This is Katrina with a different set of ineptitude and far higher stakes. Reminds me of the Taleb story about the guy who flips a coin 49 times and gets heads each time. Asks the ibankser what will be the probability on the next flip and the banker says of course 50%. Then he ask joe from brooklyn and he says heads of course, the coin is loaded.

As these poeple try to make themselves relevant the future tax bill rises. Sad, but not at all unexpected

I stand corrected, but i view Roubini as the exception that proves the rule. I am sure that forecast got him viewed as a crank, whether Serious Economists and/or the MSM even bothered to say so.

I started blogging and therefor paying close attention to the financial media at the very end of 2006. It was obvious that things were going to end badly, probably very badly, but I am surprised by the policy response from this Administration. And I would not have foreseen the nationalization being done via the Fed, which takes it out of the realm of public debate and instead made it a fait accompli.

Long winded way of saying I could see a government sponsored (or funded) recapitalization of the banking system being necessary, a la Japan, but I’m surprised it got as far as it has this fast.

Actually Roubini predicted it two years ago.

“A closely-watched Freddie Mac bond sale did hold some good news. Government officials had spent the weekend monitoring and preparing for the $3 billion debt auction. The fact that the interest rate was close to that paid for comparable Treasury notes was a sign that investors have faith in the company’s bonds.”

If “Government Officials” (would that be Goldman Sachs?) spent the weekend “preparing” for the $3Bn debt auction, is this not an admission that the management of Freddie Mac is incapable of managing its own debt auction, or that the market will no longer deal with Freddie Mac directly but will only deal with “Government Officials”?

“Modified loans will be worth more than foreclosed loans,” she said in an interview on CNBC television.

Is Bair a member of the Communist Party.

Perhaps Irving Berlin should come back from the dead (along with IndyMac) and rewrite “God Bless America” as “God Save America”

This from the New York Times

http://www.nytimes.com/2008/07/15/business/15bank.html?_r=1&hp&oref=slogin

When Sheila Bair, the chairwoman of the F.D.I.C. says “I don’t want to have to start worrying about bank runs”, could somebody remind her that that is precisely her job. And, that if she had been doning her job properly she wouldn’t have to worry.

When she says “In addition to our credit problems” is she speaking for the FDIC (running out of credit) or the American economy (running out of credit) or the US Govt. (running out of credit).

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http://biz.yahoo.com/rb/080714/indymac_fdic.html?.v=3

FDIC halts foreclosure on IndyMac mortgages: Bair

Monday July 14, 5:20 pm ET

WASHINGTON (Reuters) – The Federal Deposit Insurance Corp has temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac’s portfolio, FDIC Chairman Sheila Bair said on Monday.

Bair has scolded mortgage lenders for being too slow to help distressed borrowers restructure their home loans.

“Modified loans will be worth more than foreclosed loans,” she said in an interview on CNBC television.