Video: What the Stimulus Bill May Do for You - AssociatedPress
http://www.youtube.com/...
So that's a list some of what the Stimulus will do.
Here's a list some of what the Stimulus should do, and may help to prevent:
Hardball: Paul Krugman on the Needed Stimulus Package
http://www.youtube.com/...
Paul Krugman was on Huffington Post today, with some sober assessments of the Stimulus Bill, as passed. Also he does however, admit we may avoid another Great Depression. What a bundle of Sunshine, he is!
Paul Krugman: Stimulus Too Small, Second Package Likely (VIDEO on CNBC)
Huffington Post - February 17, 2009 05:50 PM
http://www.huffingtonpost.com/...
Here's another eye-opener from Paul, that hasn't quite made the mainstream circuit, yet:
Krugman begins: "In some ways we owe the dot-com Bubble an apology ..."
Paul Krugman: How did a few failed banks add up to a financial meltdown?
[Video won't embed -- click one of the following links instead.]
Highlights from Krugman talk at the ZocaloPublicSquare (Video)
The complete Krugman talk at the ZocaloPublicSquare (Video)
And Krugman ends up with some stern warnings about:
"the Shadow Banking System"
Huhh ??? WHAT'S THAT ?
Wikipedia:
The shadow banking system or the shadow financial system consists of non-bank financial institutions that, like banks, borrow short, and in liquid forms, and lend or invest long in less liquid assets[1]. They are able to do this via the use of credit derivative instruments which allow them to evade normal banking regulations, e.g. those related to specifying ratios of capital reserves to debt. Many "shadow bank" like institutions and vehicles have emerged in American and European markets, between the years 2000 and 2008, and have come to play an important role in providing credit across the global financial system.[2]
The system includes SIVs, conduits, money funds, monolines, investment banks, hedge funds and other non-bank financial institutions. These institutions are subject to market risk, credit risk and especially liquidity risk, since their liabilities are short-term while their assets are more long term and illiquid. ... they could go bankrupt if unable to refinance their short-term liabilities.[3]
(emphasis added)
http://en.wikipedia.org/...
Ok, but that is Wikipedia ... what else is out there, about these risky faux banks?
Brokers threatened by run on shadow bank system
Regulators eye $10 trillion market that boomed outside traditional banking
By Alistair Barr, MarketWatch - June 20, 2008
The shadow banking system grew rapidly during the past decade, accumulating more than $10 trillion in assets by early 2007. That made it roughly the same size as the traditional banking system, according to the Federal Reserve.
While this system became a huge and vital source of money to fuel the U.S. economy, the subprime mortgage crisis and ensuing credit crunch exposed a major flaw. Unlike regulated banks, which can borrow directly from the government and have federally insured customer deposits, the shadow system didn't have reliable access to short-term borrowing during times of stress.
...
In recent decades, lots of new businesses and investment vehicles have evolved that do the same thing, but outside the purview of traditional banking regulation.
Instead of getting money from depositors, these financial intermediaries often borrow by selling commercial paper, which is a type of short-term loan that has to be re-financed over and over again. And rather than offering home loans, these entities buy mortgage-backed securities and other more complex securities.
A $10 trillion shadow
... When subprime mortgage losses started last year, their sources of short-term financing dried up.
"These things act like banks, but they're not," James Hamilton, professor of economics at the University of California, San Diego, said. "The fundamental inadequacy of their own capital caused these problems."
(emphasis added)
http://www.marketwatch.com/...
OK, now let's go to the source... Bill Gross, head of PIMCO, is credited with coining the term "Shadow Banking System", for this Unregulated Private Banking ad-hoc system, that he found rather troubling (and possibly "catastrophic"):
Bill Gross Calls it "Shadow Banking System"
Bill Bonner -- January 22nd, 2008
And here's something else to worry about. Bill Gross, head of PIMCO, the world's biggest bond fund, calls it the "shadow banking system." He's referring to the way money and credit fly around the globe, courtesy of the very same "sophisticated" and "free" institutions that created such prosperity for so many people in the financial industry.
Banks recognize that not all their loans will be repaid. They operate on margins of safety, with reserves set aside for when things go wrong. But in the worlds of swaps, hedge funds and derivatives...slick operators can invest billions with no margins of safety...and no reserves. The result, Gross says, could be catastrophic:
...
According to the Bank for International Settlements (BIS), CDS totaling $43 trillion were outstanding at year end 2007, more than half the size of the entire asset base of the global banking system ...
Bill Bonner
The Daily Reckoning Australia
(emphasis added)
http://www.dailyreckoning.com.au/...
Troubling indeed!
And even Barrons is advising Geithner to address this huge behemoth, drying up worldwide Credit Markets -- putting the World's Circulatory system, into "cardiac arrest". These "wild west bankers" are often the ultimate source of so much of those Toxic Assets too, aka. CDO and CDS.
Advice to Geithner: Don't Hold Back
By JONATHAN R. LAING - Barons - Feb 9, 2009
Treasury Secretary Tim Geithner will no doubt sell the plan as crucial to reviving the credit markets and jump-starting the economy. But, sadly, the plan seems merely to continue the pattern of the past two years of largely ineffective and inconsistent policy responses. Once again, it could be too little, too late.
For one thing, the plan only contemplates fixing the banking system. Yet over the years banks have accounted for a smaller share of the U.S. private credit market as the securitization market, or what Pimco bond king Bill Gross and others call the "shadow banking system," has come to the fore. Today, banks' share has dropped to around 20% from nearly 40% in the early 1970s, according to Federal Reserve Board data charted by Bianco Research in Chicago.
(emphasis added)
http://online.barrons.com/...
(there is a nice chart of those global Credit Trendlines, in that link.)
I am now reminded, of a Classic Radio Show, from the Golden Age of Media. A radio show with a catchy Tagline, one designed so that, you would remember it, and be sure to tune in again "next time".
It went something like this:
"Who knows what Evil lurks, in the hearts of men? ...
The Shadow Knows!"
It's too bad we don't have such memorable tags in Today's Media --
Maybe if we did, "White Collar Crime" could be painted with the venom it deserves ...
How about re-branding the culprits of "White Collar Crime" as
"Gutless Greedy Bastards,
who would cheat your Grandmother,
if they could Get away with it!"
Now that is a vivid image that might stick --
one sure to capture the public's imagination ...
Afterall who's doesn't want to protect your Grandmother's Life Savings?
-- your local "White Collar Criminal" -- that's WHO!
er, I mean, "Gutless Greedy Bastards ..."
who never saw a mortgage they wouldn't refinance,
and then dump on the open global CDO market,
and pocket the loot, in the process!
Just let the "Free Market" work its "invisible" magic --
some say ...
(and I say, those Reaganomics Cheerleaders,
need some serious re-branding too!)