"F. George McDuffee" wrote in message
...
On Sun, 7 Feb 2010 17:57:45 -0500, "Ed Huntress"
wrote:
snip a bunch of good stuff
What is becoming increasingly obvious at large, and what I've always
believed, is that nothing was actually "saved".
The collapse had occurred. What didn't happen, and what I'd expected,
was
a
reckoning with that reality.
I'd thought that the purpose of this delaying tactic was to allow a
restructuring of the mechanisms to deal with that collapse in an orderly
manner. Clearly, on the evidence, I was mistaken.

The tactical retreat made isn't being followed up with either a
regrouping
or counter attack.

Not yet. But I believe in the power of lobbies, so it's maybe never.
While lobbies/political influence are indeed powerful, they can
only function when the congress/legislature, administration or
regulators can effect the outcome. For example once Hurricane
Katrina hit, not matter how much political influence or suction
the people or corporations in New Orleans had, it made no
difference. We appear to be rapidly approaching this point.

They
seem to have frightened Congress into inaction. And they've worked the
anti-socialism angle exceedingly well. They've got the Tea Party coming
and
going: they want to put a lid on bank bailouts, but not if it means more
government involvement in business.
============
The only thing that the astronomical global governmental deficits
over the last few years appears to have accomplished is to buy
some very expensive time by postponing the crash.

It is well to remember that the individual tax payers in the
European countries and Japan are just as much "on the hook"
[possibly more] as the individual American taxpayers.

The available data clearly shows that the current explosion in
public debt did *NOT* start with the collapse of Lehman Brothers
on 15 September 2008, albeit it considerably accelerated from
that point [or was at least forced to the surface and onto the
books].

Clearly the current financial/fiscal/monotary [regulatory]
environment is not sustainable and is rapidly becoming
disfunctional/unstable.

It has been about 18 months since Lehman Brothers ate the bullet.

We still have not:
(1) Enacted a new Glass-Steagall-Volker act to prevent federally
insured banks from speculating with the deopsitors/taxpayers
money.
(2) Repealed the CFTC Modernization Act of 2000 to again allow
[require] regulation of derivatives and the regulation of
commodity trading, including energy. [Think Enron, Gray Davis and
the California electricity screw job.]
(3) Enacted "small enough to fail" capital and market share caps
for financial institutions including banks/quasi-banks and
insurance companies.

The only question is not *IF*, but rather the exact sequence and
timing of the defaults that will result in a global credit
collapse, as nothing has been done to prevent it and the
conditions remain exactly the same as when the last one occurred.

While the direct liability of the Euro zone PIIGS [Portugal,
Ireland, Iceland, Greece, Spain] sovereign debt is enormous,
unfortunately this liability has been significantly amplified
through investor/speculator "leverage" and most critically
through the creation and wide sale of unregulated, and indeed
uncontrolled/unregistered, derivatives such as credit default
swaps [CDS].

It now appears that a significant portion of the capital
[taxpayer liabilities] made available by the US Federal Reserve
and Treasury has been used to inflate the sovereign debt bubble
rather than investing in domestic [US] high value added
operations, as the paper rates of return were much
quicker/higher.

It should be noted that much of the exposure/liability of the
major US and other financial institutions to the sovereign debt
bubble has been masked, in that they did not directly
invest/speculate but instead loaned the funds at high interest to
the he/bond funds and other institutions that did. Another
source of liability is counterparty risk from the CDSs, ala AIG,
or the loss of the "insurance" when the counterparty cannot or
will not make good on the credit guarantee, driving the asset
value of the bonds/CDSs held or acquired to zero.


Unka George (George McDuffee)

Indeed the euro is in deep doodo this morning.

http://www.reuters.com/article/idUSTOE61704V20100208

The vortex is sucking in Japanese stocks.

http://www.businessweek.com/news/201...talks-end.html
http://www.reuters.com/article/idUSTKW00680220100208

Looks like we are stuck in a endless loop until congress steps in and hits
the reset button with some legistation. It will be to little to late as
usual.
Apparentley we have reached critical mass and are only waiting for the
trigger to start the chain reaction.

Best Regards
Tom.