The bought-and-sold financial news media is trying to bury the story of the FBI looking into the cooked books of FRE FNM AIG and LEH while the pigs known as our Congress debate whether or not to give in to the Paulson/Bush/Bernanke/Dimon BLACKMAIL BAILOUT proposal.

EVERY MINYAN KNOWS THEY ARE NOT ALONE IN COOKING THEIR BOOKS. WHERE'S THE OUTRAGE TODDO? I know you must be a cynical cold-blooded snake to succeed as a trader, and your "give something back" mantra is being undercut by your inability to PROTECT THE MINYANS FROM THE FRAUDULENT BOOK-COOKERS BY DEMANDING THAT THE BLACKMAIL BILL IS KILLED!!!

GIVE SOMETHING BACK TODDO. YOU NEED TO POUND THE TABLE THAT THIS BLACKMAIL BILL IS SELLING THE MINYANS INTO ECONOMIC SLAVERY!!!!

There are quite a few good plans being kicked around, unfortunately, none of them are being considered.

First of all, I want to say that we are not a free market nor have we ever been a free market. Manipulating interest rates, bailing out all sorts of corporations, encouraging recklessness, subsidizing risk and government ownership of loans, insurance and social security is not what i call a free market(not to mention the thousands of other government subsidies). Keynesian economics has driven this country, not the Austrian theory of economics. All the major disturbances in the markets can be traced back to government manipulation at some level or another. So lets be realistic here and not say that we ever had a free market society. When you claim that we ever had a free market society, people automatically assume that it doesn't work or has failed in some way.

ACTION TODDO. NOT WORDS. ACTION.

YOU ARE BETRAYING EVERYTHING GOOD ABOUT MINYANVILLE IF YOU DO NOT IMMEDIATELY DEMAND THIS BLACKMAIL/BAILOUT BILL BE KILLED.

I WANT MY PRICE DISCOVERY!!!

A true capitalist system involves the free and accurate flow of information. Equal information available to all for true pricing. This has never been the case given all the "off balance sheet" items, especially in financials. Why is it that the media doesn't provide ample time to elected candidates like Ron Paul to gain traction like the previous out-of-favor McCain? Think: Disney (ABC), GE (NBC)and Murdoch (Fox). The average citizen doesn't understand all this fianncial mess yet votes on the cultural wars. We get what we deserve (vote for). Wall Street was always the world's greatest casino and the neocons have tried to eliminate the business cycle. As a result, the cycle will have a harsh correction. Nixon took us off the gold standard to inflate away the Vietnam War debt. Bush has tried the same trick and our children will pay the price. Capital preservation is the key investment strategy.

Mr. Harrison:

Remember just a few short days ago when Kevin Depew said Bill Gross was doing the FREAK?

WHAT DO YOU THINK PAULSON BERNANKE BUSH AND DIMON ARE DOING RIGHT BEFORE YOUR COLD STEELY EYES???

YOU KNOW FULL WELL THE DEFLATION MONSTER IS GOING TO DEVOUR THIS MARKET WHETHER OR NOT THEY PASS THIS CROOKED AND UNCONSTITUTIONAL PROPOSAL!!!

DO NOT STAND THERE WHILE THE CROOKS PUSH THE WOMEN AND CHILDREN OUT OF THE LIFEBOAT TO SAVE THEIR EVIL HIDES!!!

I HAVE TAKEN HOOFY AND BOO HOSTAGE AND DEMAND THAT YOU TAKE ACTION TO STOP THIS CRIME OF THE AGES!!!

DO SOMETHING OR HOOFY DIES FIRST.

Minyan Mike

Mike,

Please resume taking your meds.

yea it is bat snot. It is very possible that things to big to fail should be to big to exist. Holding the best information source we have in e-bondage is just maniacal. I too feel it is time to stick my head out the window and scream I don't give a rip, I'm as mad as hell and I'm not going to take it anymore. If it makes ya feel better even do it in CAP lock. Just seems like your hunting bear with hounds and when you tree Boo you shoot your dog. Our dogs are helping navigate this financial malaise. Muzzle bro.

Mike,

If you look a bit closer you may see toddo has been backing the table and for some time. And it has been noted. Please do not do anything rash with the hostages!

Regards
Pete

Thanks Toddo,

This is an excellent article.
Meanwhile, the VIX seems to be climbing day by day.
Tick, tick

NOTHING to lose, everything to gain. Now here's a bailout plan that will work.

"We're gonna need a bigger boat."

LMAO!!!

Hey Paulson!! .....

"SMILE, you sonovvabych!!!"

We can always make another bank.

You brought up an interesting point about short sales taking the market down with foreign investors. Even though this has been looming for awhile, it's really crashing fast. And if anyone wants to take a country out, do it with financials. Although, I think we're in bed with the enemy.

Nothing. Oh....but call your legislators and tell them to do nothing, too.

Can't be too hard for them to figure out. They've pretty much made careers out of it.

What we really need is another government budget impasse to shut down the government at the same time, and the market should recover.

Could the VIX holding 35 on such a (relatively) small volume day with a flat close be a sign that the bulk of the money in equities is now comitted to riding it out to the other side? If so, wouldn't that put us at least within earshot of the real bottom?

Our "leaders" in DC seem unified in their desire to serve up the "bailout" sandwich but divided as to what color plate it should be served on. With this level of uncertainty, shouldn't a low volume day lead to a marked downward drift if the buyers were the ones in short supply? Am I misreading something here, or trying to read something into nothing?

I suppose an alternate thesis is that the VIX is geeked up with would-be shorts settling for puts as a "good enough for now" position, and we're just consolidating in preparation for the real breakdown.....

.. No wonder McCain is afraid to debate Obama now! WHAT would he say? HOW could he defend himself and his party/president and their lies, stupidity, blunders, corruption, and 100% BAD FOR AMERICA policies against this? They're SUNK by having this total meltdown of the USA/WORLD economy because of their actions just before the BIG ELECTIONS! Last week Bush Jr. made a big deal in interviews of saying the USA has NO problems, this week he says the USA and WHOLE WORLD is in financial RUIN. We must now immediately approve his latest stupid ideas/plans WITHOUT taking time to read the SMALL PRINT. His LIES have CAUGHT UP WITH HIM... and McCain...

.. Toddo's idea of getting rid of private DEBT caused by a small fascist rich/BushCo by foisting it off on the PUBLIC/TAXPAYERS and their children and grandchildren and greatgrandchildren and ... at 100 cents on the dollar is as STUPID an idea of any of BushCo's blunders so far... and trying to inflation the rest away also causes problems eventually as we now see...

.. Sorry, Toddo, but I take ABSOLUTELY NO "responsibility" for this financial ruin that BushCo has put the USA and WORLD into! I never voted for BushCo... I'm a Republican, but an 'Eisenhower Republican' and have always detested the corrupt Bush Wing of our party... they didn't like Eisenhower, either... Bush Sr. was passable and seemed to have a modicum of sense and decency, but Bush Jr. has always been a TOTAL LOSS... his main qualification for president was having bankrupted two companies his rich family gave him to run before he bankrupted the USA... what did his supporters/voters expect from him?

.. McCain's main qualification for president is having LOST at least TWO gov't issued expensive airplanes, 130 U.S. sailors DEAD in that process, being CAPTURED by the enemy, etc. ... marrying a rich heiress for her money and riding her skirts... trying to ride the skirts of the phony female housewife/governor of Alaska into the White House... what would you expect from HIM as president?

.. My Republican Party was DOOMED the day they let the Evangelicals take it over! The Roman Empire expanded until its gov't became infected with Christianity, then it DIED forever... same for the USA...

.. BushCo inherited a PEACEFUL, PROFITABLE, WIN WIN WIN USA with a BOOMING ECONOMY that had NO DEFICIT and was actually PAYING OFF THE NATIONAL DEBT and a SOARING STOCK MARKET from Pres. Clinton in 2000... DOW recently 11,700+, NASDAQ recently 5,700+... only took BushJr.Co lies, corruption, stupidity, blunders, Bad for America policies, de-regulation(Laisse Faire), exporting good paying jobs, etc. a mere 8 years to destroy it all...

.. BTW, I thought derivatives and arbitrage and Ponzi schemes were illegal for the rest of us...

Mercury retro usually means start nothing new, does this mean the bailout will be a failure?

.. Barnie Frank says a deal is near, with new conditions imposed, hopefully MORE than ONE person, preferably at least a Dem & Repub & Independent, has oversight over who gets what funds and what is bought and for how much...

.. McCain is trying to use the bailout as leverage against Obama, no presidential candidate debate Friday unless the bailout is approved by then... what a jerk... the small print of the bailout must be gone over with a fine tooth comb first...

Hey Buzz,
Great Rant. Couldn't have put it better myself.

LOVED the bit about the Romans...lol...

Modern Consumerinity: Worshipping the X-box instead of the wooden cross.

Do you have any follow-up for us on this alarming thought:

Over the weekend, I discovered there might have been more to that decision than initially met the eye. There was chatter on the beltway that we may have been the victim of economic terrorism, a coordinated short raid that originated in London and Dubai.

Thanks for you insight and guidance.

I am a neurologist who is interested in what numbers fundamentally mean. And below is something I have been thinking about for a long time... not sure if it is relevant but what the heck...maybe you guys might see some worth in it... here it goes

Zeno, the number line, and the illusion of infinity

This is a very important concept about derivatives where we accept the idea that a finite straight line has an infinite number of points and each infinite point is a true derivative of that finite line. Thus the concept of infinity is contained within the finite and it can actually exist within the finite. As the story is told, Zeno wants to get from one point to another and he wishes to do it by moving half the difference to each point and this is done using an infinite series. Thus Zeno declared that movement is impossible for, if a finite line can be constantly divided into perfect halves of each succeeding half and this goes on to infinity, then Zeno can never move.



Now we laugh at this idea that motion is then impossible for we, as a modern world, have been taught that any finite line has an infinite number of points. This idea of the infinite within the finite used to bother people. Now we accept it as a logical entity. But we have only arrived at this entity by means of approximation and with approximation we have invented mathematical methods that hide this approximation by the use of infinite series whereby one can calculate finite lines approximately via the use of infinite series.



But Zeno had a point and I think his point was that if we accept the idea of infinity then we arrive back at zero and thus if a man would walk from point A to point B using an infinite series, as his method of walking, then he would never move for he is already at zero to start. This does not mean we cannot use the idea of infinite series as a means to calculate either straight or curved lines but that we do it by approximating reality. And Zeno's point should be our point, that this idea of infinite points on a finite number line is not a logical conclusion. And when this is taken to its extreme, in all the wonderful ways that Calculus works, it can make people forget Zeno's point for in the end we only approximate truth. And I think the error that we make in math is that we find a way to calculate by approximation and we then set up rules whereby we forget that we have done so.



Another way to look at rational numbers is to never forget that they are rational numbers of something finite. Yes there may be an infinite amount of numbers on that number line of this something finite but the something finite always has one number that remains- that it is part of a whole. One can buy a pizza and calculate its area with infinite series of its infinite parts and can come up with the exact area of that pizza. But if you would eat that pizza by the same method, you would starve to death.



Thus reality is something different than calculus, even if calculus can approximate its dimensions. And thus reality is more in line with static ratios than infinite series of change, and it is by static ratios that we calculate reality. If we were to say our pizza has a total of 2 square feet and we have to feed 8 people, each person would get 0.25 square feet of pizza, or put another way one eighth of two square feet. This can be represented within a number line of like square feet whereby a static number line is created whereby it is divided into eight pieces and we call its whole 2 square feet. It is defined within our ability to measure things and such measurement is done accurately and precisely within our means to measure. There is no infinity with rational numbers other than an infinite means of choices to measure a static ratio for 1/8 can be 2/16 can be 3/24 and this goes on to infinity. Yet the ratio is static whereby there is a part to the whole even if there are an infinite number of choices to demonstrate the static ratio.



If one then accepts that true reality can be done via infinitely smaller slices then you arrive at zero and zero is not a rational number simply because there is no longer a part being compared to the whole…



Now I am not condemning derivatives or calculus for they do have their role in our calculations. But what I do criticize is their use with real life events where we cannot forget Zeno's point. If we have a banking system or a stock market system that uses derivatives as a means to true value then we will be like Zeno and we will have nothing of value. And I think that is what is happening on Wall Street and in our banking system whereby we have all sorts of derivatives being used, in real life, as real value. Yet once separated from the whole any derivative becomes worthless. And thus I think we have all been seeing our numbers of dollars in our houses and in our 401 Ks go up and up yet once a static calling is asked for, or said another way, once we want to see these numbers as real static ratios, it all falls apart, and thus no one knows what anything is worth and thus it could very easily head to zero for in the end the trip to infinity is done with larger and larger numbers yet it always comes back to zero. Zeno was right and thus we need to come up with a method of real static ratios of worth, just like we divided up that pizza.



And I think the only entity that can do this is our central bank and it will need to work with all 50 states on our mortgage debacle. The stock market has value as do our houses but we will not get value till static ratios of value are arrived at. And I don't think we can do this by just throwing 700 billion at the problem. In a way it is sort of chasing infinity yet the danger is we will go to zero. This is very very serious and thus we need to think outside of the box. There is no room for approximation into derivative series. If we can count our pizzas and cut them up we can solve this. But you cannot solve this by just chasing infinity…

Indeed, it is never too late to start.

One place I'd start, were I writing this article (which I felt was a good article in general), is to stop patting one's self on the back for "having told us all this before". Even if true, it's hardly becoming and certainly adds nothing to the current conversation.

But I've noticed that using past articles as "I told you this would happen" is meant to generate a feeling as if only you knew this was happening and somehow only you know the correct answers.

This simply isn't the case. I pointed out in other commentaries, when I discuss what is to be done with my friends, families and neighbors, I specifically avoid mentioning that I'd suggested the current situation was a potential outcome. Why? Because it doesn't help the conversation relating to "what do we do now".
While it is useful to know HOW we got here, HOW we got here has nothing to do with HOW I may have come to the conclusion that this was a potential outcome. There were many potential outcomes, this being one of them.

While much of the information and opinion I get from Minyanville is enjoyable and I certainly will continue visiting the site, I'm getting tired of the "I told you so" references.

Just as there were many potential outcomes, there are many potential solutions. It's hard to simply say there is only one, just because it's one that someone has been touting for a long time.

The economy, over the course of 200+ years, has faced financial crises like this several times and it has not always resulted in the same outcome each time. This time the scale is very large, but judging by what? The economy is many times larger now than it was in 1907, 1901, 1893 or even 1819.

The zero is the marker. You cannot be at zero because zero represents nothing. There is no 'there' there. It's why you cannot divide by zero: there is nothing there to divide with.
Zeno's number line is fine and fun to play with in the rational, positive areas, but since the symbol for zero marks a place where nothing exists, then there is a break in the numbers between positive and negative. This means that using negative numbers along with positive numbers only works in the imaginary world of mathematics. Useful, but, as you said, not reality because the negative number line is not continuous with the positive number line.
For practical purposes, the zero break is infinitely small, but with a universe that supposedly expanded superfast at its origin, we have no way of knowing how big a nothing can be.
I don't think Zeno's paradox is so hard for people to understand, but the discussion usually ignores that the example sets up rules which are impossible to follow in reality, as most mathematics end up.
Too big to fix, too big to take apart without explosives.

I agree with you and you guys have to see if you have used the idea of zero within these derivatives and if much of the value is tied to this, then it is a huge mess for zero is used when you use any infinite series. It is as the circle where once you go to maximum (360) you end up at 0. O is meaningless and thus so is any value that comes about via derivatives.

I think that what does have value in real estate is the actual house and the person who can buy it. My worry is that if you bail out the bank, who has valued these both incorrectly, does that not simply ignore the mistake of not valuing either the buyer orwhat is being sold correctly? I think if we returned these things to some kind of local control well you could value the buyer and the house better... until we do this I am not sure we can solve this.... big distant banks which just use derivatives are blind to the real value. There has to be a real person who does this, not just some formula...

... now I am just an observer and have no idea if this is what is happening... you guys know more than I do but mathematically I think I am correct
we need more than a bailout, we need a kind of bank that can really see the real situation in all 50 states....

There is an old joke where two hunters have an accident where one is shot. The other rushes to his side and tries to bring him back. Finally he takes him to the ER. After a very long wait the doc comes out and says, "Sorry we lost him." The fellow hunter starts to cry and says to the doc, "geez was there anything I could have done a bit better?"
The doc says, "Well ... maybe you shouldn't have gutted him..."

I think of this story when I see how sorry all these leaders are. This was not what they meant to do, just as the hunter tried to save his friend. But if all you know is to keep making money any way you can, even if your customers get nothing of value over the long term, well, it is a bit like the hunter just gutting his friend for that is all he knows what to do."

I really hope the plan they enacted works and everyone's stock holdings surge. But after 700 billion plus 500 billion to China plus a war debt of about the same, well someone somewhere got gutted by well meaning hunters....

The house has no value except as a tool to live. A big house is no more valuable than a small house except in salvageable materials.

The value lies in the promise of what it will be useful for, as is the value of a person who borrows money. If everyone has been trained to be financiers or if everyone is trained to be a couch potato, there is no useful promise which will be valuable to the next generation.

What Are People For? What are they doing that is useful without consuming the future? Think about these questions because all money transactions are is the exchange of promised value to people. If the people are obsessed with destruction of their future, anything valuable to them is actually a liability.
Until we learn to be Net Creative, we are a liability to our own future.
The banks ran out of promises to build their pyramid upon, so they want the government jackboots to extract them from us.

There's another joke of the same ilk that has the punchline, "It took a long stick and a lot of courage, but I got 'em all back in there, by God!"

Washington needs to "sh!t their guts out".

Vote against incumbents.