Make that 40th.

Damn, has it really been that long?

Alas, interesting times have intervened and should the 10% chance of the worst case prevail, he may be hounded out of office just ahead of a Chamber of Commerce lynch mob.

C’est la geurre. Speaking of which, suppose the bearded followers of the Prophet (peace be upon him) liquidate their inventory of suicide bombers on the 20th anniversary of the Tet Offensive?

Can you imagine the feeding frenzy of the 24/7 media? Imagine Wolf Blitzer, stoned and hollow-eyed on NoDoze and in wrinkled Armani, orchestrating a slide show of lurid graphics and earnest experts in a firestorm of self-flagellation? FOX would incandesce. The blogsphere would fireball. And just eight months before the election.

Just 11 shopping days left until Tet……..

On the other side of the Universe, Rep. Rangel was obscured by a dense cloud of smug on the Charlie Rose show Friday as he allowed that there seemed to be much better cooperation between Congress and the White House as of late.

Indeed, strange bedfellows are created at the junction of the cusp where oil, war and worldwide financial panic intersect: The gestation of the perfect storm.

All we need is another Tet…..

For some understanding of the box in which we find ourselves and the way in which we got there, see this article at TomDispatch from Chalmers Johnson:

http://www.tomdispatch.com/post/174884/chalmers_johnson_how_to_sink_america

Eisenhower’s unease at the rise of the Military-Industrial Complex was well founded.

When the nation’s economic diversity is hollowed out, when its industrial base is decimated through financial disincentives towards capital investment and the selfishness of the rich looks to outsourcing to increase their wealth and to put those unionists in their place, disaster for the majority of the citizens will inevitably follow. Couple this with the unimaginable sums spent on the military. And it’s a totally bi-partisan endeavor. Way to go.

Much of the Chinese economy is predicated on Western, say, American companies, wont their demise affect China?

In any case, from the Financial Times article:

If this had been a mere subprime crisis, it would now be over. But it is not, and nor will it be over soon. The reason is that several other pockets of the credit market are also vulnerable. Credit cards are one such segment, similar in size to the subprime market. Another is credit default swaps, relatively modern financial instruments that allow bondholders to insure against default. Those who such sell such protection receive a quarterly premium, based on a percentage of the amount insured.

The CDS market is worth about $45,000bn (€30,500bn, £23,000bn). This is not an easy figure to imagine. It is more than three times the annual gross domestic product of the US. Economically, credit default swaps are insurance. But legally, they are not, which is why this market is largely unregulated.

Technically, they are swaps: two parties swap payments streams – one pays a regular premium for protection, the other pays up in case of default. At a time of low insolvency rates, many investors used to consider the selling of protection as a fairly risk-free way of generating a steady stream of income. But as insolvency rates go up, so will be the payment obligations under the CDS contracts. If insolvencies reach a certain level, one would expect some protection sellers to default on their obligations.

A 45 Trillion (trillion) dollar market. Largely unregulated. “If insolvencies reach a certain level, one would expect some protection sellers to default on their obligations.” Right.

Way, way beyond subprime.

Awwwww…

Those poor Saudi princes they will probably have to cut back on re-golding their bidets.

From Calculated Risk:

Stop the Subprime Meme!
From remarks by David Einhorn in October (hat tip Cal and NakedShorts)

… the credit issues aren’t just about subprime. Subprime is what the media says. Subprime is what the financial establishment says. Subprime is about them – those people and the foolish people that made loans to them. The word subprime is pejorative. Subprime is not about us, for we are not subprime. How convenient to be able to pass the blame.
Anyone who thinks this a subprime problem, doesn’t understand what is happening.

Or, as Tanta wrote: We’re all subprime now.

‘We’re all subprime now’ can be found at:

http://calculatedrisk.blogspot.com/2007/11/were-all-subprime-now.html

See also:

‘This is not merely a subprime crisis’ by Wolfgang Münchau, from The Financial Times

http://www.ft.com/cms/s/0/50d659d2-c1f3-11dc-8fba-0000779fd2ac.html?nclick_check=1

Or Stirling Newberry’s commentaries at The Agonist.

The working poor did not cause this.

Americans worry about their dependency on imported energy, but the $145,368,000,000 paid to OPEC in 2006 is a small part of the total import bill. Americans imported $602,539,000,000 in industrial supplies and materials; $418,271,000,000 in capital goods; $256,660,000,000 in automotive vehicles, parts and engines; $423,973,000,000 in manufactured consumer goods; and $74,937,000,000 in foods, feeds and beverages…”.
One can think of trade as goods flowing in two directions during a year and then money flowing in one direction at the end of the year. The money flow balances any discrepancy between the material flow in and out. In a balanced world, some years the money flows one way some years the other; overtime the money flow is supposed to net to 0.
The USA has been being carried by those nations willing to sop up $ every year for decades on end.
Eventually they stop but having sopped up so many dollars they have to divest quietly or everyone will attempt to divest simultaneously.
In July of last year the USA and the G7 nations attempted to beggar the PRC while simultaneously encouraging Japan to continue its inflation exporting carry trade. China said no thanks. Over the last 7 months the trade flows and the currency flows have changed and China is the nation that is changing them. China has RAISED its discount rate, its reserve requirements and is placing price controls on internal trade. The Chinese are SAVING not only paper money in bank accounts but real assets ( read gold and silver and industrial metals etc etc ).
Learn Mandarin.
Learn Go not checkers not chess.

A small item near the bottom of the “news” page, under U.S. News, reports on the economy: “Stock futures fluctuate after Fed cuts interest rates.” Under “business news” Fox has this: “Disaster averted? Stocks recover after Fed cut.”

Wish I could photograph that page, it’s priceless.

Everything I’ve read points to Bush’s tax cuts as one of the culprits behind the subprime mortgage crisis. Because following the dot.com bust, real estate was one of the few markets where the wealthy could invest their money and hope for a good return. Banks lowered mortgage requirements to create these real estate funds for the wealthy to invest in. Only the banks forgot or didn’t realize…argh, I’m not an expert in this…they didn’t realize that the properties with the subprime loans might default and become devalued. So banks couldn’t recover the loan amounts. All of this contributed to the real estate bubble, which is now bursting. [Hope I'm describing this accurately, please someone else weigh in....]