Ben Bernanke’s Hush Money

The bailout of IndyMac’s depositors will probably deplete 10% of the FDIC’s reserves.

Congress will back up the FDIC if the FDIC ever (1) runs out of T-bills to sell (2) to raise money (3) to pay off depositors of insolvent banks. But where will Congress get this money? From the Federal Reserve System, if lenders will not fork over the money.

The Federal Reserve System backs up Congress. This is the heart of the threat to the solvency of the dollar.

The $4 billion that the FDIC will pay to a handful of depositors at IndyMac is hush money. It is paid to them to silence every other depositor in the country. "Don’t spread rumors about any insolvent bank." Why not? "Because, in a fractionally reserved system, all of them are technically insolvent." They are all borrowed short and lent long.

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So, we face a recession. We also face bankruptcies of overleveraged small banks like IndyMac. But the large banks are far more leveraged than the public understands. They have lent huge chunks of their capital to hedge funds that are leveraged 100 to one. A 1% move opposite to what a hedge fund has expected can wipe out 100% of a 100-to-one fund’s equity. It can be insolvent faster than you can say Carlyle Capital Corporation.

Warren Buffett says that the stages of the investment cycle is managed by three successive groups: first, the innovators; second, the imitators; third, the idiots. We are well into stage three.

Great article on the smoke and mirrors economy..the link is in the title.

FDIC Takes Over 2 More Banks, Closing 28 Branches

FDIC takes over all 28 branches of 1st National Bank of Nevada and First Heritage Bank

The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators.

The link is in the title..but I'm sure we'll be seeing this story over and over again in the coming months.....the names will change but the will story remain the same...until the FDIC runs out of money anyway.

Evidence of the US Banking System Teetering on the Brink of Collapse

1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.


13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

Interesting and scary stuff, as always...the link to the article is in the title...well worth a look

The Spin Continues...But So Too Does Reality....

Crystal Ball Gazing: Visualize the Dow at 6,000

24/07/08 "ICH" -- - Last Wednesday, at an improvised press conference, George Bush gave what may have been the most comical performance of his eight year presidency. Looking like the skipper on the flight-deck of the Hindenburg, Bush tried his best to reassure the public that "all's well" with the economy and that everyone's deposits were perfectly safe in the rapidly disintegrating US banking system. Leaning lazily on the presidential podium, Bush shrugged his shoulders and said,

“My hope is that people take a deep breath and realize that their deposits are protected by our government. We're not seeing the growth we’d like to see, but the financial system is basically sound."

Right. "Breath deep" and chill out; no need to panic. One shouldn't let the long lines of anxious depositors who are presently trying to extract what's left of their life savings from the now-defunct Indymac Bank upset one's basic equanimity. The banking system is perfectly safe, you heard it from President Trickledown himself.

At the same time Bush was offering his soothing words on all the major TV news networks, Fed chairman Ben Bernanke was on the other side of Washington giving a decidedly grimmer assessment of the economy:

"The contraction in housing activity that began in 2006 and the associated deterioration in mortgage markets that became evident last year have led to sizable losses at financial institutions and a sharp tightening in overall credit conditions. The effects of the housing contraction and of the financial headwinds on spending and economic activity have been compounded by rapid increases in the prices of energy and other commodities, which have sapped household purchasing power even as they have boosted inflation. Against this backdrop, economic activity has advanced at a sluggish pace during the first half of this year, while inflation has remained elevated."

Keep in mind, that these two events were perfectly coordinated to take place at exactly the same time; 10:20 AM Wednesday. Quite a coincidence, eh? Just another masterful public relations coup engineered by the Bush PR team, the last functioning agency in the entire bureaucracy. To no one's surprise, the collusive media managed to divert attention from the impending financial firestorm long enough to lull the American people into believing that nothing is really wrong; the economy is just hunky-dory.

GM, Ford `On the Verge of Bankruptcy,' Altman Says

July 22 (Bloomberg) -- General Motors Corp. and Ford Motor Co., the two biggest U.S. automakers, have about a 46 percent chance of default within five years, according to Edward Altman, a finance professor at New York University's Stern School of Business.

``Both are in very serious shape and the markets reflect that,'' Altman, the creator of the Z-score mathematical formula that measures bankruptcy risk, said in an interview with Bloomberg Television. The model shows that these companies are ``on the verge of bankruptcy,'' he said.

Who's Next? List of Troubled Banks Worries Wall Street, DC

Banks in Colorado, Maryland, Georgia and California top privately-prepared lists of troubled banks being circulated on Wall Street and in Washington.

Wachovia loses $8.9B, cuts 6,350 workers, dividend

CHARLOTTE, N.C. (AP) -- Wachovia Corp. reported a surprisingly large second-quarter loss Tuesday, deflating Wall Street's hopes that the nation's big banks are weathering the credit crisis well. The bank said it lost $8.86 billion, is slashing its dividend and eliminating 10,750 positions after losses tied to mortgages soared.

The Creeping Crud of Contagion

Bank of China may hold huge US debt

Bank of China Ltd may own about $20 billion of debt issued by Fannie Mae and Freddie Mac, representing two-thirds of total holdings among the six largest Chinese banks, according to CLSA Ltd.

Feds can't fix Fannie and Freddie

Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) do not have a liquidity problem that can be solved by the Federal Reserve or even by an injection of Treasury capital. It's a solvency issue. Short-term cash isn't the real problem. Over time, the mortgage giants' liabilities are quite likely to swamp their assets. Thus their assets are contingent, but their debts are forever.

Fannie, Freddie spent $200M to buy influence

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.

But the political tentacles of the mortgage giants extend far beyond their checkbooks.

The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home.

They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.

Global economy won't bail out the US

This nation is the world's biggest consumer, so a slowdown here means a slowdown everywhere. And there is no safe harbor -- not in tech nor in the media's market misconceptions.

Commercial bankruptcies soar, reflecting widening economic woes

Driven by a sour economy and skittish consumers, U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008, according to an analysis by McClatchy.

Commercial filings for the first half of 2008 are up 45 percent from last year, as the national climate for commerce continues to deteriorate amid rising energy and food costs, mounting job losses, tighter credit and a reticence among consumers to part with discretionary income.

Wachovia, WaMu still in big trouble

Think we've seen the worst of the credit crisis? Not so fast: America's mortgage problems won't be over anytime soon, analysts say, and that means more bad news for these big lenders.

Those ill-fated twins of the mortgage calamity, Washington Mutual (WM, news, msgs) and Wachovia (WB, news, msgs), are getting clobbered again, after some dramatic housecleaning at the top.

Could your bank be the next to fail?

Surprisingly, about 37% of the nation's $7.07 trillion worth of deposits at the end of the first quarter was uninsured, according to a Wall Street Journal report. One reason may be that a lot of people have several accounts at a single bank and don't realize that it's the sum of all their deposits at a bank that counts -- not how much they have in any single account.

Many businesses and local governments also probably exceed the $100,000 limit.

Credit fallout is just beginning

A shrewd observer of the US credit mess says the problems are 'considerably worse' than reported. He's betting on financial-system upheaval, failing companies and an even-slower economy.

Report: Suspicious Cookies

The police, invoking the Sept. 11, 2001, attacks, suggest that any operation undertaken for any reason is legitimate. "In a post-9/11 world," said Col. Terrence B. Sheridan, superintendent of the Maryland State Police, officers are duty-bound "to protect the citizens of Maryland from threats foreign and domestic." But if they cannot distinguish five middle-aged peaceniks from criminals, the police themselves become the real threat to American society.

Remember when these types of reports came from foreign, totalitarian nations? When we couldn't imagine this sort of repression in the "Land of the Free"? Will our children have a clue what freedom really means? We have forgotten our roots...and we will pay dearly for that I'm afraid.

The Crisis Is Upon Us

America, with her traditions of free markets and property rights, led the way toward great wealth and progress throughout the world as well as at home. Since we have lost our confidence in the principles of liberty, self-reliance, hard work and frugality, and instead took on empire building, financed through inflation and debt, all this has changed. This is indeed frightening and an historic event.

The problem we face is not new in history. Authoritarianism has been around a long time. For centuries, inflation and debt have been used by tyrants to hold power, promote aggression, and provide “bread and circuses” for the people. The notion that a country can afford “guns and butter” with no significant penalty existed even before the 1960s when it became a popular slogan. It was then, though, we were told the Vietnam War and the massive expansion of the welfare state were not problems. The seventies proved that assumption wrong.

Today things are different from even ancient times or the 1970s. There is something to the argument that we are now a global economy. The world has more people and is more integrated due to modern technology, communications, and travel. If modern technology had been used to promote the ideas of liberty, free markets, sound money and trade, it would have ushered in a new golden age – a globalism we could accept.

Instead, the wealth and freedom we now enjoy are shrinking and rest upon a fragile philosophic infrastructure. It is not unlike the levies and bridges in our own country that our system of war and welfare has caused us to ignore.

I'm fearful that my concerns have been legitimate and things may even be worse than I first thought. They are now at our doorstep. Time is short for making a course correction before this grand experiment in liberty goes into deep hibernation.

There are reasons to believe this coming crisis is different and bigger than any the world has ever experienced. Instead of using globalism in a positive fashion, it's been used to globalize all of the mistakes of the politicians, bureaucrats and central bankers.

Being an unchallenged sole superpower was never accepted by us with a sense of humility and respect. Our arrogance and aggressiveness have been used to promote a world empire backed by the most powerful army of history. This type of globalist intervention creates problems for all citizens of the world and fails to contribute to the well-being of the world's populations. Just think how our personal liberties have been trashed here at home in the last decade.

The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical-care costs; the collapse of the housing bubble; the bursting of the NASDAQ bubble; stock markets plunging; unemployment rising; massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we'll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?

Excellent commentary from one of the few voices of reason in the halls of government. The link is in the title.
Watching our country tear itself apart from the inside out is very depressing. What incredible potential has been wasted. For the greed of a few and the apathy or ignorance of many. It's very much like the frustration of watching an intelligent kid, who could have the world at his or her feet, throw all that promise away for a drug habit...you just want to shake them...bring them back to their senses. Incredible....astounding....unthinkable.

Do You Trust the Government to Safeguard Your Bank Account?....The Banks Don't!

Banks reportedly not taking IndyMac checks

Finally able to withdraw their money, customers can’t open new accounts

LOS ANGELES - The frustration didn't end for some IndyMac customers when they finally were able to withdraw their funds from the failing Southern California bank seized last week by federal regulators.

Some people have run into more problems when they tried to deposit IndyMac cashier checks at other banks.

Sheryl MacPhee said she waited in line two hours Tuesday at an IndyMac branch in San Marino to liquidate a certificate of deposit. But when she took it to a Washington Mutual branch in South Pasadena to deposit, she said a manager told her their new policy was not to accept IndyMac checks. If the customer insisted, she said she was told, it could take eight weeks or more to access the full amount.

"Sure, IndyMac will give you a check," MacPhee told the Los Angeles Times, "but what good is it if no other institution will accept it?"

WaMu spokeswoman Olivia Riley said her bank is accepting IndyMac checks, "but depending on the specifics, funds will be subject to an extended hold period."

Quite interesting...it seems the banks have little faith that the FDIC can make those checks good...certainly should give anyone who still trusts the banking system with their life savings something to consider.

Court Backs Bush on Military Detentions

Jonathan L. Hafetz, a lawyer for Mr. Marri with the Brennan Center for Justice at the New York University School of Law, called the Fourth Circuit’s decision deeply disturbing.

“This decision means the president can pick up any person in the country — citizen or legal resident — and lock them up for years without the most basic safeguard in the Constitution, the right to a criminal trial,” Mr. Hafetz said.

It seems fear politics has completely overwhelmed all of our governmental "checks and balances"....they say this one may end up in the Supreme Court. It will be interesting to see if they will condone this blatantly illegal and unconstitutional insanity.

Is the Fourth Estate a Fifth Column? Corporate media colludes with democracy’s demise

Our media institutions, deeply embedded in the power structures of society, are not providing the information that we need to make our democracy work. To put it another way, corporate media consolidation is a corrosive social force. It robs people of their voice in public affairs and pollutes the political culture. And it turns the debates about profound issues into a shouting match of polarized views promulgated by partisan apologists who trivialize democracy while refusing to speak the truth about how our country is being plundered.

Our dominant media are ultimately accountable only to corporate boards whose mission is not life, liberty and the pursuit of happiness for the whole body of our republic, but the aggrandizement of corporate executives and shareholders.

These organizations’ self-styled mandate is not to hold public and private power accountable, but to aggregate their interlocking interests. Their reward is not to help fulfill the social compact embodied in the notion of “We, the people,” but to manufacture news and information as profitable consumer commodities.

Democracy without honest information creates the illusion of popular consent at the same time that it enhances the power of the state and the privileged interests that the state protects. And nothing characterizes corporate media today more than its disdain toward the fragile nature of modern life and its indifference toward the complex social debate required of a free and self-governing people.

Let’s look at what is happening with the Internet. This spring the cable giant Comcast tried to pack a Federal Communications Commission (FCC) hearing on network neutrality by hiring strangers off the street to ensure that advocates of net neutrality would not be able to get a seat in the hearing room.

SaveTheInternet.com — a bipartisan coalition — and its supporters helped expose the ruse. Soon after, there was a new hearing, this time without the gerrymandering seating by opponents of an open Internet.

Excellent article on the consequences of allowing a handful of big media corporations to decide what the people should know. The link to the entire story is in the title.

Bank Failures: Coming Soon to a Neighborhood Near You

FDIC Says At Least 90 US Banking institutions In Trouble

Several points of data indicate a rocky road for banks. According to the Federal Deposit Insurance Corp., the amount of non-current loans, those more than 90 days behind, on the portfolios of its institution has grown rapidly. In the last three months of 2007 and the first three months of 2008, the value of these loans rose by $53 billion to represent 1.71% of all loans from FDIC-insured institutions.

In the case of bank collapse, the FDIC has to step in to insure the value of deposits. Normally the FDIC attempts to maintain a fund at 1.25% of the value of its potential obligations. In recent months, however, this fund has slid to 1.19%, driven primarily by a rise in deposits, said Sheila Bair, chair of the FDIC. If this figure slides further to 1.15% it forces the FDIC to make moves to shore up the fund.

Bair said the FDIC is monitoring 90 institutions with assets of $26 billion that it has identified as troubled. The entire size of the FDIC reserve fund is $52 billion. As a precaution, the FDIC is running bank failure readiness exercises, she said.

Can Banking Shake The Crisis?

While Wall Street and Washington fret about how badly investment banks could damage the economy, Tuesday provided a fresh reminder that commercial banks could be a bigger problem as the second wave of the credit crisis begins its run.

National City (nyse: NCC - news - people ), the Cleveland bank that, in the end, might become the poster child for the credit crisis, confirmed it was under a memorandum of understanding with the Office of the Comptroller of the Currency, the Treasury Department arm regulating national banks. This is a form of heightened scrutiny, though informal and less severe than some other options, and looks at a bank's capital and risk management, loan quality and liquidity.

...Ominously, the Federal Deposit Insurance is staffing up in anticipation of bank failures. It's already tracking 90 troubled banks, 18% more than the end of last year. None of this is good news for the troubled industry, which has been hoping for a rebound.

Monday, New York Fed chief Timothy Geithner, the architect of JPMorgan Chase's (nyse: JPM - people ) rescue of Bear Stearns in March, was drumming up support for greater regulation of Wall Street firms to lessen the risks of systemic meltdown. news -

And.in case you missed it..more news for IndyMac customers:

Deposits are insured up to $100,000 per depositor. As of March 31, IndyMac had total deposits of $19.06 billion. Some 10,000 depositors had funds in excess of the insured limit, for a total of $1 billion in potentially uninsured funds, the FDIC said.

Well, you can pretty much figure that the problems they are actually admitting to are just the tip of the iceberg. Things are bound to get pretty interesting over the next few months.

Recession: With War or Without It?...by Gary North

Americans have steadily stopped saving over the last 28 years. In 1981, they saved over 11% of their discretionary income. Today, they save nothing. They are now in full spending mode. They have borrowed money against their future income, against their home equity, and on simple promises to pay (signature loans: credit cards). They have stretched themselves thin with respect to debt.

If oil goes to $400 a barrel, or $500 a barrel, and stays there for a year, American consumers will be in panic mode. They will have to cut their budgets, and they have forgotten how to cut their budgets. They have forgotten how to save.

The strategy of the optimists is to tell us that the worst is over economically. This is the government's official position. Chairman Ben Bernanke does not say this. He keeps hinting of more trouble to come. He keeps telling us that the Federal Reserve System is monitoring events. He keeps implying that there is some sort of rabbit still remaining in the Federal Reserve System's hat which they can pull out if the banking system moves into paralysis mode. But he doesn't tell us what these rabbits are, or under what conditions the FED will pull them out of its hat.

The official government position on the economy is pure propaganda.

Dow Falls Below 11,000 for First Time in Two Years

Stocks finish volatile week by ending down more than 128 points on Fannie, Freddie worries

Wall Street's angst over the ongoing fallout from the credit crisis made for a turbulent end to a volatile week Friday -- stocks tumbled, soared and then turned south again as investors tried to assess the dangers faced by the country's biggest mortgage financiers, Fannie Mae and Freddie Mac.

The Dow Jones industrial average, which traded down more than 250 points in the session, briefly moved into positive territory Friday before ending down more than 128 points. The blue chips also traded below 11,000 for the first time in two years. And all the major indexes ended with another losing week.

A new high for oil prices above $147 a barrel also weighed on stocks.

Not sure they're going to be able to prop up the economy much longer...I hope Americans are preparing for the crash.

The First Domino Falls

IndyMac Bank seized by federal regulators

The federal government took control of Pasadena-based IndyMac Bank on Friday in what regulators called the second-largest bank failure in U.S. history.

Citing a massive run on deposits at the $32-billion bank, regulators shut its main branch three hours early, leaving customers stunned and upset. One woman leaned on the locked doors, pleading with an employee inside: "Please, please, I want to take out a portion." All she could do was read a two-page notice taped to the door.

Federal authorities said, based on a preliminary analysis, the takeover of IndyMac would cost the FDIC between $4 billion and $8 billion. Regulators said all deposits of up to $100,000 were safe and insured by the FDIC.

I think it's time to start using the good old mattress bank...no interest but your savings will surely be safer...FDIC is as broke as the rest of the government, you wouldn't want to hold your breath waiting for them to return your money if a few more banks go belly up.

Economic Headlines

Fannie, Freddie `Insolvent' After Losses, Poole Says

July 10 (Bloomberg) -- Borrowing at Fannie Mae, the U.S. government-sponsored mortgage company, has never been so expensive and it may not get better any time soon.

Fannie Mae paid a record yield relative to Treasuries on the sale of $3 billion in two-year notes yesterday amid concern the biggest provider of financing for U.S. home loans won't have enough capital to weather the worst housing slump since the Great Depression. The company's credit-default swaps show traders are treating the AAA rated debt as if it were five steps lower. Fannie Mae shares tumbled 13 percent yesterday in New York to the lowest level in almost 14 years.

Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.

``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in the interview yesterday.

Foreclosures Rose 53% in June, Bank Seizures Tripled

July 10 (Bloomberg) -- U.S. foreclosure filings increased 53 percent in June from a year earlier and bank seizures rose the most on record as deteriorating property values and higher rates on adjustable mortgages forced more people to give up their homes.

More than 252,000 properties, or one in 501 U.S. households, entered a stage of the foreclosure process, RealtyTrac Inc., a seller of default data, said today in a statement. Bank seizures rose 171 percent, the most since the Irvine, California-based company began tracking statistics on default notices, warnings of a scheduled auction and repossessions in January 2005.

``The foreclosure problem is getting worse and will stay with us well into the next decade,'' Mark Zandi, chief economist for Moody's Economy.com in West Chester, Pennsylvania, said in an interview. ``The job market is eroding and homeowners have less equity. Lenders are much less willing to work with you if you've got negative equity, and you're more likely to give up your house if you're deeply underwater.''

Foreclosure activity is the highest since the Great Depression of the 1930s, said Rick Sharga, RealtyTrac's vice president of marketing. Home prices, which fell the most on record in April, according to the S&P/Case-Shiller index of 20 U.S. metropolitan areas, have created a cycle where shrinking equity drives homeowners into foreclosure, which in turn further pushes down home prices, Sharga said.

Bernanke, Paulson outline strategy to make working class pay for Wall Street crisis

Bernanke indicated that the Fed would extend its policy of offering unlimited loans to major Wall Street investment banks. The provision of Fed funds to non-commercial banks and brokerage firms, a departure from the Fed’s legal mandate without precedent since the Great Depression, is part of a policy of bailing out the banking system to the tune of hundreds of billions of dollars. The Fed announced its loan program for investment banks last March when it dispensed $29 billion to JPMorgan Chase as part of a rescue operation to prevent the collapse of Bear Stearns.

In his speech, Treasury Secretary Paulson acknowledged that home foreclosures in 2007 reached 1.5 million and predicted another 2.5 million homes would be foreclosed in 2008. But he made clear that nothing would be done to save the vast majority of distressed homeowners from being thrown onto the street.

Paulson, the former CEO of Goldman Sachs, said that “many of today’s unusually high number of foreclosures are not preventable.” With a callous indifference reminiscent of Marie Antoinette’s “Let them eat cake,” he went on to say that “some people took out mortgages they can’t possibly afford and they will lose their homes. There is little public policymakers can, or should, do to compensate for untenable financial decisions.”

In other words, low-income home owners who were lured into high-interest mortgages by predatory mortgage companies and banks are getting their just deserts! Of course, the Wall Street CEOs and big investors who made billions of dollars by speculating on these loans, creating a vast edifice of fictitious capital that was bound to collapse, are not to be held accountable for any “untenable financial decisions.” On the contrary, they are to be subsidized with hundreds of billions of dollars of credit, ultimately to be paid for by public funds.

Crisis wipes $1 trillion from financial stocks

NEW YORK - U.S. financial companies have lost more than $1 trillion in value this year, and yet another decline on Monday shows concerns aren't going away soon.

Banks and brokerages began the week lower on the same fears that have been proven toxic since last summer in the ongoing credit crisis. The financial sector was hit with a confluence of troubles on Monday: cautious remarks from a Federal Reserve official and new capital concerns at Freddie Mac and Fannie Mae .

The drop in names like Lehman Brothers , Morgan Stanley and Merrill Lynch caused the financial section of the Standard & Poor's 500 index to lose almost $150 billion in value on Monday, according to the rating agency. That means S&P 500's 85 financial components have lost some $1.3 trillion since the sector reached a high last October.

Even more startling is that shares of 35 of the companies, which include insurers, have lost more than half their value so far this year. The financial sector used to be the index's main driver, and many economists believe that the broader market will rise or fall on their health.

Change, Obama Style....Scrapping the 4th Amendment

Congress votes to immunize lawbreaking telecoms, legalize warrantless eavesdropping

The Democratic-led Congress this afternoon voted to put an end to the NSA spying scandal, as the Senate approved a bill -- approved last week by the House -- to immunize lawbreaking telecoms, terminate all pending lawsuits against them, and vest whole new warrantless eavesdropping powers in the President. The vote in favor of the new FISA bill was 69-28. Barack Obama joined every Senate Republican (and every House Republican other than one) by voting in favor of it, while his now-vanquished primary rival, Sen. Hillary Clinton, voted against it. John McCain wasn't present for any of the votes, but shared Obama's support for the bill. The bill will now be sent to an extremely happy George Bush, who already announced that he enthusiastically supports it, and he will sign it into law very shortly.

The hope and change candidate indeed...more like bait and switch. Even though I predicted Obama would be no different than any of the other political prostitutes out there, I really hoped to be wrong. Unfortunately not...this country is in big trouble no matter which of the presumed nominees win the presidency.