HousingPANIC Stupid Question of the Day

Seriously folks, did you think you'd ever see runs on banks in your lifetime?

I didn't.

But here we are. And away we go.

Get ready to see some real serious sh*t.

Want to see which banks of mortgage lenders may fail first? Well, here you go..

When you don't adequately set aside loan-loss reserves (helloooo - is anyone auditing these companies?) you get into a heap of trouble right quick.

WaMu - you're next...

Fed Governor Poole just yesterday - "Only a calamity" would justify interest rate cut. The market and MSM got it wrong today.

The bankruptcy of Countrywide (I'm short) and a classic run on the banks would be a calamity. 10 Million homedebtors losing their homes would be a calamity. $8 Trillion in housing wealth going bye-bye would be a calamity.

What Poole told the market yesterday is that the Fed ain't gonna lower rates anytime soon, and not until something big happens (i.e CFC goes BK). And the market and MSM got it wrong today - the Fed didn't lower, they simply opened up the discount window. Big difference.

They opened the window to improve liquidity. They didn't cut the ever-important Fed Funds rate, which is what Poole was talking about. Those exploding ARMs are still exploding, Mozilo is still selling, Countrywide owns cancer loans, panicked customers and a defunct business model, housing is in meltdown, and the ARM homebagholders don't have any access to refi loot anymore. Tilt.

Bottom line - lowering the discount rate, or even the funds rate, won't make the bad man go away - they were called "liar's loans" for a reason don't forget... And don't forget that the Fed is hilariously for the first time taking mortgage CDO's as collateral. In other words, the lender of last resort (the taxpayer), like with the S&L disaster, is about to get slaughtered.

Here's Poole yesterday:

William Poole, president of the St. Louis Federal Reserve Bank, said the subprime mortgage rout doesn't threaten U.S. economic growth, and only a ``calamity'' would justify an interest-rate cut now.

Poole, who confers regularly with regional business contacts and votes on rates at the Fed this year, said in an interview yesterday that ``no one has called up and said the sky is falling.'' The best course is for officials to assess economic figures, including the August jobs report, when they next convene on Sept. 18, he added.

``It's premature to say this upset in the market is changing the course of the economy in any fundamental way,'' Poole, 70, said in the interview at the bank's St. Louis headquarters. ``If the Federal Reserve were to act when it turns out there is no impact, then clearly the market would say these guys really don't have the intelligence they need to have a policy actually based on solid evidence.''