Saturday, September 27, 2008

They Need Bail, Not A Bailout

Trouble in Banktopia

"The financial system is blowing up. Don’t listen to the experts; just look at the numbers.

Last week, according to Reuters, “U.S. banks borrowed a record amount from the Federal Reserve nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial crisis since the Great Depression.” The Fed opened the various “auction facilities” to create the appearance that insolvent banks were thriving businesses, but they are not. They’re dead; their liabilities exceed their assets. Now the Fed is desperate because the hundreds of billions of dollars of mortgage-backed securities (MBS) in the banks vaults have bankrupt the entire system and the Fed’s balance sheet is ballooning by the day. The market for MBS will not bounce back in the foreseeable future and the banks are unable to roll-over their short term debt. Game over. The Federal Reserve itself is in danger. So, it’s on to Plan B; which is to dump all the toxic sludge on the taxpayer before he realizes that the whole system is cratering and his life is about to change forever. It’s called the Paulson Plan, a $700 billion boondoggle which has already been disparaged by every economist of merit in the country."

2 Comments:

Blogger Devin said...

This is going to get so ugly. This is just the start. I can't even imagine what 2009 is going to be like. There is a deep undercurrent of fear among people I meet. I am not an oldster by any means but I haven't felt these vibes since I have been around. best wishes as always-Devin

27/9/08 11:27 PM  
Blogger nolocontendere said...

This swindle will wind up becoming trillions, the banksters and corporate swine will flee, and the dollar will head for pesoville anyway next year. We are indeed very, very screwed.

28/9/08 12:16 AM  

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