The overnight LIBOR (London interbank borrowing rate) is running 3+% above the US Federal Funds rate of 2%. Banks are scared to lend to other banks because they are afraid other banks and financial institutions may implode overnight like Lehman, AIG, Washington Mutual, Wachovia and European Banks like Northern Rock, Fortis etc., and tie up the lender's money for months in bankruptcy proceedings.

The recent breaking of the buck by the Reserve money market fund occurred due to losses of loans to Lehman. No one knows how many toxic mortgage based securities are held on the balance sheets of which financial institutions. These were originated by mortgage brokers and institutions like Countrywide Financial which gave loans nearly equal to or greater than the purchase price of a home without checking documents proving the ability of the borrower to repay the loan. These were then securitized by the big banks and investment banks, stamped triple A without due diligence by rating agencies and sold to gullible greedy buyers like other banks in America and abroad, insurance companies, pension and hedge funds and investors.

A lot of these toxic securities remained unsold with the banks and investment banks when the housing market began to sink in 2006. In many cases the value of these toxic securities on their balance sheets exceeds the capitalization or book value of the institutions stuck with them. The market for them has collapsed with no buyers. Morgan Stanley, Merrill Lynch, Lehman, Bear Stearns then used the pretext that they could not be assigned a fair value and moved them to what are called Tier 3 assets which can be valued by modeling on a computer and assigned a convenient, fictitious and bogus value. They had to do this because the Financial Accounting Standards Board's rule FASB157 requires them to mark to market not imagination, all Tier 1&2 assets.

Only the American people are dumb enough to be fooled all the time. The hedge funds and large investors are smart and got worried about the safety of their dealings with the above firms. They pulled out their money and stopped trading with Bear Stearns and Lehman which went belly up and forced Merrill into the arms of Bank Of America and Morgan Stanley and Goldman Sachs to raise additional capital and convert themselves into regular banks to allow unlimited access to cheap funds from the Fed Window.

It is to generate trust between banks and to save their crooked buddies that Goofy Bush and Hanky Panky Foulson used fear and the proximity of elections to intimidate the public and the House members to pass the three page scam to give them 700 billion dollars without oversight or subject to judicial or legislative challenge. Bush, Cheney, Rumsfeld and Rice had used the same tactics to start the Iraq War and get reelected in 2004. House members worried about losing the election balked initially because of angry calls from the public, despite the co-conspirators Baloney Prank, Cursed Dopier Dud, Hurry Afraid, Fancy Fallacy who were willing to sell their country for campaign contributions from crooked Wall Street Fat Cats.

The initial no vote by the House was probably a premeditated and orchestrated farce. It allowed Wall Street to sink the stock market deepest ever and panic the public with even greater fear, which was used by the Senate. The Senate is not allowed to initiate a spending bill as it is the prerogative of the House.

So the Senate took up an old bill passed by the House attached the bailout to it and added another hundred billion dollars of goodies for their campaign contributors and passed it with a thumping majority. Because of a six year term, only a third or less of the Senators face reelection in November 2008. The ignorant and attention deficit disorder suffering, generally stupid electorate will not remember any of this in two or four years. Obama and McCain who are both puppets of the same vested interests chimed in at the right time like obedient programmed cuckoos to support the bailout.

Lies were spread like a swarm of bees by calling the bailout of Wall Street, a rescue of Main Street and the economy and the Treasury would make huge profits. The securities are toxic because the borrowers have defaulted on the mortgages and often the homes are in foreclosure with no hope of repayment. In addition Helicopter Ben Bigcranky wants to buy the toxic securities not at market price (there is none, just zero) but closer to face value (gross overpayment) eliminating any chance of profit and assuring a big loss to the Treasury and taxpayer. The bailout is to salvage the banks and Wall Street. It may allow banks to lend to other banks and institutions but will hardly convince the banks to lend to the maxed out strapped consumer or home owner with already proven inability to pay. That would be a repeat of the cycle that started this catastrophe. The tapped out consumer overburdened with credit card, automobile and home equity loans and unsure whether his or her job is likely to continue, will not be in a frame of mind to borrow more, nor will the banks inundate him or her with more loans and offers.

Consumer spending makes up over 70% of the US economy.

The criminally stupid policies of the Bushes and Clintons caused our de-industrialization and American wages to stagnate while Wall Street and CEOs looted the rising profits of banks, brokerages and corporations. This forced the desperate common man or the unthinking one to sink in a morass of debt from which extrication was prevented by Hillary Clinton, Joe Biden and like minded legislators bribed by campaign contributions, as they changed the bankruptcy laws to favor creditors only.

Furthermore there are over two trillion dollars worth of these toxic mortgage securities and sixty trillion dollars worth of credit default swaps, so 700 billion is just a drop in the leaky bucket. We are in for a deep and long recession if not a depression until the consumer's debt is reduced and savings increase.

The foolish remedy to salvage their crooked cronies has lowered the interest rates and thus penalized more prudent or elderly savers reducing their income and hence spending, a second whammy for the imploding economy. The prior lack of restraint and military Keynesianism have saddled the country with massive deficits and an empty treasury. The reckless misadventures of unnecessary preemptive wars have irreparably damaged the country's prestige and increased the price of energy. The deregulation and free market mania of our retarded president which caused this catastrophe has resulted in financial mistrust of America by creditor nations. This will shut off the spigot of lending by China, Russia and many Asian nations, leaving only the nuclear umbrella beholden Japanese, the increasingly resentful and decreasingly grateful Europeans and the illegitimate and desperate Middle Eastern oily Sheikhs to fund our daily fix of two billion narcotic dollars. The unfilled balance will have to be monetized by the Fed, increasing the money supply and its velocity, thus fueling inflation.

It is we, the people who are equally to blame, for people get the government they deserve and America hasn't made a wise choice for decades. Even worse we have perpetuated a system which eliminates the possibility of a good, wise or honest choice.