The Fed as admitted it was a made-up number, they just wanted something “sufficiently large.”

We ALL know that far more than that will end up trotting out the door, but it is an illegitimate number on its face.

Wat happens when the home country cant save it? So should banks always be limited in size by home governments? Is the stability that would create a worthwhile benefit to receive for the increased cost and ineffeciency that is ultimatley the result.

I have to say from the way things look today it is. Banks are national trasures. Coming from Canada it is clear that stable ones yield positive externalities, but the Banks are able to produce these from protection, national charters and properly functioning home economies that fund them.

Roads are generally built and maintained by governments but the payments and settlements system is built and maintained by private institutions based on the underlying laws, courts and trust that a country generates. Very symbiotic.

I am trying to be rational about all of this, but when I get to thinking about how this was allowed to happen, including numerous ridiculous management decisions, is it true Fuld had two offers to buy them and rejected both?, you have to wonder if there shoudl be metaphorical heads on metaphorical pikes?

But we can worry about the rivet makers in Belfast later, we still seem to be scooping survivors and bodies from the waters of the North Atlantic right now.

Deutsche Bank is an interesting story. They are highly leveraged (slowly coming down from 50:1) and everybody is expecting big trouble.

But so far they are refusing to get any government money. They don’t want to be rescued, because they say they don’t need to be rescued. And — to their credit — the losses are not alarmingly high. Either they will blow up big time or Deutsche Bank is able to weather the storm. We will see. But as today Deutsche Bank looks rather stable.

Deutsche Bank clearly fits into the “too big to fail” category. Germany and he EU have promised to stabilize the systemic important banks. I am not aware of any proof that Deutsche Bank could not be stabilized.

Turns out the “oversight” in the modified bill is in name only, which explains why Paulson is burning through that money without anyone slowing him down:

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/12/AR2008111202846.html

This is just disgusting; petty party politics while the economy burns down around us all.

Right after I posted that, I saw this (at Calculated Risk); it really supports what I just said:

The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead …

“I think it would be worse than the depression,” Whitehead said. “We’re talking about reducing the credit of the United States of America, which is the backbone of the economic system. … I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America. … I just want to get people thinking about this, and to realize this is a road to disaster. I’ve always been a positive person and optimistic, but I don’t see a solution here.”

http://calculatedrisk.blogspot.com/2008/11/whitehead-worse-than-depression.html

http://www.marketoracle.co.uk/Article7241.html

Bank lending to emerging markets as a percentage of GDP shows:

Austria 83%
Swtzerland 50%
Sweden 25%

This administration is kicking the can down the road.

We have seen how quickly and glibly Paulson can change gears. One moment it is imperative that the US cover the bad mortgage paper sitting in the vaults of major banks. The next moment that problem is apparently insoluable and the new imperative is to save auto/credit card/student loans.

I fully expect that shortly before leaving office Paulson will announce that operations by the treasury and fed have been successful and ‘it’s been a pleasure to rape…er, serve the people. See you later.’

Few seem to realize that we, the people, have a deranged administration. This bunch runs the gamut from sociopaths to downright idealogues with sucidal tendencies. They are perfectly willing to destroy the country in order to achieve their ends.

America would be better off to pay the bastards to leave the country before they destroy it entirely.