Greedy Guts Itself: III, Casualties(Updated again)

The depth of Greedy Gutting Itself is beginning to emerge. Paul Krugman at the NYTIMES has this estimate of the depth and breadth of the problem . If you do the math on homes averaging $250,000 in value one has between$3-5 trillion on the line. And Allan Greenspan is calling it Turbulent Times – its beginning to look like Alan was the Bud Selig Commissioner of bad debt’s rampant profligacy.

In case there is any doubt that Greedy has Gutted Itself – take a look at what is happening at CitiGroup – it is selling 5% of itself to an Abu Dhabi investment fund. More telling, this is the second time in 5 years that CitiGroup has had to go to get rescue funds from well placed Arab investors. Meanwhile every Financial Capitalist but Goldman Sachs is waiting for Sugar Daddy … uhhh, the Federal Reserve Board to once again act as the Moral Hazard relief pitcher (but remember we don’t depend on goverment handouts) – and lower interest rates yet again in December.

And in the latest sounding from the FRB – they are very likely going to oblige the bad-debt ridden “clients”. And so the financial markets, up 2oo point on the Dow Jones for example, indicates to the Fed “you better do what you have implied because we are betting on it. ” But watch what happens – there may be severe collateral damage as the dollar takes a further tailspin when US interest rates are lowered – other low risk currencies and commodities become more attractive. In short in seeking to avoid a recession from bad debt run amuck, the Fed may get the equivalent with all that foreign oil and Asian goods costing lots more.

Finally, not a peep from the FRB or the Bush Administration on reining in the financial institutions which are blithely robbing the commons with opaque, unevaluable derivative products that put trillions of dollar of capital in jeopardy while rewarding itself with low capital gains loaded pay packets stratospheric billion dollar salaries and ever more frequent recourse to the FED and other government institutions to bail them out. The vicious cycle is now down to once every 2-3 years.

I need a 5th. I love these Ayn Rand capitalists who praise the efficiency of Darwinian cuthroat markets just not applied to their company or interests. Send in the FRB Keystone Kops in their special interest cases.