Someone somewhere needs MUST alter the fancyaccountingwords and pain them in the truest light.

For example: How can assets, toxic or not be unaccounted for, or NOT ON THE BOOKS. Is this legal?

Toxic assets = 20 cents on the dollar, and must be appreciated or accounted for, or the entire system is foul polluted, and USELESS!!!

Derivatives = irredeemable debt PONZI schemes!!!

Arbitrage = predatorclass insiders and oligarchs gaming the captured system in their favor!!, to the wild and grotesque deleterious impact on markets and other investors.

TBTF = FAILED institutions, run by FAILED management, bruting and pimping FAILED products!!!

Until and unless we as a nation, or as collective humanity defines these crimes and abuses in their true light – we are all doomed to an unending cycle of boom/bust/collapse/bailout processes. And these processes cause massive harm to the greater society.

We swim in an ocean of LIES!!!

There are others, of course.

But let me make the register, pay tribute, to our friends here, including the commentators. It is great to know that The Baseline Scenario is fully operational, so that when we reach this page there certainly comes clever and sharp analysis on the central and most important issues of the political economy of the crisis.

Congratulations everyone.

If inflation goes up uncontrollably to 6%, I don’t see how we can get a bubble.

Clans, fiefdoms, villages, empires etc used to go to war to re-distribute food, property and wealth… Come on – why bother with war just to re-distribute a little wealth to ‘the deserving’ when you can just take advantage of bubbles comin’ and goin’! It’s just ‘rational decision making’ dressed up in ‘sophisticated’ garb (language) – just some guys trying to do a little ‘innovative’ business!

This admission of non-responsiveness by one regulator in a “crowd of regulators” definitely supports your argument for “making one set of good laws/incentives/enforcement.”

Surely, risk/leverage mismanagement of a number of global European banks that apparently held half of the toxic assets cannot be placed at the feet of one POTUS and one U. S. Senator.

But you’re right, we don’t have the details. A cute puzzle, though.

7% compounded for ten years is 97%. That’s Protium’s cumulative interest claim. If the deal is structured as {all unpaid interest Protium THEN all outstanding Barclays THEN all remaining Protium}, Protium has almost no chance of losing, even though it is technically in the most subordinated tranche (“equity”); it just so happens to also have a senior claim.

That is the cynical view.

The optimist would say that even with vanilla documents, hell, you have 28:1 non-recourse leverage, Barclays is going to be damned if they push you into default (that would be a hell of a mark-to-market grenade on the balance sheet – they’ll work something out), what are the odds these things are underwater for a decade continuously (first sign of life along the way and you sell the underlying)?

I think it is very wrong policy is the main reason for the higher unemployment rate and higher cost of living currently. FED support speculators on Wall Street, mainly financial institution, to push up asset price and inflation too high and then FED have very slow reaction on the speculation; therefore, we have big bubble and speculation and big crash and crisis.

This policy still goes on by Bernanke and it will cause the bigger crash and crisis but we have the same result that is the higher unemployment. Now FED lie everyone about inflation trend and the effect of monetary policy on the welfare (lower cost of living (low inflation) and lower unemployment). The inflation is currently low due to the base effect that oil price was too high last year but the current inflation trend is too high. The monthly inflation show the growth at 6% , ISM price paid show the jump in core inflation, and if we pass this October, the inflation will go to around 3-6% in the next six months (oil price is at this level) and core inflation will move up to 2-4%. Therefore, we are going to have higher inflation than the past cycle and inflation will move up more quickly than the past cycle.

Another FED’s lie is the monetary policy can improve the unemployment rate. Greenspan and Bernanke used too low interest rate after Tech bubble and create short term speculative economy with high property and asset prices, higher consumption but we have no real economy, no real employment and our businesses have no competitiveness. Frankly, GDP can grow but we have the worst employment in the every cycle because when we use too low interest rate, it will push up price higher and more quickly. Business can have more profit from higher margin and they have no need for new investment because there is no real demand increase. I call the Monopoly support by FED. Then, when speculators get too cheap funds from FED, they put into asset speculation, surely, it makes people believe that we had the good economy because stock prices went up, real estate price went up. But we were just in the speculative economy that FED created.

All FED policy that keep interest rate too low and unrealistic and the more FED try to push economy to Monopoly and Speculative economy, the more severe effect of crisis and crash will occur and surely we all know that this policy create more volatile economy and less people going to real investment that need long term return rather than short term return in financial markets. It is going to create the less real economy and the less real employment.

I think, after this October, inflation will go up uncontrollably to 6% in six months and we will have big bubble and big crash by itself and surely, unemployment rate will move up more than anyone expects. So, FED should stop the speculation and stop lying on their policy and economic and inflation forecast.

I think before regulating the bank, we should have the law to regulate FED and government to use monetary and fiscal policies for long term and sustaining growth rather than for speculators like this.