"The public...doesn't understand how bad the situation is. If it did, we might have a real panic"

[El Pinko]

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/20/AR2008022002270.html

Wall Street Bank Run

By David Ignatius
Thursday, February 21, 2008; Page A15

It doesn't look like an old-fashioned bank run because it involves the biggest financial institutions trading paper assets so complicated that even top executives don't fully understand the transactions. But that's what it is -- a spreading fear among financial institutions that their brethren can't be trusted to honor their obligations.

Frightened financiers are pulling back from credit markets -- going on strike, if you will -- to escape the unraveling daisy chain of securitized assets and promissory notes that binds the global financial system. As each financier tries to protect against the next one's mistakes, the whole system begins to sag. That's what we're seeing now, as credit market troubles spread from bundles of subprime residential mortgages to bundles of other kinds of debt -- from student loans to retailers' receivables to municipal bonds.

Investors are nervous because they aren't sure how to value these bundles of securitized assets. So buyers stay away, prices fall further, and the damage spreads.

The public, fortunately, doesn't understand how bad the situation is. If it did, we might have a real panic on our hands. And there would be more pressure for bad policies -- ones that try to freeze the damage, rather than letting prices fall to levels where buyers will return and the markets will clear. Hillary Clinton's proposed moratorium on home foreclosures, in that respect, is one of the truly bad ideas of our time. It would make the situation worse by increasing even more the illiquidity and inflexibility of the housing market.

[Skittles]

1. that last paragaraph

:scared:

[enid602]

2. foreclosures

Well, letting homes fall into foreclosure is one sure way to ensure that EVERYONE'S home becomes an illiquid and unmarketable asset.

[AX10]

3. kick

[Warpy]

4. The public is blissfully unaware of things like the derivatives market

which is something that represents hundreds of trillions of dollars in assets held by every financial institution in the world, from banks to brokerages to pensions to hedge funds and so on. Since there is nothing backing those hundreds of trillions of dollars but hot air and wishful thinking, that market will go bust. It is inevitable. When it goes, it will take every institutional investor with it. They will all find themselves with negligible assets and huge debts. We could have another situation like the crash of 29, when people said all the money disappeared overnight. The bust will be triggered by the staggering amount of mortgage and consumer debt that banks are only dimly beginning to realize is uncollectable. Banks will be looking at assets to shore up those CDOs and suddenly realize they have none.

The world economy can't stand that kind of a loss and the depression will be worldwide. Eventually the phoenixes will arise out of the ashes, but it will take wise leadership and careful planning, even to amending the constitution so that sane fiscal laws can't easily be overturned again in 40 years when the generation in power has forgotten what caused the mess we're about to slide into: deregulation that allowed the thieves and charlatans to set up shop again.

[Karenina]

12. Yup. K&R!

[balantz]

5. If I recall correctly, Edwards thought a moratorium would not be a good plan.

I wonder how bad things will get? Mass hysteria? Martial law?

Any ideas on what the eventual panic (it seems inevitable) will be like?

:scared: ditto!

[Connonym]

6. martial law

this could be exactly the tool W will use to not relinquish the White House. I know that's a tinfoil hat theory but I can't help but be afraid of it.

I've felt this issue on a very personal level -- not rising interest rate making my mortgage unaffordable but rather a job slow down making my income drop dramatically. I'm in the process of losing my house. It's been on the market over a year with the only offer being one so ridiculously low that there would be huge tax implications. I'm between that proverbial rock and hard place. It is very scary indeed. What is particularly frightening is how quickly the situation can turn from normal to terrifying. The edge is not a pretty place.

[formercia]

11. Best wishes

It looks like it's just a matter of time before we all join you.

It reminds me of the scene from 'The Hunt for Red October' just before the Soviet Sub gets hit by its own torpedo and the XO turns to the captain and says" You fool, you just got us all killed."

[Connonym]

13. Check out this scary scenario

<snip>If that's not enough to keep Bush appointees and generals lying awake deep into the night, their long-running undercover operation with the ayatollahs in Iran (who paved the way for Reagan's 1980 election), the Pakistani Inter-Services Intelligence, and the Saudi royal family could be curtailed by the staunchly pro-women's rights democrat. The Saudis especially have reason to fret now that they and their counterparts in Kuwait and the U.A.E. have started buying up huge stakes in U.S. banks. Condolleeza Rice and Nancy Pelosi are one thing. A Clinton White House is quite another.

For his part, President Bush may have implemented a back-up plan last April when he signed National Security Presidential Directive/NSPD 51, an executive order allowing him to suspend the constitution without prior congressional approval. NSPD 51 gives the President the discretion to declare a state of emergency (i.e. martial law) in the event of a major terrorist attack or other “decapitating” incident against the United States, even if the attack happens outside the country.

Under this scenario, he can cancel elections, padlock the Capitol dome and send the Supreme Court justices home. The directive also allows assigns the President's homeland security assistant - a low-level position exempt from senate confirmation - to administer what has been dubbed the Enduring Constitutional Government. In other words, another Sept. 11th disaster could reduce this year's election to little more than a particularly entertaining season of Survivor. (Here’s the text of the directive.http://www.thecityedition.com/Pages/Archive/Winter08/NSPD%2051.html)

http://www.thecityedition.com/Pages/Archive/Winter08/2008Election.html

[formercia]

15. I think that's the plan

and that's why they have been busy stirring up trouble around the world trying to provoke a major attack against US 'Interests' that would lead to the declaration of Martial Law. They just have to keep from making it look patently obvious to anyone with an IQ over 25.

[balantz]

16. I'm trying to find a list of members of congress who voted for or against NSPD 51.

Would you know where I can locate this?

[librechik]

17. I don't think any confirming votes are taken on Executive Orders

they just come off the president's pen as law.

[Connonym]

18. that whole concept makes my brain want to explode

it's just insane. I'm really not a conspiracy theorist but they don't pass shit like this without some thought of actually needing it. I have this really strong feeling of impending dread. I honestly don't believe that the American people are capable of overthrowing a corrupt government. The whole argument made by the right wing about how the constitution guarantees them the right to guns for this precise reason -- well the guns we're legally allowed to own are pathetic in the face of the tools the military has. How can one even claim that guns still give people the power to uprise when the military has weaponry that makes our guns about as effective as if we had stone spears on a stick. Sheer lunacy and nobody's paying attention.

[librechik]

19. most of us just don't want to know

betting on the very good odds that we never will.

of course we are different here. We want to know all the bad news so we can spread it far and wide to the populace--who mainly don't want to know!

[CrispyQ]

23. It's interesting that people think their guns will stand up against Blackwater.

And what other weapons? My memory is hazy, but wasn't there a story in the past year about a weapon that blasts people with sound that incapacitates them? These weapons may not be approved for use at this time, but if the people revolt, they won't wait for approval. They will pull out anything that they have been working on & use it against us.

I feel fortunate to have lived most of my life during some of the best years of the USA. I doubt it will ever be as good again.

[liberal4truth]

26. And there is another new device that can microwave people to death as well.

Non-lethal my @$$!!

[liberal4truth]

24. Check out the FEMA "camp" photos on Youtube if you want to get real scared..

Just type in FEMA CAMPS and see for yourself.

Many of these fenced-in camps are old abandoned railway yards that are being reconditioned for some reason. One is just outside of Indianapolis, Indiana. According to some there are 80 to 100 in the works.

I used to think this stuff was the same as the "Black Helicopter" nonsense but it appears to have legs.

[liberal4truth]

25. Its not just that the military has guns, its that the entire police force has military SWAT teams ..

with machine-guns and other weapons of war on the streets of Amercia too.

Combine that with all the new technology that allows for night-vision warfare, the terrific communications, command and control ability of the armed services and you have the makings of
a real mess, without even talking about all the guns in the hands of US citizens.

All we have to do is look back on the mess of Hurricane Katrina in New Orleans and see what the law-enforcement and national guard did to those poor people who lost everything, just due to a natural disaster.

[balantz]

20. Wow! Thanks....

I think my brain wouldn't accept this executive order thing. This is just...insanely scary is the only thing I can say.

[CrispyQ]

22. "If this were a dictatorship, it'd be a heck of a lot easier, just so long as I'm the dictator."

About 10 months ago my husband started saying he didn't think there would be an election. I scoffed. Once in a while I would read a similar statement on DU & that person would be ridiculed. More & more people are expressing this fear. I no longer scoff. Cheney did not work to get all this power so he could hand it off to someone else, especially a dem.

We lost a house in the mid 80s with the S&L scandal. Two offers stand out in my memory. One we would have had to bring $25k to the closing table. If we had had 25k we would have made house payments! The other one had fine print that said all our personal belongings were included in the deal. ~gasp! Fucking blood suckers.

The best to you. I hope you sell soon. :hug:

[TheWatcher]

29. Actually the line was "You arrogant ass, you've killed US."

But the analogy is just the same, and just as frighteningly relevant.

Most of the public has no clue what is really going on in the financial markets. And to be honest, at this point I can't blame people for not WANTING to know. The author of that article is correct.

If the public could grasp even a 1/10 of what is really going on behind the curtain, it would not be pretty.

[formercia]

31. SEC regulations are like safeties on the torpedo

you remove them at your peril.

Thanks for the correction on the quote. It has been a while since viewing the movie.

[southerncrone]

27. I'm so sorry for your predicament, Connonym. And I share your fear

about * using this to institute marshal law. The MSM is NOT giving this the in-depth coverage it deserves. Our economy has become so convoluted & unregulated over the last 2 decades, that it takes only one sector falling to snowball into disaster.

:tinfoilhat: I believe his had to be planned. I fear we are headed for EXTREME chaos in the next 2 yrs.
& certainly *Co. could use this to take the throne forever. :scared:

[TheWatcher]

30. It's a legitimate fear for you to have.

Who is to say what these monsters might try while we are distracted by the Primaries and the run up to the Election in November which might not be allowed to happen.

It's not tinfoil hat, it's a reasonable fear born out of the thoughtful research and investigation of the actions and movements of those currently in power. They have basically lived above the law every step of the way.

My simple question has been "Why wouldn't they?" If they have the power, resources and motivation to go ahead with the unthinkable, with no fear of recourse from the public, why would they not do it? They have gone to too much trouble to pass all the draconian legislation and measures they need to do whatever they want, and they have invested too much in putting the power structure and machinations together not to try it. I have no idea why they wouldn't.

If it doesn't happen, we can all breathe a sight of relief, but don't think just because the baton changes hands in November these people are going away.

The precedent has been set quite clearly over the past seven years. They know they can do whatever they want, whenever they want, with no fear of accountability or reprisal.

They may choose to go back into the walls like cockroaches for awhile, but do not think for a moment that you have seen the last of this bunch.

They will be back.

[Kitty Herder]

7. k&r

[truedelphi]

8. On Discovery Channel around 11Pm are these shows about the new

Non lethal (Supposedly) weapons and gadgetry - and I happened to watch one of the shows for about 15 minutes until I got the shakes so badly I could not continue. On some level I kept wondering if the financial shakedown is so awful and expected any moment - and we the audience oufht to be prepared for the stuff they have.

The whole mentality of the weaponry is to invest the user with the notion that this is part of "defending the homeland" from the terrorist - ergo p- if you don't use these things, you aren't doing the defender.

They had grenades to blow open doors, and blow apart the eardrums of the hostage takers, Of course, the show implied that no harm came to the hostages - you know, if Jesus loves you cuz your innocent then you can't be hurt can you?

[Emit]

9. Wow. I just got a call from an old friend who's much more knowledgeable on these matters than I am

His comment: "People don't understand how bad the situation really is. If they did, we'd have a real panic on our hands..."

[formercia]

32. The people who really know

are converting their paper into commodities. The longer they keep us in the dark, the better off they will be.

[SpiralHawk]

10. "Don't worry. I'm in charge. I'm the decider." - Commander AWOL

"You can trust me and my republicon homelander cronies to do a heckuva job with the, um, econometry or whatever. No problema. Just be sure your transfer all your war profits to a Swiss Bank Account, and everything will be cool. Remember, a rising tide lifts all yachts. Smirk."

- Commander AWOL

[Javaman]

14. Oh we here on DU know, it's the general public sheep that haven't a clue

and continue to spend themselves into oblivion.

Living life on the edge of a cliff and thinking you still have plenty of road.

[burythehatchet]

21. Maybe God is Money, no faith no money. n/t

[HuffleClaw]

28. i saw a 'frontline' about credit cards a while back

it clearly demonstrated a problem.

[sarcasmo]

33. Kick, the house of cards will tumble and when it does, look out.