Analysis of the Bailout Bill from Karl Denninger

Well known Market Commentator Karl Denninger runs 'The Market Ticker' website. A serious look at the daily operations of our Free Market and it's investment and financial practices. I am absolutely behind what he says 100%.

You can read his article here.

You didn't buy any bank stocks last week did you?

"(a) Authority to Purchase.—The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States."

This, at first blush, would seem to indicate that only American firms would be covered. Nothing is further from the truth. If the Chinese wish to unload some of their purchased toxic sludge they merely sell it to, oh, Goldman Sachs for 40 cents on the dollar and then Goldman sells it to the Treasury for 50. This, under the black letter of the law here, is perfectly legal, which means that one must assume that Paulson will in fact foist off all the bad paper on world markets that was originally based on a mortgage in the United States, while allowing his banker buddies here to loot the taxpayer by acting as an intermediary in the transaction!

Folks, $700 billion isn't even close to the total cost of this monster.

If Paulson and his successor decide to, they could literally cycle all $5.3 trillion of Fannie and Freddie's debt through this scheme, potentially sticking the taxpayer for 20% or more of the total, plus as much private debt on various bank balance sheets as they can manage to nationalize until (and possibly beyond) the point where the bond market tells him to go to hell.

That this "proposal" hasn't resulted in Congress calling for both Bernanke and Paulson to resign for their blatant attempt to crown Paulson King tells you everything you need to know about Congressional integrity as well.

I strongly suggest that everyone READ his article beginning to end, then do it again, make sure you understand where the actions of so very few are taking all of us. Meantime I'm gonna go sharpen my Scythe.

Holy Moley...

I thought I would never be surprised by anything our government does anymore, but this just blows me away!

WHAT IS GOING ON IN AMERICA?!?

Everything is happening so fast, its like a damn blitzkrieg on American freedoms. It should be pretty damn obvious to EVERYONE that our leaders have completely given up every little tiny bit of giving a damn about what happens to you and me and our country. It should have been obvious anyways.

People are in total shock, including me. What are these guys in DC thinking? I still can't believe it. Is this actually happening? Does anyone in this country actually approve of this?

Everyone I talk to that actually makes an effort to understand what is going on in this country is up in arms about this. I really hope all of America finds out about this and understands what it means.

Its right out in the open, they're aren't even trying to hide it! Even the damn MSM is reporting it! We have to pay trillions of dollars to rescue these greedy, evil, slimeball mega corporations from going under and taking us all with them and what do they have to do? NOTHING!! They just get another chance to do it all over again. And now Paulson gets a free ride to do pretty much whatever the hell he pleases with an infinite amount of money and no one can ever do a damn thing about it. Why is this even being considered?

I have to ask again, Is this really happening?



It's all so surreal...

reply to post by 2stepsfromtop



* for the OP link,

but, as i'm still in the need to read the article,
the observation in your 2nd quote box, that the more than $5 Trillion that the Fannie & Freddie hold.... could be up for restructuring is not what the new $700 Billion bill is supposed to address,,,

the new, (proposed) Treasury administered fund is geared to tackle/address all the private-mortgage-assets that the Freddie & Fannie GSE were not permitted to try and rectify..
those include all the other private mortgage makers out there,
along with all the other:
ARMS
no-$-down mortgages
no proof of ability to pay mortgages
Balloon payment mortgages after 5 years of no pay


not only those exotic, garbage loans, but all the CDOs & CDS, related debt instruments which are tied to these mortgages...
all told over $57-80 Trillion dollars of mortgage-'related'-assets that need cleaned out of the system!!
And the present wording of this 'bail-out' proposal includes all that toxic stuff as bad paper than can be made good ---

good for the banks & originators
bad for the taxpayers that will eat the elite bankers garbage




~~~~~
Qualifier;
at least that is the analysis i read from several web sites & blogspots






[edit on 21-9-2008 by St Udio]

Thank you very much for posting this. There were a few points in the draft that I was having trouble deciphering and this has helped a lot.

I'm completely dumbfounded.

It would seem that most Americans are completley uninformed or they don't give a damn.

Ditto for Congress and the Senate.

It seems that people just don't get it.Our whole finicial structure in this country is built on a foundation of sand.The whole nation is deep in debt in one form or another.Truth be known most people never even consider paying off all their debts before they die. This whole bail out is a scam.It's a legal way to forclose on mortaged property.Push people out of their homes and into the streets.
People,we have been living on borrowed time for a long long time.The piper is playing,can you hear it?

I was just listening to KFI radio in Los Angeles and a live interview with Jim Rogers in Singapore; he stated that the agreement is for the benefit only of Paulson, Bernanke and their friends, that it makes the Secretary in fact, a Dictator.
Furthermore the only reason the markets were climbing over the last few days and currently, is due to the current limitation on Short-Selling. If it was not for this current limitation we would be seeing a catastrophe in the markets. He also stated that we need to watch the value of long term Bond interest and the value of the Dollar internationally.

So if I am bailing out a bunch of rich dudes on Wall Street, I WANT MY MAZERATI!

Huge news!

Karl is calling for everyone to act now. He has posted two videos, one of the inherent problem and one of the solution.

The problem:
www.youtube.com...

The solution:
www.youtube.com...

The paper that should be read and spread!
www.denninger.net...

They are trying to push this bailout very quickly before people really realize what it is! You must act and call your representatives and so forth!

From Diligent Gambler
It's too bad, people don't want to hear the truth, see the truth, or touch the truth. Protest? Unfortunately, people won't get out of their lexus on a cold day to pursue justice. It's just not convenient. It's easier to go along like sheep to the slaughter house. Story of the last crash, my relative lost a quarter mil, his best friend was his financial advisor. My relative died. His wife asked where the money went, he shrugged and he ain't Atlas. I told her to sell her mutual fund's a year and a half ago. She called and said she was down 200 grand. I asked where the money went. This is a beautiful site

Karl is one of my daily reads....his insights and analysis are spot on IMHO...

The problem is that he is talking over the heads of most layman readers, although he tries as hard as he can to simplify his points....the result is that most people underestimate the magnitude of what he is really saying..

He is saying that, unless we the people wake the f*** up and hold the PTB accountable for the unconstitutional crimes committed by these treacherous deceivers in prompt fashion, we are likely to have civil war.

I've been railing on and on about this from the get-go! People don't understand the severity of the fleecing that were taking here. And either Congress also doesn't understand or they are completely complicit in it. Either way, they should all be impeached with a good number of them being tried for crimes. The time for a new government and a new currency has arrived. I in no way condone the notion of becoming a part of an international government nor do I condone a single world or regional currency. But if we are to emerge intact, we are going to need to take our country back from the corrupt politicians, bankers and corporate masters.

But if we are to emerge intact, we are going to need to take our country back from the corrupt politicians, bankers and corporate masters.

Aye, Indeed....but I'll posit that they don't give it up with out a good 'ole fashioned donnybrook