Frontline: Inside The Meltdown

The Bright Morning Star

Now after Jesus was born in Bethlehem of Judea in the days of Herod the king, behold, wise men from the East came to Jerusalem, saying, “Where is He who has been born King of the Jews? For we have seen His star in the East and have come to worship Him.”



For many will come in my name, claiming, "I am the Christ," and will deceive many. At that time if anyone says to you, "Look, here is the Christ!" or, "Look, there he is!" do not believe it. For false Christs and false prophets will appear and perform signs and miracles to deceive the elect. So be on your guard; I have told you everything ahead of time.

Most Severe Market Crash Since Great Depression?

Beautiful:



Slightly more beautiful:



I don't mean to describe all our nation's misery as beautiful, because it's not. But the economic troubles we've seen in recent months have been very much deserved. Even well earned by this country.

Three hundred days into this decline and now we can no longer say this is the "worst market since the Great Depression." It is now a "worst market than the Great Depression."



God bless Americans.

Malefactors Of Wealth

In February Congress passed a $150 billion stimulus plan. Like most households, my parents got $1,200. Depending on income and other factors like age and size of family members, others got a little more, and others like me got less.

Today "President George W. Bush signed a $700 billion financial-market rescue plan into law... to ease the credit crunch that is now threatening our economy."

I told my parents that if that $700 billion was a stimulus package similar to the one Congress passed near the start of the year, they would've got more than 4.5 times the amount they received in Spring, which would be more than $5,400!

And if you received $600 from the stimulus package in Spring, you would have gotten more than $2,700.

What American couldn't use $2,700 these days? What family wouldn't want a $5,400 handout?

I told my parents they essentially sent their $5,400 to Bank of America, Wells Fargo, JP Morgan, Goldman Sachs and every other bank who's holding these money-losing assets, and all this without their consent. Of course, I sent them my money too. And so did you, as well as your family, friends and neighbors.



I can only speak for myself, but I don't remember telling my government to send my money to these for-profit institutions. Yes, the hope is that this money will rescue our economy and assure me that my money is safe at my bank, as well as prevent the next Great Depression and allow me to keep my job, buy a car and live the American dream, but whether this plan "works" probably depends in part on how much the Treasury plans to pay for these assets:

Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis.

Pay more for these assets than what they're worth? Sure, why not? We've gone this far without much protest anyway. Let's just make Paulson ruler of the world while we're at it.

The economy lost 159,000 jobs in September, the largest drop in 5 years. Analysts are forecasting a rise in the unemployment rate to 8% by the end of 2009 from 6.1% currently, and the fact of the matter is this $700 billion won't create any new jobs (besides the ones Paulson is creating), though supporters of the Bailout Bill will say it averted having a much worse 25% unemployment rate.

If it's true as Paulson, Bernanke and others have said, that this bill was needed to avert another Great Depression and if it indeed will prevent a severe economic crisis from occurring, then I will reluctantly bite my tongue and hand my money over to Paulson.

But the thing is, with everything that's happened in the past year or so, I just cannot believe their claims. They have repeatedly lied about the severity of the situation at hand claiming month after month that our economy was sound despite all the warning signs. And if they honestly didn't know how bad things could get, then they were just stupid and incompetent.



I can only believe that they willfully lied because anybody with a little common sense and a solid understanding about business or economics could easily see the writings on the wall. And unfortunately, the worst is still not over by a long shot.

Back in April, regarding the Fed's rescue of Bear Stearns, the New York Times reported:

Mr. Bernanke, making his first public comments about Bear Stearns, spent a considerable amount of time defending the Fed’s actions in arranging for Bear Stearns to be acquired by JPMorgan Chase at a fire-sale price, and with the help of a $30 billion loan from the Fed...

“With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence,” Bernanke said. “The company’s failure could also have cast doubt on the financial positions of some of Bear Stearns’s thousands of counterparties and perhaps companies with similar businesses.”

If the failure of Bear Stearns would have been as terrible as Bernanke said it could have been in March, then why didn't he do the same thing with the much larger Lehman Brothers in September?

With $639 billion in total assets, Lehman Brothers possibly posed a bigger systemic risk than Bear Stears with only $399 billion in total assets, according to Bloomberg.

So instead of rescuing Lehman Brothers the same way the Fed rescued Bears Stearns, Lehman filed for bankruptcy on September 15th and guess what happened? Nothing Bernanke said would have likely happened.

Yes, the Federal Reserve and banks worked together to help alleviate any financial pressures and problems Lehman's bankruptcy could have caused that day, but it was clearly not the end of the world or financial armageddon.

How many mistakes must be made and how many times must we be lied to before we demand a stop to this treachery and deceit?

In April, at the Senate Banking Committee hearing about Bear Stearns' bailout a senator asked, "Was this a justified rescue to prevent a systemic collapse of financial markets or a $30 billion taxpayer bailout for a Wall Street?"

The answer is clear. Sadly our representatives, senators and government only answer to Wall Street.

Oh, and that $29 billion we put up in order for JP Morgan to buy Bear Stearns? The loan that Bernanke said he didn't think the central bank would lose money on and perhaps even profit from? Bloomberg is reporting, "The U.S. Federal Reserve may lose as much as $6 billion on a portfolio of mortgage-backed assets it took over from Bear Stearns Cos., according to Bank of America analysts."

And guess who's going to end up eating any losses on these assets?

God bless America.

Welcome To The Main Office

Bloomberg:

Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will shrink if markets don't begin functioning normally, joining Treasury Secretary Henry Paulson in urging skeptical lawmakers to quickly pass a $700 billion rescue for financial institutions.

"I believe if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover," Bernanke told the Senate Banking Committee today.

You know, a while ago I practically called Bernanke an idiot and likened him to a maggot, but I was obviously wrong. He is infinitely worst than that.

What happened to "the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so?"

Were you lying, or are you just stupid?

In this day and age you can measure your importance by where Lucifer hangs your framed soul on the wall, and in my opinion his might be somewhere in the main office.

Paulson's Brilliant Plan

The sad thing is almost all this humor is true.

You can only laugh at the stupidity and absurdity of it all because its better than crying.

Financial Terrorism On Middle Class America

Paulson Presents Two Scenarios At Emergency Meeting

Bloomberg:

Geithner and Paulson presented two scenarios at last night's meeting, people briefed on the talks told Bloomberg News. The first was a forced liquidation of New York-based Lehman, which they said could spread turmoil in the markets and lead investors to flee other investment banks.

The scenario preferred by Geithner and Paulson was for other companies to contribute money to a so-called bad bank to assume Lehman's devalued real-estate assets. That approach is similar to one Lehman presented to investors this week, which the company said would cost $5 billion to $7 billion. By assuming the 'bad' assets, firms would help ease a sale of the rest of Lehman to Barclays Plc or Bank of America Corp., the people said.

Forced liquidation?

In other words, having Lehman Brothers simply file for bankruptcy.

This could be the beginning of one those "aw, shoot" moments, when we finally find out what happens when a bank that's supposedly too big to fail, finally does.

Imagine the scene being played out in what could be this drama's final act:

Hank Paulson (U.S. Treasury Secretary): "You guys gotta pull this one off yourselves, it's your mess, we can't use government funds anymore. So unless you want other investors to flee your other commercial and investment banks, pull together and pitch in."

Banking Executives: "What the funk? JPMorgan got $30 billion to take over Bear Stearns' best assets. That ain't fair. You want us to put our money at risk when we got our own problems to deal with? We just can't do a deal without some "help." You don't want this blood on your hands, do you Hank?"

The stakes are high, the implications are grave and the only question is who is the first to flinch?



The weird thing is nobody really knows what would exactly happen if a large investment bank like Lehman Brothers is allowed to fail, though it would definitely not be good. Just how bad would it be? Some people have equated such an event to financial "armageddon," that could possibly lead to widespread panic in financial markets around the world, a nation wide run on banks, or the loss of millions of jobs and billions of dollars, among other things.

As much as I would enjoy seeing Rome burn to the ground for various reasons, after looking further at such a scenario, I don't think things would get that bad, though I'm sure there would be collateral damage like perhaps a crash in the stock market or a further increase in financial losses and layoffs. All things nobody wants of course, but the point is we made our bed long ago and now we got to sleep in it.

There's still no light at the end of the tunnel and once again, things are only going to get worse. Saving Lehman Brothers from a forced liquidation isn't going to prevent the U.S. from heading into a depression if that's indeed where we're headed. We sealed our fate weeks, months and years ago with our silence; Our silence to government bailouts, flawed and dangerous legislation, and lies after lies from the Federal Reserve, Treasury and other financial company executives.

I agree that something obviously must be done, but not with government money!

Bank of America took Countrywide at no cost to the taxpayer, JPMorgan took Bear Stearns with $30 billion of our money at stake, and we took Fannie Mae and Freddie Mac for about a projected cost of $200 billion at the moment, though the final cost will be a lot higher than that.

I was about to write that the best part of all this was that we didn't even have a say in any of this, but the truth is we technically did.

Congress gave Paulson the bazooka he requested in July, and Congress stood by as the Federal Reserve pulled their legally questionable stunt with Bear Stearns, without demanding answers, specific details and someone's head on a silver platter.

And just who is Congress? They are our elected officials, representing you and me, and we will re-elect about 90% of them again this year.

Welcome to the United States of America.



The fact is if Lehman files for bankruptcy, God willing, the sun will still rise tomorrow, though it probably won't be as sunny for some. And better yet, if Wall Street can fix their own problems, they can live to fight another day. But if the government has to bail them out or finance a rescue, it will only delay the inevitable and make the cleansing ever more painful, mark my words.

So Is This How Liberty Dies, To Thunderous Applause?

Good thing we have, like, free markets 'n stuff, and that our government doesn't interfere with it. Our business leaders and CEO's deserve the compensation they get for doing such a great job at managing these risks.

Oh, wait. Um.

The Washington Post reports:

"The Federal Reserve and Treasury Department are actively helping Lehman Brothers [which has suffered staggering losses from its bets on real estate and mortgages] put itself up for sale, and officials are hoping a deal will be in place this weekend before the Asian markets open on Monday, according to sources familiar with the matter. The government is looking for an agreement that would not involve public money."

Uh, never mind.

But then there's also WaMu. Who's going to bail them out when or if their time comes when the Federal Deposit Insurance Corporation may not have enough money for a bank this size?

God forbid we actually have a financial institution take responsibility for their reckless actions this year.

"The largest bank failure in U.S. history was Continental Illinois National Bank and Trust Company. When it failed in May 1984, it had $41 billion in assets and $30 billion in total deposits.

According to the FDIC press release, when IndyMac failed in July it had $32 billion in assets and $19 billion in deposits, making it the second-largest failure in history.

Washington Mutual has $310 billion in assets and $182 billion in deposits. (Their market cap is now below $4 billion.) So think of WaMu as 10 IndyMacs.

The FDIC now estimates the IndyMac failure will cost their insurance fund $9 billion. The total size of the fund is now $45 billion, its lowest since 1995. When the fund runs out… Well, I am not sure what happens, exactly. Presumably FDIC taps the Treasury, meaning the taxpayer, meaning you. (Actually, the Treasury borrows the money from China and Russia and the petro-states. It all depends on how you look at it.) Anyway, I am not sure what the mechanism for replenishing the fund would be… I’ll get back to you."

I am but a lowly taxpayer. I do not make billions or even millions of dollars a year. I do not have tax shelters, nor have I moved my money off shore.

I am in the middle class and my government has seen fit to waste my money, one bailout after another. More of my taxpayer dollars misused.

When my government looks to me to support major American corporations who have made billions in profits and now are mired in debt, I wonder why? Am I a source of wealth for the wealthy?

And when I am broke and cannot support myself, whether made so by poor judgment or my government's foolishness, where will I turn?

Who will bail me out?

An Eye For An Eye, Will Leave The Whole World Blind

Excerpts from a documentary called My War, My Story.



It's about this time of year you hear people say, "We're a lot safer now then we were back then."

Really? Does the fact that for the past few years we haven't had terrorists from the middle-east attack Americans on U.S. soil mean we're a lot safer now than we were seven years ago?

Except for occasional attacks on U.S. properties and territories outside the continuous 48-states, foreign terrorism on a large scale on U.S. soil has been uneventful to date, but what portions of this documentary simply indicate is that we have created a new generation of people in the middle-east who want nothing less than to see America destroyed.

What do you think the boy who was put in a cage after his family was mistakenly shot up wants to do to America? How about that family's remaining relatives and friends? How do you think they feel about America?

The only question is how many of these angry people from the middle-east have we created, and are they going to do anything about it?