Them than can plan, do; them that can’t, punt. Given the craptastic proposals for ‘regulation’ Paulson coughed up last Autumn, I’m only too happy to have someone _else_ as point man on the re-build. If we get that far. . . . The Ides of September Massacre grind down, grind on.

hah, glad you’re keeping your sense of humor, that’s what got in this mess right? All those pessimistic credit ratings

I’m just wondering how much of that tax-payer-funded 85 bazillion dollar loan is going to keep that index gig going?

The fact that the CFTC just admitted they have no clue as to if there are adverse effects of this type of investing, makes this just another fiasco within a fiasco.

I guess the question is, which kind of crisis do you prefer — an economic crisis, or a currency crisis? During 1930, 1931 and 1932, deflation was running at about 10% per year, steadily wiping out debtors whose nominal liabilities didn’t change, although their nominal incomes and assets had shrunk by 30% or more.

Frank Roosevelt’s 40% devaluation of the dollar against gold apparently stopped the deflation in its tracks. In fact, it may have been the SOLE effective policy measure employed, along with many others which backfired.

Funny, in the histories of the period, the dollar’s massive devaluation is not described as a “currency crisis,” although it certainly was for foreign holders of dollar-denominated assets (a/k/a “beggar thy neighbor”).

One way to stop real estate deflation in its tracks would be another massive devaluation of the dollar. Lower the dollar index from 78 to 50; crank CPI inflation to 10%; welcome hordes of foreign buyers; and real estate won’t sink much longer.

Admittedly, the US would be selling its birthright. It would be obliged to forfeit its de facto foreign empire, much as Britain did in the 1940s.

But all indications are that this is, in fact, the choice our politicians will make. Their planning horizon (by constitutional edict) ranges from 2 to 6 years — the next election. Selling out the country now to get re-elected 3 months hence is an entirely rational policy … from THEIR perspective.

And speaking as a prospective victim, it’s entirely rational for me and you to do some TWO-FISTED BUYING of the OLD YELLER DAWG.

http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

From Yves Vault: THURSDAY, APRIL 17, 2008
Why the Happy Talk About the Credit Crisis?

I am frequently mystified at what goes on in the markets. I am even more mystified when people who ought to know better make pronouncements that appear to be profoundly counter-factual. Even if they are talking their own book, the high odds of being revealed as bald-faced liars proven wrong ought to make them worry about damaging their credibility.

Is this wishful thinking? Delusion? A hope that that a united front can change perceptions and therefore reality? (see this as Tinkerbell behavior: if we all clap together, the markets won’t die).

http://www.nakedcapitalism.com/2008/04/why-happy-talk-about-credit-crisis.html

See Also: OIS (overnight index swap)

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Reid Says `No One Knows What to Do' to Solve Crisis (Update2)

By James Rowley and Brian Faler

Sept. 17 (Bloomberg) — The U.S. Congress is unlikely to pass new legislation to overhaul financial regulations this year because “no one knows what to do,'' Senate Majority Leader Harry Reid said today.

“We are in new territory, this is a different game,'' Reid said at a briefing in Washington. Neither Federal Reserve Chairman Ben Bernanke nor Treasury Secretary Henry Paulson “know what to do but they are trying to come up with ideas,'' Reid said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHVyPBMMM9MA

The common perception is that a more sensible regulatory structure should be put in place after the “damage is done”. In my opinion, this is backwards. The regulatory structure should be written and implemented NOW so that new firms can spring up operating under the clear new rules of the game and replace the ones with the opaque balance sheets, and begin to provide the credit and the confidence that is desperately missing now.