In case you didn’t notice, the stock market is tanking again today. Down 691 right now. McCain wants to change the subject. Good luck on that one. I think Obama needs to keep hammering on the economy, one of McCain’s weaknesses. People are losing their retirement funds, their homes, their cars. They don’t give a flying fuck about Ayers or Keating……….

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I am so not knowledgeable about financial crap. I’ve been reading this morning about CDS, and this is some scary shit.

As Congress wrestles with another bailout bill to try to contain the financial contagion, there’s a potential killer bug out there whose next movement can’t be predicted: the Credit Default Swap.

In just over a decade these privately traded derivatives contracts have ballooned from nothing into a $54.6 trillion market. CDS are the fastest-growing major type of financial derivatives. More important, they’ve played a critical role in the unfolding financial crisis. First, by ostensibly providing “insurance” on risky mortgage bonds, they encouraged and enabled reckless behavior during the housing bubble.

“If CDS had been taken out of play, companies would’ve said, ‘I can’t get this [risk] off my books,’” says Michael Greenberger, a University of Maryland law professor and former director of trading and markets at the Commodity Futures Trading Commission. “If they couldn’t keep passing the risk down the line, those guys would’ve been stopped in their tracks. The ultimate assurance for issuing all this stuff was, ‘It’s insured.’”

Second, terror at the potential for a financial Ebola virus radiating out from a failing institution and infecting dozens or hundreds of other companies - all linked to one another by CDS and other instruments - was a major reason that regulators stepped in to bail out Bear Stearns and buy out AIG (AIG, Fortune 500), whose calamitous descent itself was triggered by losses on its CDS contracts (see “Hank’s Last Stand”).

More at CNN Money

MCCAIN, GRAMM AND CDS

MORE ONPHIL “NATION OF WHINERS” GRAMM AND CDSs

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Anybody who’s been around this blog long enough will remember Bur$atil. I could go back further…….but did this chick know what was going down or what? Amazing. Here’s a history of some of her comments. I’ve been thinking about her alot the past few weeks…..wondering where she is. If you read this…… hope you are healthy and doing ok!!

2/24/08 Hey Guys, I read you from time to time… is so much to catch on. Well, while the media craze for Obama and the McCain lobbist… our infrastructure will be sold to the financiers. Remember, Wall Street and the whole financial system is broke.

3/1/08 The financial system is totally broken down. Banks bankrupt, the FED printing money like crazy, inflation soars… and Bloomberg/ Arnie will control state and federal budgets, the wars expanding, the oil over 103 , gold over 980, platinum over 2000, uranium ….we are going to collapse globaly. This is already long time in process.
By EIR and Global collpase of banks, stocks, companies, no securitation, municipal bonds, bond insurers, insurers, cell phone companies… al reporting billions in “write-downs”.

12/17/07 Sir Alan “Bubbles” Greenspan and his priting of dollar machine is leaving inflation. Ben “Helicopter” Bernanke is trying to bailout the bankrupt banks like Citibank, JP Morgan Chase, Wachowia, Merryl Lynch, Lehman Brothers, Bearn Stearns, Golman Sachs, Fannie Mae, Freddie Mac, Sallie Mae, Bank of America, the british banks like Barclay, Royal Scotland Bank, the Swiss Bank UBS, the bankrupt Northen Rock, the French Paribas, the German IKB, Sachen and every bank is dead, broke. The stole the money , the swindle that Alan “bubbles” Greenspan with the Federal Reserve, the Bank of England, the European Central Bank and all the Central Banks with the orders of the Basel bank the Bank of International Settlements who is the Central banks of Central banks prepare to broke the whole world.
Now the Moody , Fithc and others are lowering the credit rates in the debt insurance that is broke.
ANd the pensions of public workers in California with Calpers, in Colorado with Pera, and every pension in the world will be privatized in the hands of the Wall Street, London bankers and Hedge Funds. My friends, the whole is broke and the collapse of the whole Financial/Monetary System is here. The food , oil, gas is tooo expensive. Now foreclosures will be less money to pay for clothes, food, education, vacation, and all the expenses. Less taxes for towns, can create a FISCAL crisis.
We have a
financial/monetary/banking/housing/energy/political/fooodinflation/tax/insurance/human/famine crisis.

9/15/07 Soon all banks do not have liquidity to cover their accounts.
The liquidity “crunch”.
You bet. The financial meltdown will leave billions of dollars in the air, and millions in poverty.
Today Englad… tomorrow … Europe… Asia, Latin America and of course US.Wait to Bernanke to open his mouth and rock the world entire economy.
The looting of the world economy, thanks to KI$$$$$$$$$$$$$$$$$$$$$inger men.

Read more »

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Anybody here remember Bur$atil? Wish she were around now……I’d love to hear what she has to say.

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.

More at Global Research

H/T Bro

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The Dow Jones industrial average was up 1.73 percent in early trade, and the Standard & Poor’s 500 Index advanced 2.2 percent. The dollar rose 1 percent against the yen and oil rebounded by more than $2 a barrel as fears about a worldwide financial meltdown eased.

In Europe, Ireland unveiled a blanket guarantee for savings held by its banks, covering up to 400 billion euros ($575 billion) in liabilities, sending Irish bank stocks roaring up against a weaker sector trend.

Russia for the second time in a month briefly clamped its stock markets shut after just seconds of trading.

Shares of British bank HBOS Plc fell on fears that Lloyds TSB Group Plc could renegotiate a deal to buy HBOS.

France joined Belgium and Luxembourg in a 6.4 billion euro lifeline for bank Dexia and said it would come to the aid of savers with new bank measures by the end of the week.

French President Nicolas Sarkozy began talks on the crisis with finance executives on Tuesday. He has said he will meet this week with officials from Europe’s G8 member states –

Leaders are trying to reassure global markets as financial shares reel, threatening the existence of major banks, which have stopped lending to one another despite enormous injections of funds by central banks.

Facing the worst financial crisis since the Great Depression, global central banks scrambled again to try to relieve a severe squeeze in money markets by more than doubling the amount of dollar funding to $620 billion.

Bans on short-selling stocks spread to Russia, South Korea and Taiwan. Nervous investors piled into gold and U.S. Treasuries. Oil fell on fears of further economic slowdown, and the Japanese yen hit a four-month high.

More at Yahoo News

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Is he looking for a civil uprising so he can declare martial law? Logan Murphy at C& L states, I’m not an expert on the economy or Wall St., but this sure looks like an end-around by the Bush administration to give away hundreds of billions of dollars without the approval of Congress.

The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed’s emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed’s expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

More at Bloomberg

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That’s all……… carry on.

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Looks like the total for this bailout will amount to $1.8 trillion. Is it nothing more than an historic swindle? On Friday, unnoticed amid the panic, Standard & Poors upped the amount of estimated mortgage-backed securities that would eventually be written-off by the global banking sector from $285 billion to $378 billion. I’d like to know what Democrat said this. Is ths financial crisis part of Bush’s “Shock Doctrine?” Josh Marshall tells us about the rot. Juan Cole advises that if you’re going to bend over in November, you better like pain!

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From Vyan at Dailykos:
In the midst of all this handwringing and teeth gnashing over the economy on cable TV, don’t you think it’s about time someone talked to, y’know, an Economist?

In this appearance on Real Time with Bill Maher this weekend, New York Times Columnist and Economist Paul Krugman gives his view of the current Stock Market Crisis, and Bailout. And just when I was starting to feel a little confidence again, he yanks the rug out from under the entire country…

Paul Krugman on Real Time talking about the bail out.

H/T Bat

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A commenter at Balkinization posed a good question.

“Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. “———————————–

1. Can Congress abandon their Constitutional right to oversight of the Executive in this way?

2. Does this statement also mean that even the President cannot question the uses the Secretary of Treasury makes of the $700 billion? I’m not sure I can see how the President could review the expenditures without using an administrative agency of some kind.

While my question 2 seems to be a stretch, I wouldn’t give the authority to override Congressional oversight to someone I trusted a great deal, and nothing the Bush administration has said or done gives me the slightest inclination to trust anyone in it. Even if it were Constitutional to give them the authority which I suspect it is not.

As I understand it, the Constitution does allow Congress to determine jurisdiction of the courts, so that part seems that it may be constitutional. But of course I am no lawyer.

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Video of Paulson on Meet the Press

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TEXT OF DRAFT PROPOSAL FOR BAILOUT PLAN

TPM: PUT THE BREAKS ON

LARISA ALEXANDROVNA: WELCOME TO THE LAST STAGES OF THE COUP

BALKINIZATION: BUSH ADMINISTRATION: GIVE US MORE UNREVIEWABLE POWER, WE DID SO WELL LAST TIME!

FIREDOG LAKE: PAULSON TO DEMS: NOT ALLOWING CEO’S TO KEEP MULTI-MILLION DOLLAR SALARY IS A “POISON PILL”

POLITICO: DEMS ON BAILOUT:; INCLUDE HOMEOWNERS

PAUL KRUGMAN: NO DEAL

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From the Jed Report:
The responses of Barack Obama and John McCain to the economic crisis today tells you all you need to know about the choice in this election.

One the one hand, in Barack Obama we’ve got a statesman who wants to work together to get things done for all Americans. On the other hand, in John McCain we’ve got a yipping little dog (apologies to canine lovers everywhere) who will tear anything down to get ahead.

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John McCain has all the answers! To straighten the economy out, he’s asking for resignation of the head of the Federal Election Commission. Check out the post at Undiplomatic. Great post.

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Manic and increasingly desperate dealmaking gripped Wall Street on Wednesday as U.S. stocks plummeted to three-year lows amid new signs of distress in the global financial industry.

Morgan Stanley (MS.N) was discussing a merger with regional banking powerhouse Wachovia (WB.N), the New York Times reported. CEO John Mack got a phone call from Wachovia on Wednesday but is also pursuing other options, the paper said.

“In this market, anything’s possible. It seems like the market wants the investment banking model to disappear,” said Danielle Schembri, bond analyst covering brokers at BNP Paribas in New York.

Washington Mutual (WM.N), the country’s largest savings bank, put itself up for sale, sources said, confirming a New York Times report. Potential suitors include Citigroup (C.N), JPMorgan (JPM.N), Wells Fargo (WFC.N) and HSBC (HSBA.L), they added.

And top UK mortgage lender HBOS Plc (HBOS.L) struck an all-stock deal with Lloyds TSB (LLOY.L) to create a 28 billion pound ($50 billion) mortgage giant.

More at Yahoo News

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