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August 10, 2007


Big donors calling in those chits, huh?

I wonder how we'll survive the experience. Renting rooms to friends? Gardening on balconies?

If the economy does go down the tubes, 27% will look like up to BushCo. And an angry populace might be even more eager to get these clowns out of office. Impeachment might even sound reasonable to the Congressioonal GOP, mostly as a way to distance themselves from the mess and hopefully save their jobs in '08.

Just trying to make lemonade out of lemons here.

These people never cease to amaze. I did enjoy Jim Cramer's take on this regarding who would be bailed out and who would be left twisting in the wind.

I am not so opposed to some fashion of bailout, I think it is in the interest of every citizen to some extent to see to it that the entire economy doesn't collapse. I think the NYT editorial has it right though about the wrong end of the equation being bailed out. This pains me just a bit to say, but the only candidate from either party who has seen this problem and who has had a plan (and a decent one at that) for a while now is Hillary Clinton. She has had a position paper out there, if anybody looked for it, for a long time.


Yes, I was going to add that point--Hillary is going to look downright prescient to the DC insiders who didnt' see this coming.

And I'm all in favor of helping people avoid foreclosure. It actually would be a much better solution to the problem, since it would prevent real estate from completely tanking.

How is this 'sweeping under the rug' any different than Enron, except this time the Thieves/Opportunistic Lenders are going to get away with it in broad daylight?

This is just like Enron. The only difference is that with Enron, the rich bailed out before the crash. Today, the Fed is propping up the market to bail out the rich investors.

They are exactly the same in that the little guys are getting hosed. With Enron they lost all of their pension and retirement funds. Today they are loosing their homes, their credit and cannot get any relief from bankruptcy.

It's only a "free market" when the rich are making all the money. The price of a "free market" is always born by the little guys.

Do I have this right? the morgage Co are getting bailed out but I will still lose my house to forcloser? something is wrong with this

Explaining the US economy?:
"...glorification of that sort of gambling in "clever strokes" which constitutes the very essence of theft, swindling, and all sorts of similar anti-social deeds." Peter Kropotkin comments on prison systems and relevant inmates ca. 1899

Subprime lending

As I understand it, the hedge funds that package and resell these loans are extremely leveraged and AFAIK, that's what is causing the ripple effect through the credit markets. This kind of lending allowed people who were not very credit worthy to get into a house with as little as 5% down. That's been a boon to the housing industry, building $150,000 houses/condos. But (for example) right now that mortgage has only been paid down by a little over $7,500. It means the residential home market is massively overbuilt. It certainly looks like sub-prime lending has taken construction and engineering resources away from infrastructure projects and made them more expensive.

I'm not sure Bernanke has much choice about buying mortgage backed securities. No one knows just how bad the sub prime loan portfolios are (mark to market). The banks that are now foreclosing on those properties wanted to lend those funds to the equity markets, so this negatively affects mutual funds too. Best of luck to all these banks trying to resell the foreclosed properties. Also, the banks are calling in the loans from the hedge funds, but it's not clear that the banks have valued these sub-prime loans any differently than the hedge funds valued them (mark to market, sounds just like Enron). It sounds like a huge pyramid scheme, but we won't know the full damage without transparency. Wrt that, another major problem could be that a lot of the hedge funds (that have been making 30 - 35% on these sub-prime mortgages over the last few years) are incorporated in the Caymans (not sure if I am right about that). I don't think we can get that money back. My guess is that everyone in the WH is arm pit deep in hedge funds.

FWIW, iirc, the S&L crisis was front page until Saddam invaded Kuwait. I hope Congress investigates the you-know-what out of this along with asking where in the hell the damn SEC has been.

Yes, Gunner, that's right. The rich won't lose their vacation cash, but we're still packing up your home in the next weeks before they kick you out of it.

The sub-prime mortgage loan business is one major issue, of course, and I am sure that neither party wants to have fingers pointed at it (and particularly the Bushies!). I am equally concerned about the amount of consumer spending that has been taking place by people drawing equity out of their homes through home equity loans and refinancing.

By putting home equity money into the consumer spending equation, Bush has been able to keep the economy looking robust. People have paid off credit card debt with home equity loans, but then turned around and got into more credit card debt. Now they are faced with tightening credit markets.

As are corporations. Home Depot's possible sale is apparently at risk, as are other mergers, because the availability of money is suddenly up in the air.

EW, you mention the S&L debacle in this posting. If anyone wants to read a real interesting story about what happens when there is too much money chasing around (as is what appears to have happened here) looking for investments, read the book "Funny Money" by Mark Sanger. I think it is still in print. I was in the oil exploration business in the 80s, and knew some of the principals mentioned in the book. It is about the rise and fall of Penn Square Bank, and its energy lending practices. Everyone wanted to get a piece of the action. It resulted in Seattle First (SeaFirst) being closed, and Continental Illinois almost going down the toilet. If I am not mistaken, some of these actions set up the S&L debacle.

Regardless, Bush has catered to the corporate masses and has done his best to make money available to keep the economy going. That was why he wanted to tap into Social Security so much -- that would have really opened things up even more. In the meantime, he could have his little war with Iraq. Unfortunately, the wheels are getting loose and are about to fall off the wagon.

bmaz, I'm in agreement with your sentiments and agree they needed to do something here. But to bad there isn't any sort of assistance and "bail out" of those people who can't pay their mortgages and will lose their homes. Guess that gov't bailout fails to trickle down only gets so far before it quickly turns into the era of "personal responsibility" for millions of those folks, some but not all of whom were preyed upon by people who knew better but didn't care. And you are spot on with the Hillary comment too. She is out in front of this one.

I don't think the banks and big mortgage companies who made bad loans to bad credit risks with questionable maket schemes should get bailed out. But I also don't think the idiots that borrowed money on ARM's and interest only loans to fuel the fake housing market should get bailed out either. Somewhere Mr. Andrea Mitchell is smiling at all the carnage.

sojourner, Boo and EW - You are all so right; this situation is reprehensible and has a parallel track to the savings and loan crisis. It is time to take that one step further though. And where I am going will be a well worn path for most here. Specifically, the policies that put us in these dumper moments are always the result of Republicans/Conservatives gone wild. Conservative my ass, they habitually bend and break laws in order to bleed every situation past being dry. Here is the commonality between S&L and SubPrime. It wasn't that either were new or necessarily problematic or evil on their own; both had and have been around forever. It was what was allowed to be done with them by unscrupulous Republican administrations. S$Ls were great little institutions that were not only sound, they were to sound for the Republicans; there were simply tons of assets, equity and stability in them because of their inherent nature. Here is a parallel with subprime, the S&L stability was because much of their assets were land and homes. The GOP wanted this potential money out in the economy in order to cover their - wait for it- tax cuts and give aways to corporate big business. So the Reagan/Bush41 administration loosened almost every significant restriction on the S&Ls from their ownership to debt margins. Presto! They went wild and went under. I know a bit of this because the Charlie Keating/Lincoln scandal happened right here. couple of good friends were on his criminal defense team. Charlie Keating was a loathsome and despicable man; but to this day, I don't think he was guilty of any crime. What Keating did was allowed and encouraged by the government and their economic policies. doesn't mean that a decent and moral man would or should do it, only that it was not criminal. When the bottom fell out of this scam, Keating was the face put on it, partially at least to draw attention away from Neil Bush and Silverado. The same thing has occurred in the current day. The Bush Administration had to have cover for their economy wrecking and plundering policies of tax cuts and corporate give aways. There have always been sub prime and other "creative" loans; they served a useful purpose in society and were not really an issue. But the Bushies loosened the rules regarding securitization and bundling of these loans, as well as the regulations on financial markets trading and ownership of the same. Presto! An Enron ponzi like frenzy of circular trading of speculative paper put tons of virtual cash into the economy. At the same time solid citizens were badgered into wasting their equity and, indeed were forced to because of the disappearing social safety net. The same people are responsible, and the same selfish corrupt motivations and method of operation are present. These bastards will bleed any situation well beyond death. Which returns me to my constant them for the last several months. START AN IMPEACHMENT INVESTIGATION, OF SOMEBODY-ANYBODY, SO THE BRAKES CAN BE PUT ON THE MALEVOLENCE AND THE FACTS EXPOSED FOR WHAT THEY ARE.

If the economy does go down the tubes, 27% will look like up to BushCo.


There are fifty to seventy million Americans who will volunteer to live in a cardboard box under a bridge, with their families, and live on sparrows toasted on an old curtain rod over an open fire if you can guarantee them that the family -- gay, liberal, Muslim, immigrant, different -- in the next box over doesn't even get the sparrows.

This is the salient feature of American politics, and we forget it at our peril.

Alf Landon got tens of millions of votes in '36 -- perhaps didn't carry too many states, but tens of millions of votes -- and times were far worse then.

There will always be Reublicans.

John B

There are a ton of people who are in foreclosure off of more traditional loans. So yes, let's prioritize, those who were smart and still are in foreclosure, those people who have no other options.

But unless we bail out from the bottom up, we're talking about moral hazard for the rich, and more damage for teh economy as a whole.

The Bush administration or Fed is protecting the Rich with tens of billions of dollars of aid.

Sen. Hillary Clinton plans to protect middle-class homeowners who have mortgages and their lenders with at least $1Billion.

Who will help those who've already lost their homes?

And, why isn't the largest aid to the little guys with less aid going to mortgage lenders (who went into this with open eyes) and the very Rich (hedge funds and the like) who not only went into it with open eyes they relished it, they slobbered over the opportunity -- and they shouldn't be protected from the downside of their risk-taking.

Where is the balance here?

This isn't a "bailout" as that term is generally understood. The Fed has provided extra liquidity so that banks will not RAISE interest rates at a point when there is a credit crunch. This gets the fed funds rate back to around 5.25-5.5%, which is the Fed's target rate. It is not the same as a rate cut. That is a cut in the prime rate.

The problem with mortgage loans is twofold. One, too many mortgate lenders made subprime loans to people who didn't really qualify for home loans, such as "stated income" or "liar's loans" and "NINJA" (no job, no income or assets) loans, often with teaser rates. These are starting to reset, although the majority of the bad loans will reset next year. And some people added home equity loans on top of precarious but not subprime mortgage loans. They may not be able to pay their mortgages.

Then the mortgages were sold to investment houses who packaged them and sold them to hedge funds, who borrowed at lower rates to buy the packaged mortgages. But it is impossible after the packaging to really tell what these collateralized debt obligations are really worth. Plus, some hedge funds were levered up to 12-1.

Now there are defaults and requests for withdrawals, and this paper has to be marked to market, or marked to what it is really worth, if that can be ascertained. The leverage that brought big gains now causes big losses, so some funds are puking up stocks to meet redemptions and margin calls.

But none of this is bailed out by increasing liquidity in the money system to keep short term rates from going up above the Fed's long-time target.

Now if the Fed actually lowered rates, that would be more like a bailout, but none of this really resembles the bailout of the S&L industry under Bush Sr, let alone the bailouts in the form of gov't guaranteed loans given to Chrysler and others. Nor is it really like Rnron either.

Mimikatz - I wasn't saying any solution was the same as S&L or Enron, just the framework of the genesis of the problems were analogous. Additionally, and I have a hard time believing this, but I read this morning somewhere that the Fed itself is actually buying up some of these securitized packages in their effort to infuse money. That seems odd if true which, again, I question.

"Conservative my ass, they habitually bend and break laws in order to bleed every situation past being dry.


From the Compost, but I think he makes some good points New Order Ushers in a World of Instability
By Steven Pearlstein
Friday, August 10, 2007; Page D01

"Hint to White House economic team: You might not want to have had the president repeat that numbskull prediction about a "soft landing" for housing at precisely the moment central banks were pumping $150 billion into the financial system to prevent a market meltdown over anxieties about mortgage-backed securities. Brings back memories of "Mission Accomplished."

Seriously, folks, we all need to get used to days like yesterday because there are going to be a lot more of them. In a world in which trillions of dollars have been bet on the premise that low interest rates and record-low default rates would continue forever, "repricing of risk," as the administration likes to call it, is not some minor technical event. It's more like a tectonic shift going on beneath the surface of the economy [...]

Australian analyst Satyajit Das makes the point that the main achievement of the new financial architecture has not been to spread risk so much as it has been to expand risk by vastly increasing the amount of borrowed money. Making loans to buy bonds secured by packages of other loans makes for big fees and exciting work for bankers. But as Das predicted last year in his book, "Traders, Guns & Money" -- and as we all discovered yesterday -- if the supply of credit suddenly dries up anywhere in the system, the elaborate new structure they've created can come crashing down on itself."

Dayum Mimikatz, you really nailed it.

This was my favorite part, because it explained what I was clumsily trying to get at with "mark to market."

"Then the mortgages were sold to investment houses who packaged them and sold them to hedge funds, who borrowed at lower rates to buy the packaged mortgages. But it is impossible after the packaging to really tell what these collateralized debt obligations are really worth. Plus, some hedge funds were levered up to 12-1."

What happened in the S&L crisis was that the money deposited in S&Ls was insured up to $100,000 by the equivalent of the FDIC. So old people put their life savings in S&Ls. But the S&Ls used the money (which they got through offering higher rates to savers) to finance increasingly risky and then fraudulent commercial real estate schemes. The loans went bad and the GOV'T had to pay up on the insurance, sometimes more than the $100,000 limit, IIRC, and it had to set up the Resolution Trust Corporation to take over the loans from the S&Ls and find someone more responsible to take them over. The real problem was that many, many people saw this coming under Reagan but they waited until after the 1988 election to do the bailout, by which time the situation had gotten much worse.

Here the people who will be hurt the most are the investors in the hedge funds because their investments are not guaranteed AND NO ONE IS BAILING THEM OUT. To the extent we have quasi-governmental operations like Fanne Mae, Freddie Mac and Ginnie Mae in the mortgage business, they have much higher loan requirements, and don't deal in subprime. The Fed is NOT buying bad loans from hedge funds.

An injection of liquidity is a fairly routine thing, although this is larger than normal and was done twice in one day, and just makes sure there is enough money available that banks don't jack up their lending rates to take advantage of the credit crunch. Congress can and perhaps should take some action to help forestall foreclosures, but they aren't going to be bailing our the hedgies, who at least now won't earn their big fees and won't have to worry about their tax rates.


The leverage is part of the problem only because the underlying mortgages are going into default.

Through the 70's, S&L's wee only required to maintain 3% net worth to total assets. They got hammered at first by high short term interest rates, they loaned long and borrowed short. Most of the institutions that had problems then had been operating soundly and according to regulations. This plan had operated well until the environment changed but the regulations didn't. When President Carter appointed Paul Volker to the Fed, he gave him instructions to get inflation under control. This was a seismic shift in the power of the Fed. Volker proceeded to do as requested and raised interest rates to tame inflation. The S&Ls were the unfortunate victims of this environment.

The real problems came when Raygun/bush1 tried to solve the problem by desupervising the industry and let their jakals loose and others have already noted very well what they accomplished.

Deposit insurance was only for $10,000 until the end of the 70's. The $100,000 limit came as one of the Raygun/busl1 solutions. This gave rise to CD brokers selling CD's for any S&L that needed the money at insane spreads over t-bills.

You could get a $100,000 cd at a big spread over t-bills that was just as secure as t-bills as long as you only put $100,000 per institution.

The other part of what happened over the last 10-12 years or so is that instead of hiking wages, companies gave all the productivity gains to top management (and some to the shareholders, but not nearly as much). To compensate (or forestall rebellion), people were encouraged by the financial services industry to finance their consumption through taking on more debt. There are millions and millions of people who did this through home equity loans and credit card balances that they will never be able to pay off because they are essentially only paying interest and fees, not much principal. This concealed the decline in real wages since the mid 1970's. This is the GOP's "ownership" society where you own your stuff and the banks own you.

It was all a con game, and now things are coming unraveled. If anyone deserves help, it is homeowners with jobs, and a second Resolution Trust Corp to take over and restructure home mortgages is a good idea. But no bailouts for the hedgies and their clients.

Mimi - That is correct. But unless i have gone totally senile here the reason the S&Ls were able to go wild and "finance increasingly risky and then fraudulent commercial real estate schemes" is because the Republican administration at the time intentionally loosened almost completely the restrictions on the limited and secure loans they could make as well as the types of investments they could make, while at the same time more than doubling the amount of federal deposit protection. They basically created a beast that had all the federal deposit protections of a traditional bank without any of the rules and regulations of a bank. In effect the government designed the S&Ls to be looted wildly. Through lack of appropriate regulation and loosening of regulations that had been present, the government has also intentionally let the current mortgage situation occur. It is a pattern in the general, not the specific.

they habitually bend and break laws in order to bleed every situation past being dry -- BMAZ

AMEN! They also make sure that the INVESTORS are protected to the hilt! To hell with the person who is saddled with the mortgage. Stuff happens. It happened to me when the bottom fell out of the oil business in the 80s. I lost everything. But the people who have been taken advantage of, for the most part, are the mortgagors who will go into default -- the same poor people the credit card industry was complaining about when they rewrote the bankruptcy laws.

It is a con game -- one designed to suck in investment dollars, but insure that the investors get their money back. The insurance is on the backs of the people who take out the mortgages or loans.

In the final analysis, to read through all the paper that you have to sign, the lenders will get their pound of flesh through harrassment and overall stress on the borrowers. They will get their default judgments and ruin many people, then turn around and re-sell the properties for whatever they can get -- and the housing market will decline even more until the properties are sold. Property values will decline to some extent. Then it will start all over again!

EW, I agree, mostly, but the challenge is bailing out deserving people without rewarding those who don't deserve to be bailed out. Why bail out the big investors that let the homeowner mortgage up to thier eyeballs, way more than they could afford on stupid interest only loans to finance bigger and better Mcboxes nobody can afford? I'm afraid no one getts off but the big mortgage houses...

John B

Make that: McMansions with wide-screen plasma 'home entertainment centers' that require an entire room, while the bedrooms (other than the 'master suite') are barely big enough for a twin bed and a nightstand. No yards to speak of either - but they have three and four car garages. And they've probably remodeled the kitchen at least once. (Things I learn about from listening to my fellow commuters.)

This is a bailout. As with everything the Republicans have done, this bailout is being done through private market manipulations. It is a thing of beauty -- if this were a screenplay.

The skinny is that the subprime growth is just a result of Bush trying to keep the economy from melting down after 9/11 by lowering interest rates (to accelerate investment spending). The hope was that a "war time" spending program in the private and government sectors would off-set the off-balance sheet recession we are about to go through.

What this means is that Bin Laden was very successful in targeting the system's vunerability. He was aided by a group of greedy bastards and political fools who collecively thought they would be able to avoid by social or economic engineering. The laws of nature still dominate, and the piper must be paid. On 9/11 we were attacked and our idiot "leaders" thought they could talk us out of or distract us from the necessary grieving and healing process.

But they soon realized this was a great chance to loot the system and grab power (to move to Dubai and Paraguay). So they put band-aids on America's wounds and told us to go shopping and everything was wonderful. But the patch of low interest rates was like morphine. It stopped the pain of 9/11. But that bandage is peeling and the wound was never healed. And the puss is going to start flowing. And Bin Laden is smiling seeing the slow chain reaction he put in place.

The only good thing about this, the potential silver lining, is that the world is changing. And there are a lot of signs that the change can be for the better. I look at the blogs bringing honesty to mass communications. I see people realizing that if there is going to be a solution, it is a categorical life and death imparitive to be solved. This is the only way to build our way out -- though open communication, general consensus and working together. If we can't communicate open and honestly, the true evil doers win.

Yes, Mmaz, you are right, they did loosen restrictions. But my point was that the reason for the bailout was the fact that the Gov't insured deposits up to $100,000 per institution, and it doesn't insure headge fund investments. So there is no need for a bailout of the investors like the S&L bailout. Whether we need some entity or change in laws to allow restructuring of home mortgages is another story, and would be comparable to what FDR did in the depression.

The people who are really hurting aren;t people with McMansions, they are people with modest incomes who bought into a high market and often took on mortgages whose terms they didn;t really understand. When banks and S&Ls held onto mortgages, they paid attention to the credit worthiness of borrowers. But most mnortgages now are sold and packaged and resold as CDOs, and the buyers were inattentive to the level of risk involved. As I understand it, many of those taken in are European banks. One more reason for them to love us. But also pension plans and major private colleges and universities seeking higher rates of return.

And I don't believe this is a bailout, just a temporary injection of liquidity. The Fed did not cut interest rates. It will withdraw the liquidity. This is structurally different form the S&L crisis.


Perhaps I'm missing this bit--but when are they going to sell those mortgage backed securities they're buying today? When is the market going to level out so the government isn't simply buying securities no one wants to hold off a panic?

Agreed absolutely. I didn't think we were on different pages, but I fully admit to not understanding the intricacies of the current crisis as well as I should; that is why I kept probing to see if I were wrong or we were just looking at different angles. And as EW and I stated far above, I have no real problem with some sort of governmental insurance or support program for individual homeowners in distress. Heh, if things go to far south, I may be one of them....

EW - Now that is a good question. Like I told Mimi, this isn't my field of expertise, if I have one at all; but it sure kind of shocked me to learn that the mechanism the Fed was using to "infuse" all this money (38 billion now I think) is by buying this crappy stuff. Maybe that is what obviously makes sense and I just don't understand, but that freaked me right out. And as you ask, exactly what are they going to do with it? And how do they preferentially pick out what to buy; i.e. which big corp or bank to subsidize? This has the air of stench to me....

It's my understanding that the Fed is buying the mortgage backed securities at a steep discount, much like a pawnbroker would. On Monday, I think others will swoop in and take the mortgage backed securities off of the Fed's books.

I'm looking forward to Mimikatz's response to ew's 16:54.

But Boo, if there had been buyers willing to scoop those up, why did the Fed have to buy them?

emptywheel I'm so glad you asked that question because I had similar thoughts but not being an expert or even minimally well versed in this this area I was very reluctanct to ask. I went over to brad delong's blog and he has a post that said that the Fed doing just that sort of thing was unusual (buying mortgaged based securities -38 billionish as bmaz notes above). This is in addition to the billions they are injecting into the system for liquidity sake. At least that is how I interpret it. Hopefully someone here can put this in layman's terms as to how this is not actually "bailing" out people (banks and financial institutions)who originally held these things in the first place?

Maybe this is real elementary, but it seems like there has to be some kind of authority (and funding) already in place for the Fed to step in and buy packages like that. The Resolution Trust Corporation (RTC) that someone referenced previously was established solely to take a lot of "collateral" from failed loans, and re-package what could be salvaged into saleable bundles to investors. That included interests in oil and gas wells and production, real estate, etc. Unless I have missed something somewhere, the Fed has only limited authority to take actions like this. It sounds like another case of Bush doing what he wants and daring anyone else to challenge him.

BMAZ, is this the same thing you are asking?

Sorry bmaz, I'm out of my depth on this and I didn't say it right.
Nobody knows how to price/value these subprime mortgages and that's what's driving the crisis. My understanding is that the Fed is doing a quick repossession of high quality collateral, mortgages. Everyone was so worried about how deep this subprime hole might be that they wouldn't even buy quality mortgages. The Fed is allowing banks to pledge high quality mortgages as collateral in order to borrow from the Fed. The banks are paying a penalty of about a point over the discount rate, so they have a lot of incentive to repay this loan on Monday. Every day, the Fed allows banks to borrow from it against bank collateral. Today was just a much bigger transaction, 31 billion?, I think.
I'll gladly defer to others on this stuff.


Can you distinguish between the 3-day repurchase agreements ($16 billion) and the outright purchase ($19 billion)?

Just for a refresher of my earlier post.

My loan is GMAC Homecomings financial.
It is a 30 year fixed mortgage
It has a 9.85 interest rate since 2001.
They put me in foreclosure after 60 days late when my ex quit paying 1000$ a month child support, with no warning. The only option they would give me while I was trying to straighten out finance fees from the bank and and get caught up was to increase my payment by 500 hundred a month and refinance my two payments at a 28% interest rate. Then they foreclosed and refused all calls, and faxes. It has been a nightmare from there.

google mortgage fraud and you will find many people who have made their payments but had them misapplied or not applied at all. Two months of this and then they put you in foreclosure. In some cases the houses were sold before it could be straightened out legally.

I am in bankruptcy. I have not missed a chapter 13 payment or a mortgage payment. I can prove this. I went into the bankrupty (to save my house-no credit card debt) owing homecomings 8300 in finance charges and missed payments (because they would not take my checks or calls). They say I now owe 13,200$ I can prove that all my payments have cleared the bank. Where did they put them??? THey have hauled me into court twice accusing me of not paying. I proved them wrong twice. They have also messed with my escrow. Do you know how hard it is to straighten out those lies??

Since when could a bank be so inept at keeping and applying payments???? There is something very rotten in denmark. I have a master's degree and am not stupid. I have a jerk of an ex husband.

google mortgage fraud and you will find case after case like mine. It's very bad and very illegal activity.

No, I can't. My wild ass guess is that the Fed accepted lower grade collateral (mortgages) than usual. IIRC, normally, the Fed doesn't accept anything except triple A rated collateral.


I have friends whose banks can be that inept, even with checking accounts.
They just mislay stuff, it isn't coming out of their pocket (which is why there need to be real fines for this sort of stuff), and hey, you're supposed to know where the payment coupon is, even if the USPS hasn't delivered it yet (or delivered it to the wrong address - one of them was running into that repeatedly, and he was told he was supposed to find out whose database was being used).

Hang on. We're still very much in the preliminaries of a debacle that I doubt the Fed can fix with the few instruments at its disposal, not to say that there is not enormous and perhaps unprecedented pressure being exerted on the Board of Governors to do just that. I think the reasons why the usual suspects want the Fed to be the ones to bail them out have been well summarized here already; indeed it is their refusal to exert regulatory and supervisory authority over the years that largely explains the ineffable nonsense to which we are soon going to be subject.

However, I'm not there yet with a conclusion that the bailout attempt has officially begun yesterday or today. (Disclosure: I'll get that dissertation completed one day ... but my macro's not one of my fields, so here I'm just a half-overinformed citizen.)

The actions from today and yesterday are well-summarized by Mark Thoma, especially in this article. Since he is a macroeconomist, he will be following the events pretty closely, I should think. The upshot is that there is less to what the Fed has done yesterday and today than the perceptions created by much of the reporting suggests:

1) The amounts of money that were injected are consistent with the non-bailout policy that the Federal Open Market Committee announced earlier this week. The trading of reserves among banks that constitutes the fed funds market had opened well above the target interest rate of that policy. (My understanding of the mechanics of reserve trading is that it is somewhat transparent at least to many people in the Federal Reserve system, though that's something worth looking into.)

The standard way to bring the ff market rate back down within hailing distance of the target is to do what the bank in fact did, i.e. make some funds available. It certainly does this type of thing with much less fanfare many times a year. However, I do not yet know what the normal scale of such an operation is; I'm aware of some informal commentary that the $20-40b sort of level of recent days is not greatly in excess of usual, but that again is worth nailing down. The reports from Bloomberg and the like suggest that the injections stopped when whatever rate monitor the Fed uses became stable. (They finally, late in the day apparently, got Fed governor Cathy Minahan to give out a soundbyte explaining this very point, which most other media I've heard today has not made clear.)

2) The injection of funds was done by a mechanism that by design is very short term —overnight (or maybe 2- or 3-day) repurchase agreements. In other words, the Fed buys assets from banks, giving them a short term cash infusion under a contract for the banks to buy the assets back in the very short time period, at a slight premium for the Fed. The short contract term requires all sides to reassess the situation with a quick turnaround.

3) The assets can be Treasury or other government securities. It appears that in this case, at least some were Fannie Mae/Freddy Mac/Ginnie Mae bonds. Yes, folks, some of them were mortgage-back securities. This too, has been a long-standing practice, and is evidently not remarkable at the levels of this week's actions. These are very safe bonds, even in the present crisis, which are backed by properly underwritten mortgages. What we had better not see would be the Fed buying private MBS issues, certain of which are the fellows that brought us here.

Don't I seem calm? Well, there are two reasons, at least. One is that we're likely to be amazed by financial news on at least a weekly basis for quite a while; might as well keep it as low as possible. The other is that I don't think Fed Chairman Bernanke is an ideologue, unlike his predecessor, who I think still should be called before Congress to 'splain himself about a thing or two.

As I say, the political pressure on him is enormous, and such clown shows as Jim Cramer's unconscionable caterwallings should definitely be considered part of that. (Have I mentioned that I distrust clowns showing up where clowns shouldn't be?) However, I think Bernanke's own inclinations are not to provide a massive bailout of a problem that might be on the order of many hundreds of billions through money inflation, and I think he also believes that much of this problem should actually be handled by other functions of government. Since I happen to be going through some of his work, I can come back by with some links in a couple of days.

They give it back on Monday. What the Fed did is called a repurchase agreement, or "repo". It took the mortgage-backed securities as collateral; it did not buy them outright. These are often 3-day repos. Of course, the Fed could get stuck with the collateral if the counterparty who put them up as collateral can't pay the loan back.

One of Brad DeLong's commenters explains it thusly, with a bracketed coomment from Brad:

There is a big distinction between outright purchases and collateral taken in repo. On the former, you are basically right that the Fed only holds US Treasuries (although if you look closely you will see that in the past that purchased agencies outright as well). What they are doing in repo is taking collateral.

[Ah. Thanks. Bloomberg had it as a *purchase*, which would have been unusual both in size and in manner...]

This is not "intervention" since they are going to give the stuff back. In the case of todays (admittedly very large) $35 billion operation, it will all automatically reverse on Monday.

A quick look at the history of these temporary open market operations shows that they have been taking mortgage-backed securities as collateral for repo for some time. In the past 30 seconds I could verify that they have been doing it regularly since at least 2000. The quantities have normally been small (between $100 mil and $2 bil), but they have been doing it.

So this is not what I would call an "intervention in the mortgage-backed securities market". And it is not unusual.

And two, one of the reasons we're jumping to giving welfare to big capital without the normal interim steps is because doing anything else--putting much more money in the system--is going to revive the word "stagflation" faster than you can spit.

Wonderful. We're going to relive the 80s fiscal crisis and the 70s fiscal crisis.

MT, When the Fed injects money into the system either through repos, or by outright purchases of securities, it is automatically adding to the money stock, so it is not clear what you mean by saying "doing anything else--putting much more money in the system--is going to revive the word "stagflation" faster than you can spit."

What happened in the past couple of days is that the demand for money spiked (or the velocity of money dropped) because many large economic actors started to hoard money. This required a large infusion of money stock from the Fed in order to maintain the Fed Funds at or near the Fed Funds target rate of 5.25%, which is the job of the Fed.

Unless you want to argue that the Fed Funds target rate of 5.25% is in itself inflationary (and at the same time impeding growth - an unusual but not impossible combination), I am not sure how the Fed's operations to bring the Fed Funds rate in line with its stated target is stagflationary.

Folks, calm down! This is not the Fed bailing out some hedge fund. They gave banks funds to meet immediate needs for cash by their clients and took mortgage-backed securities as collateral. Even if they did buy Freddie Mac, Ginnie Mae or Fannie Mae obligations outright, that is not the same as buying subprime junk. These quasi-governmental organizations have much tighter requirements for mortgages than the boilerrooms that are going out of business. They can sell these back next week.

Agree with compelled to unlurk. The objective here is to prevent a credit crunch caused by shortage of money to lend, temptation to jack up rates, or hoarding (unwillingness to lend). It is done frequently. Greenspan arguably overdid it, but he, for example,m injected massive amounts of money into the system before Y2K and after 9/11 to prevent the system freezing up. This is a similar move. It is jus tthat lots of people are watching because the markets have been going nuts for the past couple of weeks, with wild swings as highly leveraged positions are coming unwound and funds are scrambling to meet redemptions or margin calls, and much of the mortgage-backed securities can't be fairly valued at this point.

Also, unless folks believe that we are in a 'liquidity trap' there is no reason to believe that the liquidity crunch will last; it is more likely to blow over in a few weeks at worst. This crisis of confidence would have been much more dangerous if it had happened a couple of years ago when the Fed Funds target rate was, say, 2%, because there would have been a much greater chance of a liquidity trap taking hold.

Monetary policy is a blunt instrument (it can only cause a rising tide, but cannot float only the leaky boats), but is a very potent instrument. There is really no technical limit on the amount of money the Fed can inject in order to neutralize the urge amongst market participants to hoard money; the only consideration is if it will cause inflation. However, if the action is taken to only meet the surge in demand for money because of an urge to hoard, it can not cause inflation by definition because hoarded money is not transactional money.

Once confidence returns (after the realization sets in that the Fed has infinite capacity to supply fiat currency) the unhoarding process will begin and will become evident in a drop in the Fed Funds rate, and the Fed will readily step in to sterilize the extra liquidity at that time to push up the Fed Funds rate back to the target. In fact, the Fed does this everyday as a matter of routine but on a much smaller scale.

Thanks Mimi, Prostrate and Compelled. I certainly feel better about the Fed action vis a vis the packages yesterday and today after your explanations. I was not panicked over it so much as perplexed. I am somewhat hesitant to believe this will so easily blow over as you say though. Don't underestimate the ability of the masses to herd in one direction or another; especially in light of so many other factors that are impinging on their lives with despair.

An article on the Greenspan-Bernanke succession, from just before the past week's Fed policy review meeting:

Bernanke ordeal has Greenspan written all over it

"Years and years of easy monetary policy under Greenspan created a tremendous amount of excess liquidity, which caused a total mispricing of risk," said Frank Hsu, director of global fixed-income at Fimat. "Now we're getting payback."

Analysts trace this debacle back to Greenspan, who not only cheered on the Internet boom but also battled its bust with yet another dollop of cheap credit.

Honestly, that Bloomberg reporter needs to be put on the Food beat - and Atrios ought to consider getting a second opinion before he comments on the workings of the Fed.

The commenters on this thread did a much better job with clear presentation of a very complex subject than they did.

So, what do we have? A normal Fed function, running on the high side volume-wise, but not involving the Sub-prime Mortgages market AT ALL in collateralizing a short-term exchange for cash. No biggy.

But, those Sub-primes are still worthless - there's nobody to pay for them and no credit-worthy people to buy the houses - Americans are broke.

Will there be a bail-out?

Gee, Wikipedia has everything! (Actually, I have found other useful finance articles there in the past, but when the articles depend on randomly distributed interest, who would've guessed?)

Repurchase agreement, with a section on how the Fed uses them. The external links include an article from the Fed's own Fedpoints.

Typing here as an ex-American Home Mortgage IT employee. I thought a couple cents worth were in order. My old place went from being number 7 mortgage lender to chapter 11 in 1 week. The cause was credit crunch brought upon because our underlying investment portfolio that was held up as collateral for short term loans against what are essential credit lines. We had them with all the big players. The problem here is Bear totally F*d up. They have hedge funds that are based upon mortgage backed securities (subprime) that have 0 value and are going into bankruptcy in the Caymans. They then put the screws to all the dependent companies like AHM to cough up cash with a margin call. The portfolio of servicing debt we held was loosing value to Bear and the reduced credit requied AHM to return hundreds of millions of dollars. On monday last we had stock halted and were unable to fund loans to the tune of 400 millions ( a lot of people didn't close that day ) tuesday again roughly the same. We were dead just waiting at that point with a stock price of a buck.

Nobody would help either. No private bank or federal agent. I guess our CEO didn't blow the right republicans.

by thursday, we were done. Friday laid off 6300 people out of 7200. They are only keeping open the mortgage servicing sub company that is getting checks. The last day of employment was friday 8/3 no severance and all benifits terminated COB. Nice people my senior management. As usual they paid others instead of employees.


some get bailed out others are just crushed in an instant.

Let me add a touch to this. The subprime problem is complicated by securitization. There is a good discussion at Calculated risk link. The loans are packaged, then sold in tranches. The first tranche has first claim on the money produced by the package, whether from interest, principle or foreclosure. They bear the lowest interest rate. Then there is a tranche with second call on the proceeds, and a third tranche in third place. The documents restrict renegotiation, and impose serious prepayment penalties. These requirements are necessary to protect the interest of the lower tranches.

This means that there are substantial forces pushing mortgage bankers to push customers into subprime mortgages with their higher interest rates, even if they would qualify for lower rates.

It also means that if the loan defaults, it isn't possible for the owner to renegotiate the terms. That explains why the problem is so great. Lenders prefer to avoid foreclosures where possible because there is such a large potential for loss. One lender reports an average loss of $50,000 per foreclosure. There is no way to ameliorate this loss once the loans have been securitized. It is safe to say that the investors who own the first tranche will watch the lower tranches go to the devil before they will permit any change which might affect the value of their securities.

This is just as interesting a problem as the political problems we have everywhere.

Interesting Masaccio. This pretty much explains Katie Jensen's problems I guess. Another thing that keeps striking me is that this wasn't just the "secondary" lenders doing this stuff, companies that you would think are holding their own paper, or whatever the correct term of art is, like GMAC, Countrywide, Equitable etc. were doing this. I know people, pretty well to do people, that have ended up in the same position as Katie. Most of them were with these big old school companies. Who knew?

bmaz: Katie Jensen has a different problem, I think. She needs to talk to her bankruptcy lawyer and find out what is going on.

May well be. The inability to get anyone to talk to and respond, and the messed up accounting, seemed consistent with the successive investment groups buying these packages and not being set up to deal with individual homeowners that your piece, and others, described. I have had friends call me with similar issues (mostly clucks who decided they would find an extra fortune remodeling and flipping investment houses). These were solid people who didn't care about the interest rate because it was such a short term deal, but didn't want any complications so they went to the big established places like I said above. Same result. Couple of months later, they are notified their notes are now owned by "Group X" and given an address to send the payment to.

Unfortunately, the pace of change in the mortgage lending industry accelerated greatly and with far too little scrutiny starting in the late 1990s, in ways that have made each stage in the origination, funding, servicing, etc. chain far more specialized, which seems to mean among other things that liabilities are very difficult to locate.

Part of the story has been the rise of securitization of loans (all loans, not just mortgages), so that the company that originates the loans can sell many of them to specialists who create the various stages of asset-backed securities, cdos-to-the-kth power, etc., which are then sold to investors. That process means that the loan originator —who these days might be strictly a broker and not either a bank or a finance company like GMAC in the first place— gets to take much or all of their work product off their own books. Incentives to dilligence get weakened. In addition, the originators and brokers still get fees for originating the loans. So origination becomes fee-driven, to an extent. In fact fees all along the way have too much to do with how the financing bubble was created.

What we are getting the first glimpses of now is what happens at the other end of the process, with the bagholders who ultimately own the securities, and closing the circle, with the original borrowers. The last group are where the amelioration should be concentrated in my opinion. Estimates of how many there will be have ranged from about half- to two million households, over the next two to three years. In many cases, a better transition might be all that could possibly be done, but in many others, states and the federal government need to figure out how to make the loan holders talk.

Data on the Federal Reserve operations, including historical data, through this page. And at Calculated Risk, there's also a series of special posts to consider bookmarking: The Compleat UberNerd.

A hallmark of our crony capitalism is privatization of profits and socialization of losses.

So hedge fund mavens and Wall Street titans make off with $billions while the poor middle class sucker had no idea that his pension plan was buying CDO Squared and now sees his retirement benefit reduced dramatically.

While the LBO mania was going strong the KKR and Blackstones and Carlyles where making off like bandits along with Wall Street investment banks. Now that they are stuck with all these loans and they have to pony up to pay off lenders that their hedge funds borrowed from merrily - they want already indebted taxpayers to bail them out.

Since politicians from both parties are on their payroll they'll get all the taxpayer funds they want even if it means our next generation will be in debt servitude for a long long time.

Masaccio, so are you saying that:

- bad paper (ninja risk levels) gets intentionally written
- by people making commissions on the front-end
- that want to dust-off their hands of any liability
- who then dump the paper into 'securitized' packages
- that get sold-off knowingly (garbage in = garbage out) as future fodder for Bill Collectors

Making the only clearly identifiable sucker, I mean sufferer in the money chain - the soon-to-be house-loser?

Fascinating thread, and color me cynical, but I don't trust a single damn comment of any Bush admin officer at this point, so I frankly don't care what Bernake or any of them say.

I would point out that the assumptions on this thread about homeowners being tossed from their homes are true in some cases; however, many people bought second, third, or fourth houses as 'investments'. One realtor that I know sold several properties to people who found them via the Internet, lived outside the US, and were buying 'rental investments'. Consequently, I wonder who actually owns those subprime loans? I'd like more information.

Meanwhile, the Bush administration didn't fund FBI positions to investigage white collar crime. Mortgage lending is 100% white collar crime; Congress needs to fund those positions, especially in an era of online mortgage applications (!).

I'll wait to learn more about the nature of the 'liquidity' issue, but my gut tells me that there is major weirdness in the markets.

BillE, best of luck to you.

The recess that congress could not wait to take gave Bushco the opportunity to float the bailout. Weenie dems have sold out their country once again. It went down like this: Bushco needed a bubble for the repubs to keep rollin in the do re me when he got in, which is what keeps them in office. A quick bailout saves the real estate bubble that the SEC and Fannie mae and freddie mac orchestrated. By having industry running the regulatory no one was watching our store so these puke mucks can steal america blind. It is one ripoff after another. We elected yellow/blue dawgs to straighten it out and they bailed. This was what you call advanced planning no surprise. When you go out on margin you get the call it happened in 1907 with J.Pierpont Morgan and in the crash of 29. This time their is no $100,000.00 FDIC they are all secured securities with bad paper with zero to back them and people want out yesterday. The economy needs another bubble to prop it up as americans spend/borrow but do not save. The capital markets are dry and the central banks print money and loan it to the speculating institutions to cover their obligation. The almighty dollar, which carries america is in the tank without more oil/energy. I hope you have no debt remember Bushco changed the bankruptcy law to favor credit industry. This was a conspiracy to enslave the american people.

Silverado Savings & Loan, Denver CO, a Bush family enterprise went under and the Resolution Trust Corporation (1990-94) http://www.fdic.gov/bank/analytical/banking/2006sep/article2/article2.pdf bought out the bad paper of 747 S&Ls. Remember the junk bond king did a few years for that billion dollar scam. Remember American S&L Keating devastated seniors with anothe junk bind scam. The Texas book was a foot thick then and some of these scum are still in congress. This is an old Bush family scam Nationalized. The resolution trust corporation is replaced by another fed institution that does not protect the borrower. It is part and parcel of the strenghtening of corporate takeover of the world economy which is based in USA. Control the Judicical and their is no legal recourse. Bushco, who said it is easier to run a dictatorship than a democracy is a quasi dictator for the neocon new world order which throws people under the bus rather than take the hit by the organization. Impeach or accept the yoke of tyranny.

My point is that I have actually two master's degree's. I was steered into the subprime loan with a credit rating of (780, 750, 730). They put me in the subprime market because it was more lucrative to do so.

My point is that the discussion about these illegal activities has not begun in any real sense. Trust me, I have done everything you can do. I have filed complaints with the FTC, the Attorney General, and I have talked to at least 15 lawyers. My first bankruptcy lawyer (got deployed midstream to Iraq...let me tell you the shit hits the fan from this administration in more ways that many could imagine)had no clue how to deal with this bank. My new lawyer has literally been afraid to push back. The last time we fought them in court the judge gave them a reprimand (they had sued me for not making 6 months worth of payments...they do not send a statement every month because I am in bankruptcy and they are not suppose to try to collect.) So I had no idea that they were not posting my payments until they sued me. Then I had 30 days to respond but my lawyer was in Iraq. I am not kidding you. And while it's easy to think my situation is just a rare occurence, I am telling you it is not. I'll post a link.

But I did get to court finally, (the stress is unbelievable!!). I won. But my lawyer said that this is like "poking the bear". He said "I am afraid of what they will do next. These banks tend to escalate when you fight them." So he warned me to watch my statements (I get one quarterly). He expected that they would just add the fees that they did not win in court to the end of my loan. This is what they did. The court reprimanded them. Told them to erase the fees and they just added them to the back of my loan.

People do not believe me when I tell them this stuff. This is what they have done. I cannot imagine what folks who have less resources than I do. There are many tales of people who's loans were bought out by homecomings...who have never missed a payment and were forced into foreclosure for 1) fake insurance scams...the lender says they didn't have proof of insurance, buys their insurance, jacks up their payments and then accuses them of being behind. Folks describe it taking literally months to straighten out in court. 2) they jack with the escrow accounts. My escrow has been raised every year by 150 each month. My lawyer didn't want to do the math to figure out if it was accurate...and I don't know how to do it. In one case my insurance did go up...but I have no idea why they had a shortage on others years...and they of course fine you if your escrow is short. And they pay themselves first. 3) they incorrectly apply payments. There are many posts from people who have made every payment but the mortgage company says they did not.

In my part of the country back in 2001 when this began, there weren't many lawyers who had a clue of how to deal with this stuff.

I am not denying that part of the problem is that these were high risk loans but whenever this topic is covered on the major networks the discussion is "maybe some folks just shouldn't be home owners". It makes me very frustrated. Maybe some of these mortgage servicers shouldn't be in the business if they cannot post payments accurately. These mistakes are rampant. No one reports that this is part of the problem. And it is a huge part of the problem.




there are literally hundred and hundreds of complaints on these web sites. There are several class action lawsuits in the making, and of course my lawyers are discussing that option. Bankrutpcy court will straighten out the current crap that they have pulled but my other lawyer is looking at how I was steered into the loan, how my credit was destroyed, how I ended up in foreclosure in the first case for a class action lawsuit. I have collected these complaints for this purpose.

The thing I want to get across is that the complaints on the internet are well written and from folks who have resources. What is happening to those people who don't have those resources, who are ashamed (as I was at first) and who just assume the bank is right?? These lenders target, minorities, the elderly and women. There are heartbreaking stories of elderly folks losing their 30 year homesteads to these loans.

Their is definetly a blame the victim attitude with very little discussion about the practices of these companies. I think most folks think it can't happen to them. My colleague just had her loan bought out by homecomings. She had no problems for the first year. She thought I was being overly dramatic about what was going on. They just recieved notice in the mail that they were behind on their payments. She is freaking out. They have never missed a payment. She found out that when the loan was bought out the insurance info didn't transfer. She is now in the cycle. It's a nightmare if it happens to you. And my son who works in collections said he talked to a guy who lost a half million dollar house to gmac under the same circumstances when his wife died and he wasn't watching his investments. The guy told my son, he had never seen anything like it and that he was fighting it with a lawyer. The guy had money.

These behaviors will eventually affect the market in ways that I think are more difficult to predict. That's why I am sharing this information. How are people able to make accurate predictions about what will happen next without understanding this behavior from many of these lenders if no one is talking about it??

I apologize for the first statement at the top of my post. Who cares that I have two master's degrees, (I am well aware that the company on this website is far more educated than my midwest master's degree's) my point is that I am not your average homebuyer. I don't think I was stupid and I think I researched my purchase more than most people do. That's what I meant to communicate.

The actions by the Fed, ECB and other central banks were proper and what the role of central banks are - to insure that the overnight inter-bank lending rates don't get all whacked out and there is sufficient liquidity for reserve lending. All the Fed has done is inject liquidity through 3-day repos collateralized by MBS. Now if the banks can't payback the repo then there is real trouble which seems very unlikely at this point. However, there is no doubt there has been panic among banks all wanting to increase their reserves that caused the overnight lending rates to rise rapidly overnight on Wed and Thu. What it implies is that banks suddenly had significant concern about the credit worthiness of other banks.

No bailouts yet! But our politicians are already talking about it. Increasing the conforming limits for GSEs, etc. We have not yet got to the point where a RTC is created to provide a taxpayer bailout or the Fed engineering a bailout where LTCM passed on its underwater assets to other banks. But as credit standards return from the laxity of the recent past be certain that Wall Street will be pushing for bailouts under all sorts of euphemistic labels. The first step likely is the Fed lowering the fed funds rates but will that cause lending to get back to to the standards of 2006?

There is not much point in railing against bank bail-outs now. It is a bit like allowing the construction of a nuclear power plant and complaining about the Feds taking over the clean-up after a mishap.

It is hard to imagine a situation where a Citibank or a JP Morgan Chase or a BofA will be allowed to go down by the Fed (or the Treasury), bail-out or otherwise. These organizations have grown so huge and pervasive that they will take down the whole system along with them.

It is a fait-accompli now; like it or not, if a big bank fails there will be a bail-out if the Fed reckons that one is required (after all, the other - somewhat conflicting - purpose of the Fed is to be the regulator of banks). We are long past the point of being able to avoid bail-outs of large banks. The only way this situation could have been avoided was by not permitting these institutions to become so big in the first place.

Was it G. B. Shah that said, (to paraphrase) if you owe the bank 100 pounds and are not able to pay back the bank, you are in trouble; if you owe the bank a million pounds and are not able to repay, the bank is in trouble.

We have permitted these gargantuan corporations to proliferate in many sectors of the economy; now there is nothing to do but to just learn to live with them.

Repeat: There has been no0 bailout. There will not be a bailout of the hedge funds. BushCo has many failings, but they are not bailing out the financial industry.

The real problem is situations like Katie's where bwecause of securitization of loans, it is very hard to find out who to go to for mortgage foregiveness or restructuring. there needs to be a new Resolution Trust Corp to restructure the mortgages of homeowners. As FDR did in the Depression. So people can keep their homes.

And as for investors, GNMA funds are fine. I'd be nervous about anything else, and stay away from the lesser known mutual fund firms. Vanguard is very conservative and reliable.

Mimi - You are pretty good at this. Side question. What thoughts have you about investments in China and Mongolia businesses?

A good run down on what's happening in Barron's. Just make sure your money market fund is not holding those ABCP conduits!

Even After $1 trillion Goes Poof, it Ain't Over

all of these politicians better start thinking about the working class people and not there rich friends,this is my money they are using to bail out their rich friends,they better start helping people that are losing their homes,jobs,and life savings because of these theives.I have a problem with the government using my money to bail out companies like AIG,freddy,fannie,and who ever because they couldnt manage there affairs.If we are going to bail out anybody lets give this money to the american people and let them use it to pay off their houses and credit cards,and guess what the problems will be solved,people wont be losing their houses,jobs,banks wont be defaulting.the economy will be good.and lets not fool ourselfs both the gop and the democrats are responsible for this mess this country is in,they bothe are looking out for their rich friends and their selfs to get richer,ask them how many of them are losing their homes,

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