ANGST - and the underground world of Wall Street

Paulson and Bernanke were briefed to emphasize the Angst factor in their defense strategy and almost every answer in yesterday's house hearing was channeled to these arguments. If you do not give us the $700 bil., America will go bust. Good questions were asked but the answers were not given. Especially to the image Bernanke tries to paint that these firesale marked assets are undervalued. That's the most pathetic thing he can say but he does it shamelessly. Asset-backed securities do not have a recovery momentum. If a foreclosure keeps marching, it will lead to complete loss .

Finally, we will get a obscure bailout by this WE latest and it will not stop the problem - just delay it. Basically, it's frankly a lie that this package will lay the groundwork for jobs being saved and credits coming back to Main Street. $700 bil. real money - to make it simple mat, will buy approx. $1.5 tril. notional assets, paying around 45-50 cents on the dollar (thereby overpaying by 150% the current marks, if done properly around 20 cents on the Dollar). That does not cover at all the notıonal amounts in distress.

This bailout is done for the institutions who could not mark down because that would have triggered bankruptcy like Citigroup. I know I repeat this example all the time, but it's the most obvious one since without being perfectly accurate they owned around $140 bil. of CDO's , $300 bil. of SIV's plus other mortgage related assets. They are easily around $600 bil. So far, they marked down only $50 bil., which represents less then 10% mark down on average. No way - but even paying them 50% would kill them right away - so how can they arrange to close the gap?? The only way I see is to pay them close to their mark down level (severly overvalued ) and that would have two consequences: first, the taxpayer locks in a loss of around $300-400 bil.; second, part of the consequence they have to come back in a few months to ask for another $700 bil. at least because the money will never be enough to bail out properly.

We had, according to the Bank of International Settlement (BIS), approx. of over $400 tril - yes it's trillions OTC's on Interest Rate - the entire equity market around the world are only worth $45 tril. plus credit default swaps of another $50 tril. What does that mean on the $3 tril. of CDO issuance banks have basically created up to 30 times of further derivatives based on the same underlying effect. That's why the 'Masters of Disaster' Paulson and Bernanke never could have allowed any big Wall Street bank like Bear Stearns or Lehman to fail, with no option whatsoever for any other decision. It was a stupid mistake to do so - but to some degree they are too bright to not to know that - so why did they let happen what happened because it definetly triggerd the inevitable dynamic? Bernanke sits shamelessly in the hearing, claiming that he is an expert in the Great Depression and even smiling instead of being humble and excusing for his grave mistakes.

Goldman (my undercover name for them is the Rothschild trading unit) is working in close cooperation with the FED (infiltrated with plenty ex-Goldman partners) the second most powerful man in the FED is the head of Capital markets (guess where he came from). The Fed was originally founded by the Rothschild's and, in some ways, they still own it. The Treasury has a decade-long tradition of hiring ex-CEO's from Goldman and - guess what one realy nice incentive for a $20 mil. plus earner is to serve his country? - is a little loophole which allows him to sell his stocks without any taxation. Paulson had accumulated $700 mil. worth of assets and is therefore the best paid executive in DC (he made it on not paying taxes on at least $100 mil,) not on salary, but by getting an incredible tax holiday on back of the taxpayers. So do not think for one moment that he has the taxpayers at heart when he acts.

Why was Mack the CEO of Morgan Stanley so eager to get this post with Hillary Clinton getting into White House? Now you know. There is another big incentive being at the crucial spot of the monetary power for Goldman (FED and Treasury). They are not any smarter traders - I bet you can swap the entire (99% ) investment banking force from Goldman to Morgan and vise versa and they still make the same results at Goldman.

But now the church takes care of the situation and condems the 'traders'

Excerpt from BBC news:

http://news.bbc.co.uk/1/hi/uk/7634641.stm

Dr Rowan Williams
Archbishop of Canterbury

He said the current financial crisis "exposes the element of basic unreality in the situation - the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders".

The Bush administration is responsible for the biggest terrorist attack on the western world by allowing for this financial disaster to unfold - even its biggest enemies could have not executed the task any better. The Iraq War and Wall Street disaster will for now cost US taxpayers $4 tril. That's 33% of all outstanding debt in America, which has brought them crude oil above $100 and we are marching into depression. I have no idea where he gets the guts to stand in front of cameras with a smile.