Why the Fed Bailed Out the iBanks

This is the best explanation I have seen as to why the Fed set up the TSLF, and allowed it to accept less than stellar paper:

"The real problem began in late February, as several of Wall Street’s
biggest investment banks prepared to close their books for the quarter
and realized they were looking not only at big declines in profit from
issuance of new stocks and bonds and fees from mergers and
acquisitions, but also another round of write-offs in the value of
their holdings. In response, the banks began to hunker down,
instructing their trading desks to raise margin requirements for hedge
funds and other customers, requiring them, in effect, to post more
collateral on their heavy borrowings.

Thus began a chain reaction
in which hedge funds began selling what they could — largely
mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac
and Ginnie Mae — to raise the cash to meet their new margin calls.
That wave of forced selling drove down the price of those bonds, which
prompted more margin calls and more forced selling. By the end of last
week, the interest rate spread on those securities — the difference
between their yield and that of risk-free U.S. Treasury bonds — had
jumped four, five, even 10 times the normal rate.

Among those caught up in the vicious cycle were hedge funds run by such blue-chip names as KKR and Carlyle Group, along with Thornburg Mortgage, a big mortgage lender. News of their troubles swept through Wall Street, heightening the sense of panic, as did rumors that Goldman Sachs was about to post big losses and Bear Stearns was about to run out of cash. Meanwhile, Lehman Brothers
announced that it would lay off 5 percent of its staff in what was
viewed by many as a first installment of a consolidation that would
eventually eliminate 20 percent of the jobs on Wall Street. Analysts
began to warn that financial-sector losses from mortgages, commercial
real estate, failed takeover loans and other bad gets could reach as
high as $1 trillion.

It was against this backdrop that the Fed
announced Friday that it would auction $200 billion in additional loans
to banks looking for cash to lend or use as reserve capital. By
accepting AAA-rated mortgage-backed securities as collateral for the
loans, the Fed aimed to restore confidence and trading in that
beleaguered market and begin to put a floor under prices."

Read the entire article — but the above explains the gravamen of the Fed’s actions . . .

>

Source:
A Bailout. For Everyone
Steven Pearlstein
Wednesday, March 12, 2008; Page D01
http://www.washingtonpost.com/wp-dyn/content/story/2008/03/11/ST2008031103060.html

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What's been said:

Discussions found on the web:
  1. PrahaPartizan commented on Mar 12

    “…Among those caught up in the vicious cycle were hedge funds run by such blue-chip names as KKR and Carlyle Group, along with Thornburg Mortgage, a big mortgage lender.”

    In other words, the bailout was intended to preserve the personal fortunes of the Bush family. I can’t think of a better definition of crony capitalism. These people are no different and no better than Somoza in Nicaragua, Mbutu in Zaire or Suharto in Indonesia. They deserve the same fate.

  2. ideogenetic commented on Mar 12

    The economy of the Soviet Union was inefficient because of price ceilings. They wouldn’t let prices rise to offset excess demand and entice new producers into the markets. It’s the reason they had long lines and bare shelves. When everyone can afford something because the government sets the price artificially low, you have shortages.

    The U.S. economy is plagued by the contrary failure; price floors. We won’t let prices fall. That’s why our store shelves are always full but the people are poor and have to borrow to spend.

  3. Ross commented on Mar 12

    Losses of a $1,000,000,000,000 Looks like a lot of zeros but who’s to say it will be limited to that.

    Up to 20% job losses on the street of dreams is ……..bad?

    A mere $200 billion. Tis but a scratch!

    The fed is gonna monitize this mess and Lord have mercy on anyone on a fixed income. Got sugar?

  4. Marcus Aurelius commented on Mar 12

    They’re investing our nation’s wealth in a continuing criminal enterprise. I’ll bet damn near anything that any liquidity injected into the system is quickly diverted, as it usually is, to a handful of players. It will not prop up the markets, because it will never make it to the markets.

    We are being robbed.

  5. jojo commented on Mar 12

    got sugar? It may soon be time to head for the hills and start making some Mutha%$#@ing butter!!

    200 BILLION (up from 50-up from 100) got WallStreet a 30 hour POP this time….why don’t the F*&^ers just commit sepaku and put us out of our misery?

  6. Winston Munn commented on Mar 12

    The Fed stepped in to protect MBS from downgrades to its AAA rating. Call it a $200 billion vote of confindence.

    Unfortunately, there are $1 trillion “nay” votes on absentee homeowner ballots that have yet to be counted.

  7. John F. commented on Mar 12

    Same trade next quarter?

  8. km4 commented on Mar 12

    Crony capitalism is alive and well in the USA

    Will the perpetrators of this massive ponzi scheme and looting of the US Treasury be held accountable for passing this massive shitbag to America ?

    Unfortunately no they won’t…

  9. David commented on Mar 12

    Why the Fed Bailed Out the Banks!

    They can not make the interest payment to the CD holders. Period.

    “Truth is truth to the end of reckoning.”
    William Shakespeare

  10. Winston Munn commented on Mar 12

    Quote: “Isn’t that a bit like protecting the Citarum river from pirates?”

    I think it’s more like: I’ll pretend these are worth something, and you pretend you’re solvent.

    Here’s an interesting twist – what if the Fed got the upper hand on this trade? At least MBS has s-o-m-e kind of collateral backing.

  11. Pat G. commented on Mar 12

    “In broad strokes, we’re going through a massive “de-leveraging” of the economy, wringing out trillions of dollars of debt that had artificially driven up the price of real estate and financial assets, and, more generally, allowed Americans to live beyond their means.”

    I don’t owe a single dollar to anyone and I have been living within my means for some time now and I’m sure there are others who can claim that as well. So, I disagree with the author’s premise that this is a bail out for everyone.

  12. SIV commented on Mar 12

    I thought the “personal fortunes of the Bush family” were all long oil not credit swaps and bad mortgages. You moonbats need to keep your story straight. The REAL reason was to bail out the hedgies so Chelsea Clinton doesn’t have to blow her boss to keep her job.

  13. Eric commented on Mar 12

    This bailout will be just like the super siv bailout, the mortgage rate freeze bailout, all the rate cuts….no effect just suckering some more perma bulls like don luskin and jerry bowyer into the market.

  14. F_Marriage commented on Mar 12

    Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0. Don Luskin? Is that MORON still working in finance?? Last I heard of him, he drove “OpenFund” into the ground, buying dotcoms all the way to $0.

  15. jd commented on Mar 12

    It is true that many banks were starting to feel
    additional balance sheet stress from declines in the
    value of agency bonds and AAA rated MBS. The ability
    to swap these securities for Treasuries will stop the
    spread from widening in high-grade securities and ease
    balance sheet pressures for major banks who own them.
    However the problems are much wider than this and
    center on lower quality mortgages and debts and
    include far more entities than major banks. Action
    aimed at lower quality sub-prime and Alt-A mortgage
    debt and ending the meltdown in housing prices will
    likely be required to begin to ease these central
    problems. Moreover as long as housing prices decline
    and default and foreclosure rates are rising, the
    credit contraction is likely to grow worse and could
    continue to spread, although more slowly than before.

  16. VennData commented on Mar 12

    The Wall Street Journal Opinion page states today:

    “…This is not the same as a ‘bailout,’ in the sense of using taxpayer money to rescue banks or home mortgage securities…”

    http://online.wsj.com/article/SB120527993053528697.html?mod=opinion_main_review_and_outlooks

    Oh… they do qualify it a little – I guess – so stop calling it a bailout.

    It’s just that all the liquidity and wealth created by the Bush policies (they go on and on about) is a little illiquid right now.

  17. curmudgeonly troll commented on Mar 12

    I think the banks tightened up because of their balance sheet, not their income statement.

    ie they’re not that confident about funding themselves given overreliance on short-term borrowing and lots of illiquid underwater securities on their books.

    banks don’t see the upside in financing hedge fund clients, lending them short-term to maintain their own illiquid underwater securities, which the bank will get stuck with on the next leg down.

    great scam… sell some POS ABS to your hedge fund client at 100 and lend at 90. Then the markets freeze up and you remark it at 50 and demand collateral. Which the client can’t provide so you seize it. Then you go to the Fed window and repo it at 90.

    it’s socialism for the rich, ie expropriate from one bunch of rich people to give to another bunch. everybody loves free markets as long as they go up. when they go down everybody wants a bailout and the well-connected get theirs.

    of course the flipside is you let the Bear go belly up and no telling who else gets dragged down by counterparty risk.

    the markets are like Cougar in the opening scene of Top Gun… That MiG really screwed him up. I don’t think he can make it back. You’re okay, Cougar. Just stay on my wing. I’ll take you all the way in. Easy, Cougar.

  18. njdoc commented on Mar 12

    It’s pretty obvious that the Fed is making a titanic error in judgement. The biggest problem is that there is no transparency in these assets. Hiding junk in the Fed vault through some opaque financial maneuvering doesn’t change it’s inherent value. This MLEC moment will prove to be only another failed temporizing measure, another finger in the dike (Hoover Dam of CDO’s coming soon). The Fed must allow some of these Investment Bankers to fail! Above all, it must strive for transparency, because without transparency, market participants will not return.

  19. wally commented on Mar 12

    I don’t find very believable the notion that this began in late February, 2008, when banks suddenly ‘realized’ a problem. We’re now a year into this stuff and every halfwit everywhere in a finance-related business should know what’s happening.
    Are we going to go through this every flipping quarter until the Fed is out of dry powder?
    (don’t answer that…)

  20. Neal commented on Mar 12

    All that this does is ensure that new money stays far away from the US financial markets for a much longer time.

    Let’s not forget how dependent the US is upon foreign money. We NEED that money to prop up our economy, especially after the crutch of real estate inflation has been kicked out from under our arms.

    Hiding losses and denying damage do us no service. It is clear to the rest of the world that we have the plague.

    The doors to the plague ward are closing.

    Rigging is rigging.

  21. albrt commented on Mar 12

    So what is the “normal” spread between debts that are likely to be paid back and debts that are not?

  22. jd commented on Mar 12

    we need foreign money to keep interest
    rates low. if global investors abandon
    the dollar we could see alot of financial
    distress. it premature to say that but
    it is increasing clear investors have lost faith in the fed ability to solve this credit crisis (which is as serious as a heart attack) after a year and half of misforecasts and ineffective actions

  23. mhm commented on Mar 12

    “we need foreign money to keep interest
    rates low”

    You can’t have that. See, the thought of Fed lowering rates yet again sent the dollar to fresh new lows.

    Brazil has the highest real interest rate and it is battling the flood of foreign money. Raised tax on foreign investment today (on fixed income).

    You want money? Raise the interest rate… you know that is coming in the near future.

  24. Francois commented on Mar 12

    I can (reluctantly) accept the rationale of the Fed action at this time. What I can’t accept is the notion that the bunch of fuckwads that participated and fueled this epic mess have not been given the boot.

    How can ANY lesson be learned if the upper crust get rescued at the same time as everybody else, and on top of that, get to keep salary, perks, bonuses, stock options and platinum retirement package? (Not to mention all the unbelievable pearls regularly brought to light at footnoted.org)

    It is worth reading the recent testimony of the editor of the Corporate Library Nell Minow (Perverse Incentives Lead to Perverse Behavior”) before Congress:

    “The inadequacy of board oversight of CEO compensation practices at companies hit by the sub-prime mortgage crisis will be brought to light today at the U.S. House Committee on Oversight and Government Reform meeting in testimony by Nell Minow, Editor and Co-Founder of The Corporate Library. “With executive compensation you get what you pay for and you pay for what you get,” Minow told Chairman Waxman and the other commissioners. “If you make compensation all upside and no downside that will affect the executive’s assessment of risk. It will make it clear to him that he can easily offload the risk onto shareholders. It’s heads they win, tails we lose.”

    Ms. Minow […] present(ed) to Chairman Waxman’s committee evidence on the perverse incentives of CEO Angelo Mozilo at Countrywide Financial, and former CEOs Charles Prince at Citigroup, and Stanley O’Neal of Merrill Lynch, among others. The revenues, income and earnings leading to enormous incentive payments for these executives melted away as each company wrote down billions of dollars yet the incentives had already been “earned.”

    In summation, Ms. Minow said, “The undue compensation awarded to these failed CEOs should be returned to shareholders, they should be liable for providing false and misleading statements to investors, and held accountable for the impact of their poor strategic decision-making policies. That is first and foremost the responsibility of the directors. If they fail, it is up to the shareholders to replace the board and it is up to lawmakers and regulators to make sure they have the power to do that.

    And, of course, I will bet you the entire value of my family’s estate against 19 n’gwees* that lawmakers won’t use that power. Let’s not forget who finance their electoral campaigns shall we?

    Francois
    * 100 n’gwees = 1 Zambian kwacha = 0.0002752 USD

  25. dan bergstrom commented on Mar 12

    Bush has caused all of this! If he would of taken the daily briefing seriously, “Bin Laden intent on attacking inside America”, 911 would never would have happened and Greenspan wouldn’t have lowered interest rates to 1% causing the housing boubble!!!

  26. Francois commented on Mar 12

    Addendum to my last post:

    As a reminder of the imperative necessity for lawmakers to rewrite shareholder’s rights law, so that they can effectively push back against certain top executives unbridled greed, check this recent example involving WaMu.

    http://tinyurl.com/387ykg

    Original Link:
    http://seattletimes.nwsource.com/html/businesstechnology/2004262466_webwamu05.html


    WaMu rewrites executives’ bonus plan to dodge subprime damage

    By Rami Grunbaum

    Deputy business editor

    WaMu has revised its bonus plan for nearly 3,000 top executives so continuing damage from the subprime lending collapse won’t crimp their annual awards.

    The struggling Seattle-based lender said in a regulatory filing Monday it will exclude the cost of soured real-estate loans and foreclosure expenses when it calculates net operating profit, the biggest component of executives’ 2008 bonuses.

    Other changes to the bonus plan also appear to reduce the impact of troubled parts of its business, while giving a bigger role to factors that are less problematic.

    “We are perplexed by the incentive created by the 2008 compensation scheme,” wrote Keefe Bruyette & Woods analyst Frederick Cannon in a research note Tuesday. “This management incentive structure could result in executive focus away from issues that we feel are critical to the success of Washington Mutual in 2008.”

    He said the incentive plan “surprisingly excludes the costs of credit,” meaning the cost of loans gone bad.

    WaMu stock has been hammered in the past year by large losses from real estate loans, and more losses are expected this year.

    Sizable amounts of annual compensation are at stake: Chairman and CEO Kerry Killinger has a “target bonus” of 365 percent of his base salary, but the actual bonus “may be up to 150 percent” of that target, the plan says.

    In January the company announced Killinger would forego his 2007 bonus of nearly $1.8 million — 33 percent of his target level of $3.65 million — though the bonus amount will still count in his retirement pay calculations.

    Among the changes approved by the WaMu is abolishing earnings per share as one of the four weighted factors used in calculating 2008 awards. In last year’s bonus plan, earnings per share represented 40 percent of the potential bonus.”

    Fuck me plenty!

  27. christofay commented on Mar 12

    “REAL reason was to bail out the hedgies so Chelsea Clinton doesn’t have to blow her boss to keep her job.”

    this is just sick shit. The Clintons have no influence on monetary policy in Washington. It’s a Republican show between the dunce, Bush, an inflated ego, Greenspan, and the beard, Bernanke.

  28. Dee Leverage commented on Mar 13

    The Fed’s policies are a complete disaster…the dollar is about to bring less than 100 yen for the first time since 1995. In fact, in the last 60 years, the dollar has been lower than this 2% of the time vs. the yen. Margin call coming for Bernanke.

    Dollar vs. yen

  29. jd commented on Mar 13

    what i meant was if global investor abandon the dollar buy selling long end of the bond
    curve interest rate rise. so you need outside captial to keep interest rates on the long end low and thats hard to do when
    your slashing the front end and killing the
    dollar

  30. Dee Leverage commented on Mar 13

    Here is an amazing Cramer video for anyone who did not see his interview on the Today show. Does Cramer really have a soul? What say ye? If not, he should be up for an Academy Award.

    Cramer On Today

  31. Agoracom commented on Mar 13

    Great commentary here. You all beat me to the punch, so I won’t repeat the obvious.

    Question: Where is the democratic party? Why are they not leading the charge on this latest Fed move and screaming like hell?

    Disclosure: I am a conservative capitalist from Canada, so no “liberal” flaming please…I just don’t believe capitalism should be rigged with parachutes for greedy and stupid bankers. Otherwise, it is not capitalism.

    So, I say again? Where is Obama on this and why is he not making this a central issue? Where is Clinton?

    Regards,
    George (The Greek Canuck)

  32. fatbear commented on Mar 13

    Agoracom –

    People (mainly not rich, and most not Republican) are losing their houses down here; any D politician who’d criticize Ben’s attempts to save houses and keep people employed would be crazy. That’s one of the reasons we have these little problems.

  33. tom a taxpayer commented on Mar 13

    1. Marcus Aurelius (above) hit the nail on the head:
    “They’re investing our nation’s wealth in a continuing criminal enterprise. I’ll bet damn near anything that any liquidity injected into the system is quickly diverted, as it usually is, to a handful of players. It will not prop up the markets, because it will never make it to the markets.”
    “We are being robbed.”

    2. Please…won’t some Senator or House Representative step forward and publicly announce a Congressional investigation into the Fed and Wall Street over this outrageous TSLF and the other scams.
    Please…won’t some Congressperson put the fear of God into the Fed and Wall Street.

    3. Please…won’t some State or federal prosecutor whose investigation of Wall Street is far enough along step forward and publicly announce that they will add the TSLF and other recent money laundering schemes to their investigation.
    Please…won’t some State or federal prosecutor announce a RICO investigation of the FED and Wall Street.
    Please…won’t some State or federal prosecutor put the fear of 50 years in jail into the Fed and Wall Street.

    4. Francois (above), I agree. The scam artists and incompetents at the banks and Wall Streets firm who created this mess must not profit from it. The FED must require that all top management scam artists and incompetents must be fired as a condition for a bank or Wall Street firm to get TSLF or any other FED largesse (a.k.a. money laundering).

  34. mack macdaniel commented on Mar 13

    I respectfully submit that there is no “floor” to a security whose price is ultimately dependent upon a claim whose collateral is underlied by no real right to demand anything in a reasonable amount of time.

    I realize every “alphabet” entity (on whatever/wherever balance sheet) supposedly underlies some…physical thing. I just wouldn’t want to be holding the paper signifying a “claim” my broker sold me on some asset, divided in an inversely exponential manner.

    It’s technically and fundamentally a disaster at that point. Whatever model one might run.

  35. NoFate commented on Mar 13

    Well, I guess they got their SUPER SIV after all …it’s called the FEDERAL RESERVE.

    Jesus, Ben is a fracking idiot. He basically traded real money (t-bills) for toilet paper (AAA mortgage debt).

    When did all these bozos turn into communist, banana republic, cronies?

    Our entire financial system is now a fictional entity …fake ratings, fake financial statements, fake liquidity, fake bond prices, etc.

    Ben needs to tell these morons to put their GD losses on their balance sheets and take their lumps.

    Instead he enables these morons to continue the charade for another act. Now when it blows up, it will be even bigger …and the Fed has also exposed itself.

  36. Ritchie commented on Mar 13

    tom a taxpayer: “Please…won’t some State or federal prosecutor put the fear of 50 years in jail into the Fed and Wall Street.”

    Just as soon as all the sex criminals are thrown out of office and/or in jail. First (and most important) things first!

  37. tom a taxpayer commented on Mar 13

    Ritchie, I enjoy your wry humour, and I agree with the point you make.
    Spitzer is being prosecuted for a few thousand dollars of structured financing and money laundering with a prostitution ring. Yet the Fed is on a rampage of $200 billion in TSLF and other structured financing and money laundering with the Wall Street bank robbers.

  38. kennycan commented on Mar 13

    Carlyle is not getting bailed. Carlyle Capital is being liquidated because it was leveraged 32:1. The equity will have ZERO value now.

    This is a bailout of the banks who lent 21 Billion Dollars to the Carlyle funds and are now stuck with 21 Bn of MBS securities. 5 Bn liquidated and another 16BN to go. What happens when these securities start to hit the forced sale market. That’s why the Fed did what they did, so the banks can sell these bonds down slowly and finance them in the meantime. Otherwise there are 2 options: either forced sale or curtail lending in order to finance these bonds. Either option would lead to margin calls and set off a price spiral down.

    We’re between a rock and a hard place. There is no way out. Yet Bernanke thinks he can steer this ship through the danger. Bernanke is toast and so is the USD and hence so is the US.

    I’ve watched this disaster building for 12 years now, when Alan Shrugged in early 1996. His easy money policies to alleviate the Tequila Crisis led to a Asia/EM bubble and then a Dot Com/TMT Bubble. As each bubble burst, the solution was to avoid allowing the workout from wending its way through the system. Each bubble in turn got bigger. At this point we have an S&L size crisis per month now. Or is that per week at this point. We’re getting real close to collapse I fear.

  39. Julien commented on Mar 13

    Quote :

    “Thus began a chain reaction in which hedge funds began selling what they could — largely mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae — to raise the cash to meet their new margin calls. That wave of forced selling drove down the price of those bonds, which prompted more margin calls and more forced selling. By the end of last week, the interest rate spread on those securities — the difference between their yield and that of risk-free U.S. Treasury bonds — had jumped four, five, even 10 times the normal rate.”

    To me there is something absolutly illogical here : the decrease of bond prices means there is much more sell offer than demand. That seems quite normal. The goods dealt (FMs bonds) undergo the market law. But seeing a large increase of the interest rate spread is nonsense : such a thing would mean Freddy Mac/Fannie Mae default probability is much higher than it was before, which, to me, is not the case.

    Right now, I cannot see a good reason for this…

  40. Paul Jones commented on Mar 13

    If someone tried to take a 10 dollar bill out of your wallet how would you react?

    The pinstripe bandits just diluted your dollars by 1.5% on Tuesday and gave them to their friends.

    Our heads are not screwed on properly in America. Most of us never wanted to be grown-ups, and it shows.

  41. kennycan commented on Mar 13

    Julien

    It could have meant that FNMA?FHLMC was mispriced before and is now normalizing.

    But It hink you are right. It’s not wider default risk blowing these spreads out. It’s market risk and illiquidity. Those buyers need to finance them. Higher financing costs and restricted balance sheets because of capital constraints means that most buyers are only willing to take these bonds on balance sheet if they can a) earn a positive spread over their increased financing costs and b) earn a large enough spread that if b/s constraints forces them to resell the bonds they are not hammered by the market.

  42. DonKei commented on Mar 13

    The increase in GSE spreads via Treasuries is of a piece w/ the falling dollar–the rest of the world is on to our little game, and no one wants to buy our crap securities, except those that’ll fer sure be paid back. (You print the money that pays back the debt, and it will definitely be paid back, perhaps in worthless money, but still.)

    The gig will be up when treasury rates start rocketing skyward. If the world won’t finance our oil purchases, we’re doomed. Even if right now they are demanding ever more dollars to buy a barrel of crude, they still haven’t bailed out of treasuries. It’s coming though. It’s all that’s left. Then the realignment of world economic power away from the US towards the middle east and asia will be complete.

    I’m w/ Rogers. I’m gonna teach my kids Chinese.

  43. MitchN commented on Mar 13

    Time to short Greenwich real estate…

  44. Patrick commented on Mar 13

    Interesting post. Would you be interested in syndicating your content on the home page of my site? It’s an online community of finance professionals ( http://www.wallstreetoasis.com ). I could add an RSS feed that will allow me to promote your blog posts to my home page (when i think it will lead to a good discussion and/or is appropriate), but I wanted to make sure you were comfortable syndicating first. The syndicated post would have a link back to your original post. Thanks, Patrick (you can reach me at wallstreetoasis@wallstreetoasis.com if you have any questions).

  45. Fuzz commented on Mar 13

    “Appears that the bail out was too late for the Carlyle Capital Fund.” ??????

    SoNotInTheKnow – aptly named.

    The “bailout” is exactly what caused Carlyle’s demise. Suddenly their assets had actual value, making them worth confiscating.

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