A Fool Born Every Minute

We Nattered long ago about GM's burn rate and potential BK... just type in GM on the Google search this blog line.

Now many others are jumping on the bandwagon including the WSJ predicting that a merged GM/Chrysler could go BK within a year.

Friday the Fed & Treasury created the MMIFF: money market investor funding facility,

its a $600 billion SIV which compliments the CPFF & AMLF. A review for the uninitiated follows...

SIV: structured investment vehicle, usually an off balance sheet entity, means your cooking the books.

CPFF: commercial paper funding facility. AMFL: asset backed commercial paper money market mutual fund liquidity facility.

Joseph Stiglitz, a professor of economics at Columbia University in New York, told a congressional committee on Oct. 21:

"Securitization was based on the premise that a fool was born every minute.

Globalization meant that there was a global landscape on which they could search for those fools and they found them everywhere
."

The collapse of our economic system based on "securitization" of more than $27 trillion in consumer loans, mortgage & corporate debt since 2001...

through highly leveraged LBO's; usually without capital and utilizing off balance sheet accounting SIV's, CANNOT be stopped.

So you think the real estate market will turn around? I do, when prices get much lower...

the economy recovers; the inventory gets worked off; and real wages actually increase, give it at least 5 years, perhaps much longer.

So you think Dow 36K? How about Dow 3600 next year? So you think many will retire on what is left of their 401K and financial advisors stock plan? I don't think so...

At least Shrub Jr. didn't get his way privatizing Social Security, which is technically bankrupt already with nothing but worthless IOU's.

Perhaps in addition to the real estate, financial and banking sectors...

the goverment might have to socialise the construction business to build a whole lot of homeless shelters for the elderly.

Hattip to Bloomberg & Fleck

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