"Emancipate yourself from mental slavery, none but ourselves can free our mind.” - Bob Marley
Wednesday, October 22, 2008
Sunday, October 12, 2008
From Bloomberg (hat tip comments of Calculated Risk):
Oct. 11 (Bloomberg) -- Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury's $700 billion Troubled Asset Relief Program.
The Federal Housing Finance Agency, which placed the two companies in conservatorship on Sept. 7, directed them last month to start increasing their purchases of loans and mortgage-backed securities as the Treasury seeks to absorb underperforming and illiquid assets from financial companies.
So the vile Paulson still maintains his hopes to tranfer the toxic sludge securities from his Wall Street cronies to the taxpayers, now trying to do it without even the minimal controls and transparency in place in the EESA.
Friday, October 10, 2008
The world is at severe risk of a global systemic financial meltdown and a severe global depression
Although long called Doctor Doom, and long predicting the chaos in the financial markets, he has previously predicted only a long, severe, recession...until now. The fact that he was most pessimistic but only predicting a recession was comforting, but confusing.
I guess I'm less confused and more uncomfortable now.
Wednesday, October 8, 2008
Now if only our government would get a clue.
I've been reading Nouriel Roubini for a year or more and he's been talking about the "systemic meltdown" at least that long. Other economists used to call him Doctor Doom. Now they just call him to find out what's next.
He was wrong on one call though: he thought it would take another 6 - 12 months for the big 5 investment banks to disappear.
So the fact that he was wrong on the optimistic side about something is not altogether reassuring.
And now, once more because I just can't resist:
GOOD THING WE'RE NOT IN A RECESSION!
Monday, October 6, 2008
The 35-year-old Kashkari is a former Goldman Sachs Inc. banker, the investment giant once headed by Treasury Secretary Henry Paulson. The new office was created by the emergency legislation enacted Friday to fund the largest government bailout in history.
How much does it take to see the pure grab for taxpayer gold that this "bailout" is? Is Congress really this stupid? Or are they all bought and paid for?
Sunday, October 5, 2008
- Emphasize, that even with all the trouble in the econcomy, the number one issue is the war on terror, which means the war on Islamic Fundamentalism. This should be in every speech by McCain, Palin and every surrogate. It should be in many, many TV ads.
- Continue to emphasize Obama's associations with Ayers. Empasize how he has lied on this issue.
- Hammer hard on Obama's association with other unsavory elements - his warm relations with radical Muslim professors, his consultation with the anti-Israel Zbigniew Brezinski.
- Note how Obama has never voted against any gun control measure, no matter how restrictive. Include his vote against a law that protected the very right that the Supreme Court upheld in June 2008. Emphasize that Obama stated that he thought the DC law, which was overturned, was constitutional - and that he continues to support the same ban in Chicago - all while claiming to "support" the 2nd amendment. Empasize how he has lied on this issue.
- Emphasize Obama's support of pro-abortion extremism, including Michelle Obama's mailing supporting partial birth abortion and Obama's voting 4 times against the Illinois BAIPA, even thoutgh the 4th time it was cloned from the Federal version he now claims to "support". Empasize how he is supporting infanticide and how he has lied on this issue.
It has been well documented by Mish and Market Ticker (who has a great video up tonight; it is a must see) that the darkside to this money grab may have more to do with foreign creditors than is being spoken about. China, Japan, Saudi Arabia and many others were duped into buying tons of the mortgage backed AAA rated toxic paper, and they are not amused....looking at diminished stock returns, and now saddled with worthless paper the foreign powers seem to have had enough.So, just as MaxedOutMama pointed out here on my question about the GSE bailout, this is all about keeping th foreign credit, upon whihc our once-proud nation is so dependent, flowing to enable our continuing sub-prime government spending.
The strong language that allows foreign trash to come back to the treasury was such a sticking point to any plan that a veto was threatened if this provision was taken out.
It makes sense. The total rush-iob; the inclusion of foreign assets; the fact that as stated, the plan won't actuallly address the real problem, or does so only in the most corrupt and inefficient fashion. It all makes sense.
We are so screwed. We are owned by our creditors because we must still borrow just to keep running.
Someday soon, this will be put to the ultimate test: economic blackmail used to affect our stand on foreign policy. What will we have to give up to keep pawning ouselves? Israel? Taiwan?
Or will it be a more subtle, but equally devastating, insistence that we allow the "political correctness" that allows Fundamental Islam its foothold in this country, undermining all that makes this country the beacon it has been?
As many have said, we are fadst in the process of becoming a 3rd world nation - a banana republic - with nukes.
Saturday, October 4, 2008
The plan - from Economic Disconnect :
Folks, we were screwed royally on this past bill. Every single poll, every single person I talked to was firmly against this action. FIRMLY. The Congress decided they knew so much more than their constituents.
if [Congress is] going to ignore 70% of the voters and do whatever you want, we might as well move to Iran....
What's more is that a message must be sent here. No more bailouts. No more mismanagement of the economy and national finances. No more giving the voters the middle finger with no accountability. NO MORE.
What I want you to do is to identify all incumbents that are on your ballot for November. Then I want you to vote against every single one.(You may elect to keep any official that voted NO to the bailout.)
Now I understand that for many the thought of voting for a republican makes you ill ...Get over it. You can always vote the next time for a democrat. This issue is the most important thing and all that other stuff can wait.
I get it that the thought of voting for a Democrat may make you want to take a shower....You can always vote for a republican the next time.
I can guarantee that if a boatload of incumbent get sent down the river, the new congress is going to be especially keen on listening to their voters.
This issue is the most important thing and all that other stuff can wait.
The new rallying cry: THROW THE BUMS OUT!
Vote against all incumbents who voted for the Paulson-Bush-Pelosi-Reid-Boehner-McConnell "Swindlers Bailout Act of 2008".
Senate Vote here.
House Vote here.
Even if it means voting for someone you can't stand - this is the only way we can take back Congress. Otherwise we're the same miserable sacks-of-shit they are. Only by standfing up and throwing the bums out can we have a chance of making sure this doesn't happen again.
Friday, October 3, 2008
Following the passage of the economic bailout bill Friday, House Speaker Nancy Pelosi said congressional hearings are planned to find the causes of the crisis and to determine "where we go from here."
"We were dealt a bad hand; we made the most of it," Speaker of the House Nancy Pelosi said Friday.
How nice. After letting yourselves be scared like little sissies into handing the most corrupt people in the world $700 Billion to hand out to their buddies who are also the most corrupt people in the world - which you did without consulting a single non-Admimnistration economists - even though many hundreds reviled this plan - NOW that you've bailed out ther Pigmen and Swindlers at the expense of the taxpayers, NOW you're going to have hearings!
NANCY PELOSI, YOU ARE THE STUPIDEST FUCKING ASSHOLE ON THE PLANET!
Thursday, October 2, 2008
I'm good enough that sometimes people will tell me they like what I do. I'm lousy enough that I've thrown the guitar in the corner in frustration.
But over the years I've been through enough cycles of rehearsals and gigs with a few bands that I finally figured out what used to be a mystery to me: why are some of the rehearsals - especially, always, the last rehearsal before a gig - so goddamn horrible, while the gigs go well?
After nearly 20 years - my hobbies go into hibernation at times - I finally figured it out: It's adrenaline - induced by the presence of a crowd.
It makes all the difference. Fewer mistakes are made, they are recovered from faster, and sometimes when the band loosens up in a jam, some bit of musical magic can happen.
The last rehearsal before the gig has all the downside - nerves, desire to work out all the bugs, "it's about time to do this right, dammit!" - but not the crowd. The gig has the crowd, and for me and at least some of the other folks I played with, that makes all the difference.
And it appears that this is the case with Sarah Palin. In a room with Katie Couric and a camera, it's dress rehearsal time - all nerves and no buzz.
Put her in front of a crowd - even opposing a guy with 35+ years of experience having the night of his life - and she is a force to be reckoned with.
Get this woman onto "The View" post-haste - she will make mince-meat of Whoopie and the other lefties.
Yes there was a really jarring change of subject. (But they all do that.) Yes there was a brief echo of the "what other Supreme Court decisions" horror - but she pulled out of it and kept on trucking.
And let her do one-on-one interviews again - but only in front of a live audience.
My name is Bob N. and I am an adrenaline addict!
Still unaddressed is the impact on the credit markets - or the impact on the dollar- of $700 Billion of *additional* US borrowing.
Today in a post at Naked Capitalism, one of Yves Smith's readers makes this issue more explicit:
More grist for the mill that Congress refuses to run: they are listening only to Bernanke and Paulson - the clueless and the corrupt.
Much of the working capital market, for decades has come via money market funds (MM). Joe public or Joe CFO deposits money into a MM. That MM loans it to a bank (usually by buying paper, and usually at a medium duration) and then that bank loans it out to business for inventory, payroll or whatever. The MM has converted Joe's demand deposit into a fixed-duration loan.
The problem we're having is that people are fleeing commercial MM for treasury MM. Those are buying treasuries and thus converting the money to the desirable medium duration BUT that money is loaned to the Fed, and the Fed doesn't make working capital loans. So the deposited money that had been made into working capital has been diverted into the Fed and lost to working capital.
Right now we have both commercial and treasury MMs. Deposits have shifted from commercial MMs to treasury MMs, and consequently we have less working capital (a commercial MM product) and better credit for the Fed (a treasury MM product). But, treasury MM rates are now very low and the gap between treasury and commercial fairly high, which creates an incentive for depositors to put money into commercial funds, producing some working capital.
When Paulson dumps out his 700 billion in treasuries it's going to be at the short end. That will drive up rates for short-term treasuries. This will obviously draw even *more* deposits into the treasury MMs. That means even less in the commercial MMs and thus less working credit, the eventual commercial MM product. Hence Paulson's billions remove working capital by competing for the deposits that could get used to make working capital loans. That 700 billion is going to go to fairly long-term mortgage securities. So Paulson's billions divert credit from working capital to long-term mortgages - from where it's most needed to where it's most wasted.
I think it's very telling that in two days of hearings and two weeks of discussion we have yet to see *any* detailed mechanism for how Paulson's plan will increase the supply of, say, inventory loans. It's not that every economist in the world is an idiot, it's just not going to help. I think people have fallen into the fallacy that if it costs a lot it must be valuable. Paulson's plan falls into the category of very expensive way to hurt ourselves.
These memes have become a rallying cry -- cognitive dissonance writ large -- of those folks who have been pushing for greater and greater deregulation, and are now attempting to disown the results of their handiwork.
• Did the 1977 legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants?
• 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs ?
• What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie?
• Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement?
• Did any Federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what?
• Did the CRA require banks to develop automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible?
• How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA?
• What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time?
• Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?)
• The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ?
• Did the GSEs require banks to not check credit scores? Assets? Income?
• What was it about the CRA or GSEs that mandated fund managers load up on an investment product that was hard to value, thinly traded, and poorly understood
• What was it in the Act that forced banks to make "interest only" loans? Were "Neg Am loans" also part of the legislative requirements also?
• Consider this February 2003 speech by Countrywide CEO Angelo Mozlilo at the American Bankers National Real Estate Conference. He advocated zero down payment mortgages -- was that a CRA requirement too, or just a grab for more market share, and bad banking?
Wednesday, October 1, 2008
Time to shit-can this plan and start over - this time with help from respected outside economists - not just discredited hacks like Paulson and Bernanke.
See here for information from a real expert, Nouriel Roubini on how various bailouts work - and why the Paulson plan is one of the worst possible ways to do it. Roubini has been called Dr. Doom for years as he has explicitly predicted these problem before most others.
Everything in this plan that Paulson put there must go. And Paulson must go, too. He is so clearly the wrong person to manage any part of this. His background is Wall Street - he managed Goldman Sachs at the exact time that they and others were creating this "crisis".
The bailout still has too little protect taxpayers from the inevitability that Paulson will overpay. All "oversight" is provided after the fact by people with neither the time nor qualifications to be effective.
The so-called insurance is *optional*.
Overpaying for toxic sludge securities - many if not most already rendered worthless by defaults that have already occurred is the only mechanism by which this plan helps the banks and other institutions. See here for an explanation of why the lower tranches - those often retained by Banks selling the Asset Backed Securities - are much more heavily impacted by relatively low default rates. See here for why the default rates are so much higher than those used for the original creation of these securities and the results on the securities.
Still unaddressed is the impact on the credit markets - or the impact on the dollar- of $700 Billion of *additional* US borrowing. Uncle Benny thought he'd get a freebie lowering interest rates to take the sting out of ARMs, but the dollar swooned *and* LIBOR has now disconnected from Fed Funds. These are the kinds of unintended consequences that come from winging it.
It is worth noting that on Tuesday the market indices reclaimed 2/3s of what was lost Monday. Congress does more harm dithering on this piece of crap bailout than if they would take the time to get real experts in there and do it right.
Violent Black Mobs
Terrorism and Radical Islam links
- ► 2009 (37)
- I'm Bored....
- When you're in a hole, STOP DIGGING
- "One cannot rule out a systemic collapse and a glo...
- All Roubini All the Time
- Treasury Bailout: A Den of Thieves
- My Opinion on What McCain Should Do to Win
- An Explanation of the Senseless Bailout?
- Throw the Bums OUT!
- Pelosi: NOW we're going to have hearings!
- FUCK CONGRESS! FUCK BUSH! FUCK PAULSON!
- It's the Audience, Stupid!
- How the Paulson Plan HURTS CREDIT MARKETS
- More on the Idiotic "CRA-and-GSEs-Caused-This" Mem...
- House was Right to Reject the Fatally Flawed Pauls...
- ▼ October (14)
- I'm a 57 year old geek. I voted Democratic for 20 years, because I disliked the Republicans more. But now, nobody really speaks for me. I'm for Guns, for more correct government regulation of the financial world, against illegal immigration and amnesty. (in 2008 I ended up voting Republican - too many questions about Obama, and voting against anybody who voted for TARP 1.) In 2010 I voted a stright republican ticket because the Democrats have completely lost their minds.