Reports are now coming out of the Treasury that the Feds are going to set up a private company to buy up all the bad debts sitting on Wall Street’s books. This is going to be just like the $300 billion bailout of the S&L industry in late 80s when the federal government set up the RTC to close down all the failed S&Ls only at an enormously greater cost. One of the biggest problems with the current crisis is that NOBODY really knows how far the problem spreads.

Let me repeat that NOBODY knows just how big this thing really is. The derivates market is a mass of fog designed to hide risk.

Thanks to the now repealed Glass-Steagall Act the S&L crisis of the late 80s was largely contained to the commercial real-estate and Banking sectors. It was expensive but survivable. The era of ‘shared-risk’ means that the current crisis hits the entire financial sector and even crosses numerous borders with markets around the world taking a beating.

This new ‘government sponsored corporation’ will be on the hook for all those bad debts and their derivatives. And NOBODY knows just how much money they are talking about. $500 billion, $700 billion, $1 trillion. We DO NOT KNOW.

Meanwhile the twits who made all these bad decisions will ride off into the sunset with their billions in profits and billions in taxpayer money that paid for all their mistakes.

If McCain spins it right he can use the attacks from the WSJ and other conservatives to burnish his diminished ‘maverick’ image.

Don’t be surprised to see McCain sighting these editorials in stump speeches as proof that he is taking on his own party’s power players and making them scared. He’ll start claiming to be an ‘outsider’ and other such nonsense.

This, of course, is complete bunk. McCain has spent virtually his entire career as a deregulator and his Phil (who needs Glass-Steagall) Gramm as one of his primary economic advisors.

I found this little tidbit on the BBC website:

At the same time, to stem growing panic among individual investors, the Treasury also plans to offer gurantees for the $3.2 trillion in money market mutual funds, which many people had treated as cash.

It looks like the Treasury is setting up an FDIC for mutual funds only without having them pay into a fund to cover losses and without the various capital requirements and other safety measures built into the FDIC.

This is REALLY SMART move. I don’t see how anything can go wrong. Mutual fund managers won’t in anyway be tempted to take far greater risks with consumer’s money knowing it’s now backed by the Treasury. Nope no way no how.

And there is nothing wrong with putting the taxpayers on the hook for $3.2 trillion dollars with barely a week to think about the consequences.

Senators and Congressman from both parties will bluster, make threats, talk about holding people accountable and in the end will end up passing pretty much what Bernanke and Paulson are asking for.

This is a classic Bush adminstration tactic, sream 'we'll all die' if nothing is done RIGHT NOW and minimize debate on the issue as much as possible. They did it with the Patriot Act, the Iraq War, FISA, Torture, the creation of 'Homeland Security' etc etc.

They hype the situation up, making it seem like any inaction = instant death and failure to act RIGHT NOW means your 'unAmerican' and don't give the oppostion time say anything. Plenty of people made noise about how bad the Patriot Act was but Congress passed it with virtually no debate.

And they are playing the same game here, telling Dodd and other congressional leaders that we are literally DAYS, DAYS away from a financial meltdown. Seriously, DAYS, not weeks, not months, DAYS. And if we don't act RIGHT NOW, we'll all die.

As others have said its extortion if not straight up economic terrorism.

And we're going to fall for it again.

Then why is the stock market still above 11,000?

I’m serious.

If all these banks are so insolvent that they won’t be able to cover their overnight CDOs by Friday why is anybody still putting money into them? Why is DOW not down over 2,000 points?

Where EXACTLY is this massive crisis?

If everybody on Wall Street is so panicked, where the hell is the actual PANIC?

It seems to me that Paulson and Bernanke and Wall Street twits are ginning up this massive crisis as a wonderful little distraction to keep people from looking behind the curtain. We are about to hand $700 BILLION to the same people is screwed the system up (to the point where we are DAYS, DAYS !!!!! away from meltdown) without any oversight, no controls, no accountability and no THOUGHT or DEBATE or anything.

I’m sorry, I’m just not buying it anymore.

NO MONEY TO CROOKS LIARS AND CHEATS!!!!!!!!