Obama
1) Nationalize the banks or
2) you'll have 4 yrs of hell

From Bureau of Labor and statistics

Employment Situation Summary 

I will break this down for you using my appraiser hat....

There are est. 301,621,157 people in the US as of 2/07/2009

There are 160,359,479 of working age (20-65) and that is 53% of total pop.

The previous unemployment on 2/07/2008 was 4.7% or 7,500,000

The current unemployment on 2/07/2009 is est 7.2% or 11,600,000

This is a 64% increase in total unemployment since 2/08. Imagine if these numbers are fudged by Gov't and if the % change continues at the moonshot pace. You never hear the unemployment numbers expressed in any way other than a percentage. The truth is that 11.6 MILLION people are out of work...and SEEKING WORK. This is roughly 232,000 people looking for work in each state if applied equally across the board. Now some states like the Dakotas don't even have 200,000 in total population. Now you are starting to get my drift.

The 2 truths about economic hardship

1) People hate you for telling them the truth

2) They hate you even more when they realize you are RIGHT.

If you doubt this back of the napkin rough draft...go to the link above and run the numbers for yourself......

Who's this Paul Kedrosky guy and why's he stealing my hat tip?!

Obama I suggest you start to channel Harry S Truman....“I never give them hell. I just tell the truth and they think it's hell.”

And the media drum beat continues...cuz you know...the Seedish Krona is the global reserve currency.

I'll be in the cave...

This just keeps getting fuglier.

Nostrovia,

We have essentially gone half way to nationalization and socialization of the losses.

The TALF will provide the rest of the way.

One giant RTC to rule them all!!!

The really funny part was nobody else seemed to parse the TALF the way I do, essentially dooming the banks and using them to bail out the rest of the reit leverage structure.

Obama is going to restructure the credit enablers, and in the process try to prop up all of the economy that is collapsing due to massive deleveraging.

Will he succeed?
We shall see.

Meanwhile, in this corner watch gold and silver begin to take serious flight!

Someday this war's gonna end...

CR "But stop and think about what Obama is saying. We know the correct answer, but we are afraid to do it - because of our "culture" - so we are going to follow the Japanese plan '

Obama "They kept on trying to paper over the problems. The markets sort of stayed up because the Japanese government kept on pumping money in. But, eventually, nothing happened and they didn't see any growth whatsoever"

So Obama is going to pump money to prop the markets up to see that nothing happens and the US sees no growth? Doesn't make any sense CR.

And we also have different traditions in this country.

For example, an allegedly loyal opposition that would be screaming "impeachment" if I was moving any faster on this.

They don't even support the concept of any stimulus that isn't a tax break.

Well, liberal Barack Hussein Obama's "hope and change" BS should be obvious to everyone, except to his idiot supporters and the ignorant "youth" who will inherit the monstrosity called the (a) federal debt of $13,000,000,000,000 and counting and (b) unfunded liabilities, i.e. the lies and empty promises the federal government made to the voters to pay for their (i) Social Security, (ii) Medicare, (iii) Medicaid. LOL.

Suckers.... "Hope" is not a financial planning! But you got the "change" you deserved!!

Futures are up.... just buy em, boys!

We are Leaderless ...Obama had the chance to get it right ... he failed miserably ...

Why have any announcement at all ?

Get ready for "The Shock Doctrine" to be employed ... just like it was for TARP I ...

EHP- you have a winner!
Somebody finally understands that today was essentially de facto nationalization!!!

Yeah!

Someday this war's gonna end...

So, when is Geithner's next press conference?

john --

please go back to a) freerepublic b) NRO c) michellemalkin.com and resume jerking off to i) Top Gun ii) Laffer Curves iii) birth certificate conspiracies

On paper the government doesn't contribute equity, only the leverage on private capital

The banks did that last go 'round, now look where they are. Are we supposed to be that stupid? Repeat after me: providing leverage to people (or banks) who have no net worth or means to repay the full amount, so they can chase dubious assets, is the road to national poverty.

RTC is a great solution however you need to have them declare bankruptcy to do that....

Not going to happen.....

Repost:

Can anyone offer some insight as to why a rather large "indirect bid" is still used? Today's 3 y Note auction was apparently oversubscribed but why the need for the FED and it's hands on it?

Ciao
MS

Now let's see: Japan has a population of 130 million to the US 301 million, yet those people have created the 2nd largest economy in the world. Their auto industry is world class, their electronics industry is world class, their steel industry is world class... in each case head and shoulders above the US. Their health system is less expensive than the US and delivers far better service and outcomes. Their wireless infrastructure and service is far better than US coverage and is less expensive. Their internet infrastructure and service is head and shoulders above the US. Their income range is much more compact. If these are the results from their approach to their banking seize-up, it seems to me that we could do much worse than to follow their example. We might learn something if we were a little less convinced of our own correctness.

Kelly McGillis wasn't manly enough for Tom Cruise

Would BAC be insolvent if not for Uncle Sam shoving Countryfried and Mother Merrill down their craw?

I don't think there has been deviation from those ideas.
EvilHenryPaulson
.
Yep. A hybrid that's never been tried before. If we de-flibble the phase converters, and reverse polarity on the warp drive intake manifolds, the sucking sound will give us that one in ten thousand chance to say 'tin-plated dictator with delusions of godhood.

KnotRP
Well duh, how else are banks going to get enough money if they can't get it for free? This way the losses are uncertain, just like the $9tn in various guarantees. It's why they have the stupid deals where they eat the bank eats a 10% loss and the government eats the next 90%. Just give the banks the 90% of whatever loan size in cash and save the paperwork

john, see your doctor. You have a serious case of retroperistalsis.

EHP, one problem is that we are not pumping money like the Japanese. Even the Japanese didn't pump money like the Japanese; they never spent more than a fraction of what they committed. But they did manage to keep unemployment to a fraction of what ours is, and will be.

Annonymous:

This might be what they were talking about:

U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs (Update1) \t\t
By Mark Pittman and Bob Ivry \t\t \t\t\t\t \t\t\t\t\t\t\t\t\t \t\t\t\t\t\t\t\t\t\t \t\t\t\t \t\t\t\t \t\t\t\t\t\t\t\t\t \t\t\t\t\t\t\t\t\t\t \t\t\t\t \t\t\t\t \t\t\t\t\t\t\t\t\t \t\t\t\t\t\t\t\t\t\t \t\t\t\t \t\t\t\t \t\t\t\t\t\t\t\t\t \t\t\t\t\t\t\t\t\t\t \t\t\t\t \t\t\t\t \t\t\t\t \t\t\t\t\t \t\t\t\t \t\t\t\t \t\t\t\t Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government's commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation's home mortgages.
Bloomberg.com:
News

To repeat; to wipe out shareholders and bondholders would turn this from a banking crisis to a pension crisis.

No answer is right, especially doing nothing.

Note that the US had been telling Japan "that's not the right way to do it" all through the 90s and 00s up until now. The Japanese zombie bank solution, that will never happen in America! We've got well-capitalized banks and we write down our losses like good capitalists! The US will never have credibility in Japan again.

The idea of forcing insolvent banks into temporary receivership, and having shareholders, bondholders, and management take the hit instead of taxpayers, should be VERY popular politically.

Obama underestimates the public's rage and the urgency of their demands. So he goes slow when people want action. Same thing happened with the TARP. Frighteningly, he still gets it better than the rest of D.C. And the media.

Anonymous,
Last summer the US mortgage market was $12 trillion. At that time FNM + FRE guaranteed $5.5 trillion of that. I'm not sure of the FHLB

From Aug to Dec of last year, through government orders post-conservatorship, FRE + FNM issued another $1tn of mortgages of particularly crappy value.

These are all vague numbers I haven't looked at in a while, but I think they are reliable.

The US hasn't spent enough new money to pay off every single mortgage, but there is a cumulative total of ~$9tn in recent explicit guarantees.

The question that remains to be answered is how quickly can the Treasury sell new Treasuries (bills/notes/bonds) to raise money for when those guarantees are called upon. It can be expected that at a certain point the government just creates a lot of new money to pay for it all.

To repeat; to wipe out shareholders and bondholders would turn this from a banking crisis to a pension crisis.

~~~~

Just look at what happened to Japan's stock market, all of it , not just the banks. Down 80% for over 20 years now. Can Pensions afford that ?

Investments are not without risks...sorry penioners you lose out!
crispy&cole | Homepage | 02.10.09 - 6:33 pm | #

Easy to be pithy, but I hope you and your parents like cat food and stone soup.

What's missing from Geithner?

Gravitas.

"Comrade Alexei Mikhailovich writes:
To repeat; to wipe out shareholders and bondholders would turn this from a banking crisis to a pension crisis."

Wiping out the bondholders might cause a ton of losses, but not the shareholders. There just isn't that much market value left in Citi stock.

Remember, Fannie and Freddie's shareholders came close to getting wiped out, and they had higher market caps right before being taken over.

Mr. Beach,

"A nationalization event could cause a nonlinear event in many markets. Possibly leading to a moment of greater panic and fear."

No...you just press the big button labled "N" and fire up the printing presses. It won't have any of that reverberation thing. This wouldn't be like an earthquake or anything.

Nostrovia,

Bits_of_Real_Panther
US Mortgages,
http://www.federalreserve.gov/releases/z1/Current/z1r-4.pdf 
Search document for "L.217 Total Mortgages"

Home $11166.8 + Multifamily Residential $890.4 [millions of dollars]
= $12,057,200,000,000 at Q3 2008

There is also commercial and farm mortgage categories

divide up into regions of the country, say C is now 10 regional banks, take them public,

Why would anyone buy? And with what?

now if the BAC shareholders would get wiped out in a nationalization, that's a whopper of a lawsuit waiting to happen.
s.tristero | 02.10.09 - 6:41 pm | #

Yeah right.... suing the Fed.

Good luck with that.

I guess you guys are in the same boat as I am with regards the 'indirect bid' thingy. I'd really like to get some clarity on this.....can ya help a brotha out?

Ciao
MS

. . . what do you think about WFC? They would have been fine, except for having been forced to eat the turd that was Wachovia, which stupidly has swallowed the bigger steaming dungpile that was GW.

Who thinks WFC was "forced to eat" Wachovia?

I used to think WFC was one of the strongest banks in the country. Then I saw Congress suggesting IRS Notice 2008-83 was invalid.

Big time uh-oh there.

profoundly derivative of wagner, that is
bgates | 02.10.09 - 6:48 pm | #

And Wagner was derivative of pre-Christian German epics. Doesn't take away from the greatness of the Tolkien's trilogy.

I believe the administration needs to slay the CDS monster before it can nationalize the banks.

Without Nationalization we have a lost decade , like Japan ...

But where do we get the idea that nationalization avoids that outcome?

citizen energyecon writes:
GH,

citizen energyecon | Homepage | 02.10.09 - 6:48 pm | #

Loaded to the gills. It's been very lucrative in the past, but the last couple months have been frustrating.

I've increased my stake into each successive rally, so now holding more than I'd like. Still confident though. Barring ridiculous gov't intervention, it is only a matter of time.

Hey, those comments on Japan are really going to set up sweet dynamics for the G7 meeting.

(Why insult the most liquid member of the group???)

C

Don't you know that if you wipe out the pensions you will be paying for it in some way?

~~~~

Straw Man ...

Pensions will be harder hit if the Zombie Banks are allowed to go forward ...

Especially with O as pres.
Anonymous | 02.10.09 - 6:54 pm | #

Especially for assclowns

Updated: Rachel Maddow Breaks It Down For the Slow Folks (aka GOP)
Daily Kos: Rachel Maddow Breaks It Down For the Slow Folks (aka GOP) (Update: Tim Kaine Gets in on the Action)

[T]o wipe out shareholders and bondholders would turn this from a banking crisis to a pension crisis.
Comrade Alexei Mikhailovich | 02.10.09 - 6:31 pm | #

They'll have to get in line, one crisis at a time!

(More seriously, if the banks are insolvent, then pension plans that are relying on bank debt and equity in their portfolios are already in trouble, and we're just pulling back the tarp and exposing the rot. At that point, we can choose a number of options; but if the goal of inaction (or poorly-designed action) with the banks is to preserve the pensions, that's inefficient, as well as corrupt. Cut out the middle -- if there's an argument to bail the pensions, make it directly, not after the financials take their cut!)

i'm very prepared for a world where public services are drastically cut back. i really don't care if almost every municipality in the nation has a permanent police, teacher, and nurse strike. they can all pound sand.
bgates | 02.10.09 - 6:52 pm

Sunday, my daughter and I pulled into the parking lot of our local strip mall so she could run into McD's. There was a lot of motorcycles with attached people sitting in the parking lot. My daughter came back and told me the motorcycle guys in McD's were real jerks.

We sat there for a minute and watched as a cop rolled up. Within a couple minutes 3 more cruisers rolled into the parking lot. They dispersed.

If there were no cops would they have left or would it have gotten ugly?

Geoff -- WFC only snatched Wachovia away from Citi after Treasury announced the sweetheart tax treatment. And regarding IRS Notice 2008-83, I thought it was pointed out in an earlier thread that WFC is going to be grandfathered in.

Without Nationalization we have a lost decade , like Japan ...

But where do we get the idea that nationalization avoids that outcome?
Charles Kiting

~~~~

Actually our lost decade would be much, much worse than Japan's. We have a trade deficit, low savings rate and no guarantee of employment.

Sweden avoided the "Zombie Bank" syndrome, that's where we get the idea.

Of course it will be worse because the whole world is tanking ... BUT ... it won't be as bad as having Zombie Banks suck huge amounts of capital into a Black Hole !

"We need a new paradigm. Right now we're a consumer nation, purchasing goods...."
Pavel Chichikov | 02.10.09 - 6:39 pm | #

We need to close some loops. At least that's what I try to do on my pocket farm. The more you can make & source on-site, the more you save. Eventually you can get to a place where you have surplus with real cash value, and you haven't BKed yourself or worked yourself into the grave to get there.

Pensions evaporated? Why not throw a tarp over the elder care system. Spend some money properly funding and managing Social Security. ANd put retired people to "work" teaching or something.....what are things and services we truly need, and how can we best enable our populace to make and/or provide them. If we can figure out how to downsize without cutting off limbs, maybe we can get a positive feedback loop going.

But not with our current "culture" of learned helplessness.

remember WFC took wachovia right out from under shcitibank with no taxpayer cashish (to that point).
s.tristero | 02.10.09 - 7:00 pm | #

No taxpayer cash up front.  The tax breaks that shored up the deal, added into the bailout cash, will end up costing the taxpayer much more than the original deal.

At that point, we can choose a number of options; but if the goal of inaction (or poorly-designed action) with the banks is to preserve the pensions, that's inefficient, as well as corrupt. Cut out the middle -- if there's an argument to bail the pensions, make it directly, not after the financials take their cut!)

Winner winner chicken dinner!!!

We're talking real losses here. Providing taxpayer money to banks to indirectly prop up pensioners and insurance companies will only increase the final bill. Which is too large to ever be repayed as it is.

The only possible motivation for intervening to save insolvent banks is to kick the can down the road some more. I doubt it will be successful, even in that.

It's at the point where the compound interest becomes an insatiable monster. It really is a stroke of great fortune to have record low treasury yields from a government finance perspective. One that probably won't be appreciated until it's gone
EvilHenryPaulson
.
I was thinking more like 40 years. With some repudiation thrown into the mix. Now that I think of it, this is why BK for the banks makes more sense to me. The "wall of payback" will take so long to climb it will be like the period after the Civil War in the South. But even that is survivable. I must say I'm seeing 'bad but survivable' outcomes in many scenarios. Am I insufficiently doomish? Doomesque? Doomlike?

Yes of course they could pay off all the residential mortgages, with all they money they are printing.
who me? | 02.10.09 - 6:58 pm | #

I think that would be at least a hundred trillion.  I doubt tha would happen even if the political will could be found.

MTHood,
I believe what was changed were Jamie Dimon's pants in the British sense of the word. In the conference call for the WaMu takeover, his big slice of genius was that increase in credit card market share (because JPM signs bank clients up for more credit cards and other products than anyone else) would pay for any further writedowns to WaMu's mortgage assets

re: pensions
I would be most afraid for private pensions, like retired people that purchased annuities from state regulated insurance companies. There is no adequate backup fund in place. Barclay's pointed out that most insurance companies did a terrible job at fixed-income portfolios.

Corporate pensions have the PBGC to fall back on, even if it's not much.

Municipal and State governments are probably in some of the worst shape for pensions, given their comfort in giving away large future promises like it was candy; nevermind the manner in which they were funding the pensions or the assumptions of actuaries. It's likely that many of those pension benefits could be revised downward, but unlikely they would have no backstop at all.

I think it would surprise a lot of people how many elderly retirees felt the itch to get in the stock market. The massive increases in costs of living scared them they would get priced out of life.

As for working people with investments in mutual funds. It's absolutely terrible. Even if the fund manager is smart, all the requirements mean in a downward environment they take the biggest hits. I think it's pure stupidity to require them to hold no more than x% in cash over a period, and to limit them to long equities or long bonds only.

Bayreuth was not only where modern fantasy was born,

No.

Shockingly, we know Tolkien's sources. Amazingly, we can read them ourselves. Astoundingly, they've been extensively studied by academics. Unbelievably, they're about a thousand years older than Wagner. Astonishingly, this was not discovered by some guy opining his subjective opinion in blog comments.

Except that Tolkien was a medieval scholar, so was working directly from his professional work.
ferg | 02.10.09 - 7:02 pm | #

 Check out the Kalevala, which JRRT learned Finnish to study first hand - http://en.wikipedia.org/wiki/Kalevala

bgates,
and what about the Muscle Shoals Rhythm Section?

Yeesh, you've been forsaken by God now? Wow, I must say it's kind of nice and refreshing to see someone who care so much about an artist, bgates. Doesn't take away from my 9-year old gut reaction to hearing Wagner's music though.

Magnus,
Have you been keeping up with the return of Mats Sundin?

Geoff writes:
WFC HAD to know how bad Wachovia was.... I cannot for the life of me believe they would have done that without being forced.

There was a done deal with Citi to buy Wachovia for $1/share, with all the feds on board, then someone (allegedly named Paulson) caused the IRS to issue a Notice which purported to change the application the tax law [IRC section 382(h)] and WFC swooped in with an unsolicited bid of $9/share.

Now Congress is about to pass a law saying that the IRS "interpretation" of the law was not correct.

The tax bite on WFC would be massive.

No one forced WFC to commit suicide. They may have been killed by their own greed, though.

Now it is turn of the Chinese to start launching their trial balloons

China Needs U.S. Guarantees for Treasury Bond Holdings, Yu Says
Feb. 11 (Bloomberg) -- China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

Magnus,
It is a thing of beauty. With a healthy lineup, the coach finally got to play the ideal lines.
Sundin/Kesler/Demitra have 15 points in the last 2 games since they have been together. A lot can change, but I'm hoping Mats signs up for a second year and gets to enjoy 'home' rink advantage in the Olympics

MrM,
They know that there is no guarantee or assurance worth any value. That's just something for the hens to chatter about

Joe Shmoe,

Obama is trying to prop up the neoliberal architecture, nothing more. I expected this exactly from him and as a consequence am not disappointed or surprised, nor am I obviously a supporter.

As Stiglitz pointed out in the London Times, the beneficiaries of this "longer strategy" you're romanticizing amount only to the banksters.

Obviously, what Obama is trying to say is that we need a few thousand banks to fail so that we are left with five.

We should BE SO LUCKY as to make it out this mess as well as Japan has done so far.
Darth Paulson | \t \t \t \t02.10.09 - 7:23 pm | #
To be fair, Japan is going to suffer a great deal from here on out. The export sector they've been depending on has crashed, and consumer demand is about to fall off of a cliff. They've done okay up to now only because of the global bubble. The path they've taken is really not the path we should take, our circumstances are quite different. If we follow the same policy paths, we will end up worse off.
Japan, Sweden and every country in the world, including The UK, doesn't just give money away like Paulson The Crook did -- and if Obama wants to play give away like that again, with no strings attached, I say we take him out of power, along with his pals in Congress!
\t I ♥ Timmy! | \t \t \t \t02.10.09 - 7:29 pm | #
The ruling powers in every country will give out money if it means the preservation of their power. Did they do it in Japan? Yes. In the UK? Yes. The US is no worse nor better.

query_tool writes:
. . . . I thought it was pointed out in an earlier thread that WFC is going to be grandfathered in.

Thanks for the heads-up. Didn't see that.

(It's just not humanly possible to follow every thread to its end . . . or sometimes even from the start.)

Counterpointer, fried
I have no clue who Yu is, so I might be too laid back about it.

My thinking is that there is no promise the US can make that one can expect to have value once push comes to shove.

It bails out banks and devalues the currency. It doesn't bail out banks, and devalues the currency.

The one thing China could bargain for would be a hard asset something like military access to somewhere like Diego Garcia. That would fit very well with their plans to secure their oil shipments from the middle east, all the way to the new pipeline at Burma.

China is in the same position that banks are with home builders.

"I do like the idea that the banks and the financiers know that Plan B (nationalization) has powerful proponents in the White House and is by no means out of the picture if they .. well, go on acting like bankers and financiers."
Bob Dobbs

Round these parts, we call 'em "banksters". Money-changers or "pin-striped swine" will also do quite nicely.