SAR #8073

When historians set the starting date of the first depression
of this century, it will be very close to now.

Honeymoon: The Fed's $200 billion burned through the market in about 5 hours today; even Elliot Spitzer would want a bigger bang for the money. By Monday the Fed will be buying CDO paper directly and sending the cash to Wall Street. Again. It won't be called 'nationalization.' You'll pay for it. And your kids will. And their kids.

A Norquist Moment: The anti-government GOP has triumph a new triumph: our meat supply. We have to rely on the Humane Society to report on slaughterhouses putting sick cows into our hamburger supply. We get the government that business pays for. The FDA? Oh, they're doing a heck of a job.

Swallow/Capistrano: United parcel Service said that its business volume fell significantly in February. I'm waiting to hear from Fed EX, but I'd say spring is in the air.

Cooking With Fannie: Fannie Mae has a new 'leftovers' recipe: Take a delinquent mortgage from a credit derivative bond and replace the delinquent part with cash. Then have the victim mortgagee sign a new, unsecured loan equal to all past due payments on the mortgage. The mortgagee then resumes paying on the mortgage and the unsecured loan. Careful, this recipe is prone to failure unless someone gets a very large raise.

Revisionism: It is no longer a case of institutions being too large to fail; it is now a case of institutions too large to save.

Under the Couch: An exhaustive review of more than 600,000 Iraqi documents that were captured after the 2003 US invasion has found no evidence that Iraq had any ties to al Qaeda. Saddam is appealing his execution.

Empty: Growth no long improves people's lives; it arguably makes lives worse. The cars and SUVs cost half an average household's annual income - and gasoline goes for $3.25 or more. The McMansion is not affordable to buy, heat, furnish or maintain. If the price goes down, you've turned into a renter with a non-refundable deposit. Did we rationally decide to buy this stuff? All the iPods and cell phones and plasma TVs insulate us from what we might see if we turned off the light and had a conversation with our hopes and dreams.

Self-abuse: The Bush White House denies it is stifling debate about attacking Iran. It maintains it is stifling all debate. Who's to argue?

Wet Desert: There's a region of the ocean known as "the desert of the sea" - an area in the middle of the oceans that is nearly barren. That area is expanding dramatically - at 4% a year. Doesn't sound so bad. But 4% a year is a doubling rate of 20 years, and the starting size is about 5 million square miles. Twice the size of Texas, which also a desert.

Unintended consequences: As a result of the Fed accepting sub-prime backed credit derivatives, the risk of losses on U.S. Treasury notes has increased. A European bank officer noted: "The U.S. government is not immune from the consequences of the credit crisis."

Method's Madness: Why $200 billion in the current Fed rescue? Because primary dealers hold $139.7 billion Fanny/Freddy securities and $60.2 billion mortgage-backed securities. Every penny counts. counted.

Assumptions: There are two ways of adjusting the prices of housing to incomes: allow prices to fall or raise incomes. Mass bankruptcy or rampant inflation. Choose one.