THE TIMEBOM_ KEEPS TICKING

by Michael M. Pennington 

This month we have over $54 Billion in credit derivatives that must be settled by the Treasury Department. The first of these are the Fannie Mae and Freddie Mac derivatives which come due on Tuesday. Later in the week, it’s Lehman Brothers. No one knows yet how this will work, but one thing is clear this might be the last straw, so be prepared for the worst – this week. Many insurance companies and banks hold this worthless paper so it is possible there are more casualties that could be announced later this week. We are in full crisis mode.

In total, there is more than $600 trillion in notional derivatives to be resolved. Clearly, the bankers and greedy Wall Street CEO’s and hedge fund managers  have gone beyond the scope of fiat currencies. The worthless dollar will soon be bust. These derivatives are risky bets based on the prices of real estate and commodities. Since both asset classes have been falling dramatically and the OTC paper is leveraged 100 to 1, when oil falls $1 per barrel the corresponding derivative loss is $100.Simply put, no entity could even begin to absorb losses of $100-$200 Trillion.

We are now at the terminal stage of the crisis. The contagion has spread through the global financial system. Our hotshot derivative salesmen, making millions in the process, sold this worthless paper to banks around the world. In turn, these financial institutions have hidden their derivative exposure off the balance sheets. Its no wonder almost no one understands derivatives. It’s been their dirty little secret for years. And now it is a crisis effecting us all.  It has gone from a crisis of liquidity to a crisis of solvency and now to a crisis of confidence. Regardless of what our politicians might think – you can’t legislate confidence. Everyone wants their money out because they no longer trust the banks.

HOW TO SOLVE THE BANKS PROBLEMS

Here’s a novel idea for all the money hungry bankers. Go back to accumulating checking and savings accounts from average hard working people. Fire all the traders and accountants who have been busy buying and selling risky derivatives – didn’t Enron teach these people

LET’S RENAME “PONZI SCHEME” TO “PAULSON SCHEME”

People need to wake up and understand that this is not a political party problem. THERE AREN’T TWO PARTIES IN THE US. The Republicans and Democrats in Washington are married to each other and exist for the benefit of the other. They are controlled by others outside of Washington D.C. Therefore, it’s impossible to throw the bums out because there’s only more bums to take their place. The only true factions in this nation right now are those who believe in the Constitution and democracy and those who don’t. Unfortunately, the secular socialists have the upper hand right now. We as citizens have to find a way to reverse this and restore America and its founding fathers ideals. Clinton, Bush, Gore, Cheney, Paulson, Frank, Bernanke and Greenspan and others should all be arrested and held for high crimes against the American people.

ANOTHER FOX – ANOTHER HENHOUSE

A Goldman Sachs Group alumnus in charge of the nation’s economic rescue? How unusual. Except, of course, it isn’t. Hank Paulson is promoting Neel Kashkari, the Treasury’s assistant secretary for international affairs, to be the point man overseeing the $700 billion financial bailout as the interim head of Paulson’s Office of Financial StabilityPaulson’s inner circle already includes former Goldmanites Dan Jester, a financial institutions banker, and retired banker Steve Shafran, who focused on corporate restructuring at Goldman. It also included Robert Steel, who has since left Treasury to become CEO of Wachovia. Kashkari’s appointment is another example of how deep those Goldman Sachs ties go. In fact, Paulson himself was recruited by a former Goldman Sachs banker: former White House Chief of Staff Josh Bolten. Bolten. Let’s see if I understand this. Secretary Paulsen is responsible for the $700 billion bailout fund and he appointed the guy immediately underneath him to make sure the Treasury Secretary is completely ethical. Huh???  

This entry was posted on October 6, 2008 at 10:50 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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