From bad to worse on the economic front.

It was announced today that the Federal Reserve (Banking) System has agreed to issue $200 Billion in funny money to shore up the collapsing American banking system.

In part, this infusion of cash will be backed by downward-bound mortgage-based bonds.

To explain, this means the Fed (a both privately and publicly owned system that nominally operates in the public benefit) has agreed to assume the bad debt the banks currently hold.

Inevitably the publicly-owned portion of the Fed (taxpaying suckers like you and I) will be left holding the now empty bag while the privately-owned portion of the Fed skips merrily off with all the cash.
For the sunny propaganda version of this story, read the Bloomberg article at
http://www.bloomberg.com/apps/news?pid=20601103&sid=aasY8TBYT8MY

Coupled with this lovely bit of news are a few more critical readings from the financial world today, the last of which are words of encouragement from Ben S. Bernanke, chairman of the above referenced Federal Reserve, and when the Chair of the Fed – capitalism's number one cheerleader – says banks should voluntarily write off equity, you know the caca has hit the fan):


http://tpmcafe.talkingpointsmemo.com/2008/03/07/a_recessionary_job_market/
The Disappearing Job Market
TPM — In what is the most recessionary jobs report since the last official downturn in 2001, payrolls fell 63,000 last month, and were down 101,000 in the private sector, according to today’s report from the Bureau of Labor Statistics. Unemployment actually ticked down slightly, from 4.9% to 4.8%, but this was wholly due to labor force withdrawal. Employment in the more volatile survey of households—the one from which the unemployment rate is drawn—fell over 250,000. The payroll contraction was the largest loss in almost five years...

and

http://www.ourfuture.org/news-headline/equity-63-year-low
Equity at 63-Year Low
Time Magazine — The Federal Reserve said Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945. That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945...

and

http://tpmcafe.talkingpointsmemo.com/2008/03/06/one_in_ten/
One in Ten Out of Equity
TPM — The latest numbers are out: One in ten homeowners has no equity in the family home. The data show that about 15% will be below water if prices continue to slide, owing more than their homes are worth.

So what's the plan here? One in ten homeowners could just walk away right now. Indeed, most of them, if they were the rational maximizers so prominently featured in classical economic analysis, would stop paying now, put the money in a savings account, and wait the 90 days or two years or whatever until the lender could force them out by foreclosure. In non-recourse states, they could just pocket the money and walk away free and clear. In other states, they might need bankruptcy or a last-ditch deal with the lender for a short sale. The economics shift when the homeowner has no equity to protect...

and

http://www.nytimes.com/2008/03/04/business/04cnd-fed.html
Fed Chief Urges Breaks for Some Home Borrowers
NY Times — The chairman of the Federal Reserve, Ben S. Bernanke, urged mortgage lenders and investors on Tuesday to reduce the principal on loans for many people whose homes are no longer worth as much as the amount they still have to repay.
Noting that delinquency and foreclosure rates have soared over the last year, and that housing prices have not stopped falling, the Fed chairman warned that efforts by the government and by industry to prevent foreclosures had not gone far enough...

Late Breaking News!! ...of the 'oh no, oh no, oh no' variety
http://custom.marketwatch.com/custom/myway-com/news-story.asp?guid={4B702F7F-41F8-45F0-A133-630F12F2C764}
Oil to Double in Price?!
Market Watch — Goldman Sachs caused an uproar today as they raise the possibility of $200 a barrel oil in the not too distant future...