One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT


JPMorgan to buy Bear for $2 a share By JOE BEL BRUNO and MADLEN READ,
AP Business Writers


Just four days after Bear Stearns Chief Executive Alan Schwartz
assured Wall Street that his company was not in trouble, he was forced
on Sunday to sell the investment bank to competitor JPMorgan Chase for
a bargain-basement price of $2 a share, or $236.2 million.

The stunning last-minute buyout was aimed at averting a Bear Stearns
bankruptcy and a spreading crisis of confidence in the global
financial system sparked by the collapse in the subprime mortgage
market. Bear Stearns was the most exposed to risky bets on the loans;
it is now the first major bank to be undone by that market's collapse.

The Federal Reserve and the U.S. government swiftly approved the all-
stock buyout, showing the urgency of completing the deal before world
markets opened. The Fed also essentially made the takeover risk-free
by saying it would guarantee up to $30 billion of the troubled
mortgage and other assets that got the nation's fifth-largest
investment bank into trouble.

"This is going to go down in very historic terms," said Peter Dunay,
chief investment strategist for New York-based Meridian Equity
Partners. "This is about credit being overextended, and how bad it is
for major financial institutions and for individuals. This is why
we're probably heading into a recession."

JPMorgan Chase & Co. said it will guarantee all business -- such as
trading and investment banking -- until Bear Stearns' shareholders
approve the deal, which is expected to be completed during the second
quarter. The acquisition includes Bear Stearns' midtown Manhattan
headquarters.

JPMorgan Chief Financial Officer Michael Cavanaugh did not say what
would happen to Bear Stearns' 14,000 employees worldwide or whether
the 85-year-old Bear Stearns name would live on after surviving the
Great Depression, two World Wars and a slew of recessions. He told
analysts and investors on a conference call that JPMorgan was most
interested in buying Bear Stearns' prime brokerage business, which
completes trades for big investors such as hedge funds.

At almost the same time as the deal for control of Bear Stearns was
announced, the Federal Reserve said it approved a cut in its lending
rate to banks to 3.25 percent from 3.50 percent and created another
lending facility for big investment banks. The central bank's official
meeting is on Tuesday. Before the emergency move to lower the discount
rate, which is the rate at which banks lend each other money, the Fed
was widely expected to again cut its headline rate by as much as a
full point to 2 percent.

"Having taking Bear Stearns out of the problem category, and the
strong action by the Federal Reserve, we would anticipate the market
will behave quite differently on Monday than it was Thursday or
Friday," Cavanaugh said.

Some analysts expected it to be a brutal day for global stocks,
nevertheless. Shortly after the news broke, Japan's benchmark Nikkei
stock index plunged more than 3 percent in morning trading.

A bankruptcy protection filing of Bear Stearns could have heightened
anxiety in world financial markets amid a deepening credit crunch. So
far, global banks have written down some $200 billion worth of
securities slammed amid the credit crisis -- more write-downs could
come. Last week, a bond fund controlled by private equity firm Carlyle
Group faltered near collapse because of investments linked to mortgage-
backed securities.

JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of
what the investment bank was worth just 16 days ago. It marked a 93.3
percent discount to Bear Stearns' market capitalization as of Friday,
and roughly a 98.8 percent discount to its book value as of Feb. 29.

"The past week has been an incredibly difficult time for Bear
Stearns," Schwartz said in a statement. "This represents the best
outcome for all of our constituencies based upon the current
circumstances."

Wall Street analysts say the bid to rescue Bear Stearns was more than
just saving one of the world's largest investments banks -- it was a
prop for the U.S. economy and the global financial system. An outright
failure would cause huge losses for banks, hedge funds and other
investors to which Bear Stearns is connected.

After days of denials that it had liquidity problems, Bear was forced
into a JPMorgan-led, government-backed bailout on Friday. The
arrangement, the first of its kind since the 1930s, resulted in Bear
getting a 28-day loan from JPMorgan with the government's guarantee
that JPMorgan would not suffer any losses on the deal.

This is not the first time Bear Stearns has earned a place in Wall
Street history. A decade ago, Bear Stearns refused to help bail out a
hedge fund that was deemed "too big to fail." On Friday, the tables
had turned, with the now-struggling investment bank in need of the
same kind of aid.

Bear Stearns was founded in 1923 and in recent years was best known
for its aggressive investing in mortgage-backed securities -- and what
was once a cash cow turned into the investment bank's undoing.

In June, two Bear-managed hedge funds worth billions of dollars
collapsed. The funds were heavily invested in securities backed by
subprime mortgages. Until that point, subprime mortgage-backed
securities were immensely popular with investors because of their
profitability.

The funds' demise and subsequent problems in the credit markets called
into question Bear Stearns' ability to manage its own risk and the
leadership ability of then-Chief Executive James Cayne. Critics of the
company said Cayne spent too much time away from the office last year
playing golf and bridge as the problems unfolded.

Cayne is the same executive who refused to let Bear Stearns provide
support as part of a Federal Reserve-led plan to rescue Long-Term
Capital Management in 1998. His reticence was said to deeply anger
some of his fellow Wall Street CEOs, and the episode came up every
time Bear was reported to be in trouble in recent months.

Cayne took over from the legendary Alan "Ace" Greenberg in 1993.
Greenberg joined Bear Stearns as a clerk, working his way up through
the ranks to eventually take over as CEO in 1978. Greenberg was known
for his irreverent style, and his regular memos to employees were
turned into a book called "Memos from the Chairman."

Before Greenberg's ascendancy to CEO, Bear Stearns began to expand
from its New York roots throughout the 1950s and 1960s, opening
international offices and expanding its U.S. operations.

____

AP Business Writers Jeannine Aversa in Washington and Stephen Bernard
contributed to this story.

On Mar 16, 8:39*pm, Too_Many_Tools wrote:
One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT

JPMorgan to buy Bear for $2 a share By JOE BEL BRUNO and MADLEN READ,
AP Business Writers

Just four days after Bear Stearns Chief Executive Alan Schwartz
assured Wall Street that his company was not in trouble, he was forced
on Sunday to sell the investment bank to competitor JPMorgan Chase for
a bargain-basement price of $2 a share, or $236.2 million.

The stunning last-minute buyout was aimed at averting a Bear Stearns
bankruptcy and a spreading crisis of confidence in the global
financial system sparked by the collapse in the subprime mortgage
market. Bear Stearns was the most exposed to risky bets on the loans;
it is now the first major bank to be undone by that market's collapse.

The Federal Reserve and the U.S. government swiftly approved the all-
stock buyout, showing the urgency of completing the deal before world
markets opened. The Fed also essentially made the takeover risk-free
by saying it would guarantee up to $30 billion of the troubled
mortgage and other assets that got the nation's fifth-largest
investment bank into trouble.

"This is going to go down in very historic terms," said Peter Dunay,
chief investment strategist for New York-based Meridian Equity
Partners. "This is about credit being overextended, and how bad it is
for major financial institutions and for individuals. This is why
we're probably heading into a recession."

JPMorgan Chase & Co. said it will guarantee all business -- such as
trading and investment banking -- until Bear Stearns' shareholders
approve the deal, which is expected to be completed during the second
quarter. The acquisition includes Bear Stearns' midtown Manhattan
headquarters.

JPMorgan Chief Financial Officer Michael Cavanaugh did not say what
would happen to Bear Stearns' 14,000 employees worldwide or whether
the 85-year-old Bear Stearns name would live on after surviving the
Great Depression, two World Wars and a slew of recessions. He told
analysts and investors on a conference call that JPMorgan was most
interested in buying Bear Stearns' prime brokerage business, which
completes trades for big investors such as hedge funds.

At almost the same time as the deal for control of Bear Stearns was
announced, the Federal Reserve said it approved a cut in its lending
rate to banks to 3.25 percent from 3.50 percent and created another
lending facility for big investment banks. The central bank's official
meeting is on Tuesday. Before the emergency move to lower the discount
rate, which is the rate at which banks lend each other money, the Fed
was widely expected to again cut its headline rate by as much as a
full point to 2 percent.

"Having taking Bear Stearns out of the problem category, and the
strong action by the Federal Reserve, we would anticipate the market
will behave quite differently on Monday than it was Thursday or
Friday," Cavanaugh said.

Some analysts expected it to be a brutal day for global stocks,
nevertheless. Shortly after the news broke, Japan's benchmark Nikkei
stock index plunged more than 3 percent in morning trading.

A bankruptcy protection filing of Bear Stearns could have heightened
anxiety in world financial markets amid a deepening credit crunch. So
far, global banks have written down some $200 billion worth of
securities slammed amid the credit crisis -- more write-downs could
come. Last week, a bond fund controlled by private equity firm Carlyle
Group faltered near collapse because of investments linked to mortgage-
backed securities.

JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of
what the investment bank was worth just 16 days ago. It marked a 93.3
percent discount to Bear Stearns' market capitalization as of Friday,
and roughly a 98.8 percent discount to its book value as of Feb. 29.

"The past week has been an incredibly difficult time for Bear
Stearns," Schwartz said in a statement. "This represents the best
outcome for all of our constituencies based upon the current
circumstances."

Wall Street analysts say the bid to rescue Bear Stearns was more than
just saving one of the world's largest investments banks -- it was a
prop for the U.S. economy and the global financial system. An outright
failure would cause huge losses for banks, hedge funds and other
investors to which Bear Stearns is connected.

After days of denials that it had liquidity problems, Bear was forced
into a JPMorgan-led, government-backed bailout on Friday. The
arrangement, the first of its kind since the 1930s, resulted in Bear
getting a 28-day loan from JPMorgan with the government's guarantee
that JPMorgan would not suffer any losses on the deal.

This is not the first time Bear Stearns has earned a place in Wall
Street history. A decade ago, Bear Stearns refused to help bail out a
hedge fund that was deemed "too big to fail." On Friday, the tables
had turned, with the now-struggling investment bank in need of the
same kind of aid.

Bear Stearns was founded in 1923 and in recent years was best known
for its aggressive investing in mortgage-backed securities -- and what
was once a cash cow turned into the investment bank's undoing.

In June, two Bear-managed hedge funds worth billions of dollars
collapsed. The funds were heavily invested in securities backed by
subprime mortgages. Until that point, subprime mortgage-backed
securities were immensely popular with investors because of their
profitability.

The funds' demise and subsequent problems in the credit markets called
into question Bear Stearns' ability to manage its own risk and the
leadership ability of then-Chief Executive James Cayne. Critics of the
company said Cayne spent too much time away from the office last year
playing golf and bridge as the problems unfolded.

Cayne is the same executive who refused to let Bear Stearns provide
support as part of a Federal Reserve-led plan to rescue Long-Term
Capital Management in 1998. His reticence was said to deeply anger
some of his fellow Wall Street CEOs, and the episode came up every
time Bear was reported to be in trouble in recent months.

Cayne took over from the legendary Alan "Ace" Greenberg in 1993.
Greenberg joined Bear Stearns as a clerk, working his way up through
the ranks to eventually take over as CEO in 1978. Greenberg was known
for his irreverent style, and his regular memos to employees were
turned into a book called "Memos from the Chairman."

Before Greenberg's ascendancy to CEO, Bear Stearns began to expand
from its New York roots throughout the 1950s and 1960s, opening
international offices and expanding its U.S. operations.

____

AP Business Writers Jeannine Aversa in Washington and Stephen Bernard
contributed to this story.

Another view of this rape of the American taxpayer....

yes folks...that's from $170 to $2 a share.

And it is happening under George Bush...the fool who says all is well
with the American financial markets.

Like his advice with Katrina....at least stupid is as stupid does.

Anyone want to guess how long it will take some idiot conservative to
blame Bill Clinton for this one?

TMT

JPMorgan Buys Bear on the Cheap
With bankruptcy looming, the banks reach a deal: JPMorgan will acquire
the troubled investment house for only $2 a share
by Matthew Goldstein

In the end, Bear Stearns (BSC), the once-storied New York investment
firm that became the victim of an old-fashioned run on the bank,
wasn't worth much more than a subway ride.

JPMorgan Chase (JPM), the big bank that helped bail out Bear last
Friday, is paying just $2 a share to take over the investment firm,
which a little over a year ago was trading for as high as $170 a
share. The deal to buy Bear will avert a looming bankruptcy filing by
the investment firm and potentially stave off a new crisis in the
financial markets.

The purchase price is an indication of just how far things have fallen
at Bear, which a year ago helped spark the subprime meltdown with the
collapse of its two big hedge funds. The deal values Bear at $236
million.

The Buck Stops at JPMorgan
In the end, Bear's most valuable assets weren't its legendary prime
brokerage and back-office clearing operation. Rather, it was Bear's
new gleaming office tower in Madison Avenue, that some value a little
short of $1 billion.

As part of the transaction, the Federal Reserve, which engineered last
week's emergency bailout of Bear, will provide up to $30 billion of
Bear Stearns' less liquid assets. "JPMorgan Chase stands behind Bear
Stearns," said Jamie Dimon, chairman and chief executive of JPMorgan.
"Bear Stearns' clients and counterparties should feel secure that
JPMorgan is guaranteeing Bear Stearns' counterparty risk. We welcome
their clients, counterparties, and employees to our firm, and we are
glad to be their partner."

Bear Stearns CEO Alan Schwartz said in a Friday conference call that
"nervousness in the market" prompted clients and lenders to "get cash
out" of the firm. Schwartz says, "A lot of people wanted to act from
the possibility of the rumors being true." He says before the turmoil,
Bear had been working with investment firm Lazard (LAZ) to explore
"alternatives" and those discussions will continue. Bear officials
also said the decision to seek aid from JPMorgan was their decision.

The quick collapse of Bear is a sober reminder of just how quickly a
Wall Street firm can lose the confidence of investors, traders, and
other institutions. A week ago, Bear executives were talking about how
the firm was poised to report a profitable first quarter, after the
firm posted its first quarterly loss in its history in the fourth
quarter. But in the span of seven days, Bear went from being Wall
Street's fifth largest firm to another in a long line of investment
firms to bite the dust.

In a conference call with analysts after the deal was announced,
JPMorgan executives said the big bank will stand behind all of Bear's
trades and pending deals until Bear shareholders vote on the merger.
JPMorgan officials said Bear will be "open for business" Monday
morning. The bank officials say they fully expect Bear shareholders to
approve the deal because there is no better option.

Quick Work to Contain the Risk
It's not clear what had changed so dramatically at Bear to necessitate
the emergency bailout. But events appear to have moved quickly on Mar.
13. People familiar with the situation say Bear officials called the
Fed late in the day, saying the firm had a funding problem.

Officials from the Fed were at Bear's spacious offices on Madison
Avenue all night, scouring its books and trying to devise a rescue
plan. The Fed and Bear then reached out to JPMorgan, to find out
whether the big bank could help out. JPMorgan, which has multiple
business relationships with Bear, was inclined to do so. But only with
some guarantee from the Fed that it would make JPMorgan whole if Bear
were to fail and become unable to make good on its obligations.

It would have been highly risky for other Wall Street firms if Bear
Stearns had been allowed to go under because they are tightly
interconnected with Bear as both borrowers and lenders. Any firms that
are owed a lot of money by Bear would have fallen under suspicion, on
grounds that they might not be able to pay their own debts if Bear
failed to pay them. That could have triggered a dangerous wave of
defaults. The rescue by JPMorgan Chase gives the financial system
breathing room to pay off Bear's debts gradually.

On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT


JPMorgan to buy Bear for $2 a share By JOE BEL BRUNO and MADLEN READ,
AP Business Writers
===========
You ain't seen nothin' yet....

Bear Stearns was a major player in the CDS [credit default swap]
grift, and as such is the guaranteor of huge amounts of
"securities." If their CDS backing disappears (i.e. if they go
bankrupt), the value of the "securities" they guaranteed is
approximently zero.

JP Mrgan - Chase have huge amounts of "securities" hedged with
Bear Stearn CDSs, and apparently through some sort of cross
agreement have guaranteed many of Bear Stears "securities."

For some insight into this basket of snakes click on
http://www.virginiaabernethy.com/det...php?newsid=297
"As Greenspan made certain, the CDS market remained unregulated
and opaque, so that no one knew what the scale of the risks in a
falling economy were. Because it is unregulated it often was the
case that one party to a CDS resold to another financial
institution without informing the original counterparty. That
means it is not obvious that were an investor to try to cash in
his CDS he could track down its payer of the claim. The CDS
market was overwhelmingly concentrated in New York banks who held
swaps at the end of 2007 worth nominally $14 trillion. ==The
most exposed were J.P. Morgan Chase with $7.8 trillion and
Citigroup and Bank of America with $3 trillion each." ==
snip
The FBI said it was looking into the practices of sub-prime
lenders, as well as potential accounting fraud committed by
financial firms that hold these loans on their books or
securitize them and sell them to other investors. Morgan Stanley,
Goldman Sachs Group Inc. and Bear Stearns Cos. all disclosed in
regulatory filings that they were cooperating with requests for
information from various unspecified, regulatory and government
agencies.
snip
============
To provide perspective, the annual GDP of the United States si
slightly more than 13 trillion $.

Also see
http://www.virginiaabernethy.com/new...php?newsid=297
"The multi-trillion dollar US-centered securitization debacle
began to unravel in June 2007 with the liquidity crisis in two
hedge funds owned by Bear Stearns, one of the world’s largest and
most successful investment banks."
snip

http://biz.yahoo.com/nytimes/080218/...663.html?.v=19

http://lansner.freedomblogging.com/2...ix-nasty-mess/


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

F. George McDuffee wrote:

===========
You ain't seen nothin' yet....



http://kitco.com/images/live/gold.gif

On Mar 17, 10:46*am, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:
On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools

wrote:
One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT

==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?
==============

Is Lehman Bros next on the hit list?
"The swap spreads on Lehman Brothers rocketed to 465 yesterday,
mirroring the moves in Bear Stearns debt days before."

--------------
The foreign financial markets just voted --- The consensus of
opinion on the Bear Stearns "Rescue?" *--- NO SALE!
----------
Foreign investors veto Fed rescue

By Ambrose Evans-Pritchard, International Business Editor {UK
Telegraph}
Last Updated: 1:13pm GMT 17/03/2008

As feared, foreign bond holders have begun to exercise a
collective vote of no confidence in the devaluation policies of
the US government. The Federal Reserve faces a potential veto of
its rescue measures.
snip
Asian, Mid East and European investors stood aside at last week's
auction of 10-year US Treasury notes.
snip
The share of foreign buyers ("indirect bidders") plummeted to
5.8pc, from an average 25pc over the last eight weeks. On the
Richter Scale of unfolding dramas, this matches the death of Bear
Stearns.

Rightly or wrongly, a view has taken hold that Washington is
cynically debasing the coinage, hoping to export its day of
reckoning through beggar-thy-neighbour policies.
snip
The Fed's emergency actions are imperative. Last week's collapse
of confidence in the creditworthiness of Fannie Mae and Freddie
Mac was life-threatening. These agencies underpin 60pc of the
$11,000bn market for US home loans.
snip
As of June 2007, foreigners owned $6,007bn of long-term US debt.
(Equal to 66pc of the entire US federal debt). The biggest
holdings by country are, in billions: Japan (901), China (870),
UK (475), Luxembourg (424), Cayman Islands (422), Belgium (369),
Ireland (176), Germany (155), Switzerland (140), Bermuda (133),
Netherlands (123), Korea (118), Russia (109), Taiwan (107),
Canada (106), Brazil (103). Who is jumping ship?

The Chinese have quickened the pace of yuan appreciation to choke
off 8.7pc inflation, slowing US bond purchases. Petrodollar
funds, working through UK off-shore accounts, are clearly dumping
dollars amid rumours that Gulf states - overheating wildly - are
about to break their dollar pegs. But mostly likely, the twin
crash in the dollar and US agency debt reflects a broad exodus by
global wealth managers, afraid that America is spinning out of
control. Sauve qui peut.
snip
Japanese investors and foreign funds are having to close their
yen "carry trade" positions. A chunk of the $1,400bn trade built
up over six years has been viciously unwound in weeks. The harder
the dollar falls, the further this must go.
snip
==========
for complete article click onhttp://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/17/ccv...

also see
===========
*Bear Stearns exposed as a bank saddled with toxic sub-prime debt

By Ambrose Evans-Pritchard {UK Telegraph}
Last Updated: 12:07am GMT 16/03/2008

Big American finance houses have collapsed before. Continental
Illinois required a $4.5bn (£2.25bn) bail-out in 1984 after
coming to grief in Texas as the oil boom deflated.
snip
The giant hedge fund Long Term Capital Management was saved by a
club of banks in 1998 under the guidance New York Federal
Reserve. The fund blew up after Russia's default, which ravaged
its portfolio of Danish, Italian and Spanish bonds.

snip

On both occasions the US economy was in rude good health. The
damage was quickly contained.

The implosion of Bear Stearns is more dangerous.

A host of other banks, broker dealers, and hedge funds have
played the same game, deploying massive leverage at the top of
the credit bubble to eke out extra yield. Dozens of them are
saddled with the same toxic debt - sub-prime property, credit
cards, auto loans, and mountains of unsold paper from the merger
boom.

This time the market for default insurance is flashing bright red
warning signals across the entire spectrum of US finance.

The swap spreads on Lehman Brothers rocketed to 465 yesterday,
mirroring the moves in Bear Stearns debt days before. Fannie Mae
and Freddie Mac - the venerable agencies created by Roosevelt
that underpin 60pc of the $11 trillion mortgage market - had a
heart attack on Monday. Their bonds were in free-fall,
threatening to set off another cascade of bank writedowns.

These are not sub-prime outfits. They sit at the apex of the US
mortgage credit industry. Hence the dramatic move by the Fed this
week to offer a $200bn lifeline, agreeing to accept Fannie Mae
and Freddie Mac issues as collateral.

Had the Fed delayed, many traders believe Wall Street would have
plunged through resistance levels risking a full-fledged crash.
==========
for complete article click onhttp://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourV...

Hear come the CDS "bombs"

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

Yes Lehman is on the list.

As are others.

Note that the Feds set up a new lending window for banks...the old one
wasn't fast or secret enough.

==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?
==============

VERY GOOD QUESTION.

My guess..like in the Iraq war our news is being censored. To get the
real scoop one needs to go outside those who screen our news.

TMT

"F. George McDuffee" wrote in message
...
On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress

On Mar 17, 10:03*am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...





On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good point about the different viewpoint.

But then there is that nagging issue of why this was a weekend
deal...with no one admiting problems until the default happened.

This has not been lost upon the international investment
community...who holds our IOUs.

What they think DOES matter.

Get ready for a hell of a recession.

I have also wondered what it would be like to live through a
depression...maybe we will get a chance to see?

TMT

On Mar 17, 10:03*am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...





On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good article.

I agree.

I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.

People who lose their assets and their homes remember who is
responsible when at the voting booth.

TMT

"Too_Many_Tools" wrote in message
...
On Mar 17, 10:03 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in
messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...





On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good point about the different viewpoint.

But then there is that nagging issue of why this was a weekend
deal...with no one admiting problems until the default happened.

This has not been lost upon the international investment
community...who holds our IOUs.

What they think DOES matter.

What they think is that we should operate our economy in a way that benefits
them, and to hell with us. Those IOUs are a serious matter but nowhere near
as serious as the prospect of a depression or a collapse of the US economy.
That's why, as Krugman says, Bernanke *had* to act to stop the dominoes. Or
at least to get started at it.

Get ready for a hell of a recession.

Very likely a sharp one, but I'm skeptical about how broad or long it will
be.

Nobody knew how extensive the house of cards really was, because there was
no way to sort out the ad hoc network of relationships among all of those
derivitaves and bogus/inflated securities. Likewise, nobody knows who will
be left holding the bag when it all collapses. The biggest problem for
consumers who didn't hold that debt, right now, is the credit crunch and,
potentially, an economy that has a lot less liquidity. We may *not* be
holding the bag for the big numbers. Again, nobody really knows.

I have also wondered what it would be like to live through a
depression...maybe we will get a chance to see?

That's a chance I'd gladly forgo, thanks. d8-)

--
Ed Huntress

On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?
==============

Is Lehman Bros next on the hit list?
"The swap spreads on Lehman Brothers rocketed to 465 yesterday,
mirroring the moves in Bear Stearns debt days before."

--------------
The foreign financial markets just voted --- The consensus of
opinion on the Bear Stearns "Rescue?" --- NO SALE!
----------
Foreign investors veto Fed rescue

By Ambrose Evans-Pritchard, International Business Editor {UK
Telegraph}
Last Updated: 1:13pm GMT 17/03/2008

As feared, foreign bond holders have begun to exercise a
collective vote of no confidence in the devaluation policies of
the US government. The Federal Reserve faces a potential veto of
its rescue measures.
snip
Asian, Mid East and European investors stood aside at last week's
auction of 10-year US Treasury notes.
snip
The share of foreign buyers ("indirect bidders") plummeted to
5.8pc, from an average 25pc over the last eight weeks. On the
Richter Scale of unfolding dramas, this matches the death of Bear
Stearns.

Rightly or wrongly, a view has taken hold that Washington is
cynically debasing the coinage, hoping to export its day of
reckoning through beggar-thy-neighbour policies.
snip
The Fed's emergency actions are imperative. Last week's collapse
of confidence in the creditworthiness of Fannie Mae and Freddie
Mac was life-threatening. These agencies underpin 60pc of the
$11,000bn market for US home loans.
snip
As of June 2007, foreigners owned $6,007bn of long-term US debt.
(Equal to 66pc of the entire US federal debt). The biggest
holdings by country are, in billions: Japan (901), China (870),
UK (475), Luxembourg (424), Cayman Islands (422), Belgium (369),
Ireland (176), Germany (155), Switzerland (140), Bermuda (133),
Netherlands (123), Korea (118), Russia (109), Taiwan (107),
Canada (106), Brazil (103). Who is jumping ship?

The Chinese have quickened the pace of yuan appreciation to choke
off 8.7pc inflation, slowing US bond purchases. Petrodollar
funds, working through UK off-shore accounts, are clearly dumping
dollars amid rumours that Gulf states - overheating wildly - are
about to break their dollar pegs. But mostly likely, the twin
crash in the dollar and US agency debt reflects a broad exodus by
global wealth managers, afraid that America is spinning out of
control. Sauve qui peut.
snip
Japanese investors and foreign funds are having to close their
yen "carry trade" positions. A chunk of the $1,400bn trade built
up over six years has been viciously unwound in weeks. The harder
the dollar falls, the further this must go.
snip
==========
for complete article click on
http://www.telegraph.co.uk/money/mai.../ccview117.xml

also see
===========
Bear Stearns exposed as a bank saddled with toxic sub-prime debt

By Ambrose Evans-Pritchard {UK Telegraph}
Last Updated: 12:07am GMT 16/03/2008

Big American finance houses have collapsed before. Continental
Illinois required a $4.5bn (£2.25bn) bail-out in 1984 after
coming to grief in Texas as the oil boom deflated.
snip
The giant hedge fund Long Term Capital Management was saved by a
club of banks in 1998 under the guidance New York Federal
Reserve. The fund blew up after Russia's default, which ravaged
its portfolio of Danish, Italian and Spanish bonds.

snip

On both occasions the US economy was in rude good health. The
damage was quickly contained.

The implosion of Bear Stearns is more dangerous.

A host of other banks, broker dealers, and hedge funds have
played the same game, deploying massive leverage at the top of
the credit bubble to eke out extra yield. Dozens of them are
saddled with the same toxic debt - sub-prime property, credit
cards, auto loans, and mountains of unsold paper from the merger
boom.

This time the market for default insurance is flashing bright red
warning signals across the entire spectrum of US finance.

The swap spreads on Lehman Brothers rocketed to 465 yesterday,
mirroring the moves in Bear Stearns debt days before. Fannie Mae
and Freddie Mac - the venerable agencies created by Roosevelt
that underpin 60pc of the $11 trillion mortgage market - had a
heart attack on Monday. Their bonds were in free-fall,
threatening to set off another cascade of bank writedowns.

These are not sub-prime outfits. They sit at the apex of the US
mortgage credit industry. Hence the dramatic move by the Fed this
week to offer a $200bn lifeline, agreeing to accept Fannie Mae
and Freddie Mac issues as collateral.

Had the Fed delayed, many traders believe Wall Street would have
plunged through resistance levels risking a full-fledged crash.
==========
for complete article click on
http://www.telegraph.co.uk/money/mai...15/ccom115.xml

Hear come the CDS "bombs"


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Mar 16, 8:39 pm, Too_Many_Tools wrote:
One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT

JPMorgan to buy Bear for $2 a share By JOE BEL BRUNO and MADLEN READ,
AP Business Writers

Just four days after Bear Stearns Chief Executive Alan Schwartz
assured Wall Street that his company was not in trouble, he was forced
on Sunday to sell the investment bank to competitor JPMorgan Chase for
a bargain-basement price of $2 a share, or $236.2 million.

The stunning last-minute buyout was aimed at averting a Bear Stearns
bankruptcy and a spreading crisis of confidence in the global
financial system sparked by the collapse in the subprime mortgage
market. Bear Stearns was the most exposed to risky bets on the loans;
it is now the first major bank to be undone by that market's collapse.

The Federal Reserve and the U.S. government swiftly approved the all-
stock buyout, showing the urgency of completing the deal before world
markets opened. The Fed also essentially made the takeover risk-free
by saying it would guarantee up to $30 billion of the troubled
mortgage and other assets that got the nation's fifth-largest
investment bank into trouble.

"This is going to go down in very historic terms," said Peter Dunay,
chief investment strategist for New York-based Meridian Equity
Partners. "This is about credit being overextended, and how bad it is
for major financial institutions and for individuals. This is why
we're probably heading into a recession."

JPMorgan Chase & Co. said it will guarantee all business -- such as
trading and investment banking -- until Bear Stearns' shareholders
approve the deal, which is expected to be completed during the second
quarter. The acquisition includes Bear Stearns' midtown Manhattan
headquarters.

JPMorgan Chief Financial Officer Michael Cavanaugh did not say what
would happen to Bear Stearns' 14,000 employees worldwide or whether
the 85-year-old Bear Stearns name would live on after surviving the
Great Depression, two World Wars and a slew of recessions. He told
analysts and investors on a conference call that JPMorgan was most
interested in buying Bear Stearns' prime brokerage business, which
completes trades for big investors such as hedge funds.

At almost the same time as the deal for control of Bear Stearns was
announced, the Federal Reserve said it approved a cut in its lending
rate to banks to 3.25 percent from 3.50 percent and created another
lending facility for big investment banks. The central bank's official
meeting is on Tuesday. Before the emergency move to lower the discount
rate, which is the rate at which banks lend each other money, the Fed
was widely expected to again cut its headline rate by as much as a
full point to 2 percent.

"Having taking Bear Stearns out of the problem category, and the
strong action by the Federal Reserve, we would anticipate the market
will behave quite differently on Monday than it was Thursday or
Friday," Cavanaugh said.

Some analysts expected it to be a brutal day for global stocks,
nevertheless. Shortly after the news broke, Japan's benchmark Nikkei
stock index plunged more than 3 percent in morning trading.

A bankruptcy protection filing of Bear Stearns could have heightened
anxiety in world financial markets amid a deepening credit crunch. So
far, global banks have written down some $200 billion worth of
securities slammed amid the credit crisis -- more write-downs could
come. Last week, a bond fund controlled by private equity firm Carlyle
Group faltered near collapse because of investments linked to mortgage-
backed securities.

JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of
what the investment bank was worth just 16 days ago. It marked a 93.3
percent discount to Bear Stearns' market capitalization as of Friday,
and roughly a 98.8 percent discount to its book value as of Feb. 29.

"The past week has been an incredibly difficult time for Bear
Stearns," Schwartz said in a statement. "This represents the best
outcome for all of our constituencies based upon the current
circumstances."

Wall Street analysts say the bid to rescue Bear Stearns was more than
just saving one of the world's largest investments banks -- it was a
prop for the U.S. economy and the global financial system. An outright
failure would cause huge losses for banks, hedge funds and other
investors to which Bear Stearns is connected.

After days of denials that it had liquidity problems, Bear was forced
into a JPMorgan-led, government-backed bailout on Friday. The
arrangement, the first of its kind since the 1930s, resulted in Bear
getting a 28-day loan from JPMorgan with the government's guarantee
that JPMorgan would not suffer any losses on the deal.

This is not the first time Bear Stearns has earned a place in Wall
Street history. A decade ago, Bear Stearns refused to help bail out a
hedge fund that was deemed "too big to fail." On Friday, the tables
had turned, with the now-struggling investment bank in need of the
same kind of aid.

Bear Stearns was founded in 1923 and in recent years was best known
for its aggressive investing in mortgage-backed securities -- and what
was once a cash cow turned into the investment bank's undoing.

In June, two Bear-managed hedge funds worth billions of dollars
collapsed. The funds were heavily invested in securities backed by
subprime mortgages. Until that point, subprime mortgage-backed
securities were immensely popular with investors because of their
profitability.

The funds' demise and subsequent problems in the credit markets called
into question Bear Stearns' ability to manage its own risk and the
leadership ability of then-Chief Executive James Cayne. Critics of the
company said Cayne spent too much time away from the office last year
playing golf and bridge as the problems unfolded.

Cayne is the same executive who refused to let Bear Stearns provide
support as part of a Federal Reserve-led plan to rescue Long-Term
Capital Management in 1998. His reticence was said to deeply anger
some of his fellow Wall Street CEOs, and the episode came up every
time Bear was reported to be in trouble in recent months.

Cayne took over from the legendary Alan "Ace" Greenberg in 1993.
Greenberg joined Bear Stearns as a clerk, working his way up through
the ranks to eventually take over as CEO in 1978. Greenberg was known
for his irreverent style, and his regular memos to employees were
turned into a book called "Memos from the Chairman."

Before Greenberg's ascendancy to CEO, Bear Stearns began to expand
from its New York roots throughout the 1950s and 1960s, opening
international offices and expanding its U.S. operations.

____

AP Business Writers Jeannine Aversa in Washington and Stephen Bernard
contributed to this story.

FYI...

March 16, 2008
Fair Game
Rescue Me: A Fed Bailout Crosses a Line
By GRETCHEN MORGENSON
WHAT are the consequences of a world in which regulators rescue even
the financial institutions whose recklessness and greed helped create
the titanic credit mess we are in? Will the consequences be an even
weaker currency, rampant inflation, a continuation of the slow bleed
that we have witnessed at banks and brokerage firms for the past
year?

Or all of the above?

Stick around, because we'll soon find out. And it's not going to be
pretty.

Agreeing to guarantee a 28-day credit line to Bear Stearns, by way of
JPMorgan Chase, the Federal Reserve Bank of New York conceded last
Friday that no sizable firm with a book of mortgage securities or
loans out to mortgage issuers could be allowed to fail right now. It
was the most explicit sign yet of the Fed's "Rescues 'R' Us" doctrine
that already helped to force the marriage of Bank of America and
Countrywide.

But why save Bear Stearns? The beneficiary of this bailout, remember,
has often operated in the gray areas of Wall Street and with an
aggressive, brass-knuckles approach. Until regulators came along in
1996, Bear Stearns was happy to provide its balance sheet and
imprimatur to bucket-shop brokerages like Stratton Oakmont and A. R.
Baron, clearing dubious stock trades.

And as one of the biggest players in the mortgage securities business
on Wall Street, Bear provided munificent lines of credit to public-
spirited subprime lenders like New Century (now bankrupt). It is also
the owner of EMC Mortgage Servicing, one of the most aggressive
subprime mortgage servicers out there.

Bear's default rates on so-called Alt-A mortgages that it underwrote
also indicates that its lending practices were especially lax during
the real estate boom. As of February, according to Bloomberg data, 15
percent of these loans in its underwritten securities were delinquent
by more than 60 days or in foreclosure. That compares with an industry
average of 8.4 percent.

Let's not forget that Bear Stearns lost billions for its clients last
summer, when two hedge funds investing heavily in mortgage securities
collapsed. And the firm tried to dump toxic mortgage securities it
held in its own vaults onto the public last summer in an initial
public offering of a financial company called Everquest Financial.
Thankfully, that deal never got done.

Recall, too, that back in 1998, when the Long Term Capital Management
hedge fund required a Fed-arranged bailout, Bear Stearns refused to
join the rescue effort. Jimmy Cayne, then chief executive at the firm,
told the Fed to take a hike.

And so, Bear Stearns, a firm that some say is this decade's version of
Drexel Burnham Lambert, the anything-goes, 1980s junk-bond shop
dominated by Michael Milken, is rescued. Almost two decades ago,
Drexel was left to die.

Bear Stearns and Drexel have a lot in common. And yet their differing
outcomes offer proof that we are in a very different and scarier place
than in the late 1980s.

"Why not set an example of Bear Stearns, the guys who have this record
of dog-eat-dog, we're brass knuckles, we're tough?" asked William A.
Fleckenstein, president of Fleckenstein Capital in Issaquah, Wash.,
and co-author with Fred Sheehan of "Greenspan's Bubbles: The Age of
Ignorance at the Federal Reserve." "This is the perfect time to set an
example, but they are not interested in setting an example. We are
Bailout Nation."

And so we are. After years of never allowing any of our financial
institutions to fail, they have become so enormous that nobody will be
allowed to sink beneath the waves. Otherwise, a tsunami would swamp
the hedge funds, banks and other brokerage firms that remain afloat.

If Bear Stearns failed, for example, it would result in a wholesale
dumping of mortgage securities and other assets onto a market that is
frozen and where buyers are in hiding. This fire sale would force
surviving institutions carrying the same types of securities on their
books to mark down their positions, generating more margin calls and
creating more failures.

As of last Nov. 30, Bear Stearns had on its books approximately $46
billion of mortgages, mortgage-backed and asset-backed securities.
Jettisoning such a portfolio onto a mortgage market that is not
operative would, it is plain to see, be a disaster.

But, who knows what those mortgages are really worth? According to
Bear Stearns's annual report, $29 billion of them were valued using
computer models "derived from" or "supported by" some kind of
observable market data. The value of the remaining $17 billion is an
estimate based on "internally developed models or methodologies
utilizing significant inputs that are generally less readily
observable."

In other words, your guess is as good as mine.

To some degree, what happened at Bear, of course, was a classic run on
the bank -- the kind immortalized in Frank Capra's homage to financial
responsibility, "It's a Wonderful Life." As fears about Bear's
financial position heightened, its customers began demanding their
cash and big hedge funds that were using the firm as an administrative
back office or lender moved their accounts elsewhere.

In addition, institutions that had bought credit default swaps from
Bear Stearns, insurance policies that protect against corporate bond
defaults, were scrambling to undo those trades as the firm's ability
to pay the claims looked dicier.

"For the government to print money at the expense of taxpayers as
opposed to requiring or going about a receivership and wind-down of
any insolvent institutions should be troubling to taxpayers and
regulators alike," said Josh Rosner, an analyst at Graham Fisher &
Company and an expert on mortgage securities. "The Fed has now crossed
the line in a very clear way on 'moral hazard,' because they have
opened the door to the view that they are required to save almost any
institution through non-recourse loans -- except the government doesn't
have the money and it destroys the U.S.'s reputation as the broadest,
deepest, most transparent and properly regulated capital market in the
world."

And here is the unfortunate refrain. Investors, already mistrusting
many corporate and government leaders, were once again assured that
nothing was wrong -- right up until the very end. So is it any wonder
investors react to every market rumor of an impending failure with the
certainty that it's true? In too many cases, the rumors turned out to
be true, notwithstanding the attempts at reassurance by executives and
policy makers.

Only last Monday, for example, Bear put out a press release saying,
"there is absolutely no truth to the rumors of liquidity problems that
circulated today in the market." The next day, Christopher Cox, the
chairman of the Securities and Exchange Commission, said he was
comfortable that the major Wall Street firms were resting on
satisfactory "capital cushions."

Three days later, it was bailout time for Bear.

HERE is the bind the Fed is in: Like the boy who puts his finger in
the dike to keep sea water from pouring in, the Fed finds that new
leaks keep emerging.

Regulators must do whatever they can to keep the markets open and
operating, and much of that relies upon the confidence of investors.
But by offering to backstop firms like Bear, who were the very
architects of their own -- and the market's -- current problems,
overseers like the Fed undermine a little bit more of that confidence.

Another worry? How many well-capitalized institutions remain at the
ready to take over those firms that may encounter turbulence in the
future? Banks just do not have the capital that is needed to rescue
troubled firms.

That will leave the taxpayer, alas. As usual.

"Too_Many_Tools" wrote in message
...
On Mar 17, 10:03 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in
messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...





On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good article.

I agree.

I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.

They'll probably take the heat but Clinton was just as big a proponent of
deregulation of the finance markets. I've been yelling about this for 15
years now. I know some of those guys; a few are my neighbors; they're bigger
pirates that Bluebeard. When the markets were deregulated it was like
somebody gave them a new set of pistols and sabers.

People who lose their assets and their homes remember who is
responsible when at the voting booth.

I was thinking about going up to Wall Street for lunch today, to see if the
Lower Manhatten Swan-Diving Championships had started, but then I realized
that you can jump anymore; the windows are bolted shut. d8-)

--
Ed Huntress

On Mar 17, 10:46*am, "Ed Huntress" wrote:
"Too_Many_Tools" wrote in message

...
On Mar 17, 10:03 am, "Ed Huntress" wrote:





"F. George McDuffee" wrote in
messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...

On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -
Good point about the different viewpoint.
But then there is that nagging issue of why this was a weekend
deal...with no one admiting problems until the default happened.
This has not been lost upon the international investment
community...who holds our IOUs.
What they think DOES matter.

What they think is that we should operate our economy in a way that benefits
them, and to hell with us. Those IOUs are a serious matter but nowhere near
as serious as the prospect of a depression or a collapse of the US economy..
That's why, as Krugman says, Bernanke *had* to act to stop the dominoes. Or
at least to get started at it.

Get ready for a hell of a recession.

Very likely a sharp one, but I'm skeptical about how broad or long it will
be.

Nobody knew how extensive the house of cards really was, because there was
no way to sort out the ad hoc network of relationships among all of those
derivitaves and bogus/inflated securities. Likewise, nobody knows who will
be left holding the bag when it all collapses. The biggest problem for
consumers who didn't hold that debt, right now, is the credit crunch and,
potentially, an economy that has a lot less liquidity. We may *not* be
holding the bag for the big numbers. Again, nobody really knows.

I have also wondered what it would be like to live through a
depression...maybe we will get a chance to see?

That's a chance I'd gladly forgo, thanks. d8-)

--
Ed Huntress- Hide quoted text -

- Show quoted text -

The ones holding the bag will be the American taxpayer...there is
absolutely no doubt about that.

The American taxpayer is struck for the Bear Stearns mess.

And those IOUs do matter....note that they are being called in.

The value of the dollar...the price of gold...all signs that the US is
in big trouble.

TMT

"F. George McDuffee" wrote in message
...
On Mon, 17 Mar 2008 12:03:29 -0400, "Ed Huntress"
wrote:
snip
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp
==============
As usual Krugman asks the right question and then quits.

"So here's the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren't also bailing out the people who got us into this
mess?"

I don't think he knows the answer to that.


At some point the standard excuses of ignorance, incompetence and
mischance are no longer adequate. Where are the special
prosecutors? Where are the grand juries? Where are the writs of
attachment on the proceeds of criminal activities? As dangerous
as the military-industrial complex is, it is a piker compared to
the peril of the political-financial complex.

Most of it isn't criminal. It's just free-market ideology. All kinds of
interesting financial behavior is now perfectly legal.


If we several jumbo jets a day were crashing, the NTSB would act.
It a refinery or two a day was exploding and burning, OSHA would
act. If they did not the courts [or the people] would have the
administrators' "head on a pike," along side the responsible
elected officials. The FDA had no problem forcing a packing
company to recall beef produced from "downer" cows, even though
this bankrupted the business, because of the danger of the
transmission of "mad cow" and other pathologies.

Why then are the SEC, IRS, CFTC, etc. allowed to do nothing,
although the daily loss of capital is similar (but several times
larger)? If the FAA/NTSB can ground aircraft for possibly being
non-airworthy until these can be inspected, why not "ground" the
banks, brokerages, private capital and hedge funds until their
financial condition can be verified.

Because the whole edifice depends on keeping the machine operating.


If Joe Sixpack, who gained little and lost much in the run-up to
this upheaval, is to lose his job (again), his home, his car, his
savings, his 401k etc., simple fairness dictates that the people
that created this catastrophe (and profited highly from the
run-up), either because of incompetence or veniality, should also
lose their jobs, their homes, their cars, their planes, their
boats, their deferred compensation, etc.

Ha!

--
Ed Huntress

On Mon, 17 Mar 2008 12:03:29 -0400, "Ed Huntress"
wrote:
snip
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp
==============
As usual Krugman asks the right question and then quits.

"So here’s the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren’t also bailing out the people who got us into this
mess?"

At some point the standard excuses of ignorance, incompetence and
mischance are no longer adequate. Where are the special
prosecutors? Where are the grand juries? Where are the writs of
attachment on the proceeds of criminal activities? As dangerous
as the military-industrial complex is, it is a piker compared to
the peril of the political-financial complex.

If we several jumbo jets a day were crashing, the NTSB would act.
It a refinery or two a day was exploding and burning, OSHA would
act. If they did not the courts [or the people] would have the
administrators' "head on a pike," along side the responsible
elected officials. The FDA had no problem forcing a packing
company to recall beef produced from "downer" cows, even though
this bankrupted the business, because of the danger of the
transmission of "mad cow" and other pathologies.

Why then are the SEC, IRS, CFTC, etc. allowed to do nothing,
although the daily loss of capital is similar (but several times
larger)? If the FAA/NTSB can ground aircraft for possibly being
non-airworthy until these can be inspected, why not "ground" the
banks, brokerages, private capital and hedge funds until their
financial condition can be verified.

If Joe Sixpack, who gained little and lost much in the run-up to
this upheaval, is to lose his job (again), his home, his car, his
savings, his 401k etc., simple fairness dictates that the people
that created this catastrophe (and profited highly from the
run-up), either because of incompetence or veniality, should also
lose their jobs, their homes, their cars, their planes, their
boats, their deferred compensation, etc.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Mon, 17 Mar 2008 09:38:39 -0700 (PDT), Too_Many_Tools
wrote:
snip
I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.
snip
===========
You give the Republicans too much credit.

==The current situation is not a sudden or unexpected event, but
the simply the latest in a increasingly catastrophic series of
events, apparently premised on the adage "more of the same only
better." ==

Glass-Steagall was repealed in 1999, largely setting up this
bubble, on Bill Clinton's watch.
http://en.wikipedia.org/wiki/Glass-Steagall_Act

Both parties are equally responsible, and both parties are
equally incapable of dealing with the situation because of their
over involvement with the financial establishment, although a few
rare individuals appear to be "clean."

For example, , Chairman and Chief Executive Officer of Bear
Stearns, is a Bush Pioneer having raised at least $100,000 for
Bush in the 2004 presidential election. Bear Stearns gave
$127,500 to federal candidates in the 2006 election through its
political action committee - 25% to Democrats and 75% to
Republicans.
Also see
http://www.opensecrets.org/softmoney...0&txtSort=name
{note that contributions went to both parties}

(there are other events in this chain, but you get the idea)
Continental Illinois
S&L
LTCM
Junk bond speculation
Dot com speculation
Real estate bubble
CDO/CMO bubble
Derivative speculation and unwinding

Note that this sequence could have been aborted at any stage by
vigorous investigation and prosecution for numerous violations of
the financial regulations (and common sense).


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

No way I'm diggig through 307 lines to see what pithy comments were added...


#### ## ## #### ###### ##
## ## ### ## ## ## ## ####
### #### ## ## ## ## ####
### ## #### ## ##### ##
### ## ### ## ## ##
## ## ## ## ## ##
#### ## ## #### #### ##


##### ## ## ## #### ###### ##
## ## #### ### ### ## # ## # ####
## ## ## ## ####### ## ## ####
## ## ## ## ####### ## ## ##
## ## ###### ## # ## ## ## ##
## ## ## ## ## ## ## ##
##### ## ## ## ## #### #### ##

On Mar 17, 12:48*pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:
On Mon, 17 Mar 2008 09:38:39 -0700 (PDT), wrote:

snipI also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.

snip
===========
You give the Republicans too much credit. *

==The current situation is not a sudden or unexpected event, but
the simply the latest in a increasingly catastrophic series of
events, apparently premised on the adage "more of the same only
better." ==

Glass-Steagall was repealed in 1999, largely setting up this
bubble, on Bill Clinton's watch.http://en.wikipedia.org/wiki/Glass-Steagall_Act

Both parties are equally responsible, and both parties are
equally incapable of dealing with the situation because of their
over involvement with the financial establishment, although a few
rare individuals appear to be "clean." *

For example, , Chairman and Chief Executive Officer of Bear
Stearns, is a Bush Pioneer having raised at least $100,000 for
Bush in the 2004 presidential election. Bear Stearns gave
$127,500 to federal candidates in the 2006 election through its
political action committee - 25% to Democrats and 75% to
Republicans. *
Also seehttp://www.opensecrets.org/softmoney/softcomp2.asp?txtName=Bear+Stear...
{note that contributions went to both parties}

(there are other events in this chain, but you get the idea)
Continental Illinois
S&L
LTCM
Junk bond speculation
Dot com speculation
Real estate bubble
CDO/CMO bubble
Derivative speculation and unwinding

Note that this sequence could have been aborted at any stage by
vigorous investigation and prosecution for numerous violations of
the financial regulations (and common sense).

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

Nice try but the last time I looked George Bush is President.

And this is happening on his watch.

And you the American taxpayer are losing lots of money because of his
policies.

The buck stops at his desk.

TMT

On Mon, 17 Mar 2008 12:48:52 -0600, with neither quill nor qualm, F.
George McDuffee quickly quoth:

On Mon, 17 Mar 2008 09:38:39 -0700 (PDT), Too_Many_Tools
wrote:
snip
I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.
snip
===========
You give the Republicans too much credit.

==The current situation is not a sudden or unexpected event, but
the simply the latest in a increasingly catastrophic series of
events, apparently premised on the adage "more of the same only
better." ==

Glass-Steagall was repealed in 1999, largely setting up this
bubble, on Bill Clinton's watch.
http://en.wikipedia.org/wiki/Glass-Steagall_Act

This didn't dissolve the FDIC, though, did it? Our funds are still
insured, aren't they? Scary thought.


Both parties are equally responsible, and both parties are
equally incapable of dealing with the situation because of their
over involvement with the financial establishment, although a few
rare individuals appear to be "clean."

Individuals such as Spitzer? (Well, udder dan boppin' dem hos.)


For example, , Chairman and Chief Executive Officer of Bear
Stearns, is a Bush Pioneer having raised at least $100,000 for
Bush in the 2004 presidential election. Bear Stearns gave
$127,500 to federal candidates in the 2006 election through its
political action committee - 25% to Democrats and 75% to
Republicans.
Also see
http://www.opensecrets.org/softmoney...0&txtSort=name
{note that contributions went to both parties}

"Here's a little something to remind you to keep your mouth shut up.
We'll be giving your party the lion's share juuust as soon as you're
back in power."


(there are other events in this chain, but you get the idea)
Continental Illinois
S&L
LTCM
Junk bond speculation
Dot com speculation
Real estate bubble
CDO/CMO bubble
Derivative speculation and unwinding

Note that this sequence could have been aborted at any stage by
vigorous investigation and prosecution for numerous violations of
the financial regulations (and common sense).

Sucks, doesn't it?

--
Death is more universal than life; everyone dies but not everyone lives.
-- A. Sachs

Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
On Mar 17, 10:03 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in
messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...





On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good. They've
focused on the view from their side of the world, and on the consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good article.

I agree.

I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.

They'll probably take the heat but Clinton was just as big a proponent of
deregulation of the finance markets. I've been yelling about this for 15
years now. I know some of those guys; a few are my neighbors; they're bigger
pirates that Bluebeard. When the markets were deregulated it was like
somebody gave them a new set of pistols and sabers.

People who lose their assets and their homes remember who is
responsible when at the voting booth.

I was thinking about going up to Wall Street for lunch today, to see if the
Lower Manhatten Swan-Diving Championships had started, but then I realized
that you can jump anymore; the windows are bolted shut. d8-)


Are the doors to the roof locked?


--
aioe.org is home to cowards and terrorists

Add this line to your news proxy nfilter.dat file
* drop Path:*aioe.org!not-for-mail to drop all aioe.org traffic.

http://improve-usenet.org/index.html

"Michael A. Terrell" wrote in message
...

Ed Huntress wrote:

"Too_Many_Tools" wrote in message
...
On Mar 17, 10:03 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in
messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...





On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good.
They've
focused on the view from their side of the world, and on the
consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good article.

I agree.

I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.

They'll probably take the heat but Clinton was just as big a proponent of
deregulation of the finance markets. I've been yelling about this for 15
years now. I know some of those guys; a few are my neighbors; they're
bigger
pirates that Bluebeard. When the markets were deregulated it was like
somebody gave them a new set of pistols and sabers.

People who lose their assets and their homes remember who is
responsible when at the voting booth.

I was thinking about going up to Wall Street for lunch today, to see if
the
Lower Manhatten Swan-Diving Championships had started, but then I
realized
that you can jump anymore; the windows are bolted shut. d8-)


Are the doors to the roof locked?

I don't know. But they're not jumping yet, whatever the reason. Maybe it's
too cold.

--
Ed Huntress

On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?
=====================
About as much as I would like to be a BSC employee with my 401k
stuffed with stock that was worth 84$ per share [book] on
Wednesday and worth 2$ per share on Sunday night when they cut
the deal...
=================
"One reaction is shock that a company that reaffirmed its book
value at around $84 on Wednesday can be worth $2 per share four
days later on Sunday," said Deutsche Bank analyst Mike Mayo."
snip
"The price represents roughly 1 percent of what the investment
bank was worth just 16 days ago."
for complete article click on
http://news.yahoo.com/s/ap/20080317/...5bhbiUa yBhIF

Looks like Lehman Brothers is next on the hit list.

"With Bear Stearns seemingly gone, investors pondered who might
be next. Lehman Brothers Holding Inc. stock fell more than 34
percent Monday, following a 15 percent drop on Friday amid
concerns it might be facing similar liquidity issues. Lehman
Chief Executive Richard Fuld denied Monday that the firm was
having such problems."

== Anyone have an estimate of how many bazillion dollars of
derivatives (esp. CDS and interest rate swaps) are involved here?
==

FWIW -- the Fed "created" 200 billion dollars out of nothing in
the middle of the night to bankroll this deal [and more, possibly
*MUCH* more, will likely be required]. To put this in
perspective, the entire "tax rebate" grift will pump only 160
billion into the economy.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Mar 17, 3:44*pm, Larry Jaques
wrote:
On Mon, 17 Mar 2008 12:48:52 -0600, with neither quill nor qualm, F.
George McDuffee quickly quoth:





On Mon, 17 Mar 2008 09:38:39 -0700 (PDT), Too_Many_Tools
wrote:
snip
I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.
snip
===========
You give the Republicans too much credit. *

==The current situation is not a sudden or unexpected event, but
the simply the latest in a increasingly catastrophic series of
events, apparently premised on the adage "more of the same only
better." ==

Glass-Steagall was repealed in 1999, largely setting up this
bubble, on Bill Clinton's watch.
http://en.wikipedia.org/wiki/Glass-Steagall_Act

This didn't dissolve the FDIC, though, did it? Our funds are still
insured, aren't they? *Scary thought.

Both parties are equally responsible, and both parties are
equally incapable of dealing with the situation because of their
over involvement with the financial establishment, although a few
rare individuals appear to be "clean." *

Individuals such as Spitzer? (Well, udder dan boppin' dem hos.)

For example, , Chairman and Chief Executive Officer of Bear
Stearns, is a Bush Pioneer having raised at least $100,000 for
Bush in the 2004 presidential election. Bear Stearns gave
$127,500 to federal candidates in the 2006 election through its
political action committee - 25% to Democrats and 75% to
Republicans. *
Also see
http://www.opensecrets.org/softmoney...ame=Bear+Stear....
{note that contributions went to both parties}

"Here's a little something to remind you to keep your mouth shut up.
We'll be giving your party the lion's share juuust as soon as you're
back in power."

(there are other events in this chain, but you get the idea)
Continental Illinois
S&L
LTCM
Junk bond speculation
Dot com speculation
Real estate bubble
CDO/CMO bubble
Derivative speculation and unwinding

Note that this sequence could have been aborted at any stage by
vigorous investigation and prosecution for numerous violations of
the financial regulations (and common sense).

Sucks, doesn't it?

--
Death is more universal than life; everyone dies but not everyone lives.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *-- A. Sachs- Hide quoted text -

- Show quoted text -

"This didn't dissolve the FDIC, though, did it? Our funds are still
insured, aren't they? Scary thought. "

The last time I looked the FDIC had about 3% funding to cover all
accounts it is responsible for.

That means only 3% of the depositors would get their money...the other
97% would get nothing.

That is a scary thought.

And that is the truth.

And just one more reason why the Government is trying to bury the Bear
Stearns scandal.

So why is the taxpayer having to bail out the Wall Street crooks?

Try asking President Bush this question.....

TMT

On Mar 17, 4:51*pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:
On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools

wrote:
One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

=====================
About as much as I would like to be a BSC employee with my 401k
stuffed with stock that was worth 84$ per share [book] on
Wednesday and worth 2$ per share on Sunday night when they cut
the deal...
=================
"One reaction is shock that a company that reaffirmed its book
value at around $84 on Wednesday can be worth $2 per share four
days later on Sunday," said Deutsche Bank analyst Mike Mayo."
snip
"The price represents roughly 1 percent of what the investment
bank was worth just 16 days ago."
for complete article click onhttp://news.yahoo.com/s/ap/20080317/ap_on_bi_ge/jpmorgan_bear_stearns...

Looks like Lehman Brothers is next on the hit list.

"With Bear Stearns seemingly gone, investors pondered who might
be next. Lehman Brothers Holding Inc. stock fell more than 34
percent Monday, following a 15 percent drop on Friday amid
concerns it might be facing similar liquidity issues. Lehman
Chief Executive Richard Fuld denied Monday that the firm was
having such problems."

== Anyone have an estimate of how many bazillion dollars of
derivatives (esp. CDS and interest rate swaps) are involved here?
==

FWIW -- the Fed "created" 200 billion dollars out of nothing in
the middle of the night to bankroll this deal [and more, possibly
*MUCH* more, will likely be required]. *To put this in
perspective, the entire "tax rebate" grift will pump only 160
billion into the economy.

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

And the fact that no one wants to talk about....the Feds created a
bottomless well for TWENTY MORE BANKS to borrow as much as they want
when they want....from the American taxpayer.

Trying asking your Congressman about that one.

TMT

On Mar 17, 4:24*pm, "Ed Huntress" wrote:
"Michael A. Terrell" wrote in ...







Ed Huntress wrote:

"Too_Many_Tools" wrote in message
....
On Mar 17, 10:03 am, "Ed Huntress" wrote:
"F. George McDuffee" wrote in
messagenews:nu6tt358a9bs9t5c1rjvvnucn61cg4kds9@4ax .com...

On Sun, 16 Mar 2008 19:39:01 -0700 (PDT), Too_Many_Tools
wrote:

One for the record books...

The US taxpayer is paying for this one.

How do you like being a part owner of a bankrupt bank?

There are likely more to come.

And the Iraq War is costing you $12 billion a month.

How deep are your pockets?

TMT
==============
Q: why do we have to read a UK paper to get this depth and
quality of analysis?

Because the quality of the analysis isn't necessarily very good.
They've
focused on the view from their side of the world, and on the
consequences
that they may face. It's actually a short-sighted view, in light of the
longer consequences of the situation. We're more focused on the
consequences
*we* may face.

For a short but penetrating take on it, Krugman's column today is more
relevant to what's going on here, "The B Word":

http://www.nytimes.com/2008/03/17/op...rugman.html?hp

--
Ed Huntress- Hide quoted text -

- Show quoted text -

Good article.

I agree.

I also consider that the Party that allowed this to happen...the
Republicans...will pay dearly this November.

They'll probably take the heat but Clinton was just as big a proponent of
deregulation of the finance markets. I've been yelling about this for 15
years now. I know some of those guys; a few are my neighbors; they're
bigger
pirates that Bluebeard. When the markets were deregulated it was like
somebody gave them a new set of pistols and sabers.

People who lose their assets and their homes remember who is
responsible when at the voting booth.

I was thinking about going up to Wall Street for lunch today, to see if
the
Lower Manhatten Swan-Diving Championships had started, but then I
realized
that you can jump anymore; the windows are bolted shut. d8-)

* Are the doors to the roof locked?

I don't know. But they're not jumping yet, whatever the reason. Maybe it's
too cold.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

The pink slips haven't arrived yet.

TMT

Ed Huntress wrote:

"Michael A. Terrell" wrote in message
...

Are the doors to the roof locked?

I don't know. But they're not jumping yet, whatever the reason. Maybe it's
too cold.


They are just waiting for their assistants to deliver their lattes
and biscotti.


--
aioe.org is home to cowards and terrorists

Add this line to your news proxy nfilter.dat file
* drop Path:*aioe.org!not-for-mail to drop all aioe.org traffic.

http://improve-usenet.org/index.html

"Jon Elson" wrote in message
...
Ed Huntress wrote:
"F. George McDuffee" wrote in message
...

As usual Krugman asks the right question and then quits.

"So here's the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren't also bailing out the people who got us into this
mess?"


I don't think he knows the answer to that.
But *** I *** know the answer (and I'll be the rest of you reading do,
too)! Basically, nothing will be done. The whole crappy situation is
institutionally entrenched. They've built this house of cards over
decades, and NOBODY quite knows how to take it apart without the whole
thing falling down. It will take YEARS of Congressional hearings and the
passing of new laws to stop these practices. A bunch of companies will
likely go down the tubes like Enron, when it is found there is DAMN little
actual value in all the paper they are holding. Hopefully, we won't have
a run on banks like what started at Bear Stearns, but a run on investment
and commercial banks could make what happened in 1929 look like a party!
I mean, if GM suddenly can't issue paychecks, it could get "serious".
And, it could happen pretty suddenly, the way everything is online now.

Jon

I don't think they'll do "nothing," Jon. My feeling is that they'll restore
some required disclosures to the unregulated "hedge funds" (which haven't
really been hedge funds since the '80s). And, if they find a way to make
this applicable across the board, they'll establish some kind of
documentation to derivatives trading. That means they'll have to be
registered, like stocks and most bonds are today. And deposits and some
other instruments will be subject to reserve requirements, with no way to
get around it.

In other words, all kinds of instruments will be subject to normal
good-practice banking procedures and they'll probably have to be registered.

There's some discussion going on about all this in the financial press, but
it's been overwhelmed by news of the panics. I think we'll see it surface
pretty soon.

--
Ed Huntress

Ed Huntress wrote:
"Michael A. Terrell" wrote in message
...

Ed Huntress wrote:


I was thinking about going up to Wall Street for lunch today, to see if
the
Lower Manhatten Swan-Diving Championships had started, but then I
realized
that you can jump anymore; the windows are bolted shut. d8-)


Are the doors to the roof locked?


I don't know. But they're not jumping yet, whatever the reason. Maybe it's
too cold.
Nah, the era of personal responsibility is over, the honchos
that caused this won't jump. The people who are really affected
won't be jumping, they'll be on the street level already.

Jon

Larry Jaques wrote:

This didn't dissolve the FDIC, though, did it? Our funds are still
insured, aren't they? Scary thought.
Insured as to dollar value, but not insured against loss of
buying power of those dollars. Check out what stuff costs
lately, it is a shocker. A car battery or several other items
seem to have doubled in the last couple years. Just got quoted
$182 for a rebuilt starter motor, AFTER the core trade-in.
I decided to open it up and lube the works instead! So far, it
seems to be working.

Jon

Ed Huntress wrote:
"F. George McDuffee" wrote in message
...

As usual Krugman asks the right question and then quits.

"So here's the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren't also bailing out the people who got us into this
mess?"


I don't think he knows the answer to that.
But *** I *** know the answer (and I'll be the rest of you
reading do, too)! Basically, nothing will be done. The whole
crappy situation is institutionally entrenched. They've built
this house of cards over decades, and NOBODY quite knows how to
take it apart without the whole thing falling down. It will
take YEARS of Congressional hearings and the passing of new laws
to stop these practices. A bunch of companies will likely go
down the tubes like Enron, when it is found there is DAMN little
actual value in all the paper they are holding. Hopefully, we
won't have a run on banks like what started at Bear Stearns, but
a run on investment and commercial banks could make what
happened in 1929 look like a party! I mean, if GM suddenly
can't issue paychecks, it could get "serious". And, it could
happen pretty suddenly, the way everything is online now.

Jon

On Mar 18, 12:46*pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:
On Mon, 17 Mar 2008 23:45:40 -0600, Jon Elson

wrote:
Larry Jaques wrote:

This didn't dissolve the FDIC, though, did it? Our funds are still
insured, aren't they? *Scary thought.
Insured as to dollar value, but not insured against loss of
buying power of those dollars. *Check out what stuff costs
lately, it is a shocker. *A car battery or several other items
seem to have doubled in the last couple years. *Just got quoted
$182 for a rebuilt starter motor, AFTER the core trade-in.
I decided to open it up and lube the works instead! *So far, it
seems to be working.

Jon

====================
The public now becomes aware of yet more governmental "book
cooking," specifically the systematic understatement of the CPI
[consumer price index], made possible by the continual
elimination of more and more categories in the standard "market
basket" of goods and services. *

First they substituted "generic" products for "name brand"
products, then they eliminated "fuel," and then they eliminated
"food" from the "core inflation" data.

The problem is that just as removing the light bulb or putting a
piece of black tape over the warning light on your car's
dashboard doesn't fix the "low oil" problem, *"cooking" the CPI
index doesn't change the actual rate of inflation [i.e. the
decline in the value of the dollar.]

The actual rate of inflation appears to be at least 2X to
possibly 5X the official rate, based on anecdotal evidence in my
area and the "free market" international exchange rate. *[You
know we are in trouble when the dollar falls against the
Brazilian Real *2.10 R/$ in Mar 07 to 1.70R/$ Mar 08.]http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=BRL&submi...

This is a disaster for savers with dollars or dollar denominated
paper.

Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

Well said.

Anyone who has their assets and cash in dollars has been screwed by
this Republican Administration.

TMT

On Mon, 17 Mar 2008 23:45:40 -0600, Jon Elson
wrote:

snip
Just got quoted
$182 for a rebuilt starter motor, AFTER the core trade-in.
I decided to open it up and lube the works instead! So far, it
seems to be working.

There really isn't a whole lot to them. See if you happen to
have a local rebuilder that will sell you parts. If nothing
else you can usually get parts from NAPA too, but they
charge considerably more than the local rebuilder.

Watch for worn brushes, once they wear down to the point
where the holders start to rub you will get hit-miss
operation. Last set of brushes I bought were only $2, cash
I don't know if the grubby little hole-in-the-wall place
is even in business anymore. Though the parts I bought there
were always shiny new.

--
Leon Fisk
Grand Rapids MI/Zone 5b
Remove no.spam for email

On Mon, 17 Mar 2008 23:45:40 -0600, Jon Elson
wrote:

Larry Jaques wrote:

This didn't dissolve the FDIC, though, did it? Our funds are still
insured, aren't they? Scary thought.
Insured as to dollar value, but not insured against loss of
buying power of those dollars. Check out what stuff costs
lately, it is a shocker. A car battery or several other items
seem to have doubled in the last couple years. Just got quoted
$182 for a rebuilt starter motor, AFTER the core trade-in.
I decided to open it up and lube the works instead! So far, it
seems to be working.

Jon
====================
The public now becomes aware of yet more governmental "book
cooking," specifically the systematic understatement of the CPI
[consumer price index], made possible by the continual
elimination of more and more categories in the standard "market
basket" of goods and services.

First they substituted "generic" products for "name brand"
products, then they eliminated "fuel," and then they eliminated
"food" from the "core inflation" data.

The problem is that just as removing the light bulb or putting a
piece of black tape over the warning light on your car's
dashboard doesn't fix the "low oil" problem, "cooking" the CPI
index doesn't change the actual rate of inflation [i.e. the
decline in the value of the dollar.]

The actual rate of inflation appears to be at least 2X to
possibly 5X the official rate, based on anecdotal evidence in my
area and the "free market" international exchange rate. [You
know we are in trouble when the dollar falls against the
Brazilian Real 2.10 R/$ in Mar 07 to 1.70R/$ Mar 08.]
http://finance.yahoo.com/currency/co...submit=Convert

This is a disaster for savers with dollars or dollar denominated
paper.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"F. George McDuffee" wrote in message
...
On Tue, 18 Mar 2008 01:04:29 -0400, "Ed Huntress"
wrote:


"Jon Elson" wrote in message
om...
Ed Huntress wrote:
"F. George McDuffee" wrote in
message
...

As usual Krugman asks the right question and then quits.

"So here's the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren't also bailing out the people who got us into this
mess?"


I don't think he knows the answer to that.
But *** I *** know the answer (and I'll be the rest of you reading do,
too)! Basically, nothing will be done. The whole crappy situation is
institutionally entrenched. They've built this house of cards over
decades, and NOBODY quite knows how to take it apart without the whole
thing falling down. It will take YEARS of Congressional hearings and
the
passing of new laws to stop these practices. A bunch of companies will
likely go down the tubes like Enron, when it is found there is DAMN
little
actual value in all the paper they are holding. Hopefully, we won't
have
a run on banks like what started at Bear Stearns, but a run on
investment
and commercial banks could make what happened in 1929 look like a party!
I mean, if GM suddenly can't issue paychecks, it could get "serious".
And, it could happen pretty suddenly, the way everything is online now.

Jon

I don't think they'll do "nothing," Jon. My feeling is that they'll
restore
some required disclosures to the unregulated "hedge funds" (which haven't
really been hedge funds since the '80s). And, if they find a way to make
this applicable across the board, they'll establish some kind of
documentation to derivatives trading. That means they'll have to be
registered, like stocks and most bonds are today. And deposits and some
other instruments will be subject to reserve requirements, with no way to
get around it.

In other words, all kinds of instruments will be subject to normal
good-practice banking procedures and they'll probably have to be
registered.

There's some discussion going on about all this in the financial press,
but
it's been overwhelmed by news of the panics. I think we'll see it surface
pretty soon.
====================

If you don't like my suggestions, feel free to post some of your
own for the groups evaluation/critique. Note that none of the
attack the "capitalist system" or "free market." These simply
implement the equivalent of speed and load limits for vehicle
operation on the public roads.

I favor all of the things I listed above, with the SEC oversight required to
enforce them. That's been my position since Reagan first started to loosen
up financial regulations.

Regulating the financial industry is not like regulating a manufacturer's
safety or accounting practices. The whole idea behind deregulation of
finance was that those very creative financial people would come up with new
ideas, new insruments and new kinds of trades, that benefitted the economy
as a whole. And they did.

Although derivatives were really created as a gambling vehicle for
high-rollers and day-traders, corporate treasurers quickly adopted them as a
way to protect their treasuries from predictable risk, thus increasing their
stability and reducing their bond interest rates. That freed up capital,
added to all stockholders' net worth, and gave investment a shot in the arm.

But -- and this was clear from the beginning -- allowing these new
instruments to be created and traded in the dark, with virtually no
regulation, was an invitation to the fast-buck artists to create an endless
array of shell games.

The financial industry is loaded with all kinds of shady characters, as well
as some pillars of probity and good sense. When the money is running hot,
the shady ones get the upper hand. That's basically what's happened here.


== Remember -- If we don't get what you want, we will get what
you deserve.==

There is no more chance of implementing any of these suggestions
than the baseball home run kings uniting to ban HGH, steroids,
and crank. It will required a concentrated effort to pound any
reform up the financial establishment's "nose" [I said *NOSE*]
with a 16 lb maul, which will be possible only after another
catastrophic melt-down, and their temporary loss of political
influence.

The downside of the US press reporting [such as it is] on the
"panics" is their total failure to examine the causes and make
any suggestions on how this could be avoided in the future.

That's editorializing, not reporting, and the financial editorial pages are
loaded with prognostications.


Having too much time on my hands, I have spent some time on the
web probing this problem and have the following specific
suggestions:

(1) Put an absolute limit on the amount of "leverage" that a LBO,
hedge fund, private equity fund, etc. can employ. Although
several of the "hedge funds" (more accurately "speculation
pools") were invested almost 100% in AAA rated bonds issued by
GSE entities such as Freddie Mac and Sally Mae, they had a
"leverage" of 32X [probably more] and a total lack of any cash
reserves. The slightest downturn led to margin calls, forcing
sales into a down market, further depressing prices, and their
collapse. In just one example [Carlyle Credit Corporation] 16
billion dollars of the "investors" money went up in smoke in
three days. There are many others. I suggest that the absolute
limit of leverage be set at what corresponds to the bank's loan
reserve requirements, i.e. 10X if the bank loan (cash) reserve is
set at 10%, 5X if the loan reserve is set at 20%, etc..

Some margin limits will have to be set, but I don't know how you can set
numbers on it now.


(2) Given the common practice of the banks to evade loan reserve
requirements, increase the loan reserve from 10% to 15 or 20%,
with a corresponding reduction in the max leverage allowed in the
private capital pools, hedge funds, etc.

Goodby, liquidity. Goodby, expansion of home ownership. Goodby, car sales.
Goodby, US economy...


(3) Eliminate the use of "off-shore" corporations
created/domiciled in the Cayman Islands, Liechtenstein, etc. as
SIVs [special investment vehicles], SPE [special purpose
entities], conduits, CDO [collateralized debt obligation]
trustees, etc. as this both places the records and assets beyond
the reach of the US courts, and eliminates many of the
traditional financial safeguards under US law. These are also
widely used to evade the bank loan reserve requirements.
===========
"Other underwriter responsibilities include working with a law
firm and creating the special purpose legal vehicle (typically a
trust incorporated in the Cayman Islands) that will purchase the
assets and issue the CDO's tranches. In addition, the underwriter
will work with the asset manager to determine the post-closing
trading restrictions that will be included in the CDO's
transaction documents."
http://en.wikipedia.org/wiki/Collate...ebt_obligation

(4) There does not appear to be any shortage of "liquidity" in
the financial markets, rather a mis-use/mis-allocation of the
adequate and available funds.

There isn't now. But there probably will be after the economy is thoroughly
wrung out.

As for your other suggestions, putting numbers on those ideas is something
I'm not able to do.

--
Ed Huntress

On Tue, 18 Mar 2008 01:04:29 -0400, "Ed Huntress"
wrote:


"Jon Elson" wrote in message
m...
Ed Huntress wrote:
"F. George McDuffee" wrote in message
...

As usual Krugman asks the right question and then quits.

"So here's the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren't also bailing out the people who got us into this
mess?"


I don't think he knows the answer to that.
But *** I *** know the answer (and I'll be the rest of you reading do,
too)! Basically, nothing will be done. The whole crappy situation is
institutionally entrenched. They've built this house of cards over
decades, and NOBODY quite knows how to take it apart without the whole
thing falling down. It will take YEARS of Congressional hearings and the
passing of new laws to stop these practices. A bunch of companies will
likely go down the tubes like Enron, when it is found there is DAMN little
actual value in all the paper they are holding. Hopefully, we won't have
a run on banks like what started at Bear Stearns, but a run on investment
and commercial banks could make what happened in 1929 look like a party!
I mean, if GM suddenly can't issue paychecks, it could get "serious".
And, it could happen pretty suddenly, the way everything is online now.

Jon

I don't think they'll do "nothing," Jon. My feeling is that they'll restore
some required disclosures to the unregulated "hedge funds" (which haven't
really been hedge funds since the '80s). And, if they find a way to make
this applicable across the board, they'll establish some kind of
documentation to derivatives trading. That means they'll have to be
registered, like stocks and most bonds are today. And deposits and some
other instruments will be subject to reserve requirements, with no way to
get around it.

In other words, all kinds of instruments will be subject to normal
good-practice banking procedures and they'll probably have to be registered.

There's some discussion going on about all this in the financial press, but
it's been overwhelmed by news of the panics. I think we'll see it surface
pretty soon.
====================

If you don't like my suggestions, feel free to post some of your
own for the groups evaluation/critique. Note that none of the
attack the "capitalist system" or "free market." These simply
implement the equivalent of speed and load limits for vehicle
operation on the public roads.

== Remember -- If we don't get what you want, we will get what
you deserve.==

There is no more chance of implementing any of these suggestions
than the baseball home run kings uniting to ban HGH, steroids,
and crank. It will required a concentrated effort to pound any
reform up the financial establishment's "nose" [I said *NOSE*]
with a 16 lb maul, which will be possible only after another
catastrophic melt-down, and their temporary loss of political
influence.

The downside of the US press reporting [such as it is] on the
"panics" is their total failure to examine the causes and make
any suggestions on how this could be avoided in the future.

Having too much time on my hands, I have spent some time on the
web probing this problem and have the following specific
suggestions:

(1) Put an absolute limit on the amount of "leverage" that a LBO,
hedge fund, private equity fund, etc. can employ. Although
several of the "hedge funds" (more accurately "speculation
pools") were invested almost 100% in AAA rated bonds issued by
GSE entities such as Freddie Mac and Sally Mae, they had a
"leverage" of 32X [probably more] and a total lack of any cash
reserves. The slightest downturn led to margin calls, forcing
sales into a down market, further depressing prices, and their
collapse. In just one example [Carlyle Credit Corporation] 16
billion dollars of the "investors" money went up in smoke in
three days. There are many others. I suggest that the absolute
limit of leverage be set at what corresponds to the bank's loan
reserve requirements, i.e. 10X if the bank loan (cash) reserve is
set at 10%, 5X if the loan reserve is set at 20%, etc..

(2) Given the common practice of the banks to evade loan reserve
requirements, increase the loan reserve from 10% to 15 or 20%,
with a corresponding reduction in the max leverage allowed in the
private capital pools, hedge funds, etc.

(3) Eliminate the use of "off-shore" corporations
created/domiciled in the Cayman Islands, Liechtenstein, etc. as
SIVs [special investment vehicles], SPE [special purpose
entities], conduits, CDO [collateralized debt obligation]
trustees, etc. as this both places the records and assets beyond
the reach of the US courts, and eliminates many of the
traditional financial safeguards under US law. These are also
widely used to evade the bank loan reserve requirements.
===========
"Other underwriter responsibilities include working with a law
firm and creating the special purpose legal vehicle (typically a
trust incorporated in the Cayman Islands) that will purchase the
assets and issue the CDO's tranches. In addition, the underwriter
will work with the asset manager to determine the post-closing
trading restrictions that will be included in the CDO's
transaction documents."
http://en.wikipedia.org/wiki/Collate...ebt_obligation

(4) There does not appear to be any shortage of "liquidity" in
the financial markets, rather a mis-use/mis-allocation of the
adequate and available funds. Thus the injection of 100s of
billions of dollars by the Fed is accomplishing nothing in
"thawing" the CDO segment, but is grossly inflating the commodity
bubbles such as oil, metals and food. In many cases, legislation
is not required, merely the issuance of a rule by the controlling
agency such as the CFTC [Commodity Futures Trading Agency] Some
immediate measures that should be taken include:

(A) Eliminate "naked" shorts in the commodity markets by
requiring a person or institution to have an actual deliverable
contract before they can sell "short." This will have no impact
on traditional hedging by manufactures seeking to stabilize their
raw material prices, as they will have both a long and short
position.

(B) Eliminate margin or "leveraged" speculation in the
commodities markets by increasing margin requirements, and as
possible forbidding the use of borrowed money. The current
margin requirements are arcane and not easily understood [or even
located/determined] but the objective should be to increase the
margin requirements to 100% to reduce speculation and diversion
of capital. Most likely this should be phased in over several
weeks to allow orderly unwinding of positions.

(C) While this will require a change in the law, it appears that
speculative profits in commodity trading should not be taxed at
the capital gains rate but at the regular earned income rates, to
reduce the returns (and motivation) to participate in such
speculation. Indeed, given the very bad effects such speculation
is currently having on the "real" economy, a surcharge above
normal income rates appears to be fully justified. Again this
will have no affect on traditional hedging as the gain/loss from
the short position will be off-set by the loss/gain from the long
position.

(D) Because of the very bad effect currency/foreign exchange
speculative trading is having on the real economy, it is time to
impose a "Tobin" tax of 0.01% to 0.5% on each ForEx transaction.
This is small enough to have minimal effect on actual currency
trades for commerce, but is large enough to remove much of the
profit [and motivation] for high volume churning and short-term
speculative trades.

(5) It appears mandatory to re-enact some form of Glass-Steagall
[if futures bubbles are to be avoided] to create an absolute
seperation/firewall/bulkhead between the financial sectors of
commercial/depost banking, merchant banking, stock/bond
brokerage, securities rating [monoline insurers], financial
analysis, and insurance.

The temptations and opportunities for self-dealing and
cross-subsidization are simply too much to be resisted when any
of these functions are combined in a single organization.

I would expand the prohibitions of Glass-Stegall on commercial
bank's dealing in securities to include not only domestic but
also international transactions, as this is what lead to one of
the first major post WW2 economic crisis in the 1970s when the
major US banks became heavily involved in Latin American
speculation/finance. When this particular "ship hit the sand"
[as they always do] it resulted in considerable upheaval in not
only the bank's internal operation, but the domestic environment
of the countries involved as well as the
political/military/intelegence intervention/meddling of the U.S.
government [e.g. Chile, Guatemala, El Salvador, Brazil,
Argentina, Columbia, Panama, etc.] which continues to cause
problems and cost huge sums of the US taxpayers' money even
today.
http://en.wikipedia.org/wiki/Glass-Steagall_Act


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Tue, 18 Mar 2008 11:40:29 -0700 (PDT), Too_Many_Tools
wrote:

Well said.

Anyone who has their assets and cash in dollars has been screwed by
this Republican Administration.

TMT
=========
Unfortunately, Social Security, pensions, annuities, savings
accounts, US savings bonds, etc. *ARE* denominated in US
dollars...
Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Mar 18, 2:15*pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:
On Tue, 18 Mar 2008 11:40:29 -0700 (PDT), Too_Many_Tools

wrote:
Well said.

Anyone who has their assets and cash in dollars has been screwed by
this Republican Administration.

TMT

=========
Unfortunately, Social Security, pensions, annuities, savings
accounts, US savings bonds, etc. *ARE* denominated in US
dollars...
Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

I know...and that is why I simply cannot understand conservatives with
their continued support for an Adminstration who is literately raping
them financially.

The simple truth is even if you have made money under this
Administration, you still have less than you started with.

TMT

On Mar 18, 1:29*pm, "Ed Huntress" wrote:
"F. George McDuffee" wrote in messagenews:hf30u314knrbp34l71abroivr6pb9oibj2@4ax .com...





On Tue, 18 Mar 2008 01:04:29 -0400, "Ed Huntress"
wrote:

"Jon Elson" wrote in message
om...
Ed Huntress wrote:
"F. George McDuffee" wrote in
message
m...

As usual Krugman asks the right question and then quits.

"So here's the question we really should be asking: When the feds
do bail out the financial system, what will they do to ensure
that they aren't also bailing out the people who got us into this
mess?"

I don't think he knows the answer to that.
But *** I *** know the answer (and I'll be the rest of you reading do,
too)! *Basically, nothing will be done. *The whole crappy situation is
institutionally entrenched. *They've built this house of cards over
decades, and NOBODY quite knows how to take it apart without the whole
thing falling down. *It will take YEARS of Congressional hearings and
the
passing of new laws to stop these practices. *A bunch of companies will
likely go down the tubes like Enron, when it is found there is DAMN
little
actual value in all the paper they are holding. *Hopefully, we won't
have
a run on banks like what started at Bear Stearns, but a run on
investment
and commercial banks could make what happened in 1929 look like a party!
I mean, if GM suddenly can't issue paychecks, it could get "serious".
And, it could happen pretty suddenly, the way everything is online now..

Jon

I don't think they'll do "nothing," Jon. My feeling is that they'll
restore
some required disclosures to the unregulated "hedge funds" (which haven't
really been hedge funds since the '80s). And, if they find a way to make
this applicable across the board, they'll establish some kind of
documentation to derivatives trading. That means they'll have to be
registered, like stocks and most bonds are today. And deposits and some
other instruments will be subject to reserve requirements, with no way to
get around it.

In other words, all kinds of instruments will be subject to normal
good-practice banking procedures and they'll probably have to be
registered.

There's some discussion going on about all this in the financial press,
but
it's been overwhelmed by news of the panics. I think we'll see it surface
pretty soon.
====================

If you don't like my suggestions, feel free to post some of your
own for the groups evaluation/critique. *Note that none of the
attack the "capitalist system" or "free market." *These simply
implement the equivalent of speed and load limits for vehicle
operation on the public roads.

I favor all of the things I listed above, with the SEC oversight required to
enforce them. That's been my position since Reagan first started to loosen
up financial regulations.

Regulating the financial industry is not like regulating a manufacturer's
safety or accounting practices. The whole idea behind deregulation of
finance was that those very creative financial people would come up with new
ideas, new insruments and new kinds of trades, that benefitted the economy
as a whole. And they did.

Although derivatives were really created as a gambling vehicle for
high-rollers and day-traders, corporate treasurers quickly adopted them as a
way to protect their treasuries from predictable risk, thus increasing their
stability and reducing their bond interest rates. That freed up capital,
added to all stockholders' net worth, and gave investment a shot in the arm.

But -- and this was clear from the beginning -- allowing these new
instruments to be created and traded in the dark, with virtually no
regulation, was an invitation to the fast-buck artists to create an endless
array of shell games.

The financial industry is loaded with all kinds of shady characters, as well
as some pillars of probity and good sense. When the money is running hot,
the shady ones get the upper hand. That's basically what's happened here.



== Remember -- If we don't get what you want, we will get what
you deserve.==

There is no more chance of implementing any of these suggestions
than the baseball home run kings uniting to ban HGH, steroids,
and crank. *It will required a concentrated effort to pound any
reform up the financial establishment's "nose" [I said *NOSE*]
with a 16 lb maul, which will be possible only after another
catastrophic melt-down, and their temporary loss of political
influence.

The downside of the US press reporting [such as it is] on the
"panics" is their total failure to examine the causes and make
any suggestions on how this could be avoided in the future.

That's editorializing, not reporting, and the financial editorial pages are
loaded with prognostications.







Having too much time on my hands, I have spent some time on the
web probing this problem and have the following specific
suggestions:

(1) Put an absolute limit on the amount of "leverage" that a LBO,
hedge fund, *private equity fund, etc. can employ. *Although
several of the "hedge funds" (more accurately "speculation
pools") were invested almost 100% in AAA rated bonds issued by
GSE entities such as Freddie Mac and Sally Mae, they had a
"leverage" of 32X [probably more] and a total lack of any cash
reserves. *The slightest downturn led to margin calls, forcing
sales into a down market, further depressing prices, and their
collapse. *In just one example [Carlyle Credit Corporation] 16
billion dollars of the "investors" money went up in smoke in
three days. *There are many others. *I suggest that the absolute
limit of leverage be set at what corresponds to the bank's loan
reserve requirements, i.e. 10X if the bank loan (cash) reserve is
set at 10%, 5X if the loan reserve is set at 20%, etc..

Some margin limits will have to be set, but I don't know how you can set
numbers on it now.



(2) Given the common practice of the banks to evade loan reserve
requirements, increase the loan reserve from 10% to 15 or 20%,
with a corresponding reduction in the max leverage allowed in the
private capital pools, hedge funds, etc.

Goodby, liquidity. Goodby, expansion of home ownership. Goodby, car sales.
Goodby, US economy...







(3) Eliminate the use of "off-shore" corporations
created/domiciled in the Cayman Islands, Liechtenstein, etc. as
SIVs [special investment vehicles], SPE [special purpose
entities], conduits, CDO [collateralized debt obligation]
trustees, etc. as this both places the records and assets beyond
the reach of the US courts, and eliminates many of the
traditional financial safeguards under US law. *These are also
widely used to evade the bank loan reserve requirements.
===========
"Other underwriter responsibilities include working with a law
firm and creating the special purpose legal vehicle (typically a
trust incorporated in the Cayman Islands) that will purchase the
assets and issue the CDO's tranches. In addition, the underwriter
will work with the asset manager to determine the post-closing
trading restrictions that will be included in the CDO's
transaction documents."
http://en.wikipedia.org/wiki/Collate...ebt_obligation

(4) *There does not appear to be any shortage of "liquidity" in
the financial markets, rather a mis-use/mis-allocation of the
adequate and available funds.

There isn't now. But there probably will be after the economy is thoroughly
wrung out.

As for your other suggestions, putting numbers on those ideas is something
I'm not able to do.

--
Ed Huntress- Hide quoted text -

- Show quoted text -- Hide quoted text -

- Show quoted text -- Hide quoted text -

- Show quoted text -

If the industry is willing to accept a government handout (and it has
accepted many), then government regulation comes with it.

There is no free lunch...

TMT

"Too_Many_Tools" wrote in message
...

If the industry is willing to accept a government handout (and it has
accepted many), then government regulation comes with it.

There is no free lunch...

TMT

==========================================

Just make sure you don't kill the golden goose by putting him on a
starvation diet, while the geese in London, Hong Kong, etc. are bulking up
and are spoiling for a fight for control.

--
Ed Huntress

On Mar 18, 2:57*pm, "Ed Huntress" wrote:
"Too_Many_Tools" wrote in message

...

If the industry is willing to accept a government handout (and it has
accepted many), then government regulation comes with it.

There is no free lunch...

TMT

==========================================

Just make sure you don't kill the golden goose by putting him on a
starvation diet, while the geese in London, Hong Kong, etc. are bulking up
and are spoiling for a fight for control.

--
Ed Huntress

The Golden Goose is going to be placed on a strict diet whether he
likes it or not.

If for no other reason because the consumers cannot not feed it any
more.

Can you blame them?

I am sure a conservative will.

TMT