“These are not soft numbers.  They are depression numbers.”

The Fed apparently is starting to clue into what most of us knew a couple years ago.

Home prices here dropped 26% - in February.

Why Bear Stearns? A quick lesson in the trillions cooking beneath, and why the Fed cares, and why you should care.

JHK put it this way:

“Over the weekend, the Federal Reserve engineered a $30-billion dollar Saint Paddy’s day present for the JP Morgan bank by handing them the corpse of Bear Stearns. The object of the game is to prevent the ‘assets’ of Bear Stearns from going to the auction block, on which they would be discovered to be nearly worthless, which would instantly render all similar assets held by the other big banks to be similarly worthless, and would result in a universal margin call that would pretty much unwind the hallucinated ‘wealth’ acquired over the past ten years.”

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The rare moment I agree with Bush.  Let the market correct itself.

The unraveling of the financial fauxconomy appears to be accelerating. After lying earlier in the week about their liquidity problems, Bear Stearns is on the brink of collapse. Today’s emergency bailout - hastily orchestrated in the wee hours of Friday morning - was the first such move by the US Federal Reserve since the Great Depression. The Fed is authorized to take such action only under “unusual and exigent circumstances,” and the threat of a full market seizure certainly qualifies.

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Jim Rogers on what he’d do in Bernanke’s shoes: “I would abolish the Federal Reserve and I would resign.”

Carlyle Group collapsing; California home prices already 20% off peak; next up - I dunno, maybe bank runs to get some of these fancy new fivers, which are worth about a buck?

Cool little piece at Forbes by Congressman Paul on what we’re facing with the dollar.

More homedebtors than ever walking away.

Err, and what does this kind of pressure do to the rich history of contract law?  Not to mention what it does to the idea of individual responsibility?  Then again, personal responsibility isn’t very “in” these days.

JHK says,

“I’m concerned that the American people will hate the new president if he tells them the truth: that an old way of life is over and a new one has to begin now. We’re about to find out how much ‘change’ the public can really stand.”

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Where housing is headed, according to Fortune. And, “Millions who believed the happy talk are now paying the price.”

Of the messy bed we’ve made for ourselves, legendary investor Jim Rogers says, “Conceivably we could have just had a recession, but it’s going to be much worse… it’s not a good scene.”

Mortgage crisis spreads beyond subprime.

Vallejo on the brink of bankruptcy.

Might some Wall Street heads roll?

Stern’s Professor Nouriel Roubini says America’s economy risks “mother of all meltdowns.”

Interesting blurb over at Housing Panic; Fortune asks about an “arson boom”; the 100 worst zip codes for foreclosures; this monoline shit is the tip of the iceberg; and finally, economists are finally catching on to it all.

Here’s a leaked internal document from Countrywide listing the real estate markets around the US and ranking them 1-5 for their risk level.  Very interesting.  [h/t Housing Panic]

Drunken sailors would never do it like this.  A record spend, and a record deficit.  This is not sustainable, said the broken record.

Ten-city home price drop a record

Home prices fell in ‘07 for first time in decades

Crisis creates “ghost towns”

Blacks see “financial apartheid”

Foreclosure rate soars in ‘07 

The Fed did not panic -  “The move was imperative to prevent a grave financial crisis spiralling into disaster. The threat of a melt-down in the $2.4 trillion market for US municipal bonds had suddenly moved from possible to imminent. No monetary authority could ignore such risks… Calvinist monetary discipline at this point would wreak havoc, and possibly endanger the political stability of several countries (in Europe, if not in the US). The best we can hope to do is right the ship slowly, and turn a blind eye to moral hazard for now. It is not pretty. It means a lot of pin-stripe villains and leverage louts in the City will escape their condign punishment.”

US slides into dangerous 1930s ‘liquidity trap’ - Nobel economist Joseph Stiglitz says “The Fed has finally got around to closing the stable door, but the after the horse has already bolted … the distress is going to be very severe.”

Hilarity ensued.

The thing I like about Mike Adams’ writing is that he doesn’t just speak of doom - he occasionally offers some practical solutions along the way, too.  See his latest piece on what we’ve gotten ourselves into.