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Roubinis Nightmare Scenario: A Vicious Circle Ending In A Systemic Financial Meltdown

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Crewleader Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-15-08 10:29 PM
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by Mike Whitney / March 15th, 2008

Its another round of the credit crisis. Some markets are getting worse than January this time. There is fear that something dramatic will happen and that fear is feeding itself.
Jesper Fischer-Nielsen, interest rate strategist at Danske Bank, Copenhagen; Reuters

Yesterdays action by the Federal Reserve proves that the banking system is insolvent and the US economy is on the verge of collapse. It also shows that the Fed is willing to intervene directly in the stock market if it keeps equities propped up. This is clearly a violation of its mandate and runs contrary to the basic tenets of a free market. Investors who shorted the market yesterday, got clobbered by the not so invisible hand of the Fed chief.

In his prepared statement, Bernanke announced that the Fed would add $200 billion to the financial system to shore up banks that have been battered by mortgage-related losses. The news was greeted with jubilation on Wall Street where traders sent stocks skyrocketing by 416 points, their biggest one-day gain in five years.

Its like theyre putting jumper cables onto a battery to kick-start the credit market, said Nick Raich, a manager at National City Private Client Group in Cleveland. Theyre doing their best to try to restore confidence.

Confidence? Is that what its called when the system is bailed out by Sugar-daddy Bernanke? /

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TomClash Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-15-08 10:42 PM
Response to Original message
1. More like corporate socialism
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TreasonousBastard Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-15-08 11:09 PM
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2. So, ummm, all these people who hate Fed "bailouts"...
do they have an alternative?

Or would they actually prefer governments would just let everything go to hell without even trying to help?

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Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-15-08 11:15 PM
Response to Original message
3. I've forgotten whose talking head it was while I was channel surfing
yesterday, but I heard some economics guy talking about a Minsky Moment.

The fact that this is being mentioned indicates all those smart money boys are now in a blind panic.
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Speck Tater Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Mar-16-08 02:03 AM
Response to Original message
4. The scary part is that the FED is running out of money too.
As the article points out, they have $300 billion to $400 billion left to play with, and then their resources will have dried up. After that, the FED is powerless to "inject" any more "liquidity" into the market.
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