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NEW -> Contingent Buyer Assistance Program
>At this point, I don't think there is anything that can be construed as "good" for the dollar.





Sure there is.





But what's good for the dollar isn't necessarily good for us.





There's nothing like a bout of deflation to bring purchasing power back to the dollar.
 
<img height="536" alt="Signs of Trouble" width="555" src="http://graphics8.nytimes.com/images/2008/03/08/business/20080308_ECON_SIGNS_OF_TROU.jpg" />
 
<p>Systemic Margin Call:</p>

<p><strong><em>Wall Street banks are facing a "systemic margin call" that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co, said in a report late on Friday.</em></strong></p>

<p><a href="http://www.reuters.com/article/ousiv/idUSN0832645120080308">http://www.reuters.com/article/ousiv/idUSN0832645120080308</a></p>

<p>Capitulation? If cascading cross-defaults killed Thornburg and Carlyle, what will they do to the rest of the financial sector if the big investment banks are actually prepared to throw in the towel and demand everyone settle up?</p>
 
<a href="http://piggington.com/a_february_beatdown_for_the_size_adjusted_median">A February Beatdown for the Size-Adjusted Median</a>

<p>Both median-based price indicators were thoroughly abused last month. Between January and February, the size-adjusted median price declined 5.7 percent for single family homes and 7.7 percent for condos. That's in one month, friends. Brutal. (The vanilla median was even worse, fwiw, which isn't much). </p>

<p>So much for that burgeoning spring rally.</p>




<p> </p>

<p>The above is for San Diego.


</p>
 
<p>"It's a False Alarm" From the WSJ (<a href="http://blogs.wsj.com/economics/2008/02/08/non-borrowed-reserves-false-alarm/">http://blogs.wsj.com/economics/2008/02/08/non-borrowed-reserves-false-alarm/</a>) </p>

<p><em>Last December, the Fed concluded that open market operations weren’t providing relief to some quarters of the interbank funding market and introduced the TAF. Like open market operations, the TAF enabled the Fed to lend a predetermined amount of funds to the banking system, with the interest rate at which they were lent determined through an auction process. But like the discount window, <strong>the money was lent directly to banks rather than primary dealers, and against a wide range of collateral rather than just Treasurys and agency securities.</strong> The TAF didn’t add to the money supply because <u>for each dollar lent through the TAF the Fed was careful to liquidate a dollar of its holdings of Treasury bills and bonds</u> to keep its overall balance sheet unchanged. But because the TAF is essentially discount window credit, the Fed decided to classify it as borrowed reserves.</em></p>

<p>This tells me more than just the explanation given for the huge drop in non-borrowed reserves. It tells me that the Fed is taking whatever crap the banks want to give it, and that the Fed selling T-bills and T-Bonds has mostly likely artificially kept those prices lower than they would otherwise be. The limit on TAF was raised to $100 Billion last week. I wonder if Treasury prices will drop at the same time that the auction is settled?</p>
 
<p>Well, if money is being destroyed and not replaced then don't we have deflation? Yes, we have commodity inflation, but it might mean that thoses items are expensive, but nothing else is?</p>

<p>I have a feeling these people don't really know what they are doing any more than I would, in addition to being evil.</p>
 
<img height="426" alt="Lower Rates: Not Yet the Tonic" width="394" src="http://graphics8.nytimes.com/images/2008/03/09/business/09econ.350.gif" />
 
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<p>Is Fannie Mae the Next Government Bailout?</p>

<p><a href="http://online.barrons.com/article/SB120493962895621231.html?mod=yahoobarrons&ru=yahoo&page=1">http://online.barrons.com/article/SB120493962895621231.html?mod=yahoobarrons&ru=yahoo&page=1</a></p>

<p>In the wake of margin calls on collateral at the investment concern Carlyle Capital, yields on guaranteed mortgage securities issued by Fannie and its GSE sibling <a class="verdana rolloverQuote" href="http://online.barrons.com/public/quotes/main.html?type=djn&symbol=FRE">Freddie Mac</a> (FRE) rose to their highest level over U.S. Treasuries in 22 years. Likewise credit default swaps, measuring market concerns over the safety of Fannie corporate debt, have ballooned out to 2% of the insured amount from 0.5% just four months ago.</p>
 
And on the other side of the pond.....more of the same.





<a href="http://www.cnbc.com/id/23557976">UK Homebuilders Need Interest-Rate Crutch - Economy * Europe * News * Story - CNBC.com</a>
 
<p>Looks like Spitzer might not get a chance to work on his <a href="http://www.bizjournals.com/albany/stories/2008/03/03/daily26.html?ana=from_rss">mortgage relief plan</a>...LMAO</p>

<p>"NEW YORK - Gov. Eliot Spitzer's political career teetered on the brink of collapse Monday after the corruption-fighting politician once known as "Mr. Clean" was accused of paying for a four-hour romp with a high-priced call girl." <a href="http://news.yahoo.com/s/ap/20080310/ap_on_re_us/spitzer_prostitution">Linky</a></p>
 
<p>Did you know, <a href="http://tinyurl.com/36mwpv">that the $516 trillion derivatives market</a> is $341 trillion more, than the world's real estate, stock, and bond value?</p>

<p>Bubbles, domino effects and the 'bad 2%'</p>

<p>However, while that may be true as far as the parties to an individual deal, there are broader risks to the world's economies. Remember back in 1998 when LTCM's little $5 billion loss nearly brought down the world's banking system. That "domino effect" is now repeating many times over, straining the world's monetary, economic and political system as the subprime housing mess metastasizes, taking the U.S. stock market and the world economy down with it. </p>

<p>This cascading "domino effect" was brilliantly described in "The $300 Trillion Time Bomb: If Buffett can't figure out derivatives, can anybody?" published early last year in Portfolio magazine, a couple months before the subprime meltdown. Columnist Jesse Eisinger's $300 trillion figure came from an earlier study of the derivatives market as it was growing from $100 trillion to $516 trillion over five years. Eisinger concluded: </p>

<p>"There's nothing intrinsically scary about derivatives, except when the bad 2% blow up." Unfortunately, that "bad 2%" did blow up a few months afterwards, even as Bernanke and Paulson were assuring America that the subprime mess was "contained." </p>

<p>Bottom line: Little things leverage a heck of a big wallop. It only takes a little spark from a "bad 2% deal" to ignite this $516 trillion weapon of mass destruction. Think of this entire unregulated derivatives market like an unsecured, unpredictable nuclear bomb in a Pakistan stockpile. It's only a matter of time.</p>
 
<p><strong>Oh, this just keeps getting better. I better watch the <em>Daily Show</em> tonight.</strong></p>

<p><a href="http://news.yahoo.com/s/ap/20080311/ap_on_re_us/spitzer_prostitution"><strong>Spitzer may have spent tens of thousands</strong></a> </p>

<p>"ALBANY, N.Y. - With pressure mounting on Gov. Eliot Spitzer to resign over a call-girl scandal, investigators said Tuesday he was clearly a repeat customer who spent tens of thousands of dollars — perhaps as much as <strong>$80,000</strong> — with the high-priced prostitution service over an extended period of time..."</p>
 
<p>For $80,000, this "escort" better be like Angelina Jolie/Jessica Alba/Scarlett Johannsen hot.</p>

<p>Another sad aspect of this news is that Spitzer was actually cleaning up Wall Street. They were cheering his fall when the news came out. </p>
 
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