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And, yes, I DO take it personally: The imminent collapse of the financial markets
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Thursday, March 13, 2008

The imminent collapse of the financial markets

yeah, i say "imminent" but it's really like watching a giant train wreck in slo-mo... i suppose there are a lot of other relevant analogies that could be visualized in slo-mo, my recent fave being the house of cards, but i guess we're only limited by our imaginations...
Global stock markets may have cheered the US Federal Reserve yesterday, but on Wall Street the Fed's unprecedented move to pump $280 billion (£140 billion) into global markets was seen as a sure sign that at least one financial institution was struggling to survive.

The name on most people's lips was Bear Stearns. Although the Fed billed the co-ordinated rescue as a way of improving liquidity across financial markets, economists and analysts said that the decision appeared to be driven by an urgent need to stave off the collapse of an American bank.

The only reason the Fed would do this is if they knew one or more of their primary dealers actually wasn't flush with cash and needed funds in a hurry,” Simon Maughan, an analyst with MF Global in London, said.

Mr Maughan said that the most likely victim was Bear Stearns, the first bank to run into trouble in the sub-prime crisis and the one that, among all wholesale and investment banks, is most reliant upon the use of mortgage securities for raising funds in the money markets.

“The average financial institution was up 7.5 per cent yesterday after the Fed's actions, but Bear Stearns rose just 1 per cent on massive trading volume,” Mr Maughan said. “The market is telling you it's Bear Stearns.” [emphasis and italics added]

ya gotta love that phrase, "primary dealer"... it kinda has the same ring to as "my main man" and i can't help but picture a drug kingpin in a dusty, abandoned warehouse, doing a deal...

bonddad at daily kos notes the above and adds in carlyle capital to come up with this prognosis...

Simply put, folks, things are getting incredibly nasty. And there isn't much of a respite in sight.

if the fed would simply stop creating worthless money out of thin air and throwing it at the problem, hoping against hope it will go away, we'd see a very rapid collapse... but they'll keep on doing it as long as they think they can stave off the ultimate fate of their clients, the super-rich elites, and continue to do it on the backs of us campesinos...

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