"One thing I do find very interesting on this board, is that unless I'm all wet, more people that post on this thread would follow Sinclairs advice than Warren Buffets. "
BL , one thing different about these two guys is that you can do what Sinclair suggests, and NO body but Warren can get the kind of deals he gets. Do you really want to own common in GS while Warren holds permanently preferred shares at 10%?
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."
Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?
Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. —Thomas Jefferson, 1802
Main number: 202 225 -3121 - ask for your elected officials in D.C. Our elected Senators and Representatives supposedly work for us, the taxpayers! Tell them what YOU think about the Wall Street Bailout.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
There goes the other big bank I was referring to a few weeks ago. No cost to the FDIC.
The WSJ reports that J.P. Morgan Chase (JPM) was expected to announce as early as Thursday night a deal to acquire the bulk of Washington Mutual Inc.'s (WM) operations in a deal that would mark the end of independence for what once was the largest U.S. thrift. Federal regulators have been heavily involved in orchestrating the transaction, which comes as WaMu was besieged by a mountain of bad mortgage loans. WaMu, of Seattle, has been scrambling to find a solution and put itself on the auction block last week. A number of interested parties have been studying WaMu's books, but the bank didn't receive any offers. While the exact structure of the transaction wasn't immediately known, J.P. Morgan is expected to acquire Washington Mutual's deposits and branches, as well as other operations. The deal isn't expected to result in any hit to the bank-insurance fund, which would be a huge relief given that some analysts worried that a failure of the thrift could cost more than $20 billion
It appears that your FDIC buddies' intelligence wasn't all that revealing a few weeks back when you asked about the next big bank to fail. My choice went down long before theirs. Just in the past few weeks we added Lehman, with bailouts/buy outs for several other investment banks. I still have to question the FDIC's intel on the rest of their projections. After all, why should they do anything but parrot the party line?
I asked many more questions than you requested. Some answers you may like, some you may not.
Ask the FDIC how many weeks/months they anticipate before they run out money and have to be bailed out themselves
1. The FDIC has a letter of credit with Congress. 2. Banks are 3x better capitalized than they were in 1990-1991. 3. Deleveraging is strengthening balance sheets. 4. The media is overhyping. 5. Due to media overhyping, people have been diversifying their assets among many banks. There are alot less uninsured deposits than months ago. 6. The FDIC has the ability to raise insurance premiums. 7. The "list" is greater than 117. 8. A big bank will probably fail. 9. The FDIC will not be insolvent, nor will the USA. 10. The bulk of sub-prime mortgages due for reset occured this summer. Since forclosures usually take 90 days or more, expect the worse to be over in late fall. 11. The real estate market is already slowing its decline and will probably bottom by Spring 09. 12. There are a tremendous number of high quality banks. 13. There is still new bank creation, although slower than in previous years. 14. Stronger capitalization means more acquisition.
My interpretation......It is always darkest before dawn, and it is pretty dark right now.
But it's got a whole lot darker since that FDIC meeting. That 3X capitalization that the FDIC spoke of has not been very helpful in the past few weeks. Capitalizing 30-1 or even 50-1 leverage when everyone is linked into the same derivatives chain is apparently not well understood even by the experts.
The remaining $40-50B previously left in FDIC would have not been able to cover a WaMu and anyone else too big to fail. But as you have said it seems they haven given a few hundred billion more in these bailouts. They will need all of that, and then some.
I didnt include Lehman because I dont believe it is covered by the FDIC anyway. It was also quite obvious, as was WM, that they were going under. There is one other quite large bank that could go, but thats all I'll mention of it.
The community and smaller regional banks are all very well capitalized and are sound, as are several smaller broker/dealers. I also know there is a HUGE amount of money just waiting to pounce on the small to mid sized banks.
With the 700 Billion dollar bailout plan..... looks to me like our choices come down to....
1. Let them take the natural course and fail, with us taking the repercussions of loss of 401k's, unable to get credit, etc. In other words, we will all take a financial hit.... but perhaps we will still have some FREEDOM left. and BROKE.
2. Let them take the bailout plan as currently set up, with us probably still taking some financial loss (or not). BUT.... we will have given dictatorial powers to the FED, and we will have lost a significant amount of freedoms. They will own you.
The part that really scares me... is how they wrote in that no other entity will be able to review or change their decisions. IOW, forget about the 3 branches of government and the Constitution. The FED will be able to decide whatever they want, and no court, etc., can contest it. Talk about giving yourself carte blanc to to any criminal act you want..... WTF?????? HOW BIG OF FOOLS DO THEY THINK THE AMERICAN PEOPLE ARE??????
We have talked about the possibility of confiscation of gold and silver.... well GUESS WHAT! If the FED gets the power mentioned above...... you might as well load up the cart and take it in to them. IMO the time may very well be coming upon us, and we will have NO RECOURSE.
I have gone back and forth with trying to decide in my mind whether I am for the bailout plan..... and have decided NO WAY. We very well may have some tougher times upon us..... but I cannot see giving the government dictatorial powers they will want. They will own the businesses, and they will OWN US.
The black hole of dictatorial FED powers means that my 401k and pension are not safe unless I withdraw and take the penalty and tax losses and accept an early buyout and invest in non-currency, non-equities. This was a 1993 Clinton plan and also a 2008 Hillary and Barack plan...tap into America's 401k at just 8 or 10%...more if needed down the road. This was to give the unfortunates who couldn't save a nest egg that was yours...you know....share the pie.
Meanwhile, the so called deal penned this afternoon is already sour full of D-pork. The Dow was up nearly 200 but the news was after the close. I think the lack of confidence doesn't bode well for tomorrow and monday's market.
Reuters Bailout in chaos, feds seize WaMu Thursday September 25, 9:51 pm ET
Why is it do you think that as the Government bails out nearly everyone they refuse to raise the LONG out dated limits on the FDIC’s $100,000 deposit insurance amount?
Of all the folks that deserve the most protection surely it should be those that stayed away from risky investments, and just kept their money in the Banks. Treasuries, with the exception of I bonds, are now paying nothing in the way of interest as demand for safety has gone through the roof.
Thousands of the most conservative investors and small business people are losing their life savings in these failed institutions, if they did not spread their money around to many banks. It may be getting close to mattress times.
How much is the Government insurance now on Money Markets?
I guess this answers my question above about money markets? Are these insured?????
Goodyear draws $600m from credit lines By Bernard Simon in Toronto
Published: September 25 2008 20:59 | Last updated: September 25 2008 20:59 Goodyear Tire & Rubber has been forced to draw $600m from its bank credit lines as a result of its inability to gain quick access to cash invested with Reserve Primary Fund, the troubled money market mutual fund.
The Ohio-based tyremaker’s move underlines the impact of Reserve Primary’s decision last week to delay redemptions after its net asset value fell below $1 a share.
Reserve Primary was hit by a $785m investment in commercial paper issued by Lehman Brothers, the bankrupt investment bank.
No one but the gutsiest gamblers should own any stocks or bonds in any of these Banks or S&L’s at this point. They are almost all filled with toxic derivates of one kind or another. The billions being lost by the big players should give small investors their heads up to stay away.
It is truly getting close to mattress time. Folks ought to at least keep six months in cash at home at all times.
Sept. 26 (Bloomberg) -- JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.'s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.
David Bonderman's TPG Inc., which led a $7 billion capital infusion for WaMu earlier this year, lost most of its initial $2 billion investment. TPG, based in Forth Worth, Texas, said in a statement yesterday it was ``dissatisfied with the loss'' and that the WaMu investment was a ``small part of assets.''
JPMorgan won't acquire WaMu's liabilities, including claims by shareholders and subordinated and senior debt holders.
Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank ``unsound,'' the Office of Thrift.
JPMorgan is taking on $176 billion in mortgage-related assets and writing down the value of it and other portfolios by about $31 billion, the company said. The bank will make a one- time payment of $1.9 billion to the FDIC as part of the deal.
WaMu has $28.4 billion in outstanding bonds, with Capital Research and Management the largest debt-holder.
WaMu was the second-biggest provider of option ARMs, behind Wachovia Corp.
Well those of us that feel this bail out is just more money to the Wall Street manipulators are not alone!!!
Sept. 26 (Bloomberg) -- More than 150 U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
In a Sept. 24 letter to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.
Hummmm...things get curiouser and curiouser. So they created this nightmare monster that has no bounds called Hmlandsecurity that basically has no one doing oversight on them; they are free to tap your phone, track your car, monitor your accounts, whatever they think might be necessary to protect the natsecurity. The urgency to keep us all safe became paramont to any individual liberties you might have previously enjoyed. Heaven forbid you get on their nofly list because baby, you ain't flyin' nomo. This was an emergency measure that of course became policy and has no sunset rules, it will continue as a well funded and unregulated internal security machine that has broad powers and knows no boundaries; it's for YOUR safety. You dare not even type their name, kind of like the I rs because web crawlers will seek the poster out and do some monitoring (at least, that's the perception here).
Now a 700 bil financial security package run by an unregulated, appointed, and answerable to no one, group of banking professionals and government committee members. Kind of like hmlndsecurty, i rs, there may be others. They can do pretty much what ever they want to do, they will be well funded, they will regard your money as their money, your metal as their metal, they will probably have access to most any funding source that they feel they need access to (too bad ss is already gone, bummer). Nah, doubtful that they will attach your 401's or metal but as long as you have cash money in the public arena, consider it just that...cash money in the public arena and also consider that it is measured and figured into "the plan". Oh yes, also consider that it's for your financial survival, sort of like for your safety, kind of like for national secty, sort of like bend over.
We would be fools to buy into this. We should take the hit and recover. Realize that we pay $400,000,000,000 a year just to service the interest payments to those that have funded our national debt, we pay those people more and more every year, that money we owe to the people that buy our securities isn't free. So what's 700 bil in the face of servicing our existing debt at 400 bil a year...it's a drop in the bucket and certainly not going to solve the problem; folk, this is a 10 trillion problem, billions is like cents on the dollar, this is a huge deal and it can not be solved by throwing a pittance at it and creating this "agency" on the side. Looks like a power grab by the three big banks that survived. That 700 bil is barely a downpayment. Take a look at this chart, this is where your money went Fedbudget. See anything there might interest you, maybe like how insignificant 700 billion is? It's like my wife enjoys reminding the children regarding their expenditures: "When you find yourself standing in a hole, it's time to stop digging."
Consider that this bail out proposal would give the three major surviving banks carte blanche in dealing with the national economy, your economy, and any foreigners that come into contact with either. Consider that this is the same banks that charge 25% of your unpaid credit balance as an interest rate and derive a fair amount of their income from the penalties, interest, over limit fees, past due fees, and any other item they can come up with to stick it to their customers...and we want them to manage our national financial security and we will start by giving them 700 billion? HEY YOU!...YEAH, YOU...BEND OVER!!! Man, I can't even begin to get my head around the implications of this bail out proposal.
JMHO
Edited to add: Hey, it's Friday. I wonder what kind of news we will have on Monday since the banks seem to want to do most of their business on the weekends when they aren't actually open and people can't get to their money...more bye byes? 9000 dow at open? 950 gold?
Anyone find it strange that the FDIC grabs WAMU just as the talks for a 700B bailout fall apart. If this weekends talks fail as well ,then I guess Wachovia will be gone by Tuesday. If the Politicos do not get this thing sorted out very quickly, it would appears that Paulsons old buddies will be the only ones standing to get the entire 700B.
There are none so blind as those who will not see!
By Adrian Douglas
I was astonished by the pompous attitude of Dennis Gartman as reported in the Friday Midas as follows
QUOTE
Interestingly, the FT reported yesterday that the US Mint has again suspended sales of one of its popular coins: the one ounce "Buffalo" gold coin. The Mint said Wednesday that due to unprecedented demand for the coin, it has had to suspend further sales until such time as it can replenish its inventories. This happened a short while ago to its "Eagle" gold coins, which the likes of GATA and the other "Conspiratorialists" pointed to as a sign that there was some vast conspiracy afoot regarding gold that was now being exposed. We take the Mint at its word, however; demand for its gold coins has indeed been historically high and it has almost certainly missed the market in this regard. "Buffaloes" and "Eagles" will be available to investors again in the future as the Mint gears up to meet demand. The Mint is like any other retail operation; it makes forecasts of demand for its product; it buys raw materials as necessary to meet those forecasts, and it hopes its forecasts are accurate. If demand is higher than expected, short term shortages result, and if demand is weaker, inventories rise. Let us not read more into this than that. To do so is to waste one's time that can be put to far better use elsewhere. Thus, we may be bullish of gold, but we are not bullish because the "Buffalo" is "dead:"
END
Does he not realize what happened in September 2008? There was a tectonic event that happened that has changed the landscape forever. The Administration admitted that the "financial system" is insolvent! Paulson is not requesting 700B$ for a specific company that is in trouble. It is to aid financial institutions in the system in general! This is a world first. Never has so much money been requested to bail out institutions that have not been identified. Through fractional reserve banking 700B$ can be turned into $7 trillion with 10% reserve requirements. We have learned this week that the FED discount window has been lending at 188B$ per day on average in the last few days!
We have seen spectacular corporate collapses…Bear Stearns, Fannie Mae & Freddie Mac, Lehman Brothers, AIG, Washington Mutual etc. Hasn’t anyone noticed anything strange? In economic recessions it is the small companies that fail first. This is why the large companies have been around for so long. This is why mergers are sought because it gives financial strength and stability. So how could the biggest fail first?
If we take Dennis Gartman’s approach we would say that the reason is "sub-prime mortgages"…and "Let us not read more into this than that"!!! When is it going to be clear to the likes of the willingly obtuse Dennis Gartman and the public that the sub-prime mortgage problem does NOT bring down the biggest financial market and economy in the world? That is simply preposterous. It is ridiculous. Subprime mortgage defaults are at most only 5% of the US economy. What financial system or economy can not take a 5% hit? It is people like Dennis Gartman who have taken everything at face value who are responsible for the financial "meltdown" we are facing. No one asked any questions. No one asked why 3 US bank were growing derivatives on their books in excess of 100+ Trillion dollars when it was openly reported by the OCC every quarter. No one asked why gold derivatives were growing to be many times bigger than the gold market itself, even though it was openly reported by the BIS each quarter. No one asked how the total derivatives market could grow to be 20 times bigger than the total liquidated asset value of the entire planet! No one asked how short sales in companies stock could exceed the total number of shares outstanding. No one asked how day after day counter-intuitive moves happened in the market. No one asked how the US dollar could gain in purchasing power while the most promiscuous period of currency issuance of modern times went in to overdrive, and how the "strong dollar policy" was implemented. No one asked why the Federal Reserve stopped reporting M3 because it was apparently too expensive to collect the data! No one wonders why COMEX gold and silver futures have declined in price while the physical metal supplies have all but dried up in the retail market!
Nobody that is except the thinking people in GATA and a few other astute observers. Even the SEC today has admitted they failed in their oversight function (as if it were not obvious!!)
This week the President, the Chairman of the FED, The Treasury Secretary, the Chairman of the Senate Banking Committee and a few others all told the public that the American Financial System was days away from collapse. These are not people who are recognized as "conspiracy nuts". This is the government speaking! They are saying the same thing that GATA has been saying for 10 years! The Administration has told so many lies maybe people don’t believe them, but the body language of these people tells me that we had better believe them. This is our Soviet moment. This is the system on the brink of failure. Gold has always served as the warning indicator of financial calamities. We have been told that the engine room is on fire yet the Gold Fire Alarm is reading a chilly 32 Deg. A hurricane of CAT 6 (yes one category over the maximum!) has hit Wall St and the gold weather detector tells us it is warm and sunny! An earthquake of 10.0 on the Richter scale has hit the financial system and large companies are being shaken and are collapsing. Yet the gold seismic activity detector tells us that all is quiet in the ground below us! Dennis how is this possible? How can the futures price of gold and silver not be reacting to these CONFIRMED Armageddon scenarios, while nearly all retail physical metal has been bought up and none is available in quantity? How can this be? Would it be worth just reading a "little bit more into this"? If you do then there is only one logical conclusion.
Meanwhile, back at the ranch, J6P is watching football, NASCAR on their super wide screens completely oblivious that the living room rug has been pulled from under him. Jane6pack will watch catatonically at the season opener of Desperate Housewives. And the kids will be sucking down sodas and thrusting their arms at the Wii TV. When they all watch the lines at their local bank on TV this week they will pull a "Homer"..."hmmm, donuts."
We animals let you humans run the world for 30,000 years.........and look what you have done to it.....YOU ARE RUINING IT! It was such a lovely world, too.
Bear, if it's any consolation, had the animals or Cromagnum man come up with fiat money and otc derivatives before us, they'd have run the world into the ground too.
Sinclair's latest thoughts:
OTC derivatives have a measured life wherein more OTC derivatives have to be written to accommodate changes in the interest rate market, assumed risk, creditworthiness of either counter-party and many other variables. Eventually there will not be a number big enough to define the size of the notional value of all written OTC derivatives. Where did anyone get the idea that those endless equations will in fact ever recover from the ashes?
Keep in mind in bankruptcy of one side of the arrangement (I can't call it a transaction because it isn't yet) notional value becomes real value.
Fair question, how much of that $700B goes towards shorting the "right" things in our markets and for buying additional otc derivatives?
Here is a really dumb question. Since the Fed, "a private institution" already has permission to print all the money it wants. Why do they need a 700 billion bail out from us???
What are they up to now 2 trillion???
Fed Pumps Further $630 Billion Into Financial System
Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.
The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.
Because the US Govt is purchasing the 'toxic' securities from the Banks. The Banks need/want them off their books so that they can show a profit. The regular payments on the securities are too high for the banks when compared to the assets they own. Thus Bankrupcy. The taxpayer is being asked to buy the securities knowing full well that many of them will not pay, and consequently the underlying worthless mortgage will be transferred to the Govt. (Thus all the stuff about re-negotiating mortgage terms).
It is not that they do not have cash. As has already been mentioned elsewhere, there is plenty of cash, the banks simply do not want to lend for the well founded fear of creating more worthless debt.
I do not see how the 'bailout' will help the underlying problem (too much bad debt), other than to return bank to profitability, and put the losses on the taxpayer's tab.
Mark Piersall Random Collector www.marksmedals.com
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. —Thomas Jefferson, 1802
<< <i>Anyone find it strange that the FDIC grabs WAMU just as the talks for a 700B bailout fall apart. If this weekends talks fail as well ,then I guess Wachovia will be gone by Tuesday. If the Politicos do not get this thing sorted out very quickly, it would appears that Paulsons old buddies will be the only ones standing to get the entire 700B. >>
Call me a liar for being out a dayWachovia gone!! Who is next ? I am betting on 3 or 4 regional banks by tomorrow, just to give congress a rap on the knuckles. Hank will get his way! No matter the cost
<< <i>Meanwhile, back at the ranch, J6P is watching football, NASCAR on their super wide screens completely oblivious that the living room rug has been pulled from under him. Jane6pack will watch catatonically at the season opener of Desperate Housewives. And the kids will be sucking down sodas and thrusting their arms at the Wii TV. When they all watch the lines at their local bank on TV this week they will pull a "Homer"..."hmmm, donuts."
Ren >>
i prefer Joe Lunchbox and Sally Kitchen...but my time was long before yours (i think)
that 5% sub-prime mortgage thingy RR is the ONE hella big feeding trough of for this monster that is collapsing and taking almost everything with it....yessireee cow pie OTC derivatives....get 'em while they're hot!
The PPT and buddies can continue to short, and naked short the gold miners without a care in the world from the SEC. The no uptick rule makes it even easier. At some point in time people will come to their senses and the miners will explode again. Right now they are being tossed out with the bathwater. One of my miners was so hammered by the PPT in previous weeks, it is impervious from further down drafts. Thanks PPT!
Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc. on an open-bank basis with assistance from the F.D.I.C.”
The FED is counting on getting this $700B passed so they have a means to dump those $400B in worthless securities they have picked up over the past 7 months. What's more, once they dump them into the USTreasury, they or their connected banks can continue to buy and sell them every so often while taking their "cut" in the process. The potential for abuse is still there.
“The FED is counting on getting this $700B passed so they have a means to dump those $400B in worthless securities.”
RR, I think you have it.
The Fed is now loaded with all this worthless paper and knowing that, they are now looking for some fools to dump it on, that of course would be us.
I know that the guys on Wall Street think we all are idiots out here, as they continue to tell us the most ridiculous lies.
I love this one, “ The credit markets are froze up and Banks will not lend to one another” Why is it necessary for banks to lend to one anther, don’t they have any of their own customers? Why would a bank be afraid to lend to one of their long time customers, unless this customer wanted to use derivatives as collateral?
Donald Trump, who I am sure has no bad loans or paper on his books yesterday said, “ the one good thing about the congress forcing us into a depression, is that oil is going to go to $25 a barrel”
This problem could be fixed today with two simple strokes of the pen. Let the SEC change the accounting rules so that the mark to market rules were suspended for 2 years, and let the FDIC up the insurance amounts to $500,000 per account for banks and money markets to cover the last 4 decades of inflation.
If a bank fails and the taxpayers have to bail out the FDIC at least the money will go to depositors.
Hey GS, if they don't lend to each other, maybe they can lend to their customers by using their customers deposits and giving them interest on their deposits and then lending their deposits to borrowers. Woah...what a stinking concept...and even at 1:1 parity, with no fractional reserves; could that really happen? This is all BS on a grand stage with threats to everyones 401K being made, unemployment threats...all doom and gloom if we don't bend over for them. Hopefully we can starve those blood suckers into submission.
I read that this morning Goldsaint, too bad that isn't required reading for every American today, it explains things in pretty easy to understand terms.
I think that is a great idea. We will surely be able to overcome the severe economic downturn with only doctors, lawyers, and govt employees working. >>
Lest we forget university professors writing for Time™ Is that the rag that chose Putin as it's Man of the Year ?
Dave, I just cannot understand why you are for this bailout.
This $700 billion is already spent, the FED spent $640 billion more yesterday, and is licking it chops to get our new money.
The problem with Socialism is that it always kills the people it is meant to serve. Never in the history of mankind has this system of government ever worked. In addition to that, we are getting to the end of the system when Americas largest corporations must go with a begging bowl to the taxpayers.
Lets let the FED handle their own problems or go broke!
Since the time of the Great Society this cancerous socialism has been increasingly eating away at our great country. 50% of Americans pay no Federal taxes, 40 percent are on one subsidy or another, farmers, are on the dole, oil companies are on the dole, higher education is on the dole. Brother I mean the list is just too large to go on with.
Now it is going to be Wall Street, the only folks who are not going to be getting money from the government are the truly working class, and small business class, in the U.S., and I tell you now this is not sustainable.
As we have posted to this thread for nearly 4 years, what did we all think would happen? COLLAPSE of the fiat financial system!
We all new that this is the way this would end, why prolong it? We must just say NO MASS at some point and begin to rebuild. The cat is out of the old bag, why continue this game?
Time to send millions of emails, calls, etc. to these Senators
Senate May Try to Revive Financial-Rescue Legislation (Update2)
By Alison Fitzgerald and Matthew Benjamin
Sept. 30 (Bloomberg) -- The U.S. Senate will try to salvage a $700 billion financial-rescue package after the measure was defeated in the House of Representatives. The lawmakers won't have a lot of room to negotiate.
Comments
dollar for the toxic sludge. I am worried that 20 cents on the dollar
might be 19 cents too much.
Camelot
BL ,
one thing different about these two guys is that you can do what Sinclair suggests, and NO body but Warren can get the kind of deals he gets. Do you really want to own common in GS while Warren holds permanently preferred shares at 10%?
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."
Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?
Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty,
Ron Paul
http://www.campaignforliberty.com/
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Capitol Hill Switchboard TOLL FREE:
1-877 851-6437
1-800 828-0498
1-800 614-2803
1-866 340-9281
1-866 338-1015
Main number: 202 225 -3121 - ask for your elected officials in D.C.
Our elected Senators and Representatives supposedly work for us, the taxpayers!
Tell them what YOU think about the Wall Street Bailout.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
The WSJ reports that J.P. Morgan Chase (JPM) was expected to announce as early as Thursday night a deal to acquire the bulk of Washington Mutual Inc.'s (WM) operations in a deal that would mark the end of independence for what once was the largest U.S. thrift. Federal regulators have been heavily involved in orchestrating the transaction, which comes as WaMu was besieged by a mountain of bad mortgage loans. WaMu, of Seattle, has been scrambling to find a solution and put itself on the auction block last week. A number of interested parties have been studying WaMu's books, but the bank didn't receive any offers. While the exact structure of the transaction wasn't immediately known, J.P. Morgan is expected to acquire Washington Mutual's deposits and branches, as well as other operations. The deal isn't expected to result in any hit to the bank-insurance fund, which would be a huge relief given that some analysts worried that a failure of the thrift could cost more than $20 billion
Knowledge is the enemy of fear
It appears that your FDIC buddies' intelligence wasn't all that revealing a few weeks back when you asked about the next big bank to fail. My choice went down long before theirs. Just in the past few weeks we added Lehman, with bailouts/buy outs for several other investment banks. I still have to question the FDIC's intel on the rest of their projections. After all, why should they do anything but parrot the party line?
I asked many more questions than you requested. Some answers you may like, some you may not.
Ask the FDIC how many weeks/months they anticipate before they run out money and have to be bailed out themselves
1. The FDIC has a letter of credit with Congress.
2. Banks are 3x better capitalized than they were in 1990-1991.
3. Deleveraging is strengthening balance sheets.
4. The media is overhyping.
5. Due to media overhyping, people have been diversifying their assets among many banks. There are alot less uninsured deposits than months ago.
6. The FDIC has the ability to raise insurance premiums.
7. The "list" is greater than 117.
8. A big bank will probably fail.
9. The FDIC will not be insolvent, nor will the USA.
10. The bulk of sub-prime mortgages due for reset occured this summer. Since forclosures usually take 90 days or more, expect the worse to be over in late fall.
11. The real estate market is already slowing its decline and will probably bottom by Spring 09.
12. There are a tremendous number of high quality banks.
13. There is still new bank creation, although slower than in previous years.
14. Stronger capitalization means more acquisition.
My interpretation......It is always darkest before dawn, and it is pretty dark right now.
But it's got a whole lot darker since that FDIC meeting. That 3X capitalization that the FDIC spoke of has not been very helpful in the past few weeks. Capitalizing 30-1 or even 50-1 leverage when everyone is linked into the same derivatives chain is apparently not well understood even by the experts.
The remaining $40-50B previously left in FDIC would have not been able to cover a WaMu and anyone else too big to fail. But as you have said it seems they haven given a few hundred billion more in these bailouts. They will need all of that, and then some.
roadrunner
I didnt include Lehman because I dont believe it is covered by the FDIC anyway. It was also quite obvious, as was WM, that they were going under. There is one other quite large bank that could go, but thats all I'll mention of it.
The community and smaller regional banks are all very well capitalized and are sound, as are several smaller broker/dealers. I also know there is a HUGE amount of money just waiting to pounce on the small to mid sized banks.
Is this one of the roots of the problem?
Knowledge is the enemy of fear
1. Let them take the natural course and fail, with us taking the repercussions of loss of 401k's, unable to get credit, etc. In other words, we will all take a financial hit.... but perhaps we will still have some FREEDOM left. and BROKE.
2. Let them take the bailout plan as currently set up, with us probably still taking some financial loss (or not). BUT.... we will have given dictatorial powers to the FED, and we will have lost a significant amount of freedoms. They will own you.
The part that really scares me... is how they wrote in that no other entity will be able to review or change their decisions. IOW, forget about the 3 branches of government and the Constitution. The FED will be able to decide whatever they want, and no court, etc., can contest it. Talk about giving yourself carte blanc to to any criminal act you want..... WTF?????? HOW BIG OF FOOLS DO THEY THINK THE AMERICAN PEOPLE ARE??????
We have talked about the possibility of confiscation of gold and silver.... well GUESS WHAT! If the FED gets the power mentioned above...... you might as well load up the cart and take it in to them. IMO the time may very well be coming upon us, and we will have NO RECOURSE.
I have gone back and forth with trying to decide in my mind whether I am for the bailout plan..... and have decided NO WAY. We very well may have some tougher times upon us..... but I cannot see giving the government dictatorial powers they will want. They will own the businesses, and they will OWN US.
Meanwhile, the so called deal penned this afternoon is already sour full of D-pork. The Dow was up nearly 200 but the news was after the close. I think the lack of confidence doesn't bode well for tomorrow and monday's market.
Ren
As Dave pointed out,
Reuters
Bailout in chaos, feds seize WaMu
Thursday September 25, 9:51 pm ET
Why is it do you think that as the Government bails out nearly everyone they refuse to raise the LONG out dated limits on the FDIC’s $100,000 deposit insurance amount?
Of all the folks that deserve the most protection surely it should be those that stayed away from risky investments, and just kept their money in the Banks. Treasuries, with the exception of I bonds, are now paying nothing in the way of interest as demand for safety has gone through the roof.
Thousands of the most conservative investors and small business people are losing their life savings in these failed institutions, if they did not spread their money around to many banks. It may be getting close to mattress times.
How much is the Government insurance now on Money Markets?
Are these insured?????
Goodyear draws $600m from credit lines
By Bernard Simon in Toronto
Published: September 25 2008 20:59 | Last updated: September 25 2008 20:59
Goodyear Tire & Rubber has been forced to draw $600m from its bank credit lines as a result of its inability to gain quick access to cash invested with Reserve Primary Fund, the troubled money market mutual fund.
The Ohio-based tyremaker’s move underlines the impact of Reserve Primary’s decision last week to delay redemptions after its net asset value fell below $1 a share.
Reserve Primary was hit by a $785m investment in commercial paper issued by Lehman Brothers, the bankrupt investment bank.
No one but the gutsiest gamblers should own any stocks or bonds in any of these Banks or S&L’s at this point. They are almost all filled with toxic derivates of one kind or another. The billions being lost by the big players should give small investors their heads up to stay away.
It is truly getting close to mattress time. Folks ought to at least keep six months in cash at home at all times.
Sept. 26 (Bloomberg) -- JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.'s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.
David Bonderman's TPG Inc., which led a $7 billion capital infusion for WaMu earlier this year, lost most of its initial $2 billion investment. TPG, based in Forth Worth, Texas, said in a statement yesterday it was ``dissatisfied with the loss'' and that the WaMu investment was a ``small part of assets.''
JPMorgan won't acquire WaMu's liabilities, including claims by shareholders and subordinated and senior debt holders.
Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank ``unsound,'' the Office of Thrift.
JPMorgan is taking on $176 billion in mortgage-related assets and writing down the value of it and other portfolios by about $31 billion, the company said. The bank will make a one- time payment of $1.9 billion to the FDIC as part of the deal.
WaMu has $28.4 billion in outstanding bonds, with Capital Research and Management the largest debt-holder.
WaMu was the second-biggest provider of option ARMs, behind Wachovia Corp.
I will stop hogging all the posts!
Well those of us that feel this bail out is just more money to the Wall Street manipulators are not alone!!!
Sept. 26 (Bloomberg) -- More than 150 U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
In a Sept. 24 letter to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.
Now a 700 bil financial security package run by an unregulated, appointed, and answerable to no one, group of banking professionals and government committee members. Kind of like hmlndsecurty, i rs, there may be others. They can do pretty much what ever they want to do, they will be well funded, they will regard your money as their money, your metal as their metal, they will probably have access to most any funding source that they feel they need access to (too bad ss is already gone, bummer). Nah, doubtful that they will attach your 401's or metal but as long as you have cash money in the public arena, consider it just that...cash money in the public arena and also consider that it is measured and figured into "the plan". Oh yes, also consider that it's for your financial survival, sort of like for your safety, kind of like for national secty, sort of like bend over.
We would be fools to buy into this. We should take the hit and recover. Realize that we pay $400,000,000,000 a year just to service the interest payments to those that have funded our national debt, we pay those people more and more every year, that money we owe to the people that buy our securities isn't free. So what's 700 bil in the face of servicing our existing debt at 400 bil a year...it's a drop in the bucket and certainly not going to solve the problem; folk, this is a 10 trillion problem, billions is like cents on the dollar, this is a huge deal and it can not be solved by throwing a pittance at it and creating this "agency" on the side. Looks like a power grab by the three big banks that survived. That 700 bil is barely a downpayment. Take a look at this chart, this is where your money went Fedbudget. See anything there might interest you, maybe like how insignificant 700 billion is? It's like my wife enjoys reminding the children regarding their expenditures: "When you find yourself standing in a hole, it's time to stop digging."
Consider that this bail out proposal would give the three major surviving banks carte blanche in dealing with the national economy, your economy, and any foreigners that come into contact with either. Consider that this is the same banks that charge 25% of your unpaid credit balance as an interest rate and derive a fair amount of their income from the penalties, interest, over limit fees, past due fees, and any other item they can come up with to stick it to their customers...and we want them to manage our national financial security and we will start by giving them 700 billion? HEY YOU!...YEAH, YOU...BEND OVER!!! Man, I can't even begin to get my head around the implications of this bail out proposal.
JMHO
Edited to add: Hey, it's Friday. I wonder what kind of news we will have on Monday since the banks seem to want to do most of their business on the weekends when they aren't actually open and people can't get to their money...more bye byes? 9000 dow at open? 950 gold?
That's exactly how I now see it. Another HUGE power grab..... by the culprits that caused this crisis to begin with.
Our 401ks will not be safe..... and our PM's will not be safe. Not if they get the powers they are asking for.
If this power grab takes place, I do not see how we will ever free ourselves from it.
Clinton/Bush have created havoc for our country.... socialism, we are here. Constitution? What is that...? Another barbarous relic obviously.
in the hands of four giant banks. Talk about consolidation
of power.
Camelot
Chance favors the prepared mind.
If this weekends talks fail as well ,then I guess Wachovia will be gone by Tuesday.
If the Politicos do not get this thing sorted out very quickly, it would appears that Paulsons old buddies will be the only ones standing to get the entire 700B.
...and, there you have it.
Edited to add: It is always easier to do business with people you know well than people you don't know very well.
for 30,000 years.........and look what you
have done to it.....YOU ARE RUINING IT!
It was such a lovely world, too.
Camelot
For those interested in what the Tax payer is being ask to bail out, here is a good part of it. This bail out is way to small!!
LINK
By Adrian Douglas
I was astonished by the pompous attitude of Dennis Gartman as reported in the Friday Midas as follows
QUOTE
Interestingly, the FT reported yesterday that the US Mint has again suspended sales of one of its popular coins: the one ounce "Buffalo" gold coin. The Mint said Wednesday that due to unprecedented demand for the coin, it has had to suspend further sales until such time as it can replenish its inventories. This happened a short while ago to its "Eagle" gold coins, which the likes of GATA and the other "Conspiratorialists" pointed to as a sign that there was some vast conspiracy afoot regarding gold that was now being exposed. We take the Mint at its word, however; demand for its gold coins has indeed been historically high and it has almost certainly missed the market in this regard. "Buffaloes" and "Eagles" will be available to investors again in the future as the Mint gears up to meet demand. The Mint is like any other retail operation; it makes forecasts of demand for its product; it buys raw materials as necessary to meet those forecasts, and it hopes its forecasts are accurate. If demand is higher than expected, short term shortages result, and if demand is weaker, inventories rise. Let us not read more into this than that. To do so is to waste one's time that can be put to far better use elsewhere. Thus, we may be bullish of gold, but we are not bullish because the "Buffalo" is "dead:"
END
Does he not realize what happened in September 2008? There was a tectonic event that happened that has changed the landscape forever. The Administration admitted that the "financial system" is insolvent! Paulson is not requesting 700B$ for a specific company that is in trouble. It is to aid financial institutions in the system in general! This is a world first. Never has so much money been requested to bail out institutions that have not been identified. Through fractional reserve banking 700B$ can be turned into $7 trillion with 10% reserve requirements. We have learned this week that the FED discount window has been lending at 188B$ per day on average in the last few days!
We have seen spectacular corporate collapses…Bear Stearns, Fannie Mae & Freddie Mac, Lehman Brothers, AIG, Washington Mutual etc. Hasn’t anyone noticed anything strange? In economic recessions it is the small companies that fail first. This is why the large companies have been around for so long. This is why mergers are sought because it gives financial strength and stability. So how could the biggest fail first?
If we take Dennis Gartman’s approach we would say that the reason is "sub-prime mortgages"…and "Let us not read more into this than that"!!! When is it going to be clear to the likes of the willingly obtuse Dennis Gartman and the public that the sub-prime mortgage problem does NOT bring down the biggest financial market and economy in the world? That is simply preposterous. It is ridiculous. Subprime mortgage defaults are at most only 5% of the US economy. What financial system or economy can not take a 5% hit? It is people like Dennis Gartman who have taken everything at face value who are responsible for the financial "meltdown" we are facing. No one asked any questions. No one asked why 3 US bank were growing derivatives on their books in excess of 100+ Trillion dollars when it was openly reported by the OCC every quarter. No one asked why gold derivatives were growing to be many times bigger than the gold market itself, even though it was openly reported by the BIS each quarter. No one asked how the total derivatives market could grow to be 20 times bigger than the total liquidated asset value of the entire planet! No one asked how short sales in companies stock could exceed the total number of shares outstanding. No one asked how day after day counter-intuitive moves happened in the market. No one asked how the US dollar could gain in purchasing power while the most promiscuous period of currency issuance of modern times went in to overdrive, and how the "strong dollar policy" was implemented. No one asked why the Federal Reserve stopped reporting M3 because it was apparently too expensive to collect the data! No one wonders why COMEX gold and silver futures have declined in price while the physical metal supplies have all but dried up in the retail market!
Nobody that is except the thinking people in GATA and a few other astute observers. Even the SEC today has admitted they failed in their oversight function (as if it were not obvious!!)
This week the President, the Chairman of the FED, The Treasury Secretary, the Chairman of the Senate Banking Committee and a few others all told the public that the American Financial System was days away from collapse. These are not people who are recognized as "conspiracy nuts". This is the government speaking! They are saying the same thing that GATA has been saying for 10 years! The Administration has told so many lies maybe people don’t believe them, but the body language of these people tells me that we had better believe them. This is our Soviet moment. This is the system on the brink of failure. Gold has always served as the warning indicator of financial calamities. We have been told that the engine room is on fire yet the Gold Fire Alarm is reading a chilly 32 Deg. A hurricane of CAT 6 (yes one category over the maximum!) has hit Wall St and the gold weather detector tells us it is warm and sunny! An earthquake of 10.0 on the Richter scale has hit the financial system and large companies are being shaken and are collapsing. Yet the gold seismic activity detector tells us that all is quiet in the ground below us! Dennis how is this possible? How can the futures price of gold and silver not be reacting to these CONFIRMED Armageddon scenarios, while nearly all retail physical metal has been bought up and none is available in quantity? How can this be? Would it be worth just reading a "little bit more into this"? If you do then there is only one logical conclusion.
roadrunner
Ren
Bear, if it's any consolation, had the animals or Cromagnum man come up with fiat money and otc derivatives before us, they'd have run the world into the ground too.
Sinclair's latest thoughts:
OTC derivatives have a measured life wherein more OTC derivatives have to be written to accommodate changes in the interest rate market, assumed risk, creditworthiness of either counter-party and many other variables. Eventually there will not be a number big enough to define the size of the notional value of all written OTC derivatives. Where did anyone get the idea that those endless equations will in fact ever recover from the ashes?
Keep in mind in bankruptcy of one side of the arrangement (I can't call it a transaction because it isn't yet) notional value becomes real value.
Fair question, how much of that $700B goes towards shorting the "right" things in our markets and for buying additional otc derivatives?
roadrunner
Here is a really dumb question. Since the Fed, "a private institution" already has permission to print all the money it wants. Why do they need a 700 billion bail out from us???
What are they up to now 2 trillion???
Fed Pumps Further $630 Billion Into Financial System
Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.
The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.
Because the US Govt is purchasing the 'toxic' securities from the Banks. The Banks need/want them off their books so that they can show a profit. The regular payments on the securities are too high for the banks when compared to the assets they own. Thus Bankrupcy.
The taxpayer is being asked to buy the securities knowing full well that many of them will not pay, and consequently the underlying worthless mortgage will be transferred to the Govt. (Thus all the stuff about re-negotiating mortgage terms).
It is not that they do not have cash. As has already been mentioned elsewhere, there is plenty of cash, the banks simply do not want to lend for the well founded fear of creating more worthless debt.
I do not see how the 'bailout' will help the underlying problem (too much bad debt), other than to return bank to profitability, and put the losses on the taxpayer's tab.
Random Collector
www.marksmedals.com
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. —Thomas Jefferson, 1802
<< <i>Anyone find it strange that the FDIC grabs WAMU just as the talks for a 700B bailout fall apart.
If this weekends talks fail as well ,then I guess Wachovia will be gone by Tuesday.
If the Politicos do not get this thing sorted out very quickly, it would appears that Paulsons old buddies will be the only ones standing to get the entire 700B. >>
Call me a liar for being out a day
Hank will get his way! No matter the cost
<< <i>Meanwhile, back at the ranch, J6P is watching football, NASCAR on their super wide screens completely oblivious that the living room rug has been pulled from under him. Jane6pack will watch catatonically at the season opener of Desperate Housewives. And the kids will be sucking down sodas and thrusting their arms at the Wii TV. When they all watch the lines at their local bank on TV this week they will pull a "Homer"..."hmmm, donuts."
Ren
i prefer Joe Lunchbox and Sally Kitchen...but my time was long before yours (i think)
"we dont need no stinking bailout bill"
not my quote.
to its fellow mining shares recently.
Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc. on an open-bank basis with assistance from the F.D.I.C.”
Anyone believe that statement? I know I don't.
roadrunner
A lot of people rebalanced their portfolios today.
(You guys are close to five digits!
<< <i>Trying to look on the bright side of things --
A lot of people rebalanced their portfolios today.
(You guys are close to five digits! >>
Don't you mean four digits if you are talking about the Dow(?)
Ren
roadrunner
1984
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
“The FED is counting on getting this $700B passed so they have a means to dump those $400B in worthless securities.”
RR, I think you have it.
The Fed is now loaded with all this worthless paper and knowing that, they are now looking for some fools to dump it on, that of course would be us.
I know that the guys on Wall Street think we all are idiots out here, as they continue to tell us the most ridiculous lies.
I love this one, “ The credit markets are froze up and Banks will not lend to one another”
Why is it necessary for banks to lend to one anther, don’t they have any of their own customers?
Why would a bank be afraid to lend to one of their long time customers, unless this customer wanted to use derivatives as collateral?
Donald Trump, who I am sure has no bad loans or paper on his books yesterday said, “ the one good thing about the congress forcing us into a depression, is that oil is going to go to $25 a barrel”
This problem could be fixed today with two simple strokes of the pen. Let the SEC change the accounting rules so that the mark to market rules were suspended for 2 years, and let the FDIC up the insurance amounts to $500,000 per account for banks and money markets to cover the last 4 decades of inflation.
If a bank fails and the taxpayers have to bail out the FDIC at least the money will go to depositors.
I've been advised by higher ups to keep my mouth shut.
<< <i>
I've been advised by higher ups to keep my mouth shut. >>
...oh,
and to " get to work"
LINK
Edited to add Another good article from a Harvard Economist
<< <i>Sent to me by a friend, the real truth!!
LINK >>
I think that is a great idea. We will surely be able to overcome the severe economic downturn with only doctors, lawyers, and govt employees working.
Knowledge is the enemy of fear
<< <i>
<< <i>Sent to me by a friend, the real truth!!
LINK >>
I think that is a great idea. We will surely be able to overcome the severe economic downturn with only doctors, lawyers, and govt employees working.
Lest we forget university professors writing for Time™
Is that the rag that chose Putin as it's Man of the Year ?
Dave, I just cannot understand why you are for this bailout.
This $700 billion is already spent, the FED spent $640 billion more yesterday, and is licking it chops to get our new money.
The problem with Socialism is that it always kills the people it is meant to serve. Never in the history of mankind has this system of government ever worked. In addition to that, we are getting to the end of the system when Americas largest corporations must go with a begging bowl to the taxpayers.
Lets let the FED handle their own problems or go broke!
Since the time of the Great Society this cancerous socialism has been increasingly eating away at our great country. 50% of Americans pay no Federal taxes, 40 percent are on one subsidy or another, farmers, are on the dole, oil companies are on the dole, higher education is on the dole. Brother I mean the list is just too large to go on with.
Now it is going to be Wall Street, the only folks who are not going to be getting money from the government are the truly working class, and small business class, in the U.S.,
and I tell you now this is not sustainable.
As we have posted to this thread for nearly 4 years, what did we all think would happen?
COLLAPSE of the fiat financial system!
We all new that this is the way this would end, why prolong it? We must just say NO MASS at some point and begin to rebuild. The cat is out of the old bag, why continue this game?
Senate May Try to Revive Financial-Rescue Legislation (Update2)
By Alison Fitzgerald and Matthew Benjamin
Sept. 30 (Bloomberg) -- The U.S. Senate will try to salvage a $700 billion financial-rescue package after the measure was defeated in the House of Representatives. The lawmakers won't have a lot of room to negotiate.