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Bailout is a done deal

Sunday, September 28, 2008, 7:48 AM

As predicted by many here and elsewhere, a great show of "protecting the taxpayer" commenced, but, in the end, the bailout bill sailed through largely unchanged.

WASHINGTON — Congressional leaders and the Bush administration reached a tentative agreement early Sunday on what may become the largest financial bailout in American history, authorizing the Treasury to purchase $700 billion in troubled debt from ailing firms in an extraordinary intervention to prevent widespread economic collapse.

Link (NYT)

» Read more


Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says

Saturday, September 27, 2008, 3:21 PM

Uh oh.

File this one under "oops".

Sept. 25 (Bloomberg) -- Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.

"We are in the same boat, we must cooperate,'' Yu said in an interview in Beijing on Sept. 23. "If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.''

An agreement is needed so that no nation rushes to sell, "causing a collapse."

Link (Bloomberg)

» Read more


Gas Shortage in the South Creates Panic, Long Lines

Saturday, September 27, 2008, 3:03 PM

While Ike was a lot less damaging than he could have been, it turns out that he did wreak enough havoc to create a severe gas shortage across the southeast.

I raise this for two reasons.

One, this can't be helping the mood down there...running out of gas is both shocking and distinctly un-American.

Two, this just shows what happens to complex delivery networks that operate on a just-in-time delivery basis. » Read more


Reminder - On the radio tonight from 9-10 pm EST

Saturday, September 27, 2008, 3:00 PM

I will be doing my second spot with Robert Mangino on talk radio, this Saturday night from 9-10 pm EST.

You can listen in via streaming radio.

Go here: and click on the button at the top of the page that says "Listen."


FDIC May Need $150 Billion Bailout

Friday, September 26, 2008, 2:39 PM

This news is from yesterday, but it bears mentioning.

From 2002 to 2007, U.S. lenders made a total of $2.5 trillion in subprime mortgages, according to the newsletter Inside Mortgage Finance. "Given the magnitude of the bad loans still on bank balance sheets, it would be miraculous for the FDIC to squeak by with losses of less than $200 billion,'' Whalen says.


The pace at which these monster cost estimates are piling up tells us that there's a very high probability that the Federal Reserve is going to be directly monetizing debt, if they haven't started already.

This little chart from the Fed raises the prospect that direct monetization has already begun.

» Read more


Viewing and Using Tip!

Friday, September 26, 2008, 10:26 AM

If the site seems to be displaying improperly, clear out your temporary files and cache.  This has seemed to do the trick for many folks.

What's happened is that some browsers have stored an old version of the webpage and are trying to interpret the new site with that old information.

We are aware that Safari seems immune to this trick and needs some attention on our part.

No more to this message


Chaos in Washington!

Friday, September 26, 2008, 9:47 AM

This is the most explosive story of the day, because of what it implies - a rupture in the formerly seamless power structure down in DC.

The chaos in Washington represents the most serious split of political power in, well, far too long.  Depending on your point of view, this is either a godsend or a complete disaster.

If you are the Bush administration, trying to find a crevice of political advantage for John McCain, it is a disaster.

You don't even have to read between the lines on this one.

WASHINGTON - Even for a party whose president suffers dismal approval ratings, whose legislative wing lost control of Congress and whose presidential nominee trails in the polls, it was a remarkably bad day for Republicans.

A White House summit meeting on Thursday meant to shore up John McCain's shaky campaign "devolved into a contentious shouting match." And that's how McCain's own campaign described it.

The meeting revealed that President Bush's $700 billion bid to combat the worst financial crisis in decades had been suddenly sidetracked by fellow Republicans in the House, who refused to embrace a plan that appeared close to acceptance by the Senate and most House Democrats.


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Government Seizes WaMu and Sells "Some" Assets

Friday, September 26, 2008, 8:20 AM

As recently predicted here, Washington Mutual became the next big bank failure.  However the details are slightly beyond my comprehension and I will have to wait for more details to understand exactly what happened here.

First of all, I have no idea what "some" or "virtually all" assets means.

Washington Mutual, with $307 billion in assets, is by far the biggest bank failure in history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

By taking on all of WaMu’s troubled mortgages and credit card loans, JPMorgan Chase will absorb at least $31 billion in losses that would normally have fallen to the F.D.I.C.

Link to NYT article

And it is completely left unsaid why JPM would agree to eat $31 billion in losses the "normally would have fallen to the FDIC"

But I can explain that.  That $31 billion will be foisted upon the unlimited billion bailout fund as soon as possible.  In short, the US taxpayer is being asked to provide a massive grant to JPM so it can expand its business reach. 

And, of course, the greed of Wall Street is so profound that they can't even resist the urge to rub this fact into the public nose.

“We are building a company,” Mr. Dimon said in a brief interview. “We are kind of lucky to have this opportunity to do this. We always had our eye on it.”

As if you needed any further confirmation about just how out of control the looting and theft of the public funds really are, the NYT provides it in the very next paragraph.

Mr. Fishman [MW's new CEO], who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus.

$18.1 million dollars for less than three weeks.  Only in America friends, only in America.  We might like to tempt ourselves with the thought that this money came from some magic pool, but it came directly from investors, depositors and/or taxpayers.

» Read more


The site is back up and running!

Friday, September 26, 2008, 6:57 AM

Thank you for your patience yesterday as we switched over to our new,
faster server.  It took us longer than we anticipated, but the results
will be worth the wait.  You'll notice that the site now has a new look
and feel to it.  We are working to smooth out the wrinkles in the new
format, so please let us know if you come across anything that needs
fixing.  Thanks.


Site Will Be Down Later Today From About 12 (Noon) -2 p.m. EST

Thursday, September 25, 2008, 10:17 AM


For a variety of technical reasons, the move to the new server has to happen during daylight hours (sorry).

For roughly 2 hours, from about 12-2 EST, the site will be offline.

When it comes back on, it will also have an entirely new look and feel.  While there will be many changes over the next couple of weeks as we tweak the new site, the bulk of the changes will happen all at once, later today. » Read more