"750 billion in the last year with very little oversight of such staggering lending. The risk that this stealth bailout of many insolvent mortgage lenders will end up costing massive amounts of public money is now rising."
What an alarmist. Clearly these institutions would never have become so successful if they were this impurdent. Even then, the federal government can always come to the rescue. The USG is too big to fail, after all.
So the way I understand it (from Roubinis testamony) the FHLB system started buying all the nonconforming toxic stuff out there once wall street started to pass? I feel kinda dirty and used....
started buying all the nonconforming toxic stuff out there once wall street started to pass? I feel kinda dirty and used.... \t nades nades | Homepage | 01.13.09 - 11:30 am | #
Nades, Nades - Our governement would never allow something like that to happen. Relax, it's all good.
ades writes:
So the way I understand it (from Roubinis testamony) the FHLB system started buying all the nonconforming toxic stuff out there once wall street started to pass?
which would mean that paulson's original TARP plan to buy the bad assets was something that the FHLBs had already been doing for about a year?
I now conclude that Bernanke is an evil guy, and a shill for the banks.
He states that we must save the banking system, and he proposes three options:
-- Taxpayer purchases of the bad assets
-- Taxpayers, in exchange for warrants or a fee, guarantee part of the losses on a specified portfolio of troubled assets
-- Taxpayers capitalize so-called bad banks, which would purchase assets from financial institutions
He wants the U.S. taxpayer to save and bailout the banking system. He wants the U.S. taxpayer to throw good money after bad.
Terrible.
The guy is a shill for an evil organization.
It is one thing for the Treasury to advocate such. It is quite different, to me, when a Princeton professor, under color of being head of a neutral, purportedly public service body, advocates such.
I am not saying that they will follow your advice or that the person(s) will move the information up the food chain, however, it's better than masturbation...
Give it a shot...I have already entered this website as a sounding board to their ideas...
Reading Roubini's testimony from February 2008 is "deja vu all over again." Looks like his Corporate CDS and "Jingle Mail" warnings will be all the more relevant as earnings for BOTH homeowners and corporations declined severely over the last quarter.
For the Homeowner, Spring is the last hope for offloading the house at a price anywhere close to the mortgage. For Corporate CDS, declining earnings, defaults, and counterparty risk comes to the fore (defaults of counterparties) forcing writedowns on REALIZED losses in mortgages, corporates, and failed CDS reimbursement.
as Churchill said "Americans invariably do the right thing after trying everything else first"
Lets just nationalize any bank that is unable to operate in the free market without the assistance of government. Enough with the privatizing of profits and socializing of losses.
I think the greatest danger of all these policies is that they are placing the free market into disrepute- thus making is much easier for greater regulation and greater government intervention. That is the real price that will be paid.
ComradeDope....The Domino has started and it will WIPE out every thing in it's path to it's decend...
Financial Wizards: Can't The Nationalization of Banks be say for a certain period of time and does not have to be forever. Hell, name it something else, give me some good names out there with no body parts, pleeez.
Well then! Let's see how many billions we have to raise for this leg of our glorious Republic's voyage across the crimson seas.
Comrade Byzantine_Ruins | Homepage | 01.13.09 - 11:48 am | #
I think the greatest danger of all these policies is that they are placing the free market into disrepute- thus making is much easier for greater regulation and greater government intervention. That is the real price that will be paid. crazyvermonter | 01.13.09 - 11:48 am | #
Au Contraire! I think THIS is the real objective. It is not viewed as a price to be paid, but as a reward to be won.
You are tempting folks to bring forth a U.S. Kristallnacht.
Comrade-Dope jg (jg) | 01.13.09 - 11:34 am "
Comrade-Dope jg (jg) writes:
joe s-, what else do you do, but resort to violence, after elected representatives stand by and let our system be looted?
We the people will not allow ourselves to perish, to be crucified, on a Cross of Debt.
Comrade-Dope jg (jg) | 01.13.09 - 11:49 am
Is no one else slightly concerned about the evocation of Kristallnacht?
do you know what it was?
some hints:
1) it had nothing to do with the Federal Reserve.
2) it had nothing to do with banking systems.
3) it was German and from the 1930s
Which Jews do you propose to subject to violence because of Bernanke, Comrade Dope jg? Roubini, too? Please explain the connection and the logic.
In one sense the danger you speak of is real enough. You prove it yourself. The economic collapse is unleashing racism - against Latinos, against Obama for being president-elect while black, and now you want to lead the first pogroms.
yeah, please let's use a different metaphor. "Kristallnacht" means a lot more than just the smashing of windows. Sometimes I wonder what they're teaching kids today in history class that they think they can just use these historical terms so loosely.
State governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion,
Accelerating Complications
To return to 2007 actuarial funding levels by 2010, the 109 funds would need annual returns of 52 percent on assets, the analysis found. Annual returns of 18 percent would achieve the goal by 2013, the center said. The projections are based on a 5.7 percent annual increase in liabilities and a $50 billion increase in assets from contributions above annual payouts.
"I always loved the phrase "unrealized losses". I mean, at this point, I think everybody is starting to realize there are losses."
Nemo | Homepage | 01.13.09 - 11:31
Nemo,
The home I looked at yesterday is owned by DoooshBank. They currently have 130+ homes in their name on the counties website. There are only 98k housing units in the county.
Per the broker they have already sold 300+.
I asked how many were currently in the pipeline...A gulp and a stammer were returned.
Oh,the place I looked at?
It sold for 265k at the top in 2005.
On a good day it is worth 30k,closer to 20k is realistic...
I was trying to think the other day, where has Roubini been wrong?
Outside of the timing, he has anticipated just about everything. Not that what the FHLBs wasn't fairly apparent, but he seems to be one of the few economists who gave a clear warning.
Is he so smart, or are the rest just a bunch group-thinking sheep?
"Noted statistician John Williams (shadowstats.com) reports that biases in measurement have understated the job loss over the last 12 months by 1,150,000 jobs. Williams reports the unemployment rate as it was measured prior to reforms designed to minimize the measured rate of unemployment. According to the methodology used in 1980, the US unemployment rate in December 2008 reached 17.5 percent. "
I think we have a reason Obama might want the rest of the TARP money lickety-split. Surprised it's Seattle, though. Wasn't it Atlanta that kept popping up in the "OMG how could those idiots make that loan" stories like the 50 billion to Countrywide?
Abstract: Does growing commercial-bank reliance on Federal Home Loan Bank (FHLBank) advances increase expected losses to the Bank Insurance Fund (BIF)? Our approach to this question begins by modeling the link between advances and expected losses. We then quantify the effect of advances on default probability with a CAMELS-downgrade model. Finally, we assess the impact on loss-given-default by estimating resolution costs in two scenarios: the liquidation of all banks with failure probabilities above two percent and the liquidation of all banks with advance-to-asset ratios above 15 percent. The evidence points to non-trivial increases in expected losses. The policy implication is that the FDIC should price FHLBank-related exposures.
So, I read the link... and it just pushes all my buttons.
The real interesting quote is:
"The FHLB system has $1.25 trillion of debt, making it the largest U.S. borrower after the federal government. Moodys said its unlikely to cut the systems Aaa grades because of their government support, and that the banks are unlikely to suffer actual losses as large as those reported under accounting rules.
Seattle FHLB Chief Executive Officer Richard Riccobono wrote in a letter yesterday to members that the calculation of its risk-based capital needs, the measure by which it is failing regulatory tests, significantly overstates our market risk.
WTF! They don't know what the real losses will be. They don't know that it significantly overstates the market risk! These hacks are gambling with taxpayer dollars and should be fired. They failed as stewards.
Reichstag Fire? That was burning and no killing, right?
The problem with Kristallnacht was not killing (I don't think anyone was killed, actually). The problem is that it was violence directed specifically against Jewish owned business. (and, it was government-directed.)
I really don't think you wanted to suggest violence against Jews in America, right? So, if that was not your intention, try not to use Kristallnacht as a metaphor.
"Bastille Day" would be more appropriate, or the storming of Versailles, or whatever. Much more appropriate for peasants vs. royals.
Dont worry... that 100+ Billion they reserved for the GSE's also covers the FHLB's.
They couldn't need more than that to cover losses on $750 Billion, could they? After all, the FHLB's provide liquidity to such esteemed institutions as WAMU and CountryFried. The best of the best.
I looked into "noted statistician John Williams", and it sounds like most of his claims have been refuted and he's not taken seriously by just about anyone outside of blogdom.
That's not to say there probably aren't plenty of problems with the statistics the government hands out, and our way of counting the unemployed isn't a bit draconian.
Reichstag Fire? That was burning and no killing, right?
I know this pushes the boundaries of respect for all commenters, but Comrade-Dope jg, are you really that much of a fascist? Or do you really not know what you are talking about?
The Reichstag Fire was the pre-text that Hitler used to establish full NAZI rule in Germany.
That historical event had no likeness to the American Revolution. It had no likeness to any movement for social justice against plutocrats. It had nothing to do with people gaining control over run away institutions or banks or corporations.
The Riechstag Fire was the pre-text that open the path to concentration camps and then to war in Europe.
....seems the smart thing to do is "stop playing the game". Pick up your chips and say "Adios". Time to start taking care of the upcoming family needs.....
Dope jg's examples all seem to be NAZI in origin. This isn't just about anti-semitism. It is either about ne-Nazism or a level of education that would make George W Bush look like a rocket scientist.
On January 8, 2009, Moody's said that only 4 of the 12 FHLBs may be able to maintain minimum required capital levels and the U.S. government may need to put some of them into conservatorship.[1]
Black Star Ranch(Excellent) writes: \t....seems the smart thing to do is "stop playing the game". Pick up your chips and say "Adios". Time to start taking care of the upcoming family needs..... \t Black Star Ranch | \t \t \t \t01.13.09 - 12:12 pm | # Black Star Ranch | 01.13.09 - 12:12 pm | #
That's what Denniger is suggesting. Take you money to a credit union, and tell the banks to screw.
I really need to go back and read Galbraith, Minsky, and even Freidman's accounts of the "Great Crash." I believe our October 1929 moment was really August 2007. Following October 1929, there were periodic rallies in the stock market in late 1929 and 1930, only to be followed by steep declines as the enormity of the problems finally overwhelmed all the optimistic bull the traders and stockjobbers laid on Joe Public. Lots of shoes still to drop and even our best politicians (Barney Frank, I mean you), seem unable to accept reality (Barney is still a denialist about the Real Estate bubble, probably because his constituents back in Massachussets are denialists ("there goes my public, I must go lead them"). When I see this enormous destruction of wealth, I believe it overwhelms all the liquidity pumped into the system, and that the real money supply is contracting in a manner not controllable by the Federal Reserve. Deflation is here. Look out below.
"Chief Executive Officer Richard Riccobono wrote in a letter yesterday to members that the calculation of its risk-based capital needs, the measure by which it is failing regulatory tests, significantly overstates our market risk......."
"I think we have a reason Obama might want the rest of the TARP money lickety-split. Surprised it's Seattle, though. Wasn't it Atlanta that kept popping up in the "OMG how could those idiots make that loan" stories like the 50 billion to Countrywide?"
Maybe he's trying to get ahead of the curve. Seattle is about 18 months behind the early crashing bubble areas. My Mom lives up there. Until early-to-mid 2008, things were still on the way up or at least stable. They might be playing a very accelerated game of catch-up the way events have snowballed so rapidly in the past 3 months.
All 12 FHLBanks are jointly and severally liable for the liabilities of each individual FHLBank. Since August 2006, all 12 Banks have been registered with the United States Securities and Exchange Commission and all financial statements and other filings are available to the public at the SEC web site (EDGAR).
Shadowstats is one of those sites that backs up the contention that a half-truth is more dangerous than a lie. It's true that the Fed manipulates statistics, and that gives Shadowstats a very receptive audience; but Shadowstats just makes it up, basically. Williams applies 'correction factors' to the Fed data but the 'correction factors' come out of thin air.
On July 30, 2008, the Housing and Economic Recovery Act of 2008 (HERA) became law. The FHLBanks were referenced in this legislation, and the two changes were 1) the existing regulator (the Federal Housing Finance Board) was replaced with the Federal Housing Finance Agency, and 2) the Secretary of the Treasury was authorized to purchase FHLBank debt securities in any amount through December 31, 2009. After that time, the limit would return to the original $4 billion.
I, too, look forward to Conjure's next clock update. In particular, I note that he hasn't yet posted an "end of the world" clock. Global recession, yes. End of the world, no.
Equity buyers thinking they can see across the credit-collapse valley as well as the emerging commerce-collapse chasm apparently have better long-distance vision than mine, but this morning's indices closing today above current levels will have made 3 higher lows since the Nov bottom, continuing to point towards those gaps at NAZ 1950 and SPY 110, up 20% plus. Unbelievable. Closes below 3 month support down only 3% at NAZ 1500 and SPY 85 however should end the bear market rally. OK, no more TA, but any dope bears around might look out.
Maybe he's trying to get ahead of the curve. Seattle is about 18 months behind the early crashing bubble areas.
Yeah, we've seen that with the banks. Admission of losses is limited not by losses but by how much the bank can take; so it's the healthiest ones that admit the worst losses (or in this case cut back the dividends). Is Seattle one of Moody's 4 adequately capitalized FHLBs?
I wasn't aware that the FHLB even had dividends. If it's owned by the member banks, then that's another source of income for them that's down the tubes.
Moody's says that only 4 of 12 can meet minimum regulatory requirements?
Aw crap...
But who's to say that the credit unions are any different?
I want Ben and Tim to fear the inflation (and, consequently, revolutionary) fire that they are now stoking and feeding.
Comrade-Dope jg (jg) | 01.13.09 - 12:21 pm | #
I think you are missing the point- they want inflation. Misguided as it might be they don't understand the current problem and would therefore like to convert it into a problem that they do understand and think they know how to fix. BTW I got that from an assistant dean at a major Business school who hangs out with this lot.
Assume Crash Positions! writes:
"I think we have a reason Obama might want the rest of the TARP money lickety-split.
Note the formula that appears in the Times: "At Obamas Urging, Bush to Seek Rest of Bailout Funds." I have some colleagues who have ringside seats, and this was staged. We have the appearance of bi-partisanship, but Obama is bending over backwards to prevent a slugfest. Or so I have been told. Key section:
The decision to request the money now reflects the calculation by Mr. Obama and his aides that it would be better to have both the incoming and outgoing presidents urging lawmakers to release the money, given the high level of anger and frustration on Capitol Hill over how the Bush administration has managed the bailout program.
Ben doesn't make the call to nationalize the banks. Barak does, sometime after Jan 20. Ben won't be the key player under Barak in a bank nationalization or major reorganization or wholesale Chapter 11. I think it will be Sheila Bair.
Meanwhile, Conjure, you have a nice day, too. Tell MP we say hello.
yes - but at least he has the courage to spell out that our problems are caused by over spending and in 2005 he was critic of what was going on.
You can certainly disagree with his solution to the problem-but unlike so many he has at least diagnosed it correctly and certainly was not a party to creating the mess.
The economic principles in place in the late 1920s were (simplistically):
1) Budgets will be balanced;
2) Money is tied to gold. (Yes, it was fractional at the time. It was still tied to gold.)
I'm in the camp that agrees the driving force for the Great Depression was the credit bubble created (in part) by the "easy money" principles of 1924-1929. It parallels my belief that the core of our current economic downturn is also due to credit collapse. Regardless of whether this belief is accurate or not, the facts on the ground are that a return to a gold standard and insistence upon balanced budgets would not prevent the current problem from happening again.
Mayan calendar, Schmayan calendar. The Panic of 1837 had its own doomsday cult... remember the Millerites and how the world was supposed to end on October 22, 1844?
Bernanke said the government could consider buying troubled assets, providing asset guarantees or setting up a so-called bad bank to buy assets from banks in exchange for cash and equity.
"With the worsening of the economy's growth prospects, continued credit losses and asset markdowns may maintain for a time the pressure on the capital and balance sheet capacities of financial institutions," he said.
Barak does, sometime after Jan 20. Ben won't be the key player under Barak in a bank nationalization or major reorganization or wholesale Chapter 11. I think it will be Sheila Bair.
From a legal perspective, there is so much wrong with these statement
750 billion in the last year with very little oversight of such staggering lending. The risk that this stealth bailout of many insolvent mortgage lenders will end up costing massive amounts of public money is now rising."
This sure resembles the TARP program and Congress..
I immediately thought og Countrywide & WAMU reading this article.
like oakland recently with the bart police shooting a kid held down in the back, people came out and let them know they were pissed..
We are being shot in the back..I agree that we need some form of revolution..they don't care what the avg citizen thinks..they are above them..
I'm all ears too.
we need more walt's (gran torino)
then ben's...all the help goes to the criminals..well then it becomes necessary to be one yourself...
I, you and me dont mix well when it's the children's future that is being stolen by greed, lies and deceit..
When a bloated whale carcass beaches, you either tow it back to sea or bury it...pouring water over it will not bring it back...we are the sand beneath the whale...we support it yet wallow in it's stink and reek in the smell of death...
I laugh at the rose colored glasses of the pacifists..
Washington Mutual Inc., Merrill Lynch & Co. and Bank of America Corp. were the largest users of the Seattle FHLBs secured loans as of Sept. 30, borrowing 59 percent of its $46.3 billion, according to a November securities filing.
"It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace," said the BCC report based on a survey of almost 6,000 firms which employ 680,000 people.
Manufacturing, home sales and orders, employment expectations, investment, confidence and cash-flow have all hit record lows.
Now where's the news US economy downturn is even more 'frightening' ?
That's right the US MSM are mainly spinmeisters, cheerleaders, and assclowns !
Sorry dude, I am quite certain you are wrong about who calls the shots on nationalization.
Let start by taking your wording for granted as a place to begin. Look at the way you put it. Bernanke can make a "decision," but Obama issues the "order." No order and no enforcement equals no nationalization. So who really makes the decision?
But I think it is even deeper than that. Although Fed Chairs are independent in theory, in practice they hew to the President's line. See, for expample, Bernanke's recent tilt toward exactly the fiscal stimulu policy advocated by Obama.
Nationalizations in the past have all been by Presidential order, and thus Presidential decision. See Truman and the steel companies.
Presidents lead in complex ways, or at least the talented ones do. Eisenhower was a master of getting people out in front of his own position, so that it looked like he was being led. FDR, too. And Obama looks like he might be master at this, as well (I'm thinking of his campaign against Clinton and his recent handling of the stimulu proposal).
"It does look like a great eight years, aside from the last quarter, unfortunately," Edward P. Lazear, chairman of Bush's Council of Economic Advisers, said in a recent interview. "In the long term, things look good. The reason things look good is this economy will rebound, and it will rebound strongly. . . . We expect things to turn around, and I would say early in President Obama's administration."
" a return to a gold standard and insistence upon balanced budgets would not prevent the current problem from happening again."
kirk, excellent point about the 20s (and the reason that any and all economic theory should not cross 1973 in any kind of a historical overview).
however, totally wrong about that last statement - a commodity currency gives a sense of discipline which makes the kind of leverage and securitization we've seen impossible. it most certainly would prevent the worst excesses of the post-reagan era.
Take the banks, fire the management, fire the shareholders, sort out the worthless paper then when they're back on their feet again do an ipo for a profit and there we go.
Some of the worthless paper would be really easy to toss out as it would have been traded between the banks now under government receivership.
Nemo writes:
I always loved the phrase "unrealized losses". I mean, at this point, I think everybody is starting to realize there are losses.
Nemo | Homepage | 01.13.09 - 11:31 am | #
Remember the Wile E. Coyote Rule: you won't fall if you don't look down.
New York-based Pfizer plans to reduce its global research staff -- currently about 10,000 people -- by 5 percent to 8 percent this year, company spokeswoman Kristen Neese said Tuesday.
"This is in line with our refocused research areas," Neese said.
The move comes after the company announced in September that it was narrowing its research focus to six disease areas -- Alzheimer's, cancer, schizophrenia, pain, inflammation and diabetes -- and abandoning new research in other areas.
Joseph Tainter writes a lot about the flattening cost-value curve in R&D in his Collapse of Complex Societies. However, this development would also be of interest to the editors of the recent essay collection Agnotology, which is the study of how ignorance develops and is (in some cases) manufactured. Humankind has actually forgotten some of the scientific stuff it "knew" (no one knows what exactly was in Greek fire, for example, but it sure was militarily important). Hundreds of years from now, we're not just going to have undiscovered breakthroughs, but we're actually going to have forgotten ones.
The U.S. may decide to put some of the FHLBs, the largest U.S. borrower after the federal government, into conservatorship or force them into mergers with others, Moodys said. At issue is whether declines in the market value of the mortgage bonds, totaling $13.5 billion on Sept. 30, will be deemed other-than- temporary impairments, or OTTI, and how much of the losses their regulator will see as irreversible, the statement said.
The response by the Federal Housing Finance Agency to any shortfalls is something of an open question, Brian Harris, a senior vice president at Moodys, said in a telephone interview. To the extent they think the economic loss is much lower than what the OTTI is, I think that would affect their actions.
How many video clips of elected officials, from around the world, in their version of congress have you seen where they attack each other? I could link 10 videos in a minute.
When the pictures/news reports of Congress start showing them throwing things other then words at each other I would seriously start worrying. Right now I see a relaxed smiling group of legislators. Are they deluded or do they understand some things that we don't?
Personally the first image of Pelosi getting a glass of water thrown in her face will be my signal to head for the hills.
CR commenters might just be ahead of the curve in moving past civil discourse.
thanks. Angotology sounds like an interesting book. I think we've forgotten something recently . . . what was it? Rule of law? Need for an educated citizenry? Remembering not to let the fox guard the hen house? I don't know, but it was something like that.
LORAIN, Ohio -- The Coast Guard rescued a black swan that was stuck in the ice in the Black River on Sunday. \t locust | \t \t \t \t01.13.09 - 12:47 pm | # I thought those things were contained to Australia. The end is near!
"For Janisik (OT): Slovakia considering restarting the Bohunice nuclear power plant."
I think Slovakia is fairly well poised for a global slowdown. Right in the heart of Europe, hard working people, intelligent young folk...could be interesting...
I might return as a poor American peasant to live with my nouveau riche uncle or something...
Rosner: Force Banks to Write-down Bad Debt Before They Get a Dime of TARP II
Forcing banks to take write-downs before the government injects capital is how Sweden successfully resolved its banking crisis in the 1990s.
But even if the "Swedish solution" were adapted, Rosner says the structured finance market remains broken, which is preventing all this government money from making its way into the economy in a meaningful way. He compares it to opening a water spigot without having the pipes to take the water where it needs to go.
Agnotology is available on Amazon.com. The basic thesis of the book seems to be that human knowledge may be of finite breadth. The more we learn, the more of our former knowledge passes into ignorance. It is a collection of scholarly essays on a variety of topics. Agnotology means "the study of ignorance."
if i may mention it for the umpteenth time, fully 45% of the USA believes that humanity is literally less than ten thousand years old, per easily google-able recent pew research.
so, fully half of our country believes in the easter bunny, while the top 5% IQs cooked up crap like trillions of dollars of CDS paper. what do you expect to happen.
Jeeze!.........Its an accounting issue that unfortunately does not reflect the true economics of the Federal Home Loan Bank system, John von Seggern, the president of the Council of Federal Home Loan Banks said.
I don't know for certain, but my general take is that in a nationalization of the banks, the debtholders and shareholders get wiped out.
Hence, the options holders are wiped out as well.
In a sense, it's an angry parent fed up with the squabbling over the chess game and coming in and totally clearing the board.
In that case, SKF is probably not the place that you want to be.
Now my general question is, if treasuries burst, what's a safe place to be? I'm starting to lean towards foreign bonds - or else only the most blue-blooded of the domestic corporate bonds.
Tuesday January 13, 2009, 10:30 am EST
Yahoo! Buzz Print MOSCOW (AP) -- Russia and Ukraine hotly blamed each other Tuesday as Russia restarted natural gas supplies but little or no gas flowed toward Europe. EU officials watched in dismay and criticized both nations for their intransigence. Russia, Ukraine trade blame as Europe sees no gas - Yahoo! Finance
I'll submit the idea of a torch and pitchfork parade through manhattan. Total silence, just surly looks. I think that'd creep them out. Stop every few intersections and tar and feather some effigies. Better yet, don't parade through wall street, parade through the neighborhoods where they live.
"Can an economy survive after such widespread fraud?"
We aren't even pretenders to the throne that is Italy. Not that I'm arguing they're functional beyond the essence of that episode of Star Trek where the mob runs everything.
or just buy some dba. i will, if it weakens a little more. i like the soft commodities a lot in this climate, and will love them as a defensive play if they get cheaper.
The 12 banks of the FHLBank System are owned by over 8,100 regulated financial institutions from all 50 states, U.S. possessions, and territories.
Equity in the FHLBanks is held by these owner/members and is not publicly traded.
Institutions must purchase stock in order to become a member. In return, members obtain access to low-cost funding, and also receive dividends based on their stock ownership.
FHLBanks are exempt from state and local income taxes, but are subject to property taxes.
Bernanke will go to Obama and tell him that the Federal Reserve has lost control of the system and that nationalization is necessary in order to restore control.
Obama will call yet another meeting, in order to provide safety in numbers, and call for a consensus view. Everyone will agree with Bernanke's view.
Obama will issue the order which, in fact, will merely be a recognition of reality.
As to the technicalities, Conjure and I leave that you.
O har har - the press release from Seattle FHLB includes the treat: "Unfortunately, the risk-based capital rules that apply to the Seattle Bank rely on market value rather than expected loss as the measure for determining our risk-based capital requirement."
A system that usually provides a lending stock of about $150 billion has forked out loans amounting to over $750 billion in the last year with very little oversight of such staggering lending.
Again, this illustrates a problem common to all types of "panic spending".
Spending not done in the course of "normal" economic activity tends to be ad hoc and poorly allocated. The result is a lot of wasted resources.
I think this is one of the perils of the upcoming BigTime Stimulus package.
If more debt is heaped onto an already overloaded public balance sheet, and that debt is used poorly, then the US economy will simply sink more deeply and irrevocably into the morass.
Welcome to the state of Denial, oops, I mean California, where the state government is poised to run out of money even as public employee unions sue the state to stop employee furloughs and the state legislature bickers over drastic cuts in services which leave state wages, pensions and benefits essentially untouched. As the state's economy slides ever deeper into recession, tax revenues plummet, opening a projected $41 billion deficit which widens by the week. This is denial on a scale so grand that it borders on psychosis or alcoholic delusion.
Your contention about the expansion of cheap credit in the 1920's is the thesis for Murry Rothbard's The Great Depression". You may have to find the book through the Interlibray Loan system. That's how I got it. You may find it also from Lew Rockwell web site, or from the Missean Institute in Alabama.
yup, i bought in around 50, fortunately, i cut most of my short-treasury holdings around 47, had some tbt at that point too (which i flipped for an eensy-weensy gain, believe it or not).
i've been trying to short treasuries in one form or another for 5 years, of course, it has almost always been a disaster. but having insurance for the day when the asian CBs wake up on the wrong side of the bed and rates jack up 300 bps is worth it IMO.
also, a JNK and TBT combo has a certain appeal - there was a good 2000 bp gap between the two when I got in, and the past month has gone well with that play.
"Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.
When you won, you divided the profits amongst you, and when you lost, you charged it to the bank.
You are a den of vipers and thieves."
Duke of Con Dao writes:
forget that odious term Kristallnacht, or the French Revolution... for my money it's the 1905 Russian Revolution
Duke of Con Dao | 01.13.09 - 12:45 pm | #
Uhh...1917 maybe instead?
You people need less finance and more history books...
Black Star Ranch writes:
".....if treasuries burst... (then its time for) 50-lb sacks of rice, beans, dog food, chicken feed, grain, flour,....etc., etc....... 12:56 pm
I am not saying that they will follow your advice or that the person(s) will move the information up the food chain, however, it's better than masturbation...
Lots of folks here need to read more history, but the Duke's citation on Russia 1905 is not inappropriate within the terms of the discussion he entered into.
I'm still thinking March 1933, when FDR was inaugurated.
Citigroup CEO Vikram Pandit plans to announce in the coming days a major shift away from the "financial supermarket" model that has guided the bank for the last decade.
Supermarket? Citi is more like a minimart.
Pretty soon, the gubbmint will be able to sell Citi on Craigslist.
You can have the gold, Botswana and Canada.
We'll keep the nuclear aircraft carriers and cruise missiles.
We'll see who stays the world's reserve currency.
mock turtle(Excellent) writes: jack Bauer will come in at 12:01 and mop up everything for the masters for less than 10 cents on the dollar
I would be so much more reassured if I thought the Dark Masters really had the slightest control over matters at this point. Alex Jones lives in a very comforting world. The Prison Planet is a wonderfully structured environment where your only mission and duty is to escape from the inescapable.
I think mp is being a bit too drastic.
We already nationalized the banks.
That preferred stock and the tarp, and all of the other nationalizations have already occured.
The bailout of Fannie and Freddie, combined with the FHLBs constitute the end game of all the bailouts.
Essentially, the Bush administration nationalized by stealth.
All that awaits is Obama's introduction of the GSA payscale.
Essentially, there is no unburdened national bank right now.
We have swiftly become Japanese.
Now the challenge will be to transmit the benefits of nationalization to stricken debtors without collapsing the entire housing segment of the economy.
The next bailout has to be from the bottom up, top down has nearly totally failed.
I love it when big banks/thrifts/financial instituitions become insolvent! because then the govt can go in and buy up and guarantee everything, and then make a profit! Hank tells me each time that we're going to make a profit! Yay!
if this keeps up, the USA will be the most profitest government on Earth!
I should probably write out the business plan and patent it. (wouldn't want France or something to figure this out).
YTL's Business Plan, Patent Pending:
Step 1: bailout imprudent financial institution using money we don't have.
Step 2: ???
Step 3: Profit!
Step 4: USA is the most profitest!
@ crazyvermonter: "why are you picking on Volcker?? He doesn't deserve to be in the company of all the other morons on your list."
Oh, sure: poor choir boy Volcker just got mixed up with the wrong crowd. Of course he's not just one more of the criminal scum parasites. Oh, no: not Volcker. He just was kept in the dark about all the criminality swirling around him. Dontcha' know.
Don't you have some snow to shovel or something constructive?
I think many people are attacking the messenger because they don't like the message. there are plenty of ignorant people here (and more than a few abroad) who will play the same scapegoating game as folks did in previous eras. this is wrong, and I hate this tendency and fear it, but no one should be mistaken about its likelihood. similarly, no one who takes history seriously should think that the economics and social dynamics of previous times made this dynamic a difficult won to foment.
I was thinking more: the villagers finally getting fed up with the monsters getting lose from the laboratory. The castle never suffers from this, being stone, but the wooden houses and livestock of the populace sure do.
Unlike the villagers, tho, I imagine an expression of rage so silent it is deafening.
I really hope that happens. We should have nationalized back in Sept/Oct. We've lost a lot of time since then.
mp writes:
@joe shmoe
As a practical matter, what will happen is this:
Bernanke will go to Obama and tell him that the Federal Reserve has lost control of the system and that nationalization is necessary in order to restore control.
mp | 01.13.09 - 12:59 pm | #
Anonymous writes:
Welcome to the state of Denial, oops, I mean California, where the state government is poised to run out of money even as public employee unions sue the state to stop employee furloughs and the state legislature bickers over drastic cuts in services which leave state wages, pensions and benefits essentially untouched. As the state's economy slides ever deeper into recession, tax revenues plummet, opening a projected $41 billion deficit which widens by the week. This is denial on a scale so grand that it borders on psychosis or alcoholic delusion.
When a bloated whale carcass beaches, you either tow it back to sea or bury it...pouring water over it will not bring it back...we are the sand beneath the whale...we support it yet wallow in it's stink and reek in the smell of death...
I laugh at the rose colored glasses of the pacifists.. \t cd | \t \t \t \t01.13.09 - 12:36 pm | # cd | 01.13.09 - 12:36 pm | #
What about dynamiting it Anybody got a link to the video>
yes, your command of history is indeed impressive. almost as impressive as prof bernanke's grip on economics. teach on, nor car. I believe you and the good professor hail from the same region, incidentally. imagine that.
Fair Economist writes: \tI think we have a reason Obama might want the rest of the TARP money lickety-split. Surprised it's Seattle, though. Wasn't it Atlanta that kept popping up in the "OMG how could those idiots make that loan" stories like the 50 billion to Countrywide? Fair Economist | Homepage | 01.13.09 - 12:04 pm | # ----- I may be an hour--or three--late but I haven't read an answer to this question yet.
The Atlanta bank was the one we were all gossiping last week. Was the Seattle bank's announcement coming out of no where? Was the Atlanta gossip--AcrossTheCurve mentioned it too--a head fake? Ideas? Suggestions?
What's amazing to me is that at the same time Citi is trying to sell off lines of business, BoA is touting the "supermarket model" with its acquisition of ML. Something does not compute!
"Being anti-illegal immigration DOES NOT EQUAL being racist."
no, but it does generally equate with stupidity and short-sightedness. you are aware that a recent study showed that illegals are actually doing a better job on not defaulting on subprimes than the rest of us, aren't you?
The CR Blog comments is the captions running under the movie we are watching. The movie is titled "Financial Destruction!"
I think we are at the part were we are seeing random crowd scenes of unaware people. Kids going about their business. Mom's and Dads smiling. The bustle of the street.
Meanwhile, unknown to them, the B-52 pilots, missle crews, and subs are getting codes coming in that they are busy authenticating.
The President, in this movie, believes it is all contained. So far it has just been a few single warheads.
Everyone is commited to minor destruction to make sure everyone realizes how commited they are, yet each believes the status quo can be maintained...
Citizen AllenM writes:
I think mp is being a bit too drastic.
We already nationalized the banks.
Not until shareholders and most creditors are wiped out.
What's happenning now is a theft of tax payer's money and future generation's money to pay out dividends and bonuses. Keeping the ponzi scheme running until THEY decide to stop it.
totally logical. the country would be in better shape if folks in the NRA and ACLU realized they're on the same side of a very important set of issues.
If this is nationalization, as Lolfed might say, Ur doin it rong. The whole point of nationalization is for the gov't to take over banks who are either 1. insolvent and/or 2. unwilling to provide the liquidity needed to get the system back on its feet.
Giving a bunch of cash to banks so they can hoard it isn't exactly the point.
bgates writes:
"Being anti-illegal immigration DOES NOT EQUAL being racist."
no, but it does generally equate with stupidity and short-sightedness. you are aware that a recent study showed that illegals are actually doing a better job on not defaulting on subprimes than the rest of us, aren't you?
am now out of TBT however. was in it and intellectually interesting, but the Fed/Treasury is going to depress the yield curve longer than I think that it makes sense to hold it given the mathematical nature of the ultrashort instrument.
This could go on for quite a bit longer than a few months.
" given the mathematical nature of the ultrashort instrument."
agreed that holds in doublestuff can be stupid. but i got a nice bounce out of dxo next month, and have had plenty of nice flips out of sds, dig, and many others.
Bernanke will have to be the point-man on any nationalization effort. If O were to do it, every moron on the planet would scream "Pinko." Don't forget the politics of all this - the sheeple are still fighting old, old battles.
Actually, if Paulson and Bernanke don't pull that trigger, I doubt it gets pulled. Imagine our new, highly educated, black president pitching a "Swedish-style" reorganization to the unwashed masses. Optics matter, unfortunately, and that may be our death. Isn't this a sick little backwater we've created?
i find our lack of emphasis on language education in the state frustrating as well. we should be raising a generation that speaks english, spanish and chinese well. instead, we let our strengths become weaknesses.
Don't think so. Central Banks have corralled 90% of the world's gold. The mother lode of them all is on Liberty Street. \t anon | \t \t \tHomepage | \t01.13.09 - 1:39 pm | # anon | Homepage | 01.13.09 - 1:39 pm | # I believe that at one time, Indian women had nearly half of the world's supply of gold held in jewelry. I suspect that this is still true.
"Learning more than one language in childhood is supposed to be good for the brain as well as the mind. "
and california should be the logical home of a trilingual education. we could rule the world. instead, the anglos play the blame game, the latinos often seem content with being a permanent underclass, while the asians wonder why no one else thinks a UC degree is still a good thing to have. sad.
If you are reading this, thanks for
the Vanuatu Island sugestion. I prefer
to deal with volcanos and canibals than submit to blood-thirsty, pent-up,
Fascist cravings.
... The OTS has been headed by two very ideologically tilted directors who believe in deregulation with a passion, McCoy said: James Gilleran, who began his term in 2001, and current director John Riech, who took office in 2005.
In 2003, Gilleran posed with the three other federal banking agency officials for a photo to illustrate the Bush Administrations commitment to cutting red tape. Gilleran wielded a chainsaw instead of garden shears.
A review of the agencys history of enforcement actions prior to bank failures or takeovers show that its actions were either late, or inadequate, McCoy said. Thrifts would be cited for compliance problems with flood insurance certificates, for example, rather than mortgage quality. The IndyMac backdating controversy is the latest debacle that should put an end to the question of the agencys ability to function in its current form, she believes.
The OTS is the worst federal regulator on the block, she said. It has a culture of being so permissive and cozy with the thrifts it regulates, that you cant really break it without major reform. What were seeing is not only an attitude from the top but a pervasive way of doing business that has permeated even the front line examiners at OTS.
....
The case of Darrel Dochow, the senior employee demoted in December over the backdated IndyMac documents, also summarizes the agencys problems.
... Dochow approved an IndyMac strategy to overstate the strength of its financial condition, shortly before its failure in July ....
It wasnt Dochows first brush with trouble. Dochow was demoted from his position as head regulator of the Federal Home Loan Bank Board over his role in putting off for two years the shutdown of Charles Keatings Lincoln Savings & Loan, which collapsed in 1989, one of the most well-known bank failures of the savings and loan crisis....
The Federal Home Loan Bank Board was replaced by the OTS in 1989, as a move to tighten regulatory standards. Dochow and many other former employees, however, were hired on, McCoy said.
Dochow worked his way back up the bureaucratic ladder at OTS, and redeemed himself in 2006 by helping to persuade Countrywide Financial Corp. to switch its regulator from the OCC to the OTS, according to a Washington Post probe of the agency. The story described the OTS as having an overly close identification with its banks.
Aided in part by the Countrywide deal, Dochow was promoted to head of the agencys western regional district by 2007, McCoy said, giving him the distinction of being at the center of two of the worst bank crises in recent history.
But OTSs issues go beyond Dochow. As GWs Wachter noted, the OTS competes with other regulators for its customers and relies on fees it charges the banks it oversees, giving it a problematic setup similar to that of credit rating agencies. ...
Oh, on the "not everything is gloom and doom" front, the A2/P2 spread is down to 223 basis points. Still a bad number, still worse than any postwar recession, but far better than before and not suggestive of a Great Depression. More of a marginal depression. If this continues good I'll have to back off on my 13% unemployment prediction.
Let's say - hypothetically - President Change steps up in class and finds the intestinal fortitude to nationalize the banks.
That's a...monumental event. To put it mildly.
In such a scenario, does the Federal Reserve retain its existence in pretty much the form/function it has now, or will the conversations be going to an entirely new level of possibilities?
Fair Economist writes:
Oh, on the "not everything is gloom and doom" front, the A2/P2 spread is down to 223 basis points.
Not sure these now accurately portray the actual credit conditions? I respect your views and wonder if you still believe them to be an accurate measure?
stockdog42, at present the Fed is buying high grade paper and not midgrade commercial paper (at least supposedly). That would actually increase the spread if the market can't arbitrage properly. It's actually one of the few indicators left that Fed action isn't making artificially good, unlike TED or LIBOR.
There are some indications that the market's ability to arbitrage is coming back somewhat (TIP spreads are getting to be almost reasonable for a Japan-style Long Depression as opposed to just plain nuts) and that may underly the improvement. Fed action may have been artificially increasing the spread. Before the paralyzed market was just accepting the spread. Now the market can sell the overpriced AA paper to buy underpriced A2/P2 paper, insofar as the spread is excessive. If so the spread will probably fall more.
Violence is not necessary and counterproductive. Being willing to suffer for the "right" cause is. I have no idea what is "right" at this point.
tg is a born & bred dope in a | 01.13.09 - 12:54 pm | #
Congress will defend the interests of their corporate clients, at the expense of the taxpayer, until citizen gangs break down the congressional doors.
How about just another tea party, say, TEA, the Taxpayers Escrow Assn. with half of one's taxes paid and the other half held in an escrow account, to be paid upon gov't fulfillment of TEA/citizen demands. Pelosi, Reid, Frank and their corrupt ilk will never respond to anything less. Then maybe AMU, the American Mortgagor Union. Peaceable ideas, get their attention, head off trouble since they're still in the Greenbrier bunker mentality.
joe shmoe writes:
...The Riechstag Fire was the pre-text that open the path to concentration camps and then to war in Europe...
Pure propaganda:
a) The Holocoust occured during the war, not prior to it ! ("concentration camps and then to war) Do not change either the sequence or the causality of events.
b) please consult Raul Hilberg (the "nestor" of the Holocoust-research, himself a Jew and banned from the premises from Yad Vashem!) for the path to the Holocoust. He said "Keiner wusste 1933 was im Jahre '38 passieren würde, keiner hatte eine Ahnung was in späteren Zeiten, '41 beschlossen würde." (see : Video: Rückblick auf die Holocaustforschung - Geschichte und Erinnerung ,it's in german, translate it yourself.)
So, you are in direct contradiction to the most preeminent Holocoust researcher!
Learn youself history and do not disseminate propaganda! That's not any better than Holocoust-Denial !
Excellent idea, but we need something visceral as well. How about dumping these birds--Bernanke, Paulson, Pelosi et. al in the harbor--just a little something to make sure they're awake and paying attention.
Instead now we pay $0.89 and $15.00 social costs spread throughout the social welfare system regionally and nationally.
I'll take a nation of laws and enlarged LEGAL immigration, thank you. Time to shut all the loopholes whereby people can achieve same or equivalent status by illegal or quasi-legal means as the firm law-abiding sector. Isn't that why we have this financial crisis at present? Systemic gaming.
Crisis deepens as Russia-Ukraine gas deal unravels
By Fred Weir | 01.13.09
[snip]
But as observers heads spin over the on again, off again flow of Russian gas, which accounts for a quarter of Europes total supply, there are growing suspicions that hidden concerns over Ukraines geopolitical choices and high-level corruption in both Russia and Ukraine may be the real factors driving this dispute.
[snip]
The rhetoric between Moscow and Kiev has flared to new heights in recent days, with Russian Prime Minister Vladimir Putin accusing Ukraines warring politicians of stealing gas to fund their political campaigns, and Ukrainian President Viktor Yushchenko replying that Russian claims are untrue and designed to humiliate Ukraine.
[snip]
But Mr. Petrov adds that Putins claim that Ukraines leadership is sunk in corruption is a case of the pot calling the kettle black.
Experts say that instead of contracting directly with Ukraines state gas firm, Naftohaz, Russias Gazprom sells its gas through shadowy offshore intermediaries who flip the payments back and forth, beyond any official scrutiny. One such entity, RosUkrEnergo, is 50 percent owned by Gazprom.
Its absolutely inexplicable why Gazprom has these joint ventures with obscure little companies, and transfers billions of dollars to them, unless the purpose is to evade taxes and reward particular unseen interests, says Mikhail Krutikhin, a partner with RusEnergy, a Moscow-based consultancy. Someone is getting that money. If this isnt corruption, what is? he says.
Mr. Vydrin, the Ukrainian parliamentarian, agrees. Gas spells corruption in both Ukraine and Russia, he says. Neither Russian nor Ukrainian gas officials live on their salaries, and it would be very painful for them to give up this model of doing business. Crisis deepens as Russia-Ukraine gas deal unravels | csmonitor.com
I seriously doubt these are safer alternatives to banks. A credit union I am most familiar with is offering 5+% returns on 1 yr CDs. Now, how, exactly, do they manage that in this environment?
Abolition of The Fed is my objective. Abdication by Ben, Governors, and Presidents would be great.
Please provide me a suitable banner if 'You give us inflation, we give you Kristallnacht' is too inflammatory.
Comrade-Dope jg (jg) | 01.13.09 - 12:33 pm | #
Have you seen Fight Club? If you erase the debt record, then we all go back to zero. Sounds like a better place to start than with Kristallnacht.
There are fewer and fewer taxpayers due to increasing unemployment with less and less income due to reduced hours, salary give-backs, suspended bonuses, etc. Put that in your pipe and smoke it Ben! The soon to be ex-prez is right on one thing when he said "this sucker's going down" The taxpayer is fast becoming a mythical entity.
Sad thing is. Lettuce is heavily subsidized by US protectionism. Get rid of lettuce protection and growing it in Mexico would be profitable. Reaganist/Econoliberal Californians love their Argula salads and cheap labor but hate fair competition.
I believe that I've demonstrated your premise to be false - that a commodity based currency does not "gives [sic] a sense of discipline which makes the kind of leverage and securitization we've seen impossible."
There's not very much money involved with the FHLBs, is there?
Nemo !
B... b... but... my 10% divvy from BAC is safe, right?
And to think, people are willing to lend our government money for 10 years, for a little over 2%!
They are going to print like no one has ever printed before.
"750 billion in the last year with very little oversight of such staggering lending. The risk that this stealth bailout of many insolvent mortgage lenders will end up costing massive amounts of public money is now rising."
What an alarmist. Clearly these institutions would never have become so successful if they were this impurdent. Even then, the federal government can always come to the rescue. The USG is too big to fail, after all.
"Bankers hours" are getting shorter...
So the way I understand it (from Roubinis testamony) the FHLB system started buying all the nonconforming toxic stuff out there once wall street started to pass?
I feel kinda dirty and used....
I always loved the phrase "unrealized losses". I mean, at this point, I think everybody is starting to realize there are losses.
These purchase of toxic assets from Countrywide, etc. were noted on this blog going back to 2007.
(and yes I know it's an accounting term)
So what actually happens if a FHLB goes bust?
started buying all the nonconforming toxic stuff out there once wall street started to pass?
I feel kinda dirty and used....
\t nades
nades | Homepage | 01.13.09 - 11:30 am | #
Nades, Nades - Our governement would never allow something like that to happen. Relax, it's all good.
This is a BIG domino!
ades writes:
So the way I understand it (from Roubinis testamony) the FHLB system started buying all the nonconforming toxic stuff out there once wall street started to pass?
which would mean that paulson's original TARP plan to buy the bad assets was something that the FHLBs had already been doing for about a year?
now might be a good time to go bankrupt.
So what actually happens if a FHLB goes bust?
\t Nemo
Nemo | Homepage | 01.13.09 - 11:32 am | #
We the people incur realized losses
OT, but related:
I now conclude that Bernanke is an evil guy, and a shill for the banks.
He states that we must save the banking system, and he proposes three options:
-- Taxpayer purchases of the bad assets
-- Taxpayers, in exchange for warrants or a fee, guarantee part of the losses on a specified portfolio of troubled assets
-- Taxpayers capitalize so-called bad banks, which would purchase assets from financial institutions
He wants the U.S. taxpayer to save and bailout the banking system. He wants the U.S. taxpayer to throw good money after bad.
Terrible.
The guy is a shill for an evil organization.
It is one thing for the Treasury to advocate such. It is quite different, to me, when a Princeton professor, under color of being head of a neutral, purportedly public service body, advocates such.
Bernanke Urges ‘Strong Measures’ to Stabilize Banks (Update7) - Bloomberg.com
Buck you, Fernanke, you shyster.
You are tempting folks to bring forth a U.S. Kristallnacht.
So what actually happens if a FHLB goes bust?
If IIRC correctly, the FHLBs are owned by their lenders (i.e. member banks), who are also their borrowers.
Very incestuous.
Com. Dope jg
"a U.S. Kristallnacht"?????
swedish style nationalization of banks, yes.
neo-nazism, NO!
"which would mean that paulson's original TARP plan to buy the bad assets was something that the FHLBs had already been doing for about a year?"
The TARP only became necessary when the Fed/FHLBs, etc. ran out of funds. TA=good collateral to the Fed/FHLBs
I second Comrade Dope. Bernanke is a shill and should be publicly acknowledged as one. Buck you, Fernanke.
Is this bad?
Posted in the last thread, however worth repeating...
May I humbly suggest that if you want a say in O' game plan, you make your opinions known at:
Change.gov: The Obama-Biden Transition Team | momentvision
I am not saying that they will follow your advice or that the person(s) will move the information up the food chain, however, it's better than masturbation...
Give it a shot...I have already entered this website as a sounding board to their ideas...
jmho
c'mon you grouchy bears. Get with it!
It's TURNAROUND TUESDAY!!!
Comrade-Dope jg (jg) writes:
OT, but related:
I now conclude that Bernanke is an evil guy, and a shill for the banks.
Welcome to the dark side.
"were all Jas now" will be the 2009 mantra....
batman formation appearing now....
Wikipedia in FHLB system:
Wikipedia, the FHLBs
In a just world, BB takes early retirement.
Reading Roubini's testimony from February 2008 is "deja vu all over again." Looks like his Corporate CDS and "Jingle Mail" warnings will be all the more relevant as earnings for BOTH homeowners and corporations declined severely over the last quarter.
For the Homeowner, Spring is the last hope for offloading the house at a price anywhere close to the mortgage. For Corporate CDS, declining earnings, defaults, and counterparty risk comes to the fore (defaults of counterparties) forcing writedowns on REALIZED losses in mortgages, corporates, and failed CDS reimbursement.
The Fed has delayed, but not stopped the cascade.
conjure clock update looks ever more likely.
Well then! Let's see how many billions we have to raise for this leg of our glorious Republic's voyage across the crimson seas.
THE
BANKS
ARE
INSOLVENT.
as Churchill said "Americans invariably do the right thing after trying everything else first"
Lets just nationalize any bank that is unable to operate in the free market without the assistance of government. Enough with the privatizing of profits and socializing of losses.
I think the greatest danger of all these policies is that they are placing the free market into disrepute- thus making is much easier for greater regulation and greater government intervention. That is the real price that will be paid.
joe s-, what else do you do, but resort to violence, after elected representatives stand by and let our system be looted?
We the people will not allow ourselves to perish, to be crucified, on a Cross of Debt.
Kohn gives no estimate for 'ultimate cost' of TARP.
I should have been an accountant, that way I would have figured out how to keep insolvency, solvent.
I mean cash is just one account, right, like there's a whole bunch more where that one came from.
$1.25 trillion.
this. is. getting. scary.
ComradeDope....The Domino has started and it will WIPE out every thing in it's path to it's decend...
Financial Wizards: Can't The Nationalization of Banks be say for a certain period of time and does not have to be forever. Hell, name it something else, give me some good names out there with no body parts, pleeez.
Well then! Let's see how many billions we have to raise for this leg of our glorious Republic's voyage across the crimson seas.
Comrade Byzantine_Ruins | Homepage | 01.13.09 - 11:48 am | #
The Crimson Permanent Assurance
YouTube - The Crimson Permanent Assurance part 1
I think the greatest danger of all these policies is that they are placing the free market into disrepute- thus making is much easier for greater regulation and greater government intervention. That is the real price that will be paid.
crazyvermonter | 01.13.09 - 11:48 am | #
Au Contraire! I think THIS is the real objective. It is not viewed as a price to be paid, but as a reward to be won.
"Buck you, Fernanke, you shyster.
You are tempting folks to bring forth a U.S. Kristallnacht.
Comrade-Dope jg (jg) | 01.13.09 - 11:34 am "
Comrade-Dope jg (jg) writes:
joe s-, what else do you do, but resort to violence, after elected representatives stand by and let our system be looted?
We the people will not allow ourselves to perish, to be crucified, on a Cross of Debt.
Comrade-Dope jg (jg) | 01.13.09 - 11:49 am
Is no one else slightly concerned about the evocation of Kristallnacht?
do you know what it was?
some hints:
1) it had nothing to do with the Federal Reserve.
2) it had nothing to do with banking systems.
3) it was German and from the 1930s
Which Jews do you propose to subject to violence because of Bernanke, Comrade Dope jg? Roubini, too? Please explain the connection and the logic.
In one sense the danger you speak of is real enough. You prove it yourself. The economic collapse is unleashing racism - against Latinos, against Obama for being president-elect while black, and now you want to lead the first pogroms.
By now it should be obvious that everything with "Federal" in the name is toast.
When will treasuries bubble burst?
And when that happens, when will the global growth & trade bubble burst?
yeah, please let's use a different metaphor. "Kristallnacht" means a lot more than just the smashing of windows. Sometimes I wonder what they're teaching kids today in history class that they think they can just use these historical terms so loosely.
On top of FHLP
State governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion,
Accelerating Complications
To return to 2007 actuarial funding levels by 2010, the 109 funds would need annual returns of 52 percent on assets, the analysis found. Annual returns of 18 percent would achieve the goal by 2013, the center said. The projections are based on a 5.7 percent annual increase in liabilities and a $50 billion increase in assets from contributions above annual payouts.
2008 was a really bad year...
"I always loved the phrase "unrealized losses". I mean, at this point, I think everybody is starting to realize there are losses."
Nemo | Homepage | 01.13.09 - 11:31
Nemo,
The home I looked at yesterday is owned by DoooshBank. They currently have 130+ homes in their name on the counties website. There are only 98k housing units in the county.
Per the broker they have already sold 300+.
I asked how many were currently in the pipeline...A gulp and a stammer were returned.
Oh,the place I looked at?
It sold for 265k at the top in 2005.
On a good day it is worth 30k,closer to 20k is realistic...
Chris
I was trying to think the other day, where has Roubini been wrong?
Outside of the timing, he has anticipated just about everything. Not that what the FHLBs wasn't fairly apparent, but he seems to be one of the few economists who gave a clear warning.
Is he so smart, or are the rest just a bunch group-thinking sheep?
"Noted statistician John Williams (shadowstats.com) reports that biases in measurement have understated the job loss over the last 12 months by 1,150,000 jobs. Williams reports the unemployment rate as it was measured prior to reforms designed to minimize the measured rate of unemployment. According to the methodology used in 1980, the US unemployment rate in December 2008 reached 17.5 percent. "
Could it really be that high?
When real hegemony ended, there was an attempt to artificially preserve it with financial hegemony...
it failed...the contagion was then intentionally spread...
did I miss anything?
Okay, mal.
Reichstag Fire? That was burning and no killing, right?
I'm all in favor of burning, tarring and feathering, and beating, but not killing or maiming. Life imprisonment works for me.
What else will Bernanke, Paulson, Geithner, Rubin, and Greenspan understand? What else will Bush, McDonough, and Volcker understand?
Sorry, when representatives do not listen, bad things -- for the status quo/powers that be -- happen.
Like the American Revolution.
I think we have a reason Obama might want the rest of the TARP money lickety-split. Surprised it's Seattle, though. Wasn't it Atlanta that kept popping up in the "OMG how could those idiots make that loan" stories like the 50 billion to Countrywide?
You are tempting folks to bring forth a U.S. Kristallnacht.
Comrade-Dope
I hope that was just a thoughtless slip of the rhetorical tongue there, i.e., a Bushism and not the thuggery it sounds like.
May I suggest using "Bastille Day" instead of Kristallnacht?
Wow, so THAT'S it. Thank you for piecing it together for me, F-E-.
From 2005:
Should the FDIC Worry about the FHLB? The Impact of Federal Home Loan Bank Advances on the Bank Insurance Fund
SSRN-Should the Fdic Worry About the Fhlb? The Impact of Federal Home Loan Bank Advances on the Bank Insurance Fund by Rosalind Bennett, Mark Vaughan, Timothy Yeager
Abstract: Does growing commercial-bank reliance on Federal Home Loan Bank (FHLBank) advances increase expected losses to the Bank Insurance Fund (BIF)? Our approach to this question begins by modeling the link between advances and expected losses. We then quantify the effect of advances on default probability with a CAMELS-downgrade model. Finally, we assess the impact on loss-given-default by estimating resolution costs in two scenarios: the liquidation of all banks with failure probabilities above two percent and the liquidation of all banks with advance-to-asset ratios above 15 percent. The evidence points to non-trivial increases in expected losses. The policy implication is that the FDIC should price FHLBank-related exposures.
So, I read the link... and it just pushes all my buttons.
The real interesting quote is:
"The FHLB system has $1.25 trillion of debt, making it the largest U.S. borrower after the federal government. Moodys said its unlikely to cut the systems Aaa grades because of their government support, and that the banks are unlikely to suffer actual losses as large as those reported under accounting rules.
Seattle FHLB Chief Executive Officer Richard Riccobono wrote in a letter yesterday to members that the calculation of its risk-based capital needs, the measure by which it is failing regulatory tests, significantly overstates our market risk.
WTF! They don't know what the real losses will be. They don't know that it significantly overstates the market risk! These hacks are gambling with taxpayer dollars and should be fired. They failed as stewards.
I'm tired of hearing the accounting rules excuse.
OT- Hallelujah: Stocks Finally Undervalued (Shiller) Henry Blodget | Jan 12, 09 1:58 PM \t Hallelujah: Stocks Finally Undervalued (Shiller)
Do you believe it, and/or does it matter?
Reichstag Fire? That was burning and no killing, right?
The problem with Kristallnacht was not killing (I don't think anyone was killed, actually). The problem is that it was violence directed specifically against Jewish owned business. (and, it was government-directed.)
I really don't think you wanted to suggest violence against Jews in America, right? So, if that was not your intention, try not to use Kristallnacht as a metaphor.
"Bastille Day" would be more appropriate, or the storming of Versailles, or whatever. Much more appropriate for peasants vs. royals.
Superfly...Yes...IMHO, Historians will dig it out, fifty years from now.
Dont worry... that 100+ Billion they reserved for the GSE's also covers the FHLB's.
They couldn't need more than that to cover losses on $750 Billion, could they? After all, the FHLB's provide liquidity to such esteemed institutions as WAMU and CountryFried. The best of the best.
Could it really be that high?
supafly73
I looked into "noted statistician John Williams", and it sounds like most of his claims have been refuted and he's not taken seriously by just about anyone outside of blogdom.
That's not to say there probably aren't plenty of problems with the statistics the government hands out, and our way of counting the unemployed isn't a bit draconian.
s-i-g-, it looks like there was death and killing in the storming of the Bastille:
Bastille Day - Wikipedia, the free encyclopedia
IMO, we need an 'attention getter' for Ben and Tim, who will soon hold the levers of financial power here in the U.S.
I'd like them to feel visceral fear of f****** up our Republic.
I'm open to suggestions, joe s-.
Comrade-Dope jg (jg) writes:
Okay, mal.
Reichstag Fire? That was burning and no killing, right?
I know this pushes the boundaries of respect for all commenters, but Comrade-Dope jg, are you really that much of a fascist? Or do you really not know what you are talking about?
The Reichstag Fire was the pre-text that Hitler used to establish full NAZI rule in Germany.
That historical event had no likeness to the American Revolution. It had no likeness to any movement for social justice against plutocrats. It had nothing to do with people gaining control over run away institutions or banks or corporations.
The Riechstag Fire was the pre-text that open the path to concentration camps and then to war in Europe.
Dope, indeed.
Thank God! It is only $1.25 trillion. For just a moment I thought we were talking about real money.
....seems the smart thing to do is "stop playing the game". Pick up your chips and say "Adios". Time to start taking care of the upcoming family needs.....
"...the banks are unlikely to suffer actual losses as large as those reported under accounting rules."
Now where have we heard that before?
So I guess Bernanke already implemented the "Bad Bank" model he is yapping about in London today?
@mal
Dope jg's examples all seem to be NAZI in origin. This isn't just about anti-semitism. It is either about ne-Nazism or a level of education that would make George W Bush look like a rocket scientist.
Groundhogday writes:
"...the banks are unlikely to suffer actual losses as large as those reported under accounting rules."
Now where have we heard that before?
Groundhogday | 01.13.09 - 12:13 pm | #
Exactly the same as saying equity prices are so low that they can only go up.
On January 8, 2009, Moody's said that only 4 of the 12 FHLBs may be able to maintain minimum required capital levels and the U.S. government may need to put some of them into conservatorship.[1]
Black Star Ranch(Excellent) writes:
\t....seems the smart thing to do is "stop playing the game". Pick up your chips and say "Adios". Time to start taking care of the upcoming family needs.....
\t Black Star Ranch | \t \t \t \t01.13.09 - 12:12 pm | #
Black Star Ranch | 01.13.09 - 12:12 pm | #
That's what Denniger is suggesting. Take you money to a credit union, and tell the banks to screw.
No, mal, I have no interest in violence against Jews. We have many dear friends who were Jews.
I just want Ben and Tim to stop dead in their tracks. Outcry to Congress on TARP did not stop them.
Fear of prompting violence against their people may.
I really need to go back and read Galbraith, Minsky, and even Freidman's accounts of the "Great Crash." I believe our October 1929 moment was really August 2007. Following October 1929, there were periodic rallies in the stock market in late 1929 and 1930, only to be followed by steep declines as the enormity of the problems finally overwhelmed all the optimistic bull the traders and stockjobbers laid on Joe Public. Lots of shoes still to drop and even our best politicians (Barney Frank, I mean you), seem unable to accept reality (Barney is still a denialist about the Real Estate bubble, probably because his constituents back in Massachussets are denialists ("there goes my public, I must go lead them"). When I see this enormous destruction of wealth, I believe it overwhelms all the liquidity pumped into the system, and that the real money supply is contracting in a manner not controllable by the Federal Reserve. Deflation is here. Look out below.
"Now where have we heard that before?"
This is the one that I thought sounded ominous:
"Chief Executive Officer Richard Riccobono wrote in a letter yesterday to members that the calculation of its risk-based capital needs, the measure by which it is failing regulatory tests, significantly overstates our market risk......."
"I think we have a reason Obama might want the rest of the TARP money lickety-split. Surprised it's Seattle, though. Wasn't it Atlanta that kept popping up in the "OMG how could those idiots make that loan" stories like the 50 billion to Countrywide?"
Maybe he's trying to get ahead of the curve. Seattle is about 18 months behind the early crashing bubble areas. My Mom lives up there. Until early-to-mid 2008, things were still on the way up or at least stable. They might be playing a very accelerated game of catch-up the way events have snowballed so rapidly in the past 3 months.
... and scene!
All 12 FHLBanks are jointly and severally liable for the liabilities of each individual FHLBank. Since August 2006, all 12 Banks have been registered with the United States Securities and Exchange Commission and all financial statements and other filings are available to the public at the SEC web site (EDGAR).
Shadowstats is one of those sites that backs up the contention that a half-truth is more dangerous than a lie. It's true that the Fed manipulates statistics, and that gives Shadowstats a very receptive audience; but Shadowstats just makes it up, basically. Williams applies 'correction factors' to the Fed data but the 'correction factors' come out of thin air.
Chart's Batman formation complete...
...now we go silently into the night.
Perhaps an IPO? That would help them recapitalize, right?
On July 30, 2008, the Housing and Economic Recovery Act of 2008 (HERA) became law. The FHLBanks were referenced in this legislation, and the two changes were 1) the existing regulator (the Federal Housing Finance Board) was replaced with the Federal Housing Finance Agency, and 2) the Secretary of the Treasury was authorized to purchase FHLBank debt securities in any amount through December 31, 2009. After that time, the limit would return to the original $4 billion.
I, too, look forward to Conjure's next clock update. In particular, I note that he hasn't yet posted an "end of the world" clock. Global recession, yes. End of the world, no.
It's TURNAROUND TUESDAY!!!
bearly | 01.13.09 - 11:41 am | #
Equity buyers thinking they can see across the credit-collapse valley as well as the emerging commerce-collapse chasm apparently have better long-distance vision than mine, but this morning's indices closing today above current levels will have made 3 higher lows since the Nov bottom, continuing to point towards those gaps at NAZ 1950 and SPY 110, up 20% plus. Unbelievable. Closes below 3 month support down only 3% at NAZ 1500 and SPY 85 however should end the bear market rally. OK, no more TA, but any dope bears around might look out.
rickstersherpa | 01.13.09 - 12:15 pm | #
Look up comments for August 17, 2007. That is as close as I can get to the exact "MOMENT".
the Secretary of the Treasury was authorized to purchase FHLBank debt securities in any amount through December 31, 2009
Who needs TARP then?
Maybe he's trying to get ahead of the curve. Seattle is about 18 months behind the early crashing bubble areas.
Yeah, we've seen that with the banks. Admission of losses is limited not by losses but by how much the bank can take; so it's the healthiest ones that admit the worst losses (or in this case cut back the dividends). Is Seattle one of Moody's 4 adequately capitalized FHLBs?
C'mon, joe. You're whining, and not offering an attention-getting alternative.
I am all ears, sir.
Is there a violent overthrow of a central bank that I could mine for material?
I want Ben and Tim to fear the inflation (and, consequently, revolutionary) fire that they are now stoking and feeding.
Ben and Tim do not appear to be swayed by letters and faxes and phone calls to Congress, and the voting out of the bailout Republicans.
Time to move to next steps.
Comrade-Dope jg (jg) | 01.13.09 - 12:03 pm | #
why are you picking on Volcker?? He doesn't deserve to be in the company of all the other morons on your list.
Aw crap...
But who's to say that the credit unions are any different?
Oh dear, mal.
Let's use Versailles. The 'storming' of the Bastille saw seven, or was it four, non-political inmates emerge blinking into the light.
Winter Palace also a non-starter.
homedad43 - At least FHLB seems to be immune from credit downgrades.
How did that work out for Lehman ?
CONJURE'S GLOBAL DEPRESSION CLOCK
The time is now--
11:59:56
Conjure says, "Ben, now would be a good time to nationalize the banks and fix the problem."
"You are running out of time."
I want Ben and Tim to fear the inflation (and, consequently, revolutionary) fire that they are now stoking and feeding.
Comrade-Dope jg (jg) | 01.13.09 - 12:21 pm | #
I think you are missing the point- they want inflation. Misguided as it might be they don't understand the current problem and would therefore like to convert it into a problem that they do understand and think they know how to fix. BTW I got that from an assistant dean at a major Business school who hangs out with this lot.
Oh crap.
Assume Crash Positions! writes:
"I think we have a reason Obama might want the rest of the TARP money lickety-split.
Note the formula that appears in the Times: "At Obamas Urging, Bush to Seek Rest of Bailout Funds." I have some colleagues who have ringside seats, and this was staged. We have the appearance of bi-partisanship, but Obama is bending over backwards to prevent a slugfest. Or so I have been told. Key section:
The decision to request the money now reflects the calculation by Mr. Obama and his aides that it would be better to have both the incoming and outgoing presidents urging lawmakers to release the money, given the high level of anger and frustration on Capitol Hill over how the Bush administration has managed the bailout program.
Is Bush Tanking Stocks to Grab the Remaining $350 Billion TARP? « naked capitalism
I think this just highlights the need for everybody to come clean- lets clean it up one time even if means nationalizing everything under the sun.
Since acient times, pogroms have been used by the elite to scapegoat others.
I would hope we've evolved.
Volcker, a month ago or so, was calling for Keynesian measures to fight the downturn.
He did fine work 30 years ago, but seems a bit soft-headed, now, given his call for bailout measures.
Thus, he now provides cover for Congressional (fiscal) dummies and Fed (monetarist) crooks.
crazyvermonter:
Wow, an assistant dean at a major business school.
Tell him that I'm still pissed about that C in Operations Management. That last problem was like the grocery store equivalent of the Kobiyashi Maru.
Maybe that Mayan Calender of 2012 Is accurate....
"I would hope we've evolved."
Conjure says, "Wrong! Go to the back of the class."
@Conjure,
Ben doesn't make the call to nationalize the banks. Barak does, sometime after Jan 20. Ben won't be the key player under Barak in a bank nationalization or major reorganization or wholesale Chapter 11. I think it will be Sheila Bair.
Meanwhile, Conjure, you have a nice day, too. Tell MP we say hello.
yes - but at least he has the courage to spell out that our problems are caused by over spending and in 2005 he was critic of what was going on.
You can certainly disagree with his solution to the problem-but unlike so many he has at least diagnosed it correctly and certainly was not a party to creating the mess.
A point I would ask many here to keep in mind.
The economic principles in place in the late 1920s were (simplistically):
1) Budgets will be balanced;
2) Money is tied to gold. (Yes, it was fractional at the time. It was still tied to gold.)
I'm in the camp that agrees the driving force for the Great Depression was the credit bubble created (in part) by the "easy money" principles of 1924-1929. It parallels my belief that the core of our current economic downturn is also due to credit collapse. Regardless of whether this belief is accurate or not, the facts on the ground are that a return to a gold standard and insistence upon balanced budgets would not prevent the current problem from happening again.
Mayan calendar, Schmayan calendar. The Panic of 1837 had its own doomsday cult... remember the Millerites and how the world was supposed to end on October 22, 1844?
This FHLB needs to be called a bad bank?
"With the worsening of the economy's growth prospects, continued credit losses and asset markdowns may maintain for a time the pressure on the capital and balance sheet capacities of financial institutions," he said.
"Ben doesn't make the call to nationalize the banks."
Conjure says, "Sorry, Ben makes the decision, Obama issues the order."
@Conjure,
With you 100% on evolution, or the lack of it during the past few centuries.
Barak does, sometime after Jan 20. Ben won't be the key player under Barak in a bank nationalization or major reorganization or wholesale Chapter 11. I think it will be Sheila Bair.
From a legal perspective, there is so much wrong with these statement
No pogroms for me.
Abolition of The Fed is my objective. Abdication by Ben, Governors, and Presidents would be great.
Please provide me a suitable banner if 'You give us inflation, we give you Kristallnacht' is too inflammatory.
But what does L. Summers think? Isn't he BB's heir apparent?
mp writes:
"Ben doesn't make the call to nationalize the banks."
Conjure says, "Sorry, Ben makes the decision, Obama issues the order."
mp | 01.13.09 - 12:31 pm | #
No problem.. we have 4 more seconds til it hits the fan (as per conjure).
I expect Jack Bauer will come in at 11:59:59.99 and save the day with some amazing plan..
750 billion in the last year with very little oversight of such staggering lending. The risk that this stealth bailout of many insolvent mortgage lenders will end up costing massive amounts of public money is now rising."
This sure resembles the TARP program and Congress..
I immediately thought og Countrywide & WAMU reading this article.
conjure,
What happens to options if banks get nationalized?
I expect Jack Bauer will come in at 11:59:59.99 and save the day with some amazing plan.."
Conjure says, "Don't bet on it."
fair economist "Surprised it's Seattle, though"
Well, isn't the largest bank failure in history from Seattle ?
BondsofSteel, there are no accounting rules, that's an oxymoron.
Jg,
like oakland recently with the bart police shooting a kid held down in the back, people came out and let them know they were pissed..
We are being shot in the back..I agree that we need some form of revolution..they don't care what the avg citizen thinks..they are above them..
I'm all ears too.
we need more walt's (gran torino)
then ben's...all the help goes to the criminals..well then it becomes necessary to be one yourself...
I, you and me dont mix well when it's the children's future that is being stolen by greed, lies and deceit..
When a bloated whale carcass beaches, you either tow it back to sea or bury it...pouring water over it will not bring it back...we are the sand beneath the whale...we support it yet wallow in it's stink and reek in the smell of death...
I laugh at the rose colored glasses of the pacifists..
"The 'storming' of the Bastille saw seven, or was it four, non-political inmates emerge blinking into the light."
one of whom was the marquis himself - patron saint of hedge fund managers forever
Washington Mutual Inc., Merrill Lynch & Co. and Bank of America Corp. were the largest users of the Seattle FHLBs secured loans as of Sept. 30, borrowing 59 percent of its $46.3 billion, according to a November securities filing.
Uhhh huh!
UK economy downturn 'frightening'
BBC NEWS | Business | UK economy downturn 'frightening'
"It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace," said the BCC report based on a survey of almost 6,000 firms which employ 680,000 people.
Manufacturing, home sales and orders, employment expectations, investment, confidence and cash-flow have all hit record lows.
Now where's the news US economy downturn is even more 'frightening' ?
That's right the US MSM are mainly spinmeisters, cheerleaders, and assclowns !
GS was advising countrywide when they pulled down that money. Yet another GS solution. When are the bankers who advised going to be held liable...
Barclays cutting 2,100 investment bank jobs: report
Dealbreaker is all over the carnage beat - called this several days ago.
@Conjure
Sorry dude, I am quite certain you are wrong about who calls the shots on nationalization.
Let start by taking your wording for granted as a place to begin. Look at the way you put it. Bernanke can make a "decision," but Obama issues the "order." No order and no enforcement equals no nationalization. So who really makes the decision?
But I think it is even deeper than that. Although Fed Chairs are independent in theory, in practice they hew to the President's line. See, for expample, Bernanke's recent tilt toward exactly the fiscal stimulu policy advocated by Obama.
Nationalizations in the past have all been by Presidential order, and thus Presidential decision. See Truman and the steel companies.
Presidents lead in complex ways, or at least the talented ones do. Eisenhower was a master of getting people out in front of his own position, so that it looked like he was being led. FDR, too. And Obama looks like he might be master at this, as well (I'm thinking of his campaign against Clinton and his recent handling of the stimulu proposal).
Ask MP to give you a scotch and a toad bone.
It's time for Conjure and me to get back to our doings.
Conjure says, "Have a nice day."
It won't be called Nationalization, MSM won't allow it, so what's another word/phrase that will be used...Time to Coin it right here on CR.
"It does look like a great eight years, aside from the last quarter, unfortunately," Edward P. Lazear, chairman of Bush's Council of Economic Advisers, said in a recent interview. "In the long term, things look good. The reason things look good is this economy will rebound, and it will rebound strongly. . . . We expect things to turn around, and I would say early in President Obama's administration."
" a return to a gold standard and insistence upon balanced budgets would not prevent the current problem from happening again."
kirk, excellent point about the 20s (and the reason that any and all economic theory should not cross 1973 in any kind of a historical overview).
however, totally wrong about that last statement - a commodity currency gives a sense of discipline which makes the kind of leverage and securitization we've seen impossible. it most certainly would prevent the worst excesses of the post-reagan era.
Take the banks, fire the management, fire the shareholders, sort out the worthless paper then when they're back on their feet again do an ipo for a profit and there we go.
Some of the worthless paper would be really easy to toss out as it would have been traded between the banks now under government receivership.
Nemo writes:
I always loved the phrase "unrealized losses". I mean, at this point, I think everybody is starting to realize there are losses.
Nemo | Homepage | 01.13.09 - 11:31 am | #
Remember the Wile E. Coyote Rule: you won't fall if you don't look down.
Same with these thingys
Warning that house prices may fall by 80%
Warning that house prices may fall by 80% - The Irish Times - Tue, Jan 13, 2009
wow, i wish it were the case here! it would be awesome for those starting out like me
Drugmaker Pfizer cutting up to 800 scientist jobs - Yahoo! Finance
New York-based Pfizer plans to reduce its global research staff -- currently about 10,000 people -- by 5 percent to 8 percent this year, company spokeswoman Kristen Neese said Tuesday.
"This is in line with our refocused research areas," Neese said.
The move comes after the company announced in September that it was narrowing its research focus to six disease areas -- Alzheimer's, cancer, schizophrenia, pain, inflammation and diabetes -- and abandoning new research in other areas.
Joseph Tainter writes a lot about the flattening cost-value curve in R&D in his Collapse of Complex Societies. However, this development would also be of interest to the editors of the recent essay collection Agnotology, which is the study of how ignorance develops and is (in some cases) manufactured. Humankind has actually forgotten some of the scientific stuff it "knew" (no one knows what exactly was in Greek fire, for example, but it sure was militarily important). Hundreds of years from now, we're not just going to have undiscovered breakthroughs, but we're actually going to have forgotten ones.
For Janisik (OT): Slovakia considering restarting the Bohunice nuclear power plant.
"wow, i wish it were the case here! it would be awesome for those starting out like me :-)"
patience grasshopper...
Here yah go:
FHLBs May Fall Below Capital Minimums, Moodys Says
FHLBs May Fall Below Capital Minimums, Moody’s Says (Update5) - Bloomberg.com
The U.S. may decide to put some of the FHLBs, the largest U.S. borrower after the federal government, into conservatorship or force them into mergers with others, Moodys said. At issue is whether declines in the market value of the mortgage bonds, totaling $13.5 billion on Sept. 30, will be deemed other-than- temporary impairments, or OTTI, and how much of the losses their regulator will see as irreversible, the statement said.
The response by the Federal Housing Finance Agency to any shortfalls is something of an open question, Brian Harris, a senior vice president at Moodys, said in a telephone interview. To the extent they think the economic loss is much lower than what the OTTI is, I think that would affect their actions.
forget that odious term Kristallnacht, or the French Revolution... for my money it's the 1905 Russian Revolution
The level of fraud is this country is unbelievable. Can an economy survive after such widespread fraud?
Fear, anger, recriminations, finger pointing, extreme views. Hmmmmmm.
How many video clips of elected officials, from around the world, in their version of congress have you seen where they attack each other? I could link 10 videos in a minute.
When the pictures/news reports of Congress start showing them throwing things other then words at each other I would seriously start worrying. Right now I see a relaxed smiling group of legislators. Are they deluded or do they understand some things that we don't?
Personally the first image of Pelosi getting a glass of water thrown in her face will be my signal to head for the hills.
CR commenters might just be ahead of the curve in moving past civil discourse.
"wow, i wish it were the case here! it would be awesome for those starting out like me :-)"
patience grasshopper...
Comrade Janosik | 01.13.09 - 12:44 pm | #
i've been really patient, waiting for home prices to drop since 2005. now i really want to see manhattan prices collapse.
Coast Guard Rescues Swan Stuck In Ice
LORAIN, Ohio -- The Coast Guard rescued a black swan that was stuck in the ice in the Black River on Sunday.
@mal
thanks. Angotology sounds like an interesting book. I think we've forgotten something recently . . . what was it? Rule of law? Need for an educated citizenry? Remembering not to let the fox guard the hen house? I don't know, but it was something like that.
Fo'csle: Why ain't she turnin'?
Boatswain: It's gonna hit!
"friardaddy writes:
So I guess Bernanke already implemented the "Bad Bank" model he is yapping about in London today?"
FRIARDADDY, I am mighty afraid that the Bad Bank is the FED.
I bet that the FHLB gave a loan or two to illegal aliens.
LORAIN, Ohio -- The Coast Guard rescued a black swan that was stuck in the ice in the Black River on Sunday.
\t locust | \t \t \t \t01.13.09 - 12:47 pm | #
I thought those things were contained to Australia. The end is near!
"For Janisik (OT): Slovakia considering restarting the Bohunice nuclear power plant."
I think Slovakia is fairly well poised for a global slowdown. Right in the heart of Europe, hard working people, intelligent young folk...could be interesting...
I might return as a poor American peasant to live with my nouveau riche uncle or something...
The irony alone would make a great novel.
Comrade-Dope jg (jg) writes:
Okay, mal.
Reichstag Fire? That was burning and no killing, right?
I dont quite think thats the right reference either.
Reichstag was perpetuated BY the government. Kristalnacht too.
I think you mean to evoke something more along the lines of the French Revolution
Rosner: Force Banks to Write-down Bad Debt Before They Get a Dime of TARP II
Forcing banks to take write-downs before the government injects capital is how Sweden successfully resolved its banking crisis in the 1990s.
But even if the "Swedish solution" were adapted, Rosner says the structured finance market remains broken, which is preventing all this government money from making its way into the economy in a meaningful way. He compares it to opening a water spigot without having the pipes to take the water where it needs to go.
Agnotology is available on Amazon.com. The basic thesis of the book seems to be that human knowledge may be of finite breadth. The more we learn, the more of our former knowledge passes into ignorance. It is a collection of scholarly essays on a variety of topics. Agnotology means "the study of ignorance."
"Need for an educated citizenry?"
if i may mention it for the umpteenth time, fully 45% of the USA believes that humanity is literally less than ten thousand years old, per easily google-able recent pew research.
so, fully half of our country believes in the easter bunny, while the top 5% IQs cooked up crap like trillions of dollars of CDS paper. what do you expect to happen.
Jeeze!.........Its an accounting issue that unfortunately does not reflect the true economics of the Federal Home Loan Bank system, John von Seggern, the president of the Council of Federal Home Loan Banks said.
....Nahhh....ain't nothin' but a meatball....
Thanks as always, mp.
LORAIN, Ohio -- The Coast Guard rescued a black swan that was stuck in the ice in the Black River on Sunday.
They let it live!!!??!?!
Good god, why didn't they kill the thing!
REBear re options and nationalization.
I don't know for certain, but my general take is that in a nationalization of the banks, the debtholders and shareholders get wiped out.
Hence, the options holders are wiped out as well.
In a sense, it's an angry parent fed up with the squabbling over the chess game and coming in and totally clearing the board.
In that case, SKF is probably not the place that you want to be.
Now my general question is, if treasuries burst, what's a safe place to be? I'm starting to lean towards foreign bonds - or else only the most blue-blooded of the domestic corporate bonds.
Can an economy survive after such widespread fraud?
Anonymous | 01.13.09 - 12:45 pm | #
most countries politcal/econ systems are far more corrupt than ours, they survive, so will we.
but resort to violence, after elected representatives stand by and let our system be looted?
Violence is not necessary and counterproductive. Being willing to suffer for the "right" cause is. I have no idea what is "right" at this point.
Gandhi Salt March: 1930
"they survive, so will we."
don't cry for me, cupertino
Russia, Ukraine trade blame as Europe sees no gas
Tuesday January 13, 2009, 10:30 am EST
Yahoo! Buzz Print MOSCOW (AP) -- Russia and Ukraine hotly blamed each other Tuesday as Russia restarted natural gas supplies but little or no gas flowed toward Europe. EU officials watched in dismay and criticized both nations for their intransigence.
Russia, Ukraine trade blame as Europe sees no gas - Yahoo! Finance
".....if treasuries burst, what's a safe place to be?"
I'd say 50-lb sacks of rice, beans, dog food, chicken feed, grain, flour,....etc., etc.......
"what's a safe place to be?"
bought some djp this morning. still holding jnk, gsg, tbt and maf.
"I'm open to suggestions, joe s-."
I'll submit the idea of a torch and pitchfork parade through manhattan. Total silence, just surly looks. I think that'd creep them out. Stop every few intersections and tar and feather some effigies. Better yet, don't parade through wall street, parade through the neighborhoods where they live.
"Can an economy survive after such widespread fraud?"
We aren't even pretenders to the throne that is Italy. Not that I'm arguing they're functional beyond the essence of that episode of Star Trek where the mob runs everything.
exactly bGates, exactly.
there's always talk about the need for math and science education. true enough. but basic literacy must come first.
GE may face a ratings downgrade at Moody's: analyst
"I'd say 50-lb sacks"
or just buy some dba. i will, if it weakens a little more. i like the soft commodities a lot in this climate, and will love them as a defensive play if they get cheaper.
from wikipedia
The 12 banks of the FHLBank System are owned by over 8,100 regulated financial institutions from all 50 states, U.S. possessions, and territories.
Equity in the FHLBanks is held by these owner/members and is not publicly traded.
Institutions must purchase stock in order to become a member. In return, members obtain access to low-cost funding, and also receive dividends based on their stock ownership.
FHLBanks are exempt from state and local income taxes, but are subject to property taxes.
ha ha ha ha ha
not pub-lick-ly traded
must be a "member" to benefit
AND
drim roll please
do not pay federal nor state nor local taxes!
no ponies for the rabel
What's the effective difference if that fhlb stops divvy when the FED pays interest on reserves. Need a real banking pro for that answer.
@joe shmoe
As a practical matter, what will happen is this:
Bernanke will go to Obama and tell him that the Federal Reserve has lost control of the system and that nationalization is necessary in order to restore control.
Obama will call yet another meeting, in order to provide safety in numbers, and call for a consensus view. Everyone will agree with Bernanke's view.
Obama will issue the order which, in fact, will merely be a recognition of reality.
As to the technicalities, Conjure and I leave that you.
Everything looks good if you are standing on your head.
Thanks Homedad.
O har har - the press release from Seattle FHLB includes the treat: "Unfortunately, the risk-based capital rules that apply to the Seattle Bank rely on market value rather than expected loss as the measure for determining our risk-based capital requirement."
WE HAVE A TRIPLE BATMAN FORMATION
LADIES AND GENTLEMEN, BRACE YOURSELVES, FOR THIS IS NOW A TRIPLE BATMAN DAY
mark-to-malarket
mark-to-marky-mark (and the funky bunch)
mark-to-marquee
mark-to-marquis
mark-to-marakesh
mark-to-mark 4:33
whats the difference between a religious cult
and the FHLB
answer
FHLBs are always tax exempt
A system that usually provides a lending stock of about $150 billion has forked out loans amounting to over $750 billion in the last year with very little oversight of such staggering lending.
Again, this illustrates a problem common to all types of "panic spending".
Spending not done in the course of "normal" economic activity tends to be ad hoc and poorly allocated. The result is a lot of wasted resources.
I think this is one of the perils of the upcoming BigTime Stimulus package.
If more debt is heaped onto an already overloaded public balance sheet, and that debt is used poorly, then the US economy will simply sink more deeply and irrevocably into the morass.
MP
We shall see. We agree that the system is out control and in what sure looks like a death sprial.
Always a pleasure to discuss with you and Conjure.
[still holding jnk, gsg, tbt and maf.
bgates]
I have too been adding to TBT incrementally, but it has been a bitter pill so far. Deep red.
mp writes:
I expect Jack Bauer will come in at 11:59:59.99 and save the day with some amazing plan.."
Conjure says, "Don't bet on it."
mp | 01.13.09 - 12:35 pm | #
jack Bauer will come in at 12:01 and mop up everything for the masters for less than 10 cents on the dollar
Peasant D-, that is an OUTSTANDING idea/suggestion; thank you!
That WOULD creep them out, if the throng sauntered past Ben and Tim's houses.
Threat of Kristallnacht, kind of.
Welcome to the state of Denial, oops, I mean California, where the state government is poised to run out of money even as public employee unions sue the state to stop employee furloughs and the state legislature bickers over drastic cuts in services which leave state wages, pensions and benefits essentially untouched. As the state's economy slides ever deeper into recession, tax revenues plummet, opening a projected $41 billion deficit which widens by the week. This is denial on a scale so grand that it borders on psychosis or alcoholic delusion.
charles hugh smith-Weblog and Essays
For Kirk Spencer at 12:29 PM-
Your contention about the expansion of cheap credit in the 1920's is the thesis for Murry Rothbard's The Great Depression". You may have to find the book through the Interlibray Loan system. That's how I got it. You may find it also from Lew Rockwell web site, or from the Missean Institute in Alabama.
"but it has been a bitter pill so far"
yup, i bought in around 50, fortunately, i cut most of my short-treasury holdings around 47, had some tbt at that point too (which i flipped for an eensy-weensy gain, believe it or not).
i've been trying to short treasuries in one form or another for 5 years, of course, it has almost always been a disaster. but having insurance for the day when the asian CBs wake up on the wrong side of the bed and rates jack up 300 bps is worth it IMO.
also, a JNK and TBT combo has a certain appeal - there was a good 2000 bp gap between the two when I got in, and the past month has gone well with that play.
"Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.
When you won, you divided the profits amongst you, and when you lost, you charged it to the bank.
You are a den of vipers and thieves."
---Andrew Jackso
I expect Jack Bauer will come in at 11:59:59.99 and save the day with some amazing plan.."
Conjure says, "Don't bet on it."
mp | 01.13.09 - 12:35 pm |
I would agree... there's no amazing plan to undo years of wealth illusions and deception.
The best possible plan can at best minimize collateral damage.
But the primary damage has been done and cannot be undone.
"the expansion of cheap credit in the 1920's"
leinwand's "1927" is also recommended highly, for more of a social history
"had some tbt at that point too"
meant pst
Duke of Con Dao writes:
forget that odious term Kristallnacht, or the French Revolution... for my money it's the 1905 Russian Revolution
Duke of Con Dao | 01.13.09 - 12:45 pm | #
Uhh...1917 maybe instead?
You people need less finance and more history books...
Black Star Ranch writes:
".....if treasuries burst... (then its time for) 50-lb sacks of rice, beans, dog food, chicken feed, grain, flour,....etc., etc....... 12:56 pm
Black Star.. thats twice in two days
maybe liberals and conservatives can get along!
may i just add two things to your list
silver and lead
This piece is so worth your while, if you have the time for 95 pages of deep background:
http://www.libertarianpress.com/fiatmoneyinflation/Fiat%20Money%20Inflation%20in%20France%20by%20Andrew%20Dickson%20White.pdf
May I humbly suggest that if you want a say in O' game plan, you make your opinions known at:
http://change.gov/page/s/yourvision
I am not saying that they will follow your advice or that the person(s) will move the information up the food chain, however, it's better than masturbation...
Anonymous | 01.13.09 - 11:41 am | #
Masturbation accomplishes something.
.
"You people need"
no, i'm pretty sure 1905 was the intended reference.
1905 Russian Revolution - Wikipedia, the free encyclopedia
speak for yourself
Nor Car
Lots of folks here need to read more history, but the Duke's citation on Russia 1905 is not inappropriate within the terms of the discussion he entered into.
I'm still thinking March 1933, when FDR was inaugurated.
Citigroup CEO Vikram Pandit plans to announce in the coming days a major shift away from the "financial supermarket" model that has guided the bank for the last decade.
Supermarket? Citi is more like a minimart.
Pretty soon, the gubbmint will be able to sell Citi on Craigslist.
"Pretty soon, the gubbmint will be able to sell Citi on Craigslist."
i thought that site was cracking down on meth-addict prostitutes?
Joe Shmoe I've had many run-ins with that asshole. Not worth your time. He Jew-baits every chance he gets.
joe s-, what else do you do, but resort to violence, after elected representatives stand by and let our system be looted?
We the people will not allow ourselves to perish, to be crucified, on a Cross of Debt.
Comrade-Dope jg (jg) | 01.13.09 - 11:49 am | #
Perfectly reasonable, until you invoke Nazism and/or anti-Semitism, as a reference to Kristallnacht does.
I personally would shed no tears if violence came to the Kleptocracy in DC/NY, whatever their religion/race.
You can have the gold, Botswana and Canada.
We'll keep the nuclear aircraft carriers and cruise missiles.
We'll see who stays the world's reserve currency.
Jon Stewart compares press conference styles of Bush and Obama. Don't lose hope in Obama just yet.
"The Daily Show" On Obama's Press Conference: "He's Still Got A Lot To Learn"
mock turtle(Excellent) writes:
jack Bauer will come in at 12:01 and mop up everything for the masters for less than 10 cents on the dollar
I would be so much more reassured if I thought the Dark Masters really had the slightest control over matters at this point. Alex Jones lives in a very comforting world. The Prison Planet is a wonderfully structured environment where your only mission and duty is to escape from the inescapable.
If only.
"maybe liberals and conservatives can get along!"
mock, I've never believed I was "either" of the above, entirely. I imagine we'd agree on a lot....
I think mp is being a bit too drastic.
We already nationalized the banks.
That preferred stock and the tarp, and all of the other nationalizations have already occured.
The bailout of Fannie and Freddie, combined with the FHLBs constitute the end game of all the bailouts.
Essentially, the Bush administration nationalized by stealth.
All that awaits is Obama's introduction of the GSA payscale.
Essentially, there is no unburdened national bank right now.
We have swiftly become Japanese.
Now the challenge will be to transmit the benefits of nationalization to stricken debtors without collapsing the entire housing segment of the economy.
The next bailout has to be from the bottom up, top down has nearly totally failed.
Someday this war's gonna end...
Yogi
quite clearly that is correct
I SMELL A PROFIT OPPORTUNITY!!!!
I love it when big banks/thrifts/financial instituitions become insolvent! because then the govt can go in and buy up and guarantee everything, and then make a profit! Hank tells me each time that we're going to make a profit! Yay!
if this keeps up, the USA will be the most profitest government on Earth!
I should probably write out the business plan and patent it. (wouldn't want France or something to figure this out).
YTL's Business Plan, Patent Pending:
Step 1: bailout imprudent financial institution using money we don't have.
Step 2: ???
Step 3: Profit!
Step 4: USA is the most profitest!
@ crazyvermonter: "why are you picking on Volcker?? He doesn't deserve to be in the company of all the other morons on your list."
Oh, sure: poor choir boy Volcker just got mixed up with the wrong crowd. Of course he's not just one more of the criminal scum parasites. Oh, no: not Volcker. He just was kept in the dark about all the criminality swirling around him. Dontcha' know.
Don't you have some snow to shovel or something constructive?
"Perfectly reasonable, until you invoke"
I think many people are attacking the messenger because they don't like the message. there are plenty of ignorant people here (and more than a few abroad) who will play the same scapegoating game as folks did in previous eras. this is wrong, and I hate this tendency and fear it, but no one should be mistaken about its likelihood. similarly, no one who takes history seriously should think that the economics and social dynamics of previous times made this dynamic a difficult won to foment.
Comrad dope, you are right racist violence could solve this. I mean WWII supposedly ended the last depression.
won = one of cousre
bgates writes:
"You people need"
no, i'm pretty sure 1905 was the intended reference.
Wikipedia, the free encyclopedia
Rus...olution_of_1905
speak for yourself
bgates | 01.13.09 - 1:12 pm | #
No...
The 1905 revolution did nothing. Nicholas just got 12 more years of breathing room to alienate the public.
What happened in 1917?
Oh, I see. Thanks
I would agree... there's no amazing plan to undo years of wealth illusions and deception.
Amazing plan? Things are far beyond that.
We need an amazingly amazing plan. And we need it ASAP.
"Threat of Kristallnacht, kind of."
I was thinking more: the villagers finally getting fed up with the monsters getting lose from the laboratory. The castle never suffers from this, being stone, but the wooden houses and livestock of the populace sure do.
Unlike the villagers, tho, I imagine an expression of rage so silent it is deafening.
Bleed em dry. Stop participating. Go all cash. SAVE. Be frugal, buy only necessities. Pay off all debt or default.
And vote the bastards out
I really hope that happens. We should have nationalized back in Sept/Oct. We've lost a lot of time since then.
mp writes:
@joe shmoe
As a practical matter, what will happen is this:
Bernanke will go to Obama and tell him that the Federal Reserve has lost control of the system and that nationalization is necessary in order to restore control.
mp | 01.13.09 - 12:59 pm | #
Anonymous writes:
Welcome to the state of Denial, oops, I mean California, where the state government is poised to run out of money even as public employee unions sue the state to stop employee furloughs and the state legislature bickers over drastic cuts in services which leave state wages, pensions and benefits essentially untouched. As the state's economy slides ever deeper into recession, tax revenues plummet, opening a projected $41 billion deficit which widens by the week. This is denial on a scale so grand that it borders on psychosis or alcoholic delusion.
charles hugh smith-Weblog and Essays
Anonymous | 01.13.09 - 1:07 pm | #
I have seen psychosis and alcoholism, and California is definitely insanity.
Just keep giving entitlements to illegal aliens (= subsidies for industries that employ illegals at the taxpayer's expense).
Being anti-illegal immigration DOES NOT EQUAL being racist.
When a bloated whale carcass beaches, you either tow it back to sea or bury it...pouring water over it will not bring it back...we are the sand beneath the whale...we support it yet wallow in it's stink and reek in the smell of death...
I laugh at the rose colored glasses of the pacifists..
\t cd | \t \t \t \t01.13.09 - 12:36 pm | #
cd | 01.13.09 - 12:36 pm | #
What about dynamiting it
Anybody got a link to the video>
"The 1905 revolution did nothing."
yes, your command of history is indeed impressive. almost as impressive as prof bernanke's grip on economics. teach on, nor car. I believe you and the good professor hail from the same region, incidentally. imagine that.
Fair Economist writes:
\tI think we have a reason Obama might want the rest of the TARP money lickety-split. Surprised it's Seattle, though. Wasn't it Atlanta that kept popping up in the "OMG how could those idiots make that loan" stories like the 50 billion to Countrywide?
Fair Economist | Homepage | 01.13.09 - 12:04 pm | #
-----
I may be an hour--or three--late but I haven't read an answer to this question yet.
The Atlanta bank was the one we were all gossiping last week. Was the Seattle bank's announcement coming out of no where? Was the Atlanta gossip--AcrossTheCurve mentioned it too--a head fake? Ideas? Suggestions?
Step 2: ???
Step 2: Repeat Step 1 until Step 3 is achieved.
Just emailed by a coworker:
The Bailout Game | Home
Yearningtolearn...You got it, no Jas dope.
Was the Atlanta gossip--AcrossTheCurve mentioned it too--a head fake? Ideas? Suggestions?
Perhaps Seattle was an ice breaker. It's all one big water mellon now anyway.
"maybe liberals and conservatives can get along!"
I always thought people slapped those labels on themselves as a statement that they don't want to get along...
@ Citi abondoning "supermarket model"
What's amazing to me is that at the same time Citi is trying to sell off lines of business, BoA is touting the "supermarket model" with its acquisition of ML. Something does not compute!
"Being anti-illegal immigration DOES NOT EQUAL being racist."
no, but it does generally equate with stupidity and short-sightedness. you are aware that a recent study showed that illegals are actually doing a better job on not defaulting on subprimes than the rest of us, aren't you?
Want a secure mortgage? Loan to the Amish or an Illegal Immigrant
Picture this in your head.
The CR Blog comments is the captions running under the movie we are watching. The movie is titled "Financial Destruction!"
I think we are at the part were we are seeing random crowd scenes of unaware people. Kids going about their business. Mom's and Dads smiling. The bustle of the street.
Meanwhile, unknown to them, the B-52 pilots, missle crews, and subs are getting codes coming in that they are busy authenticating.
The President, in this movie, believes it is all contained. So far it has just been a few single warheads.
Everyone is commited to minor destruction to make sure everyone realizes how commited they are, yet each believes the status quo can be maintained...
re: nationalization
something tells me that nationalization is a credit event, but of course, that depends on the individual contract.
R-G-AZ, that makes sense to me.
Question is, when does such happen?
The FHLB thing is a stunner, to me. The time of the B- to O- declaration of 'Game's up' may be close (within a few months?).
"does not compute"
kenny is a shark that can't stop swimming, that's all there is to it
Citizen AllenM writes:
I think mp is being a bit too drastic.
We already nationalized the banks.
Not until shareholders and most creditors are wiped out.
What's happenning now is a theft of tax payer's money and future generation's money to pay out dividends and bonuses. Keeping the ponzi scheme running until THEY decide to stop it.
however, it's better than masturbation...
bobn | Homepage | 01.13.09 - 1:11 pm | #
Then you're not doing it right-
something tells me that nationalization is a credit event
You mean as far as derivatives are concerned?
I think it's certainly a credit event in that it transfers bad debt from private balance sheets to the public.
ING cutting 750 U.S. jobs, or 8% of U.S. workforce: report
Just emailed by a coworker:
citizen energyecon | Homepage | 01.13.09 - 1:22 pm | #
O
Kind of funny, when the pump money quits flowing for 30 minutes, how the dollar starts drifting down, along with the stock market and commodities:
Beartopia - Commodities & Currencies News
Black Star Ranch
agreed
i was tryin to be half funny and half for real
my political opinions vary from issue to issue probably like yours.
example, im "green" and i like to hunt and fish. (life time member of the NRA and Sierra Club)
I expect Jack Bauer will come in at 11:59:59.99 and save the day with some amazing plan.."
Conjure says, "Don't bet on it."
mp | 01.13.09 - 12:35 pm |
This was all tongue in cheek.
SDS heavy.. and waiting..
"(life time member of the NRA and Sierra Club)"
totally logical. the country would be in better shape if folks in the NRA and ACLU realized they're on the same side of a very important set of issues.
Chase out of Wholesale lending.
The Mortgage Lender Implode-O-Meter News Pick-ups: Imploded: Chase Prime - Wholesale
Can frazer get up...
down goes frazier!!!
Down Goes Frasier, Down Goes Frasier Video
UGA (gasoline) is still gree
If this is nationalization, as Lolfed might say, Ur doin it rong. The whole point of nationalization is for the gov't to take over banks who are either 1. insolvent and/or 2. unwilling to provide the liquidity needed to get the system back on its feet.
Giving a bunch of cash to banks so they can hoard it isn't exactly the point.
bgates writes:
"Being anti-illegal immigration DOES NOT EQUAL being racist."
no, but it does generally equate with stupidity and short-sightedness. you are aware that a recent study showed that illegals are actually doing a better job on not defaulting on subprimes than the rest of us, aren't you?
404 Not Found? p=329
bgates | 01.13.09 - 1:26 pm | #
Maybe because they have 2-3 families in ONE single family dwelling??????
bgates:
thanks for the thoughts.
am now out of TBT however. was in it and intellectually interesting, but the Fed/Treasury is going to depress the yield curve longer than I think that it makes sense to hold it given the mathematical nature of the ultrashort instrument.
This could go on for quite a bit longer than a few months.
m-t-, you have similar psychological profile to my sister-in-law, a pistol-toting vegetarian.
Comrade Byzantine_Ruins
about the 1201 jack bauer thing
i realize you may well be right...that this isnt a "faint" to consolidate
but rather
a total economic three ring psychosis
i mean the entire deal is off the hook
like..outta control
economic condition DEFCON 1
"Bleed em dry. Stop participating. Go all cash. SAVE. Be frugal, buy only necessities. Pay off all debt or default......And vote the bastards out"
...AND, the best way to fight the next revolution ...
"Maybe because they have 2-3 families in ONE single family dwelling?"
if only we could all be great americans occupying 3500 sq ft castles deep in riverside county with 2 or 3 people
Step 2: ???
Step 2: Repeat Step 1 until Step 3 is achieved.
Angry Saver: this is the most depressing post I've ever read. too bad it's spot on.
"You can have the gold, Botswana and Canada."
Don't think so. Central Banks have corralled 90% of the world's gold. The mother lode of them all is on Liberty Street. Takes a minute to load (pdf).
http://www.ny.frb.org/publications/frame2.cfm?url=%2Feducation%2Faddpub%2Fgoldvaul%2Epdf
Bush, McCain ,Pelosi, Kennedy support Massive Illegal Immigration
The American Middle Class opposes it.
Cheap Labor Conservatives and Lexus Liberals can't handle the truth and scream "racism".
Energyecon,
Just played the bailout game. Lost beaucoup points with the FNM/FRE decision.
Anyway, I let all the banks fail and guess what, main street still looked like main street. Go figure.
" given the mathematical nature of the ultrashort instrument."
agreed that holds in doublestuff can be stupid. but i got a nice bounce out of dxo next month, and have had plenty of nice flips out of sds, dig, and many others.
I'm with FineWhine.
My mom was born in Mexico. She was a migrant farm worker as a child.
She is anti illegal immigration. As is my father. As are all their children.
bgates and Comrade-Dope jg (jg)
you both nailed it
"can't handle the truth"
i know, full-blooded native americans like yourself find it problematic. but some of the rest of us like the idea of long-term economic growth.
citizen energyecon - Thanks for sharing. Too funny.."Palin gets eaten by a bear" and the bottom scripts are way to funny
"As are all their children."
who are hopefully doing a better job than my average-5th-generation cousins at getting college degrees. not like that is hard.
Bernanke will have to be the point-man on any nationalization effort. If O were to do it, every moron on the planet would scream "Pinko." Don't forget the politics of all this - the sheeple are still fighting old, old battles.
Actually, if Paulson and Bernanke don't pull that trigger, I doubt it gets pulled. Imagine our new, highly educated, black president pitching a "Swedish-style" reorganization to the unwashed masses. Optics matter, unfortunately, and that may be our death. Isn't this a sick little backwater we've created?
What is precious is not the bloodlines.
What is precious is the culture.
Permissive nutjobs in Sacramento allow immigration without requiring immersion in the culture.
That is why I am against illegal immigration.
It weakens our precious American culture (well, the fine culture that we USED to have).
Angry Saver: this is the most depressing post I've ever read. too bad it's spot on.
Fish gotta swim, bird gotta fly, and banker gotta write himself a bonus.
"without requiring immersion in the culture"
i find our lack of emphasis on language education in the state frustrating as well. we should be raising a generation that speaks english, spanish and chinese well. instead, we let our strengths become weaknesses.
"our precious American culture"
Jet-skis?
What happened to our rally?
Don't think so. Central Banks have corralled 90% of the world's gold. The mother lode of them all is on Liberty Street.
| \t01.13.09 - 1:39 pm | #
\t anon | \t \t \tHomepage
anon | Homepage | 01.13.09 - 1:39 pm | #
I believe that at one time, Indian women had nearly half of the world's supply of gold held in jewelry. I suspect that this is still true.
OK SKF now green. Obama will at least require 2nd half TARP Pigs to pay no dividend. That would be both sane and popular.
What happened to our rally?
It ended in 2000.
"What happened to our rally?"
all of my tickers are green ATM. though i am self-kicking a bit for buying a few pnc puts last month instead of bac.
all of my tickers are green ATM. though i am self-kicking a bit for buying a few pnc puts last month instead of bac.
bgates | 01.13.09 - 1:53 pm | #
I weep for your opportunity cost losses.
Moderate, legal immigration is not incompatible with growth. Grow up.
We have swiftly become Japanese.
It really looks like death is stalking the Japanese economy now.
I wonder if their failure to clear the debt out of their system by piling bad debt onto the the public balance sheet has come back to haunt them.
"Grow up."
our drug war has created a beirut with over 150 million people in it to the south. they want to escape. i'd advise doing the same.
Learning more than one language in childhood is supposed to be good for the brain as well as the mind.
sorry, over 100 mil.
"Learning more than one language in childhood is supposed to be good for the brain as well as the mind. "
and california should be the logical home of a trilingual education. we could rule the world. instead, the anglos play the blame game, the latinos often seem content with being a permanent underclass, while the asians wonder why no one else thinks a UC degree is still a good thing to have. sad.
You anti illegals would sure change your tune if you went to the grocery store and paid $7 for ONE head of lettuce.......
You benefit from it too....
Ciao
MS
Conterpointer,
If you are reading this, thanks for
the Vanuatu Island sugestion. I prefer
to deal with volcanos and canibals than submit to blood-thirsty, pent-up,
Fascist cravings.
http://washingtonindependent.com/24782/insurance-firms-aim-for-tarp-money-less-oversight
... The OTS has been headed by two very ideologically tilted directors who believe in deregulation with a passion, McCoy said: James Gilleran, who began his term in 2001, and current director John Riech, who took office in 2005.
In 2003, Gilleran posed with the three other federal banking agency officials for a photo to illustrate the Bush Administrations commitment to cutting red tape. Gilleran wielded a chainsaw instead of garden shears.
A review of the agencys history of enforcement actions prior to bank failures or takeovers show that its actions were either late, or inadequate, McCoy said. Thrifts would be cited for compliance problems with flood insurance certificates, for example, rather than mortgage quality. The IndyMac backdating controversy is the latest debacle that should put an end to the question of the agencys ability to function in its current form, she believes.
The OTS is the worst federal regulator on the block, she said. It has a culture of being so permissive and cozy with the thrifts it regulates, that you cant really break it without major reform. What were seeing is not only an attitude from the top but a pervasive way of doing business that has permeated even the front line examiners at OTS.
....
The case of Darrel Dochow, the senior employee demoted in December over the backdated IndyMac documents, also summarizes the agencys problems.
... Dochow approved an IndyMac strategy to overstate the strength of its financial condition, shortly before its failure in July ....
It wasnt Dochows first brush with trouble. Dochow was demoted from his position as head regulator of the Federal Home Loan Bank Board over his role in putting off for two years the shutdown of Charles Keatings Lincoln Savings & Loan, which collapsed in 1989, one of the most well-known bank failures of the savings and loan crisis....
The Federal Home Loan Bank Board was replaced by the OTS in 1989, as a move to tighten regulatory standards. Dochow and many other former employees, however, were hired on, McCoy said.
Dochow worked his way back up the bureaucratic ladder at OTS, and redeemed himself in 2006 by helping to persuade Countrywide Financial Corp. to switch its regulator from the OCC to the OTS, according to a Washington Post probe of the agency. The story described the OTS as having an overly close identification with its banks.
Aided in part by the Countrywide deal, Dochow was promoted to head of the agencys western regional district by 2007, McCoy said, giving him the distinction of being at the center of two of the worst bank crises in recent history.
But OTSs issues go beyond Dochow. As GWs Wachter noted, the OTS competes with other regulators for its customers and relies on fees it charges the banks it oversees, giving it a problematic setup similar to that of credit rating agencies. ...
citizen energyecon writes:
\tJust emailed by a coworker:
citizen energyecon | Homepage | 01.13.09 - 1:22 pm | #
-----
Illinois governor voted "most honest politican". LoL
Oh, on the "not everything is gloom and doom" front, the A2/P2 spread is down to 223 basis points. Still a bad number, still worse than any postwar recession, but far better than before and not suggestive of a Great Depression. More of a marginal depression. If this continues good I'll have to back off on my 13% unemployment prediction.
Let's say - hypothetically - President Change steps up in class and finds the intestinal fortitude to nationalize the banks.
That's a...monumental event. To put it mildly.
In such a scenario, does the Federal Reserve retain its existence in pretty much the form/function it has now, or will the conversations be going to an entirely new level of possibilities?
Fair Economist writes:
Oh, on the "not everything is gloom and doom" front, the A2/P2 spread is down to 223 basis points.
Not sure these now accurately portray the actual credit conditions? I respect your views and wonder if you still believe them to be an accurate measure?
Anyway, I let all the banks fail and guess what, main street still looked like main street. Go figure.
Angry Saver | 01.13.09 - 1:40 pm | #
Yes, evidently the game writers had an agenda, the highest score is had by bailing out all the banks - sigh...
stockdog42, at present the Fed is buying high grade paper and not midgrade commercial paper (at least supposedly). That would actually increase the spread if the market can't arbitrage properly. It's actually one of the few indicators left that Fed action isn't making artificially good, unlike TED or LIBOR.
There are some indications that the market's ability to arbitrage is coming back somewhat (TIP spreads are getting to be almost reasonable for a Japan-style Long Depression as opposed to just plain nuts) and that may underly the improvement. Fed action may have been artificially increasing the spread. Before the paralyzed market was just accepting the spread. Now the market can sell the overpriced AA paper to buy underpriced A2/P2 paper, insofar as the spread is excessive. If so the spread will probably fall more.
MS writes:
You anti illegals would sure change your tune if you went to the grocery store and paid $7 for ONE head of lettuce.......
$7 for a head of lettuce that wasn't picked by a slave is a bargain.
may i just add two things to your list
silver and lead
mock turtle | 01.13.09 - 1:10 pm | #
Are you implying we need to worry about werewolves now?
.
Violence is not necessary and counterproductive. Being willing to suffer for the "right" cause is. I have no idea what is "right" at this point.
tg is a born & bred dope in a | 01.13.09 - 12:54 pm | #
Congress will defend the interests of their corporate clients, at the expense of the taxpayer, until citizen gangs break down the congressional doors.
How about just another tea party, say, TEA, the Taxpayers Escrow Assn. with half of one's taxes paid and the other half held in an escrow account, to be paid upon gov't fulfillment of TEA/citizen demands. Pelosi, Reid, Frank and their corrupt ilk will never respond to anything less. Then maybe AMU, the American Mortgagor Union. Peaceable ideas, get their attention, head off trouble since they're still in the Greenbrier bunker mentality.
joe shmoe writes:
...The Riechstag Fire was the pre-text that open the path to concentration camps and then to war in Europe...
Pure propaganda:
a) The Holocoust occured during the war, not prior to it ! ("concentration camps and then to war) Do not change either the sequence or the causality of events.
b) please consult Raul Hilberg (the "nestor" of the Holocoust-research, himself a Jew and banned from the premises from Yad Vashem!) for the path to the Holocoust. He said "Keiner wusste 1933 was im Jahre '38 passieren würde, keiner hatte eine Ahnung was in späteren Zeiten, '41 beschlossen würde." (see : Video: Rückblick auf die Holocaustforschung - Geschichte und Erinnerung ,it's in german, translate it yourself.)
So, you are in direct contradiction to the most preeminent Holocoust researcher!
Learn youself history and do not disseminate propaganda! That's not any better than Holocoust-Denial !
"How about just another tea party"
Excellent idea, but we need something visceral as well. How about dumping these birds--Bernanke, Paulson, Pelosi et. al in the harbor--just a little something to make sure they're awake and paying attention.
$7 lettuce.
Instead now we pay $0.89 and $15.00 social costs spread throughout the social welfare system regionally and nationally.
I'll take a nation of laws and enlarged LEGAL immigration, thank you. Time to shut all the loopholes whereby people can achieve same or equivalent status by illegal or quasi-legal means as the firm law-abiding sector. Isn't that why we have this financial crisis at present? Systemic gaming.
Shocked, shocked I say...
Crisis deepens as Russia-Ukraine gas deal unravels
By Fred Weir | 01.13.09
[snip]
But as observers heads spin over the on again, off again flow of Russian gas, which accounts for a quarter of Europes total supply, there are growing suspicions that hidden concerns over Ukraines geopolitical choices and high-level corruption in both Russia and Ukraine may be the real factors driving this dispute.
[snip]
The rhetoric between Moscow and Kiev has flared to new heights in recent days, with Russian Prime Minister Vladimir Putin accusing Ukraines warring politicians of stealing gas to fund their political campaigns, and Ukrainian President Viktor Yushchenko replying that Russian claims are untrue and designed to humiliate Ukraine.
[snip]
But Mr. Petrov adds that Putins claim that Ukraines leadership is sunk in corruption is a case of the pot calling the kettle black.
Experts say that instead of contracting directly with Ukraines state gas firm, Naftohaz, Russias Gazprom sells its gas through shadowy offshore intermediaries who flip the payments back and forth, beyond any official scrutiny. One such entity, RosUkrEnergo, is 50 percent owned by Gazprom.
Its absolutely inexplicable why Gazprom has these joint ventures with obscure little companies, and transfers billions of dollars to them, unless the purpose is to evade taxes and reward particular unseen interests, says Mikhail Krutikhin, a partner with RusEnergy, a Moscow-based consultancy. Someone is getting that money. If this isnt corruption, what is? he says.
Mr. Vydrin, the Ukrainian parliamentarian, agrees. Gas spells corruption in both Ukraine and Russia, he says. Neither Russian nor Ukrainian gas officials live on their salaries, and it would be very painful for them to give up this model of doing business.
Crisis deepens as Russia-Ukraine gas deal unravels | csmonitor.com
citizen energyecon writes:
...Shocked, shocked I say...
Calm down, in american diction it's :
"Better than expected!"
Already forgotten ?
On credit unions:
I seriously doubt these are safer alternatives to banks. A credit union I am most familiar with is offering 5+% returns on 1 yr CDs. Now, how, exactly, do they manage that in this environment?
Abolition of The Fed is my objective. Abdication by Ben, Governors, and Presidents would be great.
Please provide me a suitable banner if 'You give us inflation, we give you Kristallnacht' is too inflammatory.
Comrade-Dope jg (jg) | 01.13.09 - 12:33 pm | #
Have you seen Fight Club? If you erase the debt record, then we all go back to zero. Sounds like a better place to start than with Kristallnacht.
YouTube - fight club movie trailer
Countrywide had borrowed at least $51.1 billion from the Federal Home Loan Bank system.
Other lenders as well but Countrywide I believe bested even WAMU if I recall.
This will not end well.
Now whom can we short on this?
And it was from the Atlanta FHLB which has yet to fess up to how bad their books are.
"...... if you went to the grocery store and paid $7 for ONE head of lettuce......."
.....I'm all for THAT - I'd grow more lettuce at $7. a head!
There are fewer and fewer taxpayers due to increasing unemployment with less and less income due to reduced hours, salary give-backs, suspended bonuses, etc. Put that in your pipe and smoke it Ben! The soon to be ex-prez is right on one thing when he said "this sucker's going down" The taxpayer is fast becoming a mythical entity.
Sad thing is. Lettuce is heavily subsidized by US protectionism. Get rid of lettuce protection and growing it in Mexico would be profitable. Reaganist/Econoliberal Californians love their Argula salads and cheap labor but hate fair competition.
You anti illegals would sure change your tune if you went to the grocery store and paid $7 for ONE head of lettuce
But I don't think anyone's ever been asked to pay $7 for a head of lettuce, not even at Whole Foods. And if we are, we'll do without lettuce.
bgates, two words in response: Tulip Bubble.
I believe that I've demonstrated your premise to be false - that a commodity based currency does not "gives [sic] a sense of discipline which makes the kind of leverage and securitization we've seen impossible."
Define "Free Market" please?