we're bankrupt

They no longer have the money!

"The Fed has gone from being a balancing (liquidity) mechanism to being a funding (equity) mechanism, and what's worse, the collateral they are holding may not be worth the amount of loan they have outstanding."

"That is, the system as a whole is insolvent, in that it fails the essential test of having the amount of reserves in liquid assets as mandated by law."

"What's worse, since the H.3 report says that the amount of "required reserves" is $40 billion or so, and the non-borrowed reserves is more than double that amount the system is not only insolvent (that is, has non-borrowed equal to the required amount) but in fact is negative by double the amount required."

The above is from an article by Market Ticker, and he explains it really well. I'm no economist. And I am really bad at math. But even I know that a huge spike on a graph is a pretty bad thing and that you're not supposed to be borrowing way more money than you have ability to pay back. Hmmm. Another guy, Mr. Mortgage though excitable, is also clear and credible.

And yet...and yet...experts agree everything is fine...

Like this expert
And this one
And especially this one

Well, I don't know about you, but way spiky spikes on financial graphs don't seem so good to me.

Do you feel fine?

PS: click on the graph, it gets bigger

It's not your money anymore

Didn't you know that? In the deepening worldwide financial crisis, the deputy of the International Monetary Fund announced today that in order to to shore up the financial institutions, for the good of everyone, thay just may have to grab your money. Just like that. Really. I am not making this up.

IMF tells states to plan for the worst
Financial Times of London
By Krishna Guha in Washington

"Governments might have to intervene with taxpayers’ money to shore up the financial system and prevent a “downward credit spiral” from taking hold, the International Monetary Fund said on Wednesday."

"John Lipsky, the IMF’s first deputy managing director, said: “We must keep all options on the table, including the potential use of public funds to safeguard the financial system.”

"IMF deputy managing director’s comments make it clear that the fund is open in principle to the possibility of taxpayer-funded intervention in the market for mortgage securities as well as intervention to save individual banks from bankruptcy. Mr Lipsky warned: “The risks of further escalation of this crisis are rising and decisive policy action will be needed.”

He said this crisis was different from recent past crises because both the financial markets and the banking system “have faltered simultaneously.” The first priority had to be to reverse the “spreading strains” in global financial markets and restore the functioning of the financial system in advanced economies."

Now, there is some debate among the tiny pinheads like me that 'taxpayer money' means 'already paid into public funds like transportation accounts' or if it means dipping into deposit liquidity in individual banks. Likely the former, but either way, it's not good.

I love the carefully couched euphemisms, particularly 'spreading strains.' In laymen's terms it means: "we're cooked."