>>>>>>>>Interesting also that a temporary ban has been put on shorting bank stocks. Normally there would be great gnashing of teeth over interference with the free market (and there probably is). But I guess it's clear at this point that we don't have a free market. They simply don't work without oversight and occasional intervention.
>>>>>>>>
>>>>>>>>Seemingly daily interventions, now that's a little scary. I wasn't around in the 1930s so haven't seen anything like this before in the U.S.
>>>>>>>>
>>>>>>>>>Well it looks like they have so many problems now; they can no longer wait to do it over the weekend only, almost 24/7 now. I am now hearing Hank, Ben, and several committees in congress are looking to do a RTC type bailout. Although it will be expensive, it is the right move to make if we ever want to put this behind us.
>>>>>>>>>
>>>>>>>>>Bob
>>>>>>>>>
>>>>>>>>>>>>Another one bites the dust
>>>>>>>>>>>>http://english.aljazeera.net/business/2008/09/200891551219215862.html
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>Did you miss the whole threads on that days ago? They filed on Sunday.
>>>>>>>>>>
>>>>>>>>>>Now the question remains, who goes down this weekend? There's a lot more to do, and so little times. Every week has only one weekend, and we all know the least painful way to cut a cat's tail: a centimeter a day... i.e. they have to do this, whatever they're doing, bit by bit. Now, which domino falls next weekend? Virtual betting remains open next 24 hours.
>>>>>>
>>>>>>
>>>>>>Hopefully a few short sellers will have been caught out by the ban and subsequent massive rise in stock values (FTSE 100 is up almost 10%) so they will have to pay out but no longer have access to their method of making money.
>>>>>
>>>>>How cruel.
>>>>
>>>>The short selling restriction is longe over here.
>>>>
>>>>I would regard the rise in the markets today as bordering on hysteria. All the things that are wrong are still wrong. Inflation is rising unemployment is rising and house prices are falling. Banks have no clear idea how much they owe and problems with their money supply.
>>>
>>>I am so sorry that British economy is in disarray. Obviously, it is much worse than in America. Time for change. Chase away these Labor bureaucrats from the office and install new blood. Go Tories.
>>
>>
>>This is the BBC finance correspondents blog about this.
>>
>>http://www.bbc.co.uk/blogs/thereporters/robertpeston/
>
>Sorry, I cannot follow links.


Pasted it in for you Edward

Must be hard browsing from prison :-) (thats a joke)


The breathtaking rises in the price of bank shares this morning are symptomatic of a stock market that is bereft of reason and is being driven almost purely by hysteria and momentum.

Federal Reserve buildingThey are surging in part because of the FSA's crackdown on short-sellers but mostly because of the overnight news that the US Treasury Secretary, Hank Paulson, and the Chairman of the Federal Reserve, Ben Bernanke, are preparing a bold - or possibly impetuous - plan to tackle what can now be classified as the most severe and intractable malfunction of the banking system since the late 1920s.

As I put it on the Ten O'Clock News last night, yesterday's co-ordinated intervention by central banks, led by the US Federal Reserve, to pump an additional $180bn of short-term loans into the banking system treats only a symptom, not the cause, of banks' reluctance to lend to each other and to us.

It's a stopgap, while Paulson prepares to absolve many of the world's biggest banks of their idiocy during the boom years, by nationalising their bad debts.

To understand the pros and cons of what's being considered by Paulson, it's worth reminding ourselves of what created the latest terrifying phase of the credit crunch.

The ultimate cause is the chronic downturn in the US housing market. The proximate causes are the rotten loans to US homeowners sitting on banks' and other financial institutions' balance sheets that has mullered their capacity to make new loans.

The recent trigger has been the crises at Lehman, AIG, Fannie Mae and so on, which have created a climate of fear, in which bankers and managers of money appear to believe that almost any bank could collapse.

One important new stress has been a significant withdrawal of investors' cash from US money-market funds, because of the perception that the funds aren't as safe as was widely thought - which has in turn deprived banks of an important source of wholesale deposits (this sudden rise in the perceived riskiness of these funds was sparked by the announcement of a loss at the Reserve Primary Fund).

The drying-up of liquidity from money-market funds is in part what drove HBOS to acknowledge that the game was up, and that a rescue takeover by Lloyds TSB was the best form of protection for its savers and shareholders.

To reiterate, the big point is that Paulson is working with Congress on a package of measures that - he hopes - will attack the roots of the crisis.

It would involve buying many hundreds of billions of the banks' bad loans to overstretched US homeowners.

And it would also attempt to re-establish confidence in money-market funds by insuring them, in the way that retail bank deposits are insured against loss.

This would be the mother of all bailouts. It would certainly involve the deployment of hundreds of billions of US taxpayers' money, possibly more than a trillion dollars.

And it comes on top of the $300bn commitment of public money already made by Paulson to the rescue of Fannie, Freddie and AIG.

It all represents a massive humiliation for Wall Street, the giant US financial services industry and bankers supposed to be the canniest on the planet.

Paulson, himself, was one of their ilk, as the former boss of Goldman Sachs.

There will be serious long-term damage to the ability of the US to export its way of doing business to the rest of the world.

The American way of capitalism doesn't seem all that brilliant right now.

In that sense, a degree of moral authority - as well as financial clout - will shift east.

It'll also damage the robustness of the US public finances.

Possibly the biggest risk for the US is that in bailing out the finances of the private sector, Paulson would dent international investors' confidence in the American government's balance sheet - which could ultimately undermine the dollar, push up inflation even more and raise the cost of servicing debt for the US authorities.

Maybe the US is still big enough and powerful enough to persuade the rest of the world to pay for the mistakes of its financial sector - which is broadly what's being proposed.

But, as I mentioned here yesterday, surely it would be more rational for the Chinese to own the American financial system itself, rather than lend to the US Government (and in that context, it's resonant that Morgan Stanley may well be close to selling almost half of itself to CIC, China's state investment fund).

In this game of Wall Street Monopoly, there's no "get-out-of-jail-free" card.