JP Morgan buys Bear Stearns

[karlos]

Looks like the shaking of the trees has created cheap assets for those creating the crisis.
JP mOrgan is famous as being one of the groups involved in bankrolling Adolf Hitler and the Bush family.

[conspiracy analyst]

Carlyle group seems to be next on the cards.

When banking collapses occur like house price collapses the few at the top centralise more of the wealth. The Yanks could not go on printing the dollar endlessly without at some time the bubble exploding.

Oil may reach $200 due to the collapsing dollar as the dollar underpins world trade. Now each country moves away from an imploding dollar oil soars in price thus forcing the dollar even further down and excarcabating the crisis.

I dont believe JP Morgan engineered the collapse in the dollar but they are attempting to profit from it.

Hitler wanted to conquer the world, he wasn't instrumental in the 1929 Wall Street Crash as it affected his country more than anybody else.

Sterling is collapsing alongside the dollar and when it reaches 1 Euro to £1 it will be erased. The Yanks will try to get rid of their debts by dropping the dollar.

Barter will once more become a new form of trade within the West.

The world economy is fragmenting into its constituent part between those that trade in worthless currency and those that trade in goods. In the end goods will have a greater value than notes. One can eat a chicken or heat ones house one cannot use paper other than as toilet paper, but even that becomes impossible if one has no food to buy.

[conspiracy analyst]

America was conned - who will pay?

The South Sea Bubble ended in riots as trust was lost. Wall Street also duped the public

* Larry Elliott, economics editor
* The Guardian,

This article appeared in the Guardian on Monday March 17 2008 on p30 of the Financial section. It was last updated at 00:05 on March 17 2008.

Bear Stearns marks the moment when the global financial crisis went critical. Up until last Friday, it had been possible - just about - to believe that the worst was over and that things were about to get better. That pretence was stripped away when JP Morgan, at the behest of the Federal Reserve, stepped in when the hedge funds pulled the plug on the fifth-biggest US investment bank.

It is now clear that no end is in sight to the turmoil, and the reason for that is that the Fed and the US treasury are no closer to solving the underlying problem than they were eight months ago. The crisis will only end when house prices stop falling and banks stop racking up huge losses on their loans. Doing that, however, will require the US government to intervene directly in the real estate market to end the wave of foreclosures. Ideologically, it is ill-equipped to take that step and, as a result, property prices will fall and the financial meltdown will go on and on.

Ultimately, though, action will be taken because there will be political pressure for it. Indeed, it is somewhat surprising that there is not already rioting in the streets, given the gigantic fraud perpetrated by the financial elite at the expense of ordinary Americans.

The US has just had its weakest period of expansion since the 1950s. Consumption growth has been poor. Investment growth has been modest. Exports have been sluggish. But if you are at the top of the tree, the years since the last recession in 2001 has been a veritable golden age. Salaries for executives have rocketed and profits have soared, because the productivity gains from a growing economy have been disproportionately skewed towards capital.

Patriotic

For ordinary Americans, though, it has been a different story. Real wages have been growing slowly; at just 1.6% a year on average over the latest upswing, well down on the experience of earlier decades. Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.

As they did - for a while. Now it's payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned. They have been duped by a bunch of serpent-tongued hucksters who packed up the wagon and made it across the county line before a lynch mob could be formed.

The debate now is not about whether the US is in recession but how deep and long that recession will be. Super-bears have started to say that this is perhaps "The Big One", by which they mean the onset of a new Great Depression. The need to rescue Bear Stearns has done little to still those voices.

As the economics team at HSBC recently pointed out, there has been a "catastrophic breakdown" of trust, and when that has happened in the past - the US in the 1930s, Japan in the 1990s - chucking extra money at the banks in the hope that they will start lending again proves ineffective.

It's not hard to see why trust has become such a rare commodity: Wall Street at the height of the securitisation mania had, in effect, become London at the time of the South Sea Bubble crisis in 1720. Vast quantities of funny paper were changing hands even though those involved in the deals had no idea of their true worth. Nor did they care. Inevitably, now the bubble has burst and the huge Ponzi securitisation scam has been exposed, there has been a reaction. The securitisation market is dead, there is less money sloshing round the system, banks are hoarding their cash.

Having allowed the housing boom to rage out of control for too long and then delaying cuts in interest rates until the housing market was gripped by recessionary forces, the Fed is now trying to make up for lost time with a burst of hyperactivity. It will cut interest rates on Wednesday and keep cutting them: financial markets expect the Fed funds rate to be 1% by the summer, and they are probably right. In most downturns, easier monetary policy does the trick. Lower interest rates make it cheaper to borrow and also change the trade-off between saving and spending. This may not be the usual sort of downturn, however, with consumers going through a period of debt revulsion after the excesses of recent years, even so the consensus is that after two or three quarters of falling output, a slow and sluggish recovery will be under way.

Deflation

These hopes are likely to be dashed, unless there is intervention at home and internationally to tackle the crisis. Domestically, the priority should be to stop homes that have been foreclosed being auctioned on the open market, since by selling them at a 50% discount property prices are driven down. The US does not seem to have learned the lessons from Japan, which encouraged a fire sale of property in the 1990s and was sucked into a classic debt deflation trap as a result. Those who argue, with some force, that it would be counter-productive to intervene in the market because the US needs to work the rottenness out of its system must recognise that the cold turkey option will be very long and painful.

The second form of intervention should be to shore up the dollar, the collapse of which is worrying countries that rely heavily on exports and is the main reason for the surge in commodity prices. Co-ordinated intervention by the major central banks needs to be at the top of the agenda at next month's G7 meeting in Washington, and there could be action even sooner if the dollar continues to tank.

In the longer term, lessons must be learnt from the turmoil. One is that you don't solve the problems of a collapsing bubble by blowing up another, which is what Alan Greenspan did after the dotcom fiasco in 2001 - the most irresponsible behaviour of any central banker in living memory.

The second lesson is that there has to be far stricter regulation not just of the US real estate market but of Wall Street, to prevent the return of irresponsible lending as soon as the recovery is firmly under way. If this is, heaven help us, The Big One, one of the only consolations will be that the repugnance at the orgy of speculation that has sapped the strength of the US economy will put a new New Deal on the political agenda.

But for this to happen there has to be a political response and even though this year's presidential election will be held in the shadow of recession, there appears not to be a potential FDR among the contenders for the White House. Yet if this crisis really does get as bad as some are forecasting, the public will rightly demand more than a slap on the wrist for Wall Street.

[conspiracy analyst]

http://www.wakeupfromyourslumber.com/node/6078

Good News or Bad? Local Gun Shop Jammed w/ Buyers

Wanted to share something I thought was relevant to recent discussions here on the economy.

My wife and I visited our local Gun shop over the weekend to purchase a hand gun for her. You couldn't believe how many people were in this store buying fireamrs! I shop regularly at this store for cheap ammunition to shoot at the range, so I am familiar with the traffic. This place was jammed. You could hardly get around each other at the counters and down the aisles. The tension was thick. People seemed tense. I was hyped up on coffee and feeling honery so I loudly proclaimed, "Everyone here must be worried about the Economy and riots in the streets!" I thought I was going to get kicked out. But everyone sighed in agreement; some even clapping their hands. I believe people are finally getting worried.

The title of my post asks the question, "is this a good thing or a bad thing?"

Everytime I have tried to talk to these types of people (shooting advocates; gun range people etc.), I can never seem to get past the Patriotic bs -- i.e., we must support our government; our government is our savior.

I am very glad that Americans own guns. I think this is the only thing that will save us. However.......I also worry that most Americans are so fooled, that those guns could be turned on people like me for suggesting that someone else is to blame for all of this mess. A particular range I shoot at has a paper target you can purchase with Osama as the target. This is the most popular target to shoot at!

I live in the South and I will tell you that I have not found one single person who doesn't believe in the propaganda. That is very troubling to me. My hope is to find others close with a like mind so that we can support one another. I really believe that at some point, we will all need to start reaching out and finding others with like minds, not just on the internet, but those who live near us. I have resisted this because it is so hard to trust anyone these days. But I do believe that the only way we will make it through all of this, is by sticking together.

I hope that my situation is not the norm. I hope that all of you are finding communities of like minded people. There is strength in numbers and 'they' seem to have the numbers right now.

I fear the worst; I plan for the worst, and hope for the best.

I would be interested to hear what others are experiencing around them. Sincerely.
Posted in

* c

[Mark Gobell]

[outsider]

'Money as Debt' (Brasscheck 50mins):

http://www.brasschecktv.com/page/135.html

and a better link to the same:

http://video.google.co.uk/videoplay?docid=-9050474362583451279