Wednesday, March 19, 2008


The ABCs of the financial situation by Roubini:
This is the most radical change and expansions of Fed powers and functions since the Great Depression: essentially the Fed now can lend unlimited amounts to non bank highly leveraged institutions that it does not regulate. The Fed is treating this run on the shadow financial system as a liquidity run but the Fed has no idea of whether such institutions are insolvent. As JPMorgan paid only about $200 million for Bear Stearns – and only after the Fed promised a $30 billlion loan – this was a clear case where this non bank financial institution was insolvent.
It's short, read it all, and then tremble. Because it's not about economics, it's about politics. The Treasury of the United States is being (has been) delivered up to the kleptocracy. You think you've got money? You've got shit!

When the $800B Fed funds are tapped out, they (the Fed) have the power to print all the paper money that might be necessary to prop up the Big Shitpile. How many trillion will that be? It makes the attempt to loot Social Security look like knocking over the local Fast and Easy Mart.

It's the validation of unlimited leverage, and the fact that it cannot be allowed to fail. From LTCM to the present, the monetary powers have been at the peak of their dominance. The failure of the United States political establishment to come to grip with this will, in the estimation of Blog Simple, lead to their marginalization from world power. There is no real reason that most of the US cannot be allowed to descend to third or fourth world conditions. A security apparatus is in place for it, and ready to spring into action.


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