WC Varones

Don't lend your hand to raise no flag atop no ship of fools

"Tricked" into buying homes they couldn't afford?!

Obama is now saying poor people were "TRICKED into buying homes they couldn't afford." Here's a story about ACORN. The Full article is really WORTH reading. Here is first bit of it. HERE is full story.



Chutzpah: ACORN's drive to lower mortgage standards paved the way for the meltdown - yet last week, it was holding protests like this one in Florida, trying to get a cut of the financial-market-rescue bill.
Chutzpah: ACORN's drive to lower mortgage standards paved the way for the meltdown - yet last week, it was holding protests like this one in Florida, trying to get a cut of the financial-market-rescue bill.

WHAT exactly does a "community organizer" do? Barack
Obama
's rise has left many Americans asking themselves that question. Here's
a big part of the answer: Community organizers intimidate banks into making
high-risk loans to customers with poor credit.

Bailout = Marx article

This article comes from a libertarian writer/publisher and can be viewed here

Bailout marks Karl Marx's comeback
Posted: September 29, 2008, 8:03 PM by Jeff White

Marx’s Proposal Number Five seems to be the leading motivation for those backing the Wall Street bailout

By Martin Masse

In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.

Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package.

National Weather Service to ban hurricanes

Lawmaker urges SEC to halt market volatility

September Madness


(click to enlarge)

HT: T-Dub

You crazy Dems, Just keep saying there's blame to go around

There is no problem with Fannie, Freddie....everything is roses under "the OUTSTANDING leadership of Franklin Raines".

Pelosi bailout summary

WSJ:
Office of Speaker Nancy Pelosi -- Sept. 28, 2008

REINVEST, REIMBURSE, REFORM

IMPROVING THE FINANCIAL RESCUE LEGISLATION

Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets -- including cutting in half the Administration's initial request for $700 billion and requiring Congressional review for any future commitment of taxpayers' funds. If the government loses money, the financial industry will pay back the taxpayers.

3 Phases of a Financial Rescue with Strong Taxpayer Protections

* Reinvest in the troubled financial markets … to stabilize our economy and insulate Main Street from Wall Street
* Reimburse the taxpayer … through ownership of shares and appreciation in the value of purchased assets
* Reform business-as-usual on Wall Street … strong Congressional oversight and no golden parachutes

CRITICAL IMPROVEMENTS TO THE RESCUE PLAN

Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable -- protecting American taxpayers and Main Street -- and these elements will be included in the legislation

Protection for taxpayers, ensuring THEY share IN ANY profits

* Cuts the payment of $700 billion in half and conditions future payments on Congressional review
* Gives taxpayers an ownership stake and profit-making opportunities with participating companies
* Puts taxpayers first in line to recover assets if participating company fails
* Guarantees taxpayers are repaid in full -- if other protections have not actually produced a profit
* Allows the government to purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families

Limits on excessive compensation for CEOs and executives

New restrictions on CEO and executive compensation for participating companies:

* No multi-million dollar golden parachutes
* Limits CEO compensation that encourages unnecessary risk-taking
* Recovers bonuses paid based on promised gains that later turn out to be false or inaccurate

Strong independent oversight and transparency

Four separate independent oversight entities or processes to protect the taxpayer

* A strong oversight board appointed by bipartisan leaders of Congress
* A GAO presence at Treasury to oversee the program and conduct audits to ensure strong internal controls, and to prevent waste, fraud, and abuse
* An independent Inspector General to monitor the Treasury Secretary's decisions
* Transparency -- requiring posting of transactions online -- to help jumpstart private sector demand

Meaningful judicial review of the Treasury Secretary's actions

Help to prevent home foreclosures crippling the American economy

* The government can use its power as the owner of mortgages and mortgage backed securities to facilitate loan modifications (such as, reduced principal or interest rate, lengthened time to pay back the mortgage) to help reduce the 2 million projected foreclosures in the next year
* Extends provision (passed earlier in this Congress) to stop tax liability on mortgage foreclosures
* Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis—allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks

Note some obvious flaws:

* No salary caps for executives of firms that take taxpayer money.
* Vague language around taxpayers getting equity; my guess is that many firms would get taxpayer money without giving up equity.
* Automatic additional funding unless blocked by a supermajority. If this is a bipartisan solution, why not require affirmative Congressional action for additional funds?

There is still time to press the rank-and-file to fix this stuff. Investment advisor Mike Shedlock says to hit the switchboard!
There is a bill in the house. There is not one in the Senate so we need to create as much doubt as we can, as soon as we can.

Do they have the votes? That is another story. They won't if we can scare every junior member in the house, or appeal to the right few in the Senate.

There are still changes worth getting. So let's get them
.

Letter from Feinstein

She's going along with the bailout, but I did appreciate this line:
I am told that the reason the Treasury Secretary does not want limits on executive compensation is because he believes that an executive then will not bring his company in to partake in any program that is set up. Here is my response to that: We can put that executive on his boat, take that boat out in the ocean, and set it on fire.

If you want to read the whole text of Feinstein's letter, Mish has it.

Change we can believe in

"Barack Obama needs to grow up?" Well, maybe. Either that or, as President, he can carry out his threats to have his critics arrested. Say what you will about other celebrities who have grown up in the public eye, like Lindsay Lohan and Britney Spears: at least they never tried to have you thrown in jail.

Bailout update

Pelosi: Let Americans Review Legislation Before Vote

Meaning Pelosi wants it done tonight. Pro-bailout side keeps saying a deal is near, but Republicans are not getting the taxpayer protections they want.

Republicans object to arbitrary Sunday deadline

I agree. I want the people to have time to read the legislation before it's passed, but I don't want an arbitrary deadline.


U.S. Democrats seek Wall Street tax in bailout plan


If a vague, optional, distant-future tax is replacing equity now, that sucks.

Whose fault is it?

I wouldn't put it in such partisan terms, and I'm not so enthusiastic about McCain, but this video is entirely factually consistent with what I know about the housing bubble.

Watch the whole thing. Especially if you are even considering the possibility of voting for Obama.



... and this C-SPAN highlight reel of Democrats blocking regulation of Fannie Mae and Freddie Mac.

You call this a perp walk?

More than a year after one of the biggest real estate fraud rings in the state was exposed, California gets around to revoking David Crisp's real estate license.

You read that right. No indictments, just a revocation of real estate licenses. A first-year student at Thomas Jefferson School of Law could prosecute this case.

It is a disgrace that the Treasury Department is asking us to bail out the bad banks from the housing bubble while the Justice Department still hasn't gotten around to prosecuting the criminals who made millions from it.

David Crisp is small potatoes. I want perp walks of Angelo Mozilo, Michael Perry, Franklin Raines and Chris Dodd.

A healthy bank's perspective on the bailout

A letter to Congress from John Allison, CEO of BB&T:
1. Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the problems in the financial system have been caused by government policies including, affordable housing (now sub-prime), combined with the market disruptions caused by the Federal Reserve holding interest rates too low and then raising interest rates too high.

2. There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.

3. While all financial intermediaries are being impacted by liquidity issues, this is primarily a bailout of poorly run financial institutions. It is extremely important that the bailout not damage well run companies.

4. Corrections are not all bad. The market correction process eliminates irrational competitors. There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom. It is important that any rules post “rescue” punish the poorly run institutions and not punish the well run companies.

5. A significant and immediate tax credit for purchasing homes would be a far less expensive and more effective cure for the mortgage market and financial system than the proposed “rescue” plan.

6. This is a housing value crisis. It does not make economic sense to purchase credit card loans, automobile loans, etc. The government should directly purchase housing assets, not real estate bonds. This would include lots and houses under construction.

7. The guaranty of money funds by the U.S. Treasury creates enormous risk for the banking industry. Banks have been paying into the FDIC insurance fund since 1933. The fund has a limit of $100,000 per client. An arbitrary, “out of the blue” guarantee of money funds creates risk for the taxpayers and significantly distorts financial markets.

8. Protecting the banking system, which is fundamentally controlled by the Federal Reserve, is an established government function. It is completely unclear why the government needs to or should bailout insurance companies, investment banks, hedge funds and foreign companies.

9. It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail out did not exist. Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?

10. The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks. (Banks would not have received the gains had the houses appreciated.) This will substantially increase the risk in mortgage lending and make mortgage pricing much higher in the future.

11. Fair Value accounting should be changed immediately. It does not work when there are no market prices. If we had Fair Value accounting, as interpreted today, in the early 1990’s the United States financial system would have crashed. Accounting should not drive economic activity, it should reflect it.

12. The proposed new merger accounting rules should be deferred for at least five years. The new merger accounting rules are creating uncertainty for high quality companies who might potentially purchase weaker companies.

13. The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. The Treasury has a number of smart individuals, including Hank Paulson. However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry. Therefore, they can not be relied on to objectively assess all the implications of government policy on all financial intermediaries. The decision to protect the money funds is a clear example of a material lack of insight into the risk to the total financial system.

14. Arbitrary limits on executive compensation will be self defeating. With these limits, only the failing financial institutions will participate in the “rescue,” effectively making this plan a massive subsidy for incompetence. Also, how will companies attract the leadership talent to manage their business effectively with irrational compensation limits?

ter·ror·ist /ˈtɛrərɪst/ –noun

1. a person, usually a member of a group, who uses terror or intimidation to achieve political goals.

WaMu ceases to be. It is no more.

I'm going to miss the khaki, blue shirt attire; they were a good bank. I did have an account with them that I closed last Saturday. They had excellent customer service and their employees did not deserve to end up in this situation.

But business is business. The shame is that Killinger walks away mega rich for having steered the ship right into an iceberg that fired torpedoes. (Yup hitting the Titanic/Lusitania reference again) I mean it’s people like Killinger, Fuld and Mozilo who really deserve 1 Chuck Norris roundhouse to the head. One is all that would be needed.

Here’s the obituary: Bloomberg

And this makes me think the Board of WaMu also deserve 1 or 2 round houses to the head depending on how many people were on the board:

WaMu in March rebuffed a takeover offer from JPMorgan Chief Executive Officer Jamie Dimon that WaMu valued at $4 a share.

WaMu Thursday

This would have been big news, once upon a time.

But this news has been expected for a while, and today is also Bailout Blowup Thursday.

Anyway, looks like FDIC may have avoided losses on this one(?)*, WaMu debt and equity holders get zeroed, and JPM takes on the crap loans with the great deposit base. If Sheila Bair did get away without taking any losses, that's a hell of a trick. Good on ya, Sheila!

UPDATE: * The FDIC may take no losses, but if Paulson gets his way, the taxpayer will take the losses from JP Morgan.

Daylight!!!

The White House summit apparently blew up when McCain indicated support of an alternative option, a more free-market-oriented proposal being developed in the House.

If there was ever a time to hammer the Congressional switchboard, it's now!

Bailout bits

Bilbray is a wavering weenie.

BuyMyShitPile.com says instead of bailing out Wall Street to help Main Street, let's bail out Main Street to help Wall Street.

If I were in San Francisco, I'd be going to this protest today. Look for one in your area. The closest to me is in El Cajon. Nobody goes to El Cajon.

Cue Germanic Invasions?

Possibly missing from Paulson's "To-Read" list:
-Decline and Fall of the Roman Empire by Edward Gibbon
Two short items he's likely already checked off his "To-Read" list:
1) "The American people will never knowingly adopt socialism, but under the name of liberalism they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened." – Norman Thomas, prominent 1940's era American socialist

2)
"We can't expect the American People to jump from Capitalism to Communism, but we can assist their elected leaders in giving them small doses of Socialism, until they awaken one day to find that they have Communism." - Nikita Krushchev
Yes, let's now go and "assist our elected leaders", shall we? Need some help with that sledge-hammer, Dick Durbin?

Was that an attempted reprise of The War of the Worlds?


Front page of Chicago Tribune showed a picture of Ben and Hank at the Senate Interrogation Table. A man between and behind them in the audience was holding up a sign that said simply, "No Blank Checks" [A possible Negocious sighting?]. Yes, some people think they are putting on a panic-inciting-show for us. So I say, if this really IS a show, an Orson Welles-ian, as well as an Orwellian show they're trying to give us, then why are they sitting down at that table? Maybe at their next testimony, someone should bring a sign that echos the wise words of Biden from a couple of weeks ago; "Hey Paulson, Stand up so the crowd can see you!"
Here we see Orson Welles taking an opportunity to quote Paulson, oddly enough. Mr. Welles comments on the matter of the green-lazer-shooting-invaders, saying "If that situation were to persist, it would threaten all parts of our economy."

Newt Point

from a transcript of a Newt Gingrich appearance [full transcript]:

NG: I mean, this is, look, there’s a proposal in the Congress which liberal Democrats love to allow bankruptcy judges to rewrite contracts. Now that would be the end of contract law in America, and the end of the rule of law. And it would mean you had trial lawyers shopping for judges, and every agreement you ever made to loan money or invest money would be potentially changeable at the whim of a judge. And it would be literally a crippling impact on the entire American economic system. And yet these guys are so into litigation and so into paying off their lawyer friends, that they have no idea the level of damage they’re going to do. And in Paulson’s case, you know, the chairman of Goldman Sachs are trying to bail out his friends on Wall Street, and he wants $700 billion dollars of your money with no accountability, thank you very much.


Gay to Straight

I'm trying to take a break from the insanity of the markets so I'm spending time on Youtube watching a little Penn and Teller. They are beacons of reason and logic.

I just have to post this site which they mention in their Bullshit - Family Values episode. This site is awesome: gaytostraight.org.

Please check other related sites like - lionstovegetariansism.org, fishtoairbreathers.org and finally hippiestointelligence.org.

Unlike the D.C. Wind

How are they gonna even begin to calculate the carbon-offsets that will be required to make up for this?

Solar Wind Weakest Since Beginning of Space Age

The intensity of the sun's million-mile-per-hour solar wind has dropped to its lowest levels since accurate records began half a century ago, scientists say.
I've learned never to mention to Global Warming fans that we even HAVE a Sun. They don't take it too well. Oh, and I also advise not to mention the fact that current measurements are showing that every single planet in our Solar System has been getting warmer in recent years. Such information complicates discussions about the Kyoto Treaty, for instance.
And for more fun:
STUDY: Green idealists most likely to take long-haul flights...

Bette Midler Quits Touring To Help Save The Planet...

Kaptur rant on Congress Floor

YOU GO GIRL!

Natives getting restless now

House.gov is really slow right now. Think some people might be contacting their Representatives?

And a united front from McBama:
Obama, McCain Say Government Must Recoup Bailout Cost

Presidential candidates Barack Obama and John McCain offered a guarded embrace of the Treasury Department plan to rescue ailing financial firms, with both outlining extra conditions and finding themselves in the rare position of competing for attention with Congress.

The two nominees agreed that any proposal to aid U.S. financial markets must include provisions for recouping government money and returning it to taxpayers.

Smells like warrants or contingent equity to me. Let's hope they stick to that position.

I just called my Rep., Brian Bilbray, a moderate/populist Republican, and his office assured me he is very opposed to the bailout.

Good precedent

Paulson and Bernanke know what they're doing. They have historical precedent. Just look at the other countries that have inflated their way out of a debt crisis: Argentina, Zimbabwe, and Weimar Germany.

You know, Mugabe and Hitler were bad, but not as bad as making Wall Street guys go without seven-figure bonuses.

Guido Buffett

The markets are giddy this morning with Warren Buffett's "vote of confidence" investment in Goldman Sachs.

The terms of the deal?
Berkshire will buy $5 billion of Goldman perpetual preferred stock that carries a 10 percent dividend.

It also will receive warrants to buy $5 billion of common stock, or 43.5 million shares, at $115 per share, within five years, which could give it a roughly 9 percent stake in Goldman.

10% annually forever, plus deep-in-the-money warrants? That's not a "vote of confidence;" that's loan-sharking!

Buffett's warrants can most closely be compared to call options, but call options on GS only go out 2.25 years. $110 and $120 strike prices most recently traded for around $38, making Buffett's 43 million free options worth $1.65 billion -- but he has five-year warrants, not two-year, so they are actually worth far more than that.


Goldman Sachs CEO Lloyd Blankfein after "negotiating" with Buffett's men.

Warren Misread the Memo

He wasn't supposed to invest in Goldman until AFTER the phony bologna vote on the bailout took place. Now he’s risking letting everyone know this is a total hoax. Oracle of Omaha my ass; can’t even read a Presidential memo.

The Benefit of the doubt, and Biden

Before we go picking on Biden again (now there's one "change agent" who should be charging admission for the constant entertainment he's been providing us all these 36 years he's been in office), let's carefully consider all possible angles of the truth.

Maybe TV
HAD been invented in 1929 when the market crashed, but just wasn't yet available in all 57 states. Additionally, when FDR gave this alleged nationally-televised speech on the crash of the market, I bet hardly anyone bothered to tune in, because they were probably busy tuning into a technology that actually existed at the time, the RADIO, in order hear what their PRESIDENT, Mr. Hoover, was saying about the crash. But you've gotta wonder why FDR, who at the time was the 44th Governor of the state of New York, went to such lengths to give a speech to the entire country the day of the crash. Do you think his constituents in New York were offended that he was ignoring his subjects-uh-citizens of the Empire State, "going national" on them with another one of his monumental speeches?

Gosh, people have really changed since 1929. I mean, are
ANY of us even remotely interested in what the current governor of New York, David Paterson thinks about the crisis? I'm not. But if any of you happen to catch his major Financial-Crisis speech tonight on the DSTR (that's, of course, the Digital Synthetic Telepathy Receiver), and he happens to say anything important, please let me know. Anyway, I can't wait until 79 years from now, when Vice Presidential candidate Harry Pastignoranti refers to tonight's David Paterson speech.

A heartbeat away

On Drudge:
OBAMA SCOLDS BIDEN ON AIG FLIP-FLOP: 'JOE SHOULD HAVE WAITED'...

BIDEN: OBAMA AD MOCKING MCCAIN 'TERRIBLE'

Biden: 'No coal plants here in America'...

Tells Couric: 'When the stock market crashed, Franklin Roosevelt got on the television'...

Sounds like Biden could use a vacation in The Villages, America's friendliest hometown.

And We Out

A transcription of Denninger's video comments from 9/17/08, which can be watched here: http://market-ticker.denninger.net/archives/2008/09/17.html

The Potential End Of America's Government

History records that every nation that has printed money to attempt to get out of a financial crisis has failed politically, AND economically....every single one. Weimar Germany, Zimbabwe, Argentina, etc...if you're not a buff of history you might wanna read up on those things because THAT may be what's coming to America. For over a year I've been sending tickers, petitions, letters to congress, to Paulson, to anyone who would listen...but the one line I didn't believe the treasury would cross was the one that history says ALWAYS destroys your nation and your government. They crossed it today. Now, it may be a one time deal and you'll probably have people tell you it won't happen again, but....that's what they said after Bear-Stearns' bailout. These funds and these speculators will short each and every one of these financials until their credit ratings are downgraded. And as soon as they are, they will cash in their chips. These firms will be forced into a liquidity crisis JUST as AIG was. They will come with their hat in their hands to the federal government. Bernanke and Paulson will once again bend over.

The problem here, folks is; we don't have the money. Bernanke's Federal Reserve has already burned through the majority of its balance sheet. All of its short-term paper (debt) has been sold off. And that is where the money came from that they have used so far for the TAFF and the PDCF and the TSLF and all these other alphabet-soup things that they have done. You probably heard about them and you don't know what the hell they are and that's fine. It's not important. The important thing is that none of that was hyper-inflationary because there was no printing of money going on. It was from existing reserves that were held that were run off into the market and that's where the cash came from that was put into the system. That's fine.

This is different. You see all the Federal Reserve has left in its SOMA account is LONG term treasury instruments. 10 year, 30 year, which are things that are NOT easy to run off. You have to wait for the time to expire before you can redeem them in the market. If you SELL them, you DEPRESS the market for those instruments and you send interest rates MUCH higher. Ben Bernanke's in a box. Paulson is in a box.

So they did the ONE thing I hoped they wouldn't do, and I didn't believe they would do. They printed up some cash, literally, and showered it on Wall Street, potentially starting a cycle that could lead to the destruction of our nation.

Folks, this must not be allowed to stand. This video must go as widely as possible to everyone you can find. Congress must stand up, and stop this.

Congress, under our constitution, is the only instrumentality that is legally empowered to regulate our monetary supply. They delegated that power to the Federal Reserve and they had every right to do so. But that doesn't mean they don't have oversight authority, or responsibility. They do. The Senate and House are in session right now and will be until the end of the month. It is absolutely critical that this be stopped. Barney Frank is now talking about the Federal Reserve taking on ALL the bad paper (debt), a-la the RTC. Unfortunately for Barney Frank, in order to DO that, we would have to print hundreds and hundreds of additional BILLIONS of dollars of cash that we do not have. Folks, this WILL happen, unless you stand up and stop it.

Don't believe for a minute that this is in the best interest of our nation. It is not. Don't believe for a minute that somehow, we should keep these people who are over-levered and over-geared from collapsing. We must not. Yes, will be painful if we have a lot of bank failures. Yes, it will painful if we have Wall St. essentially implode and start over. It will be very bad.

A year ago last August, I started sending letters and petitions to the government as well as putting them up on the marketticker site, asking, pleading that the government intervene, that it perform its regulatory function and force this leverage to be taken down. They did nothing of the kind. These institutions have continued to lie, cheat, and steal. Now they're exploding. The time has run out, folks.

You must choose. If you watch this video and sit on your hands and do nothing, then what comes of it in this nation is your responsibilty. This line, once crossed, WILL be crossed again. OR, you can pick up the phone right now. You can call your Senators, call your Congressmen, call President Bush, and call the Treasury Department. You can tell them this must stop, and you can demand that you get their committment that it will- TODAY. Not next month. Not next year. Not in the next congress, but now.

If they refuse, and they probably will, you must choose. Do you consent? Or do you go on strike? What is our system of government, our FORM of representation, our representative democracy worth to you?

I urge you to do some reading -tonight- on Weimar Germany, on Argentina, and on Zimbabwe. I urge you to find me a nation that, in the past, has tried to hyper-inflate their way out of a debt crisis, and has politically survived. You can't find one, because it has never happened. The choice is yours, folks. You need to make it today.

-Karl Denninger 9/17/08

The question facing Senators right now

Would you like hyperinflation with that depression?

I hates me some McCain

George Will sees McCain just as I do:
For McCain, politics is always operatic, pitting people who agree with him against those who are "corrupt" or "betray the public's trust," two categories that seem to be exhaustive -- there are no other people. [...]

Conservatives who insist that electing McCain is crucial usually start, and increasingly end, by saying he would make excellent judicial selections. But the more one sees of his impulsive, intensely personal reactions to people and events, the less confidence one has that he would select judges by calm reflection and clear principles, having neither patience nor aptitude for either.

It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

History repeats itself

... the first time as tragedy, the second time as people making shit up.

This quote is making the rounds of Internet, attributed to Andrew Jackson:
"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves."

Yes, Jackson had his battles with the bankers, but this quote is just a little too perfect. And I can't find any references to it in authoritative sources. Can anyone here help verify or debunk this?

Stupid Bank Tricks, Part III

Recently I posted Stupid Bank Tricks, Parts I and II, wherein Capital One sent me an offer for $30,000 at 0% for 16 months, I accepted, Capital One reneged and gave me a $10,000 limit, I told them to go to hell, and they sent me another offer for $30,000.

Well, I sent in the second offer again accepting the $30,000 limit, and yesterday I again received a new card with a $10,000 limit. I called them up and told them where they could shove their card. Meanwhile, I have received yet another identical offer from Capital One in the mail. I think I'll accept. I can keep this up as long as they can.

I loves me some Democrats

Dems to would-be dictator Paulson: "Piss off, baldy!"
Lawmakers from both parties, while acknowledging the urgency of the moment, nevertheless object to giving what they characterize as a "blank check" to Treasury Secretary Henry Paulson to buy troubled assets from financial institutions. They want provisions that would explicitly protect taxpayers.

"We don't have a lot of time. We want to act but we want to act responsibly," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., at a press briefing Monday afternoon.

Dodd has proposed his own version of the bailout bill, which includes clauses similar to the key features of the Varones plan: equity for the government and limits on executive compensation. The only thing missing is prosecution for the crooks who got us into this mess. I wonder why Dodd left that one out?

Shoot the messenger

If you're not scared, you're not paying attention.

Today we have news that on top of the U.K. and U.S. banning short sales of financial stocks, Australia and the Netherlands are banning short selling entirely.

Short-selling is a necessary component of hedge funds, the "alternative investments" that so many public and private pension funds increasingly use. Idiot bureaucrats may just cause the mother of all short squeezes and do irreparable damage to already underfunded pension funds.

And what about the hedge fund industry itself? It employs a hell of a lot of people in Greenwich, New York, Chicago, San Francisco, and in financial centers around the world. A broad-based ban on strategies that are central to hedge funds is going to cause a lot of job losses. Not to mention that now it is clear that the government will capriciously manipulate markets, many investors will choose to avoid playing an unpredictably rigged game.

Errata

The original title of the post "Chris Cox is a moron" did not live up to the standards that readers have come to expect of this blog. The title has been changed. The W.C. Varones Blog regrets this error.

A modest proposal for the TARDS

Here is the draft of the Toxic Asset Removal and Disposal Service (TARDS) bailout plan. It gives Henry Paulson absolute, unchecked power to give any banks he chooses good cash for bad assets. Courts are specifically excluded from questioning his almighty will.

This amounts to a direct transfer of wealth from Joe Taxpayer to the wealthy Wall Street bankers who got us in this mess -- at least to those wealthy Wall Street bankers Paulson chooses to shower with favors. Remember: there are no checks and balances.

Paulson will not pay fair prices for the assets. If he did, the banks would go bust as the fair prices are certainly lower than the values the banks need to stay solvent. So this is a handout: good cash for garbage. Some, if not most, of the assets Paulson buys will be worth ZERO. These are not just mortgages, which would likely have some value, but the worst tranches of mortgage-backed securities, which were designed to be worthless in a downturn to protect the AAA ratings of the better tranches.

So why is the taxpayer taking all of the losses while Wall Street gets all of the upside?

I propose a few modifications that should be politically popular with both parties in Congress:

1) Treasury gets extremely dilutive warrants from any bank that touches this facility. This is what happened at AIG: the taxpayers may lose a lot of money, but at least Wall Street's profit from the scheme is minimized and the taxpayers get something back in a best-case scenario.

2) Executive compensation is capped at any bank that touches this facility. Nobody makes more than 10x or 20x the median employee, and no more stock options. Maybe even a clawback for ill-gotten gains during the bubble. Executives don't go along? Push them out.

3) A huge new program for the Justice Department to prosecute mortgage fraud and securities fraud for everyone that caused this problem, from Angelo Mozilo and investment bankers all the way down to speculators who committed fraud on their loan applications.

This must be written into law now, before Congress give Paulson a blank check and unchecked power. Please contact your Senators and Congressperson today.

Hugo, Hank, Hank, Hugo.

We're about to witness our government create and spend 1 TRILLION DOLLARS in the span of 5 months.

I think the punchline in all of this is this quote from this Bloomberg article?:

As congressional aides and officials scrutinized the proposal, the Treasury late today clarified the types of assets it would purchase. Paulson would have authority to buy home loans, mortgage-backed securities, commercial mortgage-related assets and, after consultation with the Federal Reserve chairman, ``other assets, as deemed necessary to effectively stabilize financial markets,'' the Treasury said in a statement.

The Treasury would also have discretion, after discussions with the Fed, to make non-U.S. financial institutions eligible under the program.

SO not only are we going to create inflation that will make the 70's look like a picnic, we're going to bail out FOREIGN FIRMS in the process?!?! We the tax payer are letting our elected and appointed officials tax us to eliminate the investment risk of foreign interests. What happened to capitalism and how are we responsible for the horrible business decisions of the United States of Wall Street?

All you voting Democrats and Republicans that religiously hate the other party and think your representatives are the messiahs, congratulations - you'll get what you deserve.

Krugman opposes TARDS

Here's some surprising common sense from former Enron adviser Paul Krugman on the Toxic Asset Removal and Disposal Service.

He’s got the central point: unless taxpayers vastly overpay for these assets, it won’t help the banks. Selling these assets at anywhere near their true value would render the banks insolvent:
I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a “fair price” for mortgage-related assets will still leave much of the financial sector in trouble. And there’s nothing at all in the draft that says what happens next; although I do notice that there’s nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

Fun With Religious Zealots

Hey, want to have fun with some Democrat, or Republican, zealot? Here's how, for the Obama koolaid drinkers.

When you are walking into Whole Foods, one of the few, close retailers of the excellent(!) Arrogant Bastard Ale, and some Demoscum zealot asks you if you would like to register to vote, IF YOU ARE A DEMOCRAT? Ask them why their party is proposing the destruction of everything American.

And as she walks away to recruit other Jim Jones deciples, remind HER (as it was a she in my case) that they are actually traitors of the United States of America. Remind her how Chucky Schumer, Barney Frank, Chris Dodd, and Nancy Pelosi are systematically working to destroy America so they can adopt everything Venezualian. Remind her how Dodd and Frank have profited millions by taking donations from the Wall Street scum they are bailing out. Remind her that Dodd couldn't even remember the content of a bill he "authored", that Bank of America actually wrote, that in effect bailed out Bank of America and their criminal midget tanned step child Countrywide.

Listen, just thinking out loud here, do you think in 30 years people will be wearing tee shirts with the face of Senator Dodd or Represenative Frank like they wear the face of Che Guevara today? Here's a question, which one was more of a criminal? Che murdered many while Dodd and Frank are destroying an entire nation.

Zealots are zealots and it's a race between Schumer, Dodd, Cox and Paulson for the Communist of the year award. It just scares me that these religious zealots appear about as intelligent as the spiders that infest my attic.

You suck, Cox

SEC Chairman Christopher Cox became flustered when John McCain attacked him for not making stocks go up.

You don't want to see a cowardly politician when he's flustered.

Cox tried to appease McCain by lashing out at short-sellers about the financial crisis, which is roughly equivalent to lashing out at Siskel & Ebert for the box office failure of Waterworld. In his ill-considered, late-night order, Cox banned the short-selling of all "financial" stocks, throwing the market into chaos. The order was like changing the poker rules after everyone has placed their bets: "Okay everyone, deuces wild!" This is not how developed markets operate. Welcome to the new emerging market of 2008.

To make it worse, Cox and his idiot minions issued a list of what they thought were all "financial" stocks, but they included a lot of HMOs and left off a lot of banks.

Well, if you think Cox is a buffoon, wait until you see how Hank Paulson manages his new Toxic Asset Removal and Disposal Service (TARDS). Paulson is going to let banks dump their most toxic assets on the taxpayer, and he's going to give them cash. How do you put a value on toxic waste? I don't know, and neither does Paulson. Priceless.

Bank Failure Friday

Another one bites the dust. Ameribank of Norfolk, West Virginia fails, but the news doesn't seem significant any more. With Henry Paulson throwing the taxpayer under the bus of hundreds of billions, if not trillions, of bad loans, what difference does the failure of a tiny bank in West Virginia make?

Too bad the CEO wasn't a Paulson Pal and didn't donate to Chris Dodd or Barney Frank. Paulson could have bought Ameribank's bad assets with loose change. Instead, he's selling your children into debt to bail out Wall Street.

I can't say I wasn't warned

They told me that if I voted for John Kerry, we would see the government nationalize one of the largest sectors of the economy.

I did and we did.

September 19, 2008: The Day Capitalism Died

I am stunned.

1) Paulson is making taxpayers bail out the banks for the bad mortgages they made. In a matter of days, we've gone from "Paulson adamant no taxpayer money for Lehman" to "Paulson adamant taxpayers to bail out every bad bank on Wall Street."

2) SEC Chair Chris Cox is banning short-selling in all financial companies, scapegoating short-sellers for the the self-inflicted fundamental problems of financials. So much for the most open, liquid, and transparent financial markets in the world.

More at Mish.
"The thing about being a survivalist kook and stockpiling gold, guns, and food is that there's no downside. Even if you're wrong, you've still got gold, guns, and food."

- W.C. Varones Page-a-Day Calendar

Now would be a really good time to panic

Global central banks are in sheer panic mode, coordinating a massive, simultaneous firing up of the printing presses:
Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures.

Federal Reserve Actions
The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.

The FOMC has authorized increases in the existing swap lines with the ECB and the Swiss National Bank. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $110 billion by the ECB, an increase of $55 billion, and up to $27 billion by the Swiss National Bank, an increase of $15 billion.

In addition, new swap facilities have been authorized with the Bank of Japan, the Bank of England, and the Bank of Canada. These facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.

All of these reciprocal currency arrangements have been authorized through January 30, 2009.

And SEC Chairman Chris Cox is wetting his pants and looking for a scapegoat: Rome Burns, Cox Chases Shorts, Arsonists Flee

THEN WHY ARE WE PAYING THESE PEOPLE!?!?!?

WHAT IS CONGRESS FOR IF NOT THIS????

BLOOMBERG
"The Democratic-controlled Congress, acknowledging that it isn't equipped to lead the way to a solution for the financial crisis and can't agree on a path to follow, is likely to just get out of the way."

WHAT HAPPENED TO THE UNITED STATES OF AMERICA?!?!?

I don't want to be dramatic here but the government of the United States of America has failed COMPLETELY.

IF CONGRESS ISN'T CAPABLE OF DEALING WITH THE SITUATION THEN WE NEED TO DISSOLVE CONGRESS!

Perfect Match

So Morgan Stanley and Wachovia are looking to merge - FABULOUS! So two sinking ships will becoming one with the hope of a bailout from a government that literally has no VALUE to bailout with. Oh they have money, lots and lots of it. You could say that have the best printing presses in the world.

Do you think ol'Ben arranged this engagement? Sort of like Lusitania meet the Titanic.



KFI: Metrolink crash engineer was psycho gay killer

LA's KFI radio is reporting that the engineer in the deadly Metrolink crash, Robert Sanchez, may have intentionally crashed the train in a suicide, and that the family of his dead lover, Daniel Charles Burton, believes Sanchez murdered Burton and faked a suicide.

LA Times background here.

This is your country on debt



Any questions?

From Naked Capitalism via RGE.

AIG Letter to a Congresswoman

I know, I know, why write my representative when clearly she illustrates a 4th grade intellect? I don't know, I like to make believe we live in a democratic republic. We clearly don't but without this sort of expression I think my head would explode. So this is what I wrote and I'm sure the response will be something about keeping people in their homes.

Dear Representative Tauscher,

The Treasurer of the United States of America just did something illegal. He committed US money to a private firm without the consent of Congress. What he did is socialistic at the very least. I would say it's more communist.


Congresswoman Tauscher Treasurer Paulson should be arrested. Are you going to act under the laws of congress or are you going to join in this communist regime's effort to steal from the taxpayer to give to Wall Street?

Henry Paulson is very much like Hugo Chavez. Chavez took over the oil industry and the cement industry in Venezuela; Paulson is taking over Wall Street. What's the difference between the two??? We rightly vilify Chavez. Why are we allowing that sort of behavior to exist in the United States?

Please answer this question - if Congress doesn't control how our tax money is spent then who does? And a follow up question - are you a communist too?

Sincerely,
NL

Bill 'Fredo' Gross of Pimco

Is it me or do you think Bill Gross is on his knees at Paulson's lap saying this: "It ain't the way I wanted it! I can handle things! I'm smart! Not like everybody says... like dumb... I'm smart and I want respect!"

And of course Paulson will say 'You're still my brother'. So the question is - is Paulson going to encourage Bill to go fishing on Lake Tahoe?

You be the judge:




Communism is awesome!

So the Treasury HAS added to our liability side of the balance sheet by taking over AIG today - CNBC. Again I forget what the Constitution says about the government taxing us without a vote from Congress, so I don't mind. I think this is fantastic because any company that makes horrible business decisions and pays its top executives tens if not hundreds of millions of dollars is entitled to be bailed out by the taxpayer. Just be sure the golden parachutes are preserved.

Comrades we are experiencing the workers paradise. As soon as the government is responsible for ALL business in the United Socialist States of America, the sooner we will realize equality and happiness for all. Anyone mind having to fly to Kansas City to buy a toilet seat?

Moral hazard

When the Fed tells everyone it's handing out free money, don't expect people to get financing from more traditional sources:
During a weekend scramble to shore up its finances, AIG turned down a capital infusion from a group of private-equity firms because it would have effectively given them control of the company, an 89-year-old giant that does business in nearly every corner of the world.

When AIG's board rejected the capital infusion, the company's recently appointed chairman and chief executive, Robert Willumstad, took the extraordinary step of reaching out to the Federal Reserve for help.

Paulson lied. True, Treasury didn't guarantee Lehman's debt. But the Fed did the next worst thing: promised free money for everybody for an indefinite period.

Good Will Hunting II



From The Nose on Your Face.

The end of Bailout Nation?

I'm shocked, but cowardly Hank Paulson is still sticking to his promise that Lehman won't be bailed out at taxpayer expense a la Bear Stearns, Fannie Mae, and Freddie Mac.

I have little faith in Paulson, but if he doesn't fold, get ready for some fireworks tomorrow!

AIG and Merrill Lynch, considered by some to be the next dominoes to fall, are already in motion: AIG announces major restructuring, and Merrill is in talks to be acquired by Bank of America.

The moment we've all been waiting for

Tina Fey does Sarah Palin.

France attacks!!!

Trouble ahead, Lady in red,
Take my advice you'd be better off dead.
Switchman's sleeping, train hundred and two is
On the wrong track and headed for you.


Metrolink says human error caused the LA train disaster. They say the culprit was the engineer on the Metrolink train, a contract worker from Veolia Transportation. Veolia Transportation is a subsidiary of Veolia Environnement, a French water company. VE has been a hot concept stock the last few years on the "water infrastructure" theme. Too bad you get Casey Jones along with the desalinization projects.

UPDATE: CBS says the engineer, Robert Sanchez, was sending text messages while driving!

Charlie Gibson's gaffes

Krauthammer: Charlie Gibson is a know-nothing know-it-all.
The New York Times got it wrong. And Charlie Gibson got it wrong.

There is no single meaning of the Bush Doctrine. In fact, there have been four distinct meanings, each one succeeding another over the eight years of this administration -- and the one Charlie Gibson cited is not the one in common usage today. It is utterly different.

He asked Palin, "Do you agree with the Bush Doctrine?"

She responded, quite sensibly to a question that is ambiguous, "In what respect, Charlie?"

Sensing his "gotcha" moment, Gibson refused to tell her. After making her fish for the answer, Gibson grudgingly explained to the moose-hunting rube that the Bush doctrine "is that we have the right of anticipatory self-defense."

Wrong.

And that's on top of his mean and erroneous "exact words" heckling.

Gibson's incompetence and misplaced "toughness" will probably have a similar effect as Obama supporters' mean-spirited attacks on Palin's family: more popular support for Palin.

DWP

I got pulled over yesterday for Driving While Poor. I drive an older American car (in preparation for the coming Depression), and it doesn't fit in the upscale town where I live and work. The cop followed me for a couple miles and then pulled me over for having one bulb burned out on a multi-bulb center brake light (is that even probable cause for the cops to stop someone? UPDATE: not according to the Vehicle Code). He then took a long time running my license, and even questioned me as to whether I'd been drinking (daytime, midweek).

What kind of country is this when a guy can't even drive home from work without being hassled by the cops? I don't condone Obama's terrorist buddy Bill Ayers, but I'm starting to know how he feels.

Lehman on Craigslist



HT: T-Dub

Communism is neat

Lehman Brothers in Sales Talks; B of A Seen As a Potential Suitor:
But potential buyers remain wary about plugging holes in Lehman's balance sheet, and are increasingly looking to the U.S. government to help backstop future losses, according to people familiar with the talks.

A number of these buyers would "come out of the woodwork," if the U.S. were to step in, said one person monitoring the process. It remains unclear whether the U.S. Treasury or Federal Reserve would take such steps, as was done when the government assisted J.P. Morgan Chase & Co. in its Bear Stearns takeover in March.

No shit. Who wouldn't be happy to buy Lehman if the taxpayers eat all the losses and leave only profits for the acquirer? It worked for Bear Stearns, didn't it? Come to think of it, why doesn't the government finance the losses of every company in the S&P 500? That will get the stock market moving again.

Ode to Lehman



From T-Dub.

Great moments in public speaking

Ouch.

HT: Blinko

U of Wisconsin prof Menzie Chinn: I think Sarah Palin is so stupid that I can't even articulate why

University of Wisconsin professor Menzie Chinn:
In response to the largest de facto nationalization in US history, we have this example of Governor Palin's comprehension of this issue (ABC News):

Saturday in Colorado Springs, Colo., Alaska Gov. Sarah Palin said, "The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."

I can't even start to dissect what's wrong with this statement, so I will let the reader assess Palin's understanding of the role of the GSEs in the financial system. From my perspective, I would have hoped to have more comprehension from a candidate at a time when the estimate of a resulting $300 billion taxpayer liability is viewed as plausible.

I can't even start to dissect what's wrong with this statement? That's what passes for argument in Wisconsin?

Well, Menzie concedes that this is "the largest de facto nationalization in US history" and that a $300 billion taxpayer liability is plausible, so he doesn't seem to have any argument with Palin's first sentence.

As for making them smaller and smarter and more effective, how about getting them into the business of funding 30-year fixed-rate, fully documented loans with honest appraisals and reasonable debt-to-income ratios? That would make them smaller, smarter, and more effective, no? Perhaps Menzie, being an incurious dim bulb, labors under the popular misconception that Fannie and Freddie only funded high-quality mortgages. Taking a quick look at their balance sheets, as Dr. Housing Bubble did, would have disabused him of this notion. Fannie and Freddie participated in the loose standards that made housing so unaffordable.

If that's what passes for professoring in Wisconsin, the people of Wisconsin are being ripped off. I would have hoped for more comprehension from a "Professor of Public Affairs and Economics."

"Race-baiting asshat" is a code word for "governor of New York"

New York governor says that "community organizer" is a Republican code word for "black."

The law of unintended consequences

Did this



have anything to do with this?



It could be purely coincidental, but the timing is mighty suspicious. Did Lehman get thwacked by Fannie Mae and Freddie Mac derivative exposure? Oh, the delicious irony if Paulson killed Lehman by bailing out Fannie and Freddie. And when he bails out Lehman, what unintended consequences will that cause? Who will he have to bail out next?

Oh, what a tangled web we weave
When first we practice to reprieve

Greenspan's Body Count: Floozy Orman

Today's episode of Greenspan's Body Count comes from the Oprah show, where Suze (despite the ditzy spelling, it rhymes with "floozy," not with "cooze") Orman, a cheesy huckster who lied about her bio, gives advice to the widow of a suicide:
Sylvia didn't find out until the day after Joe committed suicide that he had cancelled his $300,000 life insurance policy 3 months before; leaving Suze to believe he had planned everything out. The day Joe died Sylvia had $72 dollars to her name, no savings, no extra money stashed in the house, no retirement plan, no ownership of the house - owing $350,000, $60,000 in credit card debt and a large home equity loan of $100,000. Sylvia didn't even have enough money to feed her family. She had no idea they were in debt so severely.


Greenspan's Body Count now stands at forty-five:

Joe X
Isabelle Jarka
Robert Wagner
Lt. Michael Howe
John Roberts
Palmer C. White
Dianne Pittman White
Ed Boesen
Edwin F. Rachleff
Carlene Balderrama
Troy VanderStelt
Scott M. Coles
Dawn E. Armstrong
Thomas Lizotte
Jonathon Calvin "40-Cal" Jacques
Salvador X
Lupe X
Jade X
Little Boy X
Little Girl X
Kashmir Billon
Bill McMurtry

Lisa McMurtry
James Hahn
Raymond Donaca
Deanna Donaca
[redacted]
[redacted]
Michel Veillette
Nadya Ferrari-Veillette
Marguerite Veillette
Vincent Veillette
Mia Veillette
Jacob Veillette
Maurice Pereira
Natasha Pereira
Mark Achilli
Raed Al-Farah
Andrew Kissel
Rufus Shaw Jr.
Lynn Flint Shaw
Mr. Pierce
Walter Buczynksi
Marci Buczynski
Jason Washington

The enemy of my enemy is my friend

Prison guards threaten Schwarzenegger with recall.

Sign me up!

Fox, meet henhouse

Dodd plans Senate hearing on Fannie, Freddie takeover

Word to the wise

If you're looking for a piñata in Encinitas, don't google pinata encinitas.

Hope for Mozilo

The orange midget we all think of
I hope he gets some prison love

- Touch of Black

I've been disappointed that more than a year after the mortgage debacle came to light, key figures like Angelo Mozilo, Michael Perry, and Chris Dodd still are not being prosecuted. Where is the mortgage scandal's Elliot Spitzer?

We may have found him. Meet U.S. Attorney Thomas O'Brien:
Thomas O'Brien, the U.S. Attorney for California's Central District, is emerging as a likely prosecutor in criminal cases expected from the U.S. mortgage meltdown.

In the past, he has faced gang members in court and since becoming U.S. Attorney in October 2007, he has shown he is willing to bring aggressive and sometimes even creative charges.

His office is already looking into New Century Financial Corp and IndyMac Bancorp Inc, according to securities filings by those two mortgage lenders. Countrywide Financial Corp, based in Calabasas, California, is also on his patch.

Executives charged with wrongdoing would face a straight shooter who is developing a reputation for being tough on white collar crime, according said Brian Sun, a former federal prosecutor who is now a trial lawyer with international law firm Jones Day.

If O'Brien brings cases to trial, it would mark the first time California's Central District has prosecuted a major financial fraud case since the 1980s savings and loan crisis.

"Is he ambitious? Of course he is," said Brian O'Neill, another former federal prosecutor who is also an attorney at Jones Day. "People don't get there unless they are ambitious."

He may be an ambitious showboater in the mold of Spitzer, but if he locks up the scumbags, he has my support.

Dog days



Blissfully unaware of Paulson's treachery, dogs competed in the Surf Dog Surf-a-Thon at Del Mar today.

BOHICA


reprinted without permission from Gary Varvel via Mike Morgan

Taxpayers to be made to pay for corrupt GSEs' lending mistakes

Well, McCain and Obama both opposed a taxpayer bailout of Fannie Mae and Freddie Mac
Just before Labor Day, Sen. Obama derided Fannie and Freddie as a “weird blend,” advocating that “If these are public entities, then they’ve got to get out of the profit-making business, and if they’re private entities, then we don’t bail them out.” He said later that he has “no sympathy” for the CEOs of Fannie and Freddie, and that the government shouldn’t bail out “investors who had made a killing.”

McCain, similarly, railed in an editorial that “if elected, I’ll continue my crusade for the right reform of the institutions: making them go away. I will get real regulation that limits their ability to borrow, shrinks their size until they are no longer a threat to our economy, and privatizes and eliminates their links to the government.” McCain attributed the growth of the agencies to “crony capitalism,” and Washington selling out to Wall Street.


(until they supported it) and the just-adopted Republican Party platform was abundantly clear on the subject:
We support energetic federal investigation and, where appropriate, prosecution of criminal wrongdoing in the mortgage industry and investment sector. We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself.

Nevertheless, U.S. Treasury Secretary Henry Paulson is selling your children into debt in order to bail out his Wall Street pals. Initial estimates put the likely cost to taxpayers in the hundreds of billions, with the chief beneficiaries being large speculators in Fannie and Freddie debt, led by Communist China and billionaire Bill Gross's PIMCO.

Stupid Bank Tricks, Part II

A couple weeks ago, I posted Stupid Bank Tricks. I marvelled at the stupidity of Capital One, whose marketing department was sending out offers that their credit department didn't have the cojones to fund:
A couple weeks ago, I got a credit card offer from Capital One for 0% APR for 16 months on balance transfers up to 30k. I accepted and gave them the account number of my car loan to pay off. Today, I received a new credit card with a 10k limit and a rejection of the balance transfer. I guess credit is tightening faster than the marketing department can keep up with, but at $50 - $100 customer acquisition costs, that's a bad way to run a business.

I called Capital One and told them where they could put their credit card.

I thought that would be the end of it. But this week, I received another copy of the same offer from them: another 0% balance transfer for up to $30,000 for 16 months. Well, who am I to turn that down? I sent it in again, with the same request to transfer my car loan. We'll see if they approve it.

I was amazed enough that these idiots would send me another credit card offer after I had just been issued a card with the exact same terms, especially after I had immediately cancelled the card. But the next day, guess what arrived in my mailbox? A third offer for the exact same deal.

In my previous post I mentioned mailing gravel back in the postage paid envelopes. Since then, I've seen an even better idea: attach the envelope to a brick and send it back.

No, no, no. Palin dispatches moose, not women

To counter Palin, Obama to dispatch female surrogates

Other headlines I considered:
We had to dispatch these women in order to save them

Election strategies from Cousin Hussein

Credit crisis over!!!

Thank goodness. The credit crisis is over, according to Wall Street's most revered bank CEO, JP Morgan's Jamie Dimon.

In mid-April, Dimon called it:
Dimon said on a conference call with reporters that the credit-market crisis may be as much as 80 percent over.

The problem "is working itself out," Dimon said.

The crisis really got under way, by most people's reckoning, last summer. So if we were 80% done in April, it's completely over now in September. This is true whether you measure in time or in the level of any index of financial stocks.

Whew! Glad that one's over. Buy a house now before it doubles!

Now tell us how you really feel

Some people are even more pissed off about the Fannie-Freddie bailout than I am.

Happy Bank Failure Friday, everyone!!!

It's 4:15 on the West Coast, and lazy Bush appointee Sheila Bair still hasn't seized any banks. I guess she's still busy modifying loans for all the fraudulent borrowers from fraudulent lender IndyMac, after she arbitrarily showered billions of dollars of insurance money on IndyMac's uninsured depositors, leaving the insurance fund so low that she's going to have raid taxpayer money from the U.S. Treasury. Heckuva job, Bairie!

We've had two weeks in a row with bank failures (admittedly tiny banks). Will Sheila get off her ass and make it three? And when will she quit screwing around with these tiny banks and go after some big fish?

The Feds did give Downey Savings and Loan a little bitch-slap today. It won't be too long until DSL is seized.

But the big news is Fannie and Freddie bailout weekend. The stocks jumped today on bailout speculation, then tanked after-hours when people realized that even Wall Street lackey Hank Paulson might not be so crass as to make equity speculators whole at the expense of taxpayers.

As they say on Big Thunder Mountain, "Hang on to them hats and glasses, 'cause this here's the wildest ride in the wilderness!"

UPDATE: Bingo!!! Silver State Bank goes down. This is a personal favorite of mine, one I've been waiting for. It's also the one where John McVain's son just slipped out the back, Jack. No scandal there, unfortunately. He joined the board when SSBX acquired his Arizona bank recently, and he bailed just so he wouldn't become a Neil Bush campaign ad.
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