Hate the Bailout Speak Now or Forever Hold Your Peace: Tech Ticker, Yahoo! Finance: "In the interim, I encourage you to contact your elected representatives -- whether you oppose the bailout plan or support it -- because this legislation is too important to be left to the politicians:
Congress switchboard: (202) 224-3121
White House: (202) 456-1414
Blast email to senators HERE
Tuesday, September 30, 2008
It's the Foreclosures, Stupid (NACA)
Dollars & Sense blog | Dollars & Sense: "It's the Foreclosures, Stupid (NACA)
by Dollars & Sense - Bruce Mark
This is an "action alert" from the Neighborhood Assistance Corporation of America. The CEO of NACA, Bruce Marks, was on the radio program Here and Now this morning explaining why he opposes a bailout; there appears to be no way to listen to the segment, but they may put up a link to it sometime at the show's site. Hat-tip to John Miller.
There is one reason for the financial crisis – Foreclosures.
There is only one solution – Restructure mortgages to make them affordable.
Who would benefit – Everyone
The above sounds very basic but we are providing One Trillion dollars to bailout major financial institutions and insurers without addressing the underlying cause of the crisis which are the millions of homeowners at-risk of foreclosure. They want to say it is too complicated and throw out terms like CDO, Leverage swaps, and others to justify giving President Bush a blank check. While we have been there, the Congress is getting ready to repeat the disastrous past.
We are now committing hundreds of billions of tax payer dollars to bailout the very institutions who created the crisis. At a minimum lets use some of these funds to get the investors to do what is necessary in making these mortgages affordable. The previous bailouts of Bear Stearns, Fannie Mae, Freddie Mac and AIG have not opened up the credit markets. Despite the huge commitments of taxpayer funds they have accomplished little. In fact, Fannie and Freddie continue to refuse restructuring on affordable terms – having their owners the American people foreclosing on themselves.
"
by Dollars & Sense - Bruce Mark
This is an "action alert" from the Neighborhood Assistance Corporation of America. The CEO of NACA, Bruce Marks, was on the radio program Here and Now this morning explaining why he opposes a bailout; there appears to be no way to listen to the segment, but they may put up a link to it sometime at the show's site. Hat-tip to John Miller.
There is one reason for the financial crisis – Foreclosures.
There is only one solution – Restructure mortgages to make them affordable.
Who would benefit – Everyone
The above sounds very basic but we are providing One Trillion dollars to bailout major financial institutions and insurers without addressing the underlying cause of the crisis which are the millions of homeowners at-risk of foreclosure. They want to say it is too complicated and throw out terms like CDO, Leverage swaps, and others to justify giving President Bush a blank check. While we have been there, the Congress is getting ready to repeat the disastrous past.
We are now committing hundreds of billions of tax payer dollars to bailout the very institutions who created the crisis. At a minimum lets use some of these funds to get the investors to do what is necessary in making these mortgages affordable. The previous bailouts of Bear Stearns, Fannie Mae, Freddie Mac and AIG have not opened up the credit markets. Despite the huge commitments of taxpayer funds they have accomplished little. In fact, Fannie and Freddie continue to refuse restructuring on affordable terms – having their owners the American people foreclosing on themselves.
"
Help the Home Owner - that is it!
Bridge Loan to Nowhere!
In the movie Men in Black, Will Smith and Tommy Lee Jones team up to save the world by resolute preventive action. By contrast, America's real-life Men in Black--Treasury Secretary Hank Paulson, Federal Reserve Chair Ben Bernanke and New York Fed President Timothy Geithner--haven't done as well lately. Ever since that classical day of reckoning, the Ides of March 2008, when the terrifying specter of chain bankruptcy and currency collapse first loomed over lower Manhattan like an attacking spaceship because of Bear Stearns, it's been downhill.Thomas Ferguson
A little over a week ago, the Men in Black made a fatal mistake. They allowed the aliens to vaporize the proud old firm of Lehman Brothers. Whole fleets of spaceships then immediately began attacking AIG, Wachovia, Washington Mutual, even Morgan Stanley and Goldman, Sachs. Now desperate, the Men in Black switched back to their old tactics and rescued AIG, but the damage had been done. The aliens had learned from Lehman and AIG how vulnerable Wall Street really was. Soon inter-bank markets everywhere in the world locked up. With financiers preferring treasuries that paid essentially nothing to every other asset in the world, huge runs started on money market funds.
calls to Congress are 50 percent “No” and 50 percent “Hell, No”.
Trouble in Banktopia: Stop the "Banksters!" : Indybay: "whole mountainous pile of horsecrap-debt is about to be stacked on the back of the maxed-out taxpayer and the ever-shriveling greenback...From Bloomberg: “The plan by Treasury Secretary Henry Paulson to buy troubled assets from financial institutions would put ‘one more straw on the back of the frightfully encumbered camel that is the federal government ledger,’ Fisher said today in the text of a speech in New York. ‘We are deeply submerged in a vast fiscal chasm.’…The seizures and convulsions we have experienced in the debt and equity markets have been the consequences of a sustained orgy of excess and reckless behavior, not a too-tight monetary policy,” Fisher said to the New York University Money Marketeers Club.” (Bloomberg) "
Monday, September 29, 2008
Roubini Pans the Bailout as a "Disgrace and Ripoff"
Roubini Pans the Bailout as a "Disgrace and Ripoff" and Most People Agree
Sept 28: Something needs to be done because of the errors, deceptions, regulatory lapses, and mismanagement of the Bush and Clinton administrations which allowed the unbridled greed of Wall Street to bring the global economy to the brink of ruin.The priority of this plan is to preserve the status quo. This will not work. This plan will fail and more money will be urged.
Building from the bottom up, protecting the savings of depositors is paramount while liquidating the prime actors in this colossal financial fraud. Balance must be returned to the economy. A simple bailout will not accomplish this.
Restoring the confidence of the public after 16 years of pathological deceit will not be easy.
The Democratic leadership has shown itself to be vacuous, unimaginative and mechanical; the Republicans are pigmen through and through.
Any approach that maintains Morgan Stanley and Goldman Sachs as major players in the banking industry is a disgrace.
Friday, September 26, 2008
SHOULD CONGRESS BAILOUT WALL STREET TO HELP MAIN STREET?
Will Congress Listen to Voters? 91% say NO BAILOUT!
The Bush Administration proposes a $700 billion bailout to restore confidence in the economic system so banks start lending again. Without that, many other banks and businesses (and the jobs and mortgages) will fail they say. Critics say we shouldn't reward their bad decisions. Democrats say the plan needs oversight, homeowner protections and caps on executives' salaries. What do you think? Act quickly as the Administration wants a vote within days. Consider a hand delivered letter with Extra Impact. Start by picking your view in our Action Poll. (72,788 messages thus far)
9% say I Support the $700 Billion Mortgage Bailout
91% say I Oppose the $700 Billion Mortgage Bailout
Weiss White Paper to Congress on TARP Bailout Plan
Category 5 Credit Market Hurricane!
Weiss Research Inc Sept 25, 2008"... Too Much, Too Soon for the U.S. Bond Market. There should also be no illusion that the market for U.S. government securities can absorb the additional burden of funding massive government bailouts without traumatic consequences.
In its Fiscal Year 2009 Mid-Session Review, Budget of the U.S. Government, the
Office of Management and Budget (OMB) projects the 2009 federal deficit will rise to $482 billion. At the same time, the OMB seeks to minimize this record.
SIPC Annual Report 2007, http://www.sipc.org/pdf/SIPC_Annual_Report_2007_FINAL.pdf, page 8. 25 See July 1991 testimony by Martin D. Weiss before the House Subcommittee on Commerce, Consumer Protection, and Competitiveness and February 1992 testimony by Weiss before the Senate Committee on Banking, Housing, and Urban Affairs regarding the insurance industry failures. Weiss Research, Inc.
Deficit by stating it will be only 3.3% of estimated GDP, which is lower than the
recent peak of 3.6% of GDP. However, the OMB made this projection before the recently announced or proposed bailouts. Considering those that have come to light in the last fortnight alone, the potential bill for the government’s largesse can be calculated as follows:
Fannie Mae and Freddie Mac $200 billion
AIG Insurance Corp. 85 billion
Financial market bailout proposal 700 billion
Total $975 billion
This bill, approaching $1 trillion, is so extreme, it is undeniable that:
1. It could double or triple the federal deficit in a very short period of time.
2. Such a dramatic increase in the deficit would drive up the cost of borrowing not only for the U.S. Treasury, but also for other bonds and for millions of Americans seeking a mortgage or other credit, since Treasury yields are the benchmarks against which most borrowing is based.
3. To the degree that the Federal Reserve purchases U.S. government securities for its own account to help support bond prices, it would devalue the U.S. dollar, risking a dollar collapse and the flight of much-needed foreign capital from the U.S.
4. Ultimately, either of these outcomes — sharply higher U.S. interest rates or a U.S. dollar collapse — could seriously aggravate the very debt crisis that the bailout plan seeks to address...."
Thursday, September 25, 2008
Bailout Ideas- in lieu of TARP plan
STOP AND FILIBUSTER – NO DEAL
Don Knotts Key essential elements for a good plan by Norton West Sept. 25, 2008
1. TRANSPARENCY, FULL DISCLOSURE, PUBLIC AIRING to culminate in a public referendum, especially if any funding comes from taxpayers.
2. START WITH A COMPREHENSIVE CRISIS ANALYSIS IN ADVANCE: Create a comprehensive list of all default-financial market perils including commitments already made to Fannie Mae, Bear Stearns…..add CDS market exposure (about $ 50 trillion dollars), credit card exposure, commercial mortgage loan exposure, HE loan exposure, auto loan exposure and any other off-balance sheet contingent liabilities. We this total in hand begin to work on a Bailout Plan. No future surprises. Those who design and execute this plan will be fully accountable and liable under the law as trustees in the Public interest. Plan must have a funding and cash flow project plan for over a 5 – 10 year period. This is the starting point of analysis for a viable plan. This sounds much bigger than $ 700 Billion and should all be considered up front. There must be legal limits to this foray.
3. A TWO PHASE PLAN: First Phase for immediate Action and second Phase for the bulk of provisions to be initiated and implemented over a five to ten year period that is well defined and visible for the benefit of market stability.
4. ALL ELEMENTS TO BENEFIT THE TAXPAYER. THAT IS IT. If there is any leverage to be gains it should be secured for the taxpayer: job training, longer unemployment insurance, new job corp. for new directions for our future, personal debt counseling, reductions and stabilization. Middle class financial stability is the ONLY THING THAT WILL GROW THE ECONOMY! No CASH for TRASH!
5. PAY-GO PLAN as we did during Clinton Administration when we had a balanced budget; the planning process must have full public disclosure and transparency. No back room deals for the good old boys.
6. PRESIDENT’S BOGUS ARGUEMENTS. We do not need to offer consumers anymore credit! We need incentives for savings and energy use reductions, not more spending above and beyond our means. We need to help consumers manage their debt in order to reduce it, keep their homes and train for new jobs of the future. Any further debt burden on the taxpayer will only drive down spending, cause more bankruptcies and exacerbate the economic slowdown we are already in.
7. USE EXISTING NEW BANK AND INVESTMENT CO FED LOAN PROVISIONS: Why are the banks and investment houses not using the new funding mechanisms the FED already setup in the Spring which were designed to create the capital to make loans available to the public? How is the Bailout any better and why will it be anymore successful? Aren’t we already providing them with favorable rates? If they need liquidity, the FED has already offered that.
8. CUT OVERSEAS MILITARY EXPENSES in one-half now and shift those funds for bailout plan implementation. We need to see our “national security” as much broader than just the Homeland Security and Defense Budget. Our democracy is hanging in the balance here. Issues here are also part of national security and should be considered in that light of high priority: health care and child care for kids, head start program, renewable energy infrastructure development, spending more on educating kids per year than with do on prisoners, health care for everyone at a reasonable price, exercising congressional and executive branch oversight of financial institutions, funding existing programs for our social network. (see details under item 13)
9. ISSUE PREFERRED STOCK DISCOUNT CERTIFICATES to all taxpayers much as we distributed tax rebate checks this spring. These would be numbered and authorize taxpayers to purchase with your own money Preferred Stock shares in a list of financial institutions the Treasury is trying to save. Investor gets 10% off market price and no brokerage fee. The investment choice needs to be in the taxpayer’s hands. This would be our choice to invest just as Warren Buffett did in Goldman Sach this week. The choices good enough for Warren Buffett are good enough for Joe six pack or any taxpayer. Otherwise, funding would come for Pay-go basis.
10. STOP PREDITORY LENDING PRACTICES by credit card companies that was passed previously by the Congress under pressure from the industry lobbyists. Borrower negotiates for a rate and it cannot be bounced up without real personal contact and proper notice to the client and cannot be bounced up more the 20% above the standard rate. No more tricks like moving the payment date back with notice in the fine print that result in one day late payment causing automated doubling or tripling of rates!!!!!!!!!!!!!!!! Assign a personal banker / counselor to each borrower with direct phone line contact and real interest in managing clients debt.
11. ESTABLISH AN ACCOUNTING RULES COMMITTEE to create new accounting rules on transferring and valuing off-balance sheet collateralized asset onto the balance sheet that will subsequently be written down over a five year period. If this is done with full transparency so that the world markets will gain confidence in our practices and no one institution will be at a disadvantage except as they have created by their own behavior.
12. DIRECT PROVISIONS FOR HANDLING CDS instruments; that is, Collateralized Derivative Swaps that are insurance on CDO’s, CMO’s etc.
13. START A 1930 STYLE WORK CORP to build our infrastructure for renewable energies. Job training, support with incentive and incentives for collaboration between collegiate and industry research and educational institutions in support of renewable energies.
14. REDEFINITION OF WHAT NATIONAL SECURITY IS in the context of spending priorities, national budget and national deficit?
15. FINAL PLAN GOES OUT TO VOTER REFERENDUM IN NOVEMBER ON ELECTION DAY.
1. When budgeting for this, National Security must have a much broader meaning. When our democracy is facing collapse financially and philosophically, many issues are part of “National Security”. For Example,
• funding a building of renewable energy infrastructure
• Millions of children without health care
• Spending three times as much annual to maintain a prisoner as we do to educate our children. This is a national security issue.
• Being first in the World in spending on health care but a third world country in terms of health care performance.
• Being first in the World in arms sales to the rest of the World ferments more war not World stability and peace.
• Proclaiming to support a strong dollar while watching the floating exchange rates decimate the dollar value is a national security issue.
• Not providing first rate mental health and medical health necessities for veterans is a national security issue.
• Not providing adequate child care for working mothers and single parents.
• Using executive orders by the President to get around laws is a national security issue.
• Providing Medicaid programs that are so poorly designed (such low reimbursements) that most doctors in Maine have signs in their office that they do not accept Maine Care……..this is a ethical, moral and national security issue.
• Creating unfunded mandates
• Creating essential social programs and support mechanisms and subsequently providing such low funding that they are effectively unusable by the people who need them most.
• Proclaiming you are fiscal conservative and then creating the largest budget deficits in history. This is dishonest and creates a financial crisis such as today. This is a national security issue.
• Conducting international trade with such deficit spending that the country is being financed at the will of dictators, communists, and countries that are not friendly towards us. This is downright stupidity and creates a national security issue.
• Letting corporate special interest group and lobbyists finance and influence our elected and appointed representative such that the Public is losing control of their free speech voice. This is a direct threat to the continuance of our Democracy and the operation of our Constitution..it is a national security issue.
• Supporting tax and job incentive for the middle class.
In conclusion, it suggest that the national budget for next year have all these issue listed under the National Security, Pentagon, Commerce and Education Dept budget so as to facilitate some creative reprioritizing of our spending priorities for the future.
MY ALTERNATE BAILOUT PLAN
STOP! THINK, LISTEN TO THE PUBLIC
Here are my thoughts that I am sending to my Maine representatives. Their should be no rush when a full public airing has not been done for the huge structural changes to the financial, fiscal, monetary and executive brnach of government that does NOT support the balance of powers amongst the three branches of government in accordance with our Contsitution.A Two phase Plan: One for action now and one for a thoughtful public airing of a long term solutions ending in a voter referendum required to enter the bill into law. Paulsen plan is throwing out too much structure, further concentrating extraordinary power in the executive branch, and perpetuating the “power without consequences” that got us to this point of collapse.
Key Elements:
Not this:
• Treasury printing new treasury bonds to pay for $ 700 billion plus money to buy junk collateralized securities that do not have an market value. Why: because this borrowing will push every private enterprise effort for financing out of the market, force interest rates up, inflation up and consumer spending down.
• Throw out current financial structures and regulatory framework; Why: because the problem is not with the financial structures, it is with the lack of oversight with existing regulations.
• Special preference for powers granted to the two remaining investment banks: Goldman Sach and Morgan Stanley; WHY: this just perpetuates the special boy network of secrecy that got us where we are.
• Limitless powers for Paulson. Why: Because power without consequence shows to produce results NOT in the Public interest and fosters secrecy which is exactly why this disaster is resulting. We must have consequences for execs and transparency of process for the Public interest.
Yes this:
• Allow failure. It is part of the free market system and should be; otherwise, we are extending the period of pain, continuing the aura of secrecy, providing no consequences to those who lead us down this road, and spreading the economic upheaval to the broader economy and Main St.
• Re-activate and fund existing regulations and oversight with transparency to the Public. Lack of enforcement and oversight with existing laws and regulatory structures is a large part of the problem. Do not throw out the system when the people are primarily responsible.
• All aspects of the structural changes, regulatory changes and new responsibilities for leaders must have consequences for those in charge and be entirely transparent to the Public. Oversight must be re-activated.
• Alerts to the Public: Democracy is at a precipice: Police state tactics are underway and it is not an accident. Authorities are well aware that public unrest is the one thing they must control in order to stay in control.
• News: Brutal police action at the Republican Convention
• News: A big Mistake: Letting the Foxes run the Chicken Coup, and be our experts on how to fix the problems: Both parties had private parties at the convention put on by unnamed corporate lobby interests where the public and press would not be allowed to enter. Our democratic standards in the constitution have been corrupted by corporate interests. For example, the military industrial complex, the congressional, monetary, fiscal and executive branch leaders are using the revolving door to maintain their corp power and personal interests by working for all these organizations over time.
• News: An active unit of the Army is now being reassigned to work in the US for what purpose? To train in crowd control.? What is this for? Answer: I expect that when the public acts together in protest in the street, these troops will be used to suppress freedom of speech and threaten active citizens who are exercising their rights under our constitution. Active citizen protest is not synonomous with terrorism. More info... http://www.democracynow.org/2008/9/22/headlines#10 http://www.globalsecurity.org/military/library/policy/army/fm/3-19-4/chap8.htm
Phase I for action now but No rush jobs for such massive structural changes. We need clarification of the role of government that is consistent with our constitution and separation of power amongst three branches of government. A power balance that is already heavily and dangerously weighted towards the Executive Branch will be further weighted to the Executive branch by the Paulsen Bailout. This must not stand!
• Boost public and market confidence in managing major changes in financial market. Five year timeline to be established now. Part of this must be policy actions by the FED and Treasury to support a resurgence of the Dollar. The market forces are working just fine for this. We have plenty of qualified experts on how to do this. This must be done transparently and over a pre-announced time schedule so the world market knows it is predictable.
• Tranparency is the key to settling the World Market and consumer confidence for an effort that must include input from a broad range of people who give contemplative consideration that will foster a long term workable solution.
• The Govt Buys Nothing on the Taxpayers nickel! If we do then you can kiss renewable energy future goodbye and say hello to a guaranteed economic collapse that will make 1930 look easy. That is my prediction.
• Appropriate Govt leadership role and assistance: is to be only in the form of loans to support guided efforts (by regulatory agencies) for the existing private financial institutions to manage off balance sheet assets and bring them onto the balance sheet now with new and transparent accounting rules that take effect over time.
• Accounting Rules Changes: Create uniform method of valuating off balance sheet securitized assets: via advisory group of Treasury, congress and CPA association. Make effective ASAP with required interim financial statements for all financial institutions.
• Govt support orderly change in accounting and market mechanisms that take effect over a five year period.
• Jobs and Education Incentives: Encourage econ activity and jobs growth by spending on long-term incentives for consumers and industry towards energy savings in the form of: housing, transportation, CO2 reductions. Put the incentives in the hands of middle class consumers and broad range of renewable energy startups. Not just the old style major corporations. Small businesses create more jobs now. Startup an energy job corp. for renewable energy via training and campus innovation incentives. Pay for organizing industry / Educational system collaborative efforts to improve our educational and job training system for the low energy consumption economy of the future.
• Securitized Assets and Amortization: These institutions will have 5 years transition to amortize these assets down to their real market value; however, they must show all this in their financial statements now.
• Based on above we will have a reliable basis to re-establish necessary bank reserve requirements. This is where it is appropriate for the Treasury to supply loans to meet these reserves.
Phase II: Public airing and referendum of long term solution: To be implemented by June 30, 2009. After full and proper public transparency and public discussion with thoughtful input from our best economic advisors and public input. This will affect the next 2, 3, 4 generations and deserves a full and contemplative public review and popular referendum national vote to pass.
Considerations:
• Balance of power amongst the three branches of govt. You can’t fix the problem by giving Paulsen vast powers without any consequences to his actions. This is a repeat of what we are doing for the execs on Wall Street. How stupid can we get? Besides this idea in itself is a very bad idea!
• What is wrong with the original structure of fiscal and money policy institutions if it is followed and regulations are in place and actively enforced?
1. Federal Reserve
2. US Treasury
3. Congressional Oversight, Banking Committee
4. SEC
The problem is not with the system structure but with the people that have corrupted it outside of the Public eye for their own benefit, the intentional blind eye shown by the regulatory authorities, congress and the executive branch which has all been twisted and magnified by the illusions of Democracy in the face of our system being run under the influence of political lobbyist pressure groups, and a revolving door for jobs between the executive, congressional, lobbyists and private corporate executive recruitments. It is all run behind the scene by the same group of players. They do NOT have the Publics interest in mind. The Public is lulled to sleep by lies of comfort and promises that the govt will protect them from an increasingly dangerous world. Big daddy will take care of us. The middle class is running so hard to keep up now that they don’t have the time to object or protest or complain. It is survival in the trenches. We MUST have a trustworthy govt operation under these conditions for the middle class to once again get this economy going.
Contact:
Norton West
Low Energy Efficiency Design of Maine
73 Harbor Place
South Portland, ME 04106-2857
(207) 239-0200
hfnorton@gmail.com
see my economic blog at http://economic-tracks.blogspot.com
World according to TARP - PAULSON BAILOUT PLAN
Let’s hear it for the acronyms, especially now that we’ve graduated to four letters; Forget CDS, CDO and SIV - it’s time to talk TARP.
Yes folks, it’s the Troubled Asset Relief Program, or as we like to say here on FT Alphaville, the Mother of All Bail-outs.
WHO IS REALLY GETTING THE HELP HERE?
Here’s a quick crib to the MOAB:
What?: According to Bank of America, the goal of the program “is to preclude or at least postpone systematic failures in financial institutions.” The Treasury’s description is slightly more long-winded: “This program is intended to fundamentally and comprehensively address the root cause of our financial system’s stresses by removing distressed assets from the financial system”
Come again?: The US Treasury, through this MOAB, will buy up to $700bn in assets, financed by an equivalent issuance of government bonds and defined as “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages”. Hank P also reserves the right, in consultation with Ben B, “to purchase other assets, as deemed necessary to effectively stabilize financial markets.”
How?: The MOAB will probably purchase assets through reverse auction, although this has not yet been decided. Management of these assets will be outsourced to the private sector (BlackRock anyone?). The Treasury may sell the assets at its discretion or may hold assets to maturity.
Who?: Companies eligible to tap the program include but are not limited to banks, brokers-dealers and insurers with “significant” operations in the US.
Timing?: The program will, if approved by Congress, run through September 2010, although it will only accept assets originated or issued on or before 17 September 2008
Who’s eligible?: Any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies having significant operations in the US. and, if Hank P and Ben B agree, any other institution he deemed necessary to promote financial market stability.
Quis custodiet ipsos custodes?: Within three months of the first asset purchases, and semi-annually thereafter, the Treasury will provide the appropriate Congressional committees with regular updates on the program. BUT - “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
What about the taxpayers?: “Cash received from liquidating the assets, including any additional returns, will be returned to Treasury’s general fund for the benefit of American taxpayers,” according to the fact sheet.
What’s the word on the Street?: Generally pleased
Yes folks, it’s the Troubled Asset Relief Program, or as we like to say here on FT Alphaville, the Mother of All Bail-outs.
WHO IS REALLY GETTING THE HELP HERE?Here’s a quick crib to the MOAB:
What?: According to Bank of America, the goal of the program “is to preclude or at least postpone systematic failures in financial institutions.” The Treasury’s description is slightly more long-winded: “This program is intended to fundamentally and comprehensively address the root cause of our financial system’s stresses by removing distressed assets from the financial system”
Come again?: The US Treasury, through this MOAB, will buy up to $700bn in assets, financed by an equivalent issuance of government bonds and defined as “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages”. Hank P also reserves the right, in consultation with Ben B, “to purchase other assets, as deemed necessary to effectively stabilize financial markets.”
How?: The MOAB will probably purchase assets through reverse auction, although this has not yet been decided. Management of these assets will be outsourced to the private sector (BlackRock anyone?). The Treasury may sell the assets at its discretion or may hold assets to maturity.
Who?: Companies eligible to tap the program include but are not limited to banks, brokers-dealers and insurers with “significant” operations in the US.
Timing?: The program will, if approved by Congress, run through September 2010, although it will only accept assets originated or issued on or before 17 September 2008
Who’s eligible?: Any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies having significant operations in the US. and, if Hank P and Ben B agree, any other institution he deemed necessary to promote financial market stability.
Quis custodiet ipsos custodes?: Within three months of the first asset purchases, and semi-annually thereafter, the Treasury will provide the appropriate Congressional committees with regular updates on the program. BUT - “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
What about the taxpayers?: “Cash received from liquidating the assets, including any additional returns, will be returned to Treasury’s general fund for the benefit of American taxpayers,” according to the fact sheet.
What’s the word on the Street?: Generally pleased
World according to TARP - PAULSON BAILOUT PLAN
Let’s hear it for the acronyms, especially now that we’ve graduated to four letters; Forget CDS, CDO and SIV - it’s time to talk TARP.
Yes folks, it’s the Troubled Asset Relief Program, or as we like to say here on FT Alphaville, the Mother of All Bail-outs.
Here’s a quick crib to the MOAB:
What?: According to Bank of America, the goal of the program “is to preclude or at least postpone systematic failures in financial institutions.” The Treasury’s description is slightly more long-winded: “This program is intended to fundamentally and comprehensively address the root cause of our financial system’s stresses by removing distressed assets from the financial system”
Come again?: The US Treasury, through this MOAB, will buy up to $700bn in assets, financed by an equivalent issuance of government bonds and defined as “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages”. Hank P also reserves the right, in consultation with Ben B, “to purchase other assets, as deemed necessary to effectively stabilize financial markets.”
How?: The MOAB will probably purchase assets through reverse auction, although this has not yet been decided. Management of these assets will be outsourced to the private sector (BlackRock anyone?). The Treasury may sell the assets at its discretion or may hold assets to maturity.
Who?: Companies eligible to tap the program include but are not limited to banks, brokers-dealers and insurers with “significant” operations in the US.
Timing?: The program will, if approved by Congress, run through September 2010, although it will only accept assets originated or issued on or before 17 September 2008
Who’s eligible?: Any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies having significant operations in the US. and, if Hank P and Ben B agree, any other institution he deemed necessary to promote financial market stability.
Quis custodiet ipsos custodes?: Within three months of the first asset purchases, and semi-annually thereafter, the Treasury will provide the appropriate Congressional committees with regular updates on the program. BUT - “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
What about the taxpayers?: “Cash received from liquidating the assets, including any additional returns, will be returned to Treasury’s general fund for the benefit of American taxpayers,” according to the fact sheet.
What’s the word on the Street?: Generally pleased
Yes folks, it’s the Troubled Asset Relief Program, or as we like to say here on FT Alphaville, the Mother of All Bail-outs.
Here’s a quick crib to the MOAB:
What?: According to Bank of America, the goal of the program “is to preclude or at least postpone systematic failures in financial institutions.” The Treasury’s description is slightly more long-winded: “This program is intended to fundamentally and comprehensively address the root cause of our financial system’s stresses by removing distressed assets from the financial system”
Come again?: The US Treasury, through this MOAB, will buy up to $700bn in assets, financed by an equivalent issuance of government bonds and defined as “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages”. Hank P also reserves the right, in consultation with Ben B, “to purchase other assets, as deemed necessary to effectively stabilize financial markets.”
How?: The MOAB will probably purchase assets through reverse auction, although this has not yet been decided. Management of these assets will be outsourced to the private sector (BlackRock anyone?). The Treasury may sell the assets at its discretion or may hold assets to maturity.
Who?: Companies eligible to tap the program include but are not limited to banks, brokers-dealers and insurers with “significant” operations in the US.
Timing?: The program will, if approved by Congress, run through September 2010, although it will only accept assets originated or issued on or before 17 September 2008
Who’s eligible?: Any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies having significant operations in the US. and, if Hank P and Ben B agree, any other institution he deemed necessary to promote financial market stability.
Quis custodiet ipsos custodes?: Within three months of the first asset purchases, and semi-annually thereafter, the Treasury will provide the appropriate Congressional committees with regular updates on the program. BUT - “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
What about the taxpayers?: “Cash received from liquidating the assets, including any additional returns, will be returned to Treasury’s general fund for the benefit of American taxpayers,” according to the fact sheet.
What’s the word on the Street?: Generally pleased
Wednesday, September 24, 2008
I DISSENT- An essay against the Govt Bailout
Columbia Ventures Corporation - News: "An Essay Against A Government Bailout
September 23, 2008
By: Kenneth D. Peterson, Jr.
I will not go softly! There is a terrible, horrible crisis looming we are now told. But the Government will save us if only we will allow the most extravagant intervention into private affairs that this country has ever contemplated. The politicians and the media blare breathless sound bites about fear of collapse, fear of the future, fear of real estate, fear of failure. Have we forgotten that FDR said the only thing we need to fear is fear itself? Have we forgotten that six years ago when there was a similar full court press by the political and media elite to exploit our fears the reality in Iraq did not live up to the hype?...."
September 23, 2008
By: Kenneth D. Peterson, Jr.
I will not go softly! There is a terrible, horrible crisis looming we are now told. But the Government will save us if only we will allow the most extravagant intervention into private affairs that this country has ever contemplated. The politicians and the media blare breathless sound bites about fear of collapse, fear of the future, fear of real estate, fear of failure. Have we forgotten that FDR said the only thing we need to fear is fear itself? Have we forgotten that six years ago when there was a similar full court press by the political and media elite to exploit our fears the reality in Iraq did not live up to the hype?...."
Tuesday, September 23, 2008
Bailing out uncle Sam could get nasty - Money Matters - livemint.com
Foreigners Bailing Out
Uncle Sam?
Bailing out uncle Sam could get nasty - Money Matters - livemint.comCould this be the turn in the bond market? The relief rally following the promised $700 billion (about Rs32 trillion) clean-up of Wall Street’s toxic waste lasted barely more than a trading day. Foreign investors may finally be cottoning on that they are bailing out Uncle Sam. With bonds and shares falling—and oil shooting up—this could get nasty.Click here for breakingviews.com
For most of this month, US treasury bond prices rose on the theory that, in the midst of a crisis, they were a safe haven. But, as Hank Paulson and Ben Bernanke have approved a bewildering array of ever more far-reaching bailouts, investors started adding up the numbers. Depending how you account for the quasi-nationalizations of Fannie Mae and Freddie Mac, the total cost is now well over $1 trillion—and possible several trillion dollars.
If Uncle Sam was rich, this might not matter too much. But the government’s deficit is already yawning as the result of a slowing economy. On conservative estimates, it will reach $450 billion next year. It doesn’t take a dire assumption to think it could top $1 trillion by 2010. What’s more, the country as a whole is still relying on funds from abroad to finance its trade gap. The current account deficit is running at $60 billion a month, a cool $720 billion annually.
From an international investor’s perspective, this is beginning to look worrying. Last week they were receiving a yield of only 3.4% for holding US government paper for 10 years. Even if inflation comes back under control and hovers around 3%, that doesn’t look like much compensation.
How Lobbyists control our Congress
Letting the Foxes rule the Chicken Coup
Gmail - Today's Daily Reckoning - Mr. Market Will Have His Say - hfnorton@gmail.com*** This, by Eric Hovde, appeared in the Washington Post , explaining why Congress leapt to suicide in order to bail out Wall Street:
“The Wall Street investment banking firms, their executives, their families and their political action committees contribute more to U.S. Senate and House campaigns than any other industry in America. By sprinkling some of its massive gains into the pockets of our elected officials, Wall Street bought itself protection from any tough government enforcement.
“This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn’t been reformed in the past. Nor should several Republican congressmen and Senators who likewise contributed to watering down legislation aimed at reforming these institutions be let off the hook.”
Until tomorrow,
Bill Bonner
The Daily Reckoning Sept. 24, 2008
comments by Norton: The foxes at various time stay in power by alternately work as lobbyists, execs for the financial industry or military industrial comples or congress or the executive branch. We let them run the chicken coup and act as our advisors on political end economic matters as if we think they have our Public interest in mind. Their interests are with staying in power and reaping the benefits there of. No wonder we have a collapse of faith and performance. Paulson, ex-goldman Sach says taxpayers must pay.......or it will get worse. Well it is worse already and even he cant fool the free market so slow down, take a pause, let the Public see everything and vote by referendum on the plan that is detailed before it is appproved. And the expert Foxes including Paulson will be liiable and personally responsible for their actions!
STOP THE BAILOUT - SAVE TAXPAYERS & OUR GRAND CHILDREN
HERE IT IS:
http://www.thepetitionsite.com/1/stop-think-listen-hold-paulson-bailout
Norton West
www.leedmaine.org
reply to: norton@leedmaine.org
207 . 239 . 0200
Affordable support for going green
Norton West
www.leedmaine.org
reply to: norton@leedmaine.org
207 . 239 . 0200
Affordable support for going green
PAULSON BAILOUT PLAN - ACT NOW
Dear Friends:
Read the NY times article: The Wall Street Bailout Plan - Explained" here http://www.nytimes.com/2008/09/21/business/21qanda.html and The Nation: Paulson Bailout Plan a Historic Swindle By William Greider http://www.thenation.com/doc/20081006/greider . We only have the next two days to Act. You can kiss renewable energy future goodbye if this plan goes through....any improvements in education, justice, civil liberties, economic growth, our leadership position in the World. This is it. This is our time. ACT NOW!
Please see my suggestion of a BAILOUT PLAN in lieu of the PAULSON PLAN which is due to be acted on by the Senate Banking Committee and enacted by the end of this week. This is the worst example of a rush job that avoids transparency and PUBLIC SCRUTINY and will give even more massive powers to the executive branch without any review or consequences. This is the very kind of "power without consequences" that got us to this financial collapse precipise: This will have adverse consequences for our grand children - huge! This cannot pass on further burdens to the middle class! It is totally counter productive and will cause extended economic collapse! You can act now. Read my Plan, sign the Petition at www.petitionow.com (it may not be working yet but try this one http://www.thepetitionsite.com/13/take-action-stop-paulsons-plunder ) and write your representative ASAP. We only have a couple of day!
My Bailout Plan:
STOP. THINK. LISTEN TO THE PUBLIC!
see formatted version online at my blog: http://economic-tracks.blogspot.com
STOP. THINK. LISTEN TO THE PUBLIC!
see formatted version online at my blog: http://economic-tracks.blogspot.com
Two phase Plan: One for action now and Phase II for a thoughtful public airing of a long term solutions ending in a voter referendum required to enter the bill into law. Paulsen plan is throwing out too much structure, further concentrating extraordinary power in the executive branch, and perpetuating the "power without consequences" that got us to this point of collapse....see formatted version online at my blog: http://economic-tracks.blogspot.com
Norton West
73 Harbor Place
South Portland
Maine 04106-2857
207 239-0200
73 Harbor Place
South Portland
Maine 04106-2857
207 239-0200
MY BAILOUT PLAN
STOP! THINK, LISTEN TO THE PUBLIC
Here are my thoughts that I am sending to my Maine representatives. Their should be no rush when a full public airing has not been done for the huge structural changes to the financial, fiscal, monetary and executive brnach of government that does NOT support the balance of powers amongst the three branches of government in accordance with our Contsitution.A Two phase Plan: One for action now and one for a thoughtful public airing of a long term solutions ending in a voter referendum required to enter the bill into law. Paulsen plan is throwing out too much structure, further concentrating extraordinary power in the executive branch, and perpetuating the “power without consequences” that got us to this point of collapse.
Key Elements:
Not this:
• Treasury printing new treasury bonds to pay for $ 700 billion plus money to buy junk collateralized securities that do not have an market value. Why: because this borrowing will push every private enterprise effort for financing out of the market, force interest rates up, inflation up and consumer spending down.
• Throw out current financial structures and regulatory framework; Why: because the problem is not with the financial structures, it is with the lack of oversight with existing regulations.
• Special preference for powers granted to the two remaining investment banks: Goldman Sach and Morgan Stanley; WHY: this just perpetuates the special boy network of secrecy that got us where we are.
• Limitless powers for Paulson. Why: Because power without consequence shows to produce results NOT in the Public interest and fosters secrecy which is exactly why this disaster is resulting. We must have consequences for execs and transparency of process for the Public interest.
Yes this:
• Allow failure. It is part of the free market system and should be; otherwise, we are extending the period of pain, continuing the aura of secrecy, providing no consequences to those who lead us down this road, and spreading the economic upheaval to the broader economy and Main St.
• Re-activate and fund existing regulations and oversight with transparency to the Public. Lack of enforcement and oversight with existing laws and regulatory structures is a large part of the problem. Do not throw out the system when the people are primarily responsible.
• All aspects of the structural changes, regulatory changes and new responsibilities for leaders must have consequences for those in charge and be entirely transparent to the Public. Oversight must be re-activated.
• Alerts to the Public: Democracy is at a precipice: Police state tactics are underway and it is not an accident. Authorities are well aware that public unrest is the one thing they must control in order to stay in control.
• News: Brutal police action at the Republican Convention
• News: A big Mistake: Letting the Foxes run the Chicken Coup, and be our experts on how to fix the problems: Both parties had private parties at the convention put on by unnamed corporate lobby interests where the public and press would not be allowed to enter. Our democratic standards in the constitution have been corrupted by corporate interests. For example, the military industrial complex, the congressional, monetary, fiscal and executive branch leaders are using the revolving door to maintain their corp power and personal interests by working for all these organizations over time.
• News: An active unit of the Army is now being reassigned to work in the US for what purpose? To train in crowd control.? What is this for? Answer: I expect that when the public acts together in protest in the street, these troops will be used to suppress freedom of speech and threaten active citizens who are exercising their rights under our constitution. Active citizen protest is not synonomous with terrorism. More info... http://www.democracynow.org/2008/9/22/headlines#10 http://www.globalsecurity.org/military/library/policy/army/fm/3-19-4/chap8.htm
Phase I for action now but No rush jobs for such massive structural changes. We need clarification of the role of government that is consistent with our constitution and separation of power amongst three branches of government. A power balance that is already heavily and dangerously weighted towards the Executive Branch will be further weighted to the Executive branch by the Paulsen Bailout. This must not stand!
• Boost public and market confidence in managing major changes in financial market. Five year timeline to be established now. Part of this must be policy actions by the FED and Treasury to support a resurgence of the Dollar. The market forces are working just fine for this. We have plenty of qualified experts on how to do this. This must be done transparently and over a pre-announced time schedule so the world market knows it is predictable.
• Tranparency is the key to settling the World Market and consumer confidence for an effort that must include input from a broad range of people who give contemplative consideration that will foster a long term workable solution.
• The Govt Buys Nothing on the Taxpayers nickel! If we do then you can kiss renewable energy future goodbye and say hello to a guaranteed economic collapse that will make 1930 look easy. That is my prediction.
• Appropriate Govt leadership role and assistance: is to be only in the form of loans to support guided efforts (by regulatory agencies) for the existing private financial institutions to manage off balance sheet assets and bring them onto the balance sheet now with new and transparent accounting rules that take effect over time.
• Accounting Rules Changes: Create uniform method of valuating off balance sheet securitized assets: via advisory group of Treasury, congress and CPA association. Make effective ASAP with required interim financial statements for all financial institutions.
• Govt support orderly change in accounting and market mechanisms that take effect over a five year period.
• Jobs and Education Incentives: Encourage econ activity and jobs growth by spending on long-term incentives for consumers and industry towards energy savings in the form of: housing, transportation, CO2 reductions. Put the incentives in the hands of middle class consumers and broad range of renewable energy startups. Not just the old style major corporations. Small businesses create more jobs now. Startup an energy job corp. for renewable energy via training and campus innovation incentives. Pay for organizing industry / Educational system collaborative efforts to improve our educational and job training system for the low energy consumption economy of the future.
• Securitized Assets and Amortization: These institutions will have 5 years transition to amortize these assets down to their real market value; however, they must show all this in their financial statements now.
• Based on above we will have a reliable basis to re-establish necessary bank reserve requirements. This is where it is appropriate for the Treasury to supply loans to meet these reserves.
Phase II: Public airing and referendum of long term solution: To be implemented by June 30, 2009. After full and proper public transparency and public discussion with thoughtful input from our best economic advisors and public input. This will affect the next 2, 3, 4 generations and deserves a full and contemplative public review and popular referendum national vote to pass.
Considerations:
• Balance of power amongst the three branches of govt. You can’t fix the problem by giving Paulsen vast powers without any consequences to his actions. This is a repeat of what we are doing for the execs on Wall Street. How stupid can we get? Besides this idea in itself is a very bad idea!
• What is wrong with the original structure of fiscal and money policy institutions if it is followed and regulations are in place and actively enforced?
1. Federal Reserve
2. US Treasury
3. Congressional Oversight, Banking Committee
4. SEC
The problem is not with the system structure but with the people that have corrupted it outside of the Public eye for their own benefit, the intentional blind eye shown by the regulatory authorities, congress and the executive branch which has all been twisted and magnified by the illusions of Democracy in the face of our system being run under the influence of political lobbyist pressure groups, and a revolving door for jobs between the executive, congressional, lobbyists and private corporate executive recruitments. It is all run behind the scene by the same group of players. They do NOT have the Publics interest in mind. The Public is lulled to sleep by lies of comfort and promises that the govt will protect them from an increasingly dangerous world. Big daddy will take care of us. The middle class is running so hard to keep up now that they don’t have the time to object or protest or complain. It is survival in the trenches. We MUST have a trustworthy govt operation under these conditions for the middle class to once again get this economy going.
Contact:
Norton West
Low Energy Efficiency Design of Maine
73 Harbor Place
South Portland, ME 04106-2857
(207) 239-0200
hfnorton@gmail.com
see my economic blog at http://economic-tracks.blogspot.com
Monday, September 22, 2008
Lies From Paulson Keep Stacking Up: What You Can Do About It
Mish's Global Economic Trend Analysis: Lies From Paulson Keep Stacking Up: What You Can Do About It: "What To Do
In Bush Administration Seeks 'Dictatorial Power' I noted some actions you can take. After repeating the section, I wish to add to it. First a recap.
Contact Your Senator Today!
It's time to contact your senator. Here is contact information for Senators of the 110th Congress.
Phone or Email your Senators today. Tell them in your own words
Urge your senator to Filibuster any bailout legislation.
Emphatically state you do not want a bailout of any kind for anyone.
No Dictatorial power for Paulson or Bernanke
Taxpayers should not have to bail out banks making bad loans
Tell them that 'The Fed' and Paulson are systemic risk'.
Email AND Phone Senators Shelby, Bunning, Kyle, Ensign, Hagel
Whether Senator Shelby is your Senator or not, flood him with calls and emails asking for a filibuster and to stop the insanity. Senators Shelby, Bunning, Ensign, and Kyle might be sympathetic to the cause, based on past statements. I am taking a stab at Hagel.
Ask For A Filibuster
Please email and phone the following. Specifically ask for a filibuster and tell them to vote no to any bailout.
Tell them that anyone who votes for this bailout will never get your vote again.
Shelby, Richard C.- (R - AL)
110 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-5744
E-mail: senator@shelby.senate.gov"
In Bush Administration Seeks 'Dictatorial Power' I noted some actions you can take. After repeating the section, I wish to add to it. First a recap.
Contact Your Senator Today!
It's time to contact your senator. Here is contact information for Senators of the 110th Congress.
Phone or Email your Senators today. Tell them in your own words
Urge your senator to Filibuster any bailout legislation.
Emphatically state you do not want a bailout of any kind for anyone.
No Dictatorial power for Paulson or Bernanke
Taxpayers should not have to bail out banks making bad loans
Tell them that 'The Fed' and Paulson are systemic risk'.
Email AND Phone Senators Shelby, Bunning, Kyle, Ensign, Hagel
Whether Senator Shelby is your Senator or not, flood him with calls and emails asking for a filibuster and to stop the insanity. Senators Shelby, Bunning, Ensign, and Kyle might be sympathetic to the cause, based on past statements. I am taking a stab at Hagel.
Ask For A Filibuster
Please email and phone the following. Specifically ask for a filibuster and tell them to vote no to any bailout.
Tell them that anyone who votes for this bailout will never get your vote again.
Shelby, Richard C.- (R - AL)
110 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-5744
E-mail: senator@shelby.senate.gov"
SEC partly to Blame, allowing increased leverage 2002
Jesse's Café Américain: "maybe the S.E.C. is trying to cover up its own culpability in this crisis. Four years ago, the agency pushed through a rule that allowed the big investment banks to take on a great deal more debt. As a result, debt ratios rose from about 12 to 1 to more like 30 to 1. Guess what Lehman’s debt ratio was when it went bust? Yep: 30 to 1.
SAVE THE MONEY MARKET FUNDS The precipitating event here was the news that the Reserve Fund, a money market fund that caters to institutions, had “broken the buck” and was paying investors 97 cents on the dollar. That is only the second time that’s ever happened, and it had to scare investors, because most of us have come to think of money market funds as being the equivalent of bank savings account — perfectly safe."
SAVE THE MONEY MARKET FUNDS The precipitating event here was the news that the Reserve Fund, a money market fund that caters to institutions, had “broken the buck” and was paying investors 97 cents on the dollar. That is only the second time that’s ever happened, and it had to scare investors, because most of us have come to think of money market funds as being the equivalent of bank savings account — perfectly safe."
the wall street fix: mr. weill goes to washington: the long demise of glass-steagall | PBS
How did we get here? Will those that contributed, please stand up. Paulson, Goldman Saches, Rubin, Phil Graham...
frontline: the wall street fix: mr. weill goes to washington: the long demise of glass-steagall | PBS: "A chronology tracing the life of the Glass-Steagall Act, from its passage in 1933 to its death throes in the 1990s, and how Citigroup's Sandy Weill dealt the coup de grâce."In 2002 Graham introduced legislation that allowed the merger, so could create "hybrid instructs" without any regulations of any type...
FrontLine: 2003:
"...After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.
On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.
On Oct. 22, Weill and John Reed issue a statement congratulating Congress and President Clinton, including 19 administration officials and lawmakers by name. The House and Senate approve a final version of the bill on Nov. 4, and Clinton signs it into law later that month.
Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"
Sunday, September 21, 2008
AIG’s Dangerous Collapse & A Credit Derivatives Risk Primer
Credit Derivatives Swap market dwarfs the subprime, so get ready again
September 17, 2008 GoldseekOn September 1st, few knew that AIG, the largest insurance company in the world with over $1 trillion in assets, was in deep trouble. By September 12th, the rumors about major trouble were everywhere. By September 15th AIG’s corporate life expectancy was being measured in days, and the question was: bankruptcy, buyer or bailout? By the evening of September 16th, the federal government had massively intervened, making an $85 billion loan to AIG in exchange for a controlling 79.9% equity share of the company.
Welcome to the brave new world of credit derivatives driven collapses. A world that is far more dangerous than the world of subprime mortgage derivatives. A complex world that because of its sheer size can potentially cause more damage in a matter of days than the subprime mortgage derivatives caused in their first year in the headlines. The chart below shows the relative size of the credit derivatives and subprime mortgage markets.
How great is the real danger? The bulk of the remainder of this article explains the extent of the danger. With a few market changes, this is the credit derivatives primer as published on May 2nd of 2008. There is also new material at the end of the article, talking about what could be anticipated, and introducing some solutions.
Friday, September 19, 2008
Here Go the Short ETFs
Here Go the Short ETFs - Seeking Alpha: "Things like this make me wonder what country I am in.
I've received many emails and yes, Ultrashort Financial (SKF) is halted and it looks like we are stuck with it until October 2nd. At which time the government can decide if the peons can trade it again. If not they can push out the short ban for 30 more days.
Which will take us to November 2nd.
Which I believe is election day.
How convenient.
Update: ProShares announcement. You are now free to sell at a 35% loss. I still think they'll keep the short selling ban until the election.
Update: Reports both SKF and SEF halted due to lack of counterparties."
I've received many emails and yes, Ultrashort Financial (SKF) is halted and it looks like we are stuck with it until October 2nd. At which time the government can decide if the peons can trade it again. If not they can push out the short ban for 30 more days.
Which will take us to November 2nd.
Which I believe is election day.
How convenient.
Update: ProShares announcement. You are now free to sell at a 35% loss. I still think they'll keep the short selling ban until the election.
Update: Reports both SKF and SEF halted due to lack of counterparties."
Safety for your Money Market Funds
Park your money in a bank money-market deposit account or savings account
There are options to consider if your money-market account is suddenly keeping you awake at night:
_Move the money into a U.S. Treasury money fund at your brokerage firm. The upside is that it removes the exposure your current fund may have to corporate debt. The downside is you'll take a bit of a hit in yield on the government instruments, which have dropped in recent days. For example, the one-year Treasury note yield is about 1.5 percent, down from 2 percent, where it was trading as recently as Friday. Top money-market funds are likely trading around 2 to 2.5 percent, McBride said.
_Park your money in a bank money-market deposit account or savings account. This option carries two big advantages. The money is covered by the Federal Deposit Insurance Corp. from losses if the bank goes under. Another plus, the yield at some banks is about 3.5 percent.
"If you find yourself staring at the ceiling at 3 a.m. wondering if your money is safe, money-market deposit accounts and savings at banks offer safety of money without sacrificing yield," McBride said.
Thursday, September 18, 2008
Fed Funds spread signals crash
Fed Funds spread signals crash - iTulip.com Forums: "Fed Funds spread signals crash
The last time the Fed Funds target rate got this out of line with the effective rate was in 1987, and from a base of over 6% not 2%. On a percentage basis, at three times the target rate the spread is unprecedented. It happened today.
Fed funds jump to 6 pct in mkt, tripling Fed's target
NEW YORK NEW YORK, Sept 15 (Reuters) - Federal funds traded in the U.S. interbank lending market were indicated to have jumped to 6 percent on Monday, tripling the target rate of 2 percent which the Federal Reserve sets."
WHY WORLD CENTRAL BANKS ARE FLOODING MARKETS WITH FUNDS: since the evidence above is that banks do not trust to borrow from each other (thus the wide LIBOR spread), the central banks are making loan funds available to the commercial banks instead. by Norton
The last time the Fed Funds target rate got this out of line with the effective rate was in 1987, and from a base of over 6% not 2%. On a percentage basis, at three times the target rate the spread is unprecedented. It happened today.
Fed funds jump to 6 pct in mkt, tripling Fed's target
NEW YORK NEW YORK, Sept 15 (Reuters) - Federal funds traded in the U.S. interbank lending market were indicated to have jumped to 6 percent on Monday, tripling the target rate of 2 percent which the Federal Reserve sets."
WHY WORLD CENTRAL BANKS ARE FLOODING MARKETS WITH FUNDS: since the evidence above is that banks do not trust to borrow from each other (thus the wide LIBOR spread), the central banks are making loan funds available to the commercial banks instead. by Norton
Why FED bought only 79% of AIG!
AIG to Be Renamed "NOSLAUP II, LLC"? Hint: "Paulson" Spelled Backwards
Some members wonder why the Federal Reserve only purchased 79.9% of AIG - was there any magic to it not going over 80%? As noted in this DealBook blog by Prof. Davidoff, the government can't purchase more than 80% of a company "because if it goes over the magical number of 80 percent, the company’s debts are then required to be consolidated onto the federal government’s balance sheet. Keeping it at 79.9 percent allows the government to maintain the fiction that it is still not responsible for the company’s solvency." Thanks to Tom Conaghan of McDermott Will for tracking this down.
A nice off-balance sheet play by the Feds. I guess they are trying to be like Enron. Maybe they should rename Fannie Mae "Raptor 6" and AIG "NOSLAUP II, LLC" (ie. "Paulson" spelled backwards).
Anyways, I can't wait to see the Fed file their Schedule 13D and all of their Section 16 reports
A nice off-balance sheet play by the Feds.
by thecorporatecounsel.net blogSome members wonder why the Federal Reserve only purchased 79.9% of AIG - was there any magic to it not going over 80%? As noted in this DealBook blog by Prof. Davidoff, the government can't purchase more than 80% of a company "because if it goes over the magical number of 80 percent, the company’s debts are then required to be consolidated onto the federal government’s balance sheet. Keeping it at 79.9 percent allows the government to maintain the fiction that it is still not responsible for the company’s solvency." Thanks to Tom Conaghan of McDermott Will for tracking this down.
A nice off-balance sheet play by the Feds. I guess they are trying to be like Enron. Maybe they should rename Fannie Mae "Raptor 6" and AIG "NOSLAUP II, LLC" (ie. "Paulson" spelled backwards).
Anyways, I can't wait to see the Fed file their Schedule 13D and all of their Section 16 reports
Wednesday, September 17, 2008
6 Major Events before you finished breakfast this morning
Events neatly summarised by the FT’s John Authers:
Lewis Carroll’s White Queen “believed as many as six impossible things before breakfast”. Traders could use that skill. Here are six things we have been asked to believe since markets closed on Tuesday.
First, the US Federal Reserve is lending $85bn to American International Group to stop it from going bust. AIG is an insurer, not covered by the Fed. The action is without precedent. Does it damage the decisive move against moral hazard when Lehman was allowed to fail? Arguably not. AIG was of greater systemic importance. And Wednesday’s market response suggests that it in no way dampened aversion to risk.
Second, a US money market fund has “broken the buck”, or dropped below a nominal value of $1. For decades US savers had thought this impossible.
Third, the yield on the world’s safest investment, three-month Treasury bills, dropped to 0.15 per cent, its lowest since Pearl Harbor. Safety has not been so expensive since the war.
Fourth, the US Treasury had to bolster the balance sheet of the Federal Reserve, the anchor of the world financial system.
Fifth, Wall Street’s last two independent investment banks, Morgan Stanley and Goldman Sachs, will stay independent for days at most, judging by the price of their equity and credit.
And sixth, the risk that the US itself defaults, according to credit markets, has quadrupled in the past six months. Its triple-A rating, according to one rating agency, is “not God-given”.
All six things appear to be true. A seventh, pushed by contrarians, is that it is time to buy. The last rally, in July, started when restrictions on short-sellers were announced; draconian measures against shorts were unveiled on Wednesday. And extreme panics generally precede rallies. But this panic must be resolved first, and it looks different from the panics that have preceded it this year.
Lewis Carroll’s White Queen “believed as many as six impossible things before breakfast”. Traders could use that skill. Here are six things we have been asked to believe since markets closed on Tuesday.
First, the US Federal Reserve is lending $85bn to American International Group to stop it from going bust. AIG is an insurer, not covered by the Fed. The action is without precedent. Does it damage the decisive move against moral hazard when Lehman was allowed to fail? Arguably not. AIG was of greater systemic importance. And Wednesday’s market response suggests that it in no way dampened aversion to risk.
Second, a US money market fund has “broken the buck”, or dropped below a nominal value of $1. For decades US savers had thought this impossible.
Third, the yield on the world’s safest investment, three-month Treasury bills, dropped to 0.15 per cent, its lowest since Pearl Harbor. Safety has not been so expensive since the war.
Fourth, the US Treasury had to bolster the balance sheet of the Federal Reserve, the anchor of the world financial system.
Fifth, Wall Street’s last two independent investment banks, Morgan Stanley and Goldman Sachs, will stay independent for days at most, judging by the price of their equity and credit.
And sixth, the risk that the US itself defaults, according to credit markets, has quadrupled in the past six months. Its triple-A rating, according to one rating agency, is “not God-given”.
All six things appear to be true. A seventh, pushed by contrarians, is that it is time to buy. The last rally, in July, started when restrictions on short-sellers were announced; draconian measures against shorts were unveiled on Wednesday. And extreme panics generally precede rallies. But this panic must be resolved first, and it looks different from the panics that have preceded it this year.
Arms Trade—a major cause of suffering — Global Issues
Arms Trade—a major cause of suffering — Global Issues: "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. The world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children… This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.
— Former U.S. President, Dwight D. Eisenhower, in a speech on April 16, 1953"
CHART DETAILS - ARMS
POVERTY
— Former U.S. President, Dwight D. Eisenhower, in a speech on April 16, 1953"
CHART DETAILS - ARMS
POVERTY
Making America Stupid
Op-Ed Columnist - Making America Stupid - Op-Ed - NYTimes.com:by Thomas Friedman
"America that is focused first and foremost on drilling for oil is an America more focused on feeding its oil habit than kicking it.
Why would Republicans, the party of business, want to focus our country on breathing life into a 19th-century technology — fossil fuels — rather than giving birth to a 21st-century technology — renewable energy? As I have argued before, it reminds me of someone who, on the eve of the I.T. revolution — on the eve of PCs and the Internet — is pounding the table for America to make more I.B.M. typewriters and carbon paper. “Typewriters, baby, typewriters.”"
"America that is focused first and foremost on drilling for oil is an America more focused on feeding its oil habit than kicking it.
Why would Republicans, the party of business, want to focus our country on breathing life into a 19th-century technology — fossil fuels — rather than giving birth to a 21st-century technology — renewable energy? As I have argued before, it reminds me of someone who, on the eve of the I.T. revolution — on the eve of PCs and the Internet — is pounding the table for America to make more I.B.M. typewriters and carbon paper. “Typewriters, baby, typewriters.”"
With White House Push, U.S. Arms Sales Jump
Is this how we prop up our EXPORT trade balance? Is this the political RIGHT speaking? Who is Bush working for anyway?
With White House Push, U.S. Arms Sales Jump - NYTimes.com: "With White House Push, U.S. Arms Sales JumpBy ERIC LIPTON
Published: September 13, 2008
WASHINGTON — The Bush administration is pushing through a broad array of foreign weapons deals as it seeks to rearm Iraq and Afghanistan, contain North Korea and Iran, and solidify ties with onetime Russian allies.
Petty Officer First Class Scott Cohen/United States Navy
President Hamid Karzai of Afghanistan, right, at a ceremony on Feb. 2, 2007, for the United States’ transfer to the Afghan Army of 213 Humvees and more than 12,000 light weapons.
U.S. Weapons Abroad From tanks, helicopters and fighter jets to missiles, remotely piloted aircraft and even warships, the Department of Defense has agreed so far this fiscal year to sell or transfer more than $32 billion in weapons and other military equipment to foreign governments, compared with $12 billion in 2005.
The trend, which started in 2006, is most pronounced in the Middle East, but it reaches into northern Africa, Asia, Latin America, Europe and even Canada, through dozens of deals that senior Bush administration officials say they are confident will both tighten military alliances and combat terrorism"
U.S. Weapons Abroad
US is NUMBER ONE supplier of weapons to the World - Proud to be an American?
More on Arms Sales
The Cavalry: Bush comes through - Advanced JDAM sale approved
DOD leaving me stunned, if only I could be wrong like this every day.
The only thing as good as a strike on Iran to jolt them into changing their ways, is the threat of an even worse strike.
I’ve been following the Israeli procurement requests with avid interest. It has been clear that the United States has been intent on limiting sales to defensive systems, the denial of advanced JDAMS, possibly the F-22, mixed in with limiting refuelling tanker purchases has all but made it clear what the US position on the use of Israeli force is.. A big Ixnay.
The advanced penetrating satellite guided munitions were the biggest blow in the denial column, despite the plethora of assistance for missile defense that has been offered in support, these bombs provide a decisive advantage for any long range strike should it one day become necessary.
Bush is a champ
DOD has been adamant, but it appears the US is not prepared to leave its ally hanging and Haaretz is reporting that the Advanced JDAMS sale has been suddenly approved despite serious reservations, DOD gives the good word on approval by the ‘administration’, anyone care to guess who gave that order?
Despite reservations in Washington regarding a possible Israeli strike on Iran, the American administration will supply Israel with sophisticated weapons for heavily fortified targets, the U.S. administration announced.
The U.S. Department of Defense announced it would sell the Israel Air Force 1,000 new smart bombs, rumored to significantly enhance the IAF’s military capabilities. The deal was approved amid public and secret messages from Washington, with the Americans expressing their reservations about a possible Israeli strike against the Islamic Republic’s suspected nuclear sites.
The Pentagon’s announcement, which came on Friday, said the U.S. will provide Israel with 1,000 units of Guided Bomb Unit-39 (GBU-39) - a special weapon developed for penetrating fortified facilities located deep underground.
The $77 million shipment, which includes launchers and appurtenances, will allow the IAF to hit many more bunkers than currently possible. Although each bomb weighs 113 kilograms, its penetration capabilities equal those of a one ton bomb, according to professional literature.
Bill Moyer - January 2008 WATCH THE VIDEO
America is Proud to be FIRST in the World!
We're Number 1!
Frida Berrigan May 21, 2007Frida Berrigan is a Senior Research Associate at the World Policy Institute's Arms Trade Resource Center. This article appeared first in TomDispatch.com .
They don't call us the sole superpower for nothing. Paul Wolfowitz might be looking for a new job right now, but the term he used to describe the pervasiveness of U.S. might back when he was a mere deputy secretary of defense—hyperpower—still fits the bill.
Face it, the United States is a proud nation of firsts. Among them:
First in Oil Consumption:
The United States burns up 20.7 million barrels per day, the equivalent of the oil consumption of China, Japan, Germany, Russia, and India combined.
First in Carbon Dioxide Emissions:
Each year, world polluters pump 24,126,416,000 metric tons of carbon dioxide (CO2) into the environment. The United States and its territories are responsible for 5.8 billion metric tons of this, more than China (3.3 billion), Russia (1.4 billion) and India (1.2 billion) combined.
First in External Debt:
The United States owes $10.040 trillion, nearly a quarter of the global debt total of $44 trillion.
First in Military Expenditures:
....Blizzard of Lies
By PAUL KRUGMAN
Published: September 11, 2008
Op-Ed Columnist - Blizzard of Lies - Op-Ed - NYTimes.com: "Did you hear about how Barack Obama wants to have sex education in kindergarten, and called Sarah Palin a pig? Did you hear about how Ms. Palin told Congress, “Thanks, but no thanks” when it wanted to buy Alaska a Bridge to Nowhere?
These stories have two things in common: they’re all claims recently made by the McCain campaign — and they’re all out-and-out lies..."
These ar e lies to the American People. What do you suppose a McCain administration will project to the World? by Norton
Published: September 11, 2008
Op-Ed Columnist - Blizzard of Lies - Op-Ed - NYTimes.com: "Did you hear about how Barack Obama wants to have sex education in kindergarten, and called Sarah Palin a pig? Did you hear about how Ms. Palin told Congress, “Thanks, but no thanks” when it wanted to buy Alaska a Bridge to Nowhere?
These stories have two things in common: they’re all claims recently made by the McCain campaign — and they’re all out-and-out lies..."
These ar e lies to the American People. What do you suppose a McCain administration will project to the World? by Norton
BAILOUTS_R_US: US Taxpayer takes the wrap! $ 85 Billion loan
Where are the Smartest Guys in the Room now? They should be in Stockades in the Village Square? They're walking away and GREED still rules with few consequences
Fed in AIG rescue - $85B loan - Sep. 16, 2008: "By Tami Luhby, CNNMoney.com senior writerLast Updated: September 17, 2008: 10:21 AM EDT
NEW YORK (CNNMoney.com) -- In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group, officials announced Tuesday evening.
The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) the funds. In return, the federal government will receive a 79.9% stake in the company.
Officials decided"
How Safe is your Bank?
Institutional Risk Analytics
Look on the page for
Credit Crisis Monitor Non-accrual Assets Surveillance >>>>enter your banks ticker symbol<<<<
Look on the page for
Credit Crisis Monitor Non-accrual Assets Surveillance >>>>enter your banks ticker symbol<<<<
Tuesday, September 16, 2008
How Will November Affect Your Portfolio?
Higher rates on capital gains and dividend income
More troubling is the proposal to raise taxes on the income that's most important for stock investors: dividends and capital gains. The current 15% rate could rise to 20%-25% or even higher -- and the fear of that hike may bring an avalanche of year-end selling.
Say, for instance, you own some stocks with nice gains, and you expect to sell them within the next few years in a taxable account. Look what happens if you wait to sell until a higher tax rate comes into effect:
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.Stock
Stock
5-Year Average Annual Return
Current Gain on $10,000 Investment in 2003
Tax If Sell Now
Tax If Sell At Higher Tax Rate
Halliburton (NYSE: HAL)
26.7%
$22,709
$3,406
$4,542-$5,677
Potash Corp. (NYSE: POT)
67.6%
$122,181
$18,327
$24,436-$30,545
Apple (Nasdaq: AAPL)
69.8%
$131,126
$19,669
$26,225-$32,782
Amazon.com (Nasdaq: AMZN)
11.7%
$7,386
$1,108
$1,477-$1,847
Research In Motion (Nasdaq: RIMM)
77.9%
$168,247
$25,237
$33,649-$42,062
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.
Stock
5-Year Average Annual Return
Current Gain on $10,000 Investment in 2003
Tax If Sell Now
Tax If Sell At Higher Tax Rate
Halliburton (NYSE: HAL)
26.7%
$22,709
$3,406
$4,542-$5,677
Potash Corp. (NYSE: POT)
67.6%
$122,181
$18,327
$24,436-$30,545
Apple (Nasdaq: AAPL)
69.8%
$131,126
$19,669
$26,225-$32,782
Amazon.com (Nasdaq: AMZN)
11.7%
$7,386
$1,108
$1,477-$1,847
Research In Motion (Nasdaq: RIMM)
77.9%
$168,247
$25,237
$33,649-$42,062
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.
Faced with the possibility of paying thousands of dollars more in taxes, many investors will sell sooner rather than later.
More troubling is the proposal to raise taxes on the income that's most important for stock investors: dividends and capital gains. The current 15% rate could rise to 20%-25% or even higher -- and the fear of that hike may bring an avalanche of year-end selling.
Say, for instance, you own some stocks with nice gains, and you expect to sell them within the next few years in a taxable account. Look what happens if you wait to sell until a higher tax rate comes into effect:
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.Stock
Stock
5-Year Average Annual Return
Current Gain on $10,000 Investment in 2003
Tax If Sell Now
Tax If Sell At Higher Tax Rate
Halliburton (NYSE: HAL)
26.7%
$22,709
$3,406
$4,542-$5,677
Potash Corp. (NYSE: POT)
67.6%
$122,181
$18,327
$24,436-$30,545
Apple (Nasdaq: AAPL)
69.8%
$131,126
$19,669
$26,225-$32,782
Amazon.com (Nasdaq: AMZN)
11.7%
$7,386
$1,108
$1,477-$1,847
Research In Motion (Nasdaq: RIMM)
77.9%
$168,247
$25,237
$33,649-$42,062
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.
Stock
5-Year Average Annual Return
Current Gain on $10,000 Investment in 2003
Tax If Sell Now
Tax If Sell At Higher Tax Rate
Halliburton (NYSE: HAL)
26.7%
$22,709
$3,406
$4,542-$5,677
Potash Corp. (NYSE: POT)
67.6%
$122,181
$18,327
$24,436-$30,545
Apple (Nasdaq: AAPL)
69.8%
$131,126
$19,669
$26,225-$32,782
Amazon.com (Nasdaq: AMZN)
11.7%
$7,386
$1,108
$1,477-$1,847
Research In Motion (Nasdaq: RIMM)
77.9%
$168,247
$25,237
$33,649-$42,062
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.
Source: Yahoo Finance. As of Sept. 8. Assumes $10,000 investment in each stock and tax rate increase to 20-25%.
Faced with the possibility of paying thousands of dollars more in taxes, many investors will sell sooner rather than later.
Here's What to Do ...by Money and Markets
Here's What to Do ...
by by Martin D. Weiss, Ph.D. and Mike Larson 09-15-08
First, if you have shares that we have not recommended, go online or call your broker to sell HALF immediately, at the market. Then stand by for our next alert regarding the second half.
Second, put all the proceeds away in the safest, most liquid investment in the world: Treasury bills or Treasury-only money market funds like Capital Preservation, the Weiss Treasury-Only Money Market Fund or any of the several we have recommended repeatedly here in Money and Markets.
Third, for the stocks that you hold (including those we recommended), if you have not bought inverse ETFs or put options to help protect you against losses, get ready to do so at the very next opportunity.
Fourth, for a hard-hitting, detailed forecast of the NEXT phase of this crisis, be sure to watch the recording of our 1-hour video webcast, "Plague to Pandemic," which we just posted on our Website this afternoon. Just turn up your computer speakers and click here now.
Never before in our lifetimes has there been a more urgent need for this guidance! And never before have we been more concerned about investors who might miss it! Be sure to take advantage of it now while you still can.
by by Martin D. Weiss, Ph.D. and Mike Larson 09-15-08
First, if you have shares that we have not recommended, go online or call your broker to sell HALF immediately, at the market. Then stand by for our next alert regarding the second half.
Second, put all the proceeds away in the safest, most liquid investment in the world: Treasury bills or Treasury-only money market funds like Capital Preservation, the Weiss Treasury-Only Money Market Fund or any of the several we have recommended repeatedly here in Money and Markets.
Third, for the stocks that you hold (including those we recommended), if you have not bought inverse ETFs or put options to help protect you against losses, get ready to do so at the very next opportunity.
Fourth, for a hard-hitting, detailed forecast of the NEXT phase of this crisis, be sure to watch the recording of our 1-hour video webcast, "Plague to Pandemic," which we just posted on our Website this afternoon. Just turn up your computer speakers and click here now.
Never before in our lifetimes has there been a more urgent need for this guidance! And never before have we been more concerned about investors who might miss it! Be sure to take advantage of it now while you still can.
Monday, September 15, 2008
Why Wall Street is Melting Down
Why Wall Street is Melting Down, and What to Do About It
by Robert Reich:
Hank Paulson didn't blink, so Lehman Brothers went down the tubes. The end of socialized capitalism? Don't bet on it. The Treasury and the Fed are scrambling to enlarge the government's authority to exchange securities of unknown value for guaranteed securities in an effort to stave off the biggest financial meltdown since the 1930s.
Ironically, a free-market-loving Republican administration is presiding over the most ambitious intrusion of government into the market in almost anyone's memory.
`Tectonic' Market Shift as Lehman Fails, Merrill Sold (Update1)
By Christine Harper Bloomberg Sept 15, 2008
Bloomberg.com: U.S.: "``The implications of one of the `too big to fail' institutions being allowed to fail is incredibly difficult to grasp, but suffice to say that a huge number of firms and securities are going to get affected,'' said Michael Auyeung, who manages about $500 million as chief executive officer at Pacific Mutual Fund Bhd. in Petaling Jaya, Malaysia. ``The reach of the carnage will be global and system-wide.''
Lehman's collapse wipes out a company that had a market value of $45.5 billion in February 2007. Merrill's sale to Bank of America for $29 a share, while about a 70 percent premium to Merrill's value on Friday, compares with the company's $86 billion market capitalization in January 2007.
``It's breathtaking that we've gone from five standalone firms to two very quickly,'' said Roy Smith, a finance professor at New York University's Stern School of Business and a former partner at Goldman Sachs. ``It's certainly going to cause Wall Street to rethink the strategy.''"
Bloomberg.com: U.S.: "``The implications of one of the `too big to fail' institutions being allowed to fail is incredibly difficult to grasp, but suffice to say that a huge number of firms and securities are going to get affected,'' said Michael Auyeung, who manages about $500 million as chief executive officer at Pacific Mutual Fund Bhd. in Petaling Jaya, Malaysia. ``The reach of the carnage will be global and system-wide.''
Lehman's collapse wipes out a company that had a market value of $45.5 billion in February 2007. Merrill's sale to Bank of America for $29 a share, while about a 70 percent premium to Merrill's value on Friday, compares with the company's $86 billion market capitalization in January 2007.
``It's breathtaking that we've gone from five standalone firms to two very quickly,'' said Roy Smith, a finance professor at New York University's Stern School of Business and a former partner at Goldman Sachs. ``It's certainly going to cause Wall Street to rethink the strategy.''"
Stock Market Slides - Intervention Unsuccessful | Chris Martenson
Looking Ahead
Stock Market Slides - Intervention Unsuccessful | Chris Martenson: "the KaPoom theory'.In brief, it calls for an inflationary blow-off to a credit cycle that then falls into a deflationary hole for a while only to resolve into a massive hyperinflationary epoch when (not if) the monetary authorities panic and begin attempting to repair all the bad credit with fresh money...."
Submitted by cmartenson on Wed, 09/10/2008 - 07:22.
Jeff - one of the greatest sources of confusion out there is what inflation and deflation mean. So let's put a definition in here:
1) Inflation = a rise in money stock in proportion to goods, services AND assets (that last one is conveniently ignored by our Fed which is the single greatest intellectual oversight/mistake that they make).
2) Deflation = a fall in money stock in proportion to goods, services AND assets.
Since we all now know that money = credit = debt, I can define deflation thusly:
2) Deflation = a fall in money stock, credit, or debt in proportion to goods, services AND assets.
Note that nowhere did I mention prices of anything. It is entirely possible to have both deflation AND rising prices for some items just as it is possible to have inflation AND declining prices for some things. For our banking system prices are largely irrelevant. The continued expansion of credit/debt is the most important thing and this is why deflation is the most feared outcome for the overseers of the money system..."
Sunday, September 14, 2008
Liberal Spending
Liberal Spending?
by Charles Wheelan, Ph.D.
...So what is George W. Bush? He's certainly no liberal, either. In fact, we're left with the worst of all worlds: liberal-style spending without the stuff it usually buys.
Seven years of fiscal recklessness hasn't solidified a tattered safety net, or fixed a broken health care system, or upgraded the skills base of America's working class, or improved our crumbling infrastructure, or updated our outmoded international institutions. (Does anybody really believe that France deserves a permanent veto on the U.N. Security Council while India -- the world's largest democracy -- doesn't?) We're spending like drunken sailors, but we're not even getting the hookers and booze.
by Charles Wheelan, Ph.D.
...So what is George W. Bush? He's certainly no liberal, either. In fact, we're left with the worst of all worlds: liberal-style spending without the stuff it usually buys.
Seven years of fiscal recklessness hasn't solidified a tattered safety net, or fixed a broken health care system, or upgraded the skills base of America's working class, or improved our crumbling infrastructure, or updated our outmoded international institutions. (Does anybody really believe that France deserves a permanent veto on the U.N. Security Council while India -- the world's largest democracy -- doesn't?) We're spending like drunken sailors, but we're not even getting the hookers and booze.
Thursday, September 11, 2008
Comrades Bush, Paulson and Bernanke Welcome You to the USSRA (United Socialist State Republic of America)
RGE Monitor by Nouriel Roubini Sept 9, 2008
The now inevitable nationalization of Fannie and Freddie is the most radical regime change in global economic and financial affairs in decades. For the last twenty years after the collapse of the USSR, the fall of the Iron Curtain and the economic reforms in China and other emerging market economies the world economy has moved away from state ownership of the economy and towards privatization of previously stated owned enterprises. This trend was aggressively supported the United States that preached right and left the benefits of free markets and free private enterprise.
Today instead the US has performed the greatest nationalization in the history of humanity.
...This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole)...
Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA. Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don’t run the biggest economy in the world. But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage....
Comment by Norton
The now inevitable nationalization of Fannie and Freddie is the most radical regime change in global economic and financial affairs in decades. For the last twenty years after the collapse of the USSR, the fall of the Iron Curtain and the economic reforms in China and other emerging market economies the world economy has moved away from state ownership of the economy and towards privatization of previously stated owned enterprises. This trend was aggressively supported the United States that preached right and left the benefits of free markets and free private enterprise.
Today instead the US has performed the greatest nationalization in the history of humanity.
...This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole)...
Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA. Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don’t run the biggest economy in the world. But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage....
Comment by Norton
We need Regime Change, and I am not talking about IRAQ
Now I get it! Do you?
OUR NATIONAL DEBT. AND IT WILL DOUBLE THIS YEAR AS RESULT OF THOSE WHO ARE...SUPPOSED TO BE LEADING US
| The Gross National Debt |
THINK . READ . SHARE . VOTE . THINK ABOUT YOUR GRAND CHILDREN
Lying Corrupts Campaigns Just as Money Can
(Newser) –We all know John McCain wasn’t really offended by Barack Obama’s “lipstick on a pig” comment—the one he pretended to think was a reference to Sarah Palin. “The whole controversy is ginned up, a fraud, a lie,” writes Michael Kinsley in the Washington Post. So why isn’t anyone calling McCain on it? Lies ought to be self-defeating, but in American politics, they're not.
Many people “even respect a well-told lie as evidence of professionalism,” Kinsley writes; complain, and you’ll be seen as a whiner, a bad sport. The press meanwhile “bends over backwards to give liars the benefit of the doubt,” to avoid an appearance of bias. But lies can corrupt our system at least as much as money. Maybe McCain should "swear off corrupt lying the way he has sworn off corrupt money." SOURCE Source Washington Post
Many people “even respect a well-told lie as evidence of professionalism,” Kinsley writes; complain, and you’ll be seen as a whiner, a bad sport. The press meanwhile “bends over backwards to give liars the benefit of the doubt,” to avoid an appearance of bias. But lies can corrupt our system at least as much as money. Maybe McCain should "swear off corrupt lying the way he has sworn off corrupt money." SOURCE Source Washington Post
Wednesday, September 10, 2008
National Debt Clock
U.S. NATIONAL
DEBT
CLOCK
The Outstanding Public Debt as of 11 Sep 2008 at 02:44:56 AM GMT is:
The estimated population of the United States is 304,705,367
so each citizen's share of this debt is
$31,818.04.
The National Debt has continued to increase an average of
$1.97 billion per day since September 28, 2007!
Concerned? Then
tell Congress and the White House!
Do you have any questions about the National Debt or this Debt Clock?
Here are some answers.
The Treasury Department's Bureau of Public Debt also has
their own Public Debt FAQ.
OpenCongress - Issues by views
What are your priorities?
OpenCongress - Issues: "Most Viewed(Past Seven Days)
Abortion (494 views)
Metric system (355 views)
Immigration (299 views)
Unemployment insurance (275 views)
Iraq (253 views)
Autism (227 views)
Energy (129 views)
Civil liberties (108 views)
Technology (103 views)
Veterans' disability compensation (71 views)
Norton's comments: Here is my set of priorities:
Civil Liberties
Iraq
Energy
Veterans disability compensation
Unemployment insurance
Technology
Autism
Immigration
Metric system
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