Naked Short Sellers Attack Fannie Mae!

July 15, 2008

Elaine Meinel Supkis

Today was a fine, mixed up sort of day. Oil went down but is still far above last year's prices. The dollar keeps dying because our banking system and our government are striving for bankruptcy status. We look at a very strange debt offering from a local bank. The SEC is going after even more hell hounds and pirates concerning the possibility of 'false rumors' causing stocks they were shorting to tank. And the government also wants to stop 'naked short selling'. We were told some months ago, this thing didn't exist. HAHAHA. Also, the Democrats threaten to hand out more and more and more 'tax rebates'. This is pure madness. Inflation is still king, I say.

We are no where near the bottom of the banking crisis. So long as I see ads on TV telling us to put our homes into more hock for boats and swimming pools and vacations and now this recent offer: the bank will move forwards one car payment so we can have fun on vacation. As usual, there is a cute picture showing how great it is if we don't pay our debts but rather, party with our debts.

I suspect this ad was part of some genius' brain storm. Instead of going through the tedium of paperwork and other legal matters in order to drum up more lending, they simply let people not pay their loans for set periods of time. Then both the interest and the principal of the unpaid 'freebies' are shoved to the end of the loan period where both are added to the principal? Then you have to pay interest on this extra money? The ad doesn't tell us exactly what the results of accepting this offer is!

I have a car loan that is going to be paid off in 2 years. Then I can drive my car for another 5+ years 'for free'. Or so is my hope here. This 'free' period is every other decade. I buy a car, pay it off and then drive it for another 100,000 or more miles. Then the process resets with a new car. For cars are net losses much worse than houses. Houses can gain in value. Cars nearly always lose value, badly. The minute you turn the key, it loses 10% of its value. Paying off a car as fast as possible is the smart thing to do. Why borrow $500 from one 'missed' payment when one can have $500 every month by not buying a new car for five years? That means one saves $35,000 over 5 years! No small sum of money!

If we read this ad correctly, the banker is like a heroin peddler: they want us to go deeper into debt in order to have a fun vacation today. Instead of being prudent and not having fun but waiting and having far more fun in the future. Indeed, this seems to be a characteristic of our culture today.

SEC subpoenas over 50 hedge-fund advisers:

(Reuters) - The U.S. Securities and Exchange Commission (SEC) has sent subpoenas to more than 50 hedge-fund advisers as it investigates whether individuals spread false rumors to manipulate shares in two Wall Street firms, The Wall Street Journal said, citing a person familiar with the matter.

The subpoenas, sent as recently as Monday, are seeking trading and communications data related to short-selling and options trading in Bear Stearns Cos or Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the person told the paper.

Rumors have been blamed for the collapse of investment bank Bear Stearns and for the 40 percent slide in Lehman shares this month.

Citadel Investment and SAC Capital are two of the parties getting this unwelcome attention. Going back to last year, at my own blog is this rather amusing story:

August 20, 2008 SEC Goes After Sentinel Hedge Fund For Fraud!

Blimey. Thar she blows! Seems that as the pirates running the Sentinel, a ship that hoists sail from the Queen's Cayman Islands pirate coves has been hailed by the USS SEC. The Montey Python crew did a hilarious movie about the Meaning Of Life and in one scene, a pirate ship with clerks and accountants attack England. How appropriate! Another scene comes to mind: 'Just one more thin mint, sir.' That scene actually made me physically ill.

And then there is Yellowbeard, another favorite movie by them! Heck, everything ever done by them is appropriate all the time for everything. And we are deep in Pythonian territory here. Today, the Cayman Islands won't be rubbed off the map by Hurricane Dean but the financial pirate coves are under full assault from another quarter: furious investors have decided to invade and attack these joints. Ships filled with lawyers are now swabbing down the barrels of their cannons and already some have fired some shots.

From Bloomberg: Sentinel customers including Penson Worldwide Inc., a Dallas-based securities-clearing firm, accused the firm on Aug. 17 of selling off their assets at below-market rates to hedge fund manager Citadel Investment Group LLC.

Here is my funny little cartoon from the same story, so appropriate again, a year later:

By the way, one of my favorite songs is this one from 'Monty Python's Meaning of Life':

It's fun to charter an accountant,
And sail the wide accountan-cy.
To find, explore the funds offshore,
And skirt the shoals of bankruptcy.

It can be manly in insurance.
We'll up your premium semi-anually.
It's all tax-deductible,
We're fairly incorruptible.
We're sailing on the wide accountan-cy.

OK: here we go again---Citadel Investment Group LLC [Lucky, Lucky Criminals] is yet again, involved in dirty, dark doings. Will wonders never cease? When everyone was making easy profits on up and up and up markets, there was little criminality going on, well, at least, not obviously criminal stuff. But in a bear market, everyone draws their rapiers and pistols out and they all turn to Blue Beards. The brutal raids and counter attacks then feed the sharks that circle these floating disaster areas. The seas turn red with blood and red ink.

A lot of pirates who like to boast of their skills at grappling and boarding and then looting will now be running for the hills. None of this caused the present collapse, by the way. This is just the end result of people thinking only on the short term, for themselves and their bonuses.

Fannie, Freddie Drop as Ackman Shorts, Moody's Cuts

(Bloomberg) -- Fannie Mae and Freddie Mac plunged as Moody's Investors Service cut the financial strength ratings of the biggest U.S. mortgage-finance companies and said credit losses jeopardize dividend payments.

Fannie Mae dropped as much as 30 percent in New York and Freddie Mac declined 34 percent, as investors lost confidence that U.S. Treasury Secretary Henry Paulson's plan to avert the collapse of the mortgage firms will rescue shareholders.

Shareholders' ``money really is at risk,'' Len Blum, managing director at Westwood Capital LLC in New York, said in a Bloomberg Radio interview. ``There is no bailout for shareholders. Anyone who thinks that is delusional.''
*snip*
Fannie Mae fell $2.40 to $7.33 at 11:45 a.m. Freddie Mac dropped $1.81 to $5.30. Fannie Mae's 5.5 percent perpetual preferred shares dropped 22 percent to $18.75. Freddie Mac's 5.57 percent preferred stock declined 16 percent to $9.37.

SEC to Limit Short Sales of Fannie, Freddie, Brokers

(Bloomberg) -- The U.S. Securities and Exchange Commission will limit the ability of traders to bet on a drop in shares of brokerage firms, Freddie Mac and Fannie Mae as part of a crackdown on stock manipulation, the agency's chairman said.

Christopher Cox told the Senate Banking Committee the agency will require traders to hold shares of the two mortgage buyers and the brokerages before they execute a short sale. The order, to be in effect for as long as 30 days, will bar the practice called naked short selling, in which traders avoid the financial cost of borrowing shares when betting they'll fall.

Not too long ago, there was debate online about even the existence of 'naked short selling'. It sounds like something very small trolls do. Some very frustrated businesses that have been hammered by this sort of sales were complaining loudly about short selling wrecking their businesses. Now that a quasi-government business is going under, suddenly the SEC and the Fed talk about stopping 'naked short selling.' This tells us that things that bother us don't bother them until it happens to them. Then they suddenly are aware of what is going on! Well, talk about burned hands learning about fires!

UBS to Buy Back Up to $3.5 Billion of Frozen Shares

(Bloomberg) -- UBS AG, the Swiss bank being sued for fraud over its sales of auction-rate securities, plans to buy back up to $3.5 billion of the frozen securities sold by its brokers and financial advisers.

UBS clients who purchased auction-rate preferred shares issued by tax-exempt closed-end funds can get their money back in full along with unpaid dividends, the Zurich-based company said today in a statement.

Lawyers and SEC agents are swarming all over the place. The bankers who were willing to shaft everyone and flee to pirate coves are now slowly being cornered and forced to cough up the dough they stole. The value of all these banks are of course, in hot decline.

Buying shares is always a risk. When pundits love to say, 'Over the long run, the stock market mostly goes UP!' This is delusional. If a company goes belly up, it is removed from the statistics. In bad runs, when half of the companies either vanish or are delisted, things begin to look 'up'. Well, of course! All the losers are weeded out. But people buy individual stocks. These are far, far more uncertain and what was once Blue Chip can become Dead Script five years later. Something around for 75 years can vanish in one year. So one should never bank of stocks of one sort or another, going up over any long period of time.

Already, this year, many once-mighty stocks that were good deals are rapidly falling into the dread 'penny stock' status. From $100+ dollars a share to less than $1 a share. Bear Stearns didn't even get to fall past $20 a share when it was abruptly terminated. Lehman Brothers is now in the same boat and sinking fast. I am surprised it is still around. It won't sink due to loose lips. It is sinking because it was stupidly run into the fiscal icebergs when it took on lots and lots of unsustainable debt deals while letting capitalization collapse to less than 5%. This was sheer stupidity. And it took on lots of junk attached to the concept of the Derivatives Beast and its goofy, floating currency based 'interest rate swap' swamp gas.

Oil Falls Most in 3 Years as Worsening Economy Threatens Demand

(Bloomberg) -- Crude oil tumbled the most in three years on concern that a slower U.S. economy will curtail demand for oil and gasoline.

Oil futures dropped, and U.S. stocks retreated as investors lost confidence in the government's rescue of Fannie Mae and Freddie Mac, which fell more than 30 percent each. Federal Reserve Chairman Ben S. Bernanke, in testimony to the Senate Banking Committee, said risks to growth and inflation have risen.

``What we're looking at here is a potential banking run which we have not seen since the Great Depression, something truly systematic throughout the banking system,'' said Daniel Ahn, energy analyst at Lehman Brothers Holdings Inc. in New York. ``If the D word shows up, if it's depression not recession anymore, then that could really impact demand and prices.''

The price of oil is now so high that it can rise and fall the equivalent in just one day of what an entire barrel cost just 10 years ago. So this is nothing, really. The price of gold has fluctuated this year the same way, rising and falling within a huge $100 plus price range. All the commodities including gold will fall in the end. Why?

Because all the excess SAVINGS will be gone. More and more people will be unemployed and we get the second half of bad situations: depressions. This is when no one can borrow even 0% money because they have no business, no homes and no jobs. The money in circulation will be less and less and then we have songs like 'I'm In The Money' and bread lines and riots and revolutions.

As I keep on saying, there is NO commodity out there including gold that is immune to this force of nature. If enough money either vanishes entirely or gold sucks down the last easy credit money where it can't come out again at higher value, when NOTHING has higher value anymore compared to the boom years, then the rebuilding process begins, brutal as that is. Lessons have to be learned. Lesson number one: you can't live off of credit forever. At some point, you have to start saving money. And this should make money via interest rates. Investing money in actual businesses that hire actual humans who then do actual value-added work and then have enough income to actually buy stuff from other workers: this is called 'capitalism'. Easy to understand, eh?

Here is a chart from the US government concerning our trade deficit history:

As usual, I heavily edited it to show the dynamics here. Note how during the Gold Standard years when the dollar was still pegged to gold, the US had a positive trade regime. Also, the negative numbers on the other side are foreign workers who made money for Americans. Note the abrupt switch when Nixon and Burns dropped the gold peg: instantly, the US began to run trade deficits and the number of Americans working for foreigners began a swift climb! Note also how the rise in exports and the huge rise in the number of Americans working for aliens have not even barely begun to catch up with the US trade deficit which utterly runs out of control.

None of the business this year which our government talks about deals with any of this. The loss of sovereignty is tremendous when we consider that the US was, for most of our history, a big economy within our own selves. Now, we struggle to have a global economy and are losing both our sovereignty and we are deeper and deeper into debt, at the same time.

Democrats Are Weighing More Tax Rebates, Pelosi Says

(Bloomberg) -- Congressional Democrats are considering a second round of rebates to taxpayers, saying the benefits of the first checks sent to more than 100 million households this year are being eroded by rising energy prices.

``We will be proceeding with another stimulus package, and we once again hope we will work in a bipartisan way,'' House Speaker Nancy Pelosi said after House Democratic leaders met with a group of economists to discuss the spreading housing crisis and rising gas prices.

Pelosi and other House Democrats said that in addition to more rebates a second stimulus package would probably include additional spending for roads and other infrastructure, expanded unemployment benefits, home-heating assistance for low-income families and aid for states struggling with budget deficits.

This alarming news is total insanity. Across the nation, every politician is lining up to demand gas taxes be terminated as if dropping a 20¢ tax per gallon is going to do much of anything. The idea that we can have endless tax 'rebates' is pure insanity. Our budget, dear people, is IN THE RED. Terribly in the red! All our systems are in the red! And instead of offering higher interest rates so people save, the government is setting up these perpetual money making machines in every town square and like in Weimar Germany or Stalinist Russia, the money will be printed up and then we can rush off and use it to buy a loaf of bread. But first, we need to buy wheelbarrows to cart this new money around. Wheelbarrow makers will become rich, I tell you! Rich!.

Email this post

Culture of Life News Main Page

Comments

[Ralph]

If Gold is going to collapse as you suggest. At least it cannot go to zero. Where in your analysis, everything will end up. Foreigners: Arabs,Chinese,Russians, will take the price of gold up. They have endless "savings" in soveireign wealth funds? 1% of the SWF going into gold would cause the price in dollars to triple.Why can't you; the smartest of smart see this? Americans running to coin shops to bid up gold is a joke, and cannot happen. Americans savings rates are negative. They have not caused gold to triple since 2001. Foreigners buy gold, american joe public cant spell gold! And if gold is going to collapse, why would Goldman Sachs(king pirate) be scrambling to cover their massive gold short on TOCOM???

[Elaine Meinel Supkis]

Yes, gold is popular in Russia, India and China. Here, it is increasingly impossible to buy except if one has lots of money to sink in it. It WILL be manipulated one way or another because the nature of inflation is, it has to hammer ALL systems eventually. There is now 'exit' that will continuously outrun inflation. This is my point.

It is BETTER than stocks or bonds because those can drop to $0. Gold never does this. But it can lose value whenever inflation suddenly ends [inflation always ends very suddenly].

[cruxpuppy]

For those interested in "naked short selling" and the criminal conspiracies that have metastasized throughout the privatized mafia-influenced financial system, check out:

http://www.deepcapture.com/

wherein the story of Patrick Byrne and his company, Overstock.com, can be found in meticulous detail, reported by Mark Mitchell in "The Story of Deep Capture".

Looking for a real head ache?

This is the place to go!

[Elaine Meinel Supkis]

Yes, I wrote about Overstock.com in the past. This is when he was told, there is no such thing as 'naked short selling'. Which makes today's news totally ridiculous and infuriating.

[Anthony]

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.

"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/16/ccusdebt116.xml

[Elaine Meinel Supkis]

http://elainemeinelsupkis.typepad.com/money_matters/2008/05/elaine-meinel-5.html

Naked Short Traders In Red Hell And Black Ice

A story I wrote back in May, 2008

A reader kindly sent me a new link, 'Deepcapture.com' which is a site run by a businessman who believes that the phantom financial world of naked short sellers in the hedge fund pirate/hell hound high seas has defrauded himself and other business people. To explore this story means plunging deep into the darker pools of finance, news reporting and downright demonic affairs with everyone pointing fingers at each other. There are no 'good' people in this story. But lots of lost souls and quite a few swindlers not to mention outright criminals, corrupt politicians and the many despicable follies and wild games of the people who are the bleeding heart at the center of our financial world. Like the DTCC, the organization originally set up to transfer ownership of stocks! All are now in this bizarre universe where there are many secret portals, secret chambers and invisible monsters that destroy or create wealth.

[Elaine Meinel Supkis]

More from that earlier article:

It turns out, more than one media service like NBC or ABC has tried to cover this controversial story launched by the owner of Overstock.com, Mr. Byrne and the former editor of the business section of the Columbia School of Journalism's publications, Mark Mitchell. All the other media got cold feet or rather, realized their very best friends were in the bleeding core of this dark story, they all bailed. But not Bloomberg. In this video, we meet the head of Kynicos, a hedge fund whose Greek name means 'Cynical'. He, of course, considers this issue about using phantom stocks to 'short', stocks that are made out of thin air, to be so much immaterial junk, why would anyone notice this multi-billion dollar daily error rate? For this is what 'naked shorts' are: mistakes. At least, that is the story. Yes, whenever in business we encounter 'mistakes' that make the mistaken ones lots and lots of money, we are seeing 'fraud'. I remember over the years many a battle with billing agents who made, nearly universally, mistakes in their own favor. While cleaning up the messes they created, they would invariably demand I pay them first!

[cruxpuppy]

Inflation is not caused by non-commodity-based currencies, ie, fiat currencies, nor is it caused by the activities of Americans who work for a living, it is caused by the activities of the financial class who create money without the corresponding productive activity.

The privatized financial system which has a noose to fit every neck is unconstitutional and was imposed on the sleeping population through calculated parliamentary trickery and bold deceit. It was the financial 911.

No need to feel guilty as we sink beneath the waves! We are all subprime borrowers because there isn't one in ten Americans capable of understanding this Rube Goldberg contraption that is our privatized financial system.

That is why the system is worthless. The failure of this system IS NOT the moral failure of the people it purports to serve.

[Richard]

Today, the yen carry trade unwound, much like a year ago, in fact almost to the very day, on growing concern over the financial sector, and in particular concern over mortgage backed securities, as yen carry traders took profits on oil, USO, which fell 4.3%. Kevin's Market Blog reports that it was the largest drop since the gulf war.

It's risk aversion to the level two assets and level three assets at the banks, KBE, and investment bankers, KCE, as well as confidence over the Federal Reserve's effect and also authority to effectively capitalize and guarantee the two mortgage GSEs, Freddie Mac, FRE, and Fannie Mae, FNM, which each fell 26% today, that was the impetus for today's stock market sell off.

The barometer of the yen carry trade, EUR/JPY, FXE:FXY, gapped 1.2% lower on opening to close at 1.673. The chart of FXE:FXY weekly shows the current exhaustion of the yen carry trade.

The yen, FXY, rose 1.2%, the Euro, FXE, fell 0.1%, and the Aussie, FXA, rose 0.7%.

Gold, GLD, rose 0.3%, even though oil, USO, sold off 4.3%, indicating that an investment demand for gold is underway.

[Anthony]

ASIAN banks could risk losing many billions of dollars in the long-festering United States sub-prime mortgage crisis which is now engulfing two huge US mortgage lenders.

Yesterday, Asian bourses took a severe pounding amid revelations that three Japanese banks have US$44.3 billion (S$60 billion) of exposure to the US lenders Fannie Mae and Freddie Mac. Taiwan banks have another US$20 billion of exposure.

The US lenders are feared to be on the brink of collapse - and a massive US government plan to spend billions of dollars to bail them out did little to calm investor nerves.

http://www.straitstimes.com/Free/Story/STIStory_258052.html

[calvino]

You could not be more wrong. As the financial sleuth DFuckerling has stated only in your last post: zi juus have all zi gold. You did not contravene, you agree. Anyway it's all AIPAC's fault. You hit it on the head once again. We should be friends with your Iranian buddies. I want to even thank them for blowing up our marines, 241 of them. They deserved it, right, since they were not in a revolutionary revolt against their government, as you would have liked them to be. But that filthy pussy got your oil, so let's talk about zi Liberty, all zi time. Let us also thank your Mohamettan friends for keeping our hostages and killing Malcolm Kerr, then president of American University. Although you know that AIPAC, zi juus, and zi Mossad did it, right? Well, never mind that, let's go back to talking about zi juus. Every article should start with today zi juus.. and then whatever fits your mood.

[Elaine Meinel Supkis]

Zi Juus still have NOT paid for ze Liberty ship attack nor have zi admitted to deliberately attacking ze Liberty ship so of course, zeh are ztill GUILTY of a WAR CRIME. And ze ones here in ze US that enabled this crime and covered it up are also TRAITORS. Ja? JA.

And then ze jet of civilians ze US shot down, all Iranians. Ze US still not pay for that. Got it? It is OK to kill soldiers. Zat is war. It is NOT OK to kill innocent civilians. Got it? Like, um, Darfur, the favorite new outrage toy of zi Juus stealing Palestinian lands.

Verstehen Sie mir? Gut.

Yes, Asia will lose all the money they hold, money invested in the US. Should we feel smug? Or will this be another nail in our coffins?

This is truly 'cut off your own arm' stuff. You see, Japan has been leaching off the US for military protection for many years. They deserve to lose this money.

On the other hand, China has NOT. China will be the one demanding an arm and a leg in return. Namely, we get tossed out of Asia on our little behinds. And China becomes the top military power in Asia.

Taiwan sees the writing on the wall already and is moving closer to China. This is a good thing. Like Hong Kong, it brings more freedoms and sense of new ways of doing things. China will prosper and grow more and more free.

For the US cannot run a half a trillion military domination machine while going bankrupt. Period. This is impossible. If our rulers insist on this stupid, useless project that is bankrupting us, they will have to steal all our pensions, savings and everything and beat us into the ground. I think even the slow to react, easily distract Americans will object to this.

[Tell]

"Morgan Keegan Bond Mutual Funds"

http://www.goleft.tv/

[calvino]

Sie sind rechte gnädige Frau!

The 83 killed and 120 injured in our embassy in Beirut were also soldiers?

Malcolm Kerr, the Reverend Weir and his wife and William Buckley were also soldiers? How about Terry Anderson, Frank Reed, Joseph Cicippio, Edward Tracy? Our embassy in Tehran, also soldiers?

Since you seem possessed of lacuna in your historical memory, here's a link for the Nuremberg laws. It's a reproduction of the chart in the original German. You do have a facility in the language. The white figures are Aryan, the black ones are zi juus and the grey striped ones are zi mischlinge.

http://www.historyplace.com/worldwar2/holocaust/h-nurem-laws.htm

[Anthony]

"The FDIC that has already depleted 10% of its funds in the rescue of IndyMac alone will run out of funds and will have to be recapitalized by Congress as its insurance premia were woefully insufficient to cover the hole from the biggest banking crisis since the Great Depression

Fannie and Freddie are insolvent and the Treasury bailout plan (the mother of all moral hazard bailout) is socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized. Instead of wiping out shareholders of the two GSEs, replacing corrupt and incompetent managers and forcing a haircut on the claims of the creditors/bondholders such a plan bails out shareholders, managers and creditors at a massive cost to U.S. taxpayers."

WOW! If only someone in Congress would take notice of this and ask some questions, besides Ron Paul, who I believe has been labeled a "malcontent" by other members of Congress and therefore is not taken seriously... If he were taken seriously, there would have been some major changes in the past year, and to my recollection, there have been none, zero, nada, zilch, a great big goose egg!

http://www.dailypfennig.com/currentIssue.aspx?date=7/16/2008

[Elaine Meinel Supkis]

Correct, Anthony.

Mein liebe Herr Calvino, sie können nicht so gewaltig sein! Ist nicht gut für seinen Lieben Leben.

An unhealthy rage fixated on past sufferings while being a bully doesn't work well. The US has to deal with this, too. We still try to wave the bloody 9/11 flag as we torture Muslim children and blow up more wedding parties. It is backfiring, badly. For obvious reasons. The collapse in our finances is directly tied into all of this. Alas!

We have to change our world view on top of changing our financial activities. This is hard, very hard. The media pushes like hell to shove us into what is obvious a totally FATAL confrontation with the Iranian Kitty cat, the one that is scratching us to death. We are bleeding at every encounter with the Cat and instead of stopping, we continue blindly.

The media is pushing as hard as possible to scare European and American voters into this fatal confrontation. Remember, WWI and WWII started off small. And then rapidly expanded.

[RobG]

Anthony: Seem like Bunning of KY is (link):

Second, the Fed is asking for more power. But the Fed has proven they can not be trusted with the power they have. They get it wrong, do not use it, or stretch it further than it was ever supposed to go. As I said a moment ago, their monetary policy is a leading cause of the mess we are in. As regulators, it took them until yesterday to use power we gave them in 1994 to regulate all mortgage lenders. And they stretched their authority to buy 29 billion dollars of Bear Stearns assets so J.P. Morgan could buy Bear at a steep discount.

And, proof that they think in terms of infinite lending:

The Bush administration's plan, announced by Mr. Paulson Sunday evening, would create an unlimited line of credit for Fannie and Freddie for 18 months that Treasury could invoke as it sees necessary. Currently, each company has a $2.25 billion limit on its line of credit with the Treasury Department.

Seems like the growing perception is that it is a patch and not a fix (unless you define fix as the hit a junkie needs :-).

[Anthony]

Freddie Mac owes $5.2 billion more than its assets today are worth, meaning under current US "fair value" accounting rules, it is insolvent. Fair value of Fannie Mae assets has dropped 66% to $12 billion and may go negative next quarter. As home prices continue to fall across America, and corporate bankruptcies spread, the size of the negative values of the two will explode.

On July 14, Treasury secretary Paulson, former chairman of Wall Street investment bank Goldman Sachs, stood on the steps of the Treasury building in Washington, in a clear attempt to add gravitas to the occasion, and announced that the George W Bush administration would submit a bill proposal to Congress to make taxpayer guarantee of Freddie Mac and Fannie Mae explicit. In effect, in the present crisis it will mean nationalization of the $6 trillion agencies.

The bailout statement by Paulson was accompanied by an announcement by Bernanke that the Fed stood ready to pump unlimited liquidity into the two companies.

http://www.atimes.com/atimes/Global_Economy/JG17Dj03.html

They want to bail out FM and FM? Add $6T into the $10 national debt.

I can't even comprehend what $15Trillion of national debt means. Whatever it is, it's DEFINITELY way beyond danger zone. This is closer to Argentina style economic collapse.

[Anthony]

So...this is all going down a very familiar path. All Private debt will nationalized. (bail out) Then all of a sudden the country can't pay anymore and the world declare us bankrupt. They want hard asset instead of funny money.

And then it's currency run.

[calvino]

Liebe gnädige Frau, ist es die rechte Größe, sich fürchtet nicht. Wünschen Sie die moslemischen Kinder uns anstatt bombardieren?

[Buffalo Ken]

well I reckon you reap what you sow...

ken

P.S. Thanks for all that German stuff - kind of triggered some fond high school memories for me.....

[Buffalo Ken]

otherwise, i couldn't read it.

Hey - Do you all care to include the rest of us in your private converstations? I'm curious. I won't deny it.

Peace,
Ken

[Paul S]

The media are a huge part of the problem. Just one example: Fox News. Their motto is, "Fair and Balanced. You Decide." Can they actually say that with a straight face? Here's an interesting problem: who is THE most offensive, corporate shill/lackey on that network? My gut instinct tells me Hannity, but he;s too easy. Bill Oreilly? No, he's more opinionated and rude than a shill. Neil Cavuto? Aha. We're getting warm here. Neil will threaten to cut off your microphone if you say something he disagrees with. I guess the Neilster didn't read that part about "Fair" and balanced. One area where I must give Fox sincere credit though: they have superb taste in on-air female talent. However, much of the American media, especially the Washington media, are a laughingstock among the international press. And: I just love the way the media is going around saying, 'Well, gee, maybe we were too easy on Bush and his war'. No kidiing?

[Elaine Meinel Supkis]

The media is guilty of LYING! The Government from top to bottom are LIARS. The Fed LIES! This rot is from top to bottom.

Ken, entschuldigen, sorry, heh. Flipped into German there. Next comes Yiddish again. We were discussing war crimes and how Israel and the US are aping Nazi Germany. Not a nice discussion. Important, to me. I want to save my people from the loss of our collective souls.

For our souls are valuable! Ask any demon.

And about nationalization without the nation: England is doing this, the US is doing this. We get to own the red ink but have no control or benefits from owning the organization itself. Gah. NO. This is worse than the Soviets and the Nazis. It is totally stupid and will obviously fail. Maybe the Chinese will give us capitalism lessons when they take over our banking systems.

After all, they did listen to me in the past.

[Buffalo Ken]

Elaine - I celebrate China. I hope the Olympics are peaceful and go off as originally intended (as far as I'm aware).

That is - the best athletes demonstrate their skills. Of course, chance is always involved. That is what makes it fun.

After the Olympics, I hope we are all inspired.

Peace,
Ken

[Elaine Meinel Supkis]

Better than having us all become insipid.

[Buffalo Ken]

indeed.

[Buffalo Ken]

A couple more just for fun.

Incredible. Independent.

People's Proclamation of Independance!

All spellings intended, or at least, I think.

Peace,
Ken

[hummus]

USD is hosed. The jawboning for now is nonsense and only fools dull-witted fund managers.

You go abroad, people are in gold.

[GK]

hummus, will you not learn?

The USD is denominated in barrels of oil.

This press release, found on the FRENCH WIRE only, confirms that the Iran invasion was just a hoax to increase the price of oil for one last LOOTING before the election.

http://rawstory.com/news/afp/In_policy_reversal_US_envoy_to_meet_07162008.html

US citizens are too stupid to figure out why they just paid a few Trillion extra for motoring around and heating their homes, and now the price of oil will plunge, gold will plunge with it, the USD will soar, stocks will soar, and everything will be all fixed up for McInsane.

All those crazy inflationary dollars that were all tied up on Oil will some FLYING out like monkeys from The Wicked Witch of the West and will purchase quality companies that will go back to selling $5 coffees and cause 'happy' inflation of DOW.

The short attentions span MTV generation will forget it ever happened.

[RobG]

Great interview here: Financial Sense Newshour

Over a trillion in naked shorts in bonds too!

[RobG]

Well after my last post, I see Google is getting piled on by the naked shorts - down $50! I just moved a little of the 401k from bonds into a fund (Fidelity Contra - yup, Google is the highest percentage) only to see the 'disappointing' report get totally piled on. (thankfully they also have Schlumberger who had a great day).

This happened before to me, way back at Motorola in 2001. I knew a guy who was almost a millionaire in his 401k but it was all Motorola stock at $120, then it came. They plowed it down to $18!

That audio that I posted, pointed out the Europe stopped this nonsense. It was too destuctive.

[RobG]

Ooops, sorry, just had a Buffalo Ken moment (multiple posts within a minute - kind of like a 'Senior moment', ie. senility). The audio made a good point that these naked shorts reach their Nirvana if the target gets delisted. They don't even pay taxes on the gains!

[Elaine Meinel Supkis]

Yes, because the easy money markets are over we are in a grinding down market which means all the gnomes strip down and run around with knives, cutting each other up. How is that for a cartoon image in the mind?

[Buffalo Ken]

Hey RobG - are you saying I'm senile? Maybe you just don't understand. Maybe I don't. Whatever...I'm not in the mood to get into it with you or anybody else for that matter.

Everybody is entitled to their opinion (that is of course assuming that Harmon's Violent Radicalization and Homegrown Terrorism Prevention Act of 2007) doesn't become law. If it does, it is not a stretch that all the camps they've been building around the country will commence with being populated with all the "homegrown terrorist". You know all those crazy folks who refuse to believe the American MYTH.

Anyhow, you all won't need to read my posts for a long while. I'm going on vacation.

Plus, I have some tomatoes and banana peppers to go pick.

Peace,
Ken