The government is now running the show.

This is from the members side of Gary North. His $10 a month to read his stuff is the best bargain on the planet. Things are going to continue to deteriorate and he is offering suggestions on what to do in light of what is happening. This from todays comments, he thinks the truth is starting to sink in to some of the media...It is from the members side

From Gary North Friday www.garynorth.com/

Stage Three: The Idiots
....Lewis' article is really about Eisman and his two partners. These three Jewish guys -- two who grew up in New York City -- spotted the emptiness of the entire system, and they got very, very rich shorting it.

They did not just short the S&P 500, as I advised my readers. They figured out how the mortgage market had been sliced and diced. They shorted subprime loans. Even better, they shorted the bonds issued against the collateral of the subprime loans.

Eisman had contempt for the supposed geniuses, who did not understand the contracts their lawyers created and they signed.

In 1991, Eisman had been hired by Oppenheimer. He was a lawyer, but he hated being a lawyer. His story is a classic in entrepreneurship. He was there at the right time.

He was hired as a junior equity analyst, a helpmate who didn't actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer's investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: "I'm a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I'd worked on a deal for the Money Store." He was promptly appointed the lead analyst for Ames Financial. "What I didn't tell him was that my job had been to proofread the ­documents and that I hadn't understood a word of the [!@#$%] things."

Oppenheimer handed the task of analyzing the Money Store and its mortgages. That was how he became the guru of subprime mortgages.
He and his two partners were convinced of one thing: that Wall Street was not interested in clients. The clients were the victims.

Danny Moses was one of the three. He knew the system. When he would negotiate a deal for the hedge fund with a large Wall Street trading firm, he always asked this question: "How are you going to [@!#$%^] me?" The trader insisted that this would not happen. No deal, said Moses. We both know what can happen. If you want the deal, tell me how you're going to be able to do it. The guy would tell him, and Moses would do the deal. He knew how much risk to accept.

You and I don't. The retirement fund managers didn't.

The three figured out in 2004 that there were major problems looming for the housing market, especially in the "sand" states: California, Florida, Nevada, and Arizona. The median home price had risen from the traditional 3 to 1 to 10 to 1 in Los Angeles.

Eisman realized in 2006 that the credit ratings agencies were ignoring this mess. The brokerage houses and investment banks would take low-rated BBB mortgages, slice and dice them, and the ratings agencies would rate the top end AAA. Now get this.

He called Standard & Poor's and asked what would happen to default rates if real estate prices fell. The man at S&P couldn't say; its model for home prices had no ability to accept a negative number. "They were just assuming home prices would keep going up," Eisman says.

These were the best and the brightest. These were the masters of the universe.

These were idiots.

The team went to Orlando in late 2006 to attend a trade show on subprime mortgages. They had expected a small, specialized group. There were 6,000 people there, Eisman says. It turned out that the show in Las Vegas was larger....

....We are witnessing the nationalization of what remains of American financial capitalism. The government is the owner now. The government promised the voters that nothing bad would happen. This guaranteed that something very bad would happen. Now it has happened.

On January 15, on the day of the announcement by Bank of America, a CNBC commentator admitted that this was a tipping point for him, after 22 years. The government is now running the show. It's not the free market any more. He asked two of the other commentators --one of them was the cute lady with the bags under her eyes, who was in the elementary school 22 years ago -- whether it might have been better to let the bad firms go belly- up, so that the good ones could rebuild. You have to see it to believe it. See it.
http://www.garynorth.com/public/4487.cfm

If they are beginning to figure it out on CNBC -- though in a moment of weakness -- then word will get out. The Federal Reserve System and the Treasury are running the show....