Bear Market Indeed

the Federal Reserve, in an attempt to restore confidence in the credit market, now accepts debt as collateral. this has been characterized as the Federal Reserve's 'boldest action since the Great Depression'. predictably, many investors and analysts are disappointed that the Federal Reserve just didn't purchase the mortgage securities outright. i am sick of idiot speculators who want their stupid asses bailed out after their foolish investment strategies bring the eminently predictable consequences down on their heads.

in other news, Drake Management is contemplating whether to shut down one of its largest hedge funds or continue to restrict redemptions or to allow their clients to shift money into other funds. they aren't the only firm to have a wee bit of trouble with hedge funds:

At least a dozen hedge funds have closed, sold assets or sought fresh capital in the past month as banks and securities firms tightened lending standards. The industry is reeling from its worst crisis because bankers -- staggered by almost $190 billion of asset writedowns and credit losses caused by the collapse of the subprime-mortgage market -- are raising borrowing rates and demanding extra collateral for loans.

Bear Stearns sought a bailout just days after reassuring their increasingly panicky clients that things were A-OK. apparently, their clients weren't reassured because there was a run on the bank which prompted the bailout by the Federal Reserve and JP Morgan. the bailout itself isn't a total fix because Bear Stearns needs to solve its financial crisis or find a buyer very soon. the real story behind the bailout is that JP Morgan borrowed the money from the Federal Reserve for Bear Stearns, but JP Morgan isn't bearing any of the risk of default on the loan. that risk is entirely on the Federal Reserve itself.

Prosperity Is Just Around The Corner

Record fuel prices blow budgets

Separate from the role energy prices play in the risk-and-reward scenario for speculating investors, the result for Americans' lives is that energy, and the mobility that it brings, is becoming crushingly expensive.

High oil "makes us poorer than we would otherwise be," says St. Louis Federal Reserve President William Poole. "There's a hit to real income. It's a drain on your purchasing power."

How this shows up in everyday life:

•Portland, Ore., trucker Lee Klass delayed a dental operation that will cost $500 after insurance payments because of $4 diesel fuel. He can't boost his fuel surcharges fast enough to keep up with zooming diesel prices, he says. "It's impossible for a normal business to keep up with it. You just can't do it."

Many more going bankrupt

Bankruptcy filings have surged 22 percent in Massachusetts this year, as more people are unable to afford their rising mortgage payments or refinance their homes to pay bills, according to court filings and bankruptcy attorneys.
more stories like this

[...]

Lawyers, trustees, and other bankruptcy specialists said the housing crisis is the single biggest reason that personal bankruptcy filings are rising rapidly. They said homeowners with subprime and adjustable-rate mortgages who cannot make their higher payments are resorting to bankruptcy. A decline in housing values has also limited the financial flexibility of homeowners who once were able to tap their home equity to pay off car loans or mounting credit card bills.

Employers cut back on hiring

Employers in many of the world's largest economies are "taking a step back in hiring", reflecting concerns that the crisis in financial markets could spill over into other sectors, according to a survey of more than 55,000 employers.

The study, conducted in 32 countries by Manpower, one of the world's largest recruitment companies, reported that the jobs outlook in the US, one of the main engines of the global economy, was the weakest for four years.

401(k)s tapped to save homes

Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills — and getting slammed with taxes and penalties in the process, according to retirement plan administrators.

Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say.

Some Homeowners Use Arson to Avoid Foreclosure

Looking to cash in on their insurance rather than face foreclosure, some people have committed arson to avoid losing their homes.

Michigan authorities believe 38-year-old Sheryl Christman was one of those people, when she set her home ablaze Sept. 1. Christman was just three days short of foreclosure.

Good times are over, central bankers told

Life for central bankers is going to get tougher as globalisation begins to produce malign effects - pushing up prices and spreading a financial crisis across the world, monetary policy chiefs said on Friday.

[...]

Jean-Claude Trichet, the ECB president, said the recent surge in commodity and food prices "reminds us that globalisation can also lead to upside risks in world inflation".

WellPoint is dark cloud for insurers

Shares of Indianapolis-based WellPoint Inc. plunged $17.11, or 26%, to $48.72 in afternoon trading, following its announcement late Monday that it would slash profit expectations. The company cited several factors, including medical costs, lower fully insured enrollment and a weak economy (emphasis mine).

Sharing the Pain

We have always gotten a distorted picture of how well Americans were doing from politicians and the media. The U.S. has a population of 300 million. Thirty-seven million, many of them children, live in poverty. Close to 60 million are just one notch above the official poverty line. These near-poor Americans live in households with annual incomes that range from $20,000 to $40,000 for a family of four.

It is disgraceful that in a nation as wealthy as the United States, nearly a third of the people are poor or near-poor.

Have A Cup O' Depression This Morning

so when do bankers start jumping out of windows and throwing themselves in front of trains?

in other news, just when thought your tour of bizarro world was over, statistics come out indicating that job cuts for the month of february are the highest in five years, yet the unemployment rate dropped last month from 4.9 percent to 4.8 percent.