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Wall Street Reintroduced to the Color Green

2 Things
Oct. 15 (Bloomberg) -- Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 billion in government investment. Getting them to lend it out may prove a tougher sell. ``The truth of the matter is, they can't put a gun to their head and say you have to lend this money,'' said Charles Horn, a former official at the Office of the Comptroller of the Currency, part of the Treasury Department, and now a partner at the Mayer Brown law firm in Washington.

Actually Charlie, he CAN put a gun to their heads and make them do whatever he wants them to do. That's the whole point here. Spanky Paulson and his band of merry scumbags are the new Fascists: if they cannot get their way through lying (Which of course they did to Congress, but really they didn't have to because our Congress is replete with know-nothing, self-concerned, shit stains who care about as much for the common man as I care for the dead fly that is decomposing under my empty refrigerator...), they will get their way through coercion and force. It's that simple.

ALEXANDRIA (Louisiana), USA - US PRESIDENT George W. Bush said on Monday that he thought the US public's 'near panic' over the global financial crisis was easing as government-led economic rescue efforts paid off. After a round table with local business leaders, Mr Bush said 'I have heard that people's attitudes are beginning to change, from a period of intense concerns - and I would call it near panic - to being more relaxed.' People are 'beginning to see the effects of changes and the liquidity that is being pumped in the system,' said Mr Bush, referring to the US$700 billion (S$1 trillion) bailout plan.

I'm not sure who's worse, Bush or all of the people who believe him. Wow, it's really like living in a science fiction world, in which all of the citizens have their brains sucked out by some Fascist pig alien monster, and then they all stare blankly into the abyss with brain-numbing, empty smiles on their lifeless faces. First off, Bush is a liar and he's been lying to us for 8 years. That is pretty hard to refute. Secondly, the overwhelming majority of Americans have absolutely no concept either (a) monetary theory or (b) ever having had ONE original thought in their entire lives. The pretty little talking bobble heads on CNN and CNBC tell us what to think, what to feel...and that's what we do. The majority of Americans have never read any book, let alone a book about (God Forbid) economics. We watch TV and eat fast food in a gluttonous orgy of utter mindlessness. And George Bush's lies are spread by the empty-headed simps who sit in front of the FOX NEWS cameras and spew ANYTHING that they are told to spew. It boggles the mind. Bush says things are getting better, because he NEEDS things to SEEM like they're getting better. And we believe him because, well, because we are dumb. I mean, what else is there to say? Sorry for being so cold, but reality cannot be changed. And the reality here is that Bush is a liar, Paulson is a liar, and the entire system of FRACTIONAL RESERVE BANKING is going right down the shitter.

The global economy is in deep DEEP trouble, and hurling trillions of dollars of OUR $$$ at the situation, in order to increase lending and thus increase our level of DEBT, when it's lending and DEBT that got us into this mess in the 1st place, is madness.

So...I sit here in utter disbelief at how obtuse we are. Sure, in the near term things will appear brighter. The DOW will rise, because "panic and worry" will have been replaced by "optimism". I hate to tell you this: The situation that we find ourselves in has NOTHING TO DO WITH EMOTIONS LIKE PANIC OR CONFIDENCE, it has to do with DEBT. DEBT!!!!! And the more we allow criminals like Paulson and Bush to convince us to throw money at the crisis, the more disastrous will be the eventual outcome.

Einstein said it best:Insanity: doing the same thing over and over again and expecting different results.

Is the Panic Over?

You are wrong. Your "Intensive Care" analogy is fatally flawed. WE are NOT experiencing a credit "revulsion": revulsion implies irrational thinking, which in itself implies choice. This is not a crisis of confidence and it is not a crisis of choice...it is a crisis of DEBT.

For centuries, there has been no distinction between MONEY and DEBT. In fact, without debt, as we all know, there is no money, no financial system. The system that, like a parasite, has lived off of its host and made a few people stinking rich while using duplicity, violence and murder to have its way in the world CANNOT BE REFORMED. It cannot. It either has to be thrown away and we have to start from scratch, or it has to continue ad infinitum until we have Warren Buffet the Quadrillionaire, the DOW @ 100,000, and global debt of 14 Septillion dollars. (14 Septillion = 14,000,000,000,000,000... dollars, in round figures of course).

But to have this continued growth, there can be NO MARGIN CALLS, no withdrawals from banks, no fiat currency....simply debt...and of course this CANNOT work. I know, capital "A" Absurd for me to even play this little game. Debt is only "money" if people (a) believe that it is money and (b) if people can and DO service their debt. AND THAT IS WHY THIS CRISIS IS UNLIKE ANY WE HAVE SEEN BEFORE. This time, people are coming to the realization that debt actually ISN'T money. People are slowly beginning to realize that our global financial system is a usurious system in which bankers and other folks in the 'money' business are making trillions of dollars on the backs (that is, debt) of the common folk. You and me.

Long Term, Financials Look Good

RE: "...I believe that Bernanke knows that if he waits until the credit markets unlock and the defaults are done, these companies will be worth much more..."

I have news for you Mr. Happy, it ain't.

Let's take Credit Markets, for example. And just to make things really interesting, I'm gonna ignore LIBOR and TED for the moment.

OK, project this: you are standing in front of a line of 100 people, stretched out perpendicular to your view.

OK, so you have 20 Billion Dollars. (Well, not actually real dollars: more like virtual dollars in guarantees....ya, debt.) Anyway...

You have 20 Billion Dollars. And the person who gave you the 20 Billion $ expects you to lend it out to 5 of the people in the line. And the LIBOR is coming in, and the TED spread is falling, and everything in 'the numbers' seems to point to this being a good way to make some cash: loan the $ out at a nice % of return, build on the 'principle', repay the 20 Billion $ and make a tidy li'l profit. Because that IS the name of the game here: PROFIT.

Hmmmm, but wait. There's a pretty good chance that at least 10-20 of these folks have a locked safe full of CDS "assets" that they are just praying that they can settle...not through continuing the lending cycle down to the consumer, but through holding onto the cash until their swap-based exposure comes to light, and then having the reserves on hand to settle margin calls without having to go belly up. Hmmmmm....kind of a crap shoot here. To whom do you loan the $$$??? Whom do you trust? They all have their hands out. They all appear sincere and well-mannered.

Oh ya. Another dilemma. You yourself also have a lot of vulnerability with regard to CDS and other worthless instruments gathering dust in your own vaults. AND, there's a pretty good chance---because these derivatives are sold and traded through dozens, if not hundreds, of unregistered, unrecorded transactions---that you may have to face the piper sometime down the road as some OTHER institution gets called to the carpet and one of your CDS bundles is unfortunately involved in the maelstrom.

LIBOR is down, TED is down...things look good. But the reality of the CDS worm leaves the LIBOR and TED spreads inconsequential to your decision-making processes.

Your choice? You sit on the 20 Billion $$$ and pray it's enough to cover your vulnerabilities as the swaps hit the fan over the coming weeks and months. (Of course, the dudes who lent you the 20 Billion are pissed and they show up with guns. Hmmm, what to do what to do?)

"Risk" has changed in ways we could never have imagined 30 years ago. Due to the unregulated nature of the Derivatives market, and because the bonds and other instruments being 'insured' didn't actually have to be 'one degree of separation' from the seller, we have a multi-trillion dollar, multi-trillion tentacled parasitic beast just waiting to bore through the leg of a few major financials....and then it's bye bye baby.

In your world Michael, there will come a time when people will once again be able to service their growing debt, where real capital growth will lead to economic expansion, and where the Fractional Reserve system will once again find itself on solid footing. BUT THAT CAN NEVER HAPPEN AGAIN MICHAEL.

This time we're talking tens of TRILLIONS of dollars of worthless "assets" in the vaults and on the ledgers of the major and small and every size financial inbetween...WORTHLESS!... Unserviceable debt. So it's not "interesting" ("...The most interesting thought with respect to this transparency is why the Federal Government didn't make companies show how much of this debt was on the books....") that the FED left this part of the process out of its playbook...it is criminal. And until ALL of the books are opened and all of the trillions and trillions of dollars in CDS-based debt is broght into the light, the financial system guided by the principles of Fractional Reserves is dead.

[ED: Comment edited to remove abuse.]

First Glimmers of Optimism

RE: Optimism

I'm optimistic about losing 20 pounds from my waist. I go for walks everyday. I eat vegetables. Everyone can see I'm optimistic. At night, when no one is looking, I eat a two pound bag of M&Ms. At some point people are going to begin to wonder why I continue to seem so optimistic, and yet I am only gaining weight, not losing it. I keep smiling. I'm now 40 pounds overweight. People are getting really spooked by my odd behavior and dimpled grin. I'm fat. Ooops, I had a heart attack and died, but I died with a smile on my face, optimistic to the end.

Here's the thing...and I am admittedly awed---like, not in a good way but in a stunned-by-it-all way---by all of the "optimism" and talk of turnarounds and "greasing" the wheels of the short term debt market, etc.

Virtually all of the financial institutions in the world have vaults full of worthless "assets", trillions of dollars "worth" of NOTHING! And so the governments of the world make all of these life saving guarantees, and the markets turn green, and smiles abound on the floors of the Markets, and the world is on the right track!!

Oh wait. Doesn't all of this bad paper eventually have to come to light? It cannot simply disappear. It cannot be purchased away by government guarantees---when in fact these governments are in the red as well. At some point, reality must win out.

Does anyone watch Star Trek?

There is a great Star Trek episode from the late 1960s entitled “Specter of the Gun”. Kirk, Spock, McCoy, Scotty and Chekhov are compelled to fight Wyatt Earp and his gang in a showdown at the O.K. Corral. Curious aliens have, of course, orchestrated the battle: some kind of a moral psychodrama. Anyway, in this episode Mr. Spock develops a “knock-out” gas from ingredients found in Doc Holiday’s office. The protagonists logically figure that if they can render the Earp Gang unconscious, then they won’t have to fight them at the O.K. Corral. (And as we know, the Earp’s defeat the Clanton’s at the gunfight at the O.K. Corral. And as Mr. Spock so aptly points out, “history cannot be changed.”)

All are certain that the gas will work; but just to be sure, Scotty volunteers to be the test subject for the agent. Spock, for one, is spellbound, when the potion fails to work. “Fascinating” he quips. Spock goes on to explain the enormity of this paradox. “The potion” he explains, “must work. By all laws we know, it simply cannot fail. And yet it has failed”. Spock goes on to theorize that a massive manipulation of the crew’s brain patterns must be occurring. He also explains that this knowledge, if used correctly, can save the crew from certain demise at the O.K Corral.

Back to 2008. At some point, the massive manipulation of our brains, orchestrated by Spanky Paulson and all of his uber-wealthy cronies, will end. Reality will intrude. The global economy MUST crash because there are simply too many dollars "worth" of worthless assets...and no amount of mass hypnosis or empty words or spin can change reality.