Man, talk about a close call. The public uproar on the whole AIG bonus Scandal was quite a fervent scene to observe. Congress was so worried about it that they basically lynched anyone who was supposed to get any kind of bonus, that had anything to do with any financial agency that took Fed or Treasury funds.
The problem is that it reminds me of the day the Treasury announced the take-over of Freddie and Fannie. I really think it was the first wave of panic that started the horrible conditions we see today. The second shock was letting Lehman Bros. fail… but the biggest shock so far was when Congress’ Lame duck Republican leaning vote against the original TARP Funds. That was the shot heard round the World.
Within a few hours of the outcome, the LIBOR jumped more than 200 basis points and essentially shut down all loaning. This was the real Credit Crisis. Everything previously experienced was just a warm up. After that everything became a shock to everyone…
So, here we are. 2 years after the fall of the Real Estate Bubble and things were starting to look as though there might be a shift in the momentum, of what many are hoping would be the bottom of this deflationary period, and Congress sounds the Alarm!
I wonder how many people will show up for work tomorrow. At least the ones that are being held responcible for cleaning up the mess at AIG might not be interested in working for free… The one thing that’s certain is that we will find out whether or not Liddy was telling the truth, in his testimony to Congress. He said that without the people who are receiving the bonuses, it would leave about $1.6 Trillion of risk unmanaged, and that that would lead to the collapse of AIG. And… according to Ben Bernanke, a collapse of AIG would lead to a World Financial Systemic Collapse.
hmm… It should be an interesting week ahead.
