Clusterfuck Nation - Hunter S. Thompson lives .... Fear and Loathing on Wall Street

The Clusterfuck Nation Chronicle by Jim Kunstler

August 20, 2007

"Hot Shots". The Federal Reserve seems to be manufacturing an impressive supply of "greater fools" to go along with the dribs'n'drabs of credit that it is dropping into the sucking chest wound that the economy has become for the body politic. The Fed's idea, I suppose, is that if they lend a little money to the geniuses who engineered the latest (and probably last) bubble of the cheap oil age to cover their present losses, then the US economy will "right itself." What I think they don't get is that finance has virtually become the US economy -- if you subtract it, there is nothing left besides hair-styling, fried chicken, and colonoscopies. By "righting the economy" do people mean the ability to keep running a transparently fraudulent set of rackets that have nothing whatever to do with financing real productive activity?

By "greater fools" I mean, of course, buyers willing to step up and purchase securities that other people are shedding as if they were smallpox blankets. But even the Fed's supply of greater fools may prove insufficient when it becomes evident how much bad paper really is out there, and how it has been allowed to contaminate every tradable niche in the banking and investment house of horrors. I don't think we've begun to hear the disclosures.

........Personally, I don't quite get how a financial industry based on bad loans would be helped by borrowing more money to bail out a hopelessly unwinding Ponzi loan racket of the type the industry had engineered for itself -- but maybe I'm lacking the gene for financial creativity that the Bear Stearns bonus babies were all born with."

If you seek an original view on the markets, a good read and something to stiffen the sinews as you clutch at your Starbucks squillion calorie nerve steadier ... read Jim if nothing else.

BTW the grand old Bank of England let it be known that on Monday a bank (one of 57 that have the facility) borrowed £314 Mn. at 6.75% which is said to be a "penal" rate but is actually only 15 points above London Interbank Rate at the time.

This is what bankers call "throwing good money after bad", when they give speeches to conferences of bankers.