Why are McCain and Bush always saying the same things?
They're both convinced, or want to convince us, that our current economic problems are "psychological."  There's something psycho about it, true, but it's not all in our heads . . .

When I was growing up as a young Republican dork, I was told that "regulation" was a bad word. Sensible people were for less government regulation. Socialists were for more government regulation because they liked big government controlling the markets and your life. And most of all they loved red tape that inhibited business.

And to this day, I still shudder when I hear the word "regulation." It sounds so nasty and socialist. That's the power of brainwashing.

Here's the only problem - it turns out you totally and completely need regulation. Without government regulation, the excesses of the market go unchecked and we constantly have financial meltdowns. Kind of like ... now.

Yes folks, be prepared. BushCo is meeting with 'regulators' today to discuss the insolvency of Freddie Mac and Fannie Mae. Any idea who will be footing the bill on this?

This is simply to draw attention away from the crooked deal that Paulson struck to get Bear Stearns into the hands of JP Morgan Chase.

It is being reported on CNNMoney.com

Two former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, surrendered Thursday to the FBI. The men face federal charges that they intentionally misled investors in two funds that collapsed last summer under the weight of wrong-way bets on mortgage-backed securities.

The case will be determined on what both managers actually knew, when they were advising investors. These are the first arrests to come out of the recent credit crisis. Even if it runs out these two managers acted illegally, Wall Street and the financials should have seen the dangers of the sub prime mortgage industry coming far in advance.

However, as the son of a former mortgage broker who was forced under threat of termination to give out loans that he knew in the long run would be detrimental to his own livelihood and that of his customers; I’m hoping more than a few of the big boys go down.

For fraud in relation to the meltdown of hedge funds triggering some of the worst of the subprime mortgage crisis.

Because, you know, of course, it's all their fault.  They did it.  Not nobody else.  Just them.

Link to Bloomberg article

I haven't seen this up yet, but, according to a report on Bloomberg, two ex-Bear Stearns hedge fund managers have been arrested at their respective homes by FBI agents.

Only the little people can fail.

Bear Stearns Chief Executive Alan Schwartz, forced to sell the hobbled investment bank to JPMorgan Chase in his eleventh week on the job, has been invited to stay on as a senior dealmaker, a person familiar with the situation said.

Meanwhile, CNBC has learned that broad Bear Stearns layoffs are set to commence later today or Tuesday, likely resulting in the eventual elimination of at least half of Bear Stearns' workforce.

Heck of a job, Schwartz. Glad to know my 30 Billion will be going to some really deserving people. More ranting below.

As we are all aware, Bear Stearns collapsed recently and was acquired by JP Morgan with the assistance of the Fed.  The Fed provided special financing of $30 billion dollars of our tax money to assist JP Morgan in the acquisition of Bear Stearns.

So what should be the terms of this special loan to JP Morgan?

Now that the shock has worn off ...

Observers are starting to question the legality of the Federal Reserve-Bear Stearns deal.  It emerged last week that, as part of the arrangement, the taxpayer was forced to take on a portfolio of some $30 billion in mortgage-backed investments.  J.P. Morgan acquired the assets on the cheap ... and the citizen assumed the liabilities.

Recent actions by the Bush/Cheney Admin leave no doubt that they have adopted Robert Mugabe as their economic guru.  

The taking of the equity of Bear Stearns  along with a minimum of $30 billion in taxpayer money and distributing the proceeds to the sharedholders of JP Morgan would strike a familiar chord to many in Zimbabwe.

However, the latest announcement (on a Friday afternoon, no less, so it must be important) indicates that FED will waive those pesky capital requirments for JP Morgan (and only JP Morgan).

The government and the pundits want you to think that the worst is over, that the crisis is averted and the causes addressed. But the truth is so much more interesting. The article (AP via NY Times) is worth reading in its entirety, but here’s the key point:

Big Wall Street investment companies are stepping up their borrowing a bit from the Federal Reserve’s unprecedented emergency lending program.

The Federal Reserve reports Thursday that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program. That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.

You see, they’ve stepped up their borrowing “a bit.” No big deal, really — just 38 billion dollars. Of public money. Each day. To the very people who created the problem. Given by the very people who allowed them — indeed, happily assisted them — create the problem.

If I might whisper something in America’s ear:

It's official ...

Hoooooray!

Another empty and confusing gesture by this administration, that means nothing but more financial disaster. The gall of these people to try to hoodwink us again. They are counting on the help of the media to swallow it whole or act like the hacks they are, and  the american people to accept it without looking at the fine print. This is a crisis that has hurt millions and destroyed many, and they want to continue their rapacity. We must fight these guys and the beaches and fight them in the hills. Paul Krugman is a great citizen and sharp eyed economist. Here is how he demolishes the pretense:

After the Bear Stearns bailout, it was no secret who this government cared about. While millions get their homes foreclosed on, the Fed bails out the big hedge funds and banks that knowingly took those risks. Well, it continues today.

News from ReallySeriousNews.com

Federal Reserve Chairman Ben S. Bernanke announced early Friday the bailout of J. Arthur Honeycutt, a retired bank magnate from Houston. Honeycutt, 81, the retired founder of a meatpacking empire, lost several million dollars investing in a thoroughbred stable that claimed to create Mr. Ed-like talking horses. The stable went bankrupt several months ago.

That’s correct. Congratulations! You know those hard earned tax dollars of yours, the tax dollars that BushCo decided a couple of weeks ago were best spent to bail out the irresponsible investment bankers on Wall Street, instead of letting them fall flat on their asses while free market capitalism belts out an appropriate punishment to those clowns? (You know, the way that we have always been told that "the system" is supposed to work when it has been abused?)

Your generous donation has enabled a guy who should, at this very moment, be as completely and totally financially bankrupt as his immortal soul is, to pocket about a cool $62 million dollars. He never missed one pricy meal, baby. Talk about laughing all the way to the bank.  Talk about (excuse screaming, please) CORPORATE WELFARE PROGRAMS.  

Yep, our tax dollars made it all possible for James Cayne to take lemons and make lemonade, a whole lot of it. And all of this while Rome burns.

Oh my!

This diary is an invitation for discussion and further information from knowledgeable Kossacks, to consider whether the JPMorgan-Bear Stearns (JPM-BS) deal merits a criminal investigation. It will be short, assuming people are as familiar as I am with the major details as the media reported them.

so... what did we have here?
After its leadership insisted that it has no liquidity problems, BS admitted Friday (11 days ago) that it does. Then over the weekend, it agreed to be bought for $2/share by JPM - placing the overall "sale" price (for it isn't really a sale, only a stock swap) at much less than the market value of its office building.

JPM, the benevolent buyer, agreed to undertake the deal only after the Fed stepped in to virtually guarantee it makes money from it.

Slightly more below the fold...