Fred Cederholm: Gravy (in its essence) is nothing more than a palliative cover-up to mask the foul taste of an entree going bad...

VHeadline commentarist and money market expert Fred Cederholm writes: I've been thinking about our United States banking/ financial mess, WaMu and Wachovia, the stock market indexes, the $700 BILLION bailout proposal, Congress, and gravy. Gyrations are spasmodic oscillations whose ongoing spinning activity seeks to return to some pre-determined norm despite any repetitive fluctuations. The US financial/and economic systems are in the tank and sinking fast. Uncle $ugar via the US Treasury, the FED, and now the additional $700 BILLION (a blank check) bailout proposal before Congress is trying to gyrate a return to normalcy.

It is unfortunate that their "normalcy" means to continue going deeper and deeper and deeper into debt.

You see revelations to the American public regarding the banking/financial mess that is shaking the very foundations of our way of life continues to unfold - but only by fits and starts, and only after another financial BIGGIE bites the dust. Each week brings to the forefront of the news, another takeover and another bailout. Each chapter is proving to be a bigger (and more expensive) domino to control. Last week's episode couldn't even wait for the weekend as WaMu was seized and the valuable parts sold to JP Morgan/Chase for $1.9 BILLION midweek. They cherry-picked the deposit side, leaving the so-called investments -- mortgages and mortgage related derivatives - for someone else to gag down.

These clearly have little, if any, determinable value and will be warehoused by some undisclosed government entity -- ultimately meaning the US taxpayers.

The Federal Deposit Insurance Corporation (FDIC) was not IDed as the new custodian/ repository for these dogs. I fear this was so because they presently lack the where-with-all to shoulder another such a huge amount. FDIC reserves are still absorbing the Indy Mac and the other eleven failures since January 1. There have been no hard figures released as to the projected costs of WaMu resolution. WaMu was failure number 13 for calendar 2008.

This Monday morning we earned that Citigroup will absorb Wachovia. They will chow down up to $42 billion of losses on a $312 billion pool of loans. Citi was forced to "eat" Wachovia in a deal only made palatable by FDIC concessions. The FDIC will be responsible for the losses beyond the $42 BILLION and was given $12 billion in Citigroup preferred stock and warrants in return for that guaranty. The FDIC emphasized that Wachovia "did not fail."" However … what waddles like a duck and quacks like a duck is not some soaring eagle, is it? The spin and word massaging now being foisted on the American public boarders on being criminal. Where is all this going to end? And… at what cost?

The stock market indexes responded by gyrating downward Monday. At the Friday closing, the Dow Industrial (a roughly 30 company index) was down almost 22% from its 52 week (and record) high of 14,280. This was after a totally unexplainable goosing upward of 121 points. The stock indices are no bell weather oracle of how the economy is doing. Neither are they any representation as to the soundness of the component corporations, their product lines, or their potential for growth and profitability. We have seen them morph into nothing more than who is the most connected in Washington, DC and who has the inside track for more (US) government bailouts, tax abatement loopholes, and special goodies to be borne on the backs of the American taxpayers for generations to come!

The $700 BILLION bailout in Congress is but the latest in a long line of ill-conceived "patches" from Uncle $ugar. On-line polls indicate that something like 80% to 90%+ of the American public opposes it. The original three page proposal drafted by Treasury Secretary Paulson swelled to 42 pages in the week after Congress got a hold of it.

Today's version is 110 pages and continues to grow. The gravy train is going to have to stop sometime -- and soon.

Gravy (in its essence) is nothing more than a palliative cover-up to mask the foul taste of an entree going bad. It is neither nutritive nor healthy.

It only serves to make whoever partakes of it fat, sluggish, and non- productive. Enough already!

Fred Cederholm
asklet@rochelle.net

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Venezuela is facing the most difficult period of its history with honest reporters crippled by sectarianism on top of rampant corruption within the administration and beyond, aided and abetted by criminal forces in the US and Spanish governments which cannot accept the sovereignty of the Venezuelan people to decide over their own future.

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