contracts? Its trajectory of late indicates a counterintuitive path, similar to oil being priced by oil futures, not fundamentals.

OT sorry - Sen Hagels wife to endorse Obama today in Omaha

I’m just glad Dick Fuld of Lehman Brothers was able to make at least $310,000,000 before the company collapsed, because I would have been worried about him having enough money to survive to his next job. Whew. I’m so relieved he’s going to be financially okay. Spit.

download refresh is glacial (use the word while people still know what it is)

This means even more treasuries will have to be issued.

Treasuries are being snapped up at the moment by folks fleeing-to-safety™, but with the FDIC now insuring bank accounts to $250,000, and with (at least some) banks paying far higher interest than the Treasury, it’s hard to understand how this treasury-buying trend can continue.

Someday, Ian, I expect the Tinkerbell in your photo to be wearing black and sporting horns.

Just sayin’.

(Paging Watertiger).

If you want to make money in this economy, set up a stand near the Beltway selling pitchforks, rakes, and torches.

Ian,

It seems to me that all these “top down” fixes are not working and will not work in an economy DRIVEN by the financial sector which “creates” “instruments which are based on nothing.

In a real word, the value of financial instruments “traded” would be closely related to some asset or “collateral”… remember that concept?

The financial services community decided that they could create wealth from thin air by using “derivative” products, assign them “value” and trade them… collecting fees for the transaction. Of course these transactions were huge so the fees are enormous and these execs walked away with enormous profits from these transactions. Virtually all the paper is not backed by anything “of value”.

Mortgages were a bit different in that supposedly there was an underlying value there, but even if the real estate market was stable and not inflating, these “instruments” were traded on the future value not at what the property was worth or is worth. A property worth $200L would have a mortgage for say $175K which would pay $400K at the end of 30 years for example and this is the value place on this mortgage and traded. To make money on this the holder would sell it for$200K and make a quikie $25K and the new holder would look for a buyer at 225K to make 25K and so on. It would pay $400K if one of these buyers would wait for the return. But they wouldn’t. And then there was the fact that the mortgages were bogus and non performing and in default.

The above is how wall street works and it is fundamentally wrong and will never work. And this is THEIR business model. With all the created wealth they will “lend” or fund business ventures supposedly. But when their ponzi scheme is not producing trades and cash, they have no money for the “real” economy. They have extracted it all in profits over the past 30 yrs! That was the flow of wealth from the bricks and mortar economy to the financial sector’s Fulds and Thains and Paulsons. And those are the ones whose names we know. There are 1000s of others who made hundreds of millions each.

This model of wealth creation by wall street, the creative financial instruments, the shares whose worth is based on “psychology”, the sheel companies who produce nothing. It’s all a ponzi scheme.

These fella grabbed most people’s retirement accounts in the BS 401K and Roth IRAs, pension plan which “invested” in the market and so forth. They had all the cash to play with. They also pimped for corporate america mergers and acquisitions with enormous fees for schemes to showing corporate america how to extract more profits and “productivity” from workers by off shoring etc. Their courruption avarice knows no bounds. Yet “we” admire them as “masters of the universe” because they can make such huge amounts of money.

That system IS nothing but a ponzi scheme and it cannot be saved by ANY plan. What it did accomplish is it destroyed our smoke stack industries, moved millions of jobs offshore and turned american into consumers of very profitable offshore produced products. They have turned americans into fuedal serfs.

The New Fuedalism - The New American Century

It could have been. One of the suggestions many folks made, but alas, no.

Morning Ian early here on the West coast.
Most world markets seemed calmed. European states avoided a bank run by gauranteeing deposits…smart and cheap fix.
Australia cut interest rates a whoping 1% settling Asia a bit. My guess is the American markets open mixed unless their is some more bad news.
Some foreclosures are getting reprieves due to the court decision, may be some hope there.
The shit pile is still on the balance sheets somewhere..any news on that other than we will bail Paulsons crony corporations.
Will hedge funds fall?

The term “gallows humor” was mentioned downthread; nowhere is it more appropriate than when applied to the environment.

No, the dollar going up makes sense. In a standard currency crisis, there is a period where people repatriate their money, that’s happening.

But this isn’t standard. It has spread massively to Europe. There is no safe place. However, US treasuries are seen as the least not-safe place, so money is flooding into them. That is also raising the dollar. Expect this to continue for a while. Remember also that none of the last few weeks have been issued yet - the money is starting to be spent, but no treasuries have been issued.

Treasuries are essentially cash, but Bernanke just announced he’ll pay interest on reserves. You can use treasuries in reserves. Banks will now pile into treasuries since they can hold it as reserves and get interest on it. That will further reinforce the dollar.

Is this bound to last forever? No, probably not. But here’s the question - say you’re worried about US fundamentals. Where do you flee to? This isn’t a contained issue.

couldn’t it have been done in smaller increments so we could stop if we saw it wasn’t working?

damn you heretic for your appeal to empiricism! /s

Reading this, catching up with yesterday’s Froomkin, and this from Seth Grahame at HuffPo, I can’t keep from asking Josh Marshall’s question from a couple of weeks ago: “Why did George Bush ruin the country?”

Paulson and Bernanke should step down. I would appoint Isaac and Galbraith. I would suggest a citizen “pitchfork phoning” demanding Paulson and Bernanke resign…

Their malfeasance is sick and derelict beyond measure and they do not deserve to receive a salary on our tax dollars nor deserve to spend another minute deciding what to do with our tax dollars. They do not deserve the responsibility.

If people buy gov bonds and not stocks then we will have lots of money in the treasury to “lend” to industry and citizens for bidness. That’s a model. Holders of treasuries and bonds make a modest and safe return and the US treasury is solvent. The money can be used for WPA type projects and taxes are pay the interest on the bonds. We won’t need taxes to fund entitlements etc. How bout that?

Resign? We’re probably gonna have to force these fools out at gunpoint in January. They’ll be screaming, “We won. We won.” the whole time.

By industry in the US do you mean the auto industry or the war toys industry?

Retirement should be invested in gov bonds and not in the market where it is safe.

We need to cool inflation and get rid of all the funny money.

I pointed out to all my neighbors (in both elections) George’s wonderful track record of being capable consistently of one task and one task only: running anything remotely successful INTO THE GROUND.

It really is not fun to be in the position of being able to say, “Told ya so,” as we lose our rights and our foundations of democracy because of him and Cheney.

Need an emergency world economic summit to coordinate an effective plan. Problem is wall street wants to rule as they have the advantagr. Wonder when global markets will rebel?

But I do not think we have screamed loud enough about THEM. We called and stated, “No!” to the bailout but I am not sure how many of those calls asked for Paulson to take a long walk…

We need some more capable brains in the Treasury…There is a “payday lenders” mentality in there right now and usury is illegal.

I mean any industry, but we kept most of the war toys industry here and spread it around nicely.

We offshored everything else, electronics, machine tools, clothing, consumer products.

They’ve got 3 1/2 months to put the US in as deep an economic hole as they can. They will use every minute to do just that. They’ll be rich beyond their wildest dreams and not give a rat’s ass about anything else.

That was my point. The only real industry we have left is cars and war toys.

“Why did George Bush ruin the country?”

because he could.

there was no one, no congress, not an opposition party, not us to stop him. :(

p.s. Waxman hearing on AIG Bailout today

Thanks Ian @ 15

Thanks Ian.

digg

I don’t think there are any good ideas at this point in the process.

The time to have acted was last year, but that didn’t fit the political plans of the GOP. They were hoping against hope to get through the election before the meltdown came, and they kept stringing things out, but the commercial paper market finally shut down and something had to be done. I think they’d convinced themselves that they could pull off the delay. They’re good at convincing themselves of the most blatant bullshit.

Wall Street played along, keeping the markets up despite a near total lack of anything underpinning them. That there was a lot of worry out there was obvious by the increasingly erratic market swings as sharp sell-offs were followed by sharp up markets. I kept watching it with amazement since it was clear there really was no there there concerning the economic fundamentals.

The only thing the GOP understands is running for office, not governing. As a result, when an actual crisis that requires governing shows up, they don’t have a clue what to do. They waited this time until the ship was not only taking water, but was actually submerged before they agreed to turn on the pumps. It could well be too late to stop a major worldwide financial disaster on the scale of the Great Depression; only time will tell that. But as we watch the world’s financial markets evaporate, we ought to save a bit of the blame for the Democrats, too. They were complicit in not insisting on getting something done earlier. This should have been a major push on their part. But cowardly venality is a bipartisan thing in D.C. these days.

What court decision?

Nothing new Wage Slave. We’ve been economic slaves for a long time.

What I just heard on NPR (and I have little faith in NPR most of the time), is that because it will take a month or so to get the $700B out there in the banks to buy the toxic waste, the day to day loans via commercial paper (to pay for payroll and basic day to day costs) won’t wait , and that paper is not moving - meaning the banks are not loaning even to monetarily sound corp on short term commercial paper. So Uncle Sam to the rescue, via this new loan avenue.

What I want to know, is if this breaks the credit logjam, can we push to stop the big $700B bailout, as the credit market will have already started breathing via this most recent move and there would be NO REASON to give an additional monies. Let the toxic stuff stay with bad banks.

Anybody got a feeling on this. Angry B

On NPR that the FED has just started buying assets. The assets are both secured and unsecured. To me, this sounds like the banks are going to first unload their bad credit card debt — you know the ultimate junk bond stuff issued at 30% interest. It was profitable because the interest rates were so high and covered any potential loss due to “risk diversification” across millions of credit card holders. Now we, the taxpayers, are buying this crap. People bought crap on their credit cards and now we collectively are absolving the banks from responsibility for having been stupid enough to make those “highly profitable” “risk diversified” consumer credit loans.

To quote Gary Shandling: “John McCain can’t be saying we are winning the war in Iraq, at the same time we are going bankrupt. That means we are losing because … the planes hitting the buildings was an economic attack. And if we didn’t have to spend X trillion into this war, we might be able to handle the housing issues. Anybody who says that we are winning this war, and the Treasury Secratery says we are two days from being bankrupt, there is a lie going on.”

When the People figure out later today what is going on, expect the market to go into a free fall. They were lied into the war, and now they are being lied into bailing out the credit-card housing crisis.

We need a new Boston Tea Party, a Montgomery Bus Boycott, a protest that calls attention to the fact that we the people are still relevant. One friend suggested that we start by delaying our mortgage payments by several weeks. As long as it is well publiciced, everyone will know what is happenning. Yet the bankers will freak out. They will see our power and remember that they work for us. Another option is to stop using your credit card for one week. Then if the boycott needs to be extended another week, so be it. Pay with cash. The new system of monitoring payments is not set up to rapidly record non-electronic payments. The bankers will remember the bus boycots and say immediately, lets give them what they want. Remember, we don’t want the system to fail, we just want the system to respect us as participants — not just residual non-pecuinary beneficiaries.

If I am not mistaken they don’t need to fund these purchases, the Fed just ‘prints’ money to buy the commercial paper, and then when it is paid back retires the dollars. The only risk is, as noted, if the companies don’t pay back, and defaults are very rare.

Dead Last:

I am with you on protest.

I am fed up.

This was never supposed to fix anything. You watch it will enrich Paulson’s friends at Goldman and maybe some others.

How does issuing 700 billion of new treasuries in exchange for assets of questionable value increase liquidity? It doesn’t and they all but said so by saying they “hoped” it would work.

Let’s repeal the bailout and start over.