Imagine what is happening behind the scenes.
Consider This: The grand deregulation experiment is over, and the results rather convincingly show that unregulated capitalism is cannibalistic. Some might meanly point out that once it all started going to hell in a handbasket they all became socialists, but that's not true. They've become a mob, looking for someone to beat up.
Why the ban on shorts? The party under attack was Goldman Sachs, that's why.
TARP: Paulson and Bernanke propose hiding troubled assets under a Temporary Asset Redemption Program (TARP), out of sight and out of mind. The plan is for the taxpayers to hold them to maturity, hoping that more than 40% of the folks with bad mortgages can actually pay their mortgages.
Party Pooper: The IEA, ignoring the party in the next room, says there is a risk of a global recession if oil prices stay at their current levels.
Picking up the Check: Some self-serving folks claim the bailout of western capitalism will make a profit for taxpayers. Hogwash. If there was money to be made, the taxpayers would not be footing the bill. Even if, against all odds, the Paulson TARP ev entually breaks even, the Treasury has to come up with over $1 trillion soon. Where is the money going to come from? How will it affect the economy?
Help Not Wanted Ads : The Bureau of Labor Statistics reports that there are 2 people looking for work for every job that is open.
The Little Engine that Could: The Fed and the Treasury think they have enough assets, counting the printing presses, to bail out everyone. This is going to make spending on the country's real needs (i.e. energy, infrastructure, health care, retirement) very difficult. Who says Bush and the neocons failed?
Funny, That: Oil prices have dropped by 30% and more, yet airlines have not rushed out to lower prices or even remove all the 'extra' charges. They say they need the extra income to continue to provide the service, a song sung by the oil companies not that long ago.
Treat the Symptom: The drop in the stock market and the freeze on credit were not the problem. They were reactions to the problem. The problem is the US and its citizens have spent too much for too long and don't want to stop.
Start Your Engines, Please Consumer spending generates two-thirds of US economic activity. Consumer spending did rise a bit in June and July, but only because stuff cost more. We actually bought fewer goods, but paid more. The BLS reports this as good news.
Hard Times: Moody’s projects losses on 2006 era mortgages will average 22% (increasing to 26% for 4Q2006 paper) and losses on 2007 mortgages will reach 30%. This is bad news for bond insurers Ambac and MBIA - or would have been until this morning. Now its bad news for the taxpayers - the folks who have lost their home will be taxed to make up the difference.
`Substantially,' Defined : The Energy Department anticipates that next week's inventory will show another 8.5 million barrel decline in US gasoline supplies, to the 175 million barrel level - which hasn't been seen since the 1960's.
Porn O'Graph: Rollercoaster - Largest two day % advance since 1929.