The Current Financial Crisis: What is It?

Still pretty cold up here in Massachusetts. Maybe another 3-4 weeks until a sustained warm up takes hold. I really need to go fishing. I was halted on the road from the house this morning by a group of wild Turkey's (7 of them) that decided to take a slow stroll down the middle of the street. Pretty wild! Kevin, are the Turkey's going to eat my potatoes?

Book Recommendation
I have a few books that are collections of the best Sci-Fi short stories of the last century. When I am short on reading material, I read a few of them. I read a great one the other night by Harry Turtledove called "The Road Not Taken". There are copies of it online, and it is very short and I loved it. I was looking over some other works from the author, and I went to Barnes and Noble to get them and I saw William Fleckenstein's new book "Greenspan's Bubbles" on the shelf. I got it today and read it earlier. It is pretty short page wise, but VERY illuminating indeed. I STRONGLY recommend getting the book. I will not go into it too much right now, but safe to say that Sir Alan was indeed lost when it came to monetary policy. No reason to think the new FED head is any different.

The Current Financial Crisis: What is It?
After review of the morning money shows and a trip around the financial net this evening I was struck by the now accepted idea that the FED and the US government now will have to start buying up mortgage backed securities and other big losers in order to stave off a "Financial Crisis". It is truly amazing to go from "we need lower rates" a few months ago to "Nationalize all bank loses to avoid a Depression".

While I would dearly LOVE to spend about 10 hours on the debate of whether to nationalize things or not, the point is now lost. There is no longer any need to argue and fight against such a foolish and retarded way to go, it has already begun and cannot be stopped. Nationalization is on the way and there wasn't even a debate or a vote. Oh well.

Instead what I want to find out is what this major "Crisis" is in reality. I see the words Depression, Hyperinflation, Japan rerun (deflation), and others floated out without any supporting evidence of any of them. As we move forward with the government (you and me and the future children) assuming the ownership of private bank assets, can we at least ask and get an answer to what it is we are trying to avoid? I think it only fair.

How dangerous and scary are things? Bad enough that Wall Street could only muster $130 BILLION dollars in bonuses for their employees at the 2007 end of year payout. I mean, that's just terrible! Imagine things being bad enough that the Bear Stearns employees, working for an insolvent company, only collected 3 BILLION in bonuses before locking the doors. Truly deplorable!

I hate fear mongering on any level. The threat being used right now is that we must do these things or else. What is the "ELSE"? Nobody has stepped forward to flesh that out. Does anyone even know? I call on big names like Roubini, Delong, Calculated Risk,Denninger, and Krugman to explain in some general terms what they are talking about.

Japan had a "Lost Decade". But I do not think the populace burnt Tokyo for fire wood or resorted to cannibalism to survive the winter. Last time I checked, Japan seemed to be ok. If the current "Crisis" goes on, will Americans have to spend some time getting by on much less, or are we going to have to live in caves and eat our pets to survive? Who knows? The point is before the reins of finance are passed on to the government (Katrina response was soooo good right?) and we accept basic communism as a national goal, somebody needs to persuade me that we are indeed trying to avoid some terrible fate and not just trying to avoid poor bank earnings for a year or two. The time is up for using a term like "Crisis" without any meaningful idea what in fact is the crisis. Here is a challenge: explain in some basic detail what is in fact the crisis being averted at any cost without using terms with no meaning like "banking failure", "systemic meltdown", "depression" and the like. Are things indeed so bad? Not so bad? Acceptable or not?

Have a good night.