Financial magicians were waving their magic wants over the dark pools and swap tables during the weekend. Voila! A 962 Billion rescue package appears, with the Fed opening up a $400 billion dollar swap window to assure dollar liquidity for European banks. The magic answer for the unsustainable, unserviceable sovereign debt in Europe was... wait for it... 962 billion MORE debt, (which is all a loan is). Talk about fighting fire with fire. Where is the money coming from? Answer: printing presses at the ECB and Fed. When will it ever be paid back? Answer: Who cares, it stopped the market collapse again...for a while.
What we saw last week was a classic battle of computer algorithms and front running high speed trading programs vs a bunch of frustrated, scared humans who were watching all their stops get blown, seeing all their buy and sell offers get cut off by computer generated bids a penny, and sometimes a hundredth of a penny, higher or lower. Meanwhile, Fannie Mae puts in a request for $8.6 billion more tax dollars, this on top of the $10 or $11 billion Freddie Mac asked for a few days ago. The BLS also waved its magic wand and claimed a couple hundred thousand new jobs were "created" by using its "Birth and death model." It cannot point to any of these jobs in the real world. They exist only in the algorithm that created them and put them on the BLS job spreadsheets. In short, they are phantom jobs, magically created by math just like the phantom dollars and euros were magically created by the Fed and ECB.
Voila! No more problems! (Until the next time we need another trillion dollar bailout.)
Isn't capitalism wonderful?
