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Wakum Mata!
Politcally Incorrect Musings
Fed goes red 
21st-May-2008 06:58 am
Money
Folks, there is a SERIOUS problem in the VERY near future. The US Federal Reserve is BANKRUPT (if I interpret this chart correctly).

At first glance, I was thinking "Wow, that is a huge and drastic change. Perhaps it is an artifact of the data running out on the graph."

Nope.

Let's take a closer look:


2003-2008 BOGNONBR graph


That is real data from real numbers, folks. The Federal Reserve is NEGATIVE on the amount of funds available for borrowing. They have overextended themselves in their effort to bail out a bunch of banks that should be punished (allowed to fail) for being irresponsible and greedy WITH YOUR MONEY.

When you put money into a bank, they loan it out to others. You *might* even get a small percentage of the interest they charge the borrowers. Odds are your bank was irresponsible with your money and had to have a little help from the Fed to keep them solvent.

Now look at the Fed (above). Unless these banks (that don't have any money) can pay back the Fed loans, the Fed is and remains empty and insolvent... to the tune of almost 100 BILLION (not a typo) US dollars.

There are further implication for this. If everyone runs to their bank and demands their cash, they won't get it. The coffers are empty.

Going through a big wall of text taken from Goldseek.com:

Amidst all this maelstrom, one must ask if wisdom prevailed during the Clinton Administration to repeal the Glass Steagall Law from the Great Depression era. That law created the Federal Deposit Insurance Corp for insuring individual banks and depositors, up to $100k per account. The law also blocked any attempt to merge banks, brokerage firms, and insurance companies. The legislation intended to protect a meltdown to spread to all critical structural elements of the financial system. With the Glass Steagall repeal, one has to wonder if some destruction was planned, or else a major consolidation was the ultimate goal.
That means there can be no end on the spread of this "contagion".

Incredibly, the bankrupt Federal Reserve has decided to loan more nonexistent money:

Fed acts Sunday to prevent global bank run Monday
By Rex Nutting & Greg Robb, MarketWatch
Last update: 10:38 p.m. EDT March 16, 2008

WASHINGTON (MarketWatch) -- Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before. [...]

---

The system is broke. You don't have any money.

But what about that market rally we have been having? The rally is for suckers.

MARKETBEAT
WSJ.com’s inside look at the markets

April 28, 2008, 10:22 am
Beware of Banking Rallies
Posted by David Gaffen

Banking stocks are no longer inducing night sweats among investors, but Morgan Stanley analyst Betsy Graseck doesn’t feel comfortable with the recent surge.

[snip]

“We think it is a mistake to chase this rally,” she writes. “The risk is much greater that credit deterioration will accelerate and banks will raise more dilutive equity and cut dividends than expected.” [...]

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What can we do?

The world depends upon the US financial system. As we tank, so do others. But Asia seems to be trying to break away from that model. If they are successful, then I think they will be a good investment. Check out the emerging market funds.

Also, try investing in gold and mining stocks. Just remember, whether you are investing in mining companies or other segments, be sure to research them thoroughly.

It is going to be a rough ride. Be ready for it.
Comments 
21st-May-2008 03:15 pm (UTC) - Emerging Markets
Yeah... Emerging markets are looking better all the time.

BBC News
Page last updated at 16:19 GMT, Tuesday, 20 May 2008 17:19 UK
Top bankers 'leaving US for Asia'

The number of high-flying investment bankers moving from the US to Asia is set to increase, experts have said, as a result of the credit crunch.

A senior Credit Suisse executive is the latest in a string of "dealmakers" to relocate from New York to Hong Kong. [...]
21st-May-2008 06:03 pm (UTC)
It's pretty amazing how stable the previous fed chairman managed to keep this stat.
21st-May-2008 09:03 pm (UTC)
Eh. I have been saying this to people for so long and they don't listen to me. I just stopped talking.

Seriously.

It does no good.

I am just waiting for the fall and gathering my troops. Cause we are going to be really fubar really soon.

I give up.
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