Friday, October 23, 2009

The Naked Man in the Limo Rode Over the Bridge

The Wall Street markets retreated this morning supposedly on the decline of home prices but it probably had more to do with the Fed threatening banks with stricter capital requirements, they would actually need to have some money before they borrow more from the Fed. They already increased the capital requirement to 13 to one, when they all collapsed last year it was 20 to one. This was regular banks, investment banks had been operating at 40 to one or worse. That’s gambling with $2.50 of their money and $97.50 of the public’s money.

If the new requirements are pushed through, the really big banks would have to issue a new class of bonds that would convert to equity if the bank fails, in other words, bonds that would become worthless like stock does. It doesn’t sound like much, but if enforced would force the super rich who buy these bonds to pay for their failures. This assumes that this isn’t all done with a wink and a nod. The rich really lost all their money in the bank crash last year but the rest of us are bailing them out at 100%. George Bush continues to ride in his limo while many of us are living in the old sedan or in a box under a bridge. The bastards.

When I say the rich lost it all last year, what I mean is their Ponzi scheme was revealed for what it is, the wealth the rich hold is just worthless paper. Unfortunately, most people only know what the corporate media tells them and still think the Emperor isn’t buck naked.

Initial unemployment claims are up again, continuing claims are down as another 100,000 or more Americans fell off the rolls and into poverty. One Republican Senator has a hold on the bill extending unemployment benefits, the bastard.
The median price of homes continues to fall, down 8.5% from last year. The government tax credit that has been boosting sales will expire shortly and even if renewed will result in a several month gap that will drive down prices more, putting more homeowners underwater.

The Fed put out its regular Beige Book summary of business activity on Wednesday and said "Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered."
The view from under the bridge: A new CNN poll this week found that 42% of Americans now rate the economy as "very poor" worse than the 35% who did in August. Okay, 42% of Americans have noticed the Emperor has no clothes.