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Short squeeze going on in oil

The front month crude oil contract that ends trading this week is up over 10% today.  Why, was there some big event?  Did terrorist blow up a pipe line or something?  Nope, what you got here is a classic short squeeze. The November contract is trading at $109, while this one in question is at $116.  You see, a lot of these traders were riding the recent downtrend in oil.  In fact, so many were figuring that oil would continue to go down, that open interest (that is all the trades that are still open and have yet to be closed) increased even on Friday!  But then, all of a sudden, the November contract wasn't moving downward as much.  The traders smelled something odd and soon realized all their compatriots were still short this morning on the week of expiration.  So what you have is one group of traders taking advantage of another group of traders.  

Goldman now a "regular"Bank

So is this really a ticket for them to do business as usual?  I'm reading on the Wall Street Journal this morning that Goldman Sachs and Morgan Stanley will be converted into regular banking holding companies.  So now they are to be like Citibank and Wachovia and Washington Mutual?

For sure, this will pair them down a lot.  The days of 40-1 leverage are over for them.  The boys and girls at the trading desks at Goldman might be hitting that aged whiskey a little more tonight.  No more being capitalist cowboys for them. 

The Selling of a Crisis - So Horrible They Cannot Describe It

We are now hearing the United States has a dire emergency and if Congress doesn't act immediately we will face some sort of Economic Armageddon the world has never seen before, which of course they cannot describe.

Rep. John Boehner:

The Most serious crisis the World Has Ever Dealt With

(Wasn't that the Black Plague or maybe WWII?)

Here is Senator Chris Dodd saying Hank Paulson should be given the authority, absolute:

People are Asking the Wrong Question

All discussion about the proposed taxpayer-funded bailout of Wall Street banks is centered around the idea of, If we don't bail them out, they will fail.
It seems no one is asking a much more important question of, "Will this bailout do any good?" Or to take this one step further, "Will this bailout do more harm than good?"

We badly need to consider what history teaches us before we repeat the same mistakes all over again.

Lessons From Hoover

People like to look back on FDR's New Deal as a success story of government intervention. These people ignore two important facts: a) that Hoover repeatedly tried to save the Wall Street banks in the preceding years and failed, and b) by the time FDR became president almost every bank in America had already failed. There was almost nothing left to save.

EconoBlogosphere's unanimous verdict: Wall Street bailout plan will soak taxpayers

In the last 24 hours, there has been an explosive outpouring of analysis of and revulsion for the Wall Street Bailout plan, from economics professors to financial traders to laypeople. And the verdict is in: Paulson's plan can only "succeed" if the taxpayer overpays for cr***y securities, and then sells them at a discount to Wall Street. Paulson alone gets to decide which Wall Street players win and lose; but it is a certainty that the taxpayer must lose, perhaps $1,000,000,000,000 (that's TRILLION).
I have prepared a round-up of the econo-blogosphere opinion below. The detailed analysis by "Naked Capitalism" is particularly compelling. Mish and Lee Adler (one a Ron Paul acolyte, the other an old fashioned progressive) both encourage a Senate Filibuster. Finally, Stirling Newberry says today and tomorrow will truly show Barack Obama's character.

Text of Bail Out Act Before Congress - TAKE ACTION NOW!

Update 09/28/08: If you are looking for the latest draft of the bill, look here. The draft in this blog post is now out of date - The Economic Populist Admin.

Calculated Risk has the scoop on the text of the bailout bill. 

Hat tip to Calculated Risk via Kossack 3 goldens, who has supplied the text of the Wall Street Bailout Act that Bush expects Congress to approve within the next week.

What in the Hell just happened?

It's the usual question that someone asks after getting hit over the head and mugged, or if they were in the immediate vicinity of an explosion.
For the American taxpayer, both of those things happened during these past two weeks.

So many unprecedented events took place in such a short period of time that it was hard to keep up. Lots of people said lots of scary things, but few stopped to break down the most important issues, which are: a) how did we get here, b) what exactly is being done, and c) what does it all mean.

I'm going to try to help with those question.

Congratulations! You now own the mortgage industry!

We are Suckers. We are Chumps.


Uncle Sam goes "all in"

And so, they have finally done it. Washington has finally bet every dollar of earnings and wealth you and I and every other taxpayer has ever made in our entire lives; every dollar that will ever be made by our children's generation; and every dollar that will ever be made by our grandchildren's generation; in an attempt -- that is by no means guaranteed to succeed -- to prop up reckless and malign investments by Wall Street.

Wondering Where Our Bail Out Is? A Few Lone Voices in Congress

The more I mull the idea that a bunch of completely irresponsible corporations who through default credit swaps and other exotic finance derivatives managed to crash their businesses are getting a potential $1.7 trillion bailout infuriates me. I was wondering if any of our representatives were not towing the Corporate Party line?

Well, yes and we have a great speech from Senator Bernie Sanders (I-VT):

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