The United States Treasury has been selling hundreds of billions of dollars in Treasury Bills the past 48 hours in order to give the Federal Reserve System additional funds to pass on to banks, in exchange for worthless securities. This is another lame attempt to once again try and stop the financial market meltdown, which is slowly crippling the world economy into a deep recession.

LEVERAGE

The main problem driving this meltdown train is leverage. Over the past four to five years, most major banks and other financial institutions, with very few exceptions, decided to take advantage of a booming economy and real estate market in an effort to make buckets of money. The highly-educated executives running these companies proceeded on missions to leverage the balance sheets of their respective companies. Yesterday, former SEC Chairman Harvey Pitt appearing on one of the major business networks said that some companies had leverage themselves as high as one-hundred times capital. That's right 100 times!! Imagine having $1 million backing any losses on $100 million in debt instruments.  

What these companies did was issue securities tied to trillions of dollars in loans, and sold them to investors. The banks retained liability for any defaults that would occur. Since the banks have limited capital and can't convince any investors to throw more money down the toilet and give it to them. Defaults now surpass interest received on the loans less expenses of the bank causing the banks capital to be erased as the bad loans and investments are charged-off. It's all on the house of cards path.

In some cases, investment banks sold different investments containing the same loans to different investors.

As real estate values continue to plunge, more of these securities become worthless. 

GREED

The executives of these once high-flying companies tied tens of millions of dollars of their own outrageous personal compensation to performance bonuses. Their Boards of Directors went along while receiving stipends and stock options as compensation for serving. So much for the independent outside directors.

TAXPAYER BAILOUT

Now, the U.S. Government wants the taxpayer to purchase all of the bad debts and investments from all of these companies, place these worthless investments into a depression type government-bailout entity where the government will then sell the "worthless" assets and recover for the taxpayers whatever money they can.

The institutions that pulled these stunts get new money from Mother Fed and move on.

NATIONAL DEBT

Forget the $10 Trillion National Debt. that number is a joke. Forget about all the stories from politicians about mortgaging your childrens future. We're on our great grandchildren now!!! Depending on who you listen to, Taxpayer-owned (Face it! We own it) Fannie Mae and Feddie Mac are responsible for between $5 and $7 Trillion in mortgages. No, all of the loans won't go bad. Let's see about the rest. AIG $85 Billion (this money is already going down the drain), Bear Stearns $32 Billion, the FDIC is going to wipeout the some $50 Billion it has in reserves.

Doubling the national debt is a grim possibility here. When a gallon of milk costs $10 you'll know why.

FREE MARKETS

If free markets were allowed to work properly the government would leave things alone. The weak fail and the fit survive. When a vacuum develops, new companies emerge to fill the void. (Yes, someone will always be there to collect your mortgage payment. Sorry!)

THE BLAME GAME

Standby for the new edition of the "Blame Game". Yes, let's name that scapegoat. Today, it was SEC Chairman Cox. Tomorrow, it'll be Alan Greenspans's underwear color. Face it, there was no enforcement to prevent this massive leveraging by these so-called genius'. It's not short-sellers, not oil, or anything else. Some very smart people were raising the red flag some time ago, warning that what is now happening, was indeed coming down the road. People like Warren Buffet.

But, nobody listened. Why? Because too much money was being made. Politicians looked the other way, and regulators were'nt staffed to deal with what was taking place.

THE RECKONING

When the dust settles, the F.B.I. and all the U.S. Attorneys' need to haul these crooks in, seize their assets, and provide all expense paid vacations to "Club Fed". Examples need to be made and scores settled!!!