Actually today is Tuesday

Here's a good WP article on how Washington and Fannie and Freddie went hand in hand down this primose path.

http://www.washingtonpost.com/wp-dyn...091302638.html

Fannie and Freddie served as a nice revolving door where up-and-comers parked waiting for a nice government appointment, and exiting government officials went to get rich after doing their time in "public service".

Note how much power Fannie and Freddie had. They were sort of a private corporation, but yet had special goverment "sponsered" status. They got special rules, which they bought from the politicians with their profits. Heck they threatened to *sue* a congressman if he released some unflattering information and had enough clout to back it up and silence the congressman.

This should be a Teapot Dome moment in our history, but I'm afraid they're going to get away with it. A few big shots will go down, offered up as scape goats, but most of them will get away.

As much as I hate it, the feds have to bail them out, lest they take the whole economy down with them. Make no mistake, this would indeed be 1929 all over again if they don't bail the big ones out. I can only hope some real reform can come out of it, but I ain't gonna hold my breath.

Honestly, I think it will take another Depression to knock some sense in their heads.

-Richard

Thanks for the links.
Wow, publius, you've really got the scenario down:

House Speaker orders wide Wall Street probe

AIG Gets $85 Billion Fed Loan

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It seems to me that every time Washington comes up with regulation to save banks from themselves, they find loopholes in it, and find a new way to hurt themselves!

One of those cases where time travel would have been so nice, buy them at the bottom, sell them at the end of the same day, triple your money.

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‘To those who regard “crime fiction” as some sacred icon which must follow a rigid formula, I will always be the man who writes 18-syllable haiku.’Trying to make sense of computers, The Error Log.

And now the FDIC itself may be in trouble:

http://news.yahoo.com/s/ap/20080916/...eposits_safety




-Richard

The fact that there are no quintillionaires around is one of the best arguments against time travel ...

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Microsoft is over if you want it.

The bar has been lowered for the promotion of ATM ideas; the bar for the acceptance of ATM ideas must remain high.

J.H.C......... The Dow went in free fall there at the last. I had my little window up showing it was at -350. I hit refresh, -375. Then refresh again, -400. Then -420, Then -450 right before the close. That was indeed free fall.

I'm going to have to quit watching this stuff -- that nearly killed me.

Heh. My broker, my "financial advisor" as he calls himself, generally calls around when he fears his customers may be getting antsy and offers soothing words. I haven't heard a word from him all week. Heck, I think he's headed for the tall grass himself. I just called his number to see. Busy. Every one of his numbers is busy. Busy indeed.

-Richard

Is it me who doesn' t understand the marked or was today a way to triple your money if you had the timing right?

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‘To those who regard “crime fiction” as some sacred icon which must follow a rigid formula, I will always be the man who writes 18-syllable haiku.’Trying to make sense of computers, The Error Log.

I think it was switching on the LHC that
did it.

Last Hedge Collector

Lost Herd Conscience

or something like that...

I am not making this up. Just got through to my broker's secretary and she said he's going on vacation and will be gone for a week. I laughed. She laughed. Poor gal sounded a bit frazzled. And he left her to take the heat.

-Richard

Such pessimists. Can't you understand extremely strong negative growth when you see it?

Besides, my underlying fundament is strong. Been sitting on it all day, no bad effects.

Can't make an omelet without breaking eggs.

Creative destruction.

Necessary shake-out of poorly performing institutions.

Any other cliches'?

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If they can get you asking the wrong questions, they don't have to worry about the answers.

"Just go shopping..."

Hmmh---are we under attack, again?

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Gold went up about $90 today, the largest single day increase in history. Yep, if I had that crystal ball and put everything I had in gold yesterday and sold it today, I would've made a killing.

But that's assuming I want those green pieces of paper, heck digital ciphers in memory somewhere mostly. Maybe I should want the gold.

Let's see, latest FT story says all the world-wide financial "distress indicators" are at their highest since the earth cooled. Again this would be 1929 all over again, save for the US govt. essentially nationalizing *trillions* worth of private companies. They won't use that term, but that's essentially what it is.

So, it's full faith, credit, and trust in the government of these here United States that is propping everything up. But wait, what's backing the government up? Well, as it says on those green pieces of paper, "In God We Trust".

And folks, that ain't no joke. The US government is about $10 trillion in debt itself.

-Richard

Probably.

Yes it was, just like every other day. That whole bit about predicting the future is the tricky part.

Here's a figure I was looking for: $280 billion. That's how much money central banks have pumped into the economy world wide just this week. I though I saw the Fed open market thingy pumped $50 billion in just one day last week.

That's the "In God We Trust" part at work. When the Fed and other central banks pump money in this way, it comes out of thin air. It's the equivalent of "printing money" as they used to say.

I ain't knocking it -- that's what they have to do to keep things from collapsing. But it, along with the other "stress indicators" gives you an idea of just how serious this thing is.

And not to be pessimistic or anything, but do you know how your friendly neighborhood Fed Bank of NY pumps $50 billion worth of cash in the market at the drop of a hat? By buying US treasury bonds. That is, buying up parts of the US government debt. That how much money Uncle Sam owes, folks. The biggest way to to get money back in the market is to take US debt out of it.


-Richard

So the feds decide to prop up AIG with $85 billion, and the Dow drops 450 points? It's true, no good deed ever goes unpunished.

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Microsoft is over if you want it.

The bar has been lowered for the promotion of ATM ideas; the bar for the acceptance of ATM ideas must remain high.

This thing is spreading. The historic Bank of Scotland, founded in 1695, just went belly up.

http://thescotsman.scotsman.com/late...ish.4503252.jp

-Richard

Gold has reached the highest value in the 21st century down here. When people turn to gold [no pun intended]... well, there´s a whole lot of shaken confidences.

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What brings us together is stronger than what pulls us apart

Why the hell are we bailing them out anyway?

Since when is it the job of my tax money to be bailing out * private companies* ?

They should be taking that money and giving it to all the people who have lost their homes or are about to. Not getting into bed with their campaign contributors, with exorbitant bailouts - the same way they did with the airlines after 9/11.

It's unacceptable to open the national treasury and shower tax money on private companies when they're in trouble. And we all know the reason they do it is because the politicians don't give a damn about the American people, only the gold meal tickets who paid for their campaign.

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In the case of AIG, it's more of a purchase. I don't particularly like government getting that far into business, but at this particular time, I'm not sure what would be a better option. A collapsing AIG would not go quietly, and would drag other companies down with it. The idea is to not let things go too far.

No doubt there will be plenty of argument about what we should do to prevent this sort of thing in the first place, but that argument is for tommorow.

Are you talking about people who took out bigger loans than they could afford? Wouldn't these be bailouts too?

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The Leif Ericson Cruiser

I can't stand the idea of the federal government owning trillions of dollars worth of private companies either. But this is the only thing they can do. As I said above, make no mistake about it, had the feds not acted, this would be 1929 all over again. (And I see Congress is doing just what my broker did -- going on vacation ).

They let Lehman go and were going to let Merrill go as well, but they couldn't let AIG go. It was too big, and would've dragged us all down. Not too many alive today remember the Depression. We'd all be advised to bone up a bit on that history. Never let that happen again.

Main street, mom and pop, etc, have much of their savings and retirements invested in Wall Street. If it goes down, Main Street goes down. They can't let that happen. AIG going belly up would've done that. All of this is cascade from the housing bubble and NINJA loan mess bursting. AIG was insuring a lot of that mess.

What they don't need to let happen is the big shots get away with their golden parachutes (from what I'm reading, there are legal means to take the money back if the feds decide to exercise it).

-Richard

Indeed, that's what they are doing in effect. If they didn't act, the whole darn credit system would come down, and you'd have more people loosing their homes than you could shake a stick at.

Right now the big central banks world wide are "flooding the streets with money" as they like to say to keep it going. Credit would dry up, loans would get called, and the whole thing would collapse.

-Richard

If in a years time things are still holding
together then it is worth it. Money may have
lost a quarter of its value but that is better
than starting over again. And if people could
only get a roof over themselves by buying then
perhaps a rethink is needed. Ordinary decent
folk bringing the next generation along want
stable housing and communities. State
renting is an honourable option.

BTW, is it the People's United States now?


sorry...

Any genuine white hats among them?

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I'm not sure I'd agree that buying AIG qualifies as giving tax money to the people. It's not direct. It's putting faith in an institution that has already *failed* to succeed in helping those people this time.

Much better to hand the money directly to the people who need it so they can buy new homes if they've lost them, and keep from losing them if they haven't yet.

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More "flooding the streets with money":

http://www.breitbart.com/article.php...show_article=1

Note this $180G is addition to the direct injections I mentioned above.

This is just flat out extraordinary. I don't how much it all adds up to date, tens of billions here, hundreds there, in chunks of various forms but this indeed a deluge of money. Think opening Hoover Dam wide open and letting it fly.

This is what central banks are supposed to do in a crisis according to the theory and plans. We'll see if it works like it's supposed to. This is a biggy crisis indeed, one they'll be talking about in the textbooks for years. Hope it has a happy ending.

-Richard

I'm not happy with this decision. The stock market bounces back BECAUSE of more gov't interference?

What time is it really?

More gov't power is what time it is.

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Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein

My opinion will depend on how much and what is still government owned five years from now. I don't see that there was much choice at the moment, but there are different ways to handle it in the long run.

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The Leif Ericson Cruiser

The point of buying AIG is to keep a lot more people from losing their homes, after they lose their jobs or investments that supported them.

In your opinion, who should be given money, how much should they be given, and where should it come from?

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I say there is an invisible elf in my backyard. How do you prove that I am wrong?

Disclaimer: Avatar is not an official NASA image and does not imply any specific interplanetary or interstellar capability.

The Leif Ericson Cruiser