Headlines...

NEW -> Contingent Buyer Assistance Program
<p>The local fish wrapper is treating this Bear S thing like a big ho-hum. Not even on the first page of the business section. And like it's all solved.</p>

<p>On the other hand, some of the local condo developers have just reduced prices a significant amount. Temporarily, they said. And Lennar has a house with 3182 square feet, nicely laid out for 400,000. If they come down another 10%, maybe it actually would be the time to buy for somebody.</p>
 
<p>"JPM gets to go the the Discount Window and borrow all the greenbacks they want; Then they loan that to Bear. In the event that Bear defaults, the NY Fed cannot go back to recover from JPM -- hence, non-recourse. "</p>

<p>I think this is the Feds way of "bluffing" that they are willing to snuff out any hint of a run on a bank - which is impossible to do if multiple banks begin to fail. NOBODY in the higher-ups is using the "R" word because they know that if the masses get spooked, then everything is toast. And why should they be concerned about the masses getting spooked? Because they know that WE ALREADY ARE TOAST!</p>

<p>The Bear Stearns bailout could very well be a forlorn hope prior to the start of the Great Recession of the 21st century.</p>

<p>I hope I am wrong, but this is the impression I'm getting from Ben, the Pres, business leaders, et. al.


</p>
 
<p><a href="http://www.newsday.com/business/nationworld/ats-ap_business10mar15,0,5894111.story">http://www.newsday.com/business/nationworld/ats-ap_business10mar15,0,5894111.story</a></p>

<p> </p>



<p id="story-body">WASHINGTON - Desperate to aid an economy in crisis, the Federal Reserve is ready to deliver yet another big interest rate cut.





How big? One-half of a percentage point, some economists say. Investors and others hope for even more, a three-quarters cut or perhaps a full point, given the turmoil on Wall Street. It will be a close call, Fed watchers say.





The speculation ends Tuesday afternoon after Fed Chairman <a title="Ben Bernanke" href="http://www.newsday.com/topic/economy-business-finance/economy/economic-policy/ben-bernanke-PEBSL000004.topic">Ben Bernanke</a> and central bank policymakers have met.





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<p id="story-body2">Whatever the decision, for a growing number of analysts, one more rate reduction will not be the lifeline that pulls the country back from the brink of the first recession since 2001.





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<p>Debt Reckoning: U.S. Receives a Margin Call</p>

<p><a href="http://online.wsj.com/article/SB120554473788438679.html?mod=hps_us_whats_news">http://online.wsj.com/article/SB120554473788438679.html?mod=hps_us_whats_news</a></p>

<p>Interesting article, some great quotes in there:</p>

<p>Former Treasury Secretary Lawrence Summers, speaking in Washington yesterday, said he sees "an increasing risk that the principal policy tool on which we have relied -- the Federal Reserve lending to banks in one form or another" -- is like "fighting a virus with antibiotics."</p>

<p>Bush: "Government policy," he said, "is like a person trying to drive a car on a rough patch. If you ever get stuck in a situation like that, you know full well it's important not to overcorrect -- because when you overcorrect you end up in the ditch."</p>
 
Here goes the broken record.<p>


The world's financial system is collapsing. There is no fix. The federal reserve can not fix it. The US federal government can not fix it. Anything the federal reserve or US gov does to try and fix it is just more of the same that created this mess and will only prolong the inevitable and make the end result worse.<p>


This is not a subprime problem. This is not even a mortgage problem. It is a leveraged debt problem. And it has to unwind.<p>


If you want to know what you can do personally to protect you and your family, get knowledge. Understand what "money" is right now, how it is created, and what the federal reserve's and US federal gov's and the banks' roles are in the creation of money.<p>


What is happening right now is nothing new. This has happened time and time again in history.<p>


LTCM was only $5B.
 
For those not familiar, LTCM is <a href="http://en.wikipedia.org/wiki/Long_term_capital_management">Long Term Capital Management.</a>





Honestly, I think these money-modeling "geniuses" forget that economics is a social science and not a science.
 
<p>Wall Street fears for next Great Depression</p>

<p><a href="http://www.independent.co.uk/news/business/news/wall-street-fears-for-next-great-depression-796428.html">http://www.independent.co.uk/news/business/news/wall-street-fears-for-next-great-depression-796428.html</a></p>

<p> </p>

<p> </p>
 
<p>I have no idea who this dude is, but he has some interesting ideas (particularily the point that unlike in the stock market, where the margin people have to put up 50% as a great depression reform, no such buffer exists for the bonds).</p>

<p>Part 1: <a href="http://www.youtube.com/watch?v=pw8R_QFK_Uw">http://www.youtube.com/watch?v=pw8R_QFK_Uw</a></p>

<p>Part 2: <a href="http://www.youtube.com/watch?v=ISBVeSxdP74">http://www.youtube.com/watch?v=ISBVeSxdP74</a></p>

<p>Part 3: http://www.youtube.com/watch?v=-AXdjfdi6Rg</p>
 
<p>"When the general public gets spooked, that's is when all hell <strong><em><u>brakes </u></em></strong>loose."</p>

<p><img alt="" src="http://www.rsportscars.com/foto/02/cadillacctsv_brakes.jpg" /></p>
 
<p>JP Morgan acquires Bear at $2.00 a share! Why is this good news?</p>

<p>When Lehman, they say is just a skoooch behind them in toxic mtg exposure.</p>

<p>And Merril somewhat behind them.</p>

<p>And that doesn't count all the mortgages which are yet to be foreclosed.</p>

<p>It's like watching the end of the world.</p>
 
My favorite part of the announcement was <a href="http://calculatedrisk.blogspot.com/2008/03/jpmorgan-conference-call-8pm-et.html">this</a>:





In addition to the financing the Federal Reserve ordinarily provides through its Discount Window, the Fed


will provide special financing in connection with this transaction. The Fed has agreed to fund up to


$30 billion of Bear Stearns’ less liquid assets.





I really need a better class of friends.
 
<p>According to the folks at Calcuated Risk, this was actually a bailout of JP Morgan, seeing as how they were highly exposed to. . .ta dah. . .Bear Stearns. Now they get 30 bil of our money to cover at least part of their exposure.</p>

<p>The dollar is way down vs the Yen.</p>

<p>Gold is way up. </p>

<p>Last I checked the futures mkt was down.</p>

<p>The head Lehman guy is suddenly headed home from India, and has apparently received calls from Paulson.</p>
 
Holy Sh*t people, this is bad. Real bad. I mean really, really bad.





The initial avalanche was started by three Bear Stearns funds becoming illiquid one year ago. Now phase 2 has begun: The run on investment firms. BS (in more ways than one) has been in business for 85 years. THAT WAS BEFORE THE GREAT DEPRESSION. This firm rode out the dark times of the early '30's and yet it has become dust in the wind in a matter of days!





The FED just cut rates on a SUNDAY! WTF! This is not good.





Holy sh*t!
 
I think you need to take your meds, bluemoon. A multi billion dollar brokerage firm becomes essentially worthless overnight, and you think it's no big deal?





Do you know how many Bear Stearns employees there are in Orange County? They are based in Newport Beach.
 
<p>According to Calculated Risk blogsters they have 14,000 employees total.</p>

<p>Frankly, I think the Fed's action will have exactly the reverse effect than that desired, by showing the insolvency of the system. WE and CR folks knew that, but everybody else didn't.</p>
 
I completely agree--this will cause more net panic than calm for the open tomorrow. The exposed financials will tumble across the board on the open. We shall see.
 
First, JPM is overpaying.<p>

Second, this is a bailout of JPM and BSC and Goldman Sachs and every other investment bank. They are all carrying OTC derivatives.<p>

Third, it will not help. This is exactly the opposite of what the US and world economies need.<p>

Fourth, the federal reserve and Paulson will not stop. When Paulson says he will do "what ever it takes", he means it. Paulson will do everything he can to use this to strenghten Goldman Sach's position in the world economy.
 
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