Lesson learned:
1) Regardless of how badly you screw up, if you're an executive you're still worth millions a year.
2) Deregulation rocks!
3) The Federal Reserve is a nest of socialists for the wealthy.
4) If you screw up big enough and badly enough, you too can reap the rewards of socialism for the wealthy.
5) We are all gonna have to pay for deregulation.
6) This is just the beginning of the mess. It gets worse.

I have turned off the stock ticker that I use to track my retirement funds.
It's too depressing to watch all that red and be helpless to do anything about it. At least I don't have a subprime mortgage.
And it doesn't warm my heart to think of all the have-more executives getting their bonuses even when they screw the pooch like this.
The greed's over. Now comes the fear.

And people get angry when someone points out that God would be unlikely to bestow his blessings on a country that steals from the poor to give to the rich. Remember, ye who castigate Rev Wright, for the rich man to get to heaven, he must sell all he has to give to the poor. Our country robs the poor to make the incompetent rich yet richer. One doesn't need a Biblical God to read the writing about our future.

No comprehendo why it's wiser to do this absurd bailout of an investment bank with negative assets than to just let it die on its own. It isn't like the bailout is going to prevent the markets from panic selling; everyone knows that if the Fed thinks it has to do a stupid deal like this, most of the high-flyers of the financial system are in the tank, and it's going to happen anyway.

For the next stupid act, we'll have another big cut in the prime rate, which won't do anything for anybody except raise the price of oil and other commodities even higher. And sow the seeds of the next great bubble.

Hello, Congress? (We already know where the executive branch's head is.)

This is really something indeed. Here you have people struggling to keep their home due to the subprime mess. Which in part, was caused by the same money folks who knew the risk associated with lending people with no credit or poor credit history. In order to pay back what they were loan only to have that same loan to be pay back at an higher interest rate. Can somebody tell me you sign off on this idea. What gave them the idea that this would work? GREED IS THE POWER OF ALL EVIL!!!!!!!!!!!!!!!!!!!!!

Cayne was apparently a very busy man, and he sure did earn those big bucks, with his very own version of Three Card Monte:

http://www.reuters.com/article/bankingFinancial/idUSN1649428620080317

(Via Atrios)

Let us not forget that our CEO-President has a history of bankrupting companies that he has run...only to be rescued by friends of Daddy. (I question whether there are any friends with pockets this deep to step in to save the U.S., W's latest business deal--not after the Carlyle debacle.)

My next question which is slightly OT is: who on earth is going to pay W to give a speech? That's what he says he is banking on. That would be like asking Hoover to talk about the Great Depression--well, maybe that isn't so OT after all.

Email exchange I had today with friend who works at JPM:

- You lot overpaid for Bear...

- *%*# off.

- Jeez, sorry, I was being sarcastic. I actually think you guys did pretty well.

- I'm not being sarcastic. This whole thing sucks. Where in my contract must I work for Uncle Jamie's charity?

On a side note, the SEC and other regulators around the world have been camped out today on the trading floors of all the big dealers. I don't know what they think they hope achieve, much less what they might know, but I have never seen this happen before.

But top of the pops today was when the CNBC news ticker flashed "Bush says markets are operating efficiently". Herbert Hoover couldn't have put it better.

Bush, in his Saturday radio address stated:

...the government must guard against going too far in trying to fix the troubled economy and that "one of the worst things you can do is overcorrect. [Snip]

...the recently adopted program of tax rebates for families and businesses should begin to lift the economy in the second quarter and have a stronger impact in the third quarter. But he urged caution about doing more, particularly about the crisis in the housing market, where prices are tumbling and home foreclosures have soared to an all-time high.

"If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help," the president said."I wonder if Bush's speech writers have pulled out all of Herbert Hoover's speeches to be retreaded?

Krugman Friday made the point that this "...looks increasingly like one of history’s great financial crises.

The next steps will be up to the politicians."

While Bush does his "Hoover" imitation, the Republican in Congress have pinned their hopes for survival in the November election on total obstructionism.

This is going to be an "interesting" year - and not at all pleasant for a lot of people, to include those who Friday worked for Bear Stearns.

This current economic situation, like the Enron Crisis that was sort of a "John the Baptist" type advance warning, is also a direct result of the Reagan Revolution as it has worked out over the last three decades. Would the problems be as severe had Glass-Steagal not been removed along with most effective financial regulation?

Next up on the bailout schedule:

Lehman Brothers

Wonder what Glassman "DOW 36,000" has to say about this? Heh.

Isn't deregulation a wonderful thing? The only way to fix this mess can only be more deregulation! Oh, and tax cuts for the wealthy.

The meltdown is really accelerating. The candidates do not seem to have a clue. The public is still evaluating candidates on personality what their preacher or spouse said. Get your shelters ready we are descending into the maelstrom.

The game with the Federal Reserve is bailout. That is how we deal with these problems in our current system. We use more debt to solve problems caused by debt. Here is something I read in an investment newsletter this morning on this:

All of the capital J.P. Morgan will use to buy the brokerage house is being borrowed. The Fed is putting up $30 billion in cold cash to help shore up Bear’s balance sheet.

“J.P. Morgan and the Fed are stepping in,” Dan Amoss explains, “because they realize the type of liquidity crisis that would unfold if they do not.“

J.P. Morgan is likely a monstrous counterparty to derivative trades with Bear Stearns, and could find itself in the trouble, too, if Bear starts defaulting.”

But more than that, “the bailout is an effort to keep the financial system functioning,” Amoss says. The Fed needs to keep up appearances “until their Term Securities Lending Facility is implemented at the end of March. They intend to keep Bear Stearns on life support for the next two weeks, not bail out BSC shareholders.”

We made a big mistake with the Federal Reserve Act of 1913. Their tactics are what led us to what happened in 1928. Are we getting led there again?

This problem didn't start with Bush (tho his Admin has made it orders of magnitude worse). Go back before Ronny Raygun, even, back to the Nixon/Schultz scuttling of the FDR Bretton Woods system. Creation of the current, utterly bankrupt and defunk floating exchange rate system is what unmoored our economy and opened the door to the corrupt gambling casino mentality and operationally clinically insane system now called "globalization". Mix in the creation of the Petrodollar system in London, in which oil at the wellhead costs less than $10 to produce, gets bought and sold a hundred times by speculators until it magically costs $110/BL. Add the systemic destruction of the regulatory regime built by FDR, under Carter and Reagan mostly, but by all Admins since Nixon, add water and stir. Top off with Greenspan's quadrillion dollar derivatives extravaganza, trillions down the Iraq rathole, brown in the oven for 15 minutes and Voila! The biggest sh!t souffle in history.

It's about over folks. This is not the beginnings of a recession, or even of a depression. This is the collapse of the entire post-Bretton woods financial system. It already collapsed last summer. Decades of dis-investment in productive industry and infrastructure, coupled with the wholesale flooding of the earth monetary aggregate with nothing backing it up has created a singularity on the event horizon. The black hole that has been created will cause a vacuum that will suck the wealth out the planet in a way Ross Perot never imagined. The loan crisis/credit cruch didn't cause it, they are post-mortem manifestations of the diseased and deceased host. The Fed, the EU and the finacial oligarchy that controls them are desperately throwing money ("liquidity") at the corpse hoping to resusitate the Frankenstein beast. It won't work.

First we need, like in a good 12 step program, to acknowledge that the dead beast in the middle of the room is indeed dead, and beginning to smell to high heaven. Next we admit to the errors of our ways. Then we quickly resolve to implement an FDR-like solution:

The Housing and Bankers Protection Act of 2007 must be adopted and set into motion immediately. Protect homeowners and federally charted banks from foreclosure and backruptcy (small and medium sized local banks, not the multinational casino banks or investment banks).

A two-tier credit system, in which a.) U.S. government credit for physical-economic recovery programs is provided at between 1-2%, and b.) other utterances of credit-injections float more or less freely (gambling bets on non-productive sectors can get credit only at much higher rates, if anyone is still fool enough to make the loans at all).

The U.S. government must now immediately approach the governments of Russia, China, India, and others for the prompt establishment of an international, emergency fixed-exchange-rate system, ending the presently hopelessly bankrupt floating exchange-rate system.