he "Mogambo Guru" strikes again... From "The Daily Reckoning" http://www.dailyreckoning.com/Writer.../MG112807.html The Cold Comfort of Economic Collapse "My God! The entire Gross Domestic Product of the United States…is only about $14 trillion! So we are talking about losing, at a stroke, the equivalent of 26% of everything we make in an entire year? Yow!" by The Mogambo Guru Total Fed Credit was up $2.4 billion last week as the Fed continues to pump excess money and credit into the economy, as if the resultant 11% inflation in consumer prices is not inflicting enough damage and making my family whine for more money, all the time wanting more and more money, which is more than enough reason to rise up as an angry mob and storm the Federal Reserve in Washington, D.C. to throw these incompetent preening weenies out into the street and into the hands of the people who are suffering the horrors of price inflation (me) and economic death (us) because of the actions of the Fed, and I will volunteer to personally "take care of" the monstrous Alan Greenspan, the actual demon from hell who did this to us, and Ben Bernanke, who continues the tradition. And let's not forget to persecute BOB Woodward, the laughable idiot who penned the ridiculous, fawning hagiography about Alan Greenspan titled "Maestro", or the idiot British government which actually awarded Greenspan a knighthood! Hahaha! Morons! And it isn't just the Federal Reserve or all the world's central bankers and governments that are acting like morons, but everyone, as I prove with the Bloomberg.com "Credit derivatives market grows by nearly half in six months." My blood actually congealed into a mass of icy goo at the news that the Bank for International Settlements said, "The market for derivatives grew at the fastest pace in at least nine years to $516 trillion in the first half of 2007" and that, "Credit-default swaps, contracts designed to protect investors against default and used to speculate on credit quality, led the increase, expanding 49 percent to cover a notional $43 trillion of debt in the six months ended June 30." Yow! Expanded by half? In half a year? This is freaking insane! It seems to me, being math-illiterate as I am, that since there are so many "halves" in there, that if I multiply things by two, I will get the "whole" of some things, and unless I miss my guess, there is going to be a "whole" lot of screaming in raw panic around here if I accidentally sober up and let the sheer enormity of the situation sink into my Tiny Mogambo Brain (TMB). And all this derivatives activity may have something to do with the Bloomberg News Service report that "Pimco, a unit of Munich-based insurer Allianz SE, expects the Fed to lower borrowing costs to around 3 percent, from 4.5 percent." My God! Reducing interest rates by a third! When inflation in prices is running at 11%! But there are lots of reasons for a lot of people to be Very, Very desperate (VVD), like when I was cruising the Asia Times Online site, when I ran across an essay titled "Subprime Mortgages, Subprime Currency" by John Lee, who is portfolio manager at Mau Capital Management. It was initially very interesting to me because "Subprime Mortgages, Subprime Currency" was such a clever turn of phrase, which always delights me and makes me clap my hands together in girlish glee, and then I get jealous because I can't be clever, too, for which I try to compensate by being a great lover, and then getting angry and frustrated at being a Huge Freaking Failure (HFF) at that, too, as my wife likes to constantly complain about, for some reason. So it was not long before I was laughing my butt off when he writes, "Bernanke told Congress that estimates that set the total losses from subprime mortgages at about $150 billion were probably 'in the ballpark'." I snorted in contempt at such a thing, and I am sorry I did because I was taking a sip of coffee at the time, it spewed into my lap, and now it looks like I peed on myself. Again. Damn! So I was in a pretty sour mood at my appearance when Mr. Lee confirms my belief that things are worse than advertised, and proves it by saying, "Given that the Fed and European Central Bank have already injected well over $150 billion since August, Bernanke obviously lied about his ballpark figure." Actually, the total I heard bandied about was that the central banks injected over a trillion dollars into the world's banking system in the last few months! A trillion! Naturally, being a hateful and vindictive kind of guy, I figure that being a stinking, lying bastard was enough to indict Bernanke and send him to a horrible prison for a long stretch, but Mr. Lee is not interested in revenge, and is more interested in other things, like, "Just how big is this subprime mess?" I knew that he was not asking me, as I am really clueless about most things, and thus have no freaking idea at all. But he hints at it when he says that "subprime mortgages are changing hands at 25 cents on the dollar", and this means that the subprime loss alone "is not $150 billion, but more like $1.6 trillion", and "if all AAA and Alt-A mortgage portfolios were to be marked to market, the loss would amount to another $2 trillion." Yikes! Now we are talking about $3.6 trillion in losses! My God! The entire Gross Domestic Product of the United States, which is the sum total of all the goods and services produced in a year, is only about $14 trillion! So we are talking about losing, at a stroke, the equivalent of 26% of everything we make in an entire year? Yow! I am, of course, stunned and catatonic, but with just enough movement left in my trigger finger to give me a fighting chance, in case this whole thing collapses like I figure it will. Cold comfort, perhaps, but better than just taking the whack! Editor's Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.