Mrs. Palin Has No Clue "who" Freddie and Fannie Are

Washington's takeover of America's two biggest financial institutions, Freddie Mac and Fannie Mae, is scary enough but market players worldwide are concerned that the Republicans have added a rookie running-mate to the presidential ticket who likely thinks Freddie and Fannie are a couple of Senators. Or a couple of constituents in Alaska.
That's why the attractive Alaskan is on a very short leash, tethered to her political Sugar Daddy John McCain. She had better stay that way and duck reporters until she cracks those briefing books and crams for the debate with Biden.
Even if she's a quick study, this is not Economics 101 at the University of Idaho we're talking about here. The recklessness of McCain's choice is underscored with this weekend's frightening move in Washington and proves the world has entered the most dangerous financial period since the 1930s.
Mrs. Palin may be relatively bright but she hasn't even a passing knowledge about the underpinnings of the financial or global capitalist system. She's handled a state budget which requires little sophistication, no education and zero policy comprehension. And despite that puny background, she could eventually be a heartbeat, or heart attack and cancer recurrence, away from becoming CEO of the world's biggest economy.
Her candidacy, and lack of sophistication, will contribute greatly to market nervousness.
And should.

Federal Deposit Insurance Corporation may be next
There will be more bad news before it starts to get better. The Fed has 150 banks on its watch list, in addition to the 11 that have already gone bust. If all go under, the Mother of Bailouts will be necessary.
Gerard Cassidy at the Royal Bank Capital Markets in Canada last week described the further fallout in his analysis called "The Texas Ratio" which looked at banking crises in the 1980s and 1990s. His "Ratio" is the point at which a bank's underlying value and bad debts intersect. Then they're headed for a bust, particularly since raising equity for banks in the U.S. is nearly impossible.
"If all 150 banks fail, the FDIC will be insolvent," he wrote.
As the FDIC's liabilities grow to 150 or more banks the insurer of last resort won't be able to cover its obligations to deposits of up to US$100,000 in a deposit account of up to US$250,000 in a retirement account.
When that happens, Congress will have to step in to avoid massive runs on the banks.
Next on the Republican list, for a new, bigger role for government, will be Detroit, suffering from the double whammy of high oil prices and low consumer spending due to the bursting of the real estate bubble. It will need the Mother of Earmarks to chug along as it figures out what to do in future.

The role of government, whether McCain, Sarah and their Republican base admit it or not, is not to remove all the referees from the ice, to use a hockey metaphor. Government's absence is in large measure to blame for this crisis.

Comments

[Aaror]

How to get to the right of the oil companies, and still be a democrat???
The oil companies want more land to drill in, even though they are not drilling in the land we already gave them. They also tell us they will drill if someone will pay for test drills. Easy solution!
We tax every acre of land leased for drilling that currently is not being developed or drilled. The money goes into an account that oil companies can use for test drills. If it isn't used, it goes to reduce the national debt!
Hey, we just gave them everything they asked for, and used firm measures to increase domestic production! Only we didn't give taxpayer dollars to the oil companies like the Repubs would have.

[dadw5boys]

EXXON likes to import Ethanol from Brazil add 10 % to a tanker of Gasoline , regined in the USA, take the TAX BREAK for using Ethenaol then they ship the gas to England where they take another tax break before selling the gas there for a higher price.

That is EXPORTING U.S. OIL!!!!!!!

[KillTheMessenger]

Care to tell us where you got your "information" from?

So EIA says that on average we are exporting about 400,000 barrels per month to the UK. Now, it that would be the same mix of products as for the total of our exports, it would contain about 40,000 barrels of motor gasoline. If that is blended with 10% ethanol, it's a total of 4,000 barrels/month worth of ethanol. What might that tax incentive be on that? Let's say it's $10/barrel. So Exxon makes $40k/month on a loophole? Is that it? A measly $40k/month? For a company that makes billions with their main business?

Wow, that's huge. Not. The best one could make of this is that we have too much refining capacity because there are obviously no shortages of gasoline in the US. And yes, we should probably close that loophole. But I wouldn't get all upset about it. I am a guy who cares about the big picture, not some measly breadcrumbs that somebody forget to vacuum off the floor.

Let's try to figure out how to reduce the $700 billion in oil imports per year. Now that would make sense.

[dadw5boys]

PALIN HAS NO IDEA THAT AMERICAN OIL COMPANYS EXPORT OIL TO EROUPE OR ANYONE ELSE WHO OWNS THE OIL CONTRACTS WHEN IT COME TIME TO FILL THEM.

DRILL DRILL DRILL HOW STUPID CAN YOU GET.

IF THEY EXPORT THE OIL WE ALLOW THEM TO DRILL FOR !!!!!!!!!!!!