Dear Trader,
According to this evening news, we are in the midst of yet ANOTHER bailout. Say Adios to Lehman Brothers. Dick Fuld, with hat in hand, went round to all the other commercial and investment banks today, begging to make a deal. They told him to go pound sand: no deal! The U.S.S.A. (Untied Socialist States of America ), however, is coming in to rescue another heretofore rainmaker on Wall Street. From the early news, it sounds more like the Fed and Treasury will FORCE this pig onto another firm's balance sheet, with YOUR tax dollars used to guarantee the deal.
I want to ask you all again - DID YOU GET TO VOTE FOR THIS? ARE YOU ALLOWING YOUR HARD EARNED TAX DOLLARS TO BE THROWN DOWN ANOTHER RATHOLE OF FINANCIAL ALCHEMY? I've already called my Congressman and raised hell. Have you? Frankly, I hope all of the other already stretched investment and commercial banks tell Vladimir Bernanke and Mikhail Paulson to go to hell! Let Lehman fall!
Tonight the Washington Post reports: The government is looking for an agreement that would not involve public money. One scenario that is emerging includes multiple suitors acquiring different pieces of the venerable investment bank, which has suffered staggering losses from its business in real estate and mortgages.
Hmm, the government wants to sell off Lehman Brothers in pieces, eh? Translation: The other so-called golden boys of Wall Street get the cherries, while the taxpayer gets the pits. You know it folks, the heaping steaming piles of dog-doo known as CDOs and other financially engineered Frankenstein "investments" will be put upon me and YOU, the taxpayer! And do you know how high this steaming pile of $#it is? It is estimated that their junk, which has been dragging them into the abyss, is $3/4-TRILLION with just a few billion in capital.
The Washington Post also said: The government is looking for an agreement that would not involve public money. Translation: Vladimir Bernanke and Mikhail Paulson are already working out a deal that involves public money.
Here are a few other recent comments from our comrades in Beijing , excuse me I meant Moscow , excuse me again, I meant Washington DC , with their proper translations.
Mikhail Paulson: Homeowners should not anticipate a government bail-out. Banks should not expect to be bailed-out by government, despite intervention by the Federal Reserve in the near-collapse of Bear Stearns in March.
Translation: Critical banks and GSEs must not be allowed to fail.
Mikhail Paulson: For market discipline to be effective, market participants must not expect that lending from the Fed, or any other government support, is readily available. For market discipline to effectively constrain risk, financial institutions must be allowed to fail.
Translation: Expect the mother of all bailouts at taxpayer expense.
Former Fed Governor William Poole: Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer.
Translation: Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer. (This man obviously isn't a B.S. artist.)
Paulson: Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission. (July 11th 2008)
Translation: We are working behind the scenes to address the inevitable failure of Fannie Mae and Freddie Mac. There is no conceivable way that Fannie and Freddie stay in their current form.
Merrill Lynch CEO John Thain: Right now we believe that we are in a very comfortable spot in terms of our capital. (July 17, 2008 - Thain on a conference call after posting Merrill's second-quarter results)
Translation: We have nowhere near enough capital. If you believe we do, then you are a complete fool. After all, I have stated Merrill has no need to raise capital 8 times this year only to immediately raise capital. You people will believe anything we say on Wall Street. After all, we were all educated at Ha'vard.
The Washington Post says: the government wants this completed by Sunday, before the Asian markets open Monday morning. (Paraphrased)
Translation: The Asian central banks said JUMP and the new government said HOW HIGH?
Wasting no time in the new U.S.S.A. (Untied Socialist States of America ) four Democratic senators urged the mortgage companies Fannie Mae and Freddie Mac today to temporarily freeze foreclosures on loans they hold. The senators; Sherrod Brown of Ohio, Bob Casey of Pennsylvania, Bob Menendez of New Jersey and Charles Schumer of New York, wrote that the companies should take whatever actions are necessary so more families do not have to suffer the economic and personal disaster of foreclosure.
YES SIR, now that the government is in charge there isn't even a pretense of free market capitalism in Congress. That playbook has been thrown the garbage and set afire. What's next, no mortgage payments will be due to us the taxpayer/lien holder because it makes Chucky Schumer feel better?
Please call and write your Congressmen tomorrow!
Today's Trading Tip:
"If You Don't Learn to be a Successful Trader, No One is Going to BAIL YOU OUT!!!"
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