The Market Ticker

"Those who make peaceful revolution impossible will make violent revolution inevitable."

John F. Kennedy, In a speech at the White House, 1962
35th president of US 1961-1963 (1917 - 1963)

Something to think about as you read the below; the context of that quote was related to the civil rights movement, but it certainly appears to apply to the current situation.

In both cases we had a government that refused to listen to the will of the people. 

In one case, a significant subset of the population that was oppressed by another due to the color of their skin.

In the latter, the entirety of the taxpaying population (still a majority of Americans, even if just barely) has been financially enslaved to support a tiny number of bankers and their cronies, including members of our current government.

In both cases, Congress and government was the cause of the enslavement, empowering those holding the whips and chains, stepping on the necks of the enslaved.

In both cases, The People made clear their demand for redress.

In one case, a Democrat President, John F. Kennedy, led the process which not long thereafter resulted in Dr. Martin Luther King making his famous "I have a dream" speech on the steps of the Lincoln Memorial.

President Kennedy recognized the truth in his statement above, and then acted in accordance with both reality and his conscience. 

Our nation was served well.

Of late we have instead been served a plethora of lying, deceit, and outright fraud.  Firms claiming to be worth $50 billion in a public filing and three days later selling themselves off for 1/3rd of that.  Claims of needing $700 billion in taxpayer money to buy "troubled assets" with the bald claim that if Congress does not immediately assent martial law will be declared and Depression will descend upon the nation, then as soon as the law is passed handing $70 billion out for bonuses, $150 billion in off balance sheet tax breaks not contemplated in the original package, and tens of billions used to intentionally overpay for underlying assets on credit default swaps - but not one penny is spent to actually buy the original "troubled assets" - mortgage securities - that were the basis of the request.

Banks, the very same Henry Paulson who just grabbed $700 billion for his banking buddies, and Congress all claimed back in July that "Hope For Homeowners" was going to help hundreds of thousands of people stay in their homes, but more than a month after it launched, the total number of applications received has been...... one hundred and eleven. 

"Hope For Homeowners" has turned out to be its namesake and nothing more - hope - and hope has always been a truly crappy investment (or life) strategy.

Congress feigns outrage, yet Congress was warned, repeatedly, that this would happen by many in both cases. In fact, I have been sounding this warning since October of 2007 with myriad faxes, phone calls and even public petitions with thousands of signatures of concerned citizens across the land.

These bills were not truthfully intended to do what was claimed, and they wouldn't have worked even if they had been.

Congress feigns outrage, but they passed the EESA over the objections of the American People, and have yet to haul the protagonists before Congress and cite them for contempt or cut off their money - both of which Congress could do right here and now if it was really outraged, rather than being complicit in the scam and screaming "outrage!" for the purpose of public theater, rather than true anger.

Today we have a new President-Elect, a Democrat, with a momentous challenge before him - a challenge in which he must either stand with the majority of Americans, or with "The Pigmen" who have plundered our nation, enslaved our people and lied through their teeth.

Anna Schwartz, one of the few economists who was alive during The Depression, has warned that Bernanke and Paulson's policies are bankrupt at best and threaten our nation's sovereignty at worst.

Now John Whitehead has similarly warned of dire consequences of the path currently being taken:

"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system." Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s.

Whitehead warned the country's financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans.

....

"Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds," he said. "Eventually U.S. government bonds would no longer be the triple-A credit that they've always been.""

We cannot bail out those who made bad bets on the backs of everyday Americans. 

It is both mathematically impossible to achieve the claimed goal and mathematically impossible to "expand credit growth" when the consumer is tapped out, having spent 20 years exporting the good jobs to China, then enticing Americans to "keep up their standard of living" by going further and further into debt.

The bankers who inappropriately granted credit to those who cannot pay, enabling this faux veneer of prosperity while fully aware of what they were doing, must be forced to eat their losses, and public subsidization of poor investment decisions must stop and in fact be reversed.

The People said "Not No but Hell NO!" during debate on the EESA/TARP. 

Congress passed it anyway.

In fact, congress has repeatedly been told "NO!" by the people on its subsidization of banking and business losses by the people, but has refused to stop literally robbing the public purse and by extension, every taxpayer's pocketbook.

Will Barack Obama be John F. Kennedy in his statements and actions?

Or is he, instead, one to hand out more whips and chains to the bankers?

We know what role Ben Bernanke, Henry Paulson and George W. Bush have chosen, not to mention the bankers who have been beneficiaries of the funds taken from us, our children and our grandchildren at gunpoint via future tax burdens.

We also know that but for President Kennedy's actions you, President-Elect Obama, would have never gone to Harvard Law School - nor would you have had the opportunity to be elected President of The United States.

America, and indeed the world, is watching Mr. Obama.

Will you do the right thing and hold those accountable according to both common sense and the law?

Or will you continue to allow these men to plunder our nation and our citizens at will, ignoring their repeated misdirections and falsehoods?

It is time for you to declare your allegiance Sir.

The world, and all of America, is watching.

Are you really "Change We Can Believe In"?

Are you really "Yes We Can"?

If so, here are the acts you must undertake as soon as you are sworn in, and you should announce them tomorrow so the market will stop tanking due to the lies of Mr. Paulson and Bernanke:

1. You will send up a bill that enacts a full repeal Gramm-Leach-Bliley.  This was the law that repealed the Glass-Steagall act (the majority of it, anyway.)
2. You will send up a bill that reinstates the leverage limit of 12:1 that used to apply to investment banks (the dropping of which is the proximate cause of this mess, and which Henry Paulson was directly responsible for through his lobbying and requests) and apply it to all institutions doing business in The United States.
3. You will send up a bill that repeals the 2005 "Bankruptcy Abuse Prevention" act - an act you voted no on originally.  This one should be a no-brainer, since you didn't support it originally.
4. You will send up a bill that repeals the TARP/EESA, and will vow to do everything in your power to stop the expenditure of any further funds under the existing law, and you will direct Treasury on January 20th to reverse the tax changes that granted $150 billion in "preferences" without a vote of Congress or even public notice.
5. You will send up a bill that requires the SEC, OTS, and OCC to compel all assets and liabilities to be consolidated upon a firm's balance sheet and directs that all marking methods, formulas and variables along with each asset held be disclosed accurately for every firm that operates in the United States.
6. You will direct The Federal Reserve by executive order to comply with the FOIA filed by Bloomberg and disclose, immediately and forever into the future, all loans issued, to whom, the specifics of the collateral pledged, and the discount or "haircut" applied.  Such information will be published via The Web at the point of issuance of Fed Credit and all actions taken by The Federal Reserve or any of its district banks shall be undertaken in the full sunshine of the public view.  If The Fed should refuse, you will pledge to send up to Congress a bill to repeal The Federal Reserve Act of 1913, and replace The Federal Reserve system entirely with an entity that will under penalty of federal law operate 100% "in the sunshine."

If you want to stabilize our markets and financial system, you must undertake all six of the above acts, and you should announce your intention to do so now, so that the markets can anticipate that the "dark ages" of obfuscation, lying and theft will stop on January 20th.

You should, today, call upon Henry Paulson to resign immediately, as his actions in 2004 were the proximate cause of this mess, he is hopelessly tied up in conflicts of interest that have been expressed in ridiculous favoritism over the last year and a half, and in addition he has refused to admit his complicity.

We are literally on the precipice of a full-on meltdown despite what the talking heads are saying.  Henry Paulson and Ben Bernanke came to you and the rest of Congress about a month ago and said they would "fix it" by buying up illiquid assets. 

They lied; not only did they not do so, I allege they never intended to do so, and worse, they knew up front that their "prescription" would not and cannot work, because there is simply not enough money and credit available to solve the problem.

The Main Street economy will not and cannot recover until the excessive debt is forced into the open and defaulted. 

That cannot happen until the lying and obfuscation both of firms and our government, including Treasury via the "TARP" and The Fed, is stopped.

Only then can lending return to a sustainable level and only then will the markets and our economy normalize.

It is a false hope of the highest order to believe that we can manage to "muddle through" or that we can sustain the consumption rates that this nation has had for the previous 20 years. 

That is not possible. 

Instead, we will (and must) return to a consumption rate more closely matching that of the 1960s on a per-capita basis, before "easy money" and "easy credit" became the underlying theme in American Life.

This adjustment will not be easy.

Without "silly credit", which cannot be restarted or maintained, we sell 11 million automobiles in the US a year, instead of 17.5 million.  We sell one million fewer homes a year.  Leisure travel dollars spent will fall by 20% and perhaps more.  We sell a lot less "bling" of various sorts, whether it be $300 cell phones (the $50 one makes calls you know, and doesn't require a $100/month service plan either!), $5 lattes or $10 martinis.  This is reality my friends, and there is no escaping it. 

What's worse is that the people who "believed" we could forever live beyond our means and just ring up another charge, either as consumers or granters of that credit, are and must eat the inevitable losses from this excess, which means for a time we will suffer output and consumption that is below sustainable limits while the excesses are worked off.

If President-Elect Obama wishes to have any hope of being able to enact improvements to our health care and educational systems (as just two examples of the many things he has promised to do) the above must be accomplished first, or the black hole of debt deflation will suck up all of the resources that would be used for those other purposes - and then some.

Worse, there is a near-100% chance that if Bernanke has or does "print", that is, intentionally devalue through monetization, the instant that act is detected (and it will be) all foreign capital support of our Treasury market will disappear.  This will force an immediate cut in Federal Spending by at least 50% (and probably more.)  It takes only a cursory look at federal spending to determine that the only way to accomplish this would be to radically slash Social Security, Medicare and the military by more than half each, along with a roughly 60% cut across all discretionary federal programs (remember, you can't stop paying the interest due without defaulting and cutting off all Treasury debt funding.)  This would literally gut every program that Americans depend on nationwide and result in tens of millions of Americans being rendered jobless, homeless, and without medical care - within days. 

In short, we would suffer an almost-identical event to what happened in Iceland. 

Yes it can - happen here.

Don't think for one second that the media and public aren't on to the charade that "big business" and government have run for the last twenty years.

They are.

John Bohner is hollering about The Fed's secrecy, Bloomberg has filed an FOIA (and presumably intends to sue if he doesn't get what he's asking for) and on MSNBC.COM we had this ditty:

"The losses have to be taken, but no one wants to take them," Hendler said at a conference Wednesday, speaking about the banks and their handling of troubled assets. "It seems like the taxpayers are going to be taking a good portion of that."

Gee, who's been saying that for a year and a half - that the losses have to be taken?  I, among others.  And what has been done?  Secretary Paulson, Ben Bernanke and President Bush have taken those losses onto the taxpayer's backs in secret instead of forcing the people who made the bad decisions to eat them.

Drudge has had bailout-slamming headlines up continually for days now.  25 million views in the last 24 hours, more than 3/4 of a billion per month.

You think "Joe Middle Class Six Pack" finds this amusing - or acceptable - when it scuttles all the other promises you (and the rest of the Democrats) have made?   You think "Joe" hasn't figured it out by now?

Somehow I doubt it.

I suspect that the rest of America who voted for you is not going to look too kindly upon your administration if you can't (or won't) make the tough choices, forcing the people who committed the bad acts and booked the losses to eat them, instead of shifting them to those Americans who did nothing wrong.

Nor will America sit still while their next door neighbor gets a freebie mortgage modification and principal forgiveness while he does not - because he put 20% down and lived within his means, while his neighbor bought a boat and a Hummer and played "nouveau riche" on a beer budget.  That sort of robbery from the prudent to benefit those who behaved imprudently (and to those who even committed fraud in overstating their incomes!) will not be tolerated.

I know I won't stand for it, and I'm one of those who did vote for you.

You wrote a lot of checks on the campaign trail, the most important of which was a promise that you would not allow this sort of crap to go on in an Obama Administration.

We voted for you and put you in office, as we have watched more than a million jobs disappear from America over the last year, with new unemployment claims coming in at 516,000 this week, continuing claims at roughly 3.9 million.

It is time to let adults in the room and lock up the children who have and are pressing policies that will, if not stopped, guarantee a Depression greater than that which gripped America in the 1930s.

I, and the rest of America, expect you to cash those checks with policies and acts, and you can start today by declaring your intentions to stand with us, not those who have ripped this nation off.

In the meantime, I'm going to blatantly rip off (and modify) Steph's comment in the forum (which she says she overheard at work) and rename the TARP for you.

It shall hereafter be known on The Market Ticker as the T.U.R.D.

Taxpayer Universal Raping Device

We The People have just one question for you Mr. Obama:

Are you going to attempt to polish it or flush it?

Ahem.

Release Date: November 12, 2008

For release at 10:00 a.m. EST

On November 10, 2008, the Federal Reserve conducted an auction of $150 billion in 17-day credit through its Term Auction Facility. This was a forward auction designed to provide term funding over year-end--the awarded loans will settle on December 22, 2008. Following are the results of the auction:

Stop-out rate:	0.528 percent
Total propositions submitted:	$12.629 billion
Total propositions accepted:	$12.629 billion
Bid/cover ratio:	0.08
Number of bidders:	16

The awarded loans will mature on January 8, 2009. The stop-out rate shown above will apply to all awarded loans.

Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EST on November 12, 2008. Participants have until 12:30 p.m. EST on November 12, 2008, to inform their local Reserve Bank of any error.

http://www.federalreserve.gov/newsevents/press/monetary/20081112a.htm

Note the bid-to-cover.

No further explanation necessary.

Well, ok, maybe there is one necessary.

Less than 10% of the available credit was drawn down.

Why?

Because when cash becomes competitive with short-term credit in terms of return (that is, cash yields zero, short-term credit costs and yields zero) then there is no reason to take risk; you're better off with the cash.

Ben pointed his liquidity gun at the market, pulled the trigger, and got......

CLICK.

Game's over Ben; you no longer have "liquidity" to shower on the market; there's no take-up.

Now we're left with either (1) doing the right thing or (2) Weimar Germany-style printing.

Oh, to Henry Paulson, who is lying once again on national TV this morning:

Shut the hell up.

You're full of crap.

You've prevented nothing.  You have in fact lied to Congress about the purpose of your $700 billion "TARP", which has been used to buy up competitors and pay bonuses, and you changed tax policy without a vote of Congress in the dark of night, which you STILL haven't talked about in public.  You didn't know what you were doing originally and it is obvious that you still don't.

In fact, Rick Santelli put it quite simply on television this morning in regards to what you did by holding up two pieces of paper:

BAIT (and) SWITCH

Your (and Bernanke's) continued cheerleading and falsehoods have destroyed business and consumer confidence.  Every time you open your mouth the market tanks, because you still have not decided to tell the truth.  "Securitizing credit" is a pointless exercise until the excessive debt is defaulted, as there is no demand for additional credit when the consumer is tapped out and businesses are failing.

You continue to talk about increasing credit in the system when the cause of the problem in the first place was excessive credit creation. 

YOU PERSONALLY lobbied Congress and The SEC to PERMIT that excessive credit creation, were rejected once in 2000, and in 2004 you came back as CEO of Goldman Sachs and GOT WHAT YOU WANTED - a policy change that WAS THE DIRECT AND PROXIMATE CAUSE OF THE MESS WE ARE NOW IN.

You have REFUSED to accept that responsibility and you continue to talk about "recovery" and "reform" but you and YOUR demands for removal of safeguards in 2000 and 2004 ARE WHY WE ARE HERE.

THERE IS NO SOLUTION TO THIS PROBLEM NOR WILL THE ECONOMY FIND A BOTTOM AND RECOVER UNTIL YOU STOP TRYING TO FEED A DRUNK WITH LIVER CANCER WHO IS PUKING UP BLOOD MORE BOOZE, AND IF YOU DON'T STOP THIS CRAP AND SOON THE DRUNK (OUR ECONOMY, OUR MONETARY SYSTEM AND POSSIBLY OUR POLITICAL SYSTEM) IS GOING TO DIE. 

WHEN THAT HAPPENS, NOT IF, YOU, CONGRESS AND PRESIDENT BUSH WILL BEAR THE PROPER RESPONSIBILITY FOR THE ENSUING DEPRESSION, ONE THAT IS LIKELY TO SURPASS THE 1930s BOTH IN SEVERITY AND DURATION.

It is time for you to accept responsibility for your actions and their consequences, resign, and for the government to invite adults into the room before we have another fiscal "accident" - this time in the Treasury market as the world decides that buying government debt from a liar is a really, really bad idea.

Seriously.

Go read the previous Ticker.

Here's the fundamental and market picture.

There were many who said that we would not have a recession in 2007, including Bernanke, Buffett, Paulson and dozens of others.  The government and its minions took actions that would "promote moderate growth over time."

In the first part of 2008 we heard the same siren song - there will be no recession, there will be no cataclysm.  "The economy is fundamentally sound."

Actions continued to be taken that amounted to giving whiskey (looser credit) to a drunk (the credit junkie that is America.)  The drunk developed cirrhosis and liver cancer from all the extra booze, which he readily consumed.  The warning signs continued to pile up, I and a few others reported them, but we were universally ignored.

Now the drunk (our economy) is in the hospital puking up blood and his liver enzyme levels are off the charts.  He's anemic, obviously jaundiced, and near death.

Congress and our government has one last chance to stop the insanity, in that The TARP has been pulled over so much that its now out of money, and Treasury will inevitably come back to ask for the other $350 billion.

Congress, our President-Elect, and our President have only one action they can take that will save us from the abyss.

They must say no and instead start issuing subpoenas and indictments, shutting off the booze, and they must do so now.

I have no reason to believe Congress or our executive (incoming or outgoing) will do this.

But if they do not we are likely to see a "relief rally" somewhere here into the end of the year, then a grueling 2-year+ crash much as happened in 1930-32, culminating with somewhere between a 75 and 90% loss in the major indices, essentially destroying both equities and the corporate debt market.

Unemployment will go north of 10% on the "official" statistics, and U6 will approach (if not breach) 20%.

GDP will contract slowly at first but the consumer-led spiral will accelerate into 2009, reaching a cumulative 20% off the peak by the end of 2010.

To Congress, and President-Elect Obama:

Who are you going to listen to now?

The men and women who have been consistently wrong?  Secretary Paulson and Ben Bernanke, both of whom said all the way up until they presented their "bailout" proposal that "The economy is fundamentally sound?"

The men who said they wanted to help "Main Street" and then gave $70 billion to Wall Street bankers for their bonus pools?

The men who said they were going to buy distressed mortgage securities, then instead spent the entire first-half allocation on handouts so their "friends" could raid weaker rivals, and in addition re-wrote tax policy in the dark of night to grant those same favored friends $150 billion in extra giveaways you didn't vote on?

Or will you listen to people like myself who have been consistently right.  The people who told you time and time again that this bailout not only would not work but would not be spent where Treasury and The Fed said it would?  That it would go to benefit not Main Street but Wall Street and other banking interests, including (quite possibly) foreign investors and governments, further impoverish the taxpayer, and yet do nothing to address the root of the problem - excessive levels of debt throughout the system?

You cannot unseize the financial system and restore the normal functioning of the capital markets until the unsustainable and irredeemable debt has been defaulted.

Will you finally listen to The American People - who were solidly against this bailout - and all the other bailouts?

I believe we may be days, weeks or (at the outside) months away from The United States reaching the point of no return in the mismanagement of this financial mess.

We are dangerously close to investors worldwide coming to the realization that Ben Bernanke at The Fed has taken in "collateral" that is not worth anything close to what has been claimed - that is, that he's been lying all along.

In fact, if you remember back when Bear Stearns was first bailed out we were told there was little chance there would be any impairment on those so-called "assets" as a significant haircut had been taken - but The Fed has been quietly writing down the "assets" in "Maiden Lane", the Bear Bailout facility, without any significant announcement or discussion with Congress.  (Yes, I know, Blackrock "claims" the collateral has been performing well on a cashflow basis. If all this is true, why can't we all see the details?)

Should investors around the world (and in the United States) come to believe that Treasury, The Fed and Ben Bernanke are liars, they would then be forced to conclude that they have in fact conspired to monetize a significant part of the bad paper "accepted" through the various facilities - which would mean The Fed has been "printing money" (despite telling you he had not in his latest Congressional testimony.) 

The consequence of that conclusion would almost certainly be immediate capital flight and a "sudden stop" shutdown of foreign investment in our Treasury Markets.  How would Congress respond if Treasury was unable to market its securities except through monetization ala Weimar Germany? 

Do you really want to face that possibility and what it would mean for America?

Adding to this is the fact that China has announced an intent to prop up their own economy through a massive fiscal stimulus package.  The difference between China and The United States is that China has a huge surplus.  The bad news is that it is largely in dollars and US Treasuries.  To fund this stimulus they will almost certainly either consume some of this surplus or at least stop adding to it.  In addition the gulf oil states are seeing their local equity markets collapse even faster than ours; they too are going to be forced to redirect foreign exchange reserves internally to support their economies and citizens.  

When you add all this up you are forced to conclude that the door is slamming closed on the United States for foreign subsidization of our budget deficits just as we attempt to ram through more than a trillion worth over the next six to twelve months.

It is not going to work.

Congress, President-Elect Obama, America.

You have a choice.

Your choice comes down to either forcing the bad debt into the open and accepting the economic turmoil that will result (and there will be plenty of it), and a cessation of deficit spending (or at least a return to the area of 1% of GDP until the economy turns) or you are likely to see 10% of America calling this home within the next two years.

Paulson, Bernanke, Geithner, Congress.

President Bush.

And if he doesn't get on top of this, President-Elect Obama.

Let us begin by noting that President-Elect Obama voted for the $700 billion bailout - The "No Banker Left Hungry Act" - while the rest of America literally was losing their jobs and homes.

Yesterday we learned that Fannie Mae lost $29 billion in the third quarter, most of it by admitting to what they knew back in the first quarter - that a huge tax credit they had would be worthless. 

Of course they didn't admit this at the time, even though I and others pointed it out.

Why aren't the former executives in prison for that bit of book-cooking?

American Express had a petition approved to become a bank holding company.  Why?  How about a bit of truth here Amex?  Do you intend to toss bad credit-card debt on the taxpayer's back and cover it with a TARP?

AIG had its bailout package nearly double in cost, and worse, they now have a huge bolus of CDOs that are being "sold" to Treasury for 50 cents on the dollar - when market prices are closer to a nickel.  That's a direct gift, and our exposure is now $150 billion - when the original bailout, which included taxpayer exposure, never got a vote in Congress.

Even better, AIG apparently hasn't stopped its high-priced junkets for executives - with one taking place as recently as this last week:

"Even as the company was pleading the federal government for another $40 billion dollars in loans, AIG sent top executives to a secret gathering at a luxury resort in Phoenix last week.

Reporters for abc15.com (KNXV) caught the AIG executives on hidden cameras poolside and leaving the spa at the Pointe Hilton Squaw Peak Resort, despite apparent efforts by the company to disguise its involvement."

Nice.  $343,000 worth of nice, if this report is correct.

Treasury says:

"In return," said Kashkari in a speech today, "AIG must comply with stringent limitations on executive compensation for its top executives, gold parachutes, its bonus pool, corporate expenses and lobbying."

Hmmmm... will we see enforcement Cash-And-Carry or will you live up to your name?

Out of the roughly $2 trillion committed thus far only about $450 billion of this money was actually passed through Congress - $100 billion in initial backstop for Fannie and Freddie, along with $350 billion for the first half of the TARP.  Nearly all of the rest was committed literally by fiat in The Federal Reserve and Treasury without a bill in Congress, Congressional debate, or a vote.

We have discovered that Treasury, on its own initiative, changed tax policy in a fashion that will cost taxpayers another $150 billion, this beyond the TARP as well, without Congressional approval - this time as an "incentive" for banks buying up other banks.

Under The Constitution all revenue bills must originate in The House. 

Congress is "afraid" to call this what it sure looks like to both me and many of them - illegal - for fear of scuttling deals that were done under the "TARP" of darkness.

General Motors got a "going concern" statement in its 10Q, which is for all intents and purposes Last Rites in the corporate sphere.  Absent some sort of intervention (more than the $50 billion already authorized for the automakers in the "Housing Bill" this spring), again under the TARP of darkness and obfuscation, GM is likely toast.

Treasury has committed all but $60 billion of its first $350 billion, and is expected to issue one half trillion dollars in funding this quarter - on top of another half-trillion last.  That's over one trillion dollars in debt, most of it new - and we're just getting warmed up.

How does Congress - and Treasury - think they're going to be able to sell this debt? 

You don't think that The Fed would monetize it by just printing up some money, do you? 

Do you think they might have already done that, perchance?

Well Bloomberg (among many others, myself included) would like to try to figure it out, but The Fed doesn't seem to want to disclose what it has taken in, from whom, and how it valued those alleged assets. 

Why not Ben? 

Are you afraid that you might wind up disclosing that you in fact have been printing money, after you told Congress there was no inflationary impact of your actions, and that such a disclosure might not only result in a contempt citation from Congress (or worse) but might also trigger mass capital flight by foreign governments and investors who suddenly come to realize that you've screwed them?

The only beneficiary of secrecy is the scoundrel who intends to lie, cheat and steal - or all three. 

You wouldn't be guilty of any of that would you Ben? 

How about you Tim (Geithner, at the NY Fed)?  Is everything on the up-and-up over there in NY?  If so, why don't you "bare all" and let us have a look-see?

Since it's our money you're playing with, in that we the taxpayer are the source of the wealth you shuffle around, we have every right to know what the hell you're doing with it and so does Congress.

If you refuse then I believe Congress should revoke your charter and subpoena everyone involved, including the Treasury Secretary's and both Bernanke's and Geithner's notes, phone records and meeting minutes, along with the details of every transaction taken by any of the above since August of 2007.  Publish it all in The Federal Register and online via the web.

Congress bleats that it is "surprised" that Treasury has given money to banks to make acquisitions and fund bonus pools, but the Treasury Secretary threatened a Presidential Veto of the bill if there were constraints put on the funds' use when the measure was first handed to Congress, if you believe the statements made in in the media by the Congresspeople who were there.

In addition, Treasury said there would be an immediate banking system collapse and a Depression if they did not immediately buy "distressed mortgage-backed securities", and yet not one single dollar of said distressed assets have been purchased to date, while $310 billion has been spent or committed so banks can make acquisitions and fund bonus pools, with said acquisitions happening at 60% discounts to claimed balance sheet values just days prior.

Has the banking system collapsed? 

Has your ATM card stopped working?

No, but Goldman and Morgan, along with others, have $70 billion in bonus pool money to pay to their employees, compliments of the US Taxpayer.

Has Congress reconvened (now that the election is over) to strip King Henry of power that he has clearly used in a fashion he said he wouldn't, and in at least one case in a fashion that many Congresspeople say is outright unlawful? 

Nope.

Now our fine President-Elect is browbeating Bush to put forward a stimulus bill before he takes office.  Why not introduce one Senator?  After all, The Democrats currently have a majority in both houses of Congress, do they not?  Get together with some House Members in your party, pen it, and have them send it up.  Get a nice veto-proof majority together (you know, that "deliberative and across the aisle" stuff?) and pass it.

I'll tell you why - further stimulus bills will do nothing just as the last one did nothing, and President-Elect Obama knows it.

Stimulus Bills make good political theater and Americans who are long on sound bites but short on economic knowledge love the idea of "free money" but we are now flirting with a bond market dislocation and potential exposure of The Fed's machinations, which will bring the curtain down on all the games at once.

In my opinion the evidence is incontrovertible that we are literally teetering on the precipice; as evidence I cite the fact that credit-worthy firms continue to have to pay outrageous coupons to get their debt offerings to go (Verizon being among the most recent) and now The Fed has announced that it intends to delay one of the cornerstone pieces of "stabilizing" short-term funding markets - its money-market liquidity facility, which was slated to cover some $500+ billion in commercial paper.

Here's a WAG on the delay, and is nothing more than a theory that happens to fit the facts - The Fed is aware (perhaps because they've been told?) of an impending "problem" with rolling some of Treasury's short-term debt (and its excessive issue.)  They are thus gambling on being able to "scare" some cash into those instruments from money-market funds, where it is currently hiding, to prevent "fails" (or a precipitous coupon jack-up) on those Treasury sales.  In short, they're willing to risk melting money markets once again in order to avoid a potential Treasury Market problem.

How do 'ya like all them spinning plates Ben?  Do 'ya think you can keep 'em all in the air, or will the first one fall and take out the rest?

President-Elect Obama is no dummy, and if we're going to have that sort of dislocation I'm quite certain he wants George Bush to be the one who has his hands all over it - as well he should, given that this is his administration and Treasury Department, along with his Fed Chairman, that has created the mess in the first place.

I put the odds of the plates falling within the next two months - and possibly within the next couple of weeks - at one chance in three.

If the plates fall we are going to have a very serious "event" in this country in the markets and in the economy - much worse than what we've seen to date.  As in 10 million jobs lost almost all at once.  A depression.  And a new leg down in the market - 30-50% - essentially straight down.

As I said, I only give the odds of this event here and now at one in three - but if Ben and Hank have been playing games, that outcome has become inevitable - we are arguing about timing, not result.

If any of the above is the case the sooner we force the bs and lies in Treasury and The Fed out into the open and deal with it the better, although if any of this has happened a Depression has been assured. 

If we discover that in fact Bernanke has attempted to monetize or simply has run out of credit in the "global money system" the Depression we will experience is the direct responsibility of Henry Paulson, Ben Bernanke and George W. Bush, with secondary responsibility resting with Congress through its refusal to put a stop to the stupidity in time and The Press, including and most especially CNBC, Larry Kudlow and Jim Cramer who have been cheerleading policies since last summer that have in fact shoved us right down the hole.

Buckle up.