Yet another reason why The Daily Show is the most important news source today.
In other news, Europe is [censored]. There is no word I can use that Joe would find appropriate for the site. The article talking about the secret report was originally titled “European banks may need 16.3 pound trillion bailout” although I guess because that’s a secret they changed it (but not the url). But of course it’s the internet so the original article was documented. We potentially have $3-$4 trillion of bad assets compared to their $22 trillion! It’s no wonder that “In the UK, Gordon Brown’s closest ally says ‘This is the worst recession for over 100 years…'” which means worse than the Great Depression (although their Great Depression wasn’t nearly as bad as ours).
The crisis in Europe is threatening to rip them apart and is what I was referring to when I said we’d entered the beginning of the Third Wave.
My advice to our politicians is to stop arguing about which amounts of spending give the biggest multiplier and start programs that can help soften the blow if there is a worldwide collapse in trade and the financial system.
Update: I want to connect the dots a little. The reason why the European banks have so many bad assets is that they were allowed to get insanely leveraged with the average ratio over 35x. By contrast, our crazy leverage is “only” at 20x, which is about twice as much as is reasonable, but still. Why where they allowed to get so leveraged? Because they were allowed to count “insured” amounts the same as cash. They would take out a policy on $500 billion of assets, pay $10 billion or whatever and then act like they had the proper amount of money for that $500 billion because they could always cash in the insurance policy. Of course when the assets add up to be larger than the home country of course that doesn’t make sense. Who would be so dumb as to insure those banks that much? AIG of course…which is now pretty much a subsidiary of the US Government. This is why we’ve already had to give them over $100 billion, with no end in sight and no idea what their liabilities even are.
If that $22 trillion is correct, then that means we’re going to have to cut off AIG and let it fail, or else be bled to death. All the $9 trillion we’ve spent/insured hasn’t gotten us one step closer to saving the system.