You would think that I had cut off someone's arm this morning with a chainsaw.

As I said I would in the forum, for the trading day today all non-donors (or not-logged-in users) were restricted from access.

The howls began within seconds of the flag being set, with the most common claim being that "you allow free access, why are you blocking me?"

Ahem.

Quite a nice psychological experiment was run here, and I hope, if you're one of those accessing the forum for free (but who have chosen not to donate), or reading it without signing in (which I also permit) you've learned something.

That something is that "freedom ain't free", and if you want to continue to live in a Republic, you need to put down the beer and turn off the Boob Tube long enough to raise some hell. In fact, you have an obligation to raise some hell from time to time, especially when our Constitution is used as toilet paper by unelected public "officials".

The Ticker put up last night, and which was on the front page all day while the market was open, had the numbers for the three big committees in Congress who are grilling Bernanke and Friends over their outrageous bailout of Bear Stearns.

I hope you called at least a few of them today.

I'm not the only one who thinks its outrageous, by the way. Try here:

"'It is sort of lonely out here,' says Rep. Scott Garrett (R-N.J.), one of the very few members of Congress questioning the federal bailout of Bear Stearns. Bear is the investment-banking firm that dramatically overexposed itself to the subprime-mortgage market and is now on its way to investment-bank heaven."

Wow. A voice of reason in the wilderness.

Let me guess - The Honorable Mr. Garrett hasn't taken any money from the clowns on Wall Street, and as a consequence he has actually felt free to uphold his oath to "uphold and defend the Constitution of The United States"

I know, its such a quaint document.

Oh, don't look at those Monoline Insurers. You know, the folks who were "too big to fail" and subject of daily "sticksaves" by Gasbagpurile on CNBC? Yes, those guys. They're now apparently missing coupon payments on debt, well, Security Capital Assurance (SCA) anyway on one issue. That got them a "D" rating (no kidding, an actual default!) yesterday.

Gee, I thought these guys were too big to fail? Now, suddenly, when they really are failing nobody's squawking? Nor is SCA the first - we also have two other firms that have repudiated their swap obligations, claiming that they really didn't have to pay off on insurance contracts they wrote.

What changed?

How about this for a theory - these folks never had a snowball's chance in Hell of being rescued, as they clearly are insolvent - but there was a need to find something the media - with the government's blessing - could lie outright about in an attempt to prop up the markets.

Ben on The Hill today basically said that Armageddon would have ensued if Bear had been allowed to go down.

Armageddon eh? That's very interesting; so now we defend lawlessness by saying that the economy would have been hurt if we hadn't acted lawlessly?

Further, Bernanke admitted in his testimony that indeed the $30 billion guarantee was in effect a bribe - he stated in plain english that absent that guarantee the transaction would not have gone through.

But wait - how did that series of events come into play in the first place?

Hmmm..... was The Fed asleep at the switch or was there malfeasance instead of misfeasance?

Did The Fed refuse to regulate and in fact egg on the creation of this derivatives bubble in the first place, generating the very problem that they then claim they had to step in to solve?

In fact that is exactly what Bernanke is stating today on The Hill - The Fed has intentionally allowed, over the space of several years, the creation and promulgation of these "financial instruments" THAT CAUSED THIS MESS IN THE FIRST PLACE.

This sounds somewhat like a rapist claiming that he did it because he has a penis and, you know, if he hadn't been born with one, the******wouldn't have happened.

Then the cops chime in and we learn that the rapist sent a letter to the cops three weeks prior with his name, address, social security number, a picture of himself, AND TOLD THE COPS HE INTENDED TO COMMIT THE RAPE, yet the cops DID NOTHING.

In addition, Bernanke admitted that Blackrock was retained on a "fee to be determined later basis" - not only was this a "no bid" circumstance but even worse, we can't be told at the present time how much all of this will cost! Let us not forget that Jamie Dimon is on the board of the Federal Reserve Bank of New York!

How do YOU spell "inside dealing"?

I've worked in private industry, both as an employer and employee, my entire life. I've also done government contract work. If I had pulled any of this in any of those positions I would have been fired at best and prosecuted at worst, especially when it came to government contracts.

How can this be allowed to stand and why is Congress NOT bending Bernanke over the table?

Oh, and this morning Bernanke also admitted we are actually in a recession. Note that this man continues to be dead flat wrong in his economic predictions - in fact, we should start tracking them:

• Subprime will be contained and not impact the broader economy, being limited to tens of billions of dollars in write-offs. (Actual: $150 billion so far, and counting)
• The effects of housing on the broader economy will be limited. (Actual: We are now in a recession)
• We will experience a slowdown in economic growth, but not a recession, and trend growth will resume in the middle of 2008. (Actual: GDP growth was below the rate of inflation in Q4, ergo, an effective recession)
• It is now likely we will have negative growth in the first half of 2008 and trend growth will not resume until 2009. (TBD)

And of course we should give these people more power, after their absolutely stellar record of telling people what is to come, and what they intend to do about it to produce the desirable outcome - that is price and economic stability, while at the same time their actions are laced with inside dealing and conflicts of interest and no-bid, NO PRICE awards of contracts!

Oh, and they should not be expected to, nor will they prevent future dislocations by doing any of the following:

• They will not force derivatives onto a public exchange where we can all see their prices.
• They will not force all the off-balance-sheet crap back onto the balance sheets where we can see how impaired these institutions are.
• They will not force margin and capital supervision on these investment banks or anyone else, which requires (1) and (2) above.

But they will violate The Constitution at any time they feel there is a risk of a "dislocation" once they have created the conditions for that dislocation through their intentional acts of both omission and commission, which incidentally, are necessary for the business models of these "investment banks" to work!

Without the ability to avoid marking to market, without the ability to hide things off the balance sheet, and without the ability to avoid margin supervision the investment banking model is fatally flawed.

Note carefully what Bernanke said today on The Hill - the "proper functioning" of the financial system today requires the maintenance of the above unsustainable model of opacity and deceit!

That's right - we can't have transparency. We can't have mark-to-market. We can't have margin supervision. We can't have swaps and other derivatives traded on a public exchange to force public price knowledge and discovery. We can't have a ban on off-balance-sheet vehicles, even though they were, in large part, why Enron imploded with almost no warning. And finally, The Fed must be empowered to raid the public purse any time it would like, effectively taking unmarketable crap collateral unto the public balance sheet, because it is critical to the functioning of the American Economy that investment bankers be able to conceal valuations and deceive the American Public and Investors.

What's worse, Bernanke appears to have admitted that The Fed is blatantly in violation of The Federal Reserve Act - in front of Congress! See, he stated what we knew already but hadn't been said "publicly" - The Fed stands to profit if those Bear Securities are actually more valuable than their models indicate.

The Federal Reserve Act does not permit The Fed to buy anything other than "full faith and credit" paper, and ownership (as opposed to lending) is defined by the risk of both loss AND PROFIT.

It is the latter that defines equity ownership as opposed to collateral against which a loan is made. (PS: Caroline Baum has it figured out too....)

Yet Congress said NOTHING about that clear violation in the hearing today.

Without the action of citizens to force Congress to act to stop this outrage there is no purpose to supposed "oversight."

The hearing today was a joke.

There was not one question about the underlying issue, which was the usurpation of the power of the purse by The Fed and The Executive and how it is that The Fed sat back and WATCHED this entire mess happen so their buddies could get billion dollar paychecks while middle-class America was literally robbed.

We can debate over whether there was a need to "step in" and bail out Bear Stearns. That's a valid and proper debate, and in a Representative Republic, one we should entertain.

But can we first hear from Ben not that there was a "risk of dominoes falling" but rather why that risk, if it existed, justified an action that is clearly outside of both The Federal Reserve Act and The Constitution, along with the clear conflicts of interest presented by Jamie Dimon being on the Board of the NY Fed yet not disclosing to the "target" of his acquisition that the discount window was about to be opened to Bear AND JP Morgan?

Oh, and to speak to Ben's economic prognostications, you didn't see CNBC report on factory orders, did you? Guess why?

Down 1.3% on the month .vs. expectations of down 0.8% - significantly worse than expectations.

Psst - don't look at mortgage applications - down big. Of course, again, not reported when released by CNBC, but last time when they were up big, that was reported - instantly.

Bubble TV at its finest.