There were a lot of people running aroung with there hair on fire this week in DC and on Wall Street. It is clear that they either don't have a fucking clue or they are lying through their teeth. The FED and Treasury are looking only to save the collective ass of their buddies on Wall Street with a big fuck you to the American taxpayer. The plan is for all the shit that Wall Street has on their books to be taken over by the government. That would be us. Imagine waking up and finding your house and all your credit cards paid off. But that is only for the rich. More privatizing the profits and socializing the losses. The losses, that we will become responsible for, have become so huge that there won't be any money left over for niceties like Social Security, health care, and repairing roads and bridges. I watched Naomi Klein last night. Her book Shock Doctrine is very timely. You really should read it to see where we are headed. Welcome to Pottersville. The financial house of cards will fall but not until the rich have been protected and then the rest of us will be living in a third-world police state. Fuck the fucking fuckers!

David Horsey

David Horsey

Tomgram: Steve Fraser, The End of a Gilded Age

What is Washington to do as the financial system collapses? Clearly, stark differences in approach as well as in public policy have already emerged. Bail-out Bear Stearns and pump up the brokerage and investment business with new lines of credit. Nationalize Fannie Mae and Freddie Mac on the backs of the taxpayer -- but let Lehman drown. Tell the financial community to save itself, after which Bank of America salutes and buys Merrill Lynch. Then, the Fed gets cold feet and decides it can't let an institution the size of the insurance giant AIG go under as well. Washington is left staring into the abyss. The old rules no longer apply. And that's the point. At moments of crisis since the mid-1980s, the relationship between Washington and Wall Street has changed fundamentally, at least when compared to anything that would have been recognizable in the previous century. As a result, the road ahead is dark and unknown.

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Congressional Leaders Stunned That Bernanke Finally Admits The Truth

Congress was stunned because Bernanke finally admitted the truth (or at least came closer to doing so). Congress ought to be reading blogs rather than listening to clowns like Paulson and Bernanke. How many times have we heard Paulson the Parrot sing the praises of the strong dollar and the soundness of the US financial system? For more on the "sound banking system" please see You Know The Banking System Is Unsound When.... and Don't Worry, The Banking System Is Sound. The market called Bernanke's Bluff, and came close to a virtual meltdown.. For now, Armageddon was Postponed as Fed Intervenes In Money Markets. The list of reasons the financial system is unsound grew massively today, by the tune of a $1.2 trillion taxpayer funded bailout designed to bail out the wealthy at the expense of the poor. Earlier today Paulson has the gall to state "this will cost the tax payer less than the alternative". No one bothered to ask why it should cost the taxpayer anything at all. Furthermore, Paulson once again proved he needs simple arithmetic lessons. Shifting losses from those who should bear them (stock and bond holders of failing companies) to the taxpayers is not going to save the taxpayers a dime, rather it is going to cost them plenty, $1.2 trillion plenty as noted in US Taxpayer: A Giant Dumpster For Illiquid Assets. The Whole Truth And Nothing But The Truth? Of course not. Bernanke did not really admit the truth, he only hinted at it. Congress was too dumb to pick it up. The truth is the US financial system is insolvent.

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US Taxpayer: A Giant Dumpster For Illiquid Assets

Paulson, Bernanke, and Congress are conspiring to make the US taxpayer the fall guy for financial stupidity by banks and brokers. Congress is now willing to ram through legislation at the last moment, even though Senate Majority Leader Reid Says "No One Knows What to Do".

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Let Wall Street Burn (the details)

At the cost of your future, the U.S. financial system is being saved. For a half century, the United States has been unable to find a hundred billion or so a year to fund general healthcare, but now that financial powerhouses like Bear Stearns, Freddie Mac, Fannie Mae, and AIG are crumbling, the U.S. Treasury can magically procure trillions of dollars in promises without so much as a nit of resistance in either chamber of the U.S. Congress. Your future earnings have now been committed to saving the asses of the millionaire and billionaires who postured as geniuses as they managed and oversaw the financial follies of the past 28 years. The future potential of your country – and the future potential of your children and grandchildren, is being wasted, now, to save a financial system that subtracts real value from the economy; a financial system that enriches the few by impoverishing the many. Don’t believe me? There was a very simple, much less costly way to stop the sub-prime mortgage crisis in its tracks. The only thing the federal government needed to do was negate the ballooning interest payments that doubled or tripled mortgage payments, which in turn caused households to begin defaulting on their payments. Bush, or Bernanke, or Paulson, or whoever could have just told the financial sector that they were not going to get their big jump in interest payments on the sub-prime mortgages and that so long as home owners continued to make their payments at their original interest rate, they could not be foreclosed on. By what authority could Bush, or Bernanke, or Paulson, or whoever do this? Would legislation had to have been passed? Well, tell me this, by what authority are we the taxpayers being forced to extend an $85 billion bailout to AIG literally overnight? What legislation was passed by our Congress that allowed such a massive commitment of our money? But to have done this, to have forced the banks and mortgage companies and hedge funds that bought the collateralized mortgage obligations to stick with the original interest rates in those sub-prime mortgages, would have been to impinge on their “freedom” to engage in usury. Usury, which was once illegal under the laws of the United States. Did you know that in the late 1800s, the very morality of six percent interest rates was a hot topic of debate? Let’s be clear here: the financial system is a net drain on the economy. It subtracts much more in value than it adds. The contortions accompanying the disappearance of Lehman Brothers and Merrill Lynch, and the “rescues” of Bear Stearns, Freddie Mac, Fannie Mae, and AIG, do nothing, absolutely nothing, to change the fundamental character of the financial system, which is to -- let’s be frank -- loot the real economy.

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Fixing Wall Street Won't Fix Our Economy

Sure, the CEOs and hedge fund managers were greedy. There's no question that wealth and the pursuit thereof led to the sub-prime fiasco and the decline of Lehman Brothers, AIG, Merrill Lynch and more. But what's really at play here is persistent poverty and Wall Street seeking to make a dime off the poor, consequences be damned, while Washington looks the other way.

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As The Market Drops Again, What the Future Holds For Americans

But the real important thing to keep an eye on in the short to medium term is not the stock market, it's currency and debt markets. There's currently a flight to "safety" with credit drying up for everybody but governments (even banks are not lending to each other), but really, how safe is anything denominated in US dollars? If you were a foreigner, would you be real easy buying more dollar denominated assets, or even Treasuries? Sure, the government can always come up with more, but how much are they going to be worth? Heck, even if you are an American, and pay for everything in US dollars, doesn't the way the dollar keeps dropping make you queasy?

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Asia Rethinks American Investments Amid Market Upheaval

Tremors from Wall Street are rattling Asian confidence, leading many investors to question the wisdom of being invested in the United States to the tune of trillions of dollars. Asian investors were starting to show hesitation even before the financial earthquake of the last week. Now, a wariness toward the United States is setting in that is unprecedented in recent memory, reaching from central banks to industrial corporations, from hedge funds to the individuals who lined up here to withdraw money from the American International Group on Wednesday. Asia’s savings have, in essence, bankrolled American spending for decades, and an Asian loss of confidence in American financial institutions and assets would have dire consequences for both the United States government and American taxpayers.

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Federal bank insurance fund dwindling

Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort. The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.

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The Wall Street Model: Unintelligent Design
What's Really Bankrupt

Wall Street is collapsing not because of bad mortgage debt or lack of capital or over-leverage. Those are merely symptoms. Wall Street is collapsing because it deserves to collapse; it needs to collapse in order for America to survive. The economist Joseph Schumpeter called it creative destruction, a system where outdated models collapse to make room for new innovation.

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The Point of No Return

Following another eratic day of trading on the stock market, Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke convened an emergency meeting of the Senate Banking Committee and other congressional leaders to request fast-track authority for a sweeping plan to buy back illiquid assets and other complex securities from distressed and under-capitalized banks. The turbulence in the financial markets has intensified and there is every indication that the situation will get worse before it gets better. There are a number of signs that the financial system is at the brink of collapse and that Wall Street is headed for a 1929-type crash. Depositors have begun to withdrawal their savings from money market funds alarmed by the gyrations in the market and the daily deluge of bad economic news. According to the Washington Post, funds dropped "by at least $79 billion, or about 2.6 percent" on Wednesday alone. The withdrawals are the equivalent of a slow bank run just at the time when stressed commercial banks need access to cheap capital to finance daily operations and provide loans for a steadily weakening economy. There's also been a surge of panic-buying of US Treasurys which is considered the safest of investments. According to the Wall Street Journal, during Wednesday's market-rout, "investors were willing to pay more for one-month Treasurys than they could expect to get back when the bonds matured. Some investors, in essence, had decided that a small but known loss was better than the uncertainty connected to any other type of investment. That's never happened before." (Wall Street Journal) Also, the VIX, or "fear gauge", has soared to levels not seen since the crisis began in August just over a year ago.

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