August 5, 2007 (LPAC)--On the eve of the Federal Reserve Board policy meeting Aug. 7, among the many media round-ups of the unfolding financial crash, comes the survey in The New York Times, by Floyd Norris, "The Loan Comes Due," on the growing panic over the rapid disappearance of credit needed to sustain the ponzi-like speculative bubbles.

"Hedge funds ... have ... pulled back. Some investors have tried to pull money out ... leading Bear Stearns to stop investors from making withdrawals from three of its funds.

"`That is the core of a financial crisis, when too many people head to the exits simultaneously,' said Robert Bruner, the dean of the business school at the University of Virginia.

"....The markets are `very panicked and illiquid,' said Mike Perry, the chief executive of IndyMac Bank, ... as he announced plans to curtail lending sharply. It is very difficult, he said, to find buyers even for AAA securities.

".... [T]he real problem is that lenders and investors fear things will get much worse. `This is what we would characterize as the first correction of the modern neo-credit [sic] market,' said [Jack] Malvey of Lehman Brothers. `We've never had a correction with these types of institutions and these types of instruments.'

".... Now, there is ... doubt not only about the quality of old loans but also about important parts of the new financial system.

"`Financial panics don't happen during depressions,' said James Grant, the editor of Grant's Interest Rate Observer. `They happen on the brink of depressions. The claim that the world is prosperous is beside the point.'

".... Robert Barbera, the chief economist of ITG, a research firm, [said] `....there is a violent tightening gong on.'"

The Times ran this article alongside a full page, illustrated report entitled "The Economy -- Housing Busts and Hedge Fund Meltdowns: A Spectators Guide."