J P Morgan was essentially bankrupt !

Here is a quote from Bill Cara;

With the reckless, unjustifiable destruction of the US Treasury under a failed Treasury Secretary, I believe there will soon be another major failure of the $USD, and another pop in commodity prices. Presently, commodity prices are under the control of the Interventionists, with the backing of the US Treasury. That is not a situation that can continue long with a rapidly deteriorating US Balance Sheet.

The $200 billion cost of taking control of Fannie Mae and Freddie Mac was only the first shot from the Paulson bazooka. The Federal Reserve Bank of New York is reporting a new development that ought to shake up America, such as, “with the full support of the Treasury Department”, lending $85 billion to AIG for 80% of the shares in that insurance company. That move, plus others such as the post-bankruptcy filing of Lehman Brothers Holdings re-payment by the Fed of $138 billion of Lehman debt to JPMorgan Chase are historic. Without that payment, JP Morgan was also bankrupt. Who is next? Judging from the trading action in Morgan Stanley and their problems this week in the credit markets, are they next to go?

The public and their elected representatives need to understand the Fed organization, its policies, governance, etc. A stop to this nonsense is urgently needed.

Under the caption “governance”, the Fed website lists the Board of Directors who are ultimately the Fed decision makers, and the parties they were elected to protect. There was never an intention to have Directors serve their own interests first.

With the Lehman bankruptcy and the bail-out of JPMorgan, it is fair to say there is no longer any governance over Fed Open Market Operations. The head trader of the FOMC is ex-Goldman Sachs US chief economist William Dudley.

3 Class A Directors elected by member banks to represent member banks, including: Jamie Dimon, Chairman of the Board and CEO, JPMorgan Chase

3 Class B Directors elected by member banks to represent the public, including: Richard S. Fuld, Jr., Chairman and CEO, Lehman Brothers Holdings Inc.

With the actions of the past week regarding Fannie, Freddie, Lehman Brothers, AIG, and soon to be others (Is Ford and General Motors next?), the capital market is now under complete control by Mssrs. Dimon, Fuld, and Paulson, people who are either bankrupt or morally hazardous. In a bloodless coup, these people have seized control from the US government. The only blood that will be spilled will be that of suicide victims on Main Street.

Flags across America should be lowered to half mast today. This is not the way the Forefathers wanted the country run. And those leaders who signed the US Declaration of Independence had no such intention for their notion of parliamentary sovereignty.

Why did America go off the rails? I think we have the answers to that today. It is time for Congress to fix the problem.