Wednesday, March 19, 2008


That red line going straight down is the evidence of George W. Bush and Dick Cheney LOOTING the US Treasury, almost from the moment that they stole the White House after stolen election (Florida) November-December 2000. The one brief, blue upswing, 2004-2007, was billions of investor dollars fleeing Wall St. and pouring into real estate, homes, and construction projects. That real-estate boom-cycle briefly fueled a stock market boom, as well, but now, in the first three months of 2008, the Dow Jones average (one of many averages, but a good typical indicator) is down from over 14,000 to low 12,000 range, shedding almost 20% of value in only several months... and the real estate market is now in even worse shape.

Bush, Cheney, and the masters of the universe on Wall St. have effectively looted US taxpayers of at least two trillion dollars... and because American workers and families are the golden goose upon which Wall St. fortunes are made, Wall St. now has little to show for its complicity in that mugging of America's productive economy.

When do right-wing Republicans LOVE big-government SOCIALISM??

- answer: WHEN IT BAILS OUT their beloved "investor" class, Wall St. bankers, and ruling class hedge-funds operators.... all of whom would have MELTED DOWN by now if not for fed intervention - BIG SPENDING, TAX-and-SPEND, US government TREASURY intervention to save greedy, corrupt, incompetent, lying, WELFARE-SOCIALISM grabbing "capitalists"!

EVEN WORSE, the cowering US media and 'Democratic' Congressional "leadership" - - even the ostensibly "technically competent" financial media - PRETENDS NOT TO NOTICE! ONE TRILLION DOLLARS spun off of Mr. Bush's government's printing presses over the past 9 months to Bail Out Wall Street.... and the STUPID, CRAVEN DEMOCRATS and media PRETEND NOT TO NOTICE!

NUMBERS, NUMBERS, NUMBERS EVERYWHERE on Wall Street, in the government, and in the US financial media... but no one understands or can grasp on to this nice, simple, round number, ONE TRILLION DOLLARS of US Treasury bailouts for Bush's economy and Wall Street cronies, in past 9 months, alone?!!!

Our Congress and media are like the SHEEP in George Orwell's novel, "Animal Farm," who, every time some courageous dissidents tried to confront the rapcious greed of the ruling pigs, were DROWNED OUT by the raucous, chorus bleating of the sheep!

(with a due tip-o-hat to Mr. Aaron Task, for being the ONLY financial reporter we have seen, put THE most important financial news of the past year, into one simple story, where it belongs.)


Fed Heads Back to the Well, Will It Run Dry?

by Aaron Task in Investing,
Posted Mar 18, 2008,JPM,TMA

Since September 2007, the Federal Reserve has cut the fed funds rate by 225 basis points and, in just the past 9 months, has injected approximately $1 trillion in the financial system via a combination of existing and newly created mechanisms.

Heck, just since Friday, the Fed has pledged to support a bailout of Bear Stearns, then backed JPMorgan's takeover by pledging to backstop $30 billion of Bears' "less liquid assets."

But, wait, there's more: The Fed also cut its discount rate (the rate at which it lends directly to financial institutions) and opened the discount window to brokerage firms (vs. just banks) for the first time since the 1930s.

After so much frenzied activity, you'd think the Fed would be due for a rest. Instead, Ben Bernanke & Co. are widely expected to further slash the fed funds rate at today's scheduled policy meeting.

The talk on Wall Street is anywhere from a 50 to a 125 basis point cut, with the fed funds futures market putting the highest odds on a full 1 point (or 100 basis point) cut to 2%.

The accompanying chatter on Wall Street is the Fed is pushing on the proverbial string, i.e. using the wrong tool (the fed funds rate) and using up its firepower and credibility in a futile attempt to fix a problem in the credit markets.

Worse, the "Sinners in the Hands of an Angry God" crowd believes the Fed is merely postponing and prolonging the pain by delaying the inevitable comeuppance for Wall Street's debt and derivatives binge. The Fed's goal, in this view, is to bailout fat-cat speculators at the expense of average, hard-working taxpayers, savers and the dollar generally.

While I certainly understand (and sympathize) with that sentiment I feel compelled to offer an alternative outlook, courtesy of Mark Dow of Pharo Management, an emerging-market-focused macro hedge fund with over $2 billion in assets.

Dow has the unique perspective of having worked at both the IMF and Treasury before heading to the buyside several years ago. From his perch (and knowledge of the institution) the Fed is "not trying to make people whole" but trying to prevent more "innocent bystanders" from becoming victims to others' mistakes. (A prime example being Thornburg Mortgage which wasn't exposed to subprime mortgages but was exposed to overnight lending markets, which have essentially frozen. Plus, the Fed didn't exactly rescue Bear Stearns' shareholders.)

"The Fed doesn't want to avoid a bad outcome – they want the unwind to occur in orderly fashion," Dow says, comparing the Fed's actions to the circuit breakers adopted by the NYSE in the wake of the 1987 market crash.

"In a panic, people make mistakes" and the Fed is trying to prevent the obvious distress in the financial markets from becoming a full-blown panic, he says. For academic types, Dow cites the economic theory of Path Dependency, which suggests the route a market or asset takes can greatly influence where it ends up.

In other words, a slow-motion train wreck that wears people down is preferable