Dear Darling,
What a blunder! Are you really so stupid that you can't see that there is a hole in the bucket and no matter how hard you try to pump the water out, nothing comes out?
The ship is sinking, darling, and you know it.
Over the past few weeks, and every day as I watch the news, you, your colleagues, your political “enemies,” mainstream commentators…you have all been perpetuating lies.
Credit crunch
I heard this was a “credit crunch”. I heard it started in the US. I heard it was caused by bankers losing “trust” in each other. I also heard the collapse of bank stock prices was the fault of short-sellers “scammers”.
You said this morning that “this is the beginning of a process to solve a big problem, which is banks not lending to each other for long periods of time.”
It's all a lie!
And it continued. You had the audacity to suggest that taxpayers receive dividends on the stocks we are “buying”. I lost control.
October
Let's get real for a second, darling?
If I told you about credit default swaps, would you know what I'm talking about? What was the rush to announce this bailout in the first place? Did bank stock prices really crash?
Or is there a Lehman CDS auction tomorrow that will cause bank stocks to crash?
When Fannie Mae and Freddie Mac CDSs were auctioned on Monday, the government's backing meant that recovery rates were high, so the sellers of the protection only had to pay a few percent — still a significant amount, but manageable, since the payments must be made by the 15th.
But Lehman didn't have government backing, did it? What happens when the CDSs are auctioned? Will the recovery reach 50%? Or less? How much exposure does the financial system have to Lehman's CDSs? You don't know, do you? No one knows!
And even worse, what about the second level of abstraction that some financial players are facing? I'm talking about hedge funds, insurance companies, banks, who are going completely crazy and putting these CDSs into CDOs and leveraging them.
Perhaps this bailout was enough to handle the Lehman auction. If so, that would be great. But sadly, there is a tsunami of other CDS's on the horizon…Washington Mutual and AIG.
Darling, the ship is sinking. Your bucket isn't working. We need a new bucket.
