[toofasttooslow]

Originally Posted by scottwww

Have you looked at TIPS? In one of my accounts (401k) I have a TIPS fund. It has been easily the best gains over the last year (11.87%). I wonder what it would do in a market melt-down.

TIP S have traditionally (since 97 or so) been a great hedge against inflation (when inflation is under control). If the U.S. currency continues to deflate and if inflation continues to rise you could lose more than you bargained for.

That and the fact that quite frankly I would be worried about anything related to the Treasury right now.

[toofasttooslow]

WTF !!???

Congress to Consider Auto Loans in Spending Bill

A proposal to fund $25 billion in low interest loans to the auto industry was included on Monday in draft legislation that could be considered by the U.S. Congress later this week.

The must-pass spending measure would set aside $7.5 billion in taxpayer funds to cover default risk and issue the government-backed credit.

President George W. Bush is expected to sign the spending bill that would keep the government funded.

The loan program is mainly aimed at helping struggling U.S. manufacturers General Motors [GM 10.68 -0.90 (-7.77%) ] , Ford Motor [F 4.90 -0.05 (-1.01%) ] , and Chrysler, which is controlled by private equity firm Cerberus Capital Management.

A congressional aide said the draft language would be included in the final bill, a victory for automakers and their allies in Congress who have pushed hard in recent weeks for lawmakers to act swiftly.

Lawmakers had planned to leave town at the end of this week, but a sweeping proposal by the Bush administration over the weekend for a government bailout to address the crisis on Wall Street has muddled the congressional calendar.


The draft bill also includes $10 million for the Energy Department to administer the loans.

However, there was no language in the legislation to address an auto industry request for Congress to ease the rules under which they might qualify for help.

Energy Department officials are drafting regulations for the loan program.

The auto industry hopes to access money sometime in 2009.

The unfunded loan package was included in last year's energy law to help auto manufacturers and their suppliers meet demands for making more fuel efficient cars.

The law requires that new vehicles on U.S. roads get 40 percent better fuel efficiency by 2020.

Loan proceeds could, for example, be spent on retooling plants from production of gas guzzling sport utilities and pickups to smaller cars powered by advanced technology engines.

These could include alternative fuels or gasoline-electric hybrids or all-electric vehicles.

The U.S. badly trails Japanese rivals in cars that rely heavily on advanced batteries.

GM, Ford and Chrysler executives mounted a lobbying blitz in recent weeks meant to convey urgency and to assure lawmakers that the loans would be repaid, and that it was not a bailout.

Due to their poor finances and uncertain outlook, GM, Ford and Chrysler face worsening credit prospects.

They complained to lawmakers that borrowing costs for making the necessary changes in their business were prohibitively expensive.

GM on Friday announced it would draw down the remaining $3.9 billion of its secured credit line to maintain its financial flexibility as it restructures.

Fitch Ratings cut GM's rating further into junk territory, citing concerns about liquidity.

Standard & Poor's Ratings Service said the move did not immediately affect GM's ratings.

Turnaround specialist Wilbur Ross championed auto industry loans at the Reuters Restructuring Summit, saying help for automakers would help the kinds of consumers that Congress has said it wants to target with any bailout of the financial services sector.

Copyright 2008 Reuters. Click for restrictions.

[nissan]

This entire proposal is getting out of hand...it's like 90% being written by special interest groups.

Lol the implicit admission by the SEC that it's shorting rules were ridiculous shows how knee jerk reactions by regulators attempting to appease whiney CEOs/special interests does not play out well for an economy which thrives on free market principles. SEC now allows market makers & hedgers to short.

[scottwww]

Originally Posted by nissan

This entire proposal is getting out of hand...it's like 90% being written by special interest groups.

Lol the implicit admission by the SEC that it's shorting rules were ridiculous shows how knee jerk reactions by regulators attempting to appease whiney CEOs/special interests does not play out well for an economy which thrives on free market principles. SEC now allows market makers & hedgers to short.

It's great that both the Democrats and the Republicans seem to be rejecting this thing ($700 billion bailout). The plan is Socialist and un-American. Maybe the whole idea should be scrapped. The poison fix could be more deadly than the disease.

[scottwww]

The FBI is now investigating Fannie Mae, Freddie Mac, Lehman Brothers, and AIG. They are looking at possible fraud by those four institutions. The FBI will focus on the firms and their top management and executives who ran them.

[toofasttooslow]

Originally Posted by scottwww

The FBI is now investigating Fannie Mae, Freddie Mac, Lehman Brothers, and AIG. They are looking at possible fraud by those four institutions. The FBI will focus on the firms and their top management and executives who ran them.

Good! As far as I'm concerned they should all be charged with securities and exchange fraud. If I had my way.... well you can guess what that would be.

[toofasttooslow]

Hmm, very interesting why is the Fed pulling money out of the market?

As always take what you see with a grain of salt, but the table is correct.


http://market-ticker.denninger.net/a...-Of-Mouth.html

[toofasttooslow]

Home sales at 17 year low.

Durable goods down 4.5%

Jobless rate highest as its been in 8 years

Dollar falling like a gold painted terd in the Hudson

Congress is getting ready to extend our national debt by nearly a trillion dollars and award it to the most unscrupulous lot in the world.

Life is good...

[toofasttooslow]

Even more good news !


http://www.reuters.com/article/compa...16693720080925

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.

A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills

[toofasttooslow]

Oh what the hell!

Wamu was siezed by the feds?? Ok this has got to stop.

JPMorgan Buys Failed WaMu Assets for $1.9 Billion
Topics:Mergers & Acquisitions | Banking
Sectors:Financial Services | Banks
Companies:JPMorgan Chase and Co | Washington Mutual IncBy Reuters | 25 Sep 2008 | 07:32 PM ET Font size: Washington Mutual was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase for $1.9 billion.

The rescue marks a historic step to clean up a U.S. financial system littered with toxic mortgage debt.



Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said.

The bailout came after the thrift suffered deposit outflows of $16.7 billion since Sept. 15, the OTS said.

"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.

Seattle-based Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The nation's largest previous banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.

The transaction gives JPMorgan roughly 5,400 branches, and fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States.

It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price.

"Jamie Dimon is clearly feeling that he has an opportunity to grab market share, and get it at fire-sale prices," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati. "He's becoming an acquisition machine."

On a conference call, JPMorgan said the transaction will add to earnings immediately, and result in $1.5 billion of annual cost savings, including from the closure of less than 10 percent of the combined company's branches. He also said JPMorgan plans to issue $8 billion of stock.

The acquisition does not cover Washington Mutual's equity, senior debt and subordinated debt holders, the FDIC. The FDIC said the transaction will not affect its roughly $45.2 billion deposit insurance fund.

The transaction also comes as Washington wrangles over the fate of a $700 billion bailout of the financial services industry, which has been battered by mortgage defaults and tight credit conditions, and evaporating investor confidence.


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"It removes an uncertainty from the market," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "The problem is that markets are in a jittery stage. Washington Mutual provides another reminder how tenuous things are."

Washington Mutual's collapse is the latest of a series of takeovers and outright failures that have transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.

These include the disappearance of Bear, government takeovers of mortgage companies Fannie Mae and Freddie Mac and the insurer American International Group, the bankruptcy filing of Lehman Brothers Holdings, and Bank of America Corp's planned purchase of Merrill Lynch.

JPMorgan, based in New York, ended June with $1.78 trillion of assets, $722.9 billion of deposits and 3,157 branches. Washington Mutual had 2,239 branches and 43,198 employees.

Shares of Washington Mutual [WM 1.69 -0.57 (-25.22%) ] plunged $1.24 to 45 cents in after-hours trading after news of a JPMorgan transaction surfaced. JPMorgan shares [JPM 43.46 2.96 (+7.31%) ] rose $1.04 to $44.50 after hours.

119-Year History

The transaction ends exactly 119 years of independence for Washington Mutual, whose predecessor was incorporated on Sept. 25, 1889, "to offer its stockholders a safe and profitable vehicle for investing and lending," according to the thrift's website. This helped Seattle residents rebuild after a fire torched the city's downtown.

It also follows more than a week of sale talks in which Washington Mutual attracted interest from several suitors.

These included Banco Santander, Citigroup [C 19.41 0.45 (+2.37%) ], HSBC Holdings [HBC 81.59 1.79 (+2.24%) ], Toronto-Dominion Bank [TD 62.00 --- UNCH (0) ], Wells Fargo [WFC 34.12 -0.15 (-0.44%) ], as well as private equity firms Blackstone Group and Carlyle Group, people familiar with the situation said.

[toofasttooslow]

Some common sense from Ron Paul.

The Creation of the Second Great Depression

by Ron Paul
by Ron Paul


DIGG THIS

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters."

That describes the current bailout package to a T. And we’re being told it’s unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences – predictable, that is, to those who understand sound, Austrian economics – are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
Then there’s this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
There goes your country.

Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don’t make me laugh.

Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind – another example of the big choice we’re supposedly presented with this November: yes or yes. Now, with a backlash brewing, they’re not quite sure what their views are. A sad display, really.

Although the present bailout package is almost certainly not the end of the political atrocities we’ll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

[scottwww]

Originally Posted by gum5h03

Some common sense from Ron Paul.

Ron Paul has a great deal of good common sense. It's too bad that the one big party doesn't have any others like it.

When I called my U.S. Senators and my U.S. Representative earlier today, I left them messages that do not mince words, something like:

Vote no on anything that could be considered a bailout using taxpayer money... my money. Vote no on anything that resembles socialism. Listen to Ron Paul who has been warning all along about this financial disaster. I am livid at the attitude of all the Republicans and Democrats who claim to have known about these problems for a year, but did nothing to really deal with it, just acting like it is all OK. Now they suddenly say that there must be $700 billion more in bailouts and more socialism THIS WEEK! You aren't getting my money. VOTE NO!

Call (202) 224-3121 for the U.S. capital switchboard operator.

Ask for YOUR representative by name and state. Tell them what you think.

http://www.house.gov/house/MemberWWW.shtml
http://www.senate.gov/general/contac...nators_cfm.cfm

[toofasttooslow]

I do believe that asking for the 700 billion dollar infusion was their checkmate move. Either way we hurt from it. If they had let the market correct itself it would come back fairly soon, but now there's no telling when it will come back.

If they say yes it will appear that all is well and the bubble will again inflate (temporarily). They will eventually run out of money again though.

Incidently, interbank lending and credit will not be any better than it is today. The 700 billion dollars is to purchase bad securities at auction prices. The investment vehicles won't recoup their losses for a very long time once they go to auction. Their liquidity will remain the same and thus no money to lend.

If they say no the markets will crash as people panic and run on their investment houses.


Either way the average Joe is going to be hosed in the end.

[krnshinsa]

I'm not sure if this belongs here but one of my friends said that a 2nd great depression is a possibility. I didn't get to discuss the facts (besides the obvious financial crisis we are in) but is this really possible to happen soon?

kinda scary if true.

[jaiman]

Originally Posted by gum5h03

Either way the average Joe is going to be hosed in the end.

Not necessarily. The positions that Treasury will buy will be sold by reverse auction, that means the bank who sells will be the one who needs cash the most and will accept the lowest price. Treasury can hold these on the books with no MTM, and make no mistake its the MTM on these loans that is killing the banks. If held to maturity I'd expect a large majority of these loans to perform, but right now they are being held on the books of banks as if the vast majority will be nonperforming. The American tax payer could end up making a huge return on this trade.

Originally Posted by gum5h03

Incidently, interbank lending and credit will not be any better than it is today. The 700 billion dollars is to purchase bad securities at auction prices. The investment vehicles won't recoup their losses for a very long time once they go to auction. Their liquidity will remain the same and thus no money to lend.

This is where you are wrong. Liquidity has dried up beacuse banks need to hoard cash to offset the MTM on these loans. Because banks want to hold cash they will not lend to each other. Remove the mortageges from the books, their capital requirements drop dramatically and business can go back to normal.

[toofasttooslow]

Originally Posted by jaiman

Not necessarily. The positions that Treasury will buy will be sold by reverse auction, that means the bank who sells will be the one who needs cash the most and will accept the lowest price. Treasury can hold these on the books with no MTM, and make no mistake its the MTM on these loans that is killing the banks. If held to maturity I'd expect a large majority of these loans to perform, but right now they are being held on the books of banks as if the vast majority will be nonperforming. The American tax payer could end up making a huge return on this trade.




This is where you are wrong. Liquidity has dried up beacuse banks need to hoard cash to offset the MTM on these loans. Because banks want to hold cash they will not lend to each other. Remove the mortageges from the books, their capital requirements drop dramatically and business can go back to normal.

So my beef with the above is that you're basing that on the fact that there has been some transparency in their financials and that they are really in not that bad of shape. In an ideal economic situation you would be right, but in the case of what's happened I doubt we are even close from an ideal situation. We've seen time after time banks and investment houses claim they are doing "ok" one week only to fail the next week. It's because of their accounting practices. There is definitely a reason why the FBI is investigating these institutions.

Also, the Fed and other "large" banks ...cough...cough...J.P. Morgan have been dicking with the market since day 1. We really have had some dare I say nefarious decisions being made by the main Fed banks througought the entire ordeal. Just take a look at the slosh from the Fed for the past few weeks. Very interesting why they're taking liquidity out of the market when supposedly the entire problem is one of liquidity.

In this type of environment the common man will absolutely NOT benefit and if we give them 700 billion more they'll just use it to finance their own takeovers and agendas. This is financial war plain and simple.

Here is a good article on the whole subject:

Hundreds of Economists Urge Congress Not to Rush on Rescue Plan

By Matthew Benjamin

Sept. 25 (Bloomberg) -- More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.

In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.

``It doesn't seem to me that a lot decisions that we're going to have to live with for a long time have to be made by Friday,'' said Robert Lucas, a University of Chicago economist and 1995 Nobel Prize winner who signed the letter. ``The situation may get urgent, but it's not urgent right now. Right now it's a financial sector problem.''

The economists who signed the letter represent various disciplines, including macroeconomics, microeconomics, behavioral and information economics, and game theory. They also span the political spectrum, from liberal to conservative to libertarian.

Some lawmakers are already citing the letter as reason not to endorse the Paulson plan. Today Senator Richard Shelby, a Republican from Alabama, said he has ``five pages of the leading economists in America that wrote to me and the leadership saying the Paulson plan is a bad plan. It will not solve problems. It will create more problems.''

`How Capitalism Works'

The letter, initially conceived by economists at the University of Chicago, was signed by professors from dozens of American universities and several outside the U.S.

David I. Levine, a professor of economics at University of California-Berkeley, says the current plan being discussed has the wrong structure.

``The structure is designed for the Treasury to be the first line of defense,'' said Levine, who studies organizations and incentives. ``A whole lot of people made money supposedly by putting their capital at risk, and those are supposed to be the first line of defense, that's how capitalism works.''

Jeffrey Miron, a Harvard University professor and self- described libertarian, objects to what he says is `` a stunningly broad, aggressive government intervention without appropriate precedents.''

He advocates allowing the normal process of business failure and bankruptcy to run its course. ``It's just nothing like the calamity the administration is making it out to be,'' he said.

Unprecedented Power

Erik Brynjolfsson, of the Massachusetts Institute of Technology's Sloan School, said his main objection ``is the breathtaking amount of unchecked discretion it gives to the Secretary of the Treasury. It is unprecedented in a modern democracy.''

Advocates for a rescue plan this week point to a seizing up of credit markets, reflected in elevated inter-bank lending rates, as reason for action. Some economists are unconvinced.

``I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout,'' said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory.

[scottwww]

Email to my U.S. Senator:

Vote NO on anything that resembles a bailout for financial institutions or other businesses. Also Vote NO on anything that bears resemblance to socialism or fascism.

I have never voted for Rep. Ron Paul or given him any direct support, but I respect him and his message more now than ever. Ron Paul is one of the few people in Congress who has tried to do anything substantive to reform the financial system.

Rather than committing taxpayer funds to provide hundred of billions of dollars to the Treasury Department and/or the Federal Reserve to manage the economic crisis, instead let failing businesses fail. The long-term effects of economic collapse is preferable to the long-term effects of more government, more agencies, and the tyranny of the powerful over the many. Let it crumble.

From the ash heap, maybe we can eliminate the Federal Reserve. End the use of fiat money. Consider ending naked trading in derivatives.

It is a tragedy that the government that is of, by, and for the people has made an environment for business to abuse the people. You further enrich the wealthy at the expense of all. This cycle must stop. Do not tax us more to try to fix it. You only make it worse. Government must decline, and freedom with liberty must increase.

The founders of this nation warned about all that is happening today. That Congress and the Presidency have largely ignored the warnings, and appear to not have any idea of what this nation is supposed to be is troubling. We must stop it while we can. This monster is only getting bigger.

There is no better opportunity to restore the Constitutional Republic and our freedom from tyranny than in a time of upheaval. Do not take us down the path that government advocates and gigantic businesses would have us go.

[nusevad]

You guys do know that if the bailout is not passed our country is basically "out of business" anyone that is opposed to it has no idea wtf is going on and the repercussions that it will cause.

You can write letters, strike, petition all you want, but in the end, the bailout is eminent. Both parties democratic/rep. knows this. But either wants to support it because 4-5 years from now, when the tax payers have to start paying, no one wants to be responsible for it, so what they are doing right now is pointing fingers even though they know it has to be done.

[Aija]

Originally Posted by FifthStreetz

You guys do know that if the bailout is not passed our country is basically "out of business" anyone that is opposed to it has no idea wtf is going on and the repercussions that it will cause.

You can write letters, strike, petition all you want, but in the end, the bailout is eminent. Both parties democratic/rep. knows this. But either wants to support it because 4-5 years from now, when the tax payers have to start paying, no one wants to be responsible for it, so what they are doing right now is pointing fingers even though they know it has to be done.

+1

[scottwww]

The depression of the 1930s brought us bigger government. Maybe the depression of 2009 will bring us less government. It appears that nothing else will stop government. If this bailout happens, it adds even more to bigger government than we already have. Fannie Mae and Freddie Mac should have gone bust. Maybe AIG shouldn't have gotten the 85 billion dollars, but at least they are not off the hook. They have to pay it back.

The truth about the Republican establishment is becoming more obvious even to those who drink it in. They are not much different than the Democrat establishment. They have proven in their majority of 2003 to 2006 that they have little to no intention of fulfilling their promises of limited government. They only talk about that. They don't DO IT.

Stop the cycle now. If the Federal Reserve System survives this, then we have not learned our lesson. They need to fall and not rise again.

[toofasttooslow]

Originally Posted by FifthStreetz

You guys do know that if the bailout is not passed our country is basically "out of business" .

And you know this for a fact do you?

That's interesting since the people requesting the money don't even know what it will or won't do.

[toddy]

If anyone had even the slightest doubt about who pulls the strings in this country, this whole debacle should tell you the answer. (Hint: its not the people)