Financials Getting Hammered

Curiously the djia is only down 200-300. It is not reflecting the magnitude of the turmoil we are seeing in the financial world.

I'll just let today's headlines speak for themselves:

Fed funds jump to 6 pct in mkt, tripling Fed's target - MacroEconomic News

Global Markets Are Battered By Wall Street Hurricane - CNBC

AIG, Facing Liquidity Crunch, Reaches Out to Regulator - CNBC

UBS Falls 19%, Hit by Reports of New Writedowns - CNBC

Wilbur Ross: Possibly a Thousand Banks Will Close - CNBC

Bailouts Will Push US into Depression: Manager - CNBC

Stocks in U.S. Drop as Lehman Bankruptcy Deepens Turmoil in Credit Markets - Bloomberg

Lehman Files for Record Bankruptcy, Victim of Meltdown Firm Helped Create - Bloomberg

Banks Hoarding Cash Send Fed Funds to Decade High Over Fed's Target Rate - Bloomberg

Bank of America Will Buy Merrill for $50 Billion as Credit Crisis Broadens - Bloomberg

Credit-Default Swaps Surge Most Ever as Lehman Threatens to Unravel Market - Bloomberg

Finally, from PrudentBear.com.

Here is what we know:

1. Fannie, Freddie and the FHLBs all failed and were effectively nationalized last Sunday.

2. On Monday, the ISDA released a tersly-worded statement that reluctantly admitted that there was a "credit-event" triggered by #1 above. The NY Fed also was involved in this situation and had hastily called for a conference call among the destroyed CDS players.

3. "Coincidentally", this last week LEH fails outright. AIG stock starts trading like pets.com at the end of the Internet boom and Merrill's stock is right behind AIG in the "dropping-like-a-stone" department. Perhaps unrelated, WaMu [stock price] also collapses. So does Wachovia. And others as well.

4. In the meantime, ISDA offers another less-tersly-worded statement that it is working with the destroyed CDS players to figure out who owes what to whom, who owns the underlying $1.4 TRILLION in Fannie/Freddie debt and the actual the size of the CDS positions (which I have made an irrefutable case for their being many multiples of CDS to underlying debt), yet doesn't reveal any of the players or the positions.

5. On Friday evening, the Federal Reserve, the Treasury, the SEC, and EVERY FRIGGIN' LARGE INVESTMENT BANK IN THE WORLD begins meeting to ostensibly discuss "ONLY" the dismemberment of Lehman.
....
Last Sunday's GSE nationalization triggered THE LARGEST DERIVATIVES EXPLOSION IN THE HISTORY OF MANKIND!!!

Yet, now we are being told that the tiny-by-comparison Lehman failure is causing all sorts of problems with parties and counterparties to Lehman debt and derivatives.

And furthermore, every Big-Shot goverment agency AND every major investment bank has been meeting in panic sessions to supposedly discuss ONLY the Lehman autopsy, and NOT the afore-mentioned GSE triggered, multi-TRILLION dollar CDS implosion?

Yeah, right.

For those few readers who need things explicitly spelled out for them, I will oblige:

This AIN'T just about Lehman, folks. It's about what Fannie and Freddie's demise triggered:

THE MASSIVE, UNPRECEDENTED, WORLDWIDE IMPLOSION OF TRILLIONS OF DOLLARS OF DERIVATIVES POSITIONS!!!

And the collapse of Leh, of AIG, of Mer, and of probably all the other banks and hedge funds and other gamblers involved in this "Casino from Hades".

Free Fallin'

Interesting day for the U.S. economy for sure. Hang on to your hats. More later today once things shape up.

Don't Waste Your Vote (on either major party)

I won’t be voting for a Democrat or a Republican in the upcoming presidential election. The primary reason is because I don’t really believe there is a major difference between the candidates. In regard to foreign policy, the welfare state, big government, and privacy issues there is no discernable difference at all. Where is the candidate for states’ rights and shrinking of the federal government? Where is the candidate who will reign in the Federal Reserve and move us toward a currency that is actually backed by something more than our imaginations and maintained the shuffling and obscuring of massive debt? As either Obama or McCain will learn during the next term…it is probably too late for that already. The tsunami is coming. I could go on for ten paragraphs about Bear Stearns, Fannie and Freddie, and, soon to come Lehman, Merrill Lynch, and WAMU…but even the perfect candidate could not fix this mess now.
Now I realize there are, theoretically, ideological differences that should be considered between the candidates. This one supports Roe vs. Wade, this one doesn’t. This one wants gun control, this one wants less. But where is the candidate who will state that NEITHER of these issues and many like them are not issues for the federal government to decide AT ALL. At best (where constitutional to even question) these should be decided by the states.
On energy policy. One party wants to drill offshore…the other doesn’t. Seriously, they are not even engaging in the correct debate. I realize most of the sheeple of America believe this is where the debate is. All the time we are told idiotic drivel like “America has 200 years of oil, and all we have to do is go get it.” Absolutely NOT true. These accounts take into consideration oil shale, oil sands, and the Bakken formation. These ARE NOT conventional oil plays and will not solve the energy crisis. We cannot extract any of these resources at high enough rates to make any more than a small bump on the declining production curve of American oil. Don’t believe me, though (someone involved in this arena professionally), research it for yourself. Just please do not listen to what the democrats, republicans, or CNN, or Fox News tell you. Oil is down to a paltry $100 a barrel now (major sarcasm)…so for Joe-six-pack this is probably a dead issue since surely it will head far back down into double digits and stay there forever….it’s our God-given American right (more major sarcasm).
Erosion of civil rights and right to privacy. This is a big one. We are seeing things that are I frankly cannot believe are happening in America. Habeus Corpus/eminent domain…where is the champion of the private property owner? A hair splitting debate about the definition of torture for crying out loud....should we ever get so close to torturing other humans to even ask ourselves these questions? Unregulated government sponsored phone tapping of private citizens. What. Does anyone even care? Neither of the two major candidates does.
I am just getting started. But if you find yourself saying you are going to vote for the lesser of two evils…then don’t. Pick a third party candidate who lines up with your views. The lesser of two evils is still evil. Down with the two (one) party system. More on this later…I’m out of time.

“The argument that the two parties should represent opposed ideals and policies, one, perhaps of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extensive shifts in policy.”
Carroll Quigley – Author of Tragedy & Hope

Happy Birthday Kori

In honor of Kori's birthday here are some pics.

Party Pictures

We had a party this weekend...about 25 or so attended. Here are some pics from the talent show we did during the party.



Me doing some comedy.



Kati singing a song.



Kori doing her magic show.



Michelle reading some Poe.



Molly performing a flip.