In the one year since the collapse of Bear Stearns, the Federal Reserve has created the following "Alphabet Soup" programs to fight this epic debt and derivatives collapse:
1. Maiden Lane, LLC (I and II) For Bear Stearns bailout.
2. Term Auction Facility (TAF)
3. Central Bank Liquidity Swaps (CBLS)
4. Primary Dealer Credit Facility (PDCF)
5. Term Securities Lending Facility (TSLF)
6. Term Securities Lending Options Program (TOP)
7. Asset-Backed Commercial Paper MMF Liquidity Facility (AMLF)
8. Commercial Paper Funding Facility (CPFF)
9. Money Market Investor Funding Facility (MMIFF)
10. Term Asset-Backed Securities Loan Facility (TALF)
11. Outright ownership stake in AIG
12. Numerous other "loans" to JPM, Citi and BofA after the Lehman Bros. collapse
13. Outright monetization of Fannie/Freddie MBS and debt
14. Outright monetization of U.S. Treasuries
15. Expansion of TALF to support the soon-to-be-announced Treasury/FDIC/Fed program to offload dead, toxic "assets" from banks.
Total amount flung or committed to be flung by the Federal Reserve:
Approximately ELEVEN TRILLION FIATSCOS!
In addition to the massive, unprecedented, insane amount of fiatsco-flinging by the Fed outlined above, the U.S. government has also been busy creating the following programs:
1. The original stimulus bill of 150 billion fiatscos which handed out checks directly to the sheeple
2. The "Bazooka Bill" of 800 billion fiatscos to bailout Fannie, Freddie and the FHLBs
3. The Troubled Asset Relief Program of 750 billion fiatscos
4. The second stimulus bill of 750 billion fiatscos
Total amount of flung or committed to be flung by Congress:
TWO-POINT-THREE TRILLION FIATSCOS!
...which brings the grand total of all fiatscos flung or promised to:
THIRTEEN-POINT-THREE TRILLION FIATSCOS!!!
So, after an entire YEAR of the Fed and Congress flinging fiat at the debt and derivatives collapse AND the total amount now OVER thirteen trillion fiatscos, here we sit.
Now, here are my questions:
1. WHY HASN'T THE PROBLEM BEEN SOLVED?
2. Why aren't the banks now solvent?
3. Why isn't lending back to 2005-2006 bubble levels?
4. Why have housing prices collapsed by thirty-percent?
5. Why are stock markets down fifty percent?
6. Why are so many businesses laying off workers and filing for bankruptcy?
And, I must admit that this massive, epic, unprecedented debt and derivatives collapse has exceeded even my gloomiest forecast--made in August, 2007--of three trillion fiatscos of debt destruction and ten trillion in derivatives decimation.
Furthermore, please keep in mind that I am ONLY counting the U.S. collapse, not the nearly-identical amount that Europe's financial systems have also melted down.
So, in actuality we are looking at:
OVER TWENTY TRILLION FIATSCOS IN DEBT AND DERIVATIVES COLLAPSE!
...worldwide. So far.
ALso, as I pointed out in a post yesterday, the central banks and governments haven't shown any sign that they will ever give up fighting this unprecedented worldwide collapse either. The U.S. Fed and federal government are in fact INCREASING their responses as opposed to backing off and allowing the collapse to run its course to the natural conclusion ("Great Disintegration I").
Moving forward to addressing the soon-to-be-announced Turbo Tax Timmy program to offload the dead, toxic "assets" STILL on the books of the banking system (which, as I pointed out above, SHOULD HAVE ALREADY BEEN DEALT WITH VIA ALL THESE PROGRAMS AND BAILOUTS), I can state with utmost certainty that this is nothing more than another attempt to offload on the taxpayer additional trillions of fiatscos of losses.
And you cant bet that we will NEVER be told exactly of what these "assets" consist, although I already know:
1. Completely worthless mortgages
2. Equally as worthless auto loans and leases
3. Just as worthless student loans
4. Other dead debt
5. All the myriad derivatives of the above (MBS/ABS, CDOs/Squareds/Cubeds/CDS) that were pyramided on top of the previously-listed dead debt
...all of which must total MORE than the thriteen trillion fiatscos flung or promised so far, or the financial system would have ALREADY been restored to order, right?
(Conclusion): We are so scroomed that it is becoming impossible to pretend otherwise anymore. Also, even IF the governments and central banks could possibly absorb all these losses, they will NEVER be able to either unwind all the dead debt and derivatives or, more importantly, re-incite the "Animal Spirits" required in the minds of the sheeple to bring the borrowing markets back to the:
FOUR TRILLION FIATSCOS PER YEAR, EVERY YEAR, YEAR-AFTER-YEAR
...amount required in the U.S. alone to keep the Ponzi Economy from continuing to implode, UNLESS TPTB decide to really pull the "Weimar/Zimbabwe Switch" and start maling one-hundred thousand fiatsco checks directly to the masses.
So, here are our stark choices:
1. Either "Great Disintegration I" continues despite all the efforts by TPTB (which it so far has)
2. TPTB manage to pull off "Weimar/Zimbabwe" for a few more years before we revert to #1 above
I wish I could come up with some other, more benign, scenario. But I can't.
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