The American middle class is a temporary phenomenon.
Disconnected: The world wiped out $5 trillion last week. Miss it yet?
Hound of the Baskervilles: Great Britain did not close the London Exchange today. Everybody everywhere is "injecting unlimited liquidity." Hasn't worked yet, so let's try a bigger dose.
Words of Comfort: The US Government has assured Mitsubishi that its $9 billion
loan to investment in Morgan Stanley would be protected. Not guaranteed, "protected".
Brace Yourselves: Bush administration aparatchiks are claiming that the nation's economic problems are a security risk and the upcoming change in leadership makes the country more vulnerable. The administration has repeatedly created and inflamed public fears as a way of achieving its goals. If there's a real danger, maybe we'd better postpone the elections.
Kojack: Last Monday, Fannie and Freddie's paper was worth 90 cents on the dollar. On Friday, Lehman's stuff was 8 cents on the dollar. Suspicion is the Treasury were the big
fools buyers on Monday. Depends on who loves ya.
World: The IMF warns that the entire financial system of the world is undergoing "a systemic meltdown."
Piper's Payday: John McCain is discovering he has limits to how badly he wants to be president. He's also discovering that Palin is campaigning more for herself in 2012 than for his fading quest. McCain seems angry and befuddled, caught up in a campaign he doesn't recognize nor apparently control.
Time Bomb? The credit swap market is worth more than $516 trillion. No one seems to understand it well enough to explain it. Seems to have been a floating crap game where anyone could take an insurance policy on anyone else's house and collect when it burned down. Yet the experts - same ones who can't explain CDS - claim that the $400 billion Lehman circus will result in only $6 billion in actual losses. Sayin' don't make it so.
The Other One's Got Bells: The government is allowing miners to start tearing up the National Parks, digging up oil shale and cooking it down to get at 800 billion barrels of oil hidden in the Rockies or somewhere like that. Sure, 800 billion barrels; at what price?
Kicking the Tires: Capital One has stopped financing inventories for car dealers in New York and New Jersey. Buyers can't get a loan to buy 'em, dealers can't get a loan to stock 'em, GM can't get a loan to make 'em. See a pattern here?
Black Hole: Congress has mandated that Fannie and Freddie buy $40 billion in bad mortgage bonds each month for the next year. That's nearly $500 billion more in toxic paper the government is going to sop up, separate from Paulson's $700 plus billion.
Snakes and Ladders: Consensus is that a lot of the Lehman auction was banks buying back their own paper - in anticipation of turning around and selling it to Paulson for 90 cents on the dollar. Neat.
Lies, Damned Lies & Talk Radio: Fox's minions and the conservative talk show characters are been blaming the mortgage mess, the credit mess, the financial meltdown and the demise of the cocktail hour on a purported Clinton instigated government push to let the poor and undeserving have houses. Not true, of course. Data from the Federal Reserve shows that 84% of subprime mortgages were written by private institutions, not Fanny/Freddie as alleged. And only 1 of the top 25 subprime lenders was subject to the housing law the conservative commentators keep citing. As usual, Fox and company are wrong, know it, and don't care.
In the Long Run... Hold 'em, financial advisers advise. The market always recovers, they say. True, except for when it doesn't.
Porn O'Graph: Net borrowed reserves & Fed reserves.