I told you so Hank, Ben, Congress, and the rest.
The entire credit system is all about confidence.
A year ago I started telling you, and everyone else via Market Ticker, they you had to cut the crap and stop allowing people to lie, or you risked confidence being destroyed.
Today, you're finding out what happens when you don't stop the lies on the balance sheets, don't stop the Level 3 crap, and don't stop lying to The American People. You can't say "I'm for a strong dollar" and then make $250 billion more of them available, the exact opposite of encouraging scarcity, which is how you get a strong dollar, and expect people to take you seriously.
You can't say "subprime is contained" and never apologize for being 100% wrong.
You can't say "the banking system is sound" and then have the second largest failure ever recorded in FDIC history happen a short while later, when the balance sheets of these firms were available to everyone - with their warts displayed - for more than a year prior.
You can't tell people "the economy is fundamentally strong" when unemployment rises and the price of oil doubles in the space of less than a year as a direct consequence of your monetary and fiscal policy.
Bluntly: You've now got a run on the equity (if not the deposits) of virtually every regional bank in the nation because nobody believes you any more.
Your attempt to stabilize confidence with Fannie and Freddie has failed because, in short, nobody believes you any more.
WaMu, National City, Wachovia, First Federal, Downey, Colonial. All down 7% or more, with some down twenty percent today, and with most of them down 90% or more in the last year.
Why?
Because nobody believes you, the FDIC, the OTS or OCC any more.
There is one - and only one - way you can stop this.
You must force every financial institution in America to tell the truth.
NOW.
If you do not stop this NOW it will spread like a cancer from firm to firm, from financial company to financial company, until it consumes all of those who do not voluntarily "come clean" before it gets to be their turn.
You have not lost control; you, along with Congress, have abdicated control. The Campaign Contributions and shell games have now reached critical mass with The American People, who are no longer willing to take the risk of their investments being destroyed without warning as a result of the lies. They can and are running for the exits first, following the time-honored principle that "he who panics first gets out with the most of his money intact."
Bernanke, Frank, Dodd, Paulson - we may be literally days - or hours - away from an all-on equity market implosion.
If it happens, it will be because you have consistently refused to listen to those of us who have been telling you that you must force these institutions to to cut this crap out and tell the truth.
You cannot stop this by talking.
You must stop it by doing.
You must issue a directive today that states quite clearly, here and now:
NO MORE OFF-BALANCE SHEET ANYTHING, NO MORE LEVEL 3 ANYTHING. YOU MUST DISCLOSE AND MARK TO THE MARKET EVERYTHING YOU HOLD, TODAY AND FOREVER MORE, AND IF THIS LEAVES YOU INADEQUATELY CAPITALIZED, YOU WILL BE FORCIBLY MERGED OR SEIZED HERE AND NOW.
Now.
Today.
Period.
Time's up.
