The State of the Financial Markets

I am very interested in macro economics, and I must say this week has been epic. Truly epic. Like a sweeping novel. Where things will end up, nobody knows. The government is going all in now, they are going to literally buy up all of the bad mortgages out there, hold them until the markets stabilize (probably years), and then sell them off. At the end of the day, they may come out even or even ahead. But I've heard that in the worst case scenario the government could lose 1 trillion dollars or so. As they say in the movie theater business, you've got to sell a lot of popcorn....

Anyway, here is a really intense article from the Wall Street Journal from today.

"That evening, during the meeting with Congressional leaders, Mr. Bernanke gave a 'chilling' description of current conditions, according to one person present. He described the frozen credit markets, busted commercial-paper markets and attacks on investment banks. The financial condition of some major institutions was 'uncertain,' he said. 'If we don't do this, we risk an uncertain fate,' Mr. Bernanke added. He said that if the problem wasn't corrected, the U.S. economy could enter a deep, multi-year recession akin to Japan's lost decade of the 1990s, or what Sweden endured in the early 1990s when a surge in bad loans plagued the economy and sent unemployment to 12%." Shock Forced Paulson's Hand - WSJ.com