The Oil Drum

One way or another the system has to reset. I do not feel like I can predict how it will reset, we all have a opinion on how we would like it to reset but it's anyones guess how the cookie will crumble.

All one can do is to try and place odds on the various likely scenarios and allocate resources and time accordingly.

It isn't so easy to fight on your feet when surrounded by hordes of people that rather live on their knees = hard to soar like an eagle when surrounded by turkeys.

Let's see. They did bupkis in school and slid through on automatic A's and games where no score was kept. All ended well. Then they took jobs paying huge wages for zero skill and little effort (though that gravy train has diminished.) All ended well. Meanwhile, they watched tens of thousands of hours of TV where the good guys virtually always won. All ended well. They even persuaded themselves that they would live forever ("toxins" aside.) All ended well (the ones no longer here have no say in this.) And all the while, they steadily became more prosperous - indeed, many who brought nothing of value to the party nonetheless conjured up palatial houses and shiny cars out of thin air. All ended well. And now the Fed will keep the party going with a giant bailout. All...

Gee, is it even conceivable that anything whatsoever might not end well?

BAC up $1.45, JP Morgan Chase up $1.29, Bear Stearns up $5.45. What Me Worry?

You needed to go all the way to the bottom of the second chart. The last two enteries demonstrate that things went very wrong in January [the last two lines on the chart] with negative nonborrowed reserves in the last line.

Also note the large "term credit auction" numbers. My understanding is that this is a new inovation designed to limit the stigma of financial institutions borrowing directly from the Fed.