The Great Depression Part II?

'Small Government' You Say?

Here's something I don't get. Freddie Mac and Fannie Mae essentially gave out huge amounts of bad loans to people it shouldn't have handed such loans. That's why they're called bad loans. It's not like there's a special, different definition for 'bad' in this case. It's just awful decision making on the part of management. Then, when the credit crunch comes, they go running to the government and the government bails them out.

So much for all that laissez-faire small government talk - they just simply throw tax payer's money at those people. In turn, the bosses of these firms leave these companies with their golden parachutes worth $13m and $8m respectively. Hang a minute, I think to myself, isn't that money from the public purse that they're taking as their golden parachute? Why doesn't the American public get more angry about this stuff?
It's ethically and morally fucked up, but nobody seems to give a shit. It's astounding. It's also pathetic to see that all that grand talk about the power of capitalism comes down to the Federal Reserve bailing out these crippled mortgage giants.

Don't Look Now, But There Goes The Banking Neighborhood

Lehamn Bros. has decalred bankruptcy. The Federal Reserve got together with a bunch of banks to create a $700b fund to shore up the hole being left by the imploding Lehman Bros. What's worse, the Fed is swapping out Treasury Bonds for the next-to-worthless mortgages. Isn't this a little bit like swapping dollar notes out in exchange for bits of used toilet paper?

Anyway, the estimated global exposure of the financial sector to the Lehman Bros collapse is estimated to be in the order of $850billion. Got that? That's US$85,000,000,000.00. Naturally, the ASX told people to stop trading with Lehman Bros. in Australia sometime this morning and the rest of it is a major meltdown of the financial sector.

Meanwhile the Bank of America acquired Merrill Lynch amid the deepening crisis. The Federal Reserve is stepping in actively to shore up the financial sector because the price of not doing so would be a rerun of the Great Depression - and nobody in their right mind wants that. The question that naturally follows is, are they too late? You certainly hope not, but you get the feeling the horse of the credit crunch bolted a good 14months ago.
So just where are we on this alleged economic cycle?