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bring back the stocks or at least the 21st century equivalent
I think in addition we need for them to write an open apology to the country in which they acknowledge what (expletive) they have been.
Good to see you back, and you probably know you have several kudos from other sites these past few days.
I volunteer to "hold the [colorful noun] so [s/he] can beat the crap out of them."
They'll pass it. The only question is which poor decisions -- by the buyers, brokers, lenders, insurers, securitizers, or investors -- will receive the biggest payout.
Huzzah!
If genuine, it is good to see that there will be at least some pushback from the legislative branch on this. The people's representatives, in theory.
The Dems must be prepared to vote this down ...
I have little hope of that as the banksters will crash the economy to hold onto their money making monopoly /...
It's total War or don't bother ...
http://www.nypost.com/seven/09212008/news/regionalnews/execs_crash__earn_130099.htm
Well, besides the Hardship Letter, they should have to write 1000 times on paper in front of the White House: I will not participate in defauding the public again.
And they have to pinky swear that they mean it.
I don't know if my ideas are workable or not, but I would like to see:
In the waning days of the last eight years the coup de' tat is put in place.
Thank you Tanta. I hope to God that something like this proposal actually happens. If it does not, if this misbegotten abortion of a plan goes through in anything like its present form, then we are in trouble like USSR in the eighties or Weimar in the twenties. If Paulson's plan goes through as written, then this govt is in real danger of losing what the political scientists call legitimacy, what the chinese call the mandate of heaven.
That sounnds like a start.
Forgot #5
C.R. takes over as Treasury Secretary.
They'll pass it.
Nemo, I don't see how they can pass it. Especially after I contacted my reps.
Seriously, how much negative feedback are the Congresspeople getting, and how much positive? I can pretty much predict that 100% of all feedback they're getting from the public (and I hope everyone is feedbacking) is negative. Only the politicians and the financiers are for it, and I doubt they're writing letters.
Will the Congress cave against 100% unanimous public opinion?
Obama on the bailout:
Obama calls bailout a 'blank check' - Yahoo! News
Comrade-Specialist Paper Pushe writes:
Forgot #5
C.R. takes over as Treasury Secretary.
Is that anyway to treat your friends?
This news just in. Barclay's to pay out 2.5 billion in bonuses to certain "key" Lehman employees
Good article:
Why You Should Hate the Treasury Bailout Proposal « naked capitalism
Take cash out of the bank and guy gold, silver, guns, ammo, and food stockpiles. It's a vote of no confidence in the empire.
This administration has lied before.
This bill has the same MO as the Iraq authorization bill.
Let the bill fail.
Then let the financial institutions fail.
And then arrest people for fraud.
Outsider --
They will add a bunch of provisions to "protect the taxpayer" and "punish Wall Street" and "protect poor defenseless homeowners from foreclosure". Then they will pass it.
They will not risk being blamed for a financial meltdown six weeks before an election, no matter what kind of ranting and raving they hear from people like you and me.
I wish I were wrong. But I'm not.
I want to see the briefing Bernanke gave them in Pelosi's office.
You want $25k from my family, you better give me the full story.
"Only the politicians and the financiers are for it, and I doubt they're writing letters."
The financiers have highly paid lobbists working very hard on the behalf, they don't have to write letters!
Nemo,
Do you think this will make it through six weeks?
If keeping the credit flowing is the goal, then we should be using the money to float solid corporate debt, not buying bad assets. Force the banks to reveal their holdings, hang the executives out to dry, and let them fail. Better to pick up the pieces and start from scratch than to try and patch this Gordian knot. Probably cheaper, too.
Furthermore, the Treasury Department will empanel a committee of the oldest, most traditional, and bitterest mortgage loan underwriters--preferably those downsized to make way for automated underwriting systems--to review these letters and opine on their acceptability
Could they fit them all in the Rose Bowl at one seating ?
/me ducks and runs
A 200% federal excise tax on all compensation paid to any individual that would not be deductible to the under the IRC if paid to the CEO of the company is all I ask for. That and a criminal sanction for any gross up or similar device to shift the burden of the excise tax from the taxpayer to any third party.
What this would mean--you can get your ten million dollar bonus, deferred comp award, whatever, but you owe uncle Sam twice whatever you get.
It would not clutter the Paulson Plan in the least. A few lines in the Internal Revenue Code.
Don't hold your breath.
I'm beginning to think there is at least a chance that Bush will be impeached before his term ends.
This time, his ineptitude and corruption have finally gone too far. Proposing to make the Treasury Secretary above the law will not play well with the ACLU, Judicial Watch, and others.
It may take time, but this is a nation of laws, and the Supreme Court will eventually get it right. Any legislation can be invalidated on constitutional grounds, and what we have here is the biggest constitutional crisis since the Watergate break-ins.
Will the Congress cave against 100% unanimous public opinion?
Outsider | 09.21.08 - 3:19 pm | #
Cave? Maybe not but if they at least EXPOSE the issues & DISCUSS openly... that might be enough to send this proposal to MLEC Land in a SuperSIV.
"Could they fit them all in the Rose Bowl at one seating ?"
Pasadena. The home of IndyMac. Very nicely put, whether you intended it or not!
(OT) Humor.
The first political sign of the season went up in my neighborhood.
"President Nixon: Now More Than Ever."
I'm gonna find out where he got and buy some.
S.
Tanta!
I sent my cramdown letter last week- I was generous- 25 cents on the dollar for that crappy heloc.
More than they deserve.
I offered them roughly zillow value.
I expect to get no return offer. I further expect when I lose my employment I will wrap that rental fiasco into my Ch 7.
Time to hunker down and wait for those who lost in this fiasco ( homeowners and taxpayers) to take their pound of flesh.
Someday this war's gonna end...
Paulson in handcuffs, for starters. Then, I'll know Congress is taking this seriously. After playing out for years, to say that it demands an immediate solution, and that it can only be done by one of the chief architects of the systems failure goes far beyond the pale for me. Assigning unlimited powers in an emergency is a good way to lose your country.
After that... debt forgiveness to the borrower for every cent forgiven the lender. Full disclosure of every debt instrument bought. An X billion dollar total limit, not an X billion dollar ceiling. An
[With apologies to David Letterman]
Top Ten Reasons to Support The Treasury Bailout Plan (the Goldman Sachs Freedom Act?)
Four that didn't make my cut:
It's been over two hundred years since we had a King, maybe we need to try that again
If you can't make people borrow, you can make their representatives borrow.
We apparently haven't been paying the banks enough fees lately
If borrowing a lot of money didn't fix the problem, maybe borrowing a whole lot more will
Hey CR, here's an idea. Start an open thread each day about a half hour before the market opens and dedicate this to SKF traders and other trader types, thereby "neatening up" the other threads.
I'm okay with this part:
"I want reforms of the industry, and I want it to be as punitive as possible."
or
Just Say No.
Mad as hell - taxpayers lash out
On CNN Front Page - link to story
Mad as hell - taxpayers lash out - Sep. 21, 2008
We Need This to Be Clean and Quick On MSNBC Front Page
Below the fold - "Paulson resists calls for added help in bailout"
Administration calls for quick action on bailout - Stocks & economy- msnbc.com
Wandering around the net seeing how this is being played in MSM...
In a rally today in Charlotte, Barack Obama laid out his thoughts on the bailout. His support for the bailout was not unconditional.
Obama Steps Up - IMO the 3 key points
1.) No blank check: Americans are going to be on the hook for almost $1,000,000,000,000. It's taxation without representation to just write blank checks without being accountable to taxpayers.
2.) Taxpayer money should not be paid to reward CEOs. Period.
3) REGULATE. REGULATE. REGULATE.
Daily Kos: Obama Steps Up: The Seven Point Plan [Update w/Official Obama Release & Poll]
Go Obama !
(OT) central_scrutinizer said: "I'm beginning to think there is at least a chance that Bush will be impeached before his term ends...."
If only we could have a referendum on it instead of relying on Congress.
S.
"I've been an advocate of bankruptcy cram-downs for ages"
And I'm glad you are, because that is one of the very few things that would actually help solve this mess. If I thought humiliating the architects of this disaster would do any good I would spend some time thinking up some good ones but I just don't have any hope on that score. Hard to shame those without a conscience.
Tanta - what do you give the odds of...
1) the bill passing as is?
2) a 'compromise' being worked out before Armageddon?
TIA.
From Cnn Money site.
Taxpayers Lash Out Against the Bailout....
Mad as hell - taxpayers lash out - Sep. 21, 2008
Register your anger on every newspaper site. Add to the public fury. Contact your reps and senators...even if you think it useless. Numbers count...I've done it, don't be passive.
Write a letter to your congresscritter. Drive slowly. Withdraw money. What a joke. Do you not understand that this is a full frontal assault on your constitution. On your freedoms.
Ask yourselves, what would a "patriot" have done about this in the 18th century in your country.
Make a stand you assholes.
Hey Seb,
Thanks for the grin - and with political humor no less!
Nude --
If keeping the credit flowing is the goal, then we should be using the money to float solid corporate debt, not buying bad assets.
Prof. Willem Buiter is also thinking along those lines, but with a slightly different angle.
Not sure I really like his idea, but I certainly like any idea better than the TARP.
Q: What's McCain's plan for bailout ?
A: Keating Five 2.0
Make every decision maker involved air a disclaimer before any public punditry on any economic matter whatsoever.
"My ethics and judgment in these matters must be considered suspect at best, in that my actions contributed to enormous losses for stockholders and the American taxpayer while drawing exorbitant compensation from the firm I helped bankrupt. Only a government bailout permitted any assets at all to be salvaged from the wreckage and my actions caused serious harm to individuals and the United States of America.
Ask yourselves, what would a "patriot" have done about this in the 18th century in your country.
Move to some sparsely populated region boarding where we currently live that is outside the reach of Washington, kill or drive out the inhabitants and then annex them into the same 'system' we just left. How's that for a plan?
Any company selling securities to the treasury under this proposal...for the following five years their CFO should have to get specific authorization from a BK trustee for any expenditures above some nominal figure. Where "nominal" is high enough to cover average salaries, and low enough to force the CFO into near-continual begging.
Comrade Canadien avec popcorn:
Dude, patriot is the new loyalist. A patriot would go shopping and drink Bud Light.
I'm not an economist or a regular poster, but after reading numerous background stories, it seems that the usual "fall guy" in the stock market ( pension plans, small investors) have been pulling billions OUT of financials and the big guys need this proposal to "restore confidence", by getting them back IN the game for the next fall. Remember that in all previous crashes, even 2001, online brokerage accounts weren't nearly as available, and it's never been easier or faster for the little guy to get out and let the big guys take the fall..
As a little guy I'm wondering why I should invest in ANY stock when we all know passbook accounts are going to be paying 10-15% again?? 1980 wasn't that long ago, I can't believe anyone would fall for this.
From Bloomberg:
Backlash Over Bailouts Grows in Congress, Wall Street (Update1)
By Matthew Benjamin and Brian Faler
Sept. 19 (Bloomberg) -- As the U.S. government takes stronger measures to stabilize financial markets, some former Federal Reserve officials, lawmakers and Wall Street executives are saying too much has already been done.
``Every time they intervene, they do more harm than good,'' said Peter Schiff, president of Euro Pacific Capital in Darien, Connecticut, a brokerage that manages $1 billion.
Critics of the rescues agree that government actions, such as those that prevented the failures of Fannie Mae, Freddie Mac and American International Group Inc., can't postpone the inevitable worsening of housing and financial markets. They say the bailouts by the Fed and Treasury also encourage future reckless risk-taking by investors.
``If we don't stop now, there will be no end,'' said Gerald O'Driscoll, a former vice president of the Dallas Fed and now a scholar at the Cato Institute in Washington. He joins Vince Reinhart, former director of the Fed's monetary affairs division, and Marvin Goodfriend, a former official at the Richmond Fed in questioning the market interventions.
They're getting support from Republican lawmakers, who are stepping up their efforts to put a halt to further rescues. Yesterday a group of 100 lawmakers released a letter asking Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson to ``refrain from conducting any additional government-financed bailouts for large financial firms.''
Backlash Over Bailouts Grows in Congress, Wall Street (Update1) - Bloomberg.com
dryfly writes:
........ kill or drive out the inhabitants and then annex them into the same 'system' we just left. How's that for a plan?
Baghdad welcomes impoverished amrikans.
Why@ ZIRP writes:
"I've been an advocate of bankruptcy cram-downs for ages"
And I'm glad you are, because that is one of the very few things that would actually help solve this mess.
Some cynical folks (okay, that's me) think the 2005 BK law was passed in knowing prelude to today.
Reversing that fiasco would be a minimum start on cleaning things up.
or
Just Say No.
Awww, no hat-tip for linking this in the comments earlier?
Comrade Canadien avec popcorn writes:
"Do you not understand that this is a full frontal assault on your constitution. On your freedoms.
Ask yourselves, what would a "patriot" have done about this in the 18th century in your country.
Make a stand you assholes."
Trust me, in my neck of the woods, they will. "We fired once more and the Feds kept a'coming, but there wasn't as many as there was awhile ago. . . " Bring 'em on!
How's that for a plan?
Are you talking about Canada?
Tedy Bruschi is my favorite patriot.
It doesn't matter what he thinks about economics.
I just realized why the whole "time is of the essence" argument from Paulson/Frank/Dodd is total bullshit.
The stock market was closed for 7 days or so right after 9/11. The reasons were technical as well as psychological, but the world as we know it did not end.
If this legislation is so important, it needs to be deliberated slowly and carefully as the founders envisioned, not rushed through in a fog of rumors and panic.
So announce a 2 week closure of all world markets. Money markets are already backstopped, so the commercial paper market should function. To prevent panic and bank runs, announce that the FDIC funding has been increased, and have competent public and former public officials (think Rudy Guiliani, Bill Clinton, Paul Volcker) go on TV and ask for calm and reason.
This will give Congress time to have a chance at getting it right.
Other ideas for any company whose securities are purchased by Treasury:
1. No manager get over $1M in compensation (wages, stock, health care, etc) or gets more than before 9/17/2008.
2. Separate auditor put in place with at least $1B/year budget to safeguard taxpayers' money and ensure maximum return.
3. Equity shares in each company.
4. No dividend payments of more than $0.01 per quarter.
Taxpayers need to benefit or least limit risk for all the risk we're taking on.
Nemo writes:
Nude --
If keeping the credit flowing is the goal, then we should be using the money to float solid corporate debt, not buying bad assets.
Prof. Willem Buiter is also thinking along those lines, but with a slightly different angle.
Not sure I really like his idea, but I certainly like any idea better than the TARP.
Nemo | Homepage | 09.21.08 - 3:35 pm | #
Pretending the bad debt doesn't exist is ignoring the 900lb gorilla in the room. The gorilla is named Hu...
Not bailing out is equivalent to the Instantaneous American Balanced Budget Act... and they won't call it 'new taxes'... it will be compulsive bond buying... 'Citizenship Bonds' payable 100 year from now.
There are no painless easy exits to this mess...
It's an old, old story.
Here's one of the early versions retold:
Little Blog In The Big Woods: The Parable Of The Grateful Serf
central_scrutinizer writes:
The stock market was closed for 7 days or so right after 9/11. ..... but the world as we know it did not end.
Someone said something about the Shock Doctrine.
I am beginning to feel like it's been implemented in a large scale.
Shackled to a Broad Street stockade for public stoning by affected taxpayers.
This is what I'd like to see play out in Congress:
Congresscritter: So this plan is absolutely necessary to keep the entire global financial system from melting down in the next couple of days?
Paulsen: Yes! Absolutely spot on!
Congresscritter: And you're only proposing it for the good of the American public? It has nothing to do with rescuing G.S., or the other idiots on Wall Street?
Paulsen: Nope. No handout for Wall Street. I've always said I'll put country ahead of profits. Yesiree! That's me, a real patriot.
Congresscritter: Well, I guess we'll have to take your word for it. Now, the only question remaining is: who should we put in charge of this? Myself, I'm leaning toward Volcker. Though Buffett might do in a pinch.
Paulsen: Wh.. wh.. what?
It seems the best approach is for the govi to provide extensive DIP financing. That's likely $700B right there.
LOL Trishyla, I vote for Buffett...
There are no painless easy exits to this mess...
Then the discussion should be about who gets to feel the most pain.
or
Just Say No.
Non-negotiable amendment
Tanta to head the bailout agency
It's been over two hundred years since we had a King, maybe we need to try that again
~ pmorrisonfl
even kings bow before the power of the banksters ...
Nemo, how are your mad perl skillz for an electronic petition?
kill or drive out the inhabitants and then annex them into the same 'system' we just left. How's that for a plan?
Sounds like a plan, the website's up:
InvadeCanada.US
Didn't work so well the first time though.
Kenworthey...where in Grant Park do you suggest meeting? Can be reached via sopocistudio@msn.com
The Subprime Hangover
Here Comes The $739 Billion Taxpayer Bailout
By Mike Whitney
25/02/08
Note the date!
Here is the link to the article:
http:// http://www.informationclearingho...rticle19414.htm
Anonymous | 09.21.08 - 3:42 pm | #
"http:// www.informationclearingho...rticle19414.htm"
The href didn't take...
Comrade Canadien avec popcorn said: "
Ask yourselves, what would a "patriot" have done about this in the 18th century in your country.
Make a stand you assholes."
The U.S. imports more oil from Canada than from any other single country.
So if you feel this strongly about what's going on in a country not your own, Monsieur le Canadien, YOU take a stand and tell your government to stop "enabling" us.
And in the meantime, butt-out of the business of American citizens. Last time I checked Canada wasn't in charge here.
Respectfully.
Sebastia
I worked for a bank in Japan a few years ago. They had a mishap one morning with a software upgrade, and their ATMs were out for a few hours.
The CEO had to go personally bow and apologize to their equivalent of their Treasury. I suspect something on this magnitude would require something more drastic.
So let's see, if I shoot myself I won't have to pay for these [noun's] [adjective] mistakes? It's amazing, but suicide sounds so much better than all this [noun].
What is exactly the motivation for any of the institutions to come to the auction, when they know they r gonna be wiped out by the lowest bid.
Prices set here will be used to markdown all the assets of all the financial companies.
What if Paulson holds the auction and nobody shows up?
Is Paulson lying or stupid or incompetent to know this, I dunno which one is worse.
The only way you could bring them to the auction to sell their assets at fire sale prices would be by putting a gun to their heads.
Would a threat of nationalization work?
Or this is just one of those bazookas Paulson hope he will never have to fire. And it is just a pathetic gimmick to restore confidence in the financial markets?
The only way this could work is if all banks were taken over in AIG style.
Shareholders take a major dilution. The Govt takes these assets off the books for 79.9% Govt ownership of the said institutions.
Comrade Canadien avec popcorn said: "
Ask yourselves, what would a "patriot" have done about this in the 18th century in your country.
Make a stand you assholes."
Exactly what I've been thinking. And Sebastian, Paulson wants the US taxpayer to bail out foreign banks, so it is very much a Canadian's business.
All we are and all we have is about to be looted to satisfy the bankers, foreign and domestic.
Bombard your senators and congressmen with emails, faxes and phone calls. Register your anger with every media website.
Don't let them hijack the country.
Someone between the constant links to Paul Krugman and Matt Stoler I realized that CR has lost its impartiality with respect to this crisis.
What in the hell is getting a CEO to write a letter going to do, besides giving his secretary some overtime?
While you use this leftist garbage for material CR loses more credibility - meanwhile Barney Frank endorses another line of credit to piss-poor borrowers and Congress puts more HUD malcreants in charge of supervising FHA loan mods.
Get with the program.
It may take time, but this is a nation of laws, and the Supreme Court will eventually get it right
If this were a dimestore novel, that would be nice bookending--the supremes put him in at the beginning of the story and they take him out at the end. If they apologized while doing it that'd go a long way to healing everything too.
Then the stocks for him. Free tomatoes and rotten eggs all around.
Why can't they just pick 3 banks that are closest to insolvency but with sufficient commercial paper sophistication to keep the economy running, and nationalize them.
Ring fence them... guarantee everything - deposits, bonds, trades, etc ... and let the rest go under.
Certainly that would cost less than $700B. Hell, at current market caps, we could buy MOST of the largest banks.
If we want to have an impact on elected officials, we have to show up, in their offices. Go there, give them three short reasons to vote against it, and then TELL THEM YOUR STORY. Politicans love anecdotes and it irrationally affects how they make decisions.
Seriously. Look up your Senators' and Rep's local office address, and just go. Tell them you're taking time off work to register how unhappy you are. Some offices "won't take people without appointments"--make sure you have a talk radio show and local newspaper phone number on your cell before you go, and threaten to call if they won't let you in to speak to someone. You'll get it, and the effect is worth literally tens of thousands of phone calls.
If you can't make it, call their Washington office and make sure you leave your ZIP code.
Bring back pillories and public hangings. Let the public launch a few rotten tomatoes at these thieves after they have been striped of their ill gotten booty.
Replace all management with one mission statement. The public good.
The only solution is to Nationalize all the banks ...
Tax payers get paid back first ... not common, not preferred, not bonds ... tax payers ...
@NamesAreHardToPick: "It's amazing, but suicide sounds so much better than all this [noun]"
My advice: chill. This is all very dangerous, but it's far from over. The system has been staring into the abyss too many times to count, starting last March, and is still here.
Some words of wisdom from the one who has seen a meltdown.
In Soviet Russia, this happened: financial system disintegrated, government disintegrated, political parties disintegrated, all legal liabilities were broken, pretty much every organization in the country suddenly disappeared.
You want to know which system was the first to come back from the ruins and start working again?
The financial one.
As soon as new government was installed and some semblance of law was established, new banks started to operate, take and lend money, etc.
Finance is a non-productive industry with zero operating and starting costs. Why are we saving it, exactly? The right thing is to let it burn, in a week we will have a new one spring up.
Bucky is getting a nice little ass beating, I don't think they like the plan.
In all seriousness. Concerned taxpayers should blockade Washington D.C next week.... the only way to stop this is if media spotlight is forced onto this issue , if the rush to run this through before full debate is held and the average joe citizen understands the nature of the proposed looting of the American taxpayer is revealed. Each Congress person should be forced to explain on the record why he / she thinks it is in the interest of the taxpayer for Paulson to be appointed Economic Dictator. Each Congressman should state on the record why he / she thinks it is in the interest of the taxpayers for Paulson to pay above market prices for any mortgage related securities simply to bailout any and all financial institutions who made dubious / stupid and flawed trading and investment business decisions. Each Congressman should be forced to explain why any financial institution participating doesn't immediately have their senior management team purged / suspension of all option and bonus programs and senior management compensation set by an oversight committee ( I would put Buffett / Paul Volcker and John Bogle on my committee .) Other thoughts are respectfully requested from the Board.....
Dear Senator,
Wall Street greed has put the financial system, our economy and our standard of living in harms way. The current bailouts, along with those being proposed, simply continue the moral hazard that created the problem. Senator, I am not fearful of seized credit markets or falling stock prices. In fact, if you believe in free markets there is no such thing as a seized market, only prices that are too high to attract buyers.
Senator, I do not support any kind of tax payer bailout! I urge you to support free market capitalism and do everything in your power to prevent government intervention in the market place. I have made some bad investment choices over the years and have paid substantially for those mistakes. It is time to let Wall Street investment bankers pay a similar price for their misjudgments. If there is economic collateral damage, well, that is simply the way the free market works.
Finally, to think that the taxpayer would be forced to buy and unwind derivatives using contracts with those on Wall Street that created them is simply unconscionable.
Thank You,
Concerned Tax Payer
sidebar
yes because right wing theft and lies have gotten us so far.
jeebus rethuglicans really are the doucheiest of the douches
The CEO had to go personally bow and apologize to their equivalent of their Treasury. I suspect something on this magnitude would require something more drastic.
Awesome. Did you have to wear shaming armbands all month too? They do that in factories if a worker gets injured. All management in that division wears armbands admitting guilt.
Tanta! Tanta! Tanta! Hooray!
Sidebar, the incompetent response to this whole crisis has been a bi-partisan affair. For every Paulson there is a Dodd; for every Barney Frank there is a Shelby.
They're all crooks, they all need to go.
sportsfan writes:
There are no painless easy exits to this mess...
Then the discussion should be about who gets to feel the most pain.
or
Just Say No.
sportsfan | 09.21.08 - 3:48 pm | #
EVERYONE will feel the pain... no matter what is done (and doing 'nothing' is doing 'something). And there lot of pain if credit markets really seize up.
For example... I got a call today from a friend who runs a small biz I work with. He is liquidating tomorrow... some 30 employees will lose jobs and he'll lose all his investment in the business. he might have to file BK.
Why? Because he can't roll over some debt and his business is too slow for him to make payments to his lenders AND buy metal to process.
The person he has the loans with has decided to foreclose on the assets (they are secured and collateral for the loan & also critical to keeping the business running).
In normal times he'd take out a little more debt to ride through the rough patch then pay back in better times. This company has been doing that since the 1920s through different owners.
My friend said even if they got the credit markets moving this week its probably too late for him - he is now (to paraphrase mp) into saving himself & his family. He won't fight liquidation too hard - cost cash to fight liquidation. He'll hang on to his own cash and let the company go BK.
That is being repeated over and over all across the country - THAT is what a credit crunch means... It isn't JUST a hassle for bankers. It kills regualr wage slaves even worse.
That's what has the pols spooked... the proles will be getting restless.
"Why can't they just pick 3 banks that are closest to insolvency but with sufficient commercial paper sophistication to keep the economy running, and nationalize them."
That would be like creating three "Super" banks. And customers will move to these banks, and eventually weakening the others.
Nationalization will have to be at the industry level.
Agreed. So why allow some lefty blogger to weigh in?
Kill the Wall Street lobbying while you're at.
The Banksters are threatening meltdown ...
Nationalize their asses ...
I wonder what Bernanke and Paulson told Congress about the economy that is so secret they can't tell the American people. It brings up the old saying about secret information, "If I told you, I'd have to shoot you." I am beginning to hear the command from Paulson and Congress more clearly now, "Line up you dumb American taxpayers."
Or that partisan hack half-wit Dr. Krugnut?
fried said: "...All we are and all we have is about to be looted to satisfy the bankers, foreign and domestic...."
Throw-more-gasoline-on-the-fire nonsense.
We are most certainly NOT being looted, for two reasons. First, a one-time hit of $700 billion to an economy that has a nominal annual GDP of over $14 trillion is hardly a killing blow.
Second, the troubled assets the government is talking about buying are a small part of the total assets.
Sebastia
Sidebar
the neo nazi blogs must be empty for you to be here ...
Signal to noise ratio starting to kick up here...
sidebar
well mister stoopid dude the blog you're commenting on is not a conservoweenie blog and has the RIGHT to push any view point they want and you have the right to sit back and watch FUX news.
go away
Pretending the bad debt doesn't exist is ignoring the 900lb gorilla in the room. The gorilla is named Hu...
I really, and I do mean really, would like to know who was coming and going behind those curtains that night. What diplomatic notes were passed. And if the words Casus belli were used.
Speaking of which, where's Cheney been hiding ?
"Signal to noise ratio starting to kick up here"
Well, down actually. The denominator is getting bigger
First, a one-time hit of $700 billion to an economy that has a nominal annual GDP of over $14 trillion is hardly a killing blow.
It isn't a one-time hit of $700B dollars, the Treasury can hold up to $700B dollars of debt at one time. If he sells it for a loss, he can buy $700B more then sell for a loss over an over. There is no ceiling to how much this can cost the tax payer. The current bill would also make him answerable to no one.
Second, the troubled assets the government is talking about buying are a small part of the total assets.
~ Sebastian
~~~~~~~
There are 600 TRILLION in derivatives out there ... if just 2% go bad that's 12 TRILLLION !
just thought you ought to know ...
LOL - quite right AT!
Math, it's a wonderful thing.
Sidebar, sorry, but you are the third dumbest son of a bitch on the planet. The honor of second dumbest is held by Sebastian.
Have a nice day. I've got things to do.
Newt Gingrich is on FIRE!
Go Newt, go!
"Congress has an obligation to protect the taxpayer."
"Congress has an obligation to limit the executive branch to the rule of law."
"Congress has an obligation to perform oversight."
second purported e-mail from the congressperson is now up:
Open Left:: An Anonymous Lawmaker Diagrams the High Stakes Chicken in the House
this seems to have started at Daily Kos.
the second e-mail names Dems who will cave to the Bush/lobbyist legislative strategy.
hope these e-mails are real. if not, we will need to find a way to make them real.
Great, now Newt Gingrich will save us...why do I feel like puking now?
How come no one (not even Nemo) speaks about taking the money from the pockets and real estate of the Mozzilos and the Paulsons who made billions from this crisis on the way up.
There are tens of thousands of people who made tens of millions. There are thousands who made hundreds of millions.
This should generate hundreds of billions.
that is some change to start with....
Next return all the 10 years of dividends banks paid - that should account for tens of billions
dryfly,
Sorry to hear about your friend's situation. He is smart to liquidate the business and preserve what he can for himself and his family.
Yes, these types of situations have been happening for quite a while. I had occasion to tell someone that he was a fool to take a HELOC to support what was going down anyway . . . and, yes, he lost it all.
The issue is what to do about what has been building for years, not just the past few weeks. If frozen credit markets prompt alternatives to come into existence, then let's freeze the credit markets. We can't continue the way we've been going.
As I said, the discussion should be about who feels how much pain. A lot of innocent people get hurt no matter what decisions are made, including
Just Say No (which clearly is a choice).
dryfly said: "That is being repeated over and over all across the country - THAT is what a credit crunch means... It isn't JUST a hassle for bankers. It kills regular wage slaves even worse."
And yet my local bank called me on Friday to offer me a below-prime loan on a greatly-expanded HELOC.
Things are clearly not going all one-way, good or bad. Your guy's anecdote (and I sincerely sympathize) may be getting repeated across the country, but so must mine be.
Sebastia
How many jobs are tied to your HELOC again Seb?
Go Newt, go!
Odd Couple 2008
So are Newt & PK gonna be cell mates at Gitmo? If so who gets the top bunk?
As if all this isn't bad enough... today Bush announced he's on the case.
Here is an odd suggestion.
If the bailout is as vital to the nation as Paulson states, then why not offset some (at least) or all of the bailout with cuts elsewhere in the federal budget.
This is called decision making, also known as governing.
"FUCKIN A"
I dont want to help hold any financial CEOs.
I want to kick the crap out of them myself.
"600 TRILLION in derivatives out there"
In and of itself, that's no cause for alarm. There's huge self-canceling "netting" in that total, and the actual cash at risk is a few percent of the notional.
The risk is if something freezes that market, and then counterparties start to try to unwind with each other, etc. That's risk is part of this whole deal, but the size, itself, not a big threat.
why all this can not wait for after the election and a new administration takes over ?
Why can't the parties propose a fix and let the people vote baed on specific plan ?
Why not put more details into Pauson's plan instead of ramming it through ?
So is this such a big deal that the finencial system is "frozen" - so let's say no one will take a loan for 3 month. This will only do good to America....People will have to work instead of living on their HELOC....
Great, now Newt Gingrich will save us...why do I feel like puking now?
Look, whatever you think about the man, he's an important voice on the right and this piece of shit bill is gonna get rammed down the throats of Americans unless BOTH the left and right rise up together!!!
cramdowns my ass. Throw the deadbeats that lied on their income statements out let & the lenders have the emptied wreckage they threw a mortgage at back to dispose of.
Where are the adults ?
I am just so ashamed of the Democrats in Congress. Dodd has always been in the pockets of the financial interests, but I always thought that when push came to shove a sense of decency would prevent him from such gross larceny of the American treasury.
this piece of shit bill is gonna get rammed down the throats of Americans unless BOTH the left and right rise up together!!!
Hopefully Paulson=Bush and both Obama will want to show a change while Mccain wants to show he is not Bush....
Sebastian, go home and get your shine box.
Oh I agree scrutinizer, it still makes me physically ill though.
How about:
"You are to be drawn on a hurdle to the place of execution, where you are to be hanged, but not till you are dead; for while still living, your body is to be taken down, your bowels torn out and burnt before your face; your head is then cut off, and your body divided into four quarters."
On the news tonight (I live in Europe), apparently Paulson has asked that European countries contribute to the bailout. Lots of laughs folks! We still have democracies.
@mp
Sorry - I just didn't know that this blog was run by Markos.
"Why can't the parties propose a fix and let the people vote baed on specific plan ?"
I want to see the specific plans BEFORE the election. Then I will decide who to vote for. The plan needs to address how to make this an economy that is viable, not what we have now.
cramdowns my ass. Throw the deadbeats that lied on their income statements out let & the lenders have the emptied wreckage they threw a mortgage at back to dispose of.
Agreed. The attempts to "keep people in their homes" have only exacerbated the situation. Allowing debt forgiveness to go untaxed was an insanely stupid move.
The risk is if something freezes that market, and then counterparties start to try to unwind with each other, etc. That's risk is part of this whole deal, but the size, itself, not a big threat.~ Austin Tex
LOL
600 TRILLION of self canceling derivatives ...
well then , just net 'em and forget 'em ... NOT
just a 2% failure rate is 12 TRILLLION ... !
and that sounds low to me given the cards that are falling ...
I'm open to other ideas, and I am looking for volunteers who want to hold the [colorful noun] so I can beat the crap out of them.
I feel it is my duty to serve. Tell me where and when.
Never thought I'd say that at least 50% of what Newt Gingrich is saying makes sense. But he is now an ally on Congress checking and overseeing executive power, and that is the basis of an alliance.
crazyvermonter writes:
bring back the stocks or at least the 21st century equivalent
Yes, the stocks and the BONDage too...bwahaaahaaahaaaa
citizen energyecon said: "How many jobs are tied to your HELOC again Seb?"
Come on, don't get crazy on me, it's obvious.
If I borrow the money and spend it, whatever I spend it on is going to support jobs, even if I just buy one of dryfly's multi-fuel stoves and burn it.
Seriously, though, I've easily got $10k in delayed repairs on my house, another $10k in kitchen upgrades my wife and I have been discussing, a daughter starting college next year. So there are jobs and money-multipliers all over.
Sebastia
On the news tonight (I live outside the US) a lot of blame for the Bush admin for low intrest rates that drove dollar down and prices up.
Bush is now blamed for shifting capital to the hands of the Arab oil producers....
also a lot of "why it could never happend here"....about the housing prices going up in such a way.... - these guys have a point. Where I live mortgages are usually 75% LTV or very very rarely go to 85% LTV tops.
I can haz plasmas and oil plez?
if a CEO runs a corporation in the ground like example Lehman Brothers then that CEO should be subject a foreclosure.
Just Say No (which clearly is a choice).
sportsfan | 09.21.08 - 4:09 pm | #
BTW - I'm not saying that 'saying no' is worse that accepting this particular 'bail out'. But I am suggesting there will be a 'national liquidation' of some sort and just letting it happen via laissez faire with resultant credit crunch is probably as bad as providing a handout to Wall Street.
There needs to be a better way - done fairly fast and done with some transparency.
A financial coup d'etat is not the way to go about it. But of course that's been the BushCo-GOP leadership model ever since 9/11. Can't blame them - its worked FOR THEM so far.
And Dems have had a cushy ride going along and NOT getting in front of that bus.
I think events have taken that model as an option off the table.
Great, now Newt Gingrich will save us...why do I feel like puking now?
dunno, could if have something to do with American Solutions for Winning the Future and off-shore drilling ?
this is the first smile-promising news i've read in over two weeks, and what a two weeks
wonder how long this plan's really been in-waiting for the right meltdown, cram-down, "need it now" moment?
since before thomas jefferson warned of this in the late 1700's ?
"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."
doesn't sound as far fetched anymore....
joe shmoe writes:
Never thought I'd say that at least 50% of what Newt Gingrich is saying makes sense.
~ Insane times require insane people ... let the insanity begin ... burn the banksters ...
Look, whatever you think about the man, he's an important voice on the right and this piece of shit bill is gonna get rammed down the throats of Americans unless BOTH the left and right rise up together!!!
central_scrutinizer | 09.21.08 - 4:13 pm |
Hahaha. Gingrich is blaming this mess on the Democrats and the Sarbanes-Oxley act.
According to him, the fraudulent banksters had nothing to do with this.
Sidebar,
Your comments are welcomed by me and, presumably, by many others.
But my position remains
Just Say No.
Trying to placate infuriated taxpayers with these childish symbolic "punishments" for the robber barons makes the whole thing even more maddening. They should be wearing striped suits, leg irons, and breaking rocks out in the hot sun.
And the credulous groveling of the Democrats on this is truly pathetic. Although I loathe them in general, I thought at least they'd be solidly opposed to this epic take down of taxpayers by wealthy financial manipulators. Dodd, Frank, Schumer, et al -- utter credulous tools, in fact they want to heap more bailout goodness on top of this steaming pile.
@Yal: May I ask, where is that? Not doubting, understand; curious about the news reports.
Random thought:
Roughly 65% of households own their home. That means about 35% don't own, and weren't directly impacted by seeing their property lose value. They shouldn't have to pay for this.
In addition, of the 65% who "own" their home, 31% (that would be about 20% of the total number of households) have no mortgage. They own their property outright. They weren't responsible for any of the mortgage shenanigans. They shouldn't have to pay for this.
That's more than 55% of all households right there, but let's continue:
Of those who own their home and have a mortgage, a significant number have probably held the mortgage (and did not refi or HELOC) since before the corrupt lending really got going (2003, 2001, 1999, choose your date). They shouldn't have to pay for this either.
Of those who own their home and have a recent-vintage mortgage, a significant fraction were either innocent dupes, or actually did the "conventional" thing (20% down, fixed rate, no lies on the paperwork). They shouldn't have to pay for this either.
Bottom line, a really large fraction of this country is entirely blameless in this fiasco - probably 70-80% or more - and yet somehow the Administration wants to have all of us pay for it!
Where's the accountability? Where are the perp walks? Where are the criminals being stripped of their ill-gotten assets?
Since that's clearly too much to ask at this point, let's start at the beginning: where are the cops? the regulators? the lawyers who could make billions prosecuting all of this crime?
I have yet to see any serious discussion in Washington about actually cleaning house and straightening out the processes that caused all of this.
I'm tempted to take my personal productivity completely offline as far as the government is concerned. Those who have saved will find it's not impossible to arrange one's finances to pay little to no federal tax for the next few years.
I want someone to hand me my personal price tag. How much is this going to cost me? I'll settle for a good-faith estimate. It irks me that so far all we get is talk about billions of "Treasury" funds, not about the price tag. When the local government suggests a bond issue to build a museum or a library, we can do the math and tell the public what the property tax hit will be on his/her home. I want to know what the hit will be for this one. Come to think of it, I don't just want an estimate. I want a maximum limit: This bailout will cost the taxpayers no more than (insert sum here) per $1,000 of taxable income.
Tell us the TRUTH. No truth, no deal.
Comrades,
This may be my last post here for a spell. I have family to take care of, and most of my time will now be occupied making preparations in case this week does not play out the way I hope.
Whatever you do, don't give up. Alliances are our only hope. ACLU, Judicial Watch, Daily Kos, John Birch society - I really don't care about the past. At this point in time, "the enemy of my enemy is my friend."
Keep calling Congress, talk radio, tell your neighbors and coworkers that this is your country's darkest hour and we need all good men and women to rise to the occasion.
Fight! Never give up!
safe_as_apartments writes:
I can haz plasmas and oil plez?
No youse can haz not! Dont you read all over is crizis!!
well then , just net 'em and forget 'em ... NOT
Actually I did a study once on the netting effects in the equities market. You'd be amazed. It reduces down to an insanely low level of actual exposure against any individual counterparty.
A CDS netting could easily be backstopped with $1T.
Contacted reps and senators for the first time ever. Let us hope that this works.
What about civil or criminal charges. Since the taxpayers have been on the hook for several episodes of poor poor stewardship of public assets (hard to argue that these are private companies) and events that can seriously disrupt the public good. Why cant see see these bastards charged with something. In the military we call it "being stupid in public", short for dereliction of duty.
I am taking this to my congress people. Lets see, Ted Sevens, no, he's corrupt, Don young, he's in bed with everyone, Lisa Murkowski, got her job via nepotism from Father Frank, ex governor (before Sarah) who picked his daughter to replace a retired or dead senator in mid term.
Damn, no one to take this to. What chance do we have in a suystem that is double -triple-diple rigged
Sebastian, you numbskull, why don't you just sell all those securities you purchased 40% higher now, before they lose another 40%. Sleep with 1 eye open. Once your wife gets a peek at your accounts she may decide your life insurance is her only chance to break even.
Are we in a recession or a depression ?
"fried said: "...All we are and all we have is about to be looted to satisfy the bankers, foreign and domestic...."
Throw-more-gasoline-on-the-fire nonsense.
We are most certainly NOT being looted, for two reasons. First, a one-time hit of $700 billion to an economy that has a nominal annual GDP of over $14 trillion is hardly a killing blow.
Second, the troubled assets the government is talking about buying are a small part of the total assets."
Sebastian,
With all sincerity, shut the f**k up. You have absolutely NO idea what you are talking about here.
The assets that are being bought are NOT mortgages, they MBS, CDOs.
They are buying the WORST of the tranches that are worth NOTHING!
Do yourself and everyone else on this blog and truly shut the f**k up on issues that you have absolutely no idea about.
Have you read ANYTHING about American history? Have you read ANYTHING about the history of Corporate America in the US?
I could care less about what percentage of the economy 700B is.
It's 700 f**king BILLION dollars!!
Paulson has EXPLICITLY stated to Congress that he will be buying assets ABOVE market value.
700B is NOT the limit. The limit is 700B at a time.
Paulson CANNOT have any decision overruled by ANY branch of the government or any court in the US.
Paulson is being given blanket immunity from prosecution as part of this bill.
People like you who support bills such as this perpetuate the raping of America, the destruction of the US dollar, the destruction of our way of life.
I am disgusted that anyone supports this bill in it's current shape and form.
The historic parallel with the Hitlers "Ermächtigungsgesetz" in 1933 shows a few things more: GErman parlamentarians were at least intimidated and threatened before, some of them already in concentration camps - so it was plausible for them to vote "yes" or not vote at all. And some really voted against it.
What excuse can a Democratic party majority in two houses of Congress make up?
They abdicdated their responsibility in the IRak war and now they just hand over their "power of the pursue" to some guy from Goldman Sachs that Paulson will nominate for Banking Handout Czar ?
Why does the US need a COngress after all?
This is blatant enrichement without any fig-leaves.
I am not an US taxpayer but it makes my stomach turn anyway.
The US political system will probably have declared its bankruptcy by Friday. Maybe Obama really means it but I guess he wants some face saving measure attached to the bill.
Sorry to say but no thinking person can escape the conclusion: The US - which lectures other countries in "democracy" - is bankrupt not only financially but morally.
The day the Chinese and Japanese decide that enough is enough this game will be over. That day might be today.
A CDS netting could easily be backstopped with $1T. ~ kis
~~~~~~~~~~~
CDSs are only 10% of the derivative total at 62 trillion of over 600 TRILLION ! ...
Watch the prices at the gas pump! We are gonna be saved! Yeah for J6P!!!!!!!!
Whatever you do, don't give up. Alliances are our only hope. ACLU, Judicial Watch, Daily Kos, John Birch society - I really don't care about the past. At this point in time, "the enemy of my enemy is my friend."
Hear, hear, for central_scrutinizer! If you go to one of your Reps' offices, take a friend who generally supports the other party from you, but agrees with you on this. That's the sort of thing that's going to get their attention.
Going OT for a moment, I've asked both Intrade and Iowa Electronic Markets to put up a contract to bet on, where the bet is:
Will The Presidential Elections get suspended/ not take place on Nov. 4th ?"
Anybody else wants to play along, email them and ask for that contract to be put up.
-skk
Good to see some righteous anger out there
in '06 John Talbott wrote:
"You don't have to believe in a grand conspiracy in order to realize that there is a housing bubble. But to those of you who depend on the government to protect your interests, you should be aware that times have changed. Your government is now controlled by the nation's biggest banks and corporations...The housing crash will provide the evidence that people will point to in order to demonstrate with certainty that our government no longer puts your best interests at heart. It is sad that such pain to average Americans has to occur before people will act to reform our unrepresenatitive gov...
Seb - I mostly agree with you on that point... Spending money from the HELOC is equivalent to that company's job effect dollar for dollar EXCEPT in aggregate few folks are getting HELOCs. You might be but credit markets ARE tightening. I hear it everywhere I go. Loans folks used to get they no longer are able to get - even for school.
My guess is you are above median income AND probably have a higher asset to liability ratio than the median wage slave. That makes it different.
Plus... a one month cut off of credit for my buddy is 30 less jobs NOW AND FOREVER... after liquidation there is no going back. A one week cut off of your HELOC means somebody mows your lawn or paints your garage one week later.
The effects are VERY different.
Pissed in California:
It's 700 f**king BILLION dollars!!
How much does the wars cost? Money and lives?
So please forgive me if i call you out on this hypocrisy.
Unless of course you actually do support the war for oil and all, then i shall retract my comments.
Nationalize and liquidate ...
just like Sweden ...
Nancy: "I want reforms of the industry, and I want it to be as punitive as possible."
Revenge politics at its finest. This is why we need to kick both Republicans and Democrats out of office - they're actually in cohoots to screw over America with their petty squabbles.
"I also find myself drawn to provisions that would serve no useful purpose except to insult the industry, like requiring the CEOs, CFOs and the chair of the board of any entity that sells mortgage related securities to the Treasury Department to certify that they have completed an approved course in credit counseling. That is now required of consumers filing bankruptcy to make sure they feel properly humiliated for being head over heels in debt, although most lost control of their finances because of a serious illness in the family. That would just be petty and childish, and completely in character for me."
Again, revenge over solutions. If you recognize that humiliating consumers is wrong, why do you want to double the stupidity by extending in revenge to others? How about opposing these stupid policies?
That's what American politics has become - Democrats trying to one-up the evil policies of Republicans.
Get out. All of you phonies, get out of our government. We need a third party, or more Independent choices.
dryfly,
"No" only takes about one second. It'll be the discussion that follows that is most important.
Personally, I don't want to see frozen credit markets, but I do want to see Congress call Paulsen's bluff.
Speed, transparency and even a hint of fairness would all be good things to work into the plan.
A blank check of unlimited size would just be stupid. Can you imagine Paulsen buying trash for 99 cents on the dollar, then selling it for a dime, followed by Lather, Rinse, Repeat?
It's time for congresscritters to earn their salaries.
Throughout most of human history, failures of this magnitude have led to the culprits losing their lives. Today, we are luckily too civilized for that. Even then, the largest crooks should hand all their docs and emails over. With that one should find ample evidence to imprison them for a long time and confiscate their property. I see no other way for dealing with the moral hazard than using criminal law.
We seek a solution with transparency and accountability, and less expense. How about this:
Increase FDIC capital 10x, to $500b.
Increase deposit insurance to $250k per depositor. Insure money market deposits and interbank loans for 12 months.
FDIC judges ACTUAL capital ratios (not fakery reported on balance sheets), and seizes banks that don't meet existing FDIC regs.
FDIC seizes BIGGEST weak banks first (e.g. WaMu) and moves down, to maximize positive impact on public trust.
FDIC corrals bad assets and auctions them off slowly over time. FDIC sells good assets and deposits to good banks.
Investors in seized banks are treated as in a bankruptcy: equity is wiped out, debt is worked out based on remaining equity, if any.
Executive management of seized banks, is fired, blackballed from other seized banks, and passed to FBI for investigation.
This is very similar to the RTC, leverages existing regulatory structure for speed and fairness, gives nothing to bad managers, treats investors just like investors in any insolvent business.
This does not rescue underwater homeowners, but that issue is separate from the short-term interbank and commercial paper crisis, so it should be handled separately.
I want someone to hand me my personal price tag. How much is this going to cost me? I'll settle for a good-faith estimate.
Hard to say what the cost will be in the immediate future. However, in the long run, it will mean that if you are middle class, your Social Security will be means tested to determine if you are eligible to receive anything and you will pay more Medicare premiums.
"A CDS netting could easily be backstopped with $1T.'
Why would someone who is up on a CDS just give up on their profit? Nice ANALysis!
It would be better to nationalize the banks, since we would at least be getting some things of real value to offset the trash.
Under this plan, the banks are only going to sell the really toxic stuff. By definition, this is a Mega-Bad-Bank designed to take all the losses so the banks can pretend they are solvent for awhile longer.
Oh it just keeps on getting better...
The Financial Services Roundtable is pushing for key refinements to the Treasury's market rescue proposal. It's calling for the Securities and Exchange Commission to suspend mark-to-market accounting rules for all mortgage related assets, even if temporarily. It wants to ensure the government bid for assets does not count broadly for accounting purposes, so that auditors cannot force banks to mark down their mortgage-related assets to the government-set price. It also wants home equity loans, construction loans and securities issued by Fannie Mae and Freddie Mac included in the deal.
Lawmakers Battle Over Rescue Plan - WSJ.com
Why not make wall street pay for the mess they created. You want a bailout? How about charging a 1% fee for all cdo,mbs,cds transaction. Then take the money and put it into a bail out fund but keep the rest of us out of it.
Why should they punish the innocent to pay for their folly.
And no power to Paulson without oversight.
Sebastian has been 100% wrong so far...take that into account when you read what he types.
why are we non politicians fighting each other? dem == rep from my view. both ignored this till it was too late. conservative vs liberal is meaningless... most citizens will be taking a beating (hope only in terms of $$$). no more of this "they are diff", there are some social issues which you could argue that. the rest are just variations of how to skin a cat, US.
Great no mark to market. Guess who gets to buy the crud at mark to model prices?
citizen energyecon ~ excellent get ...
it's all accounting make believe now ...
It is me from Europe writes:
Throughout most of human history, failures of this magnitude have led to the culprits losing their lives. Today, we are luckily too civilized for that.
Its not that were too civilized for that. The fact is the culprits will fly off in their private jets to that island they just bought, leaving the pitchfork-bearing mob on the tarmack.
I'm pretty sure this is gonna end up with nukes flying while Limbaugh blames people who couldn't pay their mortgage.
Yes, I am a cynic.
My government forked over $700 Billion dollars for this [expletive] bailout and all I got was this lousy hardship letter.
Increase FDIC capital 10x, to $500b.
Hear, hear. Do it !
citizen energyecon:
It's calling for the Securities and Exchange Commission to suspend mark-to-market accounting rules for all mortgage related assets, even if temporarily.
No one will trade in the markets, it will be pure manipulation if that happens.
The rules of the game keep changing, tails you lose and heads they're going to win.
Karachi restricted short selling too, look where they are down.
Sid, it is all about personal responsibility. In the R's world view it is only a meaningless slogan that apples to the peons.
They need to be responsible for the mess they created.
I really think this is an excellent opportunity for an independent party to win the election. People that don't like being bullied by the bought&paid-for representatives we have now. Someone who is genuinely afraid that the void in leadership and lack of responsibility that could result in destroying the fabric of this nation will be perpetuated.
I am furious.
sk writes:
Going OT for a moment, I've asked both Intrade and Iowa Electronic Markets to put up a contract to bet on, where the bet is:
Will The Presidential Elections get suspended/ not take place on Nov. 4th ?"
Anybody else wants to play along, email them and ask for that contract to be put up.
Good idea, but try Intrade or Foresight Exchange instead.
Intrade Prediction Markets
Foresight Exchange
I think it's unlikely that elections will be suspended, but I'd like to see where this trades.
Why would someone who is up on a CDS just give up on their profit? Nice ANALysis!
Classy.
If we are going to give the Treasury secretary dictatorial powers over the banks, certainly we declare that any CDS contract around the 800 banking entities becomes null and void as of Jan 1, and that they must all be transferred into some new simplified CDS security in which the govt is the sole market maker and clearinghouse. Bam - instant reduction in the systemic risk of a cascading credit meltdown.
If you watched meet the press today, there is talk of hiring the same guys who caused this mess to take over $50 billion portfolios to buy these assets.
This is theft.
What's going to stop it?
BB,
That is the part that completely escapes TPTB, markets require trust and their actions and proposals are systematically destroying the requisite trust...utterly and irrevocably.
Incredible exerpt from Naked Capitalism:
"I worked at [Wall Street firm you've heard of], but now I handle financial services for [a Congressman], and I was on the conference call that Paulson, Bernanke and the House Democratic Leadership held for all the members yesterday afternoon. It's supposed to be members only, but there's no way to enforce that if it's a conference call, and you may have already heard from other staff who were listening in.
Anyway, I wanted to let you know that, behind closed doors, Paulson describes the plan differently. He explicitly says that it will buy assets at above market prices (although he still claims that they are undervalued) because the holders won't sell at market prices. Anna Eshoo pressed him on how the government can compel the holders to sell, and he basically dodged the question. I think that's because he didn't want to admit that the government would just keep offering more and more."
"CDSs are only 10% of the derivative total at 62 trillion of over 600 TRILLION !"
Yes, but they are also the part that has the highest potential payouts. CDS are "pay the notional", event risk insurance.
I am guessing but believe I'm right, that the vast majority of the rest are more or less vanilla "you pay me a fixed rate, I pay you a floating rate" interest rate swaps. The risk in these is the difference between the Libor each quarter for a few years and the fixed rate agreed at the front. The notional is the number those rates are applied to.
So if the fixed side is, say 4%, 100T of notional is really a stream of a few years of differences to that base, measured in percent. If Libor is 4.25 at the end of this quarter, then that swap would have an exchange on 250B (25 basis points of 100T).
Then you net the matched positions laying off their risk that most smaller, non-isda banks take, and the resulting number, while still scary and very risky, is not at all the same magnitude.
This very much resembles the IMF rules imposed on other bankrupt countries.
Go and read Russ Winter.
The banks are not going to get bailed out, they are too dumb to realize it yet. The effective marking to market of these assets will result in their BK and the equity holders will be nailed to the wall.
See the F&F and AIG model.
If anyone is getting bailed out it is selected bond holders.
If you look at the numbers the problem is real, a run on the money markets and a strike by foreign bond holders.
The defaulting home owners that extracted tax free funds should be shown the same sympathy the IRS shows people that work and actually produce something.
central_scrutinizer writes:
Newt Gingrich is on FIRE!
First time in my life I've ever agreed with Newt....
o single party is above blame in this... id rather see the taxpayers unite than squabble over whose "side" is more to blame... accountability needs to be applied by US, i dont expect it from the folks running the show.
Circle the wagons around the strong commercial banks and thrifts. Let the market determine the fate of the other financial companies. Recapitalize the surviving banks and thrifts when the dust settles. Use the rest of Treasury's $ to support the population through the coming GDII.
dryfly said: "My guess is you are above median income AND probably have a higher asset to liability ratio than the median wage slave. That makes it different."
Different, but not in a negligent way.
Again, trying not to sound like a ruthless financial Darwinian, but if your buddy's business was running so close to the edge that he couldn't hold out against a single month of credit-loss, did his business "deserve" to live, from a purely economic point of view?
So many posters here seem to think that nobody should ever lose a job, or a business or their house, but the simple fact of the matter is that it happens every day in a market economy, it's part of what keeps things in balance.
Sebastia
Sebastian, Do you like the Paulson/Bernanke bailout?
What communities like Cleveland need in the bank bailout bill
Sebastian
You stupid bastard.
citizen energyecon:
Thanks for the news. It is very significant and may be loss in all this noise.
But if that happens am going to urge people to stay out of the markets.
Mark to model is what's gotten everyone into this mess, and now they are thinking of expanding it in the vain attempt at artificially bolstering up prices of securities.
They're really desperate if they do this.
Those things that you mentioned, Tanta, plus a stay in debtor's prison or a stint of indentured servitude. That's what Wall Street folks who want my tax dollars should get, Tanta.
30 lashes in the public square is fine with me, too.
BB, they are really desperate. Remember the way the play the game is to push risk off on the other guy.
sid sanders:
Exactly, both Republicans and Democrats are the problem. What we see today is when your two kids get caught wrecking your house and they're busy pointing fingers at each other.
This day and age, we have to judge politicians on a case-by-case basis rather than the R or D next to their name.
It's interesting Obama wrote a letter March 22 2007 to Bernake and Paulson warning about the impending crisis. A couple years late but better late than never:
Organizing for America | "Change Leadership"-Sen. Barack Obama: Senator Barack Obama warned... In his own words
The one I agree with the most is asking them to decide "What standards investors should require of lenders, particularly with regard to verification of income and assets and the underwriting of borrowers based on fully indexed and fully amortized rates."
Most of the others are pretty secondary or debatable.
Those of you who have made comments disparaging bankruptcy cram-downs should really follow the link Tanta put on her post and read it.
Here, I'll make it easy for you:
cram-downs
"How much does the wars cost? Money and lives?
So please forgive me if i call you out on this hypocrisy.
Unless of course you actually do support the war for oil and all, then i shall retract my comments."
I haven't supported any major decision made over the last 8 years.
Comrade Canadien avec popcorn said: "
Ask yourselves, what would a "patriot" have done about this in the 18th century in your country.
Make a stand you assholes."
The U.S. imports more oil from Canada than from any other single country.
So if you feel this strongly about what's going on in a country not your own, Monsieur le Canadien, YOU take a stand and tell your government to stop "enabling" us.
And in the meantime, butt-out of the business of American citizens. Last time I checked Canada wasn't in charge here.
Respectfully.
Sebastian
Sebastian | 09.21.08 - 3:52 pm | #
--------------------------------------------------------------------------------
Seb;
What has the amount of oil that we export to your country got to do with anything?
Do you not see that the very same issues that resulted in the bloody birth of your country are being echoed down the ages right here, right now. How are you going to respond? By, "backing up the truck on the stock market, and making some money out of the situation? As I see it, this transcends petty nationalist and economic issues. This goes to the heart of what it means to be an "American" or "free", as I see it defined by the mythology.
I see this as a watershed moment in your countries evolution and by definition, broader democracy. This has severe ramifications for the rest of the world. Not economic, but regarding the perception of the relationship between rulers and ruled. You have a constitutional document that is the template for a certain kind of social organization. This document, I fear, is in danger of being declared inoperable in this brave new world.
I ask you again, what is your response to the situation?
And by the way, can you tell me exactly who is in charge down there? You should probably get used to being lectured to by the rest of the world. In fact, it might be a good idea for you all to learn Mandarin. Be glad that the lecturing comes from one of your countrys' oldest and dearest friends. I have a feeling that you might need a few real friends in the times to come.
Yours:
Respectfully.
JT
@wisdom seeker
What you mention in the last three paragraphs or so will happen and/or is happening.
The productive people have taken their assets and productivity offline, thus the run on liquidity.
The bill will force the cops into action because the bond vigilantes have spoken.
The loud voices against the bailout are the voices of those that have profited from the game and those that want to keep their paychecks coming while pretending to shuffle paper and posting on blogs.
They are horrified because the may have to actually work for a living. LOL. Welcome to the real world.
Paulson describes the plan differently. He explicitly says that it will buy assets at above market prices (although he still claims that they are undervalued) because the holders won't sell at market prices.
Well, of course that is what he is going to do. Buy at 99 cents on the dollar and sell it off for a dime.
As has been pointed out many times by many commenters, to buy the trash at actual FMV would cause the insolvency of the sellers to become widely known.
This is absolutely the worst sort of bailout that could be imagined. It just has taxpayers picking up the tab for all the bad decisions ever made on Wall Street.
Well, some early exit polling. USD down a quarter percent vs EUR, 0.63% against the JPY carry trade. Pretty good for early Sun afternoon, but hardly Armageddon.
Gold up 18, silver up .61
Great pay above MKT price for crud. Next we will have to pay for a new sewer treatment center to get rid of it all.
They win taxpayer loses, ah yes another sucker is bor
Put all these sorry pieces of S@#T in jail and water board them daily on Pay for View till they die. I will gladly pony up 700 billion for that spectacle.
Here is McPain's chance to be a hero: step off the campaign trail this week and filibuster this monstrous, unconstitutional bill.
Otherwise, he will lose in November, as he will plausibly be painted as McSame.
If McPain filibusters this bill, he draws a huge bright line between himself and O-, and endears himself to fiscal conservatives (Republicans and independents) who have no stomach for bailouts, have no sympathy for Wall Street, and who would be thrilled that McPain put his campaign aside to help save the Republic.
I passed this thought to my fellow right-wing wingnuts (Rush, Hedgecock, Ingraham) and some Senators, and hope that McPain shows himself as a true patriot.
If it is not completely understood by "all" yet, this is just the beginning of these "payment programs",
this is the "DOOR" which allows the continuence of the financial strip mining, only at a faster, larger rate,
.7 trillion is the "lighter fluid",
the barbeque is yet still to come.
sequoia512, I think you ae on to something here. But forget the jail. Render them instead. Add a little torture. Get a confession and maybe a map to where they hid the loot. Sorry, profits.
If anyone has got 8 minutes to spare, take a peek, it's very relevant :
YouTube -
Comrade Canadien avec popcorn writes:
I ask you again, what is your response to the situation?
We're all waiting to see what that response will be. I'm looking for a "No" to open the discussion.
BTW, I'm flying up to your fine country tomorrow. You still accept U.S. currency, don't you?
BB
yep the banksters are applying the Shock Doctrine ...
I'm in favor of having the corrupt, mostly Democratic politicians who blocked reform of Fannie and Freddie locked into stocks in front of the capitol building for public humiliation.
Let Jimmy Carter and Bill Clinton go on C-Span and read essays (minimum 1000 words) explaining why the CRA was a good idea. Let them explain how mortgage loans should be made on the basis of race as opposed to the ability to repay.
Let's prosecute Franklin Raines, Jamie Gorelick, Jim Johnson and Rahm Emanuel and force them to return to taxpayers the 10's of millions of dollars they defrauded from Fannie and Freddie. Let's get them on C-Span to explain how they got their jobs and why they felt they were qualified to do them.
Let's get Barnie Frank, Chris Dodd, John Kerry and Barak Obama on C-Span to explain how it wasn't corrupt to take hundreds of thousands of dollars in campaign contributions, funneled through their political cronies running Fannie and Freddie, while sitting on, and in some cases chairing, the very congressional comittees charged with overseeing those institutions. Let's here why they blocked reform.
After we've cleaned of the Augean stable known as the Democratic party, then we can start on Wall Street.
I'll tell you what we should get for $700 Billion: Hank and Bernanke's heads on pikes as well as the heads of this current administration and any of the congressional criminals that decide to vote for this.
At this point, I'm ready for a very public execution. That's the least they deserve for looting the responsible saver's purchasing power by printing more bailout money.
Yes, I am also surprised that Bush and Cheney have not proposed water-boarding hedge fund managers to find out where the toxic MBS and CDO are buried. But perhaps Congress can put Paulson in a stress position to see if he is telling them evrything he should.
WTF has been wrong with this country?
It's the same thing that makes it acceptable for a candidate for VP to refuse to take any reporters' questions.
Art
peddle your Repbublicrap elsewhere , we've had 8 years of it ...
Thanks for the link to Newt.
He's clear and right on many things. His call for eliminating mark to market is stupid.
Newt, stick to history and politics, and leave the economics to me.
Mark to market makes sense. Anything else is smoke and mirrors. There are plenty of long-term investors who are happy to buy assets at reasonable prices. If you don't like the prices, banks, too bad for you.
Mark down that merchandise and move it, schmucks.
there you go ...
Newt wants pretend accounting ...
After we've cleaned of the Augean stable known as the Democratic party, then we can start on Wall Street.
Because, as is well-known, the Republican Party is the party of the little man. Phil Gramm is the perfect example.
Art, who pays you?
so art, it was all dems... lest we forget raygun, bush 1/2, nixon, greenspan (you name the heads of state, all complicit)... this was not a single party failure. this was a team effort to pull this off. ENOUGH with this partisan crap. it ONLY helps those in power to retain it. how best to keep power: fear, and infighting among the populace... the people footing the bill need not fight each other as they real culprits will be sneaking out the back door. and if you think its only dems, ugg....
Jim
Art = crucifix in a jar off piss ...
http://www.caglecartoons.com/images/preview/%7B26357ac3-b002-462e-8a1c-29144fd64e86%7D.gif
Is Daily Kos closed on Sundays or what?
gadzooks!!! now is the time to unite across all lines, so called political, economic, ethnic, etc... the banksters (great term) dont care who you are. they will gladly free you of your $$$.
Late to this party, so sorry if someone suggested this before.
The moral hazard part of all of this is just killing me. There MUST be something in the bill to address this. To wit:
And yeah, the second part is entirely because I'm sick of hearing about how CXOs deserve their inflated pay because of the value they add to the companies....
Nationalize and liquidate ...
Just like Sweden ...
I just had an Holy *&^t moment. I am sitting at my desk, discussing and monitoring in real time, history in the making. If you'd told me twenty years ago that in twenty years I'd be doing that I'd a thought you wuz crazy.
Interesting times.
I'm gonna take my kid to the wave pool.
bye for now
Is Daily Kos closed on Sundays or what?
Yeah, the circle jerk is closed on Sundays.
Again, trying not to sound like a ruthless financial Darwinian, but if your buddy's business was running so close to the edge that he couldn't hold out against a single month of credit-loss, did his business "deserve" to live, from a purely economic point of view?
Deserve to live or not they won't and 30 more heads to the UE line. Even if the credit market opens up next month - his firm will be gone. Liquidated by then. Entry costs are quite high so he'll not start over even even if the bank calls and says oops - you can now have a loan.
Again this is a firm that started in the 20s and was profitable pretty much on and off the whole time. Survived the depression. The slow down in automotive & housing hit them pretty hard & they had a cash crunch. Metal & energy prices going up 200% didn't help either.
They have high working capital requirements - have to buy metal to process. They don't get paid for about four months AFTER they buy. They are on credit as are their customers and customers customers. Just takes one f/u and the whole money chain stops flowing. Been plenty of f/us up and down the line lately.
Usually they can roll over debt to carry the additional cost going forward. Then payback later. Not now. They are cut off from usual credit sources - cut off cold. Most small biz is - two other firms I work w/ tell me the same thing.
Meanwhile a loan payment came due on his regular long-term debt used to upgrade equipment... a secured loan. So he had to choose... buy metal to keep running, pay the balloon payment, or close. If he doesn't buy metal he closes. If he doesn't pay the balloon they sell his machines and he closes. So he closes regardless.
Rolling credit for small biz is sort of like breathing. The air is most always there - don't even think about it - but cut it off for five minutes and the damage can be irreparable. They are being strangled right now and have tossed in the towel.
I can't blame them. I told him to do what he has to do. I'd have pulled the plug a couple months ago - he is more optimistic than I am.
The people who hold the collateral claim are going to call the loan because they are scared shitless. I also can't blame them either. I'd probably call it too in this environment - in a credit crunch get paid & get paid now IF YOU CAN. They'll sell the machines and buildings for 20 cents on the dollar of what they are owed.
That's why it sucks. No one wins in a credit crunch. Workers, mgmt, equity, lenders all lose.
so when does the fux news circle jerk stop, when bill o'liely blows cheney?
Yeah that mark to market suspension caught my eye as well (as did the doing away with capital gains tax)...but the later is my knee jerk progressive side...mark to market suspension is more of this mindset that we "have to get house prices back up". That is perpetuation of the issues.
What really resonates is Newt's desire for an Executive that adheres to the rule of law. That is a good sign.
Meanwhile I am intrigued by the discussion above regarding the potential unwinding of the CDS market (Netting). Trouble is the timing. I cannot help but think we aren't going to have the luxury of a controlled collapse. I hope I'm wrong on that point, believe me.
dryfly
Who said this would relieve the credit crunch ... ?
banks will sell their crap and hoard the money
Interesting, Newt suddenly wants a President that adheres to the law now that the next President probably won't be a Republican...whodahunkit?
There must be a few banks that have not loaded up on "toxic waste" and have clean balance sheets. Let us know who they are, and then we can transfer our money to them, and they will have plenty of money to lend. End of crisis. Let the other banks (including GS and MS) go down the drain and their CEO's, etc, be taken to jail. Preferably screaming.
Unfortunately the chance of that happening is low. What has a higher chance of happening is that everyone here vote against the incumbent in their upcoming elections. If NONE of the current politicians get re-elected, that just might send a signal to the next crop.
@dryfly:
That's a sad story. I can't agree with Sebastian; it does not sound like your guy mismanaged.
This anecdote illustrates something I've said before: this is Bernanke's worst nightmare. It illustrates the primary linkage between credit disruption in FIRE and the real economy, and how it jumps across.
If there's any good news, it is that he understands it.
Behind Paulson and Bernake, Bush is third to blame for this denial-first then spend away lunacy. Paulson's just the CFO, Bush is the real CEO putting the pressure on for bailouts he used to oppose.
As much as I agree with some of Bush's recent moderations on Iraq and Diplomacy, this is yet another turn in the wrong direction for him.
Another "exit polling" point: a couple large customer/dealer forex conduits opened a few minutes ago, and the USD's holding, even coming back against Europe.
The next tell will be the eCBOT bond futures in a half hour at 22GMT.
"Why@ ZIRP writes:
Those of you who have made comments disparaging bankruptcy cram-downs should really follow the link Tanta put on her post and read it."
Legal and binding contract. If there is something about the contract as written by the lender that violates the law, then sue the lender. Otherwise, the borrower is out on the street.
Here is a model fo the message that I have left on the phone message machines of both of my senators and my congressman, all Democrats:
My name is John Smith, and I am a lifelong Democrat who lives in the state of California in Congressman Johnson's district. I would like Congressman Johnson to know that I will never vote for him again and I will actively work against his re-election should he vote for the Paulson bailout bill, unless the bill includes provisions that severely punish the executives, directors, and shareholders of the financial institutions whose debts we taxpayers would become reponsible for. Also, any provision in the bill for absolute powers to be given to the Secretary of the Treasury, as included in Section 8 of the original draft of the bill, must be removed.
Futhermore, I want Congressman Johnson to know that should this bill pass as it stands, I will withdraw, out of protest, all of my assets from the locally-owned bank with which I do my checking.
If someone on the congressman's staff wishes to contact me, my daytime phone number is area code 888-888-8888. Thank you for your time.
BDiego writes:
Behind Paulson and Bernake, Bush is third to blame for this denial-first then spend away lunacy. Paulson's just the CFO, Bush is the real CEO putting the pressure on for bailouts he used to oppose.
As much as I agree with some of Bush's recent moderations on Iraq and Diplomacy, this is yet another turn in the wrong direction for him.
O-M-G, please don't ascribe this level of intelligence to Bush. He is just the stooge for all the ultra-rich republicans who put him in office. He probably makes no decisions himself on anything of importance.
"Why@ ZIRP writes:
Those of you who have made comments disparaging bankruptcy cram-downs should really follow the link Tanta put on her post and read it."
Legal and binding contract. If there is something about the contract as written by the lender that violates the law, then sue the lender. Otherwise, the borrower is out on the street.
BK modifies contracts, as everyone knows full well. The prohibition against cramdowns for loans secured by a primary residence is an exception to an otherwise generally applicable law.
Really, the burden of proof should lie upon those who insist upon exceptions to a generally applicable law.
mmckinl writes:
dryfly
Who said this would relieve the credit crunch ... ?
banks will sell their crap and hoard the money
mmckinl | 09.21.08 - 5:17 pm | #
That's why I'm not for the bail out bill (BOB) as is - as crafted it does little to help real people.
But saying 'no' isn't getting the credit flowing either - no is the same as a 'bad yes' from that perspective.
People on this form (most forums I've read lately) - the hard core anyway - have no idea what's coming. What it really means if credit markets lock up.
They think they'll be okay, we'll all eat squirrel and be happy. If the shtf many if not most will NOT be okay.
The people who worked at the company I was talking about had no idea the lock-up would effect them. They understand now - too late for them.
That will be repeated all across the country if HALF of the bad shit Paulson promises comes true.
My wife is a middle mgr at a mid-sized company and spent all weekend working on her department's lay off list JUST IN CASE - and it isn't a short list - bet that's going on all across the country RIGHT NOW.
This financial crisis has not morphed into an economic one yet (goods and services) but it will if unchecked. Then even if we fix the financing it might take a decade for the 'real economy' to repair... IF the liquidation of real productive goods & services goes forward in proportion to the size of the financial problems.
People need to think it through - there is definitely some hype & spinning for advantage and I have no doubt Hank & BB & Cox are in the middle of it.
But the problems are real. Make no mistake about that. Demand a better solution & real compromise - a better fix - from our leadership. Not just a quick partisan 'yes' or 'no'...
That's a sad story. I can't agree with Sebastian; it does not sound like your guy mismanaged.
He made some mistakes... he isn't a 'rocket scientist' - but who is?
I mean go to work tomorrow and look around - if it requires that everyone be a genius and practice perfect management and that there is no room for mistakes - who among you is 'qualified' to keep their job and which businesses deserve to stay in business?
If our 'capitalist' society is going to work (feed the vast majority of us) then we better have a robust enough system so that less than genius people can work in it.
EVERYONE needs to give that a thought.
Bell Curve writes:
"O-M-G, please don't ascribe this level of intelligence to Bush. He is just the stooge for all the ultra-rich republicans who put him in office. He probably makes no decisions himself on anything of importance."
That's right you heard it here, Bush doesn't make decisions himself and is not to blame for Iraq or any issue of importance like the series of bailouts we've been having.
Warrantless wiretapping? Ultra-rich conspiracy. Guantanamo for unlawful combatants? That would be the ultra-rich. Warren Buffet and Bill Gates actually dictated the last 8 years and not Bush - their public opposition to Bush policies are just a cover for their secret puppeteering in contrary.
mp,
I have to disagree. Sidebar is MUCH dumber than Seb.
Just do what they did with the French Revolution with speculators: bring on the quillotine!
Mr. fly,
I would rather see the Treasury make loans to your buddy than a bank in the hope that the bank will make a loan to your buddy. Cut out the middle man.
And another thing -
Just for the record, I hate it when events conspire to make Jas look good.
For the first time in my life I'm e-mailing members of Congress. There is a small minority who have gone on record against this bailout, but unless the rest get pressured, the lemmings will go right over the cliff & take us with them. Many Americans do not grasp what is happening & are not going to get up to speed in a week. So it's up to us who know better to do better & e-mail the idiot members of Congress telling them NO bailout! We have one week to turn things around or it's over. No matter how cynical we all are, this is our first & last chance. I figure if soldiers can die in Iraq, I can send a frickin' e-mail. You can find your State's elected officials here.
U.S. Senate
& https://forms.house.gov/wyr/welcome.shtml
RE: dryfly
Notice also how things multiply in the real economy: the credit denied to that firm induces 30 families to reduce consumption, probably slow or stop their payments on houses, cars and cards, removes the company's product from the marketplace, disrupts it's customer's plans and forecasts, diminished the sales of its suppliers, and on, and on.
@Gorilla fan,
Faxes or phone calls are more effective than email. They require more work, so have a little more weight with the politicos.
[Really, the burden of proof should lie upon those who insist upon exceptions to a generally applicable law.
Left Coast Tom ]
You want this level of risk priced into home loans? Home prices have a long way to fall from these levels in that case.
Austin,
I think we have taken to calling that the bad positive feedback loop.
But I am leery of giving money to banksters (OMG, I am using a Jasism) and saying "Please, please make loans..."
You want this level of risk priced into home loans? Home prices have a long way to fall from these levels in that case.
Well, either that or banks could start insisting that someone borrowing hundreds of thousands of dollars credibly document how they plan to pay back the loan.
There's more than one option for dealing with risk.
Besides, foreclosure recoveries seem to suck right now, banks might be better off with cramdowns. Plus, the cramdown prohibition doesn't apply to second homes, and that doesn't seem to excessively crimp the market in places like Tahoe.
i think there is only one suggestion that will sober everyone up and that is the treasury needs to calculate the cost to each family filing a 1040 and spread the cost over 5 years initially and have a provision to adjust the cost each 2 years. then have a line on the 1040 that says multiply the number of people in your household by X multiply that by Y (i assume maybe 400 per year...so let's say 400) and add this to the amount you will pay the federal govt....that is after all calculations are done...say line 68 or something...the last few lines.
that should impress everyone. sure it doesn't initially do much for moral hazard, but i feel if you light a fire under the 50% of the people who are truly middle class and are struggling, congress will hear, the president will hear, and then wall street will hear.
people do not believe this will have any effect on them. they don't. they should, but they do not. if they did, they would be quite angry. instead most plan on living their lives in quiet desperation expecting to win the next lottery and saying they can do nothing about the status quo. sad as it is, it is true, this feeling of being but one tooth in a multi-cog gear. it isn't that they are not smart or that they do not care but instead have been too "beaten down by the man." oh, i agree there are some who have no idea what is going on, but i assure you it is not a large percentage. yeah maybe they don't understand fnm and fre, bs and leh, aig...but they do watch the news and read the paper. whether we believe what their reasoning is for the malaise is not the issue here though.
without pain, we will not recover in any meaningful way. we will only push the risk into the future. hey look, i will only live for 20 more years if i'm lucky, and i may never see the results of this mess in a future bout of nausea but i am certain that unless there is significant pain, we are gonna repeat a mess bigger than this one.
so, i believe unless the taxpayer participates in this in an active way, we will never prevent this and we can look forward to another blowup in 2018 that will put this mess to shame in magnitude.
Sorry, my bad. eCBOT bonds are 2230GMT Sundays, too. But oil is open, down a little at 103.85. USD is flat to Friday night, even vs JPY.
Looks like any other old evening.
Newt Gingrich is on FIRE!
Yeah, we are so going to fix this mess by suspending mark-to-market, repealing Sarbanes-Oxley, and eliminating capital-gails tax.
Well, I guess it is at least better than TARP.
I'm going to pop Groundhog Day in the dvd, and wish that the NY/DC boys would have that chance to get it right.
I'll post the open for who can't see the USZ8/ZBZ8 tbond open.
R2K
Come make a Palin family name!
As I recall, Lady Godiva, rode naked through her town to stop a tax increase on the people. The townspeople looked away to spare her any humiliation except for Mr. Tom.
Since these buffoons have forced the taxpayers to bail them out they should have to load up a wheelbarrow with their impaird loans and securities and parade naked pushing it through the streets of Washington to the US Treasury building. Instead of looking away from them TV cameras
should broadcast the parade so ALL of America can watch and laugh.
Locally owned banks are not the problem. My locally owned banks are all doing quite well (4 and 5 star ratings). Why would you want them to go down as well? It's the LARGE banks and financials that are the problem.
Oh Tanta didn't you know that this "can't wait" for anybody to look under the hood? It HAS TO BE DONE IMMEDIATELY OR DISASTER WILL STRIKE. Therefore any conditions are out of the question. The nation's future is at stake. It has to be done NOW, with NO delay. Trust us. We know. Sign on the dotted line. Don't bother to read the fine print, or any print at all.
We should NOT dismiss the kind of "humiliating requirement" being discussed here as an act of needless revenge. In fact, if there is a deep emotional cost to the holders of bad assets to each and every asset they sell to the government, then there might be some thought given by the holders of these assets as to whether they really want to sell them. The clear benefit of this humiliation is that this will discourage firms from queueing up to unload their bad assets.
The humiliation will accrue in some measure to any employee of a firm who made in excess of a certain amount (say $1000000 per/year in 3 of the last 5 years) and the severity of the humiliation will depend on that person's income.
Austin Tex writes:
RE: dryfly
Notice also how things multiply in the real economy: the credit denied to that firm induces 30 families to reduce consumption, probably slow or stop their payments on houses, cars and cards, removes the company's product from the marketplace, disrupts it's customer's plans and forecasts, diminished the sales of its suppliers, and on, and on.
Austin Tex | 09.21.08 - 5:54 pm | #
Yup - that's why doin' nuthin' isn't an answer either.
We have some very tough choices coming our way.
It's not unreasonable to blame Democrats for their complicity in failing to stand up to Republican corruption - to a degree.
DLC Democrats(DINOs) did unite with the Repukes to repeal depression era safeguards and the DLC president (Clinton) signed the bill.
The only opposition to the outrages perpetrated on the populace, however, came from the much-maligned liberal Democrats in congress! Any cursory examination of voting records will clearly demonstrate that.
The bankruptcy bill and dozens of conservative outrages were perpetrated entirely by the 1992 - 2006 congresses - solid Republican majorities in both houses. Under a Democratic President, the budget was balanced (and Greenspan believed in fiscal responsibility.) But the fact is that from the year 2000 - when they inherited a healthy economy and controlled all three branches of government - the United States of America has been looted! What were we progressives doing? Raising hell!
And oh yeah, to you Daily Kos haters. Haven't seen a bit of evidence that any of you are worth a pimple on Markos' ass. Why not take responsibility for the actions of your fascist government? Nah. That'd take some degree of intellectual honesty.
Assigning equal responsibility for this disaster to Democrats (because of some conservative quislings) is typical Republicanism.
A damned dirty lie, in other words.
Re tBond opening:
US/ZB opened about flat on good bid/ask size, since traded down a half on very light evening volume.
All in all, everything is lacking the responses of the last few weekends. Probably because this is, for all intents, still somewhere between work in progress and rumors.
We should NOT dismiss the kind of "humiliating requirement" being discussed here as an act of needless revenge.
That's why I'm warming to Representative Anonymous' idea as a serious proposal. I initially enjoyed the red meat, and my Kongresscritter is certainly on the list of people capable of authoring such an email. But I'm warming to the idea that some sort of visceral humiliation requirement for Wall Street may be an effective counter to the moral hazard associated with a bailout that seems unavoidable. Certainly more effective than some soon forgotten slap on the wrist, and undeniably more effective than the Paulson plan of doing nothing that might hurt Wall Street's feelings.
I favor changing the name of this fair nation to the United State Socialist Republic of Amerika (USSR-a).
Then the USSR-a Government can buy up the entire economy and bail everyone out of everything. $700 billion here, $700 billion there, and pretty soon you are talking about serious money.
Videotape the mea culpas and post them on Youtube.
Gimmah.
But...but...but...
THAT'S A DEALBREAKER! As is any relief to the little guy, regulation, restrictions on commissar Paulson, etc. will kill the "deal." So say the Repukes.
So the Dems are considering a separate bill (one for Bush to sign; another to veto)
So it appears that the beggars are gonna set the rules!
If that happens, it's finally time to man the barricades.
Most of my other suggestions would not pass Consitutional muster, most notably under the "Cruel and Unusual Punishment" clause.
However, here are a few that might pass:
1) require that anyone buying a CDS hold the bond that is being insured by the CDS. Standardize all CDS's and trade them on an exchange.
2) A hard cap on Mgt comp in any institution selling assets to the govt. I think $100K would be a good round number.
3) Elimination of all dividends and share repurchases for any institution participating for a period of five years (open to a longer period than that)
4) Taxpayers get an equity stake in all participating insitutions through preferred stock or warrents.
5) Agree with the bankruptcy cramdown idea
Andrew Foland, great idea:
If we want to have an impact on elected officials, we have to show up, in their offices. Go there, give them three short reasons to vote against it, and then TELL THEM YOUR STORY. Politicans love anecdotes and it irrationally affects how they make decisions.
Seriously. Look up your Senators' and Rep's local office address, and just go. Tell them you're taking time off work to register how unhappy you are. Some offices "won't take people without appointments"--make sure you have a talk radio show and local newspaper phone number on your cell before you go, and threaten to call if they won't let you in to speak to someone. You'll get it, and the effect is worth literally tens of thousands of phone calls.
If you can't make it, call their Washington office and make sure you leave your ZIP code.
Dirk
Good suggestions, but as far as constitutional muster goes, I think the constitution is now effectively out the window.
Hardship letters, yes! And also make them read Beowulf.
And one more demand. Henry Paulson must provide a full and detailed account of his role in creating this mess while at the helm of Goldman Sachs.
No more, "what's past is past bullshit."
And he too must read Beowulf.
LET THEM FAIL!
The shorts are smarter. They will set up new banks in no time.
Why not also have the execs of these banks repay their bonuses for any years when the mortgages were originated?
Also, if a bank originates a no-doc loan, why doesn't that bank have to restate earnings when it turns out the borrower had no chance to repay?
Nationalize the whole damn thing!
This way:
1)ALL contracts between the firms and directors are suspended: no bonuses, nor stock options, not perks without the approval or a dour and resentful civil servant barely making 80K a year (very evil grin)
2) For the 700 Bills, we, The People, get to own the whole kahuna. Never know; we could even make a profit out of this unbelievable mess.
3) Markets get stabilized, knowing the owner has the deepest pockets in the Universe. What's not to like?
4) And of course, all the suggestions put forth by Tanta (very evil grin part II)
5) Regulate Regulate Regulate! Back to the 3-6-3 lifestyle of the banker of a long bygone era.
J'ai dit!
Details to be worked out, we need guiding principles atm:
Alternative - liquidate and nationalize any company that wants to sell debt to Treasury. Capitalize new banks with .gov money (the Scandinavian solution).
Tar and Feathering would be more efficient, and probably effective.
We forgot what worked at the time of the founding fathers.
Alternates: Have the CEOs personally (via voice ID) be connected with a nearly impenetrable phone tree that takes two hours to navigate at which point they could leave a message with details for later approval.
Seriously, restore deductability to all forms of debt (perhaps retroactively, at least that which is difficult to discharge or declare bankruptcy on).
Allow a refundable tax credit (not mere deduction) for Money Market or FDIC insured bank losses (instead of playing the existing games - even if an institution goes Tango Uniform they will recover a portion of the cash).
This will delay the payout for up to a year, but cost far less than blanket guarantees, and the bad things will fail.
I'll say again: I'd insist on resignations of the current administration. The Sec Of the Treasury might get powers, but it would not be Paulson.
Then while we're upping the ante on humiliation, how about we tattoo the crimes of people who perpetrated mortgage fraud on their forehead so Wamu will stop lending to them again?
They lent 43 times to some convicts after their conviction for fraud:
WaMu loaned millions to O.C. home flippers with fraud history | soni, washington, mutual - Business - The Orange County Register
Those are the real culprits for this mess, that and liars who lied to get a home they couldn't afford. The fraud is from the fraud ring, from corrupt bank employees who work on commission, and to individuals who lie to get their first home. All these individuals are working against the banks who lack proper safeguards - this is fraud despite the bank's best (and ineffective) efforts.
The bank's crime is really stupidity - the same stupidity of home buyers. If you want to humiliate them, I suggest you start with the real problem first - fraudsters and Alt-A applicants.
People are losing their jobs, retirement savings are wiped out, investors loose their shirts, and just maybe savers might loose their bank deposits, not to speak of possible hyperinflation down the road, and you are suggesting an embarrassing letter? You must be kidding.
CEO and top management should be prosecuted and jailed for 20+ years (see Ebbers and Lay and Schilling...)and middle management fired. There are plenty of fresh MBA graduates who can fill the void. And no show trials either but rather a class action law suit against top management in financial firms.
What is missing in all the above suggestions is a reform of the Federal Reserve. After all the Fed is carrying the torch in responsibility for this mess. They have failed by not setting the appropriate interest rate to guarantee macroeconomic stability. In the future there has to be only one mandate of price stability. Only then can the Federal Reserve contribute to sustainable economic growth.
Albert:
Exactly - people have just given up when all they care about is satisfactory revenge, and not even against the real culprits. I totally understand that most people are venting their frustrations and anger and I feel that too. But if we're talking real solutions, these ideas are exactly the kind of try anything wrecklessness that got us here.
An additional term to any bailout would be for any company's upper-management to surrender all personal assets to the Treasury and to file personal bankruptcy, so that they may participate in the New American Dream tm.
Fed Allows Goldman, Morgan Stanley to Become Banks
Fed Allows Goldman, Morgan Stanley to Become Banks (Update2) - Bloomberg.com
sidebar, the reason CR and Tanta are quoting 'lefty sites' is because they are FACT oriented you stupid wingnut douchebag.
Facts have a known liberal bias. Wake up.
Tanta:
Good to see you back and hope that you are feeling well.
Your sentiments exactly mirror mine. I have scared the literal shit out of friends of mine and have, I believe scared even more, out of their eldest son - a HS senior and dyed in the wool republican.
This is simply beyond political parties and I also want highly punitive measures. This is the final stage of a growing gap between the economic elites and the average person. I have sat with corporate managers who plan site closings because the senior executives want to show the market that "they're serious."
The stakes here are too high for the country. If we must do this, and I emphasize "if", then the quid pro quo must be draconian.
The longer the dick around with this, the more likely people are going to say *$^# it and sell stocks, bonds, etc.
Now that we've cleared out the short, we're teed up for a PLUNGE!
Sadly, they would just pass writing of hardship letters to subordinates. I'd make them (all C-Level guys) do a government designed, as dull as possible, three month long bankruptcy related course.