And here comes the bailout! I freaking knew this was coming. I mean, all you had to do was watch the game tape from the Savings & Loans scandal. Nothing like socialism for the rich! Of course, when someone gets bailed out, someone has to pay. That person is you, me and your grandma.
As you have probably heard by now, the Fed and JP Morgan are coming to save their boys at Bear Sterns. I suspect JP Morgan will be owning Bear Sterns by Q3 of this year, but that’s a whole different matter. That’s private capital, they can do whatever the hell they want. The Fed, on the other hand, is public capital. Again, you, me and your grandmother are the backers of the Fed.
Of course the Fed is a private organization, so there is no accountability for the asshat moves they are making this week. Here is one of my favorite moves:
The borrowings from the Fed will be secured by collateral furnished by Bear Stearns, and the Fed, not J.P. Morgan, is bearing the risk of losses if that collateral falls in value.
Thats a pretty sweetheart deal for J.P. Morgan. So basically the Fed has let Bear Sterns swap their unholy securities backed by mortgages for safer Treasury bonds. What this means is that the Fed is now backing the US Dollar on said mortgages.
By fiat, our coinage is now backed by the defaulting loans across America. This has to be one of the stupidest ideas ever. I challenge anyone to find a historical model of where a country got out of a economic slump by devaluating their own money. History will not be kind on this move.
And the worst part is Bear Sterns is not a bank. Never has been a bank, never will be a bank. It is an investment house. So technically they cannot even use the Fed’s discount window to access yet another $200 billion dollars the Fed is injecting into the money supply. They have to get JP Morgan to do that.
Wait, $200 Billoon new dollars in the system you say? Yes, last week, the Fed announced an industry-wide rescue package that would provide as much as $200 billion in loans to banks and investment houses and allow them to put up risky home-loan packages as collateral.
Again, our dollar is now being back by the home-loan meltdown. This is so stupid that the Swiss Franc caught the dollar today. The rest of the world has officially stopped all dollar buys, and all but refuses to even pick up the phone if Bear Sterns or other such cash strapped banks and investment houses are calling from America.
See, investment houses are like a dude with a black box. You are never allowed to see inside the black box, but the dude assures you there is quite a bit of loot in that box. Plus, if you put your loot in the magic black box, it will magically grow like they are magic beans. Of course, everyone needs to believe in the power of the black box for this to work.
If people no longer believe there is loot in the black box, they will stop putting money in said black box. If enough people lose faith quickly enough, the black box is complete worthless and the dude goes broke.
Bear Sterns is that dude right now.
The intervention by J.P. Morgan and the New York Fed shows Bear “didn’t have enough money to turn the lights on this morning,” said Carl Lantz, strategist at Credit Suisse. “And in a big picture sense, this isn’t that comforting.”
Wait, I remember this story!
Went something like this:
Bear Sterns is the Duke Brothers, except in reality we have Republican Socialism that keeps private enterprise from failing. If only the Duke Brothers lives in our fantasy world instead of the one Hollywood creates.
But in the world of Republican Socialism, the Duke Brothers are saved by you, me and your grandmother. And when you are paying $10 lb for chicken, you will have the Fed to think. And the Fed doesn’t get a crap about what you think, because they are a private organization.
And the first thing to solving the riddle of Republican Socialism is to make the Fed accountable to the people of these United States of America, and not the hedge fund row, and only to the hedge fund row.
Why the coinage of the US dollar is not under government control is probably one of the best kept secrets in America.
And as always, it has to do with money.
The entire wealth of the USA is also in a black box. The world has recently decided that our black box is pretty worthless. In effect, they have decided our dollar is pretty worthless.
What these means, as Republican Socialism fails, it exposes the ugly truth that the rich are only rich because they say they are rich. If you take away their black box, they would be eating out of dumpster by the end of the month.
Of course to distract the people from this inconvient truth, you better do something drastic. Especially when even Nobel Prize winners calling Republican Socialism a form of looting.
Something crazy, oh say, like attacking Babylon.