Monday, September 15, 2008

A Brief Word

Six months after the Fed guaranteed Bear Stearns' losses to JP Morgan Chase, six months into $500 billion in write-downs on the mountain of junk called "assets" with another trillion to go; after Fannie and Freddie got laid and the Treasury got scared; six months into overdue, seriously overdue, 'I'm not kidding you are really late' overdue, delinquency, and foreclosure; six months into a wasteland of cancelled IPOs, LBOs, credit lines, Ms&As, six months into the portfolio of photographs and streaming video showing all those young near and real MBA investment bankers, financial advisors, hedge fund floggers, structured investment vehicle dealers, specialty market makers, all dressed up with cardboard boxes in their arms with only one place to go --home, and that home overdue, seriously overdue, and I'm not kidding overdue-- after all that IT HAS ONLY BEEN SIX MONTHS.

And after six months of incantations, jawbones, collateral easing, calming statements, rescue and resuscitation, of here epinephrine, of there defibrillation, the Fed and the Treasury had to let a patient go. The Lehman Bros died of complications.

In truth, it's not medicine that the Fed practices, not even shamanism despite the hocus-pocus of interest rates. It's triage. The Fed and the Treasury reviewing their own finances, assessing the criticality of their own health and that of the life-blood of the financial markets, the short-term "repo" markets, decided that their own credit ratings, their own abilities to operate with and in the money markets outweighed Lehman Bros rescue.

In the long-run for capitalism, the short-term is all there is. Finance is nothing. Re-financing, and re-re-financing is everything.

Much more to come

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