Will the Fed come to the rescue of a global credit crisis, falsely reported as only relating to subprime mortgages? Will Fannie Mae and Freddie Mac-- whose executives took down tens of millions of dollars in pay while the books were cooked-- now be used as a waste dump for toxic mortages totaling in the tens of billions?
I'm seasoned enough to know that the conversations between Wall Street, the Treasury Dept., the White House, and the chairs of the Senate Banking and House Financial Services committees are at the level of panic.
Hedge funds have no requirements to report on the value of their holdings, so there is a long delay between the nearly instantaneous and massive tightening of credit over the past two weeks-- which means a severe loss of value in secondary markets for financial derivatives--and the day of reckoning for investors. Oh boy.
I know what the White House is going to do: try to find a fix even though it will be massive government intervention in "free" markets.
What are the Democrats going to do? is a question no one is asking.
In the meantime, think of what Wall Street is doing as a form of synchronized water ballet.
If you've ever watched the Summer Olympics, you know how all the women's heads turn at the same time in the pool, and their arms move this way and that with calm fluidity, all while their legs are churning out of sight like madmen drowning.
THAT'S what is going on in the markets today.
1 comment:
I think we have finally come to the cliff's edge.
There's talk now of the Fed pushing the rate down further to try to wring out the last of cash left in the system before the whole machine seizes up.
Remember when the Tsunami in Indonesia hit? Everyone marveled at the animals fleeing the impending wave. Well, the whole zoo just ran by.
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