How Much Can the US Government Guarantee? - David Merkel, Aleph
Is Fannie, Freddie Bailout Just Treating Symptom? - , RT Economics

Lehman May Not Be Long for This World - Mish's Global Econ Analysis

From Downturn To Disaster?

Comrades Bush, Paulson and Bernanke Welcome You to the USSRA (United Socialist State Republic of America)
Nouriel Roubini | Sep 9, 2008 The now inevitable nationalization of Fannie and Freddie is the most radical regime change in global economic and financial affairs in decades. For the last twenty years after the collapse of the USSR, the fall of the Iron Curtain and the economic reforms in China and other emerging market economies the world economy has moved away from state ownership of the economy and towards privatization of previously stated owned enterprises. This trends was aggressively supported the United States that preached right and left the benefits of free markets and free private enterprise.

Today instead the US has performed the greatest nationalization in the history of humanity. By nationalizing Fannie and Freddie the US has increased its public assets by almost $6 trillion and has increased its public debt/liabilities by another $6 trillion. The US has also turned itself into the largest government-owned hedge fund in the world: by injecting a likely $200 billion of capital into Fannie and Freddie and taking on almost $6 trillion of liabilities of such GSEs the US has also undertaken the biggest and most levered LBO ("leveraged buy-out") in human history that has a debt to equity ratio of 30 ($6,000 billion of debt against $200 billion of equity).

So now Comrades Bush, Paulson and Bernanke (as originally nicknamed by Willem Buiter) have now turned the USA into the USSRA (the United Socialist State Republic of America). Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill of $300 billion.

This biggest bailout and nationalization in human history comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.

The ideologue "regulators" who literally held a chain saw at a public event to smash "unnecessary regulations" are now communists nationalizing private firms and socializing their losses: the bailout of the Bear Stearns creditors, the bailout of Fannie and Freddie, the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk toxic illiquid private securities), the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of "liquidity" to distressed, illiquid and insolvent mortgage lenders, the use of the SEC to manipulate the stock market (restrictions on short sales), the use of the US Treasury to manipulate the mortgage market (Treasury will now for the first time outright buy agency MBS to manipulate and prop up this market), the creation of a whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and rescue banks and, for the first time since the Great Depression,to bail out non-bank financial institutions, and a whole range of other executive and legislative actions (including the recent bill to provide a public guarantee to mortgage for banks willing to reduce their face value).

This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).

Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA. Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don't run the biggest economy in the world. But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage.

Dangerous Economic Territory
Also: When London Ruled the World
Soon: Preparing for Economic Disaster

Asian Stocks Decline as Growth Concerns Eclipse Fannie Rally
Freddie, Fannie Scam Hidden in Broad Daylight
Pending home sales retreat
Wall St's rescue rallies are short-lived
Be on red alert for US market chaos
Long-Term Capital: It’s a Short-Term Memory
The Power of De
Few Stand to Gain on This Bailout, and Many Lose
Brokers downgraded
A $75 trillion fright fest

From Storm to Pandemic
by Martin D. Weiss, Ph.D.
Sunday, September 07, 2008 7:30 AM
We are busy preparing for Hurricane Ike. Everyone in Florida knows what to do. And hopefully, it will pass us by. But the financial pandemic that's spreading to the entire economy is ... [More...]

Opinion: A Sagging Economy
To the Editor:.

Full Story:
http://www.nytimes.com/2008/09/10/opinion/...amp;tntemail1=y

The Bailout Plain Truth and the Silent Economic Depression
The Market Oracle - London,UK
The pundits and economists continue to make simpleton arguments, such as the current conditions are no way like the depression. ...
See all stories on this topic

Nationalization of Fannie, Freddie triggers defaults for derivatives
Submitted by cpowell on 05:03PM ET Monday, September 8, 2008. Section: Daily Dispatches By Aline van Duyn
Financial Times, London
Monday, September 8, 2008

http://www.ft.com/cms/s/0/ed1e14c6-7dd0-11...658.html?ncli...

One of the largest defaults in the history of the $62,000 billion credit derivatives market has been triggered by the US government's seizure of Fannie Mae and Freddie Mac, raising questions about how dealers will unwind billions of dollars worth of contracts.

Although the $1,600 billion of debt issued by the troubled mortgage groups is regarded as safe after the US government's move to take control of the companies, their move into "conservatorship" counts as the equivalent of a bankruptcy in the credit derivatives market.

This triggers a default on credit default swaps -- instruments that provide a form of insurance on fixed-income assets. Dealers in the market are now working to settle these contracts.

The exact amount of CDS on Fannie Mae and Freddie Mac are not known, reflecting the private nature of the market, but they are part of widely traded indices and the amounts are likely to be significant. Analysts at Lehman Brothers said: "There is likely to be a considerable amount of notional protection outstanding."

The industry body, International Swaps and Derivatives Association, said on Monday it would launch a protocol to facilitate settlement of credit derivative trades involving Fannie Mae and Freddie Mac and would publish further details in due course.

The uncertainty surrounding the Fannie Mae and Freddie Mac CDS contacts highlights the need for improved settlement and trading procedures. Already, regulators have put pressure on CDS dealers, including all the large financial institutions, to reduce settlement and trading risks.

The near-collapse of Bear Stearns in March highlighted the extent to which many large financial institutions were linked together through the CDS market, and the Federal Reserve and other regulators want to reduce such systemic financial risks.

The growth of the CDS market over the past decade has outpaced development of settlement systems and trading infrastructure. One worry is the lack of standard procedures in contracts for dealers to agree ways to settle defaulted credit derivatives.

The actual payments on credit default swaps on Fannie Mae and Freddie Mac are expected to be limited because the value of the mortgage agencies' debt remains high after the US government stepped in to back it.

That means that meeting any claims on CDS may not be that costly, although the details are still being worked out and the impact is unknown.

Analysts at Creditsights said regulators could "use the bailout as another lever" to enhance the CDS market's efficiency.

Bailout hands Pimco $1.7 billion payday
Submitted by cpowell on 05:24PM ET Tuesday, September 9, 2008. Section: Daily Dispatches By Deborah Brewster
Financial Times, London
Tuesday, September 9, 2008

http://www.ft.com/cms/s/0/838d3cb4-7e96-11...0077b07658.html

NEW YORK -- The Bill Gross-managed Pimco Total Return fund reaped a $1.7 billion payday following the US government takeover of home loan giants Fannie Mae and Freddie Mac.

While shareholders in Fannie and Freddie suffered deep losses, the world's biggest bond fund saw its highest ever one-day rise against its benchmark index on Monday, benefiting from the bet made by Mr Gross on mortgage bonds issued by the agencies.

Mr Gross had made a big shift out of US Treasuries and corporate bonds over the past year and into agency bonds, betting that the government would support Fannie and Freddie Mac. By May this year, more than 60 per cent of his $132 billion fund was in mortgage debt.

Mortgage-backed bond prices rose after the US government seized control of the agencies.

Mr Gross's fund, which side-stepped the housing market slide, had risen strongly before Sunday's government bailout. In the 12 months to August 1, the fund returned 9.2 per cent, beating all of its peers, according to fund tracker Morningstar.

On Monday, the fund rose by 1.3 per cent, or $1.7 billion, its biggest one-day rise ever against the Lehman Aggregate Bond index.

Mr Gross, who co-founded Pimco and has managed the Total Return fund since 1987, was one of the first to call for a bailout of Fannie and Freddie.

In his latest monthly commentary, he also said that the government needed to use more of its own money to support financial markets, or risk a "financial tsunami."

Mr Gross' style is to take a macro-economic view and make tactical changes based on short-term movements in the economy.

The recent success of the Total Return fund has helped Pimco to be the only one of the 25 largest mutual fund managers to lift its assets under management in the year to date, according to Financial Research Corp. data to the end of July.

By contrast, several well-respected equity fund managers are suffering in the wake of the government move, which leaves Fannie and Freddie stock almost worthless. Legg Mason's Bill Miller, Fidelity, Dodge & Cox, and Wellington are among the fund managers that had heavy exposure to Fannie and Freddie -- and had lifted that further this year, according to Bloomberg data.

Fannie and Freddie's New Derivatives Cliffhanger

The bailout triggers settlement of $1.4 trillion in unregulated credit-default swaps. Do the hedge funds have the money?
http://www.businessweek.com/bwdaily/dnflas...ws+%2B+analysis

A 'Failed Business Model'




Opinion: Steve Forbes: What Next For Fannie & Freddie? A 'Failed Business Model' Washington: Outsiders' Insight May Be Right Thing For GSEs Fannie And Freddie's 15-Month Fix Dodd On The Bailout The Road From Here Wall Street: BofA's Bailout Benefit Some Banks Get Burned The Bailout Boon For Euro Banks Video: Beyond The Bailout Fannie, Freddie And The Taxpayer Banks After GSE Bailout

Henry Paulson's plan is a major disappointment.

Although it was certainly necessary to bail out ailing mortgage giants Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), the plan put forward by the treasury secretary this weekend prioritizes steering them back to financial health and defers into the future what is to become of the companies.

What's worse, after blaming the collapse of the companies on a "flawed business model," the plan will preserve that model indefinitely, allowing the shareholders of what are now insolvent entities to recover some value.

Long after Paulson is gone from the Treasury, Washington will be wrestling with the problem of what to do about Fannie and Freddie. And if the two companies are eventually nationalized, privatized or liquidated, the government--meaning taxpayers--will have to compensate the existing shareholders in some way.

The plan is relatively simple, but its implications for the future are troubling. First, Fannie and Freddie will be put under government control in an arrangement called a conservatorship. The purpose of a conservatorship is, essentially, to keep things as they are.

A conservator does not have the power to make any significant changes to the business model of a company; rather, its focus is to guide the company back to stability. Why anyone would sustain what Paulson himself called a flawed business model is hard to understand.

It gets worse. Under the plan, the Treasury is committed to providing equity capital to Fannie and Freddie. Another puzzle: Why is it necessary to inject taxpayer funds into these companies as equity? Ordinary companies need capital so that they can meet their obligations, but both these companies will have access to a financial facility at the Treasury that will allow them to borrow all the funds they require.

They don't need capital. The injection of capital is, in fact, a gift to the existing shareholders, who--as the owners of insolvent companies--own nothing and deserve no benefits from the taxpayers. By injecting these taxpayer funds and enabling the companies to survive, the Treasury plan opens the possibility that the existing shareholders will eventually profit from their investments, when, by all rights, they should be wiped out.

The nature of this gift is further emphasized by the fact that the Treasury is taking warrants for its agreement to finance these companies. These warrants will only be worth something--and thereby allow the Treasury to compensate the taxpayers--if the companies are nursed back to financial health under the conservatorship. So the government has created an incentive for itself to keep the companies alive and restore their well-being.

Once that occurs, the current shareholders will again be able to reap the benefits of holding interests in government-sponsored enterprises (GSEs)--only in this case, the two companies will not be implicitly backed by the government; they will be explicitly backed. In that case, the shareholders and the managements will once more profit from the government backing, while the taxpayers will still be the ones taking the losses.

There was an alternative, one that was simpler and much more sensible from a policy perspective. Since Fannie and Freddie operated under this "flawed business model"--by which Paulson probably meant government backing for shareholder-owned companies, the essence of a GSE--the plan should have set things in motion for the elimination of this model.

Instead of a conservatorship, the plan should have provided for a receivership. That system would get rid of the common stockholders while still monitoring the companies for an indefinite period in order to keep the mortgage market functioning smoothly.

Thus, while Paulson's plan was intended to provide some "breathing room" for consideration of the companies' future, what it will do in effect is restore them to health as government-sponsored enterprises, and, more critically, allow them and their newly empowered shareholders to bargain about the companies' collective future from a position of strength.

No wonder U.S. Sen. Charles Schumer of New York--probably the GSEs' most ardent supporter in Congress--issued the following statement after Paulson addressed the press on Sunday: "This plan will be met with broad acceptance in Congress, because it doesn't prejudge the ultimate fate of Fannie Mae and Freddie Mac.'' Translation: Prepare for a fight--because we intend to keep the GSEs alive.

Republican presidential candidate John McCain has been campaigning against the culture of corruption in the federal government. Democratic presidential candidate Barack Obama has based his campaign on the idea of change in Washington. Fannie Mae and Freddie Mac are telling illustrations of corporate welfare--the profitable private exploitation of a cozy relationship with the government. And the Paulson plan will foster just what a cynic might expect: more of the same.

Peter J. Wallison is the Arthur F. Burns fellow in financial policy studies at the American Enterprise Institute . General counsel of the Treasury during the Reagan administration, he is the author of Ronald Reagan: The Power of Conviction and the Success of His Presidency and Serving Two Masters, Yet Out of Control: Fannie Mae and Freddie Mac.

The Trouble With Fannie, Freddie

Freddie, Fannie Bailout

http://www.forbes.com/opinions/2008/09/08/...tml?partner=rcm

Warning: Worldwide wipeout ahead
Think US stocks are on a life raft? Look around the globe, where seas are much rougher. This is serious, folks. Brace for a brutal riptide of more economic upheaval.

http://articles.moneycentral.msn.com/Inves...eout-ahead.aspx

Next President To Inherit Deficit Of $500 Billion
Washington Post - United States
The expanding deficit also will increase the national debt and could impair future economic growth, particularly if lawmakers are forced to pay down that ...

Bailouts Will Push US into Depression: Manager
CNBC - Englewood Cliffs,USA
By CNBC.com | 11 Sep 2008 | 09:11 AM ET The end result of the global economic slowdown may be the US announcing national bankruptcy as the government cannot ...
See all stories on this topic

The Democrats' Depression
Human Events - Washington,DC,USA
So effective has it been in cowing the Republicans that quite possibly never again will a sitting president be able to boast of a record of economic ...
See all stories on this topic

Welcome Comrades, to the USSRA Nouriel Roubini, the famous economist who long ago predicted the financial meltdown about to occur in the US and who has been right on the money on practically every prediction he has made in the last six or eight years has something to say today about the Fannie Mae and Freddie Mac bailouts.

Perhaps sensibility will sink into some of the so called brightest and best minds, whose hollow shells for brains are in fact filled with nothing but wild ideology, who subscribe to a belief system just as obscene, if not more so than the brutal ideologies of Germany in 1933 and Russia in 1917, and they will finally come around to sanity and realize that socialism indeed works in some segments of a civilized economy, provided it is tempered with incentives for everyone to have the opportunity to exercise initiative and entrepreneurship in a capitalist economy that has a soul.

But I doubt that we have many leaders in our midst who have that kind of insight and ability. Only honest and upright men and women who govern a country can be counted on to look out for the interests for all of the citizens of that country, particularly the least of these among us. And that kind of leadership has sadly been lacking in this country since at least 1980, if not long before then.

What I fear most is that most of our citizens have been indoctrinated with the same kind of ideology since the era of Ronald Reagan, and many of them long before that era. It may be impossible to turn this nation around to honest and sensible government policies, and this country may indeed be a lost cause on the world stage. Without further ado, what follows is part of Mr. Roubini’s rant of the day — although Mr. Roubini seldom rants — since I just took my turn at having mine. And I didn’t even get into the debt we're adding every day by continuing to borrow billions monthly from the Chinese, Saudis, Russians and other world governments. Maybe Moe Blues, who has much more experience in this topic than I do can fill us in on that and more on what we, our children, and their children’s children may have in store in the coming decades.

So now Comrades Bush, Paulson and Bernanke (as originally nicknamed by Willem Buiter) have now turned the USA into the USSRA (the United Socialist State Republic of America). Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill of $300 billion. This biggest bailout and nationalization in human history comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed — untempered by fear of loss or of punishment — leads to credit bubbles and asset bubbles and manias and eventual bust and panics.

Posted by Buck Batard at 2:26 PM

GSE Bail-Out Is the Biggest Credit Event in the CDS Market: Who's On the Hook?

• On Sep 8, 13 Wall Street firms agreed unanimously that the government seizure of the biggest U.S. mortgage-finance companies Fannie and Freddie qualified as a so-called credit event on CDS contracts covering more than $1.4 trillion in debt. Upon the bail-out of all debt securities alike, senior and subordinate, the value of these underlying securities recovers near par meaning that protection sellers will only need to cover a small portion to make protection buyers whole. The absolute losses however increase with the number of outstanding contracts
• As there are likely more CDS contracts than securities outstanding, ISDA organizes an auction to determine the value of the insured securities as well as the amount of pay-offs in a cash settlement
• FT: Michael Hampden-Turner, credit strategist at Citigroup in London, estimates there are $200bn-$500bn of outstanding CDS and other credit derivatives referencing Fannie and Freddie--> This would make their default the biggest the market has encountered. The previous record was held by Delphi, the US carparts maker that went bankrupt in 2005 and which had about $25bn of CDS

Click Here For Full Analysis

Hobo life in Skid Row
Gather.com - Boston,MA,USA
However, the major problems that exploded in the skid row, such as unemployment, economic depression, technology and the War, which brought thousands of ...

America's banking blues
Toronto Star - Ontario, Canada
The Great Depression swept away the laissez-faire nostrums of the Roaring Twenties. And the stagflation of the 1970s – anemic economic growth plus punishing ...


Fannie never truly shook off government reins
Globe and Mail - Canada
OTTAWA -- Rising slowly from its Great Depression low (at 41.22 on July 8, 1932), the Dow Jones industrial average finally registered a five-year high (at ...


Give the stock-market experts a miss
Sify - Chennai,Tamil Nadu,India
The Harvard Economic Society, too, had ruled out the chances of a depression. But, as is well known, the US saw what is now known as the Great Depression ...

Financial Rescues Show That Faith in Free Market Is Shaken
Washington Post - United States
As with the Great Depression, it has taken a full-blown financial crisis to shake the faith that free markets will always deliver better outcomes than ...


Year Two of the New Depression
OpEdNews - Newtown,PA,USA
It was a check in the global economic chess game, and the checkmate came from bad playing on the part of the United States. Without the Chinese largesse, ...

Satirical News and the Build Up to the Third World War
Atlantic Free Press - Groningen,Netherlands
Make no mistake about it, last century¹s great depression ended with the build up to the Second World War, and the unacknowledged economic depression of ...

Retail Sales in U.S. Unexpectedly Dropped in August

• Bloomberg
• 09/12/2008 08:00 AM

U.S. Foreclosures Hit Record in August as Housing Prices Fell

• Bloomberg
• 09/12/2008 06:09 AM

U.S. Refiners Accelerate Closings as Hurricane Ike Strengthens

• Bloomberg
• 09/12/2008 05:51 AM

Lehman Races to Find Buyer

• WSJ ($)
• 09/12/2008 05:38 AM

Lehman’s Assurances Ring Hollow

• NY Times
• Norris
• 09/12/2008 05:34 AM

Options for Battling Crisis Narrow

• WSJ ($)
• 09/12/2008 05:32 AM

As Options Fade, Lehman Is Said to Seek a Buyer

• NY Times
• 09/12/2008 05:29 AM

As Crisis Expands, Options For Battling It Narrow

• WSJ ($)
• 09/11/2008 09:16 PM

Lehman Races to Find a Buyer

• WSJ ($)
• 09/11/2008 09:12 PM

WaMu cut to "junk," sees $4.5 billion loss reserve

• Reuters
• 09/11/2008 09:10 PM

U.S. Government Helping to Arrange Sale of Lehman Brothers
Fed May Expand Funding Aid to Banks in a `Mother of Year-Ends'
Consumer debt defaults looming large
Real Estate Woes Spread to China
Lenders shorten financing lifelines for major retailers
EU Cuts Growth Forecasts, Sees Recession in Germany
Fed's next move could be to lower rates

• 
  American corporate profits: A turn for the worse
  The outlook is deteriorating even for the best-performing firms, let alone the troubled ones

9/12/2008
Paulson's Pluck
- The Economist 9/12/2008
Credit Crisis Strains Government's Options
- Wall Street Journal 9/12/2008
Rescues Show That Faith in Free Market Is Shaken
- Washington Post 9/12/2008
Lehman’s Assurances Ring Hollow
- New York Times 9/12/2008
Investors Turn Gaze to A.I.G.
- New York Times 9/12/2008
WaMu Tries to Reassure it has Enough to Survive
- Seattle Times 9/12/2008
Foreclosures Hit Record in Aug as Prices Fell
- Bloomberg 9/12/2008
Dems Call on Fannie, Freddie to Halt Foreclosures
- Los Angeles Times 9/12/2008
Florida's Big Insurance Problem
- Business Week 9/12/2008
Retail Sales in U.S. Dropped in August
- Bloomberg 9/12/2008
Economy Dampens Spirits
- Denver Post

Doug Casey, September 12, 2008
The Greater Depression and What You Should Do About It
For international investment expert Doug Casey, there's more than a recession on the horizon... he recommends battening down now for the rough seas ahead... with some special information about making sure your investments can weather the coming storms.

The Home Mortgage Meltdown: The Real Reasons for the Fannie Mae/Freddie Mac Takeover- by Richard C. Cook - 2008-09-11

The Return of the Misery Index
By FLOYD NORRIS
It has been almost three decades since the term "misery
index" gained political currency, as President Jimmy Carter
confronted the twin problems of rising inflation and
unemployment.

Full Story:
http://www.nytimes.com/2008/09/13/business...amp;tntemail1=y

US: Sweet Dreams in Hard Times Add to Lottery Sales
By KATIE ZEZIMA
Many state lotteries are experiencing record sales, as some
try to turn a lottery ticket into a ticket back to
prosperity.

Full Story:
http://www.nytimes.com/2008/09/13/us/13lot...amp;tntemail1=y

Risk of 'Great Depression No.2'
"Developing Nations Offer Hope For U.S. Retailers"
CNN Parrots Dems on Republicans and Economy
CEI Dicscusses the Takeover of Fannie and Freddie
Fannie and Freddie: Time to Move Forward

Wayne Winegarden : Bailing Out Fannie and Freddie: Short-Term Gain, Long-Term Pain

US Dollar Rally Signals a Severe Deflationary Depression / Economics / Economic Depression
By: Kurt_Kasun

Extraordinary Measures Today, a Financial Funeral Tomorrow - I wish I was referring to Fannie and Freddie in the title of this piece, but because those institutions are being resurrected, the funeral I am waiting for is the one for our entire fiat-based system. We are now on the brink of a collapse in confidence that brings the whole world financial system to its knees. Each market intervening action is becoming more extraordinary. The rallies which pull the suckers in following the intervening actions are becoming briefer and less powerful. I expect this one to be no different. This sequence has now become a broken record. Markets threaten to take out technical support levels and the government comes to the rescue. Armageddon is avoided until another day and a relief rally ensues on the belief that the government has fixed the problem a new bull market can begin. After all, this is how investors have been conditioned over the last three decades.

Read full article...

US Hiring Intentions Lowest In 17 Years: Manpower / Economics / US Economy
By: Mike_Shedlock

MarketWatch, citing data from Manpower, is reporting Glum outlook on jobs .
Unless you work in the oil, gas or related mining industries, the job market is unlikely to look brighter in the fourth quarter, and even retailers are glum about hiring for the upcoming holiday season, according to the latest Manpower Employment Outlook Survey.


Read full article...

Debt Deflation Turning Economic Democracy Into a Financial Oligarchy / Economics / Credit Crisis 2008
By: Mike_Whitney

An interview with Michael Hudson, former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JP Morgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation).

On Friday afternoon the government announced plans to place the two mortgage giants, Fannie Mae and Freddie Mac, under “conservatorship.” Shareholders will be virtually wiped out (their stock already had plunged by over 90 per cent) but the US Treasury will step in to protect the companies' debt. To some extent it also will protect their preferred shares, which Morgan-Chase have marked down only by half.

Read full article...

Paulson's Actions Herald the Financial Collapse of the American Economy / Economics / Credit Crisis 2008
By: Peter_Schiff

Treasury Secretary Henry Paulson, the man who said that subprime was contained and that the Bazooka in his pocket would never be used, now assures us that the bailout of Fannie Mae and Freddie Mac will be costless to taxpayers. Despite the near euphoria that the plan has sparked on Wall Street, the move will go down in history as the biggest policy blunder of all time, and will be credited as a pivotal point in the financial collapse of the American economy. The ultimate cost to Unites States citizens will be in the range of hundreds of billions of dollars, perhaps more.

Read full article...

Continuing Credit Crisis About to Get a Lot Worse / Economics / Credit Crisis 2008
By: John_Mauldin

• Thoughts on the Continuing Crisis
• Fool Me Once, Shame on You
• Delinquencies and Foreclosures Spike UP
• Unemployment Rises to 6.1%
• Action Is Needed Now

We are entering the next stage of the credit crisis, and one which is potentially more troubling than what we have seen over the past year, absent some policy reactions by the central banks and governments world wide. The crisis was started by an intense run-up in leverage by financial institutions and investors world wide, investing in increasingly risky assets such as subprime mortgages and then the realization that leverage could hurt. The deleveraging process started to intensify last year about this time. The easy part of that process has been just about done. Now is the time for the really hard work. It will not be pretty. In this week's letter, we look at the process and think about its implications for the markets and the economy, and visit some data on the housing market and unemployment.

Read full article...

Credit Crisis Phase II - The Economic Crunch / Economics / Credit Crisis 2008
By: Nadeem_Walayat

The credit crisis having manifested itself most evidently during the past 12 months through the continuing tightening in the availability of credit to all sectors of the economy despite government and central bank actions of pumping hundreds of billions of dollars if not more than $1 trillion into the financial system so as to prevent a chain reaction of bank failures as the worlds big banks continue to announce ever larger bad debt provisions each and every quarter.

Read full article...

Greenspan Most Responsible for Credit Crisis Should Get Lost / Economics / Credit Crisis 2008
By: Mike_Stathis

Mr. Greenspan, you have been the individual most responsible for the current crisis; a crisis which commenced only a few years after you tried to minimize the dotcom collapse, which of course you also created. By flooding the banks with ridiculously low interest rates you thought this Ponzi scheme economy could run on worthless money forever. But when you saw the end was coming, you quietly made your exit.

Read full article...

US Dollar Rally Signals a Severe Deflationary Depression / Economics / Economic Depression
By: Kurt_Kasun

Extraordinary Measures Today, a Financial Funeral Tomorrow - I wish I was referring to Fannie and Freddie in the title of this piece, but because those institutions are being resurrected, the funeral I am waiting for is the one for our entire fiat-based system. We are now on the brink of a collapse in confidence that brings the whole world financial system to its knees. Each market intervening action is becoming more extraordinary. The rallies which pull the suckers in following the intervening actions are becoming briefer and less powerful. I expect this one to be no different. This sequence has now become a broken record. Markets threaten to take out technical support levels and the government comes to the rescue. Armageddon is avoided until another day and a relief rally ensues on the belief that the government has fixed the problem a new bull market can begin. After all, this is how investors have been conditioned over the last three decades.

Read full article...

Perverse US Dollar Rally Prelude to Financial System Collapse - 11th Sept 08

US Dollar Rally Signals a Severe Deflationary Depression - 10th Sept 08

But It's not.

The system is OIL BASED.

And as long as the US Military is ready to kill anybody who prices oil in anything but US Dollars, and as long as the world needs oil, they will ALWAYS BE WORTH SOMETHING.

Right now, Wall $treet has laid another egg, but they have the means and will to fix the problem.

Not to worry.

Greenspan: This Is The Worst Economy I've Ever Seen
http://www.huffingtonpost.com/2008/09/14/g...r_n_126274.html

ECONOMY MELTDOWN
"Once In A Century Event"
<h4 class="subhead">Greenspan: America Can't Afford McCain's Tax Plan... "I'm Not In Favor Of Financing Tax Cuts With Borrowed Money" </h4> Quick Read

Chavez Threatens To Cut U.S. Off From Oil: "Go To Hell, S--- Yankees, We Are A Dignified Nation"
Quick Read

A Conversation with Larry Summers and Robert Rubin
Charlie Rose, 09.11.2008

I recently spoke to Summers and Rubin about today's economic crisis and what the next president's economic agenda should look like.

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How Much Can The Government Do In The Credit Crisis?
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Many CEOs See More Pink Slips Ahead
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Executive Pay and "The Market Economy"
Robert Weissman, 09.11.2008

It's pretty hard these days to justify astronomical executive pay. In 2007, the average CEO's pay of $10.5 million was 344 times higher on average than the average worker's wage.

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'Franron' bailout: Good plan, bad news
Did I say "Inflation", I meant "deflation".
Alt-A Mortgages Next Risk for Housing Market as Defaults Surge