WTF!!!

From the Financial Times: "Ken Wilson, the Goldman Sachs banker who is joining the US Treasury to help the country through the financial crisis, is expected to take a temporary post that will subject him to less stringent ethics rules than many other high-level officials."

You can’t make this up folks.

Fractional Reserve Banking

Keep in mind that our fractional reserve banking system would cause a 1.5 to 3 trillion loss to suck 15 to 30 trillion out of the economy.

Up to 3 trillion + loss?

IndyMac just collapsed and the FDIC is estimating the loss at 4 – 8 Billion on the 32 billion bank. Using that as a guide I would conservatively estimate the initial loss from Fannie Mae and Freddy Mac at 1.5 to three trillion; though it’s probably higher because a goodly portion of the 40% market share it captured over the past year is doubtlessly shaky loans other banks were eager to offload.

Mother of all busts

“Freddie Mac and its fellow GSE Fannie Mae are now financing more than 80 percent of all mortgages in the U.S., up from 40 percent a year ago.”

They are holding roughly 12 trillion. What percentage has to be in default to pull them under? If the government bails them out inflation will drive up the cost of oil forcing more mortgages in default and could ultimately double the national debt in a matter of months. The result would be hyperinflation.