Somebody had to be sacrificed and B&S was the most convenient.

Thanks for the heads up. I probably would have seen it eventually, but it is better to be early in covering these things.

I see CR linked to a paper by De Long that explains why this is a good idea. Betcha it assumes the only issue is liquidity, and it not exactly applicable to this situation.

I was hoping to have a quiet evening…..oh well.

My personal forecast is that the powers that be will keep throwing ammo that this situation all year, and it won’t be until 2009 that the recognition sinks in that this is bigger than their ability to solve. Then we might have a dim idea of how far down the bottom really is.

Whether you like it or not here it comes:

http://www.ft.com/cms/s/0/a233faa2-f789-11dc-ac40-000077b07658.html

My guess is the Fed judged that the probability of Bear declaring bankruptcy even after drawing its unsecured lines increased the systemic risk, by adding the lenders’ exposure on top of all the other exposures.

If I correctly recall the WSJ article giving the Thurs. night chronology, it said that the Fed was brought into the loop only after Schwartz contacted JPM. I doubt that.

SIFMA’s Revised Guidelines for Delivery of Offering Materials for GSE Securities

http://www.fanniemae.com/ markets…HM2TXJ2FECISFGQ

We can eliminate the alphabet soup of TAF, PDCF, etc and get the same result!

No money to pay a CDO tranche because of defaults No problemo,the underwriting dealer simply prints currency notes to make up any deficit.

Dealers can print notes to put in bids at muni auctions.

Of course, the FED would (and should) frown on the printing of notes to pay common stock dividends. (Pref stock is another story).

This should be a temporary facility at least until the First Tuesday after the First Monday in November.

Wish I could, but this was from some meeting notes that a long-standing colleague forwarded to me, not a public source. I’m not at liberty to identify him or the person he met with.