When policy-makers speak in an empty forest, do they make a sound?

This weekend we had a very fine illustration of an important truth: every word said by politicians and journalists is a lie more likely than not.

By all looks, it should have been very important: after all, G-7 summit itself spoke of potential currency intervention, asserted that it would not tolerate a weak dollar, and French Finance Minister Christine Lagarde even went as far as to call this a "turning point" and a major policy change.

Look, if this really was a policy change, and a turning point of some significance, then this is the kind of stuff which makes currency rates jump by 10% or more in day.

But in fact, after the announcement, dollar has done nothing but continue its usual fluctuations around the all-time low. This, of course, means that when politicians - even of the highest level - speak, no one thinks it is worth listening anymore.

Of course, the press either cannot comprehend or doesn't want to admit that market fluctuations are just that - random fluctuations. So, as usual, the press makes itself look clinically insane by simultaneously asserting that Dollar rebounds after G7 meeting and Dollar remains on backfoot after G7 meeting. Both articles are from the same newspaper (Forbes) and are published within 25 minutes of each other.

This whole farce underscores that the real reason for the credit crunch and liquidity problems is that lies and deceit are now in every part of the financial system. The reason Fed has been and remains so impotent in fighting the credit crunch, despite its unprecedented, almost trillion-dollar sized intervention, is that Fed's actions do nothing to restore the trust and honesty in the system. In fact, Fed's intervention has done nothing but help the banks further hide the truth. And as a result, it is doing nothing but prolong the crisis.

Everyone wants their own Bear Stearns.

Now that JPMorgan Chase received an Easter present of Bear Stearns (gift-wrapped by Fed in a $30 billion MBS swap), everyone else is (naturally) envious.

I work not far from Bear Stearns main building, and today there is some kind of protest going on there, with people in yellow jackets picketing on the sidewalks. Turns out, it is a bunch of angry homeowners:

My interest rate is 12 percent and I can't refinance," Gail explained.

Gail is joining a dozen other homeowners from Connecticut who are protesting the federal bail out of Bear Strearns. The company went belly up and has added to the ongoing mortgage crisis.

"They need to help people out too, not just companies," said Gail.

This makes perfect sense to me. Everyone has equal rights, correct?
Wells Fargo CEO obviously agrees with me, too:

Wells Fargo CEO John Stumpf said the financial crisis is presenting the bank with more acquisition opportunities.

"I would not be averse to a Fed-assisted transaction," Stumpf said in a recent interview with the San Francisco Business Times. "Fixer-uppers don't bother us."

Note to Fed: if you are gonna give out any more free lunches, please tell us where to sign up in advance, so that we don't feel left out next time.

Fed: from exhausted to cornered.

Quite a bit ago I suggested that Fed was exhausted. I was almost wrong - Fed took some steroids, donned a bandit mask, and sacrificed half of its own balance sheet to open another facility to brokerages and to bail out Bear. This, as I already hinted yesterday, backfired and turned Fed from hunter to hunted. And today, the hunted was cornered.

The interest rates on 13-week Treasuries plunged today to 0.4%, going as low as 0.2% at some point during the day. There is no more room for rates to drop. Even worse, Fed is now being under investigation by Congress - which questions the legality of recent moves. This should make Bernanke think twice before trying more questionable experiments. And if you thought it couldn't get any worse than that, guess again: Krugman believes Fed is now incapable of controlling even its own Fed Funds rate!

At the same time TED spread widened yet again, back to its all time high. This, and the borderline insane flight to the safety of T-Bills, means only one thing: the credit market is screaming out loud "We don't trust anyone, and we think even the largest banks are about to go bankrupt!" Everyone is on his own now.

Market to Fed: check, check, and mate.

Interfluidity: Credit Crisis for Kindergarteners.

In one of my earlier posts I tried to explain the current credit crisis in a simplified, big-picture way. But I still had to use big words like 'credit' and 'money supply'. I even used an abbreviation like M3.

But can we explain the current economic problems in a language that even children can understand? Turns out we can.

Interfluidity blog presents: Credit Crisis for Kindergarteners.

Alice, Bob, and Sue have ten marbles between them. Whenever one kid wants another kid to take over a chore, she promises a marble in exchange. Alice doesn't like setting the table, so she promises Bob a marble if he will do it for her. Bob hates mowing the lawn, but Sue will do it for a marble. Sue doesn't like broccoli, but if she says pretty please and promises a marble, Bob will eat it off her plate when Mom isn't looking.

One day, the kids get together to brag about all the marbles they soon will have. It turns out that, between them, they are promised 40 marbles! Now that is pretty exciting. They've each promised to give away some marbles too, but they don't think about that, they can keep their promises later, after they've had time to play with what's coming. For now, each is eager to hold all the marbles they've been promised in their own hands, and to show off their collections to friends.

But then Alice, who is smart and foolish all at the same time, points out a curious fact. There are only 10 marbles! Sue says, "That cannot be. I have earned 20 marbles, and I have only promised to give away three! There must be 17 just for me."

But there are still only 10 marbles.

Suddenly, when Bob doesn't want to mow the lawn, no one will do it for him, even if he promises two marbles for the job. No one will eat Sue's broccoli for her, even though everyone knows she is promised the most marbles of anyone, because no one believes she will ever see those 17 marbles she is always going on about. In fact, dinnertime is mayhem. Spoons are placed where forks should be, and saucers used for dinner plates, because Alice really is hopeless in the kitchen. Mom is cross. Dad is cross. Everyone is cross. "But you promised," is heard over and over among the children, amidst lots of stomping and fighting. Until recently, theirs was such a happy home, but now the lawn is overgrown, broccoli rots on mismatched saucers, and no one trusts anyone at all. It's all a bit mysterious to Dad, who points out that nothing has changed, really, so why on Earth is everything falling apart?

Perhaps Mom and Dad will decide that the best thing to do is just buy some more marbles, so that all the children can make good on their promises. But that would mean giving Alice 19 marbles, because she was laziest and made the most promises she couldn't keep, and that hardly seems like a good lesson. Plus, marbles are expensive, and everyone in the family would have to skip lunch for a week to settle Alice's debt. Perhaps the children could get together and decide that an unmet promise should be worth only a quarter of a marble, so that everyone is able to keep their promises after all. But then Sue, the hardest working, would feel really ripped off, as she ends up with a much more modest collection of marbles than she had expected. Perhaps Bob, the strongest, will simply take all the marbles from Alice and Sue, and make it clear than none will be given in return, and that will be that. Or, perhaps Alice and Bob could do Sue's chores for a while in addition to their own, extinguishing one promise per chore. But that's an awful lot of work, what if they just don't want to, who's gonna force them? What if they'd have to be in servitude to Sue for years?

Almost whatever happens, the trading of chores, so crucial to the family's tidy lawns and pleasant dinners, will be curtailed for some time. Perhaps some trading will occur via exchange of actual marbles, but this will not be common, as even kids see the folly of giving rare glass to people known to welch on their promises. It makes more sense to horde.

A credit crisis arises when many more promises are made than can possibly be kept, and disputes emerge about how and to whom promises will be broken. It's less a matter of SIVs than ABCs.

Bear case still a crime unsolved.

When I first commented on the JPM / BSC deal I offered two interpretations of what happened.

The funny thing is, stunned financial commentators are still trying to choose between the two. Newspapers, blogosphere, market analysts, still cannot come to a single conclusion. Some, like Mish, think that the deal was an acknowledgment of Wall Street's insolvency; Mish even provided his own crude calculation of Bear's net worth and came up with $-30 billion. Others, like this analysis, assert that Bear has been set up by evil conspirators who wanted to take it over for nothing.

Whatever the explanation is, market as a whole seems to have chosen the robbery version. JPM's stock has been bid up to increase market capitalization by $10 billion. This is implicitly assigning 30$ per share value to Bear Sterns.

One might wonder why BSC stock itself is still trading at roughly 8$ per share, even though JPM will buy it for 2$. The answer is that BSC shareholders still need to vote 'yes/no' on the deal, and there are a lot of angry shareholders who did not like being robbed. In order to ensure that deal can go through, someone is buying up BSC shares to increase the voting power.

Who are these someones? The most innocent theory would be that it's Bear's bond holders, who need this buyout to happen or they lose everything (total bond value is on tens of billions). There are less innocent explanations too, but again, we will probably never know.

P.S. Maybe the only correction that I should make to my original analysis is that the theft seems to be not so much from Bear shareholders, but from the taxpayers. The $30 billion loan that JPM got from Fed to deal with surprises in BSC portfolio is not so much a loan but rather a purchase of Bear's MBS portfolio, since Fed assumed all risk. So it is more like a $10 billion gift from Fed (taxpayer) to JPM.

Another kind of Wile E. Coyote moment.

If you follow economic commentators you may have heard an expression "Wile E. Coyote moment", usually applied to US economy or dollar. This describes the coyote running off the cliff, and then running for a while before he realizes he is in the air and he must fall. Only then does he actually fall.

But I found a completely different kind of Wile E. Coyote moment that captures perfectly the plight of the Fed as it tries to calm the markets. Click the link and enjoy!

Fed confirms there is more than one cockroach.

Sunday night press release from Fed (have they slept at all in the last week??).

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.

Second, the Federal Reserve Board unanimously approved a request by the Federal Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent to 3-1/4 percent, effective immediately. This step lowers the spread of the primary credit rate over the Federal Open Market Committee’s target federal funds rate to 1/4 percentage point. The Board also approved an increase in the maximum maturity of primary credit loans to 90 days from 30 days.

This one is easy to read. Like old saying goes, 'there is never only one cockroach'. With yet another never-before-seen facility Fed confirms that Bear Sterns was not the only Wall Street firm that is about to go belly up. This also makes it clear that those unnamed firms are unable to even wait a week for TSLF (which will allow them to temporarily off-load some of their mortgage-backed securities to Fed at inflated prices). Sheesh.

So, on one hand this will provide liquidity to these endangered firms. On the other hand, it screams nice and loud to the investors: 'time to panic now!' which removes liquidity from these endangered firms. I think I know who will win.

Monday will be a long day...

JPMorgan gets a gift of Bear Sterns.

Only last Friday Bear Sterns has collapsed spectacularly. And two days after, rubble has been clumsily swept under the carpet.

As you can read in various news sources, JPM bought BSC for a laughable price of 2 dollars a share. I guess Bear had to be sold before Japanese stock market opened on Monday morning, hence the Sunday night press releases.

As I have previously mentioned, nothing scares Fed and Wall Street more than a full derivative unwind that an outright bankruptcy by Bear would trigger. Also, Bear is a major clearing house, and if they stopped processing transactions it would have paralyzing effect on the markets. So, you might be inclined to think that it is good news that BSC was sold, and said unwind was prevented.

But let's consider the actual deal. Just 6 months ago Bear was valued at $18 billion dollars, or 150$ per share. Even after it became obvious on Friday morning that Bear is no more, panicked investors valued it at 30$ a share on NYSE. On Saturday, Bear executives claimed that the book value of the company is actually 80$ per share (book value is total assets minus total liabilities, so in theory company should be worth at least that much).

But JPM buys them at 2$ a share.

You can only explain this in one of two ways, and neither one is pretty. Pick your poison:
a) Bear Sterns, the brightest, smartest, one of the most reliable investment banks on Wall Street, was in fact nothing but an empty shell. This should immediately ring an alarm bell in any investor's brain: if Bear was nothing but the smoke and mirrors, and was valued at $18 billions just a few months ago, what about the rest of the Wall Street? Doesn't this implicitly confirm the suspicion (that so many already voiced), that most of the big Wall Street firms are insolvent for all practical purposes?

b) One of the greatest robberies of our time just happened in broad daylight, with an enthusiastic prodding by the Federal authorities. At least $10 billion of wealth was stolen from Bear Sterns shareholders and transfered to JPMorgan Chase. In a clumsy attempt to prevent market seizure Fed has violated every rule of free markets. Whatever remained of trust that foreign (and domestic) investors might have had in fair and honest functioning of US markets has likely just disappeared this Sunday night.


The fact that Fed allowed this deal go through on such conditions shows just how scared they are of a complete and total market failure across the globe. Scared witless does not even begin to describe it.

And the last thing - I think this may turn out to be the very mis-step by the Fed that I was cautioning about.

Look the other way!

So, more and more news are slowly coming out about Bear Sterns demise. Mostly it's the things you would expect, with Wall Street workers paralyzed with fear and uncertainty, Fed and other government officials running around with their hair on fire, etc.
Not interesting.
Looks like JPM is buying Bear after all - okay, saw that coming too. Fed must have offered some really sweet deal to JPM, maybe even full immunity to financial risks. Whatever.

Look the other way!

While Wall Street was getting a heart attack, I was intently watching the news for any sign of Chinese involvement. They are the guys with $1.6 trillion dollars. They can just make the whole thing go away. The crisis has been raging for 6 months now, yet Chinese did nothing!

If they are going to help at all, now is the time. And then I saw this piece:

Citic Securities Co., China's largest brokerage by market value, said the company ``can't guarantee'' that it will reach a final agreement on a proposed investment in Bear Stearns Cos.

This is it, folks. I guess China is not helping. The only conclusion I can draw from this is that China must have realized that this crisis may effectively eliminate USA as a super-power, and they are letting it burn.

Remember that China is practically the last big player who is still propping up our terminally ill dollar. If China goes from 'not helping' mode into 'let's nudge them closer to the edge' mode, the whole effing game is over. Instantly.

Be. Very. Scared.

Fed fights desperately to save Bear Sterns (BSC).

Last update 22:49 - scroll down.
10:30 AM: Boom! Man down! Or rather, a Bear... Just a few days ago I wrote that the next milestone would be a major bank failure, and here we have it. The news just broke that Fed is feeding discount window money to JPMorgan Chase so they could quickly provide emergency funding to BSC. The most ominous phrase in the press release was "JPM is working closely with BSC [...] on other alternatives for the company". Just imagine all those wonderful 'other alternatives'!

Twice in the last two weeks there were rumors that BSC cannot meet its liabilities, and today was the third... Like they say it, third time is a charm.

This is not small fish like Thornburg, and not even medium fish like Carlyle, this is Fed's cherished Primary Dealer!
Apparently, none of the usual rescue tools Fed keeps at hand for banks in trouble have worked in this case. Bear probably did not have enough collateral to post to borrow from discount window itself, and TSLF doesn't start for a week, so Fed is spoon-feeding them through JPM. Is it legal? Probably not. Is anyone likely to object at this point? Haha.

This is the end of Bear as we knew it. Investment Bank's main asset is credibility, and their credibility was just taken out the back door and shot. Their most likely fate? They will be bought out by JPM for pennies on the dollar.

I don't think anyone will let BSC declare bankruptcy officially, since they are a major counter-party to almost everyone dealing in derivatives, and if there is one thing Well Street and Fed are both scared witless off, it is a CDS monster.

UPDATE: 1:39PM:
Here is the full text of JPM's announcement to shareholders:

We announced this morning that in conjunction with the Federal Reserve Bank of
New York, JPMorgan has agreed to provide secured funding to Bear Stearns, as
necessary, for an initial period of up to 28 days. As part of our discussions
with the Fed, they have agreed to provide non-recourse, back-to-back financing
to us through the Discount Window. As a result, we do not believe this
transaction exposes our shareholders to any material risk. We are also in
discussions with the Fed and working closely with Bear Stearns on securing
permanent financing or other strategic alternatives.

This transaction speaks to the strength of JPMorgan and the advantage of maintaining a fortress balance sheet at a time when capital is at a premium. JPMorgan has a proud history of partnering with the Fed and other government entities to help during turbulent markets. We're pleased to work with the Fed to help Bear Stearns with its current liquidity concerns.

We will continue to update you as things progress.

UPDATE: 17:30PM:
I have a few more details now, and WSJ has also updated their article with more information. Apparently, the move by the Fed was (barely) legal - they used a little known provision in Federal Reserve Act. This provision was added during the Great Depression, which before now was the last time Fed had to prop up a failing banking system. However, as Business Week notes, provision or not, the move will be questioned by banking experts and politicians, and many consider it to be outside of Fed's mandate (you bet it is!). This is the first time in history that Fed stepped in and saved an investment bank.

Also, Bear was not eligible to borrow from discount window itself (not that it had collateral, anyway!) because it does not have commercial bank license. That's why Fed had to reach them through JPM. Bear is an investment bank and a brokerage. Again, this is a moot point because Bear is certainly out of any eligible collateral to borrow from Fed.

Another observation - note that JPM's letter to shareholders says that JPM is not taking on additional risk. If you wonder who is taking on additional risk, then I am sorry to disappoint - it's YOU. Unless you pay taxes abroad, that is. It is quite obvious that loan made to Bear cannot and won't be repaid. One has to wonder what kind of guarantee JPM received from the Fed...

On a final note, Bear Sterns was founded in 1923, survived several vicious crises and has never had a yearly loss until 2007. That's right, not even during the Great Depression. It was a glorious journey, and what a spectacular ending!

UPDATE: 19:08:
Professor Roubini weighs in with an angry I told you so! As the great prophet of this catastrophe, he deserves credit.

UPDATE: 19:45:
Bear Sterns makes a public statement during a conference call and acknowledges that it may not survive. While this may seem like non-news, it does bring up an interesting question: do they mean they will be bought out, as I suspect, or do they mean they will really be allowed to default? The problem with buying them out is that their liabilities far outstrip any value they have, so who in their right mind would pay a positive amount of money to buy them? The problem with letting them default is that it will trigger a derivative unwind that may bury the entire Wall Street alive. Another stalemate (or checkmate?) for the Fed to ponder over the weekend.

UPDATE: 22:49:
Wall Street Journal brings us this gem: It Is Tough to Value Bear, But It Had Better Sell Fast. It is good for a few laughs if you are a misanthropic type and like schadenfreude. Otherwise it's plain depressing. WSJ grimly tells us that the only asset BSC has that is likely to have any real value is their office building. I see this building every day, and it's a nice building, but it's exactly the kind of thing you would rather not own today. Although it may be convenient for JPMorgan, since it is just across the street from two of JPM's own towers.
Bear says it is frantically searching for a buyer and want to find one in a few days. This is understandable, because in a couple weeks no amount of Fed money may save them from default.
The problem is, nobody on Wall Street would buy them right now. Not only is everyone out of money, who would want to take on Bear's liabilities and its bag of MBS, ABS and all other toxic securities?
This is the ultimate nightmare scenario for the Fed. They will have to bring in politicians, and fast. Depending on what they do, this may the proverbial mis-step by the government that brings the whole house of cards down.

Fed action forcing hedge funds into default?

Just hit on this analysis over at Alphaville:

…it’s arguable that the banks’ seizure of Carlyle’s $20bn-odd in assets has actually been encouraged by the Fed’s mortgages-for-Treasuries offer. Because the Fed’s new lending emergency lending facility allows the banks to swap mortgage-backed debt for Treasury Bills in a way that Carlyle could not do.

So it would be rational for the banks to take Carlyle’s assets and exchange them for top-quality, liquid US government bonds, rather than leave loans in place to a business, Carlyle, whose assets remained highly illiquid.

If this is even remotely true...

What it means is banks are pushing margin calls and forcing hedge funds to bankrupt so that they could seize their assets and exchange them at full value to the Fed, rather then let hedge funds liquidate them at fire sale prices. Talk about unintended consequences and disorderly unwind. In the coming days we shall see how much truth there is to this suspicion.

As someone said: 'Fed tried to pull a rabbit out of the hat, but got a grizzly bear instead'.

More talk of Fed outright buying MBS from banks.

There seems to be more and more talk in the news about Fed potentially just outright buying MBS securities from banks. Some credible people say it's a must-do, while other respected people are calling the entire set of recent Fed experiments criminal. Brad Setser also has some thoughts on what other central banks have been doing and claims that Fed is much tamer than say People's Bank of China. All this talk might be a prelude to the upcoming action and trying to get a feeling for what the public reaction to such a step might be.

I don't really care much if this action would be legal or not, since I think Fed's recent behavior has been equivalent to shedding all pretense that it is a responsible entity independent of the government, like its mandate says. At this point they are likely prepared to do whatever it takes to prevent the big banks from collapsing.

Also, by accepting MBS as collateral, they already accepted the risk of owning these MBS securities in case of a primary dealer default. So, if they see a major bank collapse as imminent lest they do something, they may as well think they got nothing to lose.

What I am really interested in, is if it is even theoretically possible for Fed to start just buying ABS crap outright without generating an inflation spike. The recent TAF and TSLF were not money injections, as Fed has sterilized the money inflow by removing some money from circulation. But they had to use treasuries from their own balance sheet to do that. Fed balance sheet is only $1 trillion dollars. Just recent events alone have put Fed on the hook for about 400 billion of MBS. So, in a few weeks Fed's balance sheet will not be 1000$ billion of Treasuries, but 400$ billion of MBS and 600$ billion of Treasuries. That already seems very dangerous, considering that losses on those MBS are almost certain to be around 50%, AAA rated or not.

So to me, it looks like Fed has almost reached its capacity to sterilize this intervention further. And considering that the size of mortgage market is over $10 trillion, their move is still just a fig leaf on the size of the problem. I do think any further move in this direction would be the equivalent of printing money in some form.

Also, consider this: right now Fed officially deals only with the primary dealers. But there are numerous hedge funds out there in deep trouble right now, holding not only MBS, but all kinds of depreciating stuff. Banks have loaned enormous amounts of money to these funds, and they cannot get it back. Just today Carlyle Capital and several other hedge funds announced that they stopped withdrawals and are likely liquidating. The key problem is the entire financial system is over-leveraged (too much debt), not just the banks. So if hedge funds cannot answer margin calls and repay their loans back to the banks, which is the stage which we have reached, then even removing MBS from banks will not help much.

Fed may have been moderately successful in delaying the big disorderly implosion so far, but that is all it's been doing so far - delaying. I guess Fed's goal is to make sure the unwind stays orderly, but not to prevent the debt unwind from happening. Whether it will reach the disorderly stage or not, remains to be seen - but Fed's odds are getting worse.

So my conclusion:
a) Fed can buy moderate amounts of MBS from the most troubled banks without generating immediate inflation, but it cannot buy enough to really save the banking system. If it does try to buy enough, hyper-inflation will be here.
b) Fed does not have any solution for the hedge fund problem. They appear to be on the verge of blowing up en masse, and I have not yet seen any ideas from policy makers on how to deal with that.

Crisis coverage continued: Washington Post's summary of events so far.

Stumbled upon this very nice summary of the events so far, with minimal amount of financial jargon, so that anyone can understand exactly what is going on. Covers the last few months.

TSLF: market is not impressed.

Stock markets have rallied yesterday on the news of TSLF but the real measure of stress in the financial system is TED spread (graph), which indicates how much risk investors see in lending to banks. The higher this spread, the more risks lenders perceive. And in response to an unprecedented and extreme move by the Fed, the TED spread... barely budged.

Maybe because of this stock market traded down today and dollar tanked over 1% (USD to EUR is down 6% this month alone). Treasuries gained back everything they lost yesterday, suggesting that flight to safety has not abated.

If market does not believe that this action by Fed will restore trust in the system, what else can Fed do? It can slash rates further, from 3% to 0%, but considering that they are already in the uncharted territory of experimental monetary tools, they do not believe this would help much. They will cut, sure, but it does not address solvency problem. Another thing they could do is just buy the tainted assets like ABS outright, taking on risk. But this step would be so far outside the Fed mandate, it would probably require Congress approval first. Even if they do that, it would most likely amount to money injection and trigger a surge of inflation, so it's a no-win move.

I think deep down inside Fed officials know that they deal with solvency crisis, not just a liquidity one. And monetary tools cannot cure insolvent institutions. The reason Fed was implementing all these extraordinary measures is that they are trying to at least alleviate liquidity problems for those businesses which are sound and solvent. But the snag is, the only way Fed can lend money to ordinary companies is through primary dealers - big banks. However, what market is telling the Fed right now, is that it is the primary dealers who are insolvent. Confirming the suspicion, the primary dealers do not have the capital to take on more risk and are not lending out money.

With insolvent middle man stuck between the source of money and the solvent but illiquid companies, the situation resembles a stalemate. Or maybe a checkmate.

The last and ultimate thing Fed could do is to invoke the right it has to lend freely to any individual or company in the emergency situation. This has never been done before, not even in the worst crises. Fed does not have either the manpower nor the expertise to make loans to arbitrary companies. Will they try it? I doubt it, but who knows.

One thing for sure, if you hear the news that Fed is now lending money directly to companies like General Motors, then you know it has given up on saving the banking industry.