In order to solve a problem, you first have to understand
what the problem really is.
Starters: Go read Ilargi's opening to The Automatic Earth for Sunday, the 21st. Go do it now. Then come back and enjoy.
Changing the Rules: The Fed is allowed Goldman Sachs and Morgan Stanley - the last two investment banks of any size - to become commercial ( i.e. depository) banks, giving them access to the Fed's emergency loan programs. Seems to be a fear that the $700 billion won't arrive as quickly as promised, and this is to tide them over. The Fed also invited the broker-dealer subsidiaries of Merrill Lynch, Goldman Sachs, and Morgan Stanly to belly up to the bar.
Witch Hunt: Australia has banned all short selling, The Dutch have banned 'naked shorts'. Taiwan has halted shorting on 150 stocks. Anybody remember the elements that made up the 'efficient markets' theory?
Late Breaking: Paulson has changed the language permit TARP to buy "Troubled Assets" (with no further definition) from any institution (including hedge funds!) having significant operations in the US.
Unthinkable: Paulson, citing continuing market stress, is urging Congress to quickly pass his plan, like the Patriot Act. No need to stop and think. "We need this to be clean and to be quick," Paulson said. Well, quick, anyway.
Pull the Other One: How much the taxpayer is on the hook for is unknowable because the government will make a profit if real estate prices rise. Click your heels.
History Lesson: During early 1933, shares of companies connected to the Nazis rose an annualized 43% while those that were not rose only 1.2%. Be glad our financial institutions do not get special treatment from our leaders.
Canary: This Summer the Arctic ocean has been venting methane into the atmosphere. Last year, for the first time in 20 years, the percentage of methane in the atmosphere increased.
Temperature: Foreclosures hit another record high in August, up 12% over July and up 27% over the previous August. What government bailout addresses this problem? Will the Corps of Engineers be hired to bulldoze excess housing?
Vocabulary: We've heard a lot about “moral hazard” recently, but that was then and this is now. It is not a bailout, it is 'stabelization'. It is not re-inflating the bubble, it is "ensuring the strength of the economy." Use of the term 'free ride' is not encouraged.
Seven, Six, Five, Four... The IPCC says world carbon emissions must start a dramatic decrease no later than 2015. In that we've done nothing to reduce emissions yet, there is no time to debate whether "A" or "B" is the better approach. We must adopt every possible approach to reducing our emissions to the point that CO2 levels not only stop increasing, but actually fall. Of course this will never happen.
Halloween: If McCain wins, Phil Gramm may be named Secretary of the Treasury. Still want to give unquestioned power to the Secretary?
Very Bad Good News : The recent upswing in oil prices is a good thing, just as the previous fall was a very bad thing. We were quickly forgetting the need to conserve and had been thinking about one of those discounted SUVs. Conservation is far more appealing at $140 a barrel than at $92.
Definition: Politics is not about politics, it's about money.
Are You Threatening Me? Expect Bush, Paulson, Benanke, and the Fox talking heads to warn us daily of the terrible things that will transpire if "the plan" is not passed quickly and unchanged. Why not, you trust these folks don't you? Oh, Iraq? Well...