Once again, great stuff KD. How long are foreigners going to stand for the games before they totally distrust the system?

Until they don't.

It would appear that the foreign "smart money" is in fact as dumb as a box of rocks - even more so than the average American consumer.

A "mistake" in their software?? Wow, a twelve year old has more creative excuses!!

Another great piece again today, just like always.

I did not get to finish reading again, it boils my blood, since I been waiting from 2000/01 for our government to do the right thing, instead they went out of their way and blow another bubble (housing)

I am under impresion that bernake is doing his best to blow another bubble and most easy one will be what we already have expreince on (equities)

What does it take for voices like this to be more available to all in media? If we really think this is a free country

Someone posted a Sisyphus picture a while ago. What could be more appropriate? Pigmen find a way to balance their bonuses on the Americans back, one way or the other.

Haha, this is reminescent of Pharoah days where slaves helped to build the pyramids. But in this case its all those flag waving, patriotic Americans that help to build pigmen bonuses.

History rhymes all right and we never learn from it.

Here's e-mail I sent my contacts in DC within seconds of reading the David Evans article. I also e-mailed Mr. Evans, challenging him and his sources to get involved in the process by "helping" members of HFSC understand the magnitude of the CDS problem. I asked him to call me. I'm starting to wonder where the courage will come from to force congress to enact your recommendations, however I plan to pound on them as hard as I can up to and including the house hearing on BSC.

"If you want to understand why BSC "creditors" were bailed out, please read this great article by David Evans.

http://www.bloomberg.com/apps/news?pid=2....

Failure to come to grips with the CDS "problem" would be inexcusable as this is the heart of the problem. In my efforts to help frame questions for House hearing, I have engaged the support of two sources cited in the article. They are willing to help. Congress failed in 1999 hearings and now we have the mess described in the article. A repeat performance will almost certainly result in loss of US credit rating and "collapse" of US bond market. What will the Fed do when handed the next BSC? If you think the sources know what they are talking about, as I do, then that appears inevitable."

Is it a given that the Fed has already assumed BSC counterparty liabilities via JPMorgan?

Yep....

The thing is, the people are waking up. The mainstream press is now starting to run articles on the fraud from the CPI on down.

Either Congress gets ahead of this or its going to get hit with a Clue-By-4 in one form or another, whether it be organized "no pay" protests by Joe6Pack or a mass defection at the voting booth in November - and quite possibly both.

Tin tin tin tin. Cut it out.

I don't get it. How do you plan on getting the bill introduced, debated and passed? I guess I'm lost here and need to reread again. Little help if you could.

Do you all not spam your local news agencies as well? WTF is calling congressmen going to do?

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It would appear that the foreign "smart money" is in fact as dumb as a box of rocks - even more so than the average American consumer.

Are we missing a huge piece of the puzzle, or is the world really letting itself be raped by a few individuals? I cannot imagine how foreign investors can just turn their backs on so much money..

"Until they don't.

It would appear that the foreign "smart money" is in fact as dumb as a box of rocks - even more so than the average American consumer."

Are they dumb or do they just want to keep perpetuating the current system as long as they can?

I find it hard to believe that they can't see the stupidity of what the Fed is doing. I think it is more likely that they understand it, but are choosing to ignore it because if they don't then the system collapses. That would hurt us, but it would also hurt them. So they have some reason to keep feeding into the stupid system.

I guess the question that nobody can answer is: how long until they are forced to stop ignoring the problem?

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causing "AAA" ratings to be applied when they should have been four notches lower.

Moody's says the proper rating should have been four notches lower. Yet S&P says their initial AAA was correct.

When the two top ratings companies can come to such widely divergent conclusion, that tells me and anyone else who is listening, that their ratings aren't worth ****.

I see Moody's was down 11% this morning. How appropriate.

Am watching Panel 2 of Senate hearing on BSC. Dimon testified all BSC collateral put in LLC were current loans of "investment grade" and as a "public service", JP Morgan took on the riskiest stuff. BSC tangible book was $12 billion. JP Morgan paid $1.18 billion and assumed assets/liabilities of $360 billion...discount equal to 3% of "assets". Noticed on BSC quarter ending 2/29/08 "other assets" had coincidentally increased by $29 billion from prior quarter offset by $26 billion increase in "other liabilities". Got info from Yahoo Finance and did not look at 10Q yet. Any guesses as to what this is and how it ties in to $29 billion bailout of BSC creditors?

Foreign money is eating up Treasuries and agencies.

http://www.federalreserve.gov/releases/h....

See..."marketable securities held in custody for foreign official and international accounts". It was 2.285 trillion may 14, 2008.

This compares to 2.064 trillion Jan 3, 2008.

That is an increase of 221 Billion in four and a half months. That comes out to 29% compound annual rate. Hmmmm.

Is the oil money supporting our deficits, supporting our mortgage markets, supporting our economy, keeping interest rates low and indirectly supporting the stock market?

Great plan Bernanke. Keep the economy and Wall Street afloat by allowing record oil prices, which then creates a market for our debt securities. That's a sound economic strategy, isn't it?

KD - you don't tolerate tin, but you leave that teaser at the end of your Ticker:

"Psst: You know that warning I've issued repeatedly about uninsured bank deposits over the last few months? My ears are ringing...... and a long weekend is coming up. Nuff said."

I don't know if I should take that seriously, or if it's tinfoil-hat talk. We all know that you don't find out about bank closings (or bank runs) until after the fact, right?

Nevertheless, I've deposited my cash in the vault, now securely bolted to the concrete floor.

That's not tin. That's just prudent action.

I'm just reading price action and 10Qs, nothing more.

There's no need for a "leak" to justify that sort of caution with a long weekend coming up.

Rutben

Keep up the good work. KD has outliined the steps for debate to frame this more global issue. You are right in that the CDS is a very key issue. The "wizard" cannot control a large portion of that market that is outside the financial arena. If that market starts unwinding it will obviously have a big impact in the financial space whose firms are counterparty to many of other transactions that would be impacted.

Tsberts

Pick any real estate related thrift in California and expect FDIC intervention at any time. There are literally too many candidate to list....

With these new signs that the public is starting to get it, KD's two-pronged strategy is making great sense:

1 - educate those who care and enable them to straighten out Congress.
2 - inform people how to protect their wealth from the crises that lie ahead

The last many tickers have focused on (1), and that makes sense while there's still a chance to save the system. But it's been a while since the Ticker visited the topic of how to preserve wealth in a major deflationary crash, and since the system might not be saved, we can't forget about (2).

Also, the canonical advice about physical cash, FDIC-insured accounts, TreasuryDirect ... might need a fresh look, in light of the new price-inflation issues. If the dollar is going to devalue with respect to everything except stocks, bonds and real estate, a pure-cash strategy may leave us all feeling poorer. On the other hand, going to commodities is fraught with risk, since there seem to be bubbles forming and popping all over as the financial herd works its way through the "denial" phase. Is there any way (other than with very agile, gifted and perhaps fortunate trading) for intelligent investors to avoid taking a real loss (after-price-inflation, dollar devaluation, etc.) in this maelstrom?

Put another way: even if we save ourselves from the looming stock and bond-market crashes, and we hang onto our houses, how do we protect against lifestyle destruction from dollar devaluation and price inflation?

Will the entire system crash and meltdown completely? I think its ludicrous for anyone to think that the Federal Reserve is going to let that happen without trying to fight it off. The triggers to halt the US markets will kick in and they'll organize or reorganize the PPT in a hurry. They'll lower capital margin requirements for the banks down to 1%. They'll close the banks/markets for a week, have a special $200B TAF and then start having TAF's daily. They'll start accepting more dangerous sh*t sandwiches as TAF collateral. The FFT will be lowered to 100bp with promises of further easing. ANWR will be opened up in an emergency by Congress to oil exploration/drilling. The offshore areas of the gulf coast and pacific coast will be opened to oil exploration/drilling. The Federal Reserve will get authorization to buy 1T+ of US treasuries directly. The Federal Reserve will do some BSC-style deals to shore up the balance sheets of FNM, FRE and SLM. Congress will do an emergency package worth hundreds of billions of dollars for block grants to the state governments to buy up a couple million or more homes in ghosttown subdivisions or blighted neighborhoods to be razed to the ground. Congress will also create some sort of a tax holiday for investors who buy up FNM-FRE written paper for the rest of the year.

This could all spell more disaster for the US dollar. We could see 5 bucks to the British pound and 4 bucks to the Euro. That alone is the big risk. Runaway hyperinflation can change everything. Look what it did to eastern europe in the '90s. Look what it did to Germany in the '20s. It could happen here and that's what keeps Bernanke up at night. And what's even more worrisome is how President Obama would react. Nationalize corporations? Big upheavals?

But in the long run what'll matter for the US economy is our combination of the strength of American human resources and American natural resources. Short-term fluctuations in asset prices, millions of foreclosures, millions of personal bankrupcy filings, a few thousand publicly traded companies going under, hundreds of banks collapsing and most hedge/mutual funds going under won't matter much in 30-40 years from now. It'll be the quality or lack-of-quality of our domestic resources that'll matter. And that's where stability gives us the best shot at making it. Just look at Mexico to see where instability decimates the ability to develop a good pool of human resources willing to work in the country. Mexico's economy suffers because too many of their hardest working and most ambitious workers leave for better opportunities elsewhere. If they get their sh*t together and we collapse then the number of illegal aliens crossing the Mexico-USA border will skyrocket ..... i.e. Americans going to Mexico to work as farm hands and cleaning service maids.

Another excellent ticker. I am surprised the media is reporting the deceptive reporting of government statistics.

I am more surprised lawyers for government unions have not tried to make a case their members are being shorted funds due for their COLA clauses.

KD,

been busy with work for a while and hadn't read the ticker. read tonight's. another instant classic. keep up the fight.

r8r

You know that warning I've issued repeatedly about uninsured bank deposits over the last few months? My ears are ringing...... and a long weekend is coming up. Nuff said.

Apologies in advance if this is a stupid question, but what's the connection between a 'long weekend' and the increased potential for bank closings?

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All that excess "slosh" has to go somewhere, and the "somewhere" is oil, gold, and grains in a vile attempt to "earn" their way out from under the rockpile that collapsed on top of their heads.

It's a huge and on-going tax increase on American citizens without their consent, and the money is being funnelled to bankers, hedge funds and their investors.

It makes the Bear Stearns bailout look 'honest'.

Excellent ticker Genesis. However, you might want to add the following scams:

1. Once large US multinationals were caught in Europe committing tax evasion with international transfer pricing techniques in the mid to late 90's CEOs used Congress and consultants to rob the employee pension funds with the conversion from defined benefit to defined contribution as well as hybrid plans like cash balance plans. Because the conversions hid the fact that employees were robbed behind the complex mathematics of actuarial science, people had no idea they'd been taken, that is, until they robbed a bunch of math geeks at IBM.

2. The new "employment paradigm" called for mobility across many employers, but really hid the fact that Wall Street needed to move big pensions to individual accounts so they could fleece workers with high fees under IRAs, 401K's and other alleged "good" retirement plans. As the USA article yesterday showed, it's generation X and younger folks that have been screwed out of their futures. The plan also hid the fact that outsourcing and layoffs were used to disrupt the saving trend for employees in DB plans. A new industry, J6P saving and toiling but never getting out of the hole for Wall Street pigmen was born. Just like automotobiles were sold to Americans over public transportation at the beginning of the last century, this was sold as don't YOU want to control your destiny, not let some pension manager do it for you? The problem was J6P doesn't even know how to handle huge sums of problem and they haven't been educated on how to manage it.

You are right about the fact that this is not a Republican or a Democratic party. It's really an organized political crime problem. Racketeering at a cross-political, international scale. I was an ardent Republican until 1999 when I saw the Republicans support the theft of the pensions from IBMers and became convinced of their complicity when Judge Roberts was confirmed and refused to hear the IBM pension case at the Supreme Court. I then became a good Democrat, but now I realize both parties are corrupt. Now I've lost trust in either party and even in independents.