The Federal Reserve’s current model for bailing out the financial market crisis has been

[whistle]

... none other then the Enron scam of five years ago.

Should Congress or the Federal Reserve have bailed out Enron, with its scores of "off-the-balance-sheet" loan scams, debt investment vehicles, derivatives-trading operations, and billions in hidden losses? Of course not!

Yet such an insanity is the repeated bailout of Countrywide Mortgage, which has now reached $23.5 billion in banks' new credit lines to Countrywide using Federal Reserve money-printing injections into those banks, plus a $2 billion stock purchase by Bank of America. What has Countrywide done with all that bailout credit? It has shrunk its mortgage lending by 20%, laid off 13,000 employees, further restricted refinancing for distressed mortgage-holders, and bought back devalued mortgage-backed securities (MBS) from hedge funds, investment banks, and so forth, at full price. So, the new funds are not helping distressed homeowners, that money is bailing out the hedge funds and their backers.

Well, such insanity multiplied many times over, is exactly what Wall Street's Financial Services Forum and the hedge funds' Managed Funds Association lobbies are demanding right now from the U.S. Congress.

What has to be realized is that these funds are now divided between those which are in fact now bankrupt and those which are going-bankrupt, because they have all came to dominate the various speculative markets driven by the hyper-inflated mortgage bubble: MBS and collateralized debt markets, commodities futures, currency and foreign exchange markets driven by the yen carry trade, and short-term commercial loan markets. When the huge mortgage bubble started to collapse, the hedge funds spread the debt collapse to financial markets worldwide, blowing crippling holes in the books of the banks which had supported them. Now that they are going bankrupt, they want Congress's actions to bail out the $6 trillion to $7 trillion MBS and collateralized mortgage obligations markets of which the hedge funds had held a 15% to 20% before the bubble began to collapse this past July and August.

As the U.S. home foreclosures crisis deepened, and mortgage banks and lenders sat on the edge of bankruptcy in the United States and in Europe, the Federal Reserve Chairman Ben Bernanke and President Bush said they would do nothing to help banks and homeowners. Then 24 days ago, Bernanke began the huge infusion of newly printed fiat money to the tune of several hundreds of billions of dollars claiming the action would help millions of distressed homeowners refinance and avoid foreclosure and eviction. That is total bullshit!

These efforts to act on the crisis are being distorted by tremendous pressure on Congress from the hedge funds, investment banks, and their lobbies—pressure for a huge bailout of the funds by government housing agencies. Such a bailout, under the guise of "helping homeowners avoid foreclosure," does no such thing.

Just look to the admitted failure of the $100 million Ohio state mortgage refinancing plan. Since May of this year, that program has shifted all of the hedge fund debt burdens over the U.S. Federal subsidized programs. In effect, the hedge fund lobbies, by getting Congressional approval have been able turn Fannie Mae, Freddie Mac, the Federal Housing Administration, into so many additional Federal Reserve Banks. They in turn are injecting hundreds of billions of new MBS backed funny money—as the Fed has already been doing—into a bailout of the hedge funds and their partners, the Wall Street investment banks which are the devils who created the monstrous speculative bubbles based on housing mortgages.

This bailout policy is worse than doing nothing at all about the banking crisis, and is like spraying cold gasoline on a burning building. It spreads the monetary crisis fire into an international explosion of inflation fueling inflation and causing an out-of-control hyper-inflation and eventually a complete dollar/currency collapse, perhaps spreading to all other major currency collapses around the globe.

Congress should let the richest person in the world, Queen Elizabeth II of England, to whose offshore territories 90% of these hedge funds have gone and "registered" their activities, let Her Majesty bail them out.