Another day, another bank failure (and multi-billion dollar Fed bailout)

The big story this week that isn't getting much coverage is the Fed's bailout after bailout. First, there was the $200 billion collateral swap, basically the Fed saying they would take on bad mortgage debt in exchange for public funds. $200 billion wasn't enough to thaw the frozen credit markets apparently.

Now Bear Stearns announces its insolvent so the fed is backing a JP Morgan takeover. JP Morgan faces no risk on this $266 billion dollar acquisition - if the values tank (like they did on the stock market today) that risk is transferred to the public through the central bank.

So, how long can the fed spend $300-400 billion a week with selective bailouts? Its more than our current GDP, but they can do this forever - so long as the American people accept drastically rising prices, lost jobs, and stagnant wages.

This IS government intervention. There's nothing more they can do. These no-risk loans for acquisition haven't been used since the 1930s. Government spending outpaces public production. What more could they do? They should try leaving the economy alone for once, but thats just my humble opinion.

 

Our current GDP is 14 Trillion dollars

 

GDP is meaningless. We count debt spending as growth, even if it is not invested and self-liquidating.

If you borrow money to buy dinner, GDP goes up. It's totally bogus.

 

Which is what, less than $300 billion a week? Where does the Fed get $460 a week?

If the Fed keeps spending at the rate its been spending this month, our GDP will triple by the end of the year and a gallon of milk will cost $15 Then we can brag about our $40 trillion economy

 

Atta boy! But it's probably lost on SQHost. He's never met a discussion he won't play devil's advocate in.

 

Only the nominal GDP would grow; real GDP would obviously suffer.

 

When will the economy stabilize? Atleast temporarily?

I have to sell my shares and mutual funds, and make some decent profit. I'm still waiting for the window of opportunity to take the cash home...

 

If it does, it may only be temporary. At best, the good times will be over for awhile. At worst, you could be looking at a situation worse than the depression.

I would watch things very closely. This isn't a joke or a rumor. People are taking huge losses and the FED is trying to take unprecedented measures. You probably aren't going to wake up one day 4 months from now, and it will be 2004 all over again.

 

We also have 114 Trillion dollars worth of assets, but I guess that is meaningless too.

 

You don't have $114 in assets when there is only $900 Billion in M0 money supply to buy it.

 

I'd sell ASAP, even at a loss. Doesn't make sense to hold into investments tied to dollar with the Feds expanding the money supply at current rate.

When I was young and stupid, I lost a few $$ during the internet bubble because I kept waiting for 'the window opportunity', which never came obviously. If you stay in the market, you'll be repeating my mistake. It's always hard to sell at loss, but we have years of bad economy ahead, most stocks aren't going anywhere but down

Sell what's going down and buy what's going up

 

Agricultural is going to be hot for the next 5 or 6 years. You definitely do not want to be in any financials.

 

http://online.wsj.com/article/SB120569598608739825.html?mod=yahoo_hs&ru=yahoo

I think JPM is going to buy it for something like $20 / share. Most of the shares are held by employees.

 

It may be cheaper to pay the $100,000 FIDC insurance on the deposits than to bail out banks that are beyond saving.

 

Gold is up another $20 in just a few hours, starting to look like a panic

 

The $400-billion Bear Stearns was considered too big to collapse.

JPMorgan Chase said Sunday it will acquire rival Bear Stearns for a bargain-basement $236.2 million — or $2 a share

http://news.yahoo.com/s/ap/jpmorgan_bear_stearns

 

R.I.P. Bear Stearns, I predicted that two big banks would fail this year. One down one to go. Hope it is that other worthless bank, Lehman Bros.

 

Unbelievable, they were trading around $70 a week ago. S is hitting the F
There is going to be tremendous transfer of wealth from sheople to non-sheople in the next few years. No way all these stock investors are going to be able to pay their mortgages and car loans

Interesting to see how the media keeps the information from sheople until fleecing is over