Maggie's Farm

2007 and 2008 were a heaven-sent interregnum for the Obama crew --every single one of the current disasters fired up as soon as the new Reid/Pelosi congress convened --everything from the kill-phase of the subprime blowoff, zoom rise in lending leverage, SEC rules changes to enable criminal naked shorting, the Lehman credit-killer CDS buildup, to the southern border abrupt change of a century old sleepy smuggling trade to a military-weaponized shooting war --and all under the trailing edge of the GWB admin. How very damn convenient. Almost the same sort of miracle as two-thousand-page laws springing from the forehead of Zeus ready made to vote into law.

another 2007 kick-off appears to have been the current LIBOR scandal --with no way on earth that the Fed --esp the NY Fed (president Tim Geithner) --didn't know about the fix --after all the only thing they do day to day is watch the price of money/time and cost of credit/risk premiums. LIBOR being a trust number --banks traditionally offer LIBOR to each other on unsecured loans --the minute the demand arose for secured lending among the same banks that had always been let unsecured transfers, and yet a LIBOR was STILL being offered in public, any idiot with the info would've seen the apples and oranges where there should've been --oh, all coconuts, say.

So they knew, but in letting it go on (ostensibly for an amalgam of reasons startying with low mortgage rates to try to fix what they had done to the housing mkt), they hid the best, most important, most reliable economic health signal --that is, interest rates in the open market, most especially the rate in the open or secondary market needed to trade long bonds --is not working, is not telling the truth about confidence in the future, that it always told --and until just now no one knew but the fixers, and the regulators, and the Fed and British equivalents such as FSA.

This is tactically akin to getting more and more people hooked on food stamps (what is it, 50%? 70%? --higher thabn 2008?) so that when the evil rich GOP starts making the market pay true value for the treasury's long paper, forcing the SNAP program (among the many others) to cut hard or go bust, there'll be plenty of troops in the army of the hungry instantly in the street gobbling up the entire American experiment.

Here's a wonderfully-presented straw-in-the-wind from September 2009 --written to Lord Turner of FSA, who said then he would investigate, and who just lately confronted with LIBOR said ''oh my, what a distinct surprise''.

http://thetruthserumblog.blogspot.com/2009/09/my-letter-to-financial-services.html