Nobody expects the Spanish Inquisition!
Our chief weapon is surprise. Surprise and fear. Fear and surprise.
Our two weapons are fear and surprise. And ruthless efficiency.
Our three weapons are fear and surprise, and ruthless efficiency and an almost fanatical devotion to the Pope.Our four...no...amongst our weaponry....amongst our weaponry are such elements as fear....I'll come in again.
-- Terry Jones, Monty Python's Flying Circus
Here are my top five guesses as to how the Fed plans on increasing liquidity, countdown from five to one.
5. Forget the loans, just buy the collateral. Last week Jeffrey Lacker, President of Federal Reserve Bank of Richmond, re-iterated that the Fed's discount window is wide open and it will take mortgage backed paper, auto loans, even boat loans as collateral.4. Break out the comfy chair. Ben Bernanke, a great student of the Spanish Inquisition, has used its chief weapons to perfection.
3. Buy it Now on eBay. If the Fed really wanted to put money in home owner's hands, it could use its eBay account ("HelicopterBen") to raise the bids on all kinds of stuff. Underwear, unused wedding dresses, keys to my old car, mac and cheese (hmm-hmm good). That would put cash dollars right into the hands of consumers who have to sell all their belongings to meet the higher mortgage payment from their reset ARMs.
2. A new Bravo reality show. Five Fed Governors go head-to-head trying to save the financial system, one foreclosure at a time. These deeply flawed, yet lovable characters race against the clock (and each other), trying to flip a house before the foreclosure auction ends and another hedge fund blows up. Ben is the brainy academic who tries to lead his team of talented but socially misfit governors, Don is the cranky and stubborn bank veteran, Kevin is the naive one who can't ever stand up to the others, Randy is the cocky one who knows his mad central banking skillz trump all the others, and Fred just tries to make it to the next round by not doing anything too daring or too stupid. Find out whose left after this weeks episode of "Property Bailout".
1. Carpet bomb the US with cash. Screw the helicopters, bring out the big guns. Instead of dropping wads of cash on Iraq, Bernanke should direct our commander-in-chief to fire bomb cash dollars onto the worst areas of the housing recession - Florida, Arizona, Nevada and California. Bernanke, a great student of dropping things out of helicopters, has stated that, while unconventional, carpet bombing money is also an effective monetary policy tool. The government already tested this technique in 2002 by sending every parent in the US a $400 "tax credit". This averted a more serious recession and only had the minor side-effect of raising the CPI from 1.2% to 3.0%. Bernanke speculates the only side effect of carpet bombing bags of money is inadvertently killing some of the intended recipients.
This Article is from contrahour.com
LaRouche's Homeowner and Bank Protection Act of 2007 needed immediately with No Amendments
Lyndon LaRouche announced yesterday that he will be recording a message to the American people on Saturday in which he will spell out precisely what must be done in the face of the biggest crash in modern history. Referring to the Homeowners and Bank Protection Act of 2007, which he has designed, LaRouche said that if we don't pass this legislation, there will be no protection against what will hit the nation soon. What he has 
set forth is the one and only program capable of addressing the crisis. No other proposals or amendments to his program will succeed. Any other agenda should be cancelled. With LaRouche's program, when the crash comes we will still be standing. When the storm ends homeowners and federal and state chartered banks will still be standing. There are no other options. What LaRouche has set forth, nothing more nor less, is what is required.
The biggest collapse in modern history will probably hit in September-October. The only hope is to create a firewall, so when the storm hits, chartered banks will be left standing and homeowners will still have their homes. We must deal with this issue first, otherwise there won't be any country. LaRouche has been proven right and others have been shown to have been wrong on the nature of the collapse. Therefore, what LaRouche has set forth has to be done now. Period.
LaRouche stressed that if you don't have a country standing with banks still there and people not evicted, then you can't save the country. October may be too late. If this legislation is in place in early September, we can get through. If not, hell will take you. The time for debate is over. No amendments. This is the only chance we have.
The issue today is to maintain the existence of the United States under these conditions and there is only one way--LaRouche's federal legislation. This legislation must be pushed ahead of all other legislation. It is very simple. This is the only thing that will ensure we have a nation. Anything else has no relevance to the real situation today.
People who know better but who nonetheless call for the impeachment of both Bush and Cheney are ducking the issue. The threat of war against Iran is based on the Revolution in Military Affairs initiated by the Middlebury Monster Felix Rohatyn and George P. Shultz. Moreover, given the nature of the financial and strategic crises the nation and the world are now facing, we cannot go through a replacement of the administration as a whole. We simply have to get rid of Cheney. To go after Bush and Cheney is to create a problem. Whereas by getting Cheney out, Bush can be neutralized. If Nancy Pelosi says no, tell her: "Tighten your screws. Your face is falling."
Bernanke's description of the ongoing collapse of the international financial system as a mere "episode" in his speech at Jackson Hole was laughable. As LaRouche put it, Bernanke is simple minded. He is probably in menopause. His comments were purely boola boola for the local fraternity.
Every day there are numerous "little stories" about the financial and economic carnage. On Friday, we learned that the Finance Minister of the German state of Saxony resigned in the context of the developments surrounding the collapse of the Saxon Landesbank. However, the little story is not the story, but rather a diversion from the real story, which is that we are in the process of a chain reaction collapse of the world system. As LaRouche emphasized this is not a Saxony crisis, but rather a global crisis.
The process described by Lyndon LaRouche's Triple Curve pedogogy is key, especially the second version of the curve, where in the rate of the rate of monetary growth exceeds that of the financial aggregates, as the rate of physical output declines. They are monetizing bullshit, turning fake assets into fake money.
Debt is being treated as an asset--one person's debt becomes another person's asset, which becomes the basis for the second person to take on debt, which becomes someone else's asset--the assets of the system are nothing but a leveraged chain of unpayable debts, which will detonate in a chain reaction. We're seeing grenade-level explosions now, with much bigger explosions to come.
This is a non-linear process, in which you cannot predict trends. You can only predict hypertrends: each time an asset collapses, it increases the rate of collapse of other assets, and accelerates the rate of collapse of the system as a whole.
This is a global collapse, centered in the Cayman Islands--it's the British system.
The only rational policy is to build firewalls to freeze and delay the collapse, to give us time to work things out. We don't give a damn about the fakers, let them go bankrupt.
You can not deal with this as a series of discrete problems, dealing with one at a time. It won't work.
Sachsen LB's Ormond Quay fund is an example. It was full of assets supported by credit guarantees, the assets were considered valuable but were actually worthless.
The rate of the collapse will increase hyperbolically,-- it will be gone by mid-October or earlier. If the system hits a big landmine, it will accelerate the process. The closer we get to the final blowout, the greater the amount of the unresolved debt.
Don't try to quantify this, because you can't; it is worthless, a system full of pieces of crap called assets. Give some functional examples of the process at work. Joe Blow defaults on his debt, which Bill Blow counted as an asset; so Bill Blow defaults, etc.
This is a gambling house. This is Galileo Galilei's specialty. He studied the mathematics of gambling, and created formulae of the laws of chance to help gamblers improve their odds.
