I went to an ATM today, and it asked to borrow a twenty till next week

Laughter is the best medicine!

I went to fill up my gas tank and I couldn't decide between leveraged and unleveraged

I think they meant "...that will have you laughing all the way to the bank run"

From earlier today:

Currently Smoking Cannabis writes:
The most popular game for Icelandic families in 2009?

OH YEAH
Currently Smoking Cannabis | Homepage | 10.16.08 - 12:55 pm

The difference between short bankers and a womens track team?

unintended humor? there's a Wachovia TV ad running which tries to convince us that the bank's really tops at stopping identity theft. So what does it call itself:

"Dedicated Fraud Specialists"

double entendre?

Eckerds, Walgreens, and Wal Mart Pharmacy-all running specials on "bailout" enemas. Get them while they last...Only 700 Billion in stock now! Sponsored by Ben, Hank and the FDIC. And check out our special on "greenback" toilet paper coming next week.

Oh, and you can't reach for a "new" bottom if you are already married.

Henry...That is what is known as asset inflation or a 'long term" bubble. OK, Who farted in the hot tub?

401K's have been replaced with a new and improved smaller and more compact 102K's

"And finally I want to assure the folks out here that we're not going to be using your taxpayer money to, you know, enrich financiers; that we're going to protect your money, help you get it back." GWB 10/15/08

Financials went from 5% of the US stock market in 1980 to about 24% in 2006.

I expect it to settle at around 8%. Financials won't be much more valuable than they were in the 70s with much lower leverage and why should they? The next decade will force onto the U.S. a very different economy and it will not be a financials based one.

CR, I'm not into critical comments of your posts. Generally, they're outstanding.

This set of ten one-liners, though, is so weak I have to say they are far below anything I understood to be up to your standards.

What do you call an optimist?
Anyone who buys on time and credit.

What do you call an optimist?
Anyone who buys on time and credit.
Johnny Lee

Buying on credit is a realist. Bailout out for the consumer.

Losing Las Vegas Shows How Americans Crap Out in Housing Casino - Bloomberg.com 

Chopra, the spiritual teacher whose writings Sogoloff has turned to, said that less than 2 percent of the $3 trillion to $4 trillion that circulates in the world's markets daily is used for goods and services.

The rest is trying to make money off money,'' said Chopra, adjunct professor at Northwestern University's Kellogg School of Management in Evanston, Illinois.Our financial structure which, of course, is an American system but is now global, is pure speculation. It's gambling.''

Gambling is feeling up the waiter and hoping he is gay.

Gambling is that Oprah is a woman.

Juggling yourself is commendable.

Zion ia pretty. Good night now.

"Some analysts are concerned that banks' dependence on Fed lending might become long term and difficult to change. ...
RE"

Kids stop breast feeding. The US stops lending money to defunct banks.

Okay, some music that seems appropriate for this thread:

YouTube - Brother Can You Spare a Couple Billion ? - parody

Anyone Else Read This? 
As a historian who works on the 19th century, I have been reading my newspaper with a considerable sense of dread. While many commentators on the recent mortgage and banking crisis have drawn parallels to the Great Depression of 1929, that comparison is not particularly apt. Two years ago, I began research on the Panic of 1873, an event of some interest to my colleagues in American business and labor history but probably unknown to everyone else. But as I turn the crank on the microfilm reader, I have been hearing weird echoes of recent events.

Also interesting...
Notice is hereby given, pursuant to 5 U.S.C. App. 2, section 10(a)(2), that a meeting will be held at the Hay-Adams Hotel, 16th Street and Pennsylvania Avenue, NW., Washington, DC, on November 4, 2008 at 10:30 a.m. of the following debt management advisory committee: Treasury Borrowing Advisory Committee of The Securities Industry and Financial Markets Association.

The agenda for the meeting provides for a charge by the Secretary of the Treasury or his designate that the Committee discuss particular issues and conduct a working session. Following the working session, the Committee will present a written report of its recommendations. The meeting will be closed to the public, pursuant to 5 U.S.C. App. 2, section 10(d) and Public Law 103-202, section 202(c)(1)(B)(31 U.S.C. 3121 note).

SIFMA meeting with Treasury, closed to public?

Anonymous 12:43, the article you link to is by Jim Willie. A few quotes:

"A REPLACEMENT GLOBAL RESERVE CURRENCY HAS ALREADY BEEN DECIDED UPON. Its launch awaits the proper moment. The Americans are last to know, as usual."

(snip)

"JPMorgan, with the essential aid of Goldman Sachs, plot to bring down the DJIA index and the S&P500 index whenever the USTreasury conducts auctions or needs Congressional passage of key bailout bills. They have sold $194 billion of Cash Mgmt Bills (CMB) in the last two weeks, today $70B, tomorrow another $60B. The big stock declines seen recently work to the BENEFIT of the USTreasury and US Fed. as agent for auctions. TBill yields are down near zero... The USGovt is conducting auctions for TBills at top dollar prices, when its credit rating should be caving in radically upon downgrades. These USTreasurys are destined to enter default at a later date, where the loss to foreign investors will be maximized. Most of the US public has savings dominated by stocks, with little in bonds. So the US public is being fleeced... Look for the stock market decline to come to a surprising end when the USGovt has completed the majority of their planned emergency supply sales via auction."

Willie is typically apocalyptic, his fingers typing so fast that his narrative is virtually incoherent. And he makes Roubini sound like Pollyanna.

But he was way out in front of this unfolding disaster. If he's right, we're in worse trouble than we think:

"The result is that eventually the US Economy will enter not a recession, not a depression, but a DISINTEGRATION PHASE."

SIFMA meeting with Treasury, closed to public?

National Security reasons, no doubt.

I can't believe that my father went through the horrors of Iwo Jima for what this country has become.

Thanks, all you idiots who thought GWB would be fun to have a beer with.

Who thought Reagan was really going to bring a new morning to America.

Who thought we needed Nixon to stop the peaceniks from taking over.

Etc.

OK, you other four, go to bed.

Okay, fine, I'll say if nobody else will....

"MISSION ACCOMPLISHED!"

"A dramatic error," said Christine Lagarde, France's finance minister.

Yep, they should have just bailed out everybody. Then we all could have ridden our magical unicorn ponies off into the sunset!

Ok consider this a taped-live-blog.

Jim Rokakis, Cuyahoga County Ohio treasurer.
- This county leads the country in foreclosures. 13k foreclosures 2006, 15.6k 2007, and sounds like 15k again so far for 2008.
- We went to Federal Reserve Bank of Cleveland and complained about lending practices. Hoped the Fed Reserve would regulate and enforce some laws (truth in lending? home equity act?).
- Cleveland, Dayton and Toledo passed local ordnances to stop predatory lending. 2005 requested a meeting to enforce with US attorneys and FBI. US Attorney mentioned; banks didn't have any complaint about the loans. US Attorney said, "Who are the victims if the banks aren't complaining". As we are finding out the victim is the entire world.
- Going to refute the attempts to pin this on the community reinvestment act (everyone defensive regarding community reinvesment bank).
- Spewing stats regarding impact of community reinvestment bank. The worst subprime lenders did not loan under the community reinvestment bank. Countrywide, NEW, others did not give out loans under the CRA.

Marc Morial, National Urban League
- Defending "financial mass deception" that is going to pin this crises on minority borrowers. Smear to shift blame from Wall St & Washington to middle class minorities.
- I warned about these predatory practices. Now that this has happened, everyone is blaming the community reinvestment act.
- I have facts. Wall St investors; not Fannie Mae and Freddie Mac who purchased/invested in subprime mortgage from 2004-2007 (with chart, that will be a part of the record).
- Minorities and low income borrows received a disportionate share of subprime loans. Vast majority went to white, middle, income folks.
- African Americans and Latinos were given subprime loans disproportionately to whites. Also, black borrowers were 2x as likely to be scared into subprime loan as white borrowers. Each year from x-2007, non-hispanic whites had more subprime loans than all other minorities combined.
- Vast majority of subprime loans originated in largely white tracks. Subprime rate loans were given to whites. Majority of subprime loans went to white Americans, but African americans and latinos disproportinately steered into subprime loans. They could've qualified for prime but were steered at a 2x more rate than whites; between 2004 and 2007.
- This impacts Americans of all races... agents of mass deception are trying to smear minorities.

Okay, we get the point. White people also got subprime loans. Blacks and Latinos were steered into getting subprime loans.

• Now he's going off regarding vicious attacks on the Internet going off regarding blacks, latinos, jews, and gays. Seeds of division, history warns us about singling out certain groups of people.

Okay dude, I'm white, but I don't really see the "agents of mass deception" going off on racist rants and blaming minorities.

Hey, all you whites, blacks, latinos, gays, straights, families, singles, married, immigrants, native-born folks. You shouldn't have gotten subprime loans and Wall St shouldn't have given them to you!!!!!!!!!!!! I better tag this paragraph with snarc.

• Dodd saying it is criminal to give subprime loans or steer folks who qualified for prime loans into subprime loans.

Eric Stein, Center for Responsbible Lending
- Wall St demand led to trillions of dollars of risky loans. Wall St paid more the more dangerous the loan. Paid originators more for putting borrowers in the more expensive loan, the one more likely to cause foreclosure.
- Top 5 Investment Banks earned $1.5B structuring MBS. Unsustainability is built into the loan, starts cheap, but gets more expensive. This blew up the housing bubble because people could afford larger loans (he actually back tracked). People were put into loans larger than they could sustainably afford.
- This is what Wall St was doing, where were the regulators? Federal Reserve in 2000. Someone testified the Federal Reserve is AWOL because they received authority but didn't use it.
- FDIC, didn't have IndyMac on the watch list even right before they failed.
- Many of us trying to get regulators to cut down on predatory lending. Regulators claimed they couldn't stop the free flow of credit.

5 things that can help this crises:
1) Congress lift band on loan modifications. Allow people to stay in their homes at no cost to taxpayers. Chapter 13 bankruptcy, only homeloans cannot be modified (is this true did I hear right, I don't know?). Story about someone who got sick and couldn't make payment. Servicer said they couldn't talk about it until she was late... then said can't talk to her until she's in foreclosure.

Lehman brothers; biggest purchaser and securitizer. They can have their debt resturctured, why not homeowners?

2) FDIC streamlined modification program. Focus on 34% DTI ratio. Guarantee modify mortgage, government make sure mortgage modified well.

3) Merge OTS and OCC, not up to the challenge.

4) Federal Reserve should... (okay I missed it, he spent one sentance on it).

5) Pass home ownership preservation protection act by Dodd. Wall St will pay good money for mortgages and loans that help short-term profit and reward originators and loans. But that is not a long term sustainable mortgage to homebuyer.

The basic premise is that if we keep these people in their homes, they will keep the CDS' afloat

I think the premise is more along the lines of

"if we keep these people in their homes, they won't come to DC by the millions and burn it to the ground".

Dodd: What role and what authority should the SEC be given to regulate CDS!

Arthur Levitt: This came up in 1989 during President's working group. Greenspan felt this would pass trllion of dollars of outstanding contracts into legal uncertainty. All 20 members of the president's working group supported Greenspan. We also called for clearinghouse to be established to give greater transparency. I wished that I had gone further and asked for swaps and derivitives to be given transparency that has led to many of the problems we face today.

Now, we can no longer assume these are instruments used by sophisticated investors. The fact they are unregulated, unlisted, and have permeated our marekts at every level, no longer allows that condition to continue. I believe that a SEC/CSES (?) merged entity should have oversight of whole derivatives market in a way that is reasonable, practical, and cost effective. If I could wave the magic want and get rid of deriviatives, I wouldn't do it. They have been valuable at protecting our markets. However, their impact could be devastating. We are entering a decade of transparency. Derivitives need to be more transparent, the CFEC and SEC should be responseble for regulation. The Secretary's blueprint marginalizes many other organizations, and don't think we should do it.

Dodd: Talk about those derivitives. Why those instruments protected the cirses that began.
Levvit: Well, derivitives represent leverage on leverage, narrowing margins of error. If you traded stocks, bonds, mortgages in the past, you had time to correct mistake. Problem is, talking about $Trillions, without the facility to tell us if customer A can complete a transaction with customer B. I daresay that a lot of these contracts, without a clearinghouse don't have counterparties. Will find out more about that as Lehman brother's bankruptcy goes through courts. Key issue here is clearing house. Talking about systemic failure of United States is clearing... we have clearing houses for stock, bonds, and options. Unthinkable that we don't have a clearing facility for these derivitives.

Eugene Ludwig: Making sure up the chain people have a sense of responsibility. Derivitives can explode due to their leverage.

National Urban League dude left the meeting.

Sherrod Brown now discussing Paulsen's plan and how it is going down the direction they wanted to nationalize banks (I don't know if he used that wording).

Brown: Suggestion is to buy up loans at face value.

Mayor Rokakis: If you buy these at face value you will guarantee billions and billions of losses for USG. $350-300M of outstanding loans in my county. All of these loans were made with 175-200% of auditors value. That was then, this is now; thousands of foreclosures later... not that much less when foreclosure issued. Many houses are gutted, etc... if you buy them at face value I guarantee tens of $billions of losses.

Brown: Is it true there was lax authority, did the SEC have an obligation...
Levitt: I don't think SEC lax authority. I think it rejected additional funds offered to them.
Brown: When?
Levitt: Sometime over the course of the psat 2-3 years, I'll get back to you with specific time.

So much of what SEC does is sending signals, and speeches given. Those signals haven't been given. Shareholder access... important issue that has been buckled around and failed to act. Non-binding shareholder vote on executive pay... bundling around. Over and over again message sent that SEC is not investor friendly commission. Not a question of authority, except with respect to issues such as derivitives. Clearly, we are in an unregulated area. A lot of us are responsble for not calling attention to this early on. Condition's have grown worse and worse... not a question of giving SEC authority of lacking... it's the SEC properly using authority and reinvigorating their enforcement. Giving them more cops on the beat, allowing them to send a message that they truly guard the investors.

Dodd: Issue of legislation of 1994, that required that there are regulations that protect against fraudlent mortgage market. 4-5 years ago, if we had regulation... could we avoid this mess?

Mayor Rokakis: If you look at the requirements; rules against pressureing coerrcion of appraisers. If this was in place in 2001-2003, the outrageous lending practices that accelerated this from 2004-2007 would've slowed down the position we are in today.

Stein: I agree. A lot of loans wouldn't have happened. It's important for subprime protections to be extended to Alt-A...

Dodd: AIG is using money to lobby state regulators. AIG is currently working issues on mortgage originator license requirements. Senator Mel Martinez and Feinstein were pushing hard for provision included in the law. Would you care to comment on proper licesing.

Levitt: I have a problem with a company receiving federal funds lobbying.

... sorry getting tired... losing focus...

Rokakis (actually he's a treasurer): Don't know what the format looks like when mortgages are brought back. Problem is we won't have additional leverage once mortgages are purchased.

Dodd: Most of these MBS are contracts, and they have a lot of flexibility to work out the mortgages. With trust agreements, they are different. I believe we have ability under existing law to modify those mortgages. It's not that confusing. Disservice to suggest it cannot be done. I'd be furious to discover that we're going to buy these MBS' and then not make it possible for people to get insurance.

We don't have to purchase homes like they did in the 1930s... we have FHA, we can just insure the mortgages. I'm certain we'll work out.

Stein: When government buys MBS I believe its rights are limited. AIG is not lobbying, they are trying to say that their brokers should not be licened... they should be called an employee.

Dodd: We're goin to have additional hearings. Looking at things we can do to minimize this thing happening again. Lot of things causing people to be scared of getting into market. I think we are getting on the right track, and beilve investors are going to have more confidence. Not going to blossom overnight, but we are on the way slightly. We need to bring back confidence in our country. We want to have more hearings.

Phew, hearing closed!

I once was a Bellinghamster.

speaking of funnies:

PalinAsPresident.com 

The fundamentals of the bailout are strong.

CC

MW - WTF? 4am? Get some sleep dude. Unless of course you're ascetic enough to be up already for the dawn stroll down Tybee beach.

Gotta love the recycling going on here. It brings back 98 so vividly.

Q How do you make a million in Indonesian banking?
A Start with a billion.

YLSP 2:46:

Thanks for that. It says a great deal that the Treasury - who have after all conference rooms of their own - choose to meet with SIFMA in the gilded splendor or the Hay Adams.

These people are tone deaf.

Downtown Washington DC Luxury Hotels | Hay-Adams Hotel | Historic Hotels near White House

housing starts down huge - how can this be a surprise to anyone?

Housing starts fall more than expected. Down 6.3%

TAKE THE MARKET UP ON THAT, BABEEE!!!

safe_as_apartments writes:
Housing starts should fall to close to zero. That would work off inventory, oh, in about a year.

Or a tax-credit for Arsonists.

Just saying.

-bh

Housing starts much worse than expected. How can anyone have underestimated how far they'd fall?

Because they didn't guess zero?

Even some smart builders are getting screwed. In my neighborhood (new, still filling lots), we talked to a builder rep a few months ago. They're no longer building spec houses, only building for people who sign contracts.

At least three houses started since then hav been finished, and only then has the builder's "For Sale" sign gone up. Which means the purchaser walked away from their down payment.

For spec houses, they put up the builder's For Sale sign while it's being built.

I still liked the faux Bloomberg headline: "Fed intervenes: Tom Brady to start this Sunday".

Mervyns going to Chap 7 liquidation.