Nah,  its about as cool as the other side of the pillow. Methinks the Fed is dillusional.

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20090424a1.pdf

That saying couldn’t be more true (Gartman regularly echos this). Take today for example. Now, I like Barack, but it doesn’t matter what he says at this point. The global economy is contracting and even though the Government is working hard to cushion the landing, its going to be painful nonetheless.

Granted, the US markets have been on a multi-day slide, so some buying was overdue, I can’t help but see more downside even with a really solid speech and plan delivered tonight by Obama.

I normally don’t agree with Cramer, but he had it right today on CNBC. He said, you had nothing to lose by going long on the news, and for today, he’s right.

The US Government’s (Timothy Geithner’s) plan to structure a federally overseen “Bad Bank” is a terribly misguided notion. Taking toxic assets moving them from one place to another doesn’t change anything other than sustaining the careers of corrupt and greedy executives with $1400 wastepaper baskets.

The same goes with the GM bailout. I think Toyota would have been more than happy to swoop in and buy up the remaining assets in Detroit and turn that city around from wasting away completely. Its been a multi-decade slide that hasn’t been derailed, and now its just going to take another 1 or 2 years longer. But I digress…

Back to the Bad Bank issue. This is a shell game of epic proportions. Moving assets from one place to another does not negate their existence. It simply prolongs the lives of those companies that created those assets (or, liabilities these days). The Bad Bank will not allow banks to create liquidity that will liberate the markets. The bursting of the credit bubble can only result in massive and permanent de-leveraging that we may never see again. The securitization markets essentially fueled the credit bubble by allowing toxic assets to be created and trade in the markets. Since there is no appetite for these types of risks or products any longer, we will never see the same availability of credit again.

So what’s the point in wasting taxpayer’s money on a scheme that doesn’t change anything? Come on Timmy, you can do better than that hairbrained idea.

…Truth.

According to the kind Hindu fellow that sits beside me. Check this if you don’t know what I’m referring to.

The Structured Credit world has its share of ill conceived or just plain ironic names as well. Here are a couple of my faves:

• High-Grade Structure Credit Strategies Enhanced Leverage Fund (A Bear Stearns concoction, not surprisingly.)
• Absolute Capital Management (Will you take care of my money? Absolutely!)
• RREEF REFlex Fund (If you can’t spell, you shouldn’t be a hedge fund manager.)
• Geronimo Multi-Strategy Sector Opportunity, and Option & Income (Did we cover everything yet?)
• Autonomy Capital (You mean it doesn’t manage itself?)
• ASAT Finance (Clearly a typo. Should read: Ass At Finance.)

Via The Hedge Fund Implode-o-Meter.

According to FastCompany, President Bush opposes the campaign for free nationwide Wi-Fi, which with predominantly serve the rural population. It doesn’t seem to make much sense, but then again, I don’t recall the last thing Bush did that really made a whole lot of sense either.

The argument seems to be that its an inefficient investment of infrastructure; but lets face it, as mentioned in the article, the reason it should be there is because there isn’t a private provider willing to serve that population anyway. I doubt that we’ll see people moving from the city to take advantage of a slow Wi-Fi link. Not only that, but it seems like the upload bandwidth will be throttled as an effective way to discourage file sharing.

So what’s the problem, W?

Via The Big Picture today, Ritholz shares a bit of blue-skying on whether the Big 3 (Chrysler, particularly, in the example) would fare better if they simply focused on design, marketing and selling their products, much like Apple does. Its a pretty interesting thought.

What the discussion really emphasizes is that in order to succeed, one must focus on doing one thing well, instead of trying to be the best at all things. That said, its Chrysler, GM or Ford the best at anything they do?

This is all over the Bloomy and all the big MSM sites, but Dealbreaker echos my sentiments exactly. People actually broke down the doors of a Walmart like blood-thirsty animals, trampled a temporary Walmart worker to death, all to be first in line to buy a TV. That’s right. A television.

Quoted verbatim from Dealbreaker:

You don’t have to vacation to Mumbai to be savagely murdered. Just position yourself in front of a throng of sale-crazed animals. Anytown America will probably get the job done but if you really want to up your chances, you gotta go with epicenter of batshit blood-thirsty insanity, i.e. Long Island. A 34-year old Wal-Mart employee was trampled to death this morning at a WM in Valley Stream after being knocked to the ground while trying to restrain the throng of “savages” trying to get their hands on a deeply discounted flat screen. In the same stampede, a pregnant shopper was pushed over and may have suffered a miscarriage.

Seriously. Do we need cheap TV’s and other stupid fucking material shit that bad?

So its pretty much a lock. GM, Ford and Chrysler are most likely getting a bailout. You can argue against the idea citing that its just throwing good money after bad, but its going to happen.

I really enjoyed Michael Moore’s interview with Larry King from a few days back. In it, he shared his thoughts on the impending bailout. His argument is pretty much in line with my sentiments: the auto workers are not the ones at fault. They do not deserve to lose their jobs just because the leadership of those companies refused to acknowledge what their customers wanted and destroyed their respective companies from within over the course of many many years. Indeed, the Big Three’s problems did not start in 2008. They have simply slipped to the end of their rope by the current economic and national crisis.

Moore’s suggestion that the bailout come with strict consequences and rules, is golden. When the money gets transferred to the Big Three, they need to come up with a strategic plan to reorganize the managment team and engineer products that are going to have a real demand in the coming years, such as mass transit and transportation that does not depend materially on fossil fuels.

The line for handouts is likely to not end with the Banks and the Auto companies. It will continue to the point where the Federal Goverment will have material investments in nearly every sector and industry. This appears to be an intense test of Capitalism as an economic philosophy. If it were to fail, this environment would be a viable catalyst. Moore might be right, just as he said at the end of the interview, “this is the end of Capitalism… good riddance”.

I haven’t been writing much lately about Swaplogic. I guess I’m completely distracted by what is going on the the stock markets. Its unbelievable. “Too big to fail” is now a phrase being thrown around in a ubiquitous manner. Although, it seems that the truth is absolutely to the contrary. Looks like Citi, GM, and so on, are definitely big enough to fail.

The broad market is down around 50%. The VIX is trading around 80. Just take a look at the top 10 links on Bloomberg today.

Citigroup’s Pandit Says Bank Won’t Be Broken Up as Shares Tumble Below $4

Wal-Mart Unexpectedly Names Mike Duke Chief Executive, Replacing Lee Scott

Stocks in U.S. Fluctuate as Concern Over Citigroup Offsets Commodity Rally

Buffett’s Berkshire Was Asked by SEC in June for Data on Derivative Bets

Hedge-Fund Investor Manzke `Disgusted’ by Manager Fees, Withdrawal Limits

Treasuries at Record Low Yields Trigger Squeeze Concern in Futures Market

Cravath Slashes Lawyer Bonuses Up to 73%, Cites Client Hardships, Economy

Pelosi Rejects U.S. Carmaker Bankruptcies as `Digging a Hole Far Too Deep’

UAW Chief Says Union `At Bargaining Table’ to Help Automakers Seeking Aid

Things could not look more grim. Right about now, someone should be screaming for a bottom (at least in the equity markets), but I doubt anyone wants to take that big step right now. 

I kind of feel bad for Mark Cuban. A lot of people don’t like him much, but I think he’s pretty slick. His track record has been pretty much impeccable, and since that’s pretty much all we’ve got to judge him by, I suppose he’s pretty good at what he does. Today’s news doesn’t change the fact that I read Blog Maverick pretty much every week. He’s even had the balls to address the issue right there. I hope he’s got a good explanation for the accusations made.