Perceived Wisdom

Which are the true welfare queens?

AIG
Citigroup
Goldman Sachs
Bank of America
Morgan Stanley
Halliburton
Blackwater
GM
Chrysler
Wells Fargo
JP Morgan

The Big Bank Bailout Scheme: Nothing more than bankruptcy for profit.

Bank Rescue Programs: Setting the Stage for More Looting?

The authors define looting as an upscale version of bankruptcy fraud, except that bankruptcy fraud gets prosecuted (in theory) but the white collar rent seeking version, where executives and staff pay and perk themselves to the point where it derails the business, somehow never is pursued in the US.

[naked capitalism]


Causes of the Meltdown

What I believe is causing the melt down:

1) Too many people have the same retirement investment strategies. It was great when they were investing their money, but it is disastrous when they all need to live off of the money at the same time. Like now.

2) There has been a huge contraction in the effective money supply when the complex derivative and mortgage products were halted.

[Patrick.net]

Estimates which answer the quesion in the second to last para: anywhere from 30 Trillion to 750 Trillion (“three-quarters of a quadrillion dollars“). Quite a spread. But since most deriviatives are unregulated and Credit Default Swaps are essentially ‘private bets’ the true number cannot be known. At least not until an forensic audit / autopsy is performed… after the ‘patient’ has died.

Wait, but not for long,  as I do believe  the powers that be are working dilligently on that.

‘Official’ Facts and Figures

8.1 % – unemployment rate

8 % – percentage of delinquent mortgages

8.3 Million – homes underwater (negative equity)

8.6 Million – can only find part-time jobs

5 Million – homes in foreclosure

30 % – increase in BK proceedings

$500 Billion – FDIC request for funding (woefully inadequate)

Has it only been ten years?
Long Term Capital Management is important to remember because that bailout made it clear to the pigs that their trough would always be full, no matter how bad the little piggies acted.

Can you oink ‘moral hazard‘?

Too build something great takes much time; however it can be destroyed in a fortnight. Make sure you have a sound foundation to rebuild from, and always remember: patience is a virtue.

The Modern Banking System is Like a Broken Dam: At 8% Annual Compounded Growth (the Bernie Madoff rate of return) it would take us 11 years to reach the Peak of the S&P 500. Old Ideas and Prophets Falling Hard.

Before reading this article, I would like you to take a deep breath. Okay? If you feel like candy bursting out of this broken economic piñata, you are not alone. Things are dire and virtually every piece of news we read reinforces this premise. On Wednesday, we had a nice technical rally and you should have seen the glimmer of hope in the eyes of those on the cable financial shows. We all want a recovery but a recovery based on hard work and getting back to what is financially prudent. Not the talking heads. They could care less about the ADP employment report that showed 697,000 jobs lost in the month of February. All they cared about was whether a handful of gluttonous financial stocks moved one or two points because the U.S. Treasury and Federal Reserve are intravenously pumping capital into the veins of these flailing institutions while allowing the American taxpayer to flounder like a carp yanked out of the stream.

The poorly planned Troubled Asset Relief Program (TARP) of 2008 has been a complete boondoggle. How have things gone in the stock market since the TARP came about? Well let us take a look:

[Dr. Housing Bubble]

..n- .

Prices are falling because the free market works.

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