Wall Street is feeling Blue
For some reason I don't think Fannie Mae and Fredy Mac are whiners either.
The dollar was weighed by news that the U.S. government may have to step in to salvage troubled mortgage lenders Fannie Mae and Freddie Mac with state ownership.
After doubts emerged this week about the capitalisation needs of the two government-sponsored bodies, the news that the government may intervene to return the two companies to public ownership made markets nervous.
This is scary stuff.
Debt of Fannie Mae and Freddie Mac soared in their best one-day gain in history on Friday amid speculation that a government takeover of the housing giants would make the bonds more like ultra-safe U.S. Treasuries.
The prospects, sparked by deep consternation over the ability of the companies to survive on their own and a New York Times report saying the government is mulling a takeover, caused investors to flee the companies' stock, which some analysts said could be left worthless.Investors were selling shares of the congressionally chartered companies and buying their debt, which if assumed by the government would be seen as safe as Treasury bonds, said Michael Kastner, head of fixed-income at Sterling Stamos Capital Management in New York.
I'm not losing sleep over this knowing the government will bail them out anyway. So what's the point of worrying?
Wow. I thought ReThuglicans were firm believers in the "free market" economy. You know, competition is healthy, sink or swim. Oh what am I thinking. If the company makes profit it keeps it, if it doesn't taxpayers bail it out.
Balducci @ 1:
China will bail them out. We are sinking
Is there a tank big enough for these reptiles?
Damn Corporate Welfare Bums anyway.
private profits, public risk, the Repuglican way.
These guys are brilliant - we are about to witness the largest robbery in the history of this country - this housing / credit crunch was planned and executed from the beginning - there is no way they didn't know what they were doing and what the outcome was going to be - excellent example of "Privatize the Profit and Socialize the Loss" - all the actors had their role and the directors knew the script - the "low income / victim / non home owner borrowers" were merely fodder for the machine - their role was to be willing signers of mortgages to keep the bubble going and keep the expansion of the money supply going - the mortgage brokers were the pushers to be thrown under the bus to distract the public from seeing the true directors of the play - all the other actors up the food chain had their important roles for which they were handsomely paid - once the house of cards was built the game plan was to have the federal government ultimately buy all of the bogus paper and complete the plan to "Privatize the Profit then Socialize the Loss" - we are looking at a potential doubling of the national debt which will complete the indebtedness of this country for the next century and keep the public powerless - just remember "Serfs Up".
The Bear Stearns bail out was merely a trial run of what is to come - our 700 million dollar man (his net worth) Hank (Secretary of Treasury Paulson) went to England, Germany and Russia over the July 4th holiday to get the sign off on the deal previously put together in a private meeting with 17 of the biggest players - Paulson and Bernanke came to the Senate with their dog and pony show today to sell the plan to them - some lame homeowner bail out will be offered up to distract the public from the 5 TRILLION dollar bail out of Freddie Mac and Fannie Mae - just think of a very large weather balloon full of sulphur gas that is being slowly vented so as not to allow the public to notice the smell. None of this was an accident, just like the Iraq occupation and subsequent chaos - it was planned and executed with precision. The portrait of Bush as a buffoon is just part of the script - don't be fooled by the clown behavior - he is out front to keep us distracted with his antics while the puppeteers pull the strings.
http://bankimplode.com/
Since late 2006
266
major U.S. lending operations have "imploded"
http://www.motherjones.com/news/feature/2008/07/where-credit-is-due-time...
http://www.gata.org/node/6373 -
http://video.google.com/videoplay?docid=-9050474362583451279
Money as Debt
http://video.google.com/videoplay?docid=-515319560256183936
The Money Masters
http://video.google.com/videoplay?docid=6182969183854471645
NO End in Sight
http://video.google.com/videoplay?docid=1070329053600562261
End Game - a little over the edge
One Room Think Tank
Kathleen @ 3:
In any case, we the tax payer are going to get the bill for the bailouts. Either through direct, increased taxation or indirect increased inflation.
Joe O. @ 6:
Anther option is to place the entire Government bailout on the National debt. Adding in that estimated cost of $5 trillion would bring the national debt to close to $15 trillion. That option probably won't fly though.
Here's a more immediate example of our mental whining the economy
LOS ANGELES - IndyMac Bank's assets were seized by federal regulators on Friday after succumbing to the pressures of tighter credit, tumbling home prices and rising foreclosures.
Will Phil Gramm and Insane McCain save the day HARDLY since Insane's economic whiz caused it
(1)Indy-Mac are not whiners either...and I think a Federal Seizure of a Bank- esp. that size is a pretty big deal....IndyMac was a big mortgage broker- BUT who else besides CountryWide did they work with? Any Bank associated with them, could feel the ripple effect...
(2) And can someone explain to me- I thought that Fannie and Freddy Loans were FDIC insured? am I wrong? I live in a Neighborhood that was full of fannie and freddy loans-
and my hood is emptying- 14 % are already foreclosed, this does NOT include houses that people have walked away from, or are about to face Baloon payments in July...I have watched Uhauls all summer....(Ohio is hurting-40% of all homeloans since 2000 have foreclosed, I don't think that is that unusual- but maybe it is ...this was a Huge Country Wide state....)
(3) Yesterday on CSPAN the same time this news about IndyMac came cross the wires, or the internet- I was watching CSPAN and they were airing a Town Meeting in LA and they were BANKERS there- and they were sweating- I watched the Bank of America guy speak...anyways Maybe Some Cali people or C& L folks can see if there is any helpful clips or info in that cspan tape- I will try to rewatch and look for it today....
I have watched and seen and been to Town Meetings all over the Country- and I have never seen Bankers at a Town Meeting - that was a First...
I think we are in real Trouble....and we don't need Deluded Old Men telling us it is "mental".....not now...
Are they really in need of help or is the bush administration using this as an excuse to seize their assests and give to their cronies??
http://rawstory.com/news/2008/Fannie_Freddie_say_they_have_plenty_0711.html
enigma4ever@earthlink.net @ 9:
If you do find those clips, post em. I was watching (and sweating) over my stock portfolio all day yesterday because of this situation. I would like to see the banker's reaction to it.
ConcernedCanuck @ 2:
That's exactly right. We simply must get the financial sector back to normal, and "normal" is, as Michael Lewis put it: "the firm made money, and the broker made money. Two outa three ain't bad."
Ahhh, quit yer whining, you're imagining things. I'm spending like mad at Costco. All the wars are going well, what global warming? , Bush is an awesome president and we are not in a recession. Conservatives have cut and run from reality, my friends.
Terrible @ 10:
"WASHINGTON (Reuters) - Fannie Mae and Freddie Mac said on Friday that their finances were sufficiently sound to withstand the housing crisis as government officials scrambled to restore confidence in the country's two largest mortgage finance companies..."
_________
Isn't that what the Bear Stearns cat said a couple of days before they corkscrewed into the ground? That they had plenty of capital liquidity?
IndyMac - "it's all schumer's fault!"
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAYLeK3YAie4&refer=home
The U.S. taxpayer will be bailing out China and other foriegn investors:
Chinese Government is Top Foreign Holder of Fannie Mae, Freddie Mac Bonds
WASHINGTON, Jul 11, 2008 (BUSINESS WIRE) -- As politicians call for taxpayer bailouts and a government takeover of troubled mortgage lenders Freddie Mac and Fannie Mae, FreedomWorks http://freedomworks.org/ would like to point out that a bailout is a transfer of possibly hundreds of billions of U.S. tax dollars to sophisticated investors and governments overseas.
The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury's most recent "Report on Foreign Portfolio Holdings of U.S. Securities."
http://www.marketwatch.com/news/story/chinese-government-top-foreign-hol...
Wall Street is feeling Blue
They're turning Democratic?
Is the only way to stop them is to fire
A Coors silver bullet at them?
Kathleen @ 3:
The CHINESE FISCAL CONTROL of AMERICA is going to be something to see. More authoritarian laws against workers and greater freedom for industry to pollute, drill and exploit is going to be the easy part. American business already thinks that way. They'll love it. The problem is going to be shaving all those CEO's policies. Maybe giving them the power of locking up their workers for life might compensate them?
My grandmothers siter used millions in worthless Marks as packing material when she finally moved to America from Germany in the early 1920's.
I really don't want to go there. Thanks, W!
[Deleted. Off topic. Site Monitor]
JOE O of Number 12:::
I am looking for it today- email me if you want- ( from post number 9= accidentally put email on the header).....I am sorry you were sweating....I think alot of us are....
{Deleted, Off Topic. Please take it to an open thread. Thank You. SiteMonitor}
15 BobbyG
That they had plenty of capital liquidity?
_____________________________________________________
Coors will give you plenty of liquidity.
We need welfare reform............corporate welfare reform. I am tired of these welfare queens driving Cadillacs and eating steaks on the governments dime.........................wait........where have I heard that before?
Wall Street whiners. It's really all in their minds. [snark]
[Deleted. Off topic. Please take it to the Open Thread. Thank you. Site Monitor]
enigma4ever@earthlink.net @ 10:
FDIC only insures accounts for $100,000 or less. Those accounts are fully protected and will be reimbursed in full.
Accounts over $100,000 will only receive 50% of their value in the case of IndyMac.
This is the largest bank failure in US history and it has wiped out 10% of the reserve capitol of the FDIC fund.
If you have funds in excess of $100K you should split them up between banks. Be careful though to pull a 10K report on your bank to check and see how much bad debt they have tied up in subprime mortgages. The list of banks holding large amounts of this debt is extensive.
Even the Canadian banks have been effected and last quarter all of them had to take major write downs due to subprime debt except Toronto Dominion. Their CEO wouldn't let them get into subprime and was criticized for it at the time... now his bank's stock is soaring. They took over a regional bank on the east coast, Commerce Bank, a few years ago and the first thing they did was make them sell off their mortgage division. Few banks had this much insight and integrity.
You should also check your 401K's to see if the administrator has them in SIV's or CDO's that are invested in subprime debt and a lot of people don't know that many banks mutual fund backed savings accounts are also invested in subprime debt ridden bonds. You want to make sure that these accounts are backed by FDIC and under $100,000.
Well, what do you know! The Muppets on Planet Wall Street’s CNBC show aren’t guffawing any longer. Instead, it is glumness or silence … for good reason. They have overlooked the obvious and constantly reassured the US investing public that "Everything is fine," when it clearly was NOT. But Herr Paulson said just YESTERDAY on TV there were no capitalization problems, so what gives Mr. Forked Tongue?
The talking heads are clamoring for the US Government to do something, to solve yet another market crisis … which is a main reason we are in this mess in the first place. When will these clowns wake up to the real story behind this growing US financial market nightmare? What these great minds are not talking about is what are the ramifications for a government takeover, or bailout, of these two major US financial institutions? There has to be a quid pro quo and downside for having the US public paying up for such a maneuver. One of them is to send the dollar into the dumpster and as precious metals like gold and silve move in opposite direction to the dollar, gold will be blasing past $2,000 an ounce in the blink of an eye. even Greenspan knew the value of gold and silver as money, but he sold his soul to the political devils who believed that greed and stomping on the little guy could add more to their end of the year bonuses, rather than doing waht was right for the country. As I've ranted before, dump the Federal Reserve and return to a sound monetary system as outlined in our Constitution. We can still have dollars, but for God sake, back them with something of value. The U.S requires no less.
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."....Thomas Jefferson
QUOTE
Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which-through a complex series of steps-the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.
Alan Greenspan 1966
enigma4ever@earthlink.net @ 10:
How true, and as recently as this week at one of McCain's Town Hall meetings, he
repeatedly stated that "American is not in a decline" when repsonding to a question
from one of the audience. With IndyMac Bank tanking and be bailed out by Gov.,
and now the potential of same occuring w/Fannie Mae and Fannie Mac, we(USA)
are in fact in very, very, very deep doo doo.
wall street is feeling blue? hold on one second, let me grab my comically-oversized hanky. *sniff*
note to wall street: the american public knows how you feel. we feel blue too. the difference is that the systemic economic failings are a direct result of the out of control market fundamentalism you bought and paid for through the purchasing of politicians over the decades. while, we little people, who are not part of any macro-economic considerations, are suffering from wall street's greed, hubris and deceitful schemes.
NOW--if there was a mainstream presidential candidate not buying into the market fundamentalist ideology--would be the time to eject and reject the 'washington consensus'/chicago school of economic plunder.
So if the government buys out the banks, does that mean the government owns the loans, accounts, mortgages, properties, etc.? Could a Fannie lendee eventually be paying Uncle Sam? And if that is the case, what happens if you can't... pay... Uncle Sam...?
Or am I barking up the wrong tree?
enigma4ever @ 21:
Thanks for the e-mail/link to your blog. I e-mailed you just a little bit ago with my address to sent the banker clip to.
Great blog by the way.
Andrew @ 28:
The GOP's gifts to America:
1. Nixon took us off the gold standard and gave us the HMO for our health care.
2. Reagan gave us the 401K and converted real dollar savings funds into the market opening up those funds to stock market manipulation that we've seen in Enron, Tyco, Global Crossings.
3. Reagan also gave us "The Bubble economy" and Greenspan (his man) opened the door to the Subprime disaster.
Stop your whining. Its all psychological. But you know that.
I know it's pure coincidence that the economic collapse of the Soviet Union happened after their prolonged, fruitless occupation of a Middle Eastern country, draining their coffers which could have been used in other, more worthy, ways.
This is the fruition of "Trickle Down" economics. As much as I would like to "j'accuse!" just the Republicans, I cannot, for there are far too many Democrats who helped this debacle every step of the way. It really is a matter of Greed Is Good - doesn't matter which political affiliation, age, color, religion, none of the usual divisive categories we feel comfortable blaming. This is the fundamental flaw of uncontrolled Ca[italism. While the richest of the rich are complaining about a $900 per month welfare person defrauding "the system", they are sucking the marrow out of the bones of a broken philosophy - making sure to get theirs before it all comes tumbling down.
We should thank these bastards for giving such an excellent example of why regulations are absolutely, positively necessary in a "free" market.
Time to wake up, y'all!
this is what i don't get....people in business and the white house want free market big ceo bonus/incentives complain about government/taxes/regulation but soon as they need them/help....this debt based economy is falling on it's face
phil gramm should be ashamed of his self i'm sure he'll
say he was misquoted
Bitter Bud Hussein @ 31:
I would suspect that the loans would work similar to how a VA home loan works (minus Veterans status) depending on how or if any Government bailout occurs for Fannie and Freddie. I got this question and answer segment from the homeloans.va.gov website. Something like this could be in store for the current Fannie and Freddie lendees if they can't pay:
Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have my used eligibility restored. Why?
A: In either case, although the veteran’s debt was waived by VA, the Government still suffered a loss on the loan. The law does not permit the used portion of the veteran’s eligibility to be restored until the loss has been repaid in full.
Made a 50% profit trading both of these stocks yesterday.
constituent @ 36:
constituent.....There haven't been free markets since president Raygun created the Working Group On Financial markets after the 1987 crash. A perfect example of manipulation through the media in this happened yesterday. The Dow was down over 238 points and someone in the media stated that Bernanke said the Fannioe and Freddie could use the Fed window for all the funds they needed. Before you know it the Dow does a U-turn and was up 20 points, but no one was buying it and the Dow headed back down and closed down 128. After the market closed, the Federal Reserve sent out an official press release and stated that no such offer was made. This is how you manipulate the markets through false spin in trying to by yourself a little more time.
The same is true of the gold market. Central banks have been asked by the Fed to sell their gold holdings and they have through the Washington Agreement where they can sell up to 500 tons of their gold a year. In all of last yeat foreign banks only sold a total of 280 tons. Well if gold is such a worthless relic of the past, then why have the banks now refused to part with it. Simple. They know that both gold and silver are real money and no amount of bloviating by Bernanke or Paulson is going to change 5,000 years of history.
The 16th Amendment created both the Federal Reserve as well as the I.R.S. repeal that amendment and we can start to take control of our country again rather than being slaves to the banks.
The Repubs will start blaming this on the "Democrat controlled congress" very very soon. Mark my words. Because the spineless Dems refuse to go out, everyday, and hammer home the point that this whole economic shitstorm is the direct result of 7 years of Republican deregulation, the repubs will be able to go out and frame this debate to their advantage. I guarantee you this will happen.
Pity poor President Barack if he is elected. Everything will be his fault.
Eh, who would have thought, that for all those folks who would like to privatize everything, yet when in comes to this, if it ever becomes reality, which in most likely it will, they would be the first proponents of nationalization.
FNM and FRE are in deep do do, correct. They are under-capitalized to deal with the credit crisis. This crisis is bigger than LCTM takeover of the 80s, bigger than the oil shock of the 70s, this is the tipping point. All thanks to the lax and lenient Congress that is exploited by strong-arm Bush's admin.
But I do think that Bush admin is relishing this fact, because now they have more power than ever to exploit and bully the public and Congress to their advantage. And we, fell for it, again and again.
I am sorry my friends, what part of this article is real and what part is "mental." I'll have to check my voting record and get back to you, but he doesn't speak for me, the Pittsburgh Steelers do. Free trade made them great. I'm for the second amendment so naturally I support the Packers.
Joe O. @ 37:
Thanks Joe - wow - this is some scary stuff.
Not to put on a tin-foil hat or anything, but if I were in the government's shoes I think I'd like this setup. What a convenient (and relatively cheap) way to gobble up lots of land, if I'm reading this correctly.
financial markets/banks trying to recoup from real estate
bubble burst with food/energy speculation
http://www.ipsnews.net/news.asp?idnews=43144
To Joe of 33 and Others,
I mentioned above there was a LA Town Hall Meeting on CSPAN1 ( 4 PM West Coast time) yesterday- and there were Bankers speaking about the Mortgage mess, it was really interesting- the Banker from Bank of America was clearly sweating...and very very nervous- I don't have any idea how to post it- but I will send Link to John- there are some parts of that need to be seen- and I am not sure it will be re-aired or if it is in the archives....( but if LA and California is the tipping part of this iceberg- I think this Town Hall is worth watching.....)
Here is the Info below::::
08:24 PM EDT
0:48
Speech
Mortgage and Housing Market
Town Hall Los Angeles
Kenneth D. Lewis , Bank of America
thanks C&L......and John....
Fanny and Freddie are the best of the lot. Every American Bank is broke. Every one. No hyperbole, flat bankrupt. Its a house of cards with the window open, one breeze and they all go. These are the interesting times that the Chinese proverb warned about.
NATIONALIZE IT!
this is only a foreshadowing of what is to come. from banking to transportation to the extraction of natural resources & then all sectors of industry the cries will ring out: EXPROPRIATE THE EXPROPRIATORS! RETURN WHAT COMES FROM THE PEOPLE TO THE CONTROL OF THE PEOPLE!
The panicy flight of capital kind of reminds me of this.
http://www.adventureafricaholidays.com/images/herdsofwildebeestmigration...
What is troubling to me is that in our "democracy" we all acknowledge the difference between "state ownership" and "public ownership". Now wait a minute folks, if "the state" is of, by and for the people, wouldn't those 2 things "state" & "public" ownership by necessity be synonyms? But we've all accepted that those ideals and all the "forefathers", "endowed by our creator" and "pursuit of happiness" business are all myths so on grinds the class war that is only being fought by one side. When i hear "change we can believe in" Barack Obama and the "progressive" democrats don't come to mind, Hugo Chavez and Evo Morales do.
KYhillybilly @ 6:
you're right! they practiced this twice before, at least, maybe thrice.
the SNL bailout
Enron
post 9/11 government contracting
euthyfro @ 48:
then they will invade your country, just like they did Iraq after oil was nationalized.
Bitter Bud Hussein @ 32:
it will be 'contracted out' just like your tax system. So don't worry.
We can dip our hands into the banks, but God forbid we dip our hands into the healthcare system. Socialism is bad mmkay
I hope Phil Gramm has a meeting with the leadership of Indy Mac bank to tell them that the failure and government takeover of their bank yesterday was just their imagination.
Gramm=current day Gordon Gekko. Greed is good and those who don't believe are just yellowbelly cowards.
You'll get yours, Phil and so will your greedmeister friends.
can someone please explain, why then, is it that my small town of 13,000 - after losing 2 major employers (union shops of course) - has seen 2 new banks built, a third soon... these are branches of locally owned banks... middle of farm country... corner of I 57 & 70 illinois...
my tax guy laughed and said "they had to do SOMEthing with all those fees!" ...
so now there are 5 or 6 different banks here... the only one having any trouble is an eastern bank (i think), 5th-3rd...
"...and so the house of cards fell" there's the epitaph for America.
Balducci @ 1:
Uh, that's the sentiment of a frog sitting placidly in a pot of water that is well on its way to boiling.
No, it really is time to worry. Fanny Mae and Freddie Mac aren't just your garden variety banks, they are federally chartered lenders to retail mortgage providers. They are bankers for the banks. They were once considered the safest stocks you could buy - the equity equivalent of US Treasury bonds. If they go down, it blows a big hole in the US financial system and sets back the recovery in the mortgage market - and residential housing - for years. The end result of a bailout is more US gov't debt, less confidence in the US financial system and probably a lower dollar.
Yesterday's US government takeover of IndyMac is the biggest bank failure in 25 years. It almost certainly won't be the last.
The home mortgage crisis is massive, and still getting worse - but it's only part of the problem. The next shoe to drop is probably commercial mortgage loans. Many banks, already weakened by writeoffs of home mortgages, are looking at hundreds of billions in iffy loans on office buildings and retail stores - just as recession is hitting, with major layoffs and falling sales. Office vacancy rates are way up, and headed higher.
There are dozens of smaller regional banks that might get hit by this. The ones that have problems, and can't attract new capital, will fail.
And the kicker is that the Federal Reserve can't do much, because the debt and deficit are through the roof, and oil has driven inflation so high. Raising interest rates to save the US$ will tank the economy and force more mortgage holders into bankruptcy. Reducing rates, which is probably inevitable, will send inflation back to what is was in the 70s, wreck the dollar and make it very hard to sell bonds to finance the massive federal debt.
Welcome to the aftermath of Reaganomics, which was all built on deficit spending.
between Neil Bush's S&L abortion (which McCain ran interference for) and this mortgage scandal, can we all finally say that laissez-faire capitalism is a complete failure? Further, the Bushes should NEVER, EVER be allowed near anything resembling finance.
" The money supply data from the US, Britain, and now Europe, has begun to flash warning signals of a potential crunch. Monetarists are increasingly worried that the entire economic system of the North Atlantic could tip into debt deflation over the next two years if the authorities misjudge the risk.
The key measures of US cash, checking accounts, and time deposits - M1 and M2 - have been contracting in real terms for several months. A dramatic slowdown in Britain's broader M4 aggregates is setting off alarm bells here.
Money data - a leading indicator - is telling a very different story from the daily headlines on inflation, now 4.1pc in the US, 3.7pc in Europe, and 3.3pc in Britain.
Paul Kasriel, chief economist at Northern Trust, says lending by US commercial banks contracted at an annual rate of 9.14pc in the 13 weeks to June 18, the most violent reversal since the data series began in 1973. M2 money fell at a rate of 0.37pc.
"The money supply is crumbling in the US. There was a very sharp lending contraction in the second quarter lending. If the Federal Reserve is forced to raise rates now to defend the dollar, it would be checkmate for the US economy," he said.
Leigh Skene from Lombard Street Research said the lending conditions in the US were now the worst since the Great Depression. "Credit liquidation has begun," he said. "
This is from a column in the Daily Telegraph on July 11, which talks about the scary dimensions of the credit crisis.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/11/cnmone...
Wall Street feeling blue? Fuck'em. They should be in jail for fraud. Once again US taxpayers have to pick up the tab for these greedy geckos. Note how little the MSM covers corporate culpability.
59 William Says: between Neil Bush’s S&L abortion (which McCain ran interference for) and this mortgage scandal, can we all finally say that laissez-faire capitalism is a complete failure?
________________________________________________________________
I call them laissez-fairies.
Annoyed Canuck @ 60:
Here is a link to an extremely dark but plausible essay by David DeBatto on the possible results of an attack on Iran.
We have mafioso in charge of our government, anything can happen.
Dave @ 41:
Have you been listening to RIght Wing radio? Because that's already what they are spouting. Before you know it the Dems will have been responsible for the last 8 years.
When I was in Real Estate in the mid 80s,Fannie Mae and Freddie Mac were solid.After deregulation when they went private, they became what they are now--shit.
The Greatest Depression has started. Its been caused by the greed of corporations, and their control over republicans and democrats in our government. Tyranny is here.
heY, hEY, HEY! Fannie Mae and Freddie Mac are just a bunch of whiners. It's all in their heads.
Everyone remain calm. Just because your dollar is worthless and criminals are bidding up oil (the item that is a catalyst to drive up the price of every commodity you consume) with money from your 401k's and hedge funds, there's nothing to be concerned about.
Don't worry, if the Federal Reserve Bank collapses our current currency, they'll just come up with a new one. And don't worry because the grocery stores will most likely not close. Maybe.
No one panic...just because our entire economy is about to collapse. We'll get through it...somehow....probably.
Have no fears John Q. Public, your illustrious government has a contingency for you when our economy collapses any week from now. It's called martial law. Don't think of it as being jailed in a concentration camp with little to no food, clean water, or health care. Think of it more like a vacation. Just a neat camping trip with all your neighbors.
Cool, I can't wait.
sully18 @ 65:
Well according to Sen. Dodd the fundamentals are fine. I work in the mortgage biz. Fannie & FReddie don't invest in subprime so while their might be some accounting fraud, it doesn't desrve a 80% drop in valuation. This might be more of a market perception issue. People who qualify for conventional loans are well capable of making payments.
http://www.guardian.co.uk/business/feedarticle/7646667
I'm sorry, but why doesn't the Democratic party start trying to label Republicans as moving towards fascism? When they are willing to bail out companies that make bad business decisions using tax dollars, but it's unacceptable to give aid to an individual who, through no fault of their own, lost their job due to a companies bad business decisions, then how is this not another step in that direction?
Playing nice is what has put us in this mess and when the Republicans don't play nice, why should we? Especially when we're in the right.
"We can always leave .. ", they say...but this is our country!
DigitaLiberacion' @ 70:
That's GOP idiot standard response number 3. How can you tell you're talking to a brainwashed idiot? By how they respond to what you say.
So in response to idiot GOP response number 3, just say something like..."This is MY country. And shouldn't I point out problems with it and try to make it a BETTER place?" Or something like, "prove that our government ISN'T a vast criminal organization."
You must understand that they can't think for themselves, so they will not be able to respond to these questions or questions or statements of the like. From and by people who don't let assholes think for them. People that ask questions like, "why is it that our government keeps taking away our personal freedoms?" Or, "who's sponsoring this bill? Oh, the credit card companies. I guess that means we're screwed."
So this is how McShrub is going to fund his flailing campaign!!
Nothing to see here.... it's just whining. Go shopping you whiners!!
http://www.youtube.com/watch?v=j2b5eM7lrDw
DHavok @ 70:
dems and repigs are feeding at the same troughs.
It's a sad day when the biggest FREE ENTERPRISE nation NATIONALIZES the banking system.
If anyone cares,this is our chance to take our country back from the Fascists.Let these bastards drown under the weight of their inflationary dollars.Let them hang.
Comrade Rou @ 69:
Karl Denninger , Mikr Shedlock and former Federal Reserve governor Poole would disagree with you.
Denninger:
The bad news is that we've got two GSEs with over $4 trillion in paper on their credit book between them, an unknown quantity of it is bad, and they've got less than a 1% capital cushion against that book.
Shedlock:
In case you were wondering about Record Spreads On Fannie Mae, wonder no more. Former Fed Governor Poole says Fannie Mae, Freddie Losses Makes Them 'Insolvent'
Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.
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No, the fundamentals are not fine. It is however, what they want the public to believe.
We're just "a nation of whiners," according to Mr. Enron Loophole himself.
Hang em high!! http://www.fool.com/investing/general/2008/03/17/bernanke-bails-out-bear...
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