Friday, October 3, 2008

SAR #8277

Yes, we need banks. But not necessarily these banks.
- R. Kline on Naked Capitalism

Flaws R Us: Of the many problems with the bailout robbery rescue bill, the most glaring are (1) giving dictatorial powers to a temporary employee from Kelly Services Goldman Sachs. (2) Continuing business as usual when it was business as usual that caused the problem (3) Doing nothing about falling house prices.

Plan, What Plan? The FDIC keeps saying it can always go to the Treasury for more money. Yes, but the treasury gets the money from the taxpayers, who are the ones the FDIC is going to be giving the money to. How does that qualify as a plan?

Lights Out: The Western US faces "a significant risk of power brownouts and blackouts as early as next summer," according to a new study, especially if 2009's summer has a prolonged heat wave and people can still afford electricity.

Mr. Sunshine: Nouriel Roubini expects the next step in this dance to be a trillion dollar run on banks and the government as the US financial system evaporates. Foreign banks, he says, have already started to quietly reduce their exposure to US markets and as the run accelerates there is serious risk of a systemic meltdown of the financial system.

Twilight Zone : The number of "dead zones" in the world's oceans is rising fast, and coastal fish stocks are more vulnerable to collapse than previously feared.

Devil in the Details: Forbes is running an item that claims the US could cut oil imports by 15% by cutting exports of petroleum. This is true only if petroleum coke and residual fuel oil are considered to be "petroleum". The EIA has the real numbers.

Worse & Better: Toyota is offering 3-year no-interest 'loans on new US sales. GM's new zero-interest plan runs for up to 6 years on many of its 2008 models. Wait until January, it'll be worth it.

Answer First: Maybe. The question is 'Will European banks tear the European Union apart?" It'[s not so much the answer that is troublesome, but the question. Why, for example, should Germans rescue Irish banks? Or the French, Spanish banks? How much popular unity is there in 'Union'?

We Have A Winner: The "Worst Solution" award goes to Dr. Chris Mayer for suggesting "the Bush administration and Congress allow all residential mortgages on primary residences to be refinanced into 30-year fixed-rate mortgages at 5.25%...

Fed's Discount Store: Uncle Sam's Discount Window store is doing tremendous business; its loans to primary dealers and depository institutions have risen more than 50% in the last week alone, from $262 billion to $410 billion. That's $400 billion of questionable paper the Fed is already making good, by rolling it over.

Merits: There is no point arguing the economics of the Paulson plan, it's not about economics, it's simply one last raid on the US Treasury.

Diet Everyone! The Food Climate Research Network says that to reduce global warming we should restrict ourselves to four "modest portions" of meat a week and reduce our consumption "low nutritional value" things - alcohol, sweets and chocolates. Much of this reduction will be a result of Wall Street's ineptitude and the resulting recession.

Economics Lesson: Wachovia has frozen a short-term investment fund that is mostly held by colleges and universities. Wachovia says that the fund is sound, but has liquidity problems because the money is tied up in things no one wants to buy. Tomorrow's lecture will be on the difference between liquidity and solvency as seen from the customer's point of view.

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