Financial MOAB
A few years ago, military planners got all excited over a new kind of fuel-air explosive known as MOAB — the Massive Ordnance Air Blast bomb, or informally, the Mother of All Bombs.
Welcome to Financial MOAB — the Mother of All Bailouts. All those rotten debts the finance sector has racked up? Uncle Sam will just take 'em off their hands. Voila, problem solved.
The price tag? Washington Post columnist Steve Pearlstein reckons "$200 billion to $500 billion, on top of the money already committed for Fannie Mae, Freddie Mac, AIG and Bear Stearns." Funny, there's that $200 billion figure yet again. (Update: Oh hell, let's just go for an even $1 trillion.) Feel free to place your own bets in the comments section.
How Uncle Sam proposes to pay for this, no one has adequately explained — because no adequate explanation is possible.
At least Hank Paulson and Ben Bernanke are going through the motions of getting Congress to sign off on all this. It's good to see the Fed and Treasury resort to Constitutional niceties on the really big stuff. Piddly stuff like the AIG bailout they just go off and do on their own using emergency powers they were (unconstitutionally) granted during the Great Depression.
Wall Street's reaction? A multi-hundred point rally on the Dow when word leaked yesterday an hour before the close. Asian and European markets then rejoiced and as I write the Dow is up another 250 in the opening minutes of the trading day. They don't care who's going to pay for it.
But the dollar is down. And gold is up. Currency traders and gold buyers know the score.
Warning: Monetization ahead.
Of course, Paulson and Bush will be long gone by then, and maybe Bernanke too. Someone else can take the fall for the consequences of that.
Addendum: I suppose I understand why the establishment media is making analogies between the new "Troubled Asset Relief Program" and the Resolution Trust Corporation that was formed to navigate the savings and loan crisis. But the comparison falls down on a very basic point: The RTC could sell tangible assets in the form of real estate to pay off some of the rotten paper it took onto its books. No such option exists this time.
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Shocking stuff, and so obviously doomed to fail that it’s a tad laughable. Ah well, at least I know my decision to invest all my savings in gold and silver was the right one!
Comment on September 19, 2008 @ 11:32 am
It is pretty bonkers, right? What kind of “economists” can’t see that there’s a limit to spending more than you make?
Comment on September 19, 2008 @ 11:52 am
How can anyone “put a price tag” on the cost to “rescue” the currency system? Just how much can be “spent” to prevent it from going to zero?
If we’re really gonna tag this scheme, how about the more appropriate one known as Ponzi?
Comment on September 19, 2008 @ 12:09 pm
You know what! My old highschool buddy has owed me 300 bucks for years! At the time I lent it him he was like “Please, Please I really need it, I’ll give it right back as soon as my personal crisis is over!”. So I lent it to him. Well, it’s been over three years now, he just bought a big screen TV last month but I didn’t hear a word about the 300 bucks yet. So I figure this is a bad debt on my own personal balance sheet. I’ve been trying to get through to Hank Paulson and Ben Bernanke on the phone for weeks since I hear they’re taking on everyone’s bad debts. I figure he can just give me back my 300 bucks and my friend can own the Fed instead of me. But the bastards just don’t return my call ! I mean it’s like I’m too small to matter instead of too big to fail. What gives ? Isn’t this a democracy ? Am I not as American as a Wall Street corporation ?!! If they can take on hundreds of billions of bad debt for them, why not give me my 300 bucks! Dag Nabbit !
Comment on September 19, 2008 @ 1:06 pm
zimtran: you got rid of him cheap
TARP, hmmm… I hope they come with rubber lining, zippers and toe tags.
Comment on September 19, 2008 @ 1:42 pm
Bush has a trillion dollar deficit. Without the currency deficit and government debt issuance, the tax intake would contract by another fifty percent.
When the rest of the world stops loaning us money we will have to shrink the budget by a full trillion. That’s a third of the Federal budget.
We aren’t just going to abolish welfare for poor people. We are going to abolish welfare for everybody.
Comment on September 19, 2008 @ 2:07 pm
I kind of want Obama to win so all those millions of voters become disillusioned and join our ranks of “independents”.
Comment on September 19, 2008 @ 2:12 pm
my wife thinks the govt. operates like an MLM marketing scheme. Not a bad comparison. Wanna buy some treasuries?
No how about an insurance company? well maybe a bridge then but you have to fix it up yourself!
Comment on September 19, 2008 @ 2:32 pm
My favorite weird tidbit today was all the action on LEH, which actually changed symbols in the middle of the day. Yep, if FedGov is going to buy all the toxic paper out there then Lehman Brothers maybe isn’t as bankrupt as they thought.
It opened at 5c and surged to 25c before closing at 21c. A 400% return on a one day investment if you got in and out right.
Talk about bouncing dead cats!
Comment on September 19, 2008 @ 3:32 pm
Serious question: What will all of you do when it becomes illegal to buy, sell, hold or otherwise use gold for currency???
What makes you think this government won’t simply TAKE it? They did it before… Our working assumption should be that in the name of the greater good they will confiscate your gold.
So can we have some discussion on this topic please?
Comment on September 19, 2008 @ 4:14 pm
I don’t understand. I’m a father of 2 and a grandfather of 2. As far as I can tell, Wall Street has just robbed my kids future. Where is the outrage. If a business is to big to fail, it should be to big to even exist. I thought the war robbing my kids and grand kids future was bad, but this is unbelievable.
Comment on September 19, 2008 @ 4:16 pm
David @ 12
I have wondered about that too.
The law that allowed FDR to seize private gold was, as far as I know, never repealed (it was actually written during WW1 I believe).
Since our Federal Gov’t is far more of a corrupt banana republic then it was back then, I would think the feds wouldn’t hesitate to do the same thing nowadays. If gold continues to surge in price while the value of paper assets plummet, watch out.
Comment on September 19, 2008 @ 4:57 pm
I can answer David’s question with two words:
UNDERGROUND ECONOMY! If 10 million? 15 million? 20 million? illegal immigrants can do it, why can’t we if it comes to that.
I don’t think they would take all the gold & silver, they didn’t in 1933. I believe they had an exemption for non-bullion collectible coins too, some of which only trade 10-20% over spot.
In the meantime I’m going to a rather large coin show soon and intend to get as many phone numbers of the dealers there as I can.
Just in case…I’m sure some of them would trade underground if it came to it.
Comment on September 19, 2008 @ 5:00 pm
confiscation of gold and possibly silver is probably the biggest threat to PM investors. I for one will not surrender mine. it goes back in the fground before they take it.
Here’s my take on that.
1. who get’s elected if it’s Obama then confiscation is certainly in play less so with McCain unless he gets us into a war then they have no choice -and I think he prbably will.
2. I think when it comes down it will be limited to bullion-that’s the way the law reads right now. Numismatic coins which specifically by statute includes us mint eagles and buffaloes will probably be exempted. They can’t really turn around and confiscate what they just sold you as a numismatic coin. So that leaves bullion like the etfs sitting out there. One day we’ll wake up and find out they liquidated the gold and silver ETFs and printed up some fiat to compensate us. Next up would be bullion bars and possibly bullion coins like Krugerrands.
Of course the whole idea is a violation of the 4th amendment but who cares about that we have hyperinflation, more wars and dictatorship.
Does Ron Paul get better looking every day or what?
Comment on September 19, 2008 @ 5:11 pm
Price tag? I don’t know how the price will be divvied by countries (remember, they are “adding liquidity,” too), but the total price tag will be whatever amount it takes to cover the _nominal_ face value of all the derivatives out there. Latest guesstimates on that is $1.25 quadrillion. I hear that equals about 10 years worth of global GDP…
Comment on September 19, 2008 @ 11:04 pm
Yeah, Dave, good point. Myself, i’m about to sell my house in a cash deal (luckily?) And just twp days ago i was telling my wife that i knew gold was going to rebound sharply and maybe we should put the so-called cash money from the house sale and put it into gold coins. But then it suddenly hit me a couple hours later: ‘HOLD IT!! I keep reading that for a few weeks the US mint has not made gold coins available. Not only that, but i kept stumbling upon internet wise men, uh, investors who seem to know more than i, who are complainin’ that they can’t seem to find physical gold in any decent quantity, and especially not at the new (rigged) rate of $700 something. So that in effect gold is still holding its value, because those who see the market manipulation - which seems to be every shrewed dude that deals in the innocent metal - know what’s up, i.e that supply is nowadays miniscule compared to burning demand. And that therefore the true price of gold is what you can get it for, if you can get it at all. But the main thing that suddenly hit me was the fact that the mint has suddenly apparently discontinued production, or at least that’s what ize been readin’ My brain suddenly snapped into awareness of a conspiracy to limit the coveted substance, and actually i’m sure there’s a plan to nationalize it. And why not: EVERYFRIGGING OTHER THING IS BEING FREAKING NATIONALIZED IN THE INSTANT, IN THE UNFREAKINGPRECEDENTED INSTANT. With really no rules of engagement, and no Congressional support or even Congressional, as though it matters. But, hey, what’s to stop these rogues from using the media to convince the poor mutual funds-raped citizenry that IT’S IN THE PUBLIC GOOD for gold to be nationalized just as they’re being told that criminalizing short-selling is also in everybody’s interest so that the banks don’t collapse with runs on deposits and etc. This kind of propaganda is a no-brainer: (Bernake/Paulson/Bush-itty/FrankyGay): “To protect Americans’ reasl estate investments, their mutual funds, bank account deposits et al, the Gov now needs to call in all the gold from those unscrupulous short buyers et al who are weakening the very foundation of our financial economy. As result, foreign sovereign funds are halting their investments in our country (Treas Bills etc) because things have become so diluted by the deluded dudes whov’e stolen d’loot and now we in Gov need those gold coins and bullion, silver everything back to support our multi-gazillion $ bailouts/nationalizations and rationalizations; and this gold backing will restore strength and confidence in the mighty Dollar; which will lead the foreign govs to come back to the game . . .”
Comment on September 20, 2008 @ 1:56 am
sorry, i be tired, i meant to say ‘Constitutional’ where i wrote ‘congressional’
Comment on September 20, 2008 @ 2:00 am
in the words of Mogambo… WE ARE DOOMED
Comment on September 20, 2008 @ 8:19 am
the price keeps escalating,
unlike the W.P. columnist low ball figures…
there are 7 level/layers of bail-out monies which are greasing the finance industry bowels…
*- the FRE & FNM, the AIG, the BS= $240B
*- all those happened after the monies from 4-6 wks ago $200B for the subprime baddies.
*- the recent $180B to the global central banks
*- the $50B for insuring all money-market funds
*- the newest congressional (?approved?) $700B to buy up all the non-Freddie/Fannie mortgages…made by private mortgage providers. [what i refer to as the dark-pool]
which will include allthe not accounted for ARMs and the CDS (credit swap bets)
so the $700B estimate is only the entry fee— when w add up all the bad debt instruments/paper created in the ‘bubble’ we will approach a $5 trillion bail-out at the minimum
Comment on September 20, 2008 @ 3:58 pm
I’ll love to see comments on the link below,
“Guess again who’s to blame for U.S. mortgage meltdown”
for if it is true, certain members of congress should be removed from office asap.
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=75717
Comment on September 20, 2008 @ 10:43 pm
$2 trillion.
Comment on September 21, 2008 @ 2:31 am
Yes, Marc, it’s true, the great and fearless Mogambo (GFM) has stated oft that “We are Freaking DOOMED!” (WAFD) As he hides out in his Great Mogambo Bunker (GMB) with all his gold, silver, booze and babes (GSBB, but how freaking doomed we really may be is what Mogambo may be in denial about: The great Gay Barney has been Frank with us that desperate times require desperate actions, specifically as Mr. BF (nope un intended) gives his Frankly Barney Guy Finan. Svce Committee-rubberstamp to Mssrs. Paulson and Bernanke for “absolute power” to do as they like sans any Court or Congressional challenge.
Yep, so Mr. MogamboGuru (MMG) had better re-fortify the Great Mogambo Bunker (GMB) with more ammo and guns because his Great Mogambo Nemesis (GMN)at the Fed are soon going to implement even more unthinkable and unprecedented desperate measures (MUUDM)as per their BFrankly/Schumer-empowered (Funny, wasn’t it Mr. Schumer who ‘inadvertantly’ started this whole mess a while back by leaking a letter to the Press he’d written to the SEC about Indymac’s tenuous balance sheet?!???) friends at the New Improved AbsoluteFED (NIAF).
Ya, so now KingDicktaters Paulson/BurnOnKey/Bush-itty will feel totally empowered to ’save’ the voters by invoking FDR et al Depression-era absolute desperate measures (FDREADEADM)which natchaly will include calling in all gold to support the U.S. Dolear. How doomed we is Mr. Mogambo, Magoo and pals will find out only too soon . . .
Comment on September 21, 2008 @ 4:04 am
Ya: rationalizing Nationalizing Gold!
Comment on September 21, 2008 @ 4:09 am
the ansew to wall st. woes is so simple really, Gearge should just phone up Robert,y’know,Robert in Zimbarbway,and borrow some of his money.I hear hes got trillion dollar notes.Just trying to help.
Comment on September 21, 2008 @ 6:39 am
Many of us have watched in horror and predicted this very outcome since the bailout of LTCM in 1998, we are not suprised. What is suprising, is that the banksters have been able to keep the gravy train rolling this long.
In the New World Order silly laws (like the constitution) don’t matter, we are “Nation of Men” not a “Nation of Laws” as Cousin Dick said! People, you have had a decade to prepare for this. So, no excuses if you get raped from inflation or dollar devaluation or outright confiscation.
Get your gold and get outta here fast!
By Monday morning, the description of times will be as follows:
Never have so few, stolen so much, from so many, so quickly!!
Comment on September 21, 2008 @ 1:31 pm
“Never have so few, stolen so much, from so many, so quickly”.
Perfect. America’s Epitaph. Carve it on the gravestone.
Comment on September 21, 2008 @ 2:11 pm
The Frat Boys have had a bit too much but a little of the hair of the dog that pooched you is always good to maintain the various illusions so bend over, grab your ankles and render unto Caligula what is his.
Ron Paul is not looking better, he’s just looking like a realist who is historically correct and this, as we all know, is a lost art in our “Post modern” culture of whoopie cushion drunkeness.
Comment on September 22, 2008 @ 10:00 am
Response to David in #10:
When FDR seized gold he was calling in a form of “legal tender”. That confused some people into playing along with that absurd demand of his.
Many, many Americans did not comply. My grandmother gave me a $2 gold piece and explained that she had ignored Mr. Roosevelts demand. She simple kept her gold. Grandma was pretty smart lady, she lived to be 100 years old and left each of her 7 grandchildren somewhere around $300,000 in stock.
The fact is the government has no way to collect privately held gold. What are they going to do: house to house searches? Even the foaming-at-the-mouth libtards could not abide that.
(Plus, from a practical point of view which agency is going to go house to house? I don’t think that many would want any part of that. There are still 400,000,000 million privately held guns in the USA. Any house-to-house anything in America would be very costly in terms of lives lost by the occupying force (which is how they would be perceived by at least a sizable majority at that point).
It’s not 1932. Much of what FDR did Bush and Obama can not do now. Siezing gold or silver is not a possibility in my opinion.
They may restrict trading, close ETFs, put big taxes on it, etc. This will only drive the trade further underground.
Comment on September 22, 2008 @ 12:01 pm
Response to David in #10:
When FDR seized gold he was calling in a form of “legal tender”. That confused some people into playing along with that absurd demand of his.
Many, many Americans did not comply. My grandmother gave me a $2 gold piece and explained that she had ignored Mr. Roosevelts demand. She simple kept her gold. Grandma was pretty smart lady, she lived to be 100 years old and left each of her 7 grandchildren somewhere around $300,000 in stock.
The fact is the government has no way to collect privately held gold. What are they going to do: house to house searches? Even the foaming-at-the-mouth libtards could not abide that.
(Plus, from a practical point of view which agency is going to go house to house? I don’t think that many would want any part of that. There are still 400,000,000 million privately held guns in the USA. Any house-to-house anything in America would be very costly in terms of lives lost by the occupying force (which is how they would be perceived by at least a sizable majority at that point).
It’s not 1932. Much of what FDR did Bush and Obama can not do now. Siezing gold or silver is not a possibility in my opinion.
They may restrict trading, close ETFs, put big taxes on it, etc. This will only drive the trade further underground.
Comment on September 22, 2008 @ 12:01 pm
Response to David in #10:
When FDR seized gold he was calling in a form of “legal tender”. That confused some people into playing along with that absurd demand of his.
Many, many Americans did not comply. My grandmother gave me a $2 gold piece and explained that she had ignored Mr. Roosevelts demand. She simple kept her gold. (Grandma was pretty smart lady, she lived to be 100 years old and left each of her 7 grandchildren somewhere around $100,000 in stock.)
The fact is the government has no way to collect privately held gold. What are they going to do: house to house searches? Even the foaming-at-the-mouth libtards could not abide that.
(Plus, from a practical point of view which agency is going to go house to house? I don’t think that many would want any part of that. There are still 400,000,000 million privately held guns in the USA. Any house-to-house anything in America would be very costly in terms of lives lost by the occupying force (which is how they would be perceived by at least a sizable majority at that point).
It’s not 1932. Much of what FDR did Bush and Obama can not do now. Siezing gold or silver is not a possibility in my opinion.
They may restrict trading, close ETFs, put big taxes on it, etc. This will only drive the trade further underground.
Comment on September 22, 2008 @ 12:02 pm
American taxpayers should be outraged by the treasury department’s $700 billion dollar bailout of the wall street investment banks ! It’s socialism for the benefit of the rich plain and simple ! Talk about an upside down society ! It’s as if Robin Hood mugged all the peasants and gave all the spare change he had stolen to the Sheriff of Nottingham. Looting Looting Looting ! If Wall Street can’t loot you by hook or crook they’ll get the Feds to do it for them. We are sliding into moral oblivion, where a sycophant congress and senate ram bills through without discussion or debate, where the many pay for the greed and stupidity of the well connected few ! If the United States continues doing business the way it has it will go the way of the Soviet Union !
Comment on September 23, 2008 @ 8:36 am
No use all this ranting. You think anyone in control ( if anyone is ?) is listening ?
So rant on but remember we live in a dictatorship but call it a democracy. Thats all - convenient for ALL - Looters and the Looted BOTH.
Comment on September 23, 2008 @ 4:26 pm
The very distinguished Secretary of the Treasury, Mssr. Hanky (panky) Paulson, has requested 700,000,000,000 (that’s right) buckaroos! AND unlimited authority to spend it! In return, He will save US, yes save Us. Poor Richard spoke to Hanky from the 18th century when he said “Those who would sacrifice liberty for security deserve neither”. I, however, would like to deliver a message to the first American dictator from the 3rd millennium “HEY, Mr. Secretary, @#%# You!
Comment on September 23, 2008 @ 6:58 pm
We used a fake definition of freedom to bring ruin to Iraq and Afghanistan (and possibly Pakistan). Wallstreet used a fake definition of wealth to enrich themselves. So what’s next? Looks like the definition of health used by the medical industry is becoming increasingly fake. Is it time for change when the masses seem to willingly accept the fakes? Change is a long way off. Try to get a bigger chunk of the bailout if you can.
Comment on September 23, 2008 @ 8:06 pm
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Chris you and Keith get this to Eugene Roberson for me, it would be greatly appreciated, and oh yea tell him to send me his E-mail Address. Thanks a bunch!!!!!!!!!!!!
The Meek Shall Inherit the Earth, and the Strong in faith the Heavens Suane
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Comment on October 6, 2008 @ 7:47 pm