Update: Russia Exchanges Closed (and other horror stories)

Both the MICEX and RTS exchanges have been closed - lock limit down.

The markets have rendered their decision on the G7, Geithner and Obama's administration thus far, as expressed by Rick Santelli on CNBC this morning. As a picture is worth 1000 words, here 'ya go:

CNBC was running Terminator II theme music as their bumper this morning; that's pretty accurate. There is no chart support left between here and (unfortunately) the 500s in the SPX, and there's an argument to be made that the next real support is down around that dreadful 210 target that I laid out a couple of weeks ago.

Obama's administration must stop dicking around with asset prices. The "credit freeze" is manufactured as a consequence of idiotic actions of government; by at the same time threatening to support asset prices and destroy their value they have blown bid/offer spreads out to the point that trades cannot take place.

This stupidity must stop and it must stop NOW. Whatever policy is going to be on these assets it must be set and then the government has to sit down and shut up. If government is going to attempt to overpay for these assets then it must secure 10 and 30 year funding necessary to take the entire lot - not this garbage 13-week rollover nonsense where we can destroy our government if we have a failed roll - and accept the damage that much higher interest rates will cause from issuing roughly $2 trillion in 10s and 30s. This will mean severely constrained federal budgets and much higher borrowing costs for homeowners, companies and others - in short, it will be an engineered depression for the purpose of bailing out the banks.

That's the price folks - but it is the only safe way we can actually do what we've threatened, which is to overpay for these assets.

If we're not going to overpay for these assets then we must say so in a loud, clear voice, and if that results in the banks being declared insolvent, then so be it. Do it and get it over with. It will suck but then it will also be over. There is severe economic damage that will result from this path of action as well, mostly from having to backstop the FDIC. Yes, I know this detonates pensions and the like. The fact of the matter is that they're already dead and we must stop lying to everyone, first and foremost ourselves.

We also must consider "ring-fencing" the United States, pulling all swap lines and protecting ourselves. We cannot backstop the world; we don't have the money and can't raise it. We are tying an anvil to our ankles and jumping into the water, and if this doesn't stop - now - we are headed for the abyss.

We got here as a consequence of government idiocy. If government does not stop behaving like Moe, Larry and Curly we will watch Europe implode, we will try to backstop the EU and Asia via our swap lines and we will go down with them. Swaps have blown out this morning which indicates that despite all the "attempts" to inject stability we have failed.

Time has run out for the bullcrap games of the last eighteen months. Bernanke must be directed to protect our government and Treasury first and withdraw all external support until and unless Congress has authorized the full expenditure that could result from extending any US-backed program to a foreign entity.

If Obama lacks a sack between his legs and is incapable of taking the necessary actions to protect our nation then he must resign here and now. Playing hostage to the banksters never was cute but if this is not stopped right now - today - it may well prove fatal to our Republic.

The last time the States almost called a convention was in 1983, when 32 of the 34 States needed passed resolutions calling for a federal balanced budget amendment.

Congress jumped in at that point, and passed a bill, saying a bill was sufficient, which was promptly overturned in the courts. Much like the line item veto was later overturned.

However, it is important to plant the seed of the idea at the State level now, because there will not be the luxury of years for individual States to get on board. It should be presented to them to ponder, as a “contingency plan”, because there will likely be little time for a typical process to work.

All 34 States will have to pass resolutions within, my guess, six months.

I’m not really seeing it as optional. The federal government would be in a state of near collapse for such a convention to be convened.

However, I was very careful to specify a senate-style two-person representation from each State. This would favor conservatives and Republicans. It also strongly favors an anti-federalist approach to the new constitution.

As things stand now, delegates to a constitutional convention are free to do as they please. This is why I specifically said that the States have to severely limit their function to just representing what the States want, as States, not as popular representatives.

It would be a great knock-down, drag-out as far as additions to the constitution, but there would also be some easy winners, such as a balanced budget amendment and a presidential line item veto.

And while these would be bare bones, there are any number of other fixes, patches and removals that need to be made to the constitution, many of which are not controversial.

I also added that the federal government would not be permitted to take part in the convention, which in itself would stop a lot of low rent hanky-panky. They would be as unwelcome as a representative of George III to the first convention.

The bottom line is that, in an emergency situation, the lobbyists, fanatics, crackpots, bureaucrats, consultants, etc., would be excluded from the proceedings, and they would be as somber and serious as a church.

Finally, the convention cannot dissolve until everything they have ordered has been carried out, with removal from office as the punishment for anyone who tries to stonewall them.

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