This fabulous work by Jim Flora was found by a Big Picture reader in one of his Father’s ‘Banking’ texts, vintage 1960′s from a magazine (similar to Fortune). 

Little did Flora know how accurate his drawing truly was!

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Flora_fed_funds

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Thanks, Mark!

Category: Bailouts, Federal Reserve

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

34 Responses to “How Finance Works, by Jim Flora”

  1. Rob Dawg says:

    Where iz helicoptrz? They waz helicoptrz in the 1960s?

  2. Eric says:

    And yet the dollar is screaming higher this morning.

  3. John Borchers says:

    The Fed and Treasury are now the boys who cried wolf.

  4. Dan Duncan says:

    As I write this, Freddie’s down 75% and Fannie’s down 80%.

    This only confirms what I have always suspected: Freddie has always been the stronger of the two.

  5. That is fabulous indeed!

    Anyone know where I can order a poster of this?

    P.S. – BR, terrific work over the weekend.

  6. Dan – That may be my favorite post of the entire weekend.

    Hilarious.

    Classic.

  7. KJ Foehr says:

    This doesn’t smell like a 400 point, 6 sigma day that is the beginning of a several week rally. The VIX has risen in the first hour and is now at 22.6, that also is not indicative of a resurgence of confidence. Perhaps the market is just filling the gap higher open, or maybe the whole thing is fizzling… If we close below the HOD, I will conclude the rally is not sustainable at all.

    As I type QID and SMN are up on the day!

    SKF is “only” down 6.88% — I consider that a minor miracle.. so far.

  8. manhattanguy says:

    KJ – I agree with you. This rally will fizzle by EOD. Long SKF.

  9. steve from asia says:

    “BR, terrific work over the weekend.” x2!

    I’m keeping my shorts on. Ye Olde Addage – the hole in the wall gets filled. massive hole from 1245 – 1260 in the spx. now watch the nasdaq bleed and leed us lower.

    Back on topic,you’ve just given me my new desktop backgound, cheers!

    I love how the Treasury tax is eating a man, it’s funny because it’s true!

  10. KJ Foehr says:

    LEH is getting slammed down 15% a few minutes ago. Will it be next weekend’s bailout?

    WAMU was down 12+% earlier, now down 11%.

    Looks familiar; it reminds me of the old bear market!

  11. DaveM says:

    How long will it take for Hank Paulson and his bazooka to show up in an obscene cartoon?

    Great alternative content on the breaking story BR. Thanks.

  12. me says:

    I saw a comment on prudentbear a guy said the last time the US banks were nationalized was druing the depression.

  13. manhattanguy says:

    UAL filed bankruptcy. Financials are weakening. Lehman down 14%. I am loving this Black Monday.

  14. Sathya says:

    So true. Another interesting take on the whole situation in the NYT.

    http://www.nytimes.com/2008/09/07/business/07ltcm.html?em

  15. Jeff M. says:

    Trish Regan on CNBC talking about people now being able to get a “fair rate” on their mortgage interest rates. WTF is she talking about? WTF is a “fair rate?” These people are completely useless.

  16. samsin says:

    manhattan guy:
    “UAL filed bankruptcy. Financials are weakening. Lehman down 14%. I am loving this Black Monday.”

    UAL denies the news story. The news organization that posted the article revoked it. Not sure on the exact story as some say it was a repost of an old article from ’02 (re: Calculated Risk comments.)

    If it’s totally bogus, the news group that posted it is going to be in for one hell of a lawsuit. And whoever bought those stocks after the rumor gained traction will have to give them back.

  17. malabar says:

    What I find astounding but so typical about the state of our corporate media reporting and our politics is that there is no outrage.

    For example we have James Lockhart who was the Director of the OFHEO – the regulator for Fannie and Freddie – from summer 2006. He oversaw these GSEs as they ballooned their balance sheet by becoming an uber hedge fund through unprecedented leverage and buying $800 billion plus of private label subprime and Alt-A MBS on the open market. He was in the captains seat as these institutions became a “systemic risk”.

    Some weeks ago he is making public statements that he is reducing the capital requirements of the GSEs and permitting them to further expand their balance sheets.

    Fast forward this weekend. He gets rewarded not with a grand jury investigation of his actions and non-actions but by becoming the conservator of the bailed out GSEs.

    What a country? Reward those that FUBAR big time but screw the most prudent, hard working middle class citizen.

  18. gb says:

    are the lobbyists the guys depositing their bags of money into the banks?

  19. MarkTX says:

    AT THE COURT HOUSE!

    FOR 3 NIGHTS ONLY!

    The World-Renowned Tragedians

    HANK PAULSON THE YOUNGER!
    AND
    BEN BERNAKE THE ELDER!

    Of the London and Continental Theatres,
    In their Thrilling Tragedy of

    THE KING’S CAMELEOPARD,

    OR

    THE ROYAL NONESUCH ! ! !

    Admission 200 Billion.

    LADIES AND CHILDREN NOT ADMITTED.

  20. tired says:

    what a crazy day!

  21. emailcraigs says:

    The only thing that picture doesn’t show is the lone guy labeled “middle-class” holding the whole damn thing up like Atlas. Then add another guy labeled “top 1%” trying to break his legs with a baseball bat. And while we are at it…..add a row full of stooges labeled “government” watching all this happen with a bemused expression.

  22. gunthestops says:

    I don’t think much of gold bugs, but hell with all the debt the US is taking on, I can’t believe that the dollars is in nothing more then a temporary up trend. This year alone we will add about 3/4′s of a trillion dollars onto the national debt (the most ever for a single year) With tax selling in the last quarter of the year expected to be very high–next year’s tax receipts lower then this year we got some major problems ahead for the dollar. Any thoughts???

  23. KJ Foehr says:

    I’m no expert, but for a day when the pre-market futures were up the second largest amount ever (according to Bloomberg via Lazlo Birini, I think it was), this rally sure appears to be in trouble!

    Is the big money selling into the rally, or are they waiting to buy in the last hour?

    If this bailout doesn’t generate a rally, then what happens next? New lows? Or just meandering?

    I think a failed rally now, after the bad global markets last week, would be an ominous sign…

  24. DL says:

    The 2009 Federal deficit is going to throw a real monkey wrench into President Obama’s spending and tax plans.

  25. leftback says:

    Gunthestops: I am not a gold bug either – but this might be the best time for gold since it was on its run up to $1000. I think we will see money rotate out of Treasuries and into stocks and commodities here, after all nobody knows how deep is the bottomless pit of F and F.

    Today’s action is remarkable. Clearly all kinds of illegal shenanigans going on, what a great day to be out of the market. Watch out, there are an awful lot of people who want to smash the bears, there could be some nasty traps out there.

    I covered at 11.30am Friday – just a 6th sense that something wasn’t right in the Treasury market. It’s better to be lucky than good. Not rushing back in here with Cramer and Kudlow ready to fan the flames – this is pump and dump for a few days.

    This Hurricane Ike is one to keep an eye on. A direct hit on Houston could cause a lot of dislocation. I am playing golf until Wednesday morning, no way I want to get hurt in this market. There will be more opportunties when the criminality ceases.

  26. a different chris says:

    There is an really obvious omission, though. No stock market. Those were the days when you had a good likelihood of retiring from the company you started with, with a pension. Investment was for people who actually knew what they were doing.

    So I propose adding a little corner with a bunch of dopes with those hypnotized cartoon-eyes watching a cable “business” show, whilst pinstripped Wall St. sleazebags have snuck up behind them and are picking their pockets.

  27. BobC says:

    “There will be more opportunties when the criminality ceases.”

    Uh … are you saying there will never again be opportunities?

  28. Abbot_Of_Iona says:

    There’s something wrong with this picture. It has US Industry. Didn’t that all move to China to increase profits.

    The USA : Government of the People by Goldman Sachs for Goldman Sachs

  29. Mike in NOLa says:

    Nice cartoon, but the Treasury bird should be eating the middle class and defecating dollars.

    Looks like the smart money isn’t buying this. VIX still up. My account populated with half ultra short ETF’s is up .5%. The only problem I’m having is SRS that leftback got me to buy :) Way down. I suppose someone thinks the REIT’s are gonna get bailed out, too.

    However, if the market does go negative today, I do expect lots of buying at the close like we’ve been seeing. I suppose it’s mutual funds forced to stay long and trying to get in as cheap as possible. I guess that’s a market distortion that we have to live with; almost like forced buying.

  30. re: the graphic/art of this post, note: it was done in the ’60s

    past that: “I suppose it’s mutual funds forced to stay long and trying to get in as cheap as possible. I guess that’s a market distortion that we have to live with; almost like forced buying.”

    Posted by: Mike in NOLa | Sep 8, 2008 2:03:21 PM

    “almost like forced buying.” Mike, the MutFund/Index complex IS the Font of the Perpetual Bid.

    Also, I really wonder how many of these ETF cowboys have even read their, respective, prospectuses (?)

  31. Tarzan says:

    I notice that the diagram shows those birds eating, but not where their poop falls.

    Methinks we’ve lately discovered where said bird poop is located.

  32. Irwin Chusid says:

    More (and different) works by artist Jim Flora (1914-1998): http://jimflora.com. Bio, prints, rare peeks, surprises. Stop by.

  33. Pat says:

    What the crowd of America knows all too well is nothing but finance, and where whoever has the money, has the flag.

    What they do with it is inherent to their intent, and their actions.

    Americans as a whole are given only the privilege, if it is not unduly hampered, to alter the trustee-regime with power over the game. If Americans are disenchanted, it is because they expected more control, not less – over the game given the nature of the Constitution and Declaration of Independence.

    If it appears as if political parties have let Americans down, it’s probably because they have. It isn’t leadership Americans vote for, it is more control by them vs less control by others. Americans simply want the benefit of the promises granted by their founding documents. That is the American Dream!

  34. Irwin Chusid says:

    Based on the reaction to this illustration, JimFlora.com is considering issuing a ltd ed print. The original work might be in the Flora archives. In the meantime, the estate has issued a fine art print of another of Flora’s topical illustrations for Fortune magazine The FCC’s Expanding, Demanding Universe, from 1966.