"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack, even on the least of men, is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind."
Dietrich Bonhoeffer
It will be interesting to see how the lagged effects of this begin to exhibit in the broader monetary supply measures over time.
Recall that after each of these spikes in the adjusted monetary base there was a resultant bubble in techs and then in housing. Will there be another bubble? Where will it be?
And the presses go rolling along....
Tell us again why we need to give $700 Billion of taxpayer money to Wall Street?
The report attached references the 'investment banks.' We hear that Goldman and Morgan are the only remaining investment banks while they are in the five day 'waiting period' to be bank holding companies.
While we obviously cannot be sure the implication is that they are both insolvent in the hundreds of billions of dollars, and without support would be bankrupt.
Goldman Sachs and Morgan Stanley and the other investment banks are among the prime actors that caused the problems that have been plaguing us since the 1990's.
They devastated multiple industrial sectors in the US through the distortions of asset bubbles while stuffing hundreds of millions of dollars into their pockets.
They corrupted the financial and political systems with their unbridled greed and shameless pursuit of excess and ego.
And now they need three quarters of a trillion dollars to maintain the lifestyle to which they have become accustomed.
Their spokespuppets tell us if we don't give it to them, they will crash the global economy.
The deal on the table is that they sell us nearly worthless assets and derivatives for $700 Billion dollars, and then they loan that money back to us at interest.
Would you like to buy a vowel?
We'd rather give the money to every family that made less than five million dollars on a sliding scale last year. what would that be, about $36,000? And let you wait for it to trickle up.
Oh no, we couldn't do that, it would be inflationary. It would be socialism. But if we give it to the Bush crony capitalists that is good business.
The best Wall Street should hope for is a head start, if there is any justice left in this land.
American Banker
Discount Window Borrowing Jumps to $262 Billion
By Steven Sloan
September 26, 2008
WASHINGTON — During another turbulent week on Wall Street, lending through the Federal Reserve Board's discount window skyrocketed to $262.3 billion on Wednesday, thanks to new lending programs unveiled during the week.
It was the second record in as many weeks and more than double from the previous high water mark.
The heaviest lending was centered on the primary dealer credit facility, which was established in March to give investment banks access to the discount window. The Fed eased terms on the facility on Sunday when it approved requests from Goldman Sachs and Morgan Stanley to convert to bank holding companies.
The Fed said Goldman and Morgan, the last of the major investment banks, could borrow on the same terms as commercial banks and with the same collateral. In response, lending through the PDCF totalled $105.662 billion on Wednesday, from $59.8 billion a week earlier.
Commercial banks were also very active at the discount window. Loans to banks increased 17.7%, to $39.9 billion, a new record.
Meanwhile, the Fed issued loans to weak banks for the second week in a row. These loans increased 5.6%, to $19 million on Wednesday.
The Fed's efforts to backstop the market for money market mutual funds appears to have been met with initial success. The Fed said Friday it would lend against asset backed commercial paper held by the funds. It distributed $72.7 billion by Wednesday.
The central bank also said American International Group Inc., the insurance giant the Fed bailed out on Sept. 16, drew $44.6 billion of its $85 billion government loan by Wednesday. A week earlier, the company had tapped $28 billion of the loan.
As the Fed continues to boost and widen its lending programs, concern has grown that too much of its balance sheet is being dedicated to helping banks survive the credit crunch. With these concerns in mind, the Fed grew its balance sheet by 22%, to $1.2 trillion.
The Fed was helped in these efforts by the Treasury Department, which began a program earlier this month to sell Treasury bills and send the cash generated to the Federal Reserve Bank of New York. The central bank said it received $159.8 billion from the Treasury through this program.
Anyone care to remember the many economists, talking heads and government hacks who provided lengthy explanations why China was not manipulating the currency markets to provide a de facto set of subsidies and tariffs in the international markets?
Now China is dictating the terms.
This started with the Clintons and was brought to full flower under Bush.
The Wall Street bailout will probably pass under duress. Why not? The Congress cannot hear their constituents, and have been increasingly ignoring them for years. We need to vote out all incumbents in November.
It is merely another step in the systematic betrayal of the markets and the public and all holders of the US dollar.
The reason why the government will give trillions to the banks and not the people is because of fear of making a mistake and campaign donations from Wall Street.
The reason that the Treasury and Fed wish to pay more than junk assets are worth and give it to the banks rather than the people is that the banks will take the money and put it in the multiplier machine x10 through fractional reserve accounting and inflate us out of our debt problems. They are counting on countries like China and Japan to help them hide it for as long as possible while they think about another plan to prevent hyperinflation.
What does not kill the dollar makes it.... stranger.
Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says
By Kevin Hamlin
Sept. 25 (Bloomberg) -- Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.
``We are in the same boat, we must cooperate,'' Yu said in an interview in Beijing on Sept. 23. ``If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.''
An agreement is needed so that no nation rushes to sell, ``causing a collapse,'' Yu said. Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion. Asian countries together hold half of the $2.67 trillion total held by foreign nations.
China, Japan, South Korea and others should meet soon to seal a deal, said Yu, a former academic member of the central bank's monetary policy committee. The talks should involve finance ministers, central bank governors and even national leaders, he said.
``Whether some kind of agreement between them to continue to hold Treasury bills is viable, I'm not sure,'' said James McCormack, head of sovereign ratings at Fitch Ratings Ltd in Hong Kong. ``It would be unusual. If it became apparent that sovereigns in Asia were selling Treasuries the market would take that quite badly, it's something to be avoided...''
China's huge holdings of U.S. debt means it must bear a large proportion of the ``burden of sorting things out'' in the U.S., Yu said. China is not in a hurry to dump its U.S. holdings and communication between the two nations every ``couple of days'' is keeping Chinese leaders informed and helping to avoid a potential panic, he added.
``China is very worried about the safety of its assets,'' he said. ``If you want China to keep calm, you must ensure China that its assets are safe.''
Currency Manipulator
Yu said China is helping the U.S. ``in a very big way'' and added that it should get something in return. The U.S. should avoid labeling it an unfair trader and a currency manipulator and not politicize other issues, he said.
``It is not fair that we are doing this in good faith and are prepared to bear serious consequences and you are still labeling China this and that, accusing China of this and that,'' he said. ``China knows what to do. We don't need your intervention.''
The U.S. financial crisis had taught China a lesson and that was: ``Why are we piling up these IOUs if they may default?'' China's economic expansion strategy, which emphasizes export growth that has led to trade surpluses and the accumulation of $1.81 trillion in foreign-exchange reserves, is the main problem, said Yu.
``Our export-growth strategy has run its natural course,'' he said. ``We should change course.''
China should stop intervening in the foreign currency markets and thus allow rapid appreciation of the yuan, he said. While this would cause pain for exporters, China could ease the transition by using its strong fiscal position to aid those who lose their jobs. It also should stimulate domestic demand to offset lower income from overseas sales.
Without yuan appreciation, China will continue to accumulate foreign reserves, which means further accumulating ``IOUs from the U.S.,'' said Yu. ``This is paper and it may default and it will not increase China's national welfare.''
If China doesn't allow the yuan to appreciate and continues to promote export-led growth it will lead to confrontation with the U.S. and Europe, Yu said.
South China Morning Post
China banks told to halt lending to US banks
by Alan Wheatley and Langi Chiang
Sep 24, 2008 9:52pm EDT
BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.
The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.
"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.
A spokesman for the CBRC had no immediate comment.
