SAR #8282

This whole thing has a made-for-TV feel to it.

Endangered Species : The Fed is, effectively, the last remaining bank in the US, and the country is nearing total financial and corporate meltdown. The Fed now lends to banks, non-banks, corporations, state and local governments, and foreign entities. And the loan application and vetting process is pretty speedy. By guaranteeing all deposits, Ireland, Greece, Germany and Iceland are, along with Great Britain, one-bank nations.

Previews: The US Army has published its revised field manual for for conducting 'stability operations' in collaboration with civilian government and private entities at home and abroad. Just in time.

Sneaky : The Fed, by paying 0.75% on bank reserves, while lending them money at the Fed Funds rate of 2% 1.5% is effectively only charging 1.25% 0.75%. And the bankers want another rate cut!

Receding Horizons: Every year energy optimists say that next year, when oil is just a little higher, the huge amounts of oil tied up in oil sands and oil shale will come gushing forth. Except each year the costs keep rising and it's the same story again next year. With oil dropping and the credit markets in a shambles, how much development is there going to be next year?

'Splain Me Again: Paulson, Bush, Bernanke & the rest beat up Congress for 10 days and scared the horses with tales of doom, just to get the TARP passed so Paulson could buy various toxic paper from investment firms. How come, then, can the Fed just announce: "The CPFF will ... purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers. " Tomahto, tomayto.

Humor: CNBC reports the US Dollar is rallying because it is seen as a safe-haven.

The Really Big One: Hurricane Ike demonstrated how vulnerable our gasoline supply is. If some future calamity causes the pipelines to drain, there will be no driving. In less than a week, no driving leads to no food in the cities. FEMA doesn't have a plan for that; no one does.

Happy New Year : The FHA now guarantees 30% of US mortgages, one third of which will default to foreclosure. Congress now mandates that the FHA guarantee another $300 billion in 30-year, fixed-rate risky mortgages. A third of them will go belly up, too. But the homebuilders are happy.

Quotable: Hugo Chavez, while announcing a plan to give new, fuel-efficient cars to those who turn in their old gas guzzlers said: "We are past peak oil. Between lowered demand and scarce capital for new projects, we won't be increasing oil production. and as a consequence, we'll - for better of worse - probably never see this level of economic activity again."

Greatly Depressing: Nearly 60% of Americans believe another economic depression is likely. That'll dim the Christmas lights.