Bernanke's Next Big Bail Out Plan

[Hugo Chavez]

The Federal Reserve is presently considering an emergency operation that is so risky it could send the dollar slip-sliding over the cliff. The story appeared in the Financial Times earlier this week and claimed that the Fed was examining the feasibility of buying back hundreds of billions of dollars of mortgage-backed securities (MBS) with public money to restore investor confidence and clear the struggling banks' balance sheets. The Fed, of course, denied the allegations, but the rumors abound. Currently the banking system is so clogged with exotic investments, for which there is no market, it can't perform its main task of providing credit to businesses and consumers. Bernanke's job is to clear the credit logjam so the broader economy can begin to grow again. So far, he has failed to achieve his objectives.

cont... http://counterpunch.org/whitney03292008.html

[240 is Back]

ya know... last night i was thinking about all this financial mess... and while our leaders always screw us a little, the country is still #1, the only superpower.  So they're not doing a *bad* job.  They get extra $, hook up their friends, but then again, they are smart enough to run the world and they're settling for a fixed income govt position making what, $100k?  Why should a guy as smart as Bernake settle for a civil servant job?  Hear me out lol... if you were smart enough to keep the USA #1 in the world and the dollar aliver despite being a relic and the US not having many competitive advantages anymore, wouldn't you be worth millions/billions, not $125k a year or whatever he's getting?  So if he hooks up his bear stearns brothers, it's not the end of the world here.  Not defending pilferage, just pointing out how they might think it's justified.

If everyone smart enough to do top level govt jobs went to pvt sector, we'd be screwed.  You know?  If cheney and clinton and obama and all of them worked for the pvt sectory - and they easily could and clear millions a year...

[stormshadow]

ya know... last night i was thinking about all this financial mess... and while our leaders always screw us a little, the country is still #1, the only superpower.  So they're not doing a *bad* job.  They get extra $, hook up their friends, but then again, they are smart enough to run the world and they're settling for a fixed income govt position making what, $100k?  Why should a guy as smart as Bernake settle for a civil servant job?  Hear me out lol... if you were smart enough to keep the USA #1 in the world and the dollar aliver despite being a relic and the US not having many competitive advantages anymore, wouldn't you be worth millions/billions, not $125k a year or whatever he's getting?  So if he hooks up his bear stearns brothers, it's not the end of the world here.  Not defending pilferage, just pointing out how they might think it's justified.

If everyone smart enough to do top level govt jobs went to pvt sector, we'd be screwed.  You know?  If cheney and clinton and obama and all of them worked for the pvt sectory - and they easily could and clear millions a year...

The free market is what made this country prosperous and great, not intelligent government officials.

[G o a t b o y]

  So if he hooks up his bear stearns brothers, it's not the end of the world here.  Not defending pilferage, just pointing out how they might think it's justified.

How exactly did he "hook up" Bear Stearns?  Anyone holding stock in BSC lost pretty much all their money.  The people being protected were Bear's customers (accountholders) not the company's owners, who lost everything.

Now you might argue that Jamie Dimon and JPM got "hooked up", but that's another topic.

[calmus]

 The people being protected were Bear's customers (accountholders) not the company's owners, who lost everything.

Interesting terminology.

[G o a t b o y]

Interesting terminology.

I used the terminology for a reason.  Many dipships don't understand the difference between accountholders, stockholders, and creditors.

[calmus]

I used the terminology for a reason.  Many dipships don't understand the difference between accountholders, stockholders, and creditors.

Are you joining the Beach Bum brigade of douchebag players of semantic games?  It seems pretty clear that 240 was indicating a bunch of millionaires got hooked up, which is exactly what happened...

The "accountholders" with Bear Stearns are not any different from the bigger BS shareholders in that they're all "sophisticated" investors, not some widowed grandma with a savings account. They don't need any "protection" as you put it. 

You risk big, you lose big.  One would have thought an ardent proponent of capitalism such as yourself would be down with that. 

There's some speculation that Bernanke did what he did to prevent a chain reaction, with other people in need of "protection" rushing to liquidate their millions from other I-banks.  Who gives a shit?  A good cleaning out would help us all in the long run. 

Your street cred's fading here, goat.

[G o a t b o y]

There's some speculation that Bernanke did what he did to prevent a chain reaction, with other people in need of "protection" rushing to liquidate their millions from other I-banks.  Who gives a shit?  A good cleaning out would help us all in the long run. 

That's exactly what they thought in 1929.

[stormshadow]

That's exactly what they thought in 1929.

Except it would be much worse than in 1929 as nearly everyone with a savings has it in their 401k, so just about everyone has a direct tie to the stock market. 

[240 is Back]

the bear stearns management team all got their giant bonuses in january and CNBC reported they would have had to return them had the company gone belly up. 

[G o a t b o y]

the bear stearns management team all got their giant bonuses in january and CNBC reported they would have had to return them had the company gone belly up. 

If BSC had gone belly-up at this particular point in time, it would have caused a meltdown of epic proportions (to use getbig terminology) in the financial system.  I seriously doubt Bernanke's motivation for engaging in this unprecedented bailout was protecting the bonuses of a handful of Bear executives. 

[Camel Jockey]

Why doesn't the Federal Reserve just leave shit alone?

As for bailouts, who gives a shit about stockholders who lost everything and creditors who'll never collect? That's a risk they assumed, and the government should've let the bank fade into oblivion.

[Slapper]

The free market is what made this country prosperous and great, not intelligent government officials.

Well, the thing is there's never been a free market in the USA. Our economy and companies have alway been able to compete favorably, always, with direct or indirect government intervention.

It's one of the biggest fallacies ever sold to us. Ranks high up there with the USSR being "communist".

[Slapper]

How exactly did he "hook up" Bear Stearns?  Anyone holding stock in BSC lost pretty much all their money.  The people being protected were Bear's customers (accountholders) not the company's owners, who lost everything.

Now you might argue that Jamie Dimon and JPM got "hooked up", but that's another topic.

I find it hard to believe that "the owners" did not get "da call" to dump the shares before the company went belly up. I mean, the hardest hit are the BS employees, especially those who invested part of their retirement in the company's stock.

The Fed dropping the rates suddenly like they did was only a free loan to their JPM compinches. When it comes to the Fed, the last thing they have in mind when making decisions are the regular Joes like me and you. Their "job" has become to provide liquidity for all these corporations and their huge projects as well as our voracious apetite to shop, while the value of the dollars drops to the bottom. For them people get "taken care of" with "trickle-down economics".

In conclusion... fuck it!

[War-Horse]

Its part of the plan.  Collapse the dollar by staging stupid events like un-controlled bubbles.   Expect Mexico to start gaining financial power this year and canada to rise also.   The USA is on the list to be dumbed down for easy manipulation.

[calmus]

That's exactly what they thought in 1929.

So, in other words, you were full of shit with your comments on Ron Paul, the free market, and "socialism" 

[Slapper]

Now that you guys are bringing the Great Depresion into the mix... did you know that the economy took DECADES! to recover from the slump? Did you know that, at the time, people were so fed up with the stock market that they basically stopped even depositing money in banks en masses? Did you know that, in order to get people jobs and bring the economy up, president Roosevelt had to create one of the most masive SOCIALIST programs in the history of mankind: the New Deal? Roosevelt saw what less than 15 of letting CEOs dictate the direction of the economy and decided to: strenghthen trade unions and take power away from Big Business.

Haven't we learned something from history?

[Slapper]

I mean, two economic bubbles in less than 10 years?! Gimme a break! I have yet to see this happen anywhere else.

The FED is the culprit if all of this bullshit. They "lubricate" the economy with free money that they know will devalue the dollar and eventually put more money in the top 5%'s pockets.

[calmus]

I mean, two economic bubbles in less than 10 years?! Gimme a break! I have yet to see this happen anywhere else.

The FED is the culprit if all of this bullshit. They "lubricate" the economy with free money that they know will devalue the dollar and eventually put more money in the top 5%'s pockets.

the fat tail's going to swallow the rest of the curve. soon we'll see flocks of black swans....

it's fuckin crazy the shit's that happening.  Must be an ice age in hell.

[War-Horse]

the fat tail's going to swallow the rest of the curve. soon we'll see flocks of black swans....

it's fuckin crazy the shit's that happening.  Must be an ice age in hell.

The goal is to unite USA canada and mexico with one currency by 2010.    The dollar must die, and that is why your seeing halfhearted attempts to save it, while very stupid decisions to destroy it.

We will be ordered to have I.D. cards soon to buy food and fly on airlines...under the guise of "Our national security" and the Non-war on terrorism.     Some are saying the sears tower is next on the list to re-invigor blind americans to fight terror....watch and see.

[Slapper]

So far we've seen three fatal mistakes on the part of the FED by not increasing interest rates: During the internet bubble, during the housing bubble and now with the oil bubble.

Remember the internet bubble? I mean, that was such a farce!! Come on, they had people eating outta their hands, Ron Insana and his little bitch selling the game like it was ever lasting. And we could hear no one saying: Guys, Microsoft is not worth $150, the same way a house in Queens is not worth 1 million bucks. The FED should've stepped up, raised the rates up by 2 points and ended the story right there.

But, we live in a country in which a CEO who makes 200 million is looked at like a hero, while someone from a trade union is looked at like a villain. The fundamental economic MUST (or truth) is still a requisite for both: You must produce something of value; although it is CLEARLY OBVIOUS that the motherfucking rat is the CEO, simply because the filthy motherfucka neither produces nor WILL EVER produce 200 million-worth of stuff (not even his entire rat family will produce that much in their entire filthy rat lives). Economics 101, or System of Privilege 101.

Meanwhile, the FED plays mere spectator to a game in which they're supposed to be the referees. They could've warned people of the drop in value of the internet stocks, housing and now oil. By warning I mean a clear cut increase in the price of money, not a 3-liner in the 65th page of the New York Times or the Washington Post. They waited until all their paisan cashed out and then they dropped "da ball" on everyone's pension plans.

I'd basically put them all in an Alabama jail.

[War-Horse]

So far we've seen three fatal mistakes on the part of the FED by not increasing interest rates: During the internet bubble, during the housing bubble and now with the oil bubble.

Remember the internet bubble? I mean, that was such a farce!! Come on, they had people eating outta their hands, Ron Insana and his little bitch selling the game like it was ever lasting. And we could hear no one saying: Guys, Microsoft is not worth $150, the same way a house in Queens is not worth 1 million bucks. The FED should've stepped up, raised the rates up by 2 points and ended the story right there.

But, we live in a country in which a CEO who makes 200 million is looked at like a hero, while someone from a trade union is looked at like a villain. The fundamental economic MUST (or truth) is still a requisite for both: You must produce something of value; although it is CLEARLY OBVIOUS that the motherfucking rat is the CEO, simply because the filthy motherfucka neither produces nor WILL EVER produce 200 million-worth of stuff (not even his entire rat family will produce that much in their entire filthy rat lives). Economics 101, or System of Privilege 101.

Meanwhile, the FED plays mere spectator to a game in which they're supposed to be the referees. They could've warned people of the drop in value of the internet stocks, housing and now oil. By warning I mean a clear cut increase in the price of money, not a 3-liner in the 65th page of the New York Times or the Washington Post. They waited until all their paisan cashed out and then they dropped "da ball" on everyone's pension plans.

I'd basically put them all in an Alabama jail.

Damn right.

[calmus]

The FED always comes in too late because we have a bunch of idiots running around saying "free market! free market!" and then whining about "meltdowns of epic proportions"

What needs to happen is we need to be smarter about our regulatory process.  Right now the governing philosophy (in market regulation) is that everybody's going to be happy if they pick the right stock (although debt securities dwarf the equity markets) thanks to the right info.

That is imprudent.  We also need to figure out how to regulate all the derivatives out there. 

There needs to be an appropriate balance. Instead what we do is overreact when there's a crisis, and create stupid requirements like some of the Sarbanes Oxley provisions do. 

[Slapper]

[...]Instead what we do is overreact when there's a crisis, and create stupid requirements like some of the Sarbanes Oxley provisions do.

I can attest to the fact that the Sarbanes Oxley provisions are a fucking joke. The majority of controls are STILL in the backoffices, not in the frontoffice, which is where they belong.

[calmus]

I can attest to the fact that the Sarbanes Oxley provisions are a fucking joke. The majority of controls are STILL in the backoffices, not in the frontoffice, which is where they belong.

Yeah, that whole thing needs an overhaul.