Tuesday, September 30, 2008

Get Ready for the Show - Scarahy Rides Again!

Is Scarahy allowed out alone yet? I can hardly wait to see how the MSM plays Biden's reactions to her mindless chattering, making the less-prepared candidate (once again) out to be the greater politician. Like they did with Bush . . . and Reagan . . . and Bush. It's bound to be quite a show (for morons at least). And just for amusement before the big crash arrives (obesiance must be paid to Mark Crispin Miller for creating one of the most informative and fun blogs in the ether): click here for Turdblossom's "Insider's Guide" (to "swinging" elections)!

Monday, September 29, 2008

Bank Job - "BAIL OUT" NOW! ! ! ! ! ! ! ! ! ! ! ! ! (Black Monday/Tuesday)

Watching late-night public TV has been surreal. The BBC had announcers for what is probably the most important story of the century, who seemed not to understand the economic consequences of what they were reading, and no idea as to how to give the developments the significance that even they knew they must find some way to connote the harsh implications of (and I had always thought better of them than that (I don't know why right now though)). And the final blow (at this most important moment in TV coverage) from "Charlie Rose" was his having Al Hunt, who has been exposed during the Presidential debate cycle as just one more ex-liberal/progressive/whatever-is-not-really-a-Rethugli-Con who became at least a "fellow traveler" (as the McCarthyites of the 50's used to call progressives whose politics were slightly left of center) - who Charlie said he asked in because Al knew the people in D.C. - being questioned as though he had more than a thimbleful of knowledge about markets and banking. I think of Al now as just a little bit to the left of that self-proclaimed moderate good-ole-boy Tim Russert, he of the self-serving Cheney interviews whenever the administration needed that extra lift when they were caught red-handed with the dirty laundry. So Charlie had clueless Al (who thought the bill would pass until it didn't) for his inside expert. Floyd Norris, chief financial correspondent of The New York Times and The International Herald Tribune seemed a bit more knowledgeable, but also unbelievably a lately-come-aboard-the-reality-express reporter as he talked of what he deemed the "mistake of letting Lehman go down because it was looked at as not being as important as other institutions," and thereby letting the money market funds go under with it (an international banking confidence killer which led to the later debacle in the Asian markets), and that "the creditors of Bear Stearns were taken care of, but not the stockholders - giving the public the message that the people at the bottom" had been abandoned. But not one word was mentioned laying this at the feet of Paulson and Bernanke. Tell me again what type people are asked on these shows to comment? I tend to get a little confused trying to remember what the premise had been for their presence in this mediocre (lovefest) press chat. The smartest thing Al Hunt said was that John McCain had damaged himself "because of his erratic behavior" in the days before the vote, and that "this might hurt his Presidential run" as it belied his ability to handle this most serious situation; also that "Bush was not a factor in this at all" as even the "Texas representatives voted against the bailout." Both Charlie and Al agreed that it wasn't any one part of the Paulson plan that deemed it a failure, but "a darker fear" on the part of the citizens who registered their doubts. Gee, ya think? (At all?) Norris, a supposedly knowledgeable and well-educated writer, finally mentioned the fact offhandedly that the "entire shadow financial system was allowed to grow up without regulation in the name of 'free enterprise,' which brought all this trouble - 'reaping the whirlwind'" and that the message "'you bail me out or I'll destroy your economy' is offensive to a lot of people, although it is probably true." (Could you cram another cliché in there?) I couldn't believe that he then used the analogy of "If you jump out the third floor window, will you make it? I can't prove that you won't, but do you want to risk it?" After which he then noted that foreign sovereign funds had lost money by investing in American banks previously, and that this lack of bailout passage did not urge them to do so again. The most interesting item in Norris' reporting was "The markets were down this morning when we thought it (the bailout) would pass, and that we are in a time of deleveraging and who is going to buy?" Paulson's plan to buy the debts with public money was the answer to this problem. But, Norris said, "The market is stunned, scared . . . the banks are scared, and they've gotten a number of politicians like Newt Gingrich" to agree that they should change the way they "mark" their assets in order to "hide the bad news from the public" so they can still be viable. Great insider conversation? Or obvious factoid known to everyone by now? With great on-the-site reporting like this, it's no wonder the average American is so well-informed. Charlie Rose (who pretends to understand everything, except economics) says (essentially) that he has no idea what is happening but wants to ask everyone he's ever known if they do. Then Charlie, who at the end of the show looks like a man who has lost a lot of money in the shuffle and is terminally confused, changes the subject by using a previously taped interview, from before the current market crash, with Dexter Filkins, a correspondent for The New York Times and author of The Forever War. Unfortunately for viewers who have actually followed (closely) what has happened in the last two years (since the so-called surge), Dexter wants to tell us how marvelously "things have changed" for the neighborhoods in Baghdad (as a result of the surge). When he, in the next breath, begins to seriously relate the facts about all the Iraqis that are now on the American payroll, it's hard to piece the initial breathlessness together with the head-lowering seriousity of the facts "on the ground" (as they say). He finally admits that the peace is "fragile" and that "for $300/month we are paying even many ex-Al Qaeda," for many months now, to keep the peace - a fragile peace. "Sunnis and Shiites want the Americans to stay" he says. Nice that everyone's mouthing Cheney's arguments now, isn't it? And they probably won't continue to be paid if the Americans leave soon, so the U.S. must stay. His book, by the way, is dedicated to Americans and an Iraqi who were killed in the wars, which I guess let's us know he's a little bit more serious than he sounds about the price of the current victory. Then we get more talk about his excitement over how "things are totally calm now!" He even told about a 3-mile-long wall, which was built by the U.S. forces (Halliburton?) in a Shiite enclave, victims of ethnic cleansing by the Sunnis, that now had Shiite families returning due to the paid-off Iraqis guarding it. Like this is a positive thing. And the American troops, carrying around M16's and killing people almost every day, who were in Junior High when the war started. If you wonder where the rest of your money is going/has gone, pay attention to his story about how the Iraqi troops pass out money and pamphlets every time their HumVee stops in a crowd of people who feel they've been mistreated (or blown apart?). On a less pleasant note we have the news update that Nancy Pelosi's blow up (after it became apparent that the bailout wasn't going to get enough Rethugli-Con votes for passage) proved that the Democrats in Congress were not properly prepared or politically wise enough to be able to craft a plan that could be sold to the Rethugs (or even a few moderate independents (or regular Dems?)). For myself, the (probably apocryphal) story about the taxpayer calls coming in to the Congressional offices as being 50% "No," and 50% "Hell, No!" was perfectly apt. The rest of the news:

The Dow Jones industrials plunged 777 points, the most ever for a single day. In London, one man approached about his view of the situation remarked logically "The cupboard is bare. . . . If you pay yourself far more than anyone else does and you get in trouble, prepare to lose it."
From BBC World News (11:30 PM EDT) we heard that the Asian stock market is being battered black and blue (down 4 - 5%), weaker commodity prices, short-selling ban by Taiwanese stock market (which reminds me that the short-selling ban on the NYSE is supposed to be lifted tomorrow - shades of Black Tuesday returning?). No Asian banks were in crisis though (not like in the U.S. anyway) as they are all pretty much healthy and in very good shape (wonder why?). Mitsubishi paid $9 Billion for a 21% stake of Morgan Stanley Chase.

UK Mortgage lender Bradford & Bingley confirmed Monday it is to become the second bank nationalized by the British government since the financial crisis began. In a deal hammered out with Spanish bank Santander, B&B was being taken into public ownership after uncertainty over its future prompted savers to withdraw "tens of millions of pounds." British Finance Minister Alistair Darling said B&B assets were sold to Santander's Abbey division for just over £600 million pounds, or about $1.1 billion.

Wachovia sold $2.1 Billion worth of its banking operations to Citigroup "making the Charlotte-based bank the latest casualty of the widening global financial crisis. In addition to assuming $53 billion worth of debt, Citigroup will absorb up to $42 billion of losses from Wachovia's $312 billion loan portfolio, with the Federal Deposit Insurance Corp. agreeing to cover any remaining losses. Citigroup also will issue $12 billion in preferred stock and warrants to the FDIC. The remainder of Wachovia will include its asset management, retail brokerage and certain select parts of its wealth management businesses, including the Evergreen and Wachovia Securities franchises. It will continue to be a public company under the Wachovia name."

Iceland's third largest bank was nationalized. _________________________________________ Our friend, Mike Whitney, reports that "House and Global Investors Vote 'No' on Paulson Bailout: Black Monday?" (and finally, we find out "Why?"). (Emphasis marks are mine.)
Today the US House rejected Treasury Secretary Paulson's $700 billion Emergency Economic Stabilization Act of 2008. Paulson said he has the votes, but Paulson was wrong. The House bucked the Paulson's claim that buying up the illiquid mortgage-backed assets from the nation's banks would be enough to save the financial system from an impending meltdown. The jury remains out on that question, too. Professor Nouriel Roubini, chairman of Roubini Global Economics, summed it up like this, "You're not resolving the two fundamental issues: You still have to recapitalize the banking system, and household debt is going to stay high". A large number of economists believe Roubini is right. The bill would not solve the underlying problems. There is a crisis. The banking system is undercapitalized, the credit markets are frozen, and foreign creditors are beginning to slow their purchases of US debt. It's all bad. At the same time the number of casualties among the financial giants--Bear Stearns, Indymac, AIG, Lehman, Washington Mutual--continues to grow. Three more struggling European banks were added to the list of financial institutions that needed emergency government assistance this past weekend. It's no wonder Congress feels like they have to do something to stop the bleeding. . . . Paulson's bill was designed to avert a system-wide crash by clearing the banks' balance sheets so they could resume extending credit to consumers and businesses. The hope was that massive infusion of capital would "turn back the clock" to the happy days of low interest speculation and bubble economics. Paulson is a "one trick pony" who firmly adheres to the belief that wealth creation depends on maximum leverage and an ever-weakening currency. But that world view is no longer applicable after reaching Peak Credit, where consumers are no longer able to make the interest payments on their loans and businesses and financial institutions are forced to curb their spending and dump their toxic assets at firesale prices. The system is deleveraging and nothing can stop it. Paulson has yet to accept the new reality. Besides, there was no guarantee that the banks would use the money in the way that Paulson imagines. As one Wall Street veteran explained to me, "I don't see one penny of that $700 billion ending up helping the broader economy. I see it being used to prop up share prices so the insiders can salvage as much as possible when dumping their shares". Indeed, the $700 billion is just part of a massive "pump and dump" scheme engineered with the tacit approval of the US Treasury and the Federal Reserve. Once the banksters have offloaded their fraudulent securities and crappy paper on Uncle Sam, they will do whatever they need to do pad the bottom line and drive their stocks up. That means they will shovel capital into hard assets, foreign currencies, gold, interest rate swaps, carry trade swindles, and Swiss bank accounts. The notion that they will recapitalize so they can provide loans to US consumers and businesses in a slumping economy is a pipedream. The US is headed into its worst recession in 60 years. The housing market is crashing, securitzation is kaput, and the broader economy is drifting towards the reef. The banks are not going to waste their time trying to revive a moribund US market where consumers and businesses are already tapped out. No way; it's on to greener pastures. They'll move their capital wherever they think they can maximize their profits. In fact, a sizable portion of the $700 billion will likely be invested in commodities, which means that we'll see another round of hyperbolic speculation in food and energy futures pushing food and fuel prices into the stratosphere. Ironically, the taxpayers’ largesse will be used against them, making a bad situation even worse. Then again, if a rehabbed bill isn't passed, no one can predict with certainty what will happen.
Read the rest of this scintillating essay here. _______________________________________________ Even before the bailout was flushed, Michael Hudson had dissected the shill down to its core in "The Big Bank Job: The Insanity of the $700 Billion Giveaway." (Emphasis marks and some editing are mine.)

The banksters’ plan now is for icing on the cake – to take Mr. Paulson’s $700 billion and run. It’s not a “bailout of the financial system.” It’s a giveaway – to insiders, to sell out all their bad bets. Companies across the board will get rid of their bad mortgages, and also their bad car loans, furniture time payments, credit-card loans, student loans – all the debts that any competent actuary could have told them never could have been paid in the first place. This is not what Treasury Secretary Paulson is acknowledging, and shame on him for it. Last Friday, Sept. 26, he was joined by Fed Chairman Ben Bernanke singing in unison an advertising jingle for America’s new kleptocracy that rings so false that Congress and the American public must hear the off-notes. London’s Financial Times, as well as a host of Europeans realize it. That is what has been driving the dollar’s exchange rate this week. It seems easier for foreigners to recognize the threat to turn American democracy into a rapacious kleptocracy. This change always is sudden, arranged under emergency conditions. Those with a 12-year memory will see George Bush as playing the role of Boris Yeltsin in Russia in 1996, paying off his campaign contributors by giving them all the economic surplus that the government could expropriate in the notorious “loans for shares” plan applauded and supported by Clinton Treasury Secretary (and current Obama advisor) Robert Rubin. (The moral: do we have a Putin in our near future to lock in the anti-democratic coup?) How ironic all this is! Back in the 1970s there was theorizing that the Russian and American economies were converging. The idea was that both were moving toward more centralized state control, state financing, state subsidy, and a military-industrial complex. Nobody expected the convergence to occur Yeltsin-style in government giveaways to insiders to create a new group of financial billionaires – the “seven bankers” under Yeltsin in 1996, and Mr. Paulson’s Crony Capitalist gang today. Let’s look at the euphemisms as an exercise in doublethink. Mr. Paulson defended his “troubled asset relief program” (TARP) by claiming that “illiquid mortgage assets … have lost value … choking off the flow of credit that is so vitally important to our economy.” The credit that is “so vitally important” has taken the form of bad loans. Contra Mr. Paulson’s pretense, the problem is not that they are “illiquid.” If that were the problem, it would be merely temporary. The Federal Reserve banks are designed to provide liquidity – on good collateral, of course. As Financial Times columnist Martin Wolf noted on Wednesday, Sept. 24, the problem is that the face value of mortgage loans and a raft of other bad loans far exceeds current market prices or prices that are likely to be realized this year, next year or the year after that. They are packaged (as)what the financial press rightly calls “toxic.” The bailout is not efficient, he writes, “because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.” “The simplest way to recapitalize institutions,” he concludes, is “by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system.” This is the key: if debts cannot be paid, then creditors must take losses. These bad loans are toxic because they can only be sold at a loss – if at all, because foreign investors no longer trust the U.S. investment bankers or money managers to be honest. That is the problem that Congress is not willing to come out and face. Many of these loans are outright fraudulent. And they are being sold by crooks. Crooks who work for banks. Crooks who use accounting fraud – such as the fraud that led to the firing of Maurice Greenberg at A.I.G. and his counterparts at Fannie Mae, Freddie Mac and other companies engaging in Enron-type accounting. Pinochet and Thatcher: Friedmanite predatory capitalists who ruthlessly implemented “free market” economic policies. This is not what the magic of compound interest promised. But it is where it had to end up, with mathematical inevitability. It was an advertising come-on for Wall Street money managers and promoters of “pension-fund capitalism” (or “peoples’ capitalism” as it was called in Chile by the Chicago Boys working for General Pinochet’s murderous regime, and Margaret Thatcher’s Conservatives in England). The promise is that if people consign these funds to individuals who make much, much more than they do, but have the survival-of-the-fittest advantage of being much, much more greedy, they will receive a perpetual doubling of interest. That is how retirements for American workers are still supposed to be paid – by magic, not by direct investment. Prospective retirees are supposed to ensure a good life by investing savings in loans to corporate raiders who fire, lay off, downsize and outsource these very workers. The trick is to persuade employees to hand retirement funding over to financial managers whose idea was to make money off the economy by extracting interest and dividends off workers, homeowners and companies being bought on debt leverage. In the final analysis it is debt leverage by itself that is supposed to fuel capital gains. This has led to madness. The maddest solution of all would be for the government to give the extractive financial sector even more money – funds that no private lenders have been willing to provide, not even vulture funds. No private firm has been able to discover what Mr. Paulson and the unfortunate Mr. Bernanke are sanctimoniously promising: that a viable deal, even an almost money-making one, can be made by buying junk now and waiting for “the economy” to make it good. Just what is “the economy” that is supposed to perform this remarkable feat, if not its mortgage debtors and corporate debtors? The government is to do what law enforcement officials have moved to prevent Countrywide Financial and other predatory lenders from doing: squeezing exploding Adjustable Rate Mortgages and “negative equity” mortgages out of debtors, on terms that often were bait-and-switch to begin with. Private companies could be challenged and their array of penalty fees thrown out of court. But perhaps Congress can craft a law imposing these harsh terms on voters. It is not as if we live in a system where people vote their self-interest. Promises that “taxpayers” will be able to recover a large part of this money are a fiction. If there were a hope of recovering this money, then investors abroad – foreign buyout funds, foreign banks, foreign sovereign wealth funds – would have been willing to buy Bear Stearns, Lehman Brothers, A.I.G. and other companies at some price. But they wouldn’t touch this at any price. Why then should the U.S. Treasury pay three times as much as the Iraq War for money that will end up being lost after paying off the gamblers from their own bad bets. These are the bankers who already have placed all the risk onto their clients and, by lobbying to rewrite the bankruptcy laws, onto debtors. As matters now stand, the $700 billion is to be used to finance this year’s annual bonuses, this year’s million-dollar salaries and sales commission, and to contribute yet more to the retirement funds for the golden parachutes that financial managers have siphoned off to provide a safety net for themselves. So we are back to the basic motto these days: “You only have to make a fortune once in a lifetime.” Now is the time to make these fortunes as big as they’re going to get. Because it’s all down hill from here. Why the banks won’t lend Here’s why the government giveaway logic is fallacious: It’s a giveaway, not a bailout. A bailout is designed to keep the boat afloat. But the existing Wall Street boat crafted by the investment bankers seeking to unload their junk must sink. The question as it sinks is simply who will be able to grab the lifeboats, and who drowns. Super Imperialism by Michael Hudson There is a reason why the banks won’t lend: Housing and commercial real estate already are so heavily mortgaged that there is no rental value available (over and above operating expenses, current taxes and debt service) to pledge to the banks. It still costs more to buy a house than to rent it. No increase in the amount of credit, short of hyper-inflation can cure this. No lowering of interest rate, will lead banks to risk making a bad new loan – that is, a loan that probably will go bad and end up with the bank taking a loss after the borrower walks away or defaults. Does Congress know what it is being told to do? Suppose that “taxpayers” are to squeeze money out of the “toxic” junk mortgages they buy from the investors that have bought these bad loans. The only way to do so would be for real estate prices to be raised to even higher levels. This means an even higher proportion of take-home pay by prospective homeowners. Mr. Paulson realizes this. That’s why he’s directed Fannie Mae and Freddie Mac to inflate real estate prices all the more. At least, by the existing mortgage-holders to get paid off by existing debtors selling to the proverbial “greater fool.” The hope in Mr. Paulson’s plan is that there are enough “greater fools” with enough money to borrow from yet more foolish new mortgage lenders. Only Fannie Mae, Freddie Mac and the Federal Housing Agency are willing to make such foolish loans, and that is only because they are being directed to act in a foolish way by Mr. Paulson.

Read even more here. Crossing our fingers it's not also Black Tuesday. Suzan

Sunday, September 28, 2008

Current Account Balance (Or Why It's No Longer a Unipolar World) & The Fraudulent Panic on Wall Street

Is Scarah gone yet? I'm counting down the days. And not only I, but several prominent Rethugs are also crossing their fingers that she will disappear from the ticket.

Trust me when I tell you that you don't want to look at the Current Account Balance as of September 2008 for the countries of the world. And particularly, you don't want to look down at the bottom of the list (Number 188, folks!) to notice where the U.S. reigns at (da da!) $ -738,600,000,000. (Notice how it approximates the amount that Paulson is extorting for the first round of "Bail My Friends and Me Out and We'll Allow You a Few Exorbitantly High-Interest Loans in the Future (Maybe)" except that it has a minus sign in front of it?)

But wait. That's only for up until the end of 2007, (and you know that the (multiple) wars' debts are not included there (because no one knows exactly how much is already rung up on that cash register)). What must it be for 2008, up to this weekend's "The End of the World (or Financial World, at least) As We Have Known (Thought, anyway) It?"

It should pain the "Freedom Fries" set to know that France, Italy and even the UK are behind us on the "going out of business" list (the UK is the closest, lucky them, and they can thank Tony Blair, man of the hour!). The best part for those Unipolar-World-with-the-U.S.-as-#1 believers is that China (on the list) is #1 with $360,700,000,000 (Yes, that's in the Plus Column), Japan #2 with $212,800,000,000 , Germany #3 with $185,000,000,000, Saudia Arabia #4 with $100,800,000,000, and I won't bore you with #5's plus figure (Russia!). How did this happen? (And I am feigning ignorance here.) Don't worry. No one's asking yet. And the money men are far too busy figuring out the next neato plan to extort the money required to start the next new bubble from the ignorant Americans to give interviews (and they never will until they are under subpoena). Party on, Garth! And don't let Greg Palast (our "American" British reporter) spoil the party with his latest exposé that Rover boy has already stolen the 2008 election. There's also a fine bit of reporting on the missing Rove emails (he's got 500 of them) and the plan (written in Houston by a Jim Baker concern) for Iraq's oil. Please take a few moments and watch or read it. I guarantee you it is worth your while. ________________________________________ Jeff Randall has written a pithy essay in The Telegraph about the "Economic Chain Gang." In not trusting the perpetrators of the fraud to fix it by pretending to tighten regulations again, he says "We do not need more regulation, but more appropriate regulation."
"To preserve their [the people's] independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty, or profusion and servitude" - Thomas Jefferson There was a time, early in America's history, when its leaders believed in financial discipline. No more. Perpetual debt, which Jefferson feared would enslave future generations, is clamped on Uncle Sam's undercarriage like a ball and chain. US public borrowing is $9.8 trillion - and rising. Jefferson, America's third president (1801-09), is widely regarded as the White House's most intellectually gifted occupant. He believed that "banking institutions are more dangerous to our liberties than standing armies", and that "the principle of spending money to be paid by posterity … is but swindling futurity on a large scale." If Congress approves the Treasury Secretary's $700 billion bail-out of dysfunctional banks, it would be hard to invent a better example of what Jefferson foresaw: authorised "swindling". Tomorrow's Americans and those who come after them will pay and pay for the grotesque excesses and self-indulgence of today's flim-flam merchants. As Jefferson put it: "If we run into such debt, as we must be taxed in our meat and in our drink, in our necessaries and our comforts … [we will have] no means of calling our mis-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow sufferers." Having failed to deliver victory in the War on Terror, President Bush is hoping for better luck in the War on Error. His goal is to limit damage from the egregious mistakes of sub-prime mortgages; his tactics are to carpet-bomb the banking system with federal funds. The upshot, in Jeffersonian terms, is that US taxpayers are about to be enrolled in an economic chain gang. The prospect is unappealing, but, we are told, there's no alternative. Hank Paulson's plan offers fewer details than his weekly milk bill, but now, it seems, is no time for nit-picking. Having collected sacks of gold at Goldman Sachs, this former champion of free markets wants to nationalise assets at a pace not seen since Che Guevara was lighting cigars with Batista's legacy. No wonder so many Congressmen look queasy. They must persuade constituents, many of whom are losing jobs and homes in the credit crunch, that it is a bright idea to rescue those who profited hugely from the creation of dark instruments. Not for the first time, Wall Street is bilking Main Street. For those who work in the fast lane of finance, the speed of decline has been ear-popping. Less than a year ago, America's investment banks were wallowing in record bonuses, totalling almost $38 billion. Yes, billion. Their pool of monopoly money was greater than the GDP of Bulgaria. Split among 186,000 workers at Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns, it equated to an average of more than $200,000 per person, about four times the median US household income. Goldman's chairman, Lloyd Blankfein set a new standard in executive gluttony, collecting $68 million (about one third in cash), but at least his bank is still standing. Richard Fuld, Lehman's chief executive, trousered $41 million. Nice work, except that he took the lot in the bank's shares. Nine months later, when Lehman went bust, Fuld's bonus joined his reputation, in the trash-can. Banking's bacchanalia has morphed into a therapy group for manic depressives. Those still in work look around the room and wonder how many will be flipping burgers by Christmas. In an interview with Fortune magazine, Mr Paulson admits: "Raw capitalism is a dead end. I've seen it." Now I have heard it all. What next?
Read the rest here. _____________________________________________ Remember Ralph Nader? How could you forget this most enigmatic (charismatic?) progressive thinker and writer? If you're a fan, you're gonna love this interview with Juan Gonzalez, Amy Goodman and Arun Gupta at Democracy Now, "Why Is There Need for a Bailout?" and even if you aren't, you might have to admit that he makes some very compelling arguments. Oh, and any time you catch Bush or anyone in his administration saying "I truly do," take a breath and realize that they very truly do not. (Emphasis marks and some editing are mine.)
As the Bush administration intensifies its pressure for Congress to quickly approve a $700 billion bailout of the financial industry, we get reaction from Independent presidential candidate and consumer advocate Ralph Nader. Nader calls Democratic claims of White House concessions “wish fulfillment” and says the bailout might not be needed in the first place. Real Video Stream - Real Audio Stream - MP3 Download JUAN GONZALEZ: The Bush administration is intensifying its pressure on Congress to quickly approve a $700 billion bailout of the financial industry, despite warnings from economists and some governmental officials that the bailout could worsen the financial crisis. Last night, President Bush held a prime-time address to warn the nation’s entire economy is in danger if the bailout is not approved as soon as possible. PRESIDENT GEORGE W. BUSH: The government’s top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold. More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession. Fellow citizens, we must not let this happen. JUAN GONZALEZ: [Wednesday] night’s address was the first time in his presidency that Bush delivered a prime-time speech devoted exclusively to the economy. His dire scenario about the state of the economy stood in stark contrast to his comments at his last press conference two months ago. PRESIDENT GEORGE W. BUSH: I think the system basically is sound. I truly do. And I understand there’s a lot of nervousness, and—but the economy is growing, productivity is high, trade’s up. People are working. It’s not as good as we would like, but—and to the extent that we find weakness, we’ll move. That’s one thing about this administration: we’re not afraid to making tough decisions. AMY GOODMAN: Today, the President is holding an emergency summit at the White House with both John McCain and Barack Obama, as well as top leaders for Congress. The Wall Street Journal reports Democratic leaders are hoping to nail down details of the bailout measure early today. On Wednesday, McCain said he would suspend his campaign to deal with the financial crisis. He called on Obama to postpone their debate Friday night, saying he would only attend if Congress approves a bailout package before then. Obama said the debate in Oxford, Mississippi at Ole Miss should go on as planned. We’re joined on the phone right now by a presidential candidate who was not invited to Friday’s debate, Independent candidate Ralph Nader. The longtime consumer advocate has been a vocal critic of the Wall Street bailout. Ralph Nader, welcome to Democracy Now! First, let’s start off with John McCain announcing that he is going to suspend his campaign and wants the debate cancelled. RALPH NADER: Well, I think Senator McCain is showboating. I mean, what’s going on in Washington and Congress now is the Bush administration is trying to pull the Constitution out by its roots and demand that Congress give it a blank check, without any criteria, without any accountability, for (a) $700 billion bailout of Wall Street. It’s not dependent on whether John McCain returns to Washington other than to vote. I think he’s turning his back on over 50 million American voters who expect him to show up in Ole Miss with Barack Obama and who have made arrangements to do so. He talks a lot about honor and commitment. I think he ought to change his mind and get down to Ole Miss. JUAN GONZALEZ: Ralph, the Democrats are claiming that they’ve been able to get some key concessions from the administration on its original plan. They say now they’re going to be — they’re going to cap CEO pay for those who participate in this bailout and that they’re going to get some kind of government participation or investment in these firms, so that if they make profits later on, that — or these securities make profits later on, that the government will be able to participate. But your sense — are these real substantive changes, or is this basically cosmetics on a plan that shouldn’t be in place in the first place? RALPH NADER: Well, so far, it’s wish fulfillment. If you watch what Barney Frank, the chairman of the House Banking Committee, said yesterday, nothing has really been decided. And also, it’s not clear at all why a bailout is needed. That’s part of the stampede in the pack and the panic that Bush and Paulson and Bernanke are pushing Congress toward. You know, it’s eerily reminiscent, when you listen to Bush yesterday, of how he stampeded the Congress and the country into the criminal war invasion of Iraq in 2003. I mean, look at all his statements: this could do this, this would do that, farms failing, small business, tada, tada. The first question we have to ask as citizens is, why is there a need for a bailout? The only conceivable purpose of Treasury intervention, said Roger Lowenstein in The New Republic recently, quote, "is to buoy the market using taxpayer funds by paying higher-than-market prices. After all, if the government merely intended to match the market, what would be the point?” end-quote. In other words, if these mortgage-backed securities are distressed, well, they’re going to fetch a lower price. There’s huge amount of money on the sidelines in Wall Street, everybody admits that. So, as a hedge fund manager basically said, look, if the price comes down lower than what the government is trying to keep elevated, we’ll buy this paper. Warren Buffett put $5 billion into Goldman Sachs this week. There’s a lot of money to go around. It’s quite interesting how the Bush regime is creating its own panic. When the government keeps saying Chicken Little, Chicken Little, the market is going to react in a very nervous manner. It’s a reversal of what the government usually does, which is to counsel stability and patience, etc. So, the first question Congress should ask in detailed hearings, which aren’t occurring, is simply, why is there need for a bailout? Second is, if there is a need for a bailout, why $700 billion? And third, if there is a need for a bailout, what kind of bailout? Taxpayer equity? So the taxpayer can recover if these companies make a profit, they can recover surplus, perhaps the way they did on the taxpayer bailout in 1979 with Chrysler, where Jimmy Carter demanded that Chrysler issue stock warrants to the Treasury, and Chrysler turned around, and the Treasury sold the warrants for a $400 million profit. AMY GOODMAN: We’re talking to Independent presidential candidate Ralph Nader. We’ll come back to this discussion. We’ll also be joined by Arun Gupta, who is the editor of The Indypendent and put out a letter on the internet that has just set the internet on fire, calling for a major protest today on Wall Street. It has gained steam. Many groups have signed on. JUAN GONZALEZ: Ralph, you mention how the Democrats themselves are being stampeded at this point by the Bush administration. In my column in the Daily News yesterday, I raised how another Democratic leader and another Democratic Congress handled a situation, even a more dire situation, in 1933, on the two days after Franklin Delano Roosevelt was inaugurated as president, with thousands of banks crashing at that point, and he immediately shut down all the banks on his second day in office, called Congress into an emergency session and, over the next hundred days, adopted incredible legislation, including the Glass-Steagall Act, that we’ve mentioned quite often, on federal deposit insurance, aid to homeowners, farm subsidies, created the Tennessee Valley Authority, all in the midst of a crisis, probably the most progressive amount of legislation in the nation’s history, in any period. That’s a quite different approach. And he specifically criticized the banks and Wall Street as being at the root of the crisis. RALPH NADER: That’s right. In those days, they had a serious solvency problem for these banks, which they don’t have, by and large, today. And that was admitted by Bernanke yesterday. Basically, Bernanke is saying, “Well, we’re doing this because the banks are contracting their credit, and this is affecting the economy.” Well, you can deal with that problem in a far better way than an ill-defined $700 billion bailout with total authority to the Treasury Secretary, with no judicial review, with no criteria and no reforms. In other words, the Democrats should say, if they’re going to concede this bailout, is to say, “Well, we want comprehensive regulation and disclosure of the financial industry to make sure this doesn’t happen again. We want criminal prosecution of the crooks on Wall Street and disgorgement of their ill-gotten gains. We want a securities derivative tax and higher margin requirements to make speculators use their money, more of their money than other people’s money, like worker pension funds, to keep down speculation, as well as to produce revenues, which might lighten the tax load on working families. And we want to give shareholders control over the corporations they own.” And they’re not even talking about these kinds of reforms. And this is the best time to get these reforms, because this is called a must bill on Congress—in Congress, and if Bush wants his package, he’s going to have to sign them. So, there’s no reciprocity here. It’s the usual fairly good questions by the Democrats at the hearings, but because they don’t follow through, they don’t have adequate leadership, it becomes a kind of posturing. It’s just maddening to watch how vague Bernanke and Paulson are in answering one question after another. It’s just an evasion, where they keep saying, “We need to do it. We need to do it.” And their Chicken Little material is conducted in closed session with Harry Reid and Nancy Pelosi and the Republican leadership. It’s always in closed session.
Read the rest here. _________________________________________ And don't forget this little news item:
Pre-election Militarization of the North American Homeland. US Combat Troops in Iraq repatriated to "help with civil unrest" by Michel Chossudovsky The Army Times reports that the 3rd Infantry’s 1st Brigade Combat Team is returning from Iraq to defend the Homeland, as "an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks." The BCT unit has been attached to US Army North, the Army's component of US Northern Command (USNORTHCOM). (See Gina Cavallaro, Brigade homeland tours start Oct. 1, Army Times, September 8, 2008). "Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks." It is not the first time an active-duty unit has been tapped to help at home. ... But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities. After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.
And the American sheeple just LET IT HAPPEN. Batten down the hatches for Black Tuesday! Suzan

Friday, September 26, 2008

Is Sarah Palin O U T ?

Somehow I don't think the Rethuglican stalking horse/place-holder/(only recently fully realized) humiliating choice Sarah Palin is long for this political world. I think she will be lucky if they allow her to go back to being the unindicted Governor of the state now thought of as Alacksa. If one were a particularly deep thinker (I'm going lightly here), one might begin to question exactly who the Repugns were who chose such an obviously unqualified candidate to be McCain's Vice President and why. (It surely wasn't McCain, who had only met her (if you believe his own words) twice. And I'm pretty sure that the Rove stand-in, Steve Schmidt, would never own up to this unique bit of brilliance now or would he?) This leaves one with the funny feeling that it must have had something to do with McCain's hidden health problems, which may not allow him to finish even the first of the two possible four-year terms (and I've noticed, along with some other researchers, that it's actually both candidates who may have good reason to drop out before completing even a single term). I've certainly heard this mentioned by some serious commentators, but it seems that it only makes sense if she were never allowed to be interviewed (on film or tape) in depth (which is already a missed opportunity). Perhaps not even one of her phalanx of handlers thought Katie Couric would be a challenging questioner (and the interview was an eye-opener that probably amazed almost any of her regular viewers), and that she would have a "free ride" in that venue. I'm guessing the Roverers struck out on that pitch as well. And just why would they desire having two candidates, either of whom could need to be replaced at any time? There is a very likely possibility that the Republi-Cons will still be gauging the public's eagerness at the time of the election for another choice (perhaps to be named later by the Prince of Darkness Cheney himself?). The crowning blow, however, didn't fall until the right-wing pretender of great (and overstated) moderation (just ask her!), Kathleen Parker, started screaming "foul" upon seeing Miz Sarah's latest rambling, incoherent TV performance and calling for her to "step down," after initially (sympathetically) calling her "Palin the Impaled" (a term coined here right after her nomination when I evinced the thought that her very selection had impaled her candidacy and by extension the Rethuglicans), when previously defending her against truthiness attacks. Maybe they should have booked Miz Sarah to do her tryout with Miz Kathleen before she was loosed on the public? In any case, the bets are down on Miz Sarah's last day (in the race). What are the odds? The unforgiving video is accessible below. Rate it yourself. And don't forget to vote! video Suzan

Barack & Joe Coming to Greensboro - Noon - Saturday, September 27!

Please come to the Depot in Greensboro at Noon tomorrow to participate in a rally for Barack Obama and Joe Biden. Change We Need Rally with Barack Obama and Joe Biden
This Saturday, September 27th, please join Barack Obama and Joe Biden in Greensboro, where they will talk about their vision for creating the kind of change we need.

Washington Street In front of the J. Douglas Galyon Depot Greensboro, NC

Saturday, September 27th Gates Open: 10:00 a.m. Program Begins: 12:15 p.m. This event is free and open to the public. Tickets are not required; however, an RSVP is strongly encouraged. Click here for news and directions!

Listen to Dave Stewart and Friends

Sing "American Prayer"

video

Enjoy your (new) life!

Suzan

Just Say "No!" (And Nancy Pelosi Must "Go!")

Our buddy, Mike, over at Mish's Global Economic Trend Analysis says it's "time to take back America from Wall Street and return it to Main Street USA" (also, back from the evil machinations of Karl Rove), and he tells us what we can do to ensure a safe financial future for us, our children and our children's children. (This is something I've been waiting all day for someone else to say out loud, and he has Fed Governor Richard Fisher and former Fed Governor William Poole for backup. Thanks, guys!) (Emphasis marks and some editing are mine.)

Treasury Secretary Paulson is attempting to ram down the throats of US taxpayers, a $700 billion bailout of Goldman Sachs (GS), JPMorgan (JPM), Citigroup (C), Morgan Stanley (MS) and many other banks that participated in questionable if not fraudulent mortgage lending schemes. Those corporations have padded their own pocketbooks and handed out billions of dollars in bonuses and stock options over the past few years, all based on mythical profits. Now those same corporations are asking U.S. taxpayers to bail out their bad lending practices to the tune of $700 billion. No Deal! Mad Rush To Judgment This past week has been nothing short of amazing. President Bush appeared before the nation stressing a sense of urgency. Paulson and Fed chairman Bernanke have done the same thing before Congress. Inquiring minds are asking "Why The Rush?" The answer is simple: If people see the actual details of the proposal they will understand it is a bad deal for the taxpayer and a great deal for Wall Street. It is the very same mad rush to judgment that kicked off the War in Iraq. Does anyone remember talk of "mushroom clouds?" Does anyone remember Dick Cheney saying "We know where they are?" This week we see the same action from Paulson and Bernanke. The only difference is the message this time is about "financial mushroom clouds." The rush is needed because if anyone looked at the deal, they could see taxpayers being left holding the bag. Break In The Ranks Tonight we see an unprecedented break in the ranks from current Fed Governor Richard Fisher who says Bank Rescue Plan Would Worsen Fiscal 'Chasm.' It is not often a Fed governor tells the Fed chairman to go to hell. But that is what happened just tonight. Former Fed Governor William Poole has stated "These are grand ideas that cannot be executed. There will be one stumbling block after another. I am very leery of jumping in with emergency measures like this." 190+ Economists Slam Bailout Over 190 top economists in the country have slammed this bailout on grounds of fairness, ambiguity, and long term effects. Bloomberg is reporting "Hundreds of Economists Urge Congress Not to Rush on Rescue Plan." More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely. In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a "subsidy" for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation. David I. Levine, a professor of economics at University of California-Berkeley, says the current plan being discussed has the wrong structure. Erik Brynjolfsson, of the Massachusetts Institute of Technology's Sloan School, said his main objection "is the breathtaking amount of unchecked discretion it gives to the Secretary of the Treasury. It is unprecedented in a modern democracy." "I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout," said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory. Strategic Game Playing At Taxpayer Expense Read that last paragraph above carefully. It is critical so I will repeat it "I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout," said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory. Tonight Washington Mutual went under. There have been 7 bank failures announce this year, all of them on a Friday. This one is on a Thursday. Game playing to create a sense of urgency? You tell me. What I will tell you is there is no need to rush into a $700 billion package when 190 economists, a current Fed governor, and a former Fed Governor all perceive the bailout for what it is: A bailout of Wall Street that will cost at a bare minimum $2,000 for every man woman and child in the United States. Long Term Interest Rates Rise Long term interest rates are already up a half point on news of this bill. They will rise more if it passes. Mortgages are tied to the 10 year treasury rate. You can already thank Paulson for your adjustable rate mortgage going up a half point if this bailout passes. Can you afford that? Letter From Economists Click here to see the Letter From Economists to the Speaker of the House of Representatives and the President Pro Tempore of the Senate. What is it that Paulson knows that 190+ economists don't? After all Paulson was telling us all how safe the US Banking system was just a few weeks ago. I will tell you what Paulson knows: He knows the longer and closer the taxpayer looks at this bill the angrier the taxpayer will become. House Speaker Nancy Pelosi Has sold You Down The River

Sadly, I must tell you that House Speaker Pelosi is standing behind Paulson and backing this absurd deal. See House Speaker Nancy Pelosi Sells Out Please let her know what you think. Everyone in the country should Email Nancy Pelosi: Email Nancy Pelosi. If that email bounces, please try this one Email Nancy Pelosi. Heck, please do both. Let her know how you really feel about her sellout to corporate interests on the taxpayer's back. Nancy Pelosi is Speaker of the House. She should take all of American voters interests in mind. She is failing to do so. Let her know. After you Email her please call her up. Here is here phone number (202) 225-4965. You might also want to try her district number (415) 556-4862. Tell her it is time to scrap the Paulson Plan and start all over. Barney Frank Is Another Sellout Barney Frank, as Democrat, is head of the House Financial Services Committee. Ironically he has been the biggest cheerleader over the years of Fannie Mae and Freddie Mac. He also happens to be the biggest cheerleader of the Paulson plan. Here are the phone numbers for Barney Frank. Washington, DC 20515 tel: (202) 225-5931 fax: (202) 225-0182 Newton, MA 02458 tel: (617) 332-3920 fax: (617) 332-2822 tel: (508) 999-6462 fax: (508) 999-6468 Taunton, MA 02780 tel: (508) 822-4796 fax: (508) 822-8186 Please do yourself and the United States of America a big favor. All you have to do is pick up the phone. Tell him how disgusted you are with his sellout of America. Tell him it is time to scrap the Paulson Plan and start all over. Former Treasury Secretary Paul O'Neill Weighs In ABC News Is reporting O'Neill: Bush Doesn't Get Financial Crisis, 'It Shows' Former Treasury Secretary Paul O'Neill said today that our nation's leaders -- especially President Bush -- are "in a panic" and haven't thought through the $700 billion bailout plan in a rush to pass it by the end of the week. "I don't think he understands or knows much about any of this and it shows," O'Neill said. O'Neill, who served as Bush's first treasury secretary until being fired over diverging views with the president about tax cuts and other issues, didn't have favorable things to say about the economic policies of either presidential candidate, Democrat Barack Obama or Republican John McCain. "I think most of what has been said by both campaigns about economic stuff is ill-informed and ill-advised," he said. Asked for specific problems, O'Neill said: "Everything." "It is possible to re-liquefy the credit system without 'We the People' owning $700 billion worth of homes," he said. CEO of BB&T Bank Weighs In If you are not convinced by now what a taxpayer ripoff the Paulson Plan is, then this should clinch the deal. Bloomberg is reporting Paulson Plan Aimed at Helping 'Poorly Run' Banks, BB&T Says. U.S. Treasury Secretary Henry Paulson's proposed $700 billion bank rescue aims to help "poorly run" companies and the primary beneficiaries would be Goldman Sachs Group Inc. and Morgan Stanley, said BB&T Corp. Chief Executive Officer John Allison in a critique of the plan. Treasury "is totally dominated by Wall Street investment bankers" and "cannot be relied on to objectively assess" the impact of government policy on the financial industry, Allison wrote in a Sept. 23 letter to Congress. The letter was verified by Bob Denham, a spokesman for BB&T, North Carolina's third- largest bank. Allison, 60, said Congress should "hear from well-run financial institutions" as lawmakers consider the plan, which seeks to ease the credit crunch by buying troubled mortgage-related assets. Under Allison, Winston-Salem, North Carolina- based BB&T avoided the subprime mortgage market, whose collapse led to the credit crisis. BB&T has risen 26 percent this year, the best showing in the 24-company KBW Bank Index. History In The Making! Your voice is being heard, possibly for the first time ever. Senator Barbara Boxer, Democrat of California, has received nearly 17,000 e-mail messages, nearly all opposed to the bailout, her office said. More than 2,000 constituents called Ms. Boxer’s California office on Tuesday alone; just 40 favored the bailout. Her Washington office received 918 calls. Just one supported the rescue plan. Senator Sherrod Brown, Democrat of Ohio, said he had been getting 2,000 e-mail messages and telephone calls a day, roughly 95 percent opposed. When Senator Bernard Sanders, the Vermont independent who votes with Democrats, posted a petition on his Web site asking Mr. Paulson to require that taxpayers receive an equity stake in the bailed-out companies, more than 20,000 people signed. “We certainly have never brought in 20,000 names in a day and a half,” Mr. Sanders said, sounding astonished. “For us, that’s off the wall.” It is much the same on the Republican side. Aides to Senator Jim Bunning, a Kentucky Republican who has called the bailout plan “un-American,” said the senator had received more constituent reaction to the bailout plan than to any issue since the immigration debate. Ron Paul Says "Call Them" If you have not yet done so, please read Ron Paul Says "Call Them!" Well don't just read it, Call Them! Let them know you are mad as hell and if they vote for this boondoggle you will vote them out of office. Flood Them With Calls, Faxes, and Emails! I do not know about you, but I am, mad as hell and I am not going to take it anymore. This is what I want you to do. THIS IS CRITICAL: Please fax AND phone your congressman. Do not bother with any members of the House except for Nancy Pelosi. Call them with this simple message "If you vote for this bill, you will lose my vote". Click Here For Congressional Phone And Fax Numbers Senate Fax List Please fax everyone on this list. Sen. Richard Shelby (R) 202-224-3416 or 202-224-5137 (try both not sure which is correct) Sen. Harry Reid (D) 202-224-7327 Sen. Jim DeMint (R) 202-228-5143 Sen. John Ensign (R) 202-228-2193 Sen. Jim Bunning (R) 202-228-1373 Sen. Chuck Grassley (R) 202-224-6020 Sen John McCain (R) 202-228-2862 Sen. Barack Obama 202-228-4260 Sen. John D. Rockefeller 202-224-7665 Sen. Dianne Feinstein 202-228-3954 Sen. Ron Wyden 202-228-2717 Sen. Evan Bayh 202-228-1377 Sen. Barbara Mikulski 202-224-8858 Sen. Bill Nelson 202-228-2183 Sen. John Kerry 202-224-8525 Sen. Daniel Inouye 202-224-6747 Sen. Hillary Clinton 202-228-0282 Those inclined should also fax their own senators as well. Please send this email to 10 others and have them do the same. Thanks We can STILL make a difference. Ongoing Campaigns Please act on ALL of the following. Every Fax Counts! Do your share! Fate May Rest With Shelby Senator Sanders' Petition Against Paulson Fax Now! Call Now! If you do not have internet faxing get it. I went with MetroFax. 1000 pages at a very cheap price. If you are reading this most likely you can afford $12. Sign up today and fax to your heart's content. Sample Fax Dear Senator/Congressional Leader The Paulson plan is not workable. It is a sellout to corporate America at taxpayer expense. Mad Rush To Financial Judgment Today President Bush and Treasury Secretary Paulson are preaching the same story. There can be no delay. Sweeping new Powers for the Fed are needed. The Treasury needs $700 billion dollars. There is no time to study alternatives. Senators, in your heart you know all of the above are lies. It was the very same mad rush to judgment that started the Iraq War. We do not need and cannot afford a financial mad rush to judgment. The odds of failure on the Paulson plan are 100%. The Paulson plan will not create any jobs or help homeowners pay their bills. Instead it diverts $700 billion of taxpayer funds to failed banks that took excessive risks. The sheer size of the bailout will cause interest rates to rise, further adding to taxpayer woes. Long term interest rates are already up a half point on news of this bill. They will rise more if it passes. How is that supposed to help homeowners? Robbing taxpayers to pay failed banks cannot possibly work! Printing money and giving it away cannot work either. If it did work, Zimbabwe would be the most prosperous nation in the world. 190+ Economists Slam Bailout Over 190 top economists in the country have slammed this bailout on grounds of fairness, ambiguity, and long term effects. What is it that Paulson knows that 190+ economists don't? After all Paulson was telling us all how safe the US Banking system was just a few weeks ago. Be a part of history! A grass roots campaign like this has never killed a major bill. You can help do it. Flood them with calls, emails, and faxes. Just Do It! It is time to Take Back America from Wall Street and return a piece of the pie to Main Street USA. Mike "Mish" Shedlock Mish's Global Economic Trend Analysis

Thank you for your patriotism! Suzan Please hit the PayPal button above if you can contribute to this site staying online! Thank you for your support!

Thursday, September 25, 2008

Smoking Out Miz Sarah

I gotta hand it to Katie Couric. She smoked Miz Sarah out during her interview which was shown tonight in part on CBS. All it took was a couple of well-place questions and Miz Sarah (chatting on and on) slit her own throat. I immediately thought (during the interview): "What else does the public need to know to remove all doubts about her as a candidate for any office?" I almost felt embarrassed for Miz Sarah. NOT. And who said Katie couldn't interview well? Click here to view it! You go girl! ;))))))) Suzan

Wednesday, September 24, 2008

The Lessons of Cronkite (and Vietnam) Rammed Home

Issues don't matter. Only power matters. Or at least that's the message I got from seeing Bill Clinton (fronting for his wife) on David Letterman's show the other night. You see . . . when Bill kisses up to McCain as being a well-qualified candidate for the Presidency (as he did) on a national TV show that goes out to many millions of probably uncommitted (or really confused/misinformed) voters, he's giving lip service to his commitment to Obama, not just being nice toward a man whom he has known well (and all his lobbyist/funding connections) for over 25 years. And when he continues to kiss up, by talking on The View about how Sarah Palin's candidacy is positive for the country (if you didn't fwow up right away loud enough to miss the rationale) and that he understands how she appeals to certain men (and women) in the country . . . well . . . how do you miss the message? After picking myself up from the floor after I had passed out at those words the other night, I began to think a little bit straighter and could see the upside (for the Clintons, not the country . . . and certainly not myself). Obama is destined (in every sense of that word) to fail. And the winners are: (Shush, children!) the ones already in power. Thanks for playing! What further proof does an ignorant (naive/dumbstruck/awe-stricken) voter need? And Hillary will continue to appear at Obama events right up to when the pre-determined election results are announced by a Bush cousin on Fox News. The odd thing about all this to me is how did they expect to triumph over McCain('s people) before Obama insisted on counting the votes just before they were re-ordained? Or did they? Imagine the campaign that we would have been witness to if Hillary were running against McCain. My stomach is turning again, but I'll have to say that it once again reminds me of "The Lesson of 'Uncle Walter' (Cronkite)" and by extrapolation, "The Lesson of Vietnam," which is: NEVER ALLOW A FREE PRESS TO OPERATE WITHIN THE U.S. AGAIN. EVER. Without a free press (for the last 30 some years) we went about our daily lives in ignorance and blissful preaching from the TV that we were the best the world had ever seen. Therefore, we are currently engaged in the death throes of our economy (lower-class economy actually, as the upper class has not been affected by recent developments as evidenced by the continued growing market for yachts and fine houses), guaranteed to last throughout our, our children's and possibly even our grandchildren's lifetimes, by the Wall Street sell job currently advertised to us as "necessary for our survival to pass it NOW NOW NOW." And I won't even mention the lack of reporting from the Wars on Iraq/Georgia/Iran and coming soon - Russia, which has just moved a large warship, the Peter the Great, armed with 20 nuclear cruise missiles, into the waters adjoining our "coming soon" southern venture in Venezuela. Mo Dowd (whom I rarely quote anymore due to her obvious anti-democratic inclinations) has a not-quite hilarious take on how Palin fits into the "economy" puzzle after her much advertised schooling from Sir Henry of Kissingeroff for the last few days. (Arch your eyebrow in irony as you read the next part.) Henry's (a Jew, although non-practicing, of course) inclusion signifies the final nail in the coffin of democracy, which was defeated by a coalition of Christian fundamentalist end-timers and their comrades-in-arms, wealthy stakeholders in the derelict financial institutions (currently going belly up in need of a free ride from the taxpayers), who laugh behind their (the fundamentalists') backs at their naivete - as they all are being viewed in their immense splendor by the uncomprehending, but overawed peasanty who feast their starving eyeballs upon the antics of their masters. Henry the K sold out long ago, took his money and disappeared from view (a lot like Karl Rove (although briefly reappearing from time to time on selected TV venues (FOXed)), Adnan Khashoggi and even Ken Lay perhaps) into wherever it is that wealthy people go after fleecing the flock the final time. It wouldn't surprise me to hear that Barclays and UBS (which employs ex-McCain campaign manager and choice for future Secretary of the Treasury, Phil Gramm, as a lobbyist (who has wreaked havoc there in all his economic wisdom)) will be found eligible for U.S. taxpayer transfusions as a part of the new, extended bailout (just as soon as they can get the extortion figure just right to get most of the Congresspeople on board). (A side note - UBS is the acronym for Union Bank of Switzerland although some wags today think it may be Untold Billions Squandered (or Suckered).) It makes one wonder why he emerged once more (in his 80's!) to take the stage before the final curtain. They must have really needed a good teacher. And he must still be clutching after that green light at the end of the East Egg dock. Great theater if you are so inclined, but I'm keeping my eye on the action in Georgia and Venezuela. After all, what do they need our billions and billions for really? Suzan

Monday, September 22, 2008

Bob Woodward: Bush Apologist & "World Changer"

In this time of tumultuous economic upheaval in the U.S., I've come to the conclusion that the following interview is indicative of what we are up against today in trying to obtain reasonably truthful reporting of national events. I watched Bob Woodward (and have seen no other discussion of this conversation since then) tell Charlie Rose (on his show last week) that Bush was disengaged from the Iraq war, that he had changed the original assessment he was given from General Pace from we are "not winning" in Iraq to "not losing," that Bush was very troubled by the way the military waged the war but felt that he couldn't affect what was going on, and that (ultimately) he was satisfied to let the next president continue to wage the war after he leaves office (as hard to believe in that event as that is). Bob said also that he had asked the new generals in the Army involved at that time if they thought the war in Iraq was over and only 1 in 97 thought it was; he also said he thought it could "bite us in the rear end real quickly." Charlie was quick to forgive Bush (I thought) by saying that "it's the fault of the system that we live in today that it's not prepared to tell the hard truth and to ask for sacrifice." Bob said he asked the President about whether he should have "asked for full mobilization" if the situation were really so important (to address in this fashion) and that Bush replied he "never thought it was necessary" (and that because "Bush lived in a bubble" this precluded his being told anything different). Charlie then asked "if we had learned the lessons of the Vietnam War or did we learn them and forget them or did they not apply?" To which Woodward laughed as though it was a discussion fraught with irony instead of Charlie just lobbing a sweetheart question that he could swat away without answering seriously. Bob then said that Bush "had lost the moral authority of the Presidency and that this was why Nixon had had to resign" because he "also had lost the moral authority of the Presidency" (and not that he had been confronted with the "smoking gun" evidence of the tapes by fellow Republican Howard Baker). He also spoke of George H. W. Bush as being "the cautious one" and as also being perplexed at his son's behavior (with no follow-up reporting from Woodward on the implications of such). Woodward also talked with Charlie about how he had asked Bush if he felt he had played his last card and Bush said "No" that he had not played his last card; that a President always had one more card to play and then went into an extended discussion of Petraeus as a father figure to Bush who did not acknowledge his own Father's realm of expertise or that of Colin Powell or Rumsfeld. He then talked about the lack of introspection of anyone in this administration starting with Bush and ending with Condi Rice (who said she would do the same in Iraq a thousand times again) - which drew incredulous comments and looks from Bob to Charlie - and how they had no apologies for any of their misunderstandings and missteps. Woodward then queried to no one in particular "What is the next surprise in Iraq?" Later he ventured that one of the lessons learned in Iraq is that there needs to be a process where they "can examine exactly where they are today." He said "the answers" so far "are too mushy;" that "there was no real analysis," and that the bad news had "Bush slamming down a book" and saying "I don't want to hear it" and that he didn't "want it to get into The New York Times." I had a tough time personally believing that both Bob and Charlie didn't follow up these thoughts with some real incisive commentary on what this type of failure in judgment and management of the war effort meant for a supposedly MBA-led government. Talk about mushy reporting. When speaking about Obama's and McCain's ability to lead the country wisely after this monumental foul up at the top, Woodward dodged the question by saying that because we have a democracy, the people have the opportunity to evaluate the candidates and judge what qualities they need to accomplish the task . . . (blah blah blah). He then came down exactly like all the rest of the TV talking heads (who are not good-to-go, paid-off right wingers with no apologies): they are both good candidates who would need to go to "Commander-in-Chief" school (with not one extra word (or facial tic) about Bush's own lack of preparation - talk about discreet!). (And pardon me for saying this, but I still get the feeling every time I listen closely to someone who has interviewed Bush personally that they just can't bring themselves to fall out of love with the guy. Yeah. So sue me. I said it.) He also went into detail about how Bush told everyone on his staff not to talk to the press - ever - and that Admiral Fallon (who was Petraeus' boss at Central Command), upon being asked by John McCain at his confirmation hearings "I hear you're not supporting the surge plan" got the reply that "there was no plan" and that they were going "to wait until Petraeus arrived in Iraq to devise one." When Petraeus got to Baghdad (reports Bob), it was a "ghost town." Baghdad "was almost dead." And thus, the problem was solved! The "techniques" (giving the Shiites a go at the Sunnis, torturing anyone who moved oddly, and eventually throwing up our hands and paying off both the Sunnis and Shiites) had worked! After listening to Bob (once again), I could not help thinking of Nora Ephron's remark that:

Bob has always had trouble seeing the forest for the trees. That’s why people love to talk to him; he almost never puts the pieces together in a way that hurts his sources. And that’s also why he has so much access: his sources can count on him to convey their version of events.
Thusly, the genesis of his incredulousness that never wavers, no matter the context. And yet, I never can help thinking, when listening to him speak, that he is not bothered by those trees at all, and that he says exactly what will serve to help him continue to be the reporter who never quite seems to be able to add 2 and 2 (and thus is the perfect fall guy for whatever shill has his ear). Listen to it (and the Part 1 interview if you can stand it) and try to discern why he was rambling all over the map so much. For my two-cents worth, I think he has begun to regret (at this most critical juncture with the ever-increasing intensity from the downward spiraling of the U.S. economy) his part in delivering false information from the revered Bush/Cheney House that Woodward Helped to Build. And another shoe (or two) is being readied for the fall. How many ships (and troops) are there still in the Persian Gulf and the area around Georgia? Where is Cheney and what is he up to? And what in the heck are the American taxpayers doing assuming the debts of the financial sharks who worked so hard to bankrupt them already? Suzan

Sunday, September 21, 2008

PPT (Plunge Protection Team) Panic-Buying Battered Bank Stocks?

Friends, Chickens are now roosting on (and then flying away with) our nation's homes (and bank accounts (not to dwell for too painfully long on all the savings that have also been wiped out)). "The US is now a subprime economy on life support." (Bloomberg News) Mike Whitney (commenting on the market's quick recovery asked "Were investors really that eager to buy back battered investment bank stocks or was the PPT (Plunge Protection Team) busy panic-buying up futures and forcing the market upwards 617 points?") believes we've reached The Point of No Return, and I am running more than a few of its salient paragraphs in order to spread the knowledge he so succinctly delivers within this fine confidence dissection (emphasis marks and some editing are mine):

The turbulence in the financial markets has intensified and there is every indication that the situation will get worse before it gets better. There are a number of signs that the financial system is at the brink of collapse and that Wall Street is headed for a 1929-type crash. Depositors have begun to withdrawal their savings from money market funds alarmed by the gyrations in the market and the daily deluge of bad economic news. According to the Washington Post, funds dropped "by at least $79 billion, or about 2.6 percent" on Wednesday alone. The withdrawals are the equivalent of a slow bank run just at the time when stressed commercial banks need access to cheap capital to finance daily operations and provide loans for a steadily weakening economy. There's also been a surge of panic-buying of US Treasur(ie)s which is considered the safest of investments. According to the Wall Street Journal, during Wednesday's market-rout, "investors were willing to pay more for one-month Treasur(ie)s than they could expect to get back when the bonds matured. Some investors, in essence, had decided that a small but known loss was better than the uncertainty connected to any other type of investment. That's never happened before." (Wall Street Journal) Also, the VIX, or "fear gauge", has soared to levels not seen since the crisis began in August just over a year ago. On Tuesday, interbank lending rates spiked upwards causing banks to abruptly stop lending to each other. When banks stop lending to each other, they cannot perform their primary function of transmitting credit to consumers and businesses, and the economy shuts down. That is why the Fed and other members of the western banking cartel made a surprise announcement at 3 AM (EST) Wednesday morning. From the FED:"Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. . . . The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks." Before the end of the day, the Fed had quadrupled the amount of dollars (to $247 billion) that central banks around the world could access in an effort to loosen up trading between the banks and resume lending to loan applicants and businesses. According to Bloomberg: "The Fed will spray dollars around the world via swap lines with other central banks. They can then auction them in their own markets." At first, the stock market reacted positively to the Fed's announcement, but by noon the market was 200 points down and losing altitude fast. It took another surprise announcement by the Treasury Dept - of a massive government intervention to remove the bad loans and withering mortgage-backed securities from banks' balance sheets - of to jolt the market out of its funk and send it climbing 410 points higher on the day. Paulson's emergency session of Congress last night was characterized by lawmakers who attended as "chilling." The situation is much worse than government officials have let on so far. The resurrecting of the Resolution Trust Corporation (RTC) is a desperate attempt to address the banking systems troubles head-on by providing a taxpayer funded clearinghouse for illiquid assets and toxic mortgage-related securities for which there is presently no market. The taxpayer is being asked to pay up to $1 trillion for the speculative excesses of Wall Street investment banks and their fraudulent securities scam. Homeowners who are likely to lose their homes through foreclosure will not benefit from Paulson's RTC. Both presidential candidates have already declared their support for the plan. According to the New York Times: "Rumors about the Bush administration’s new stance swept through the stock markets Thursday afternoon. By the end of trading, the Dow Jones industrial average shot up 617 points from its low point in mid afternoon, the biggest surge in six years, and ended the day with a gain of 410 points or 3.9 percent." If ever there was proof of Plunge Protection Team activity; Thursday's market is it. The market was sinking fast at midday even though the Fed just added nearly $250 billion in liquidity to the global system. Investors were buying short-term Treasur(ie)s in record numbers, the VIX "fear gauge" was soaring, money markets were collapsing, and the aftershocks from defaulting AIG and Lehmen were still being felt around the world. Were investors really that eager to buy back battered investment bank stocks or was the PPT busy panic-buying up futures and forcing the market upwards 617 points? Bloomberg News: "Options under consideration (by Congress) include establishing an $800 billion fund to purchase so-called failed assets and a separate $400 billion pool at the Federal Deposit Insurance Corp. to insure investors in money-market funds, said two people briefed by Congressional staff who spoke on condition of anonymity because the plans may change." Not a dime of public money is provided for over-extended homeowners trying to stay out of foreclosure. Not one congressman or senator at Thursday's meeting rejected the bailout plan or called for a criminal investigation to establish whether laws were broken in the sale of fraudulent securities which have clogged the global system; pushed banks, hedge funds, insurance companies and homeowners into default, and precipitated the greatest financial crisis in the nation's 230 year history. Ironically, the very people who created this mess, are the ones who will decide how to resolve it: the Federal Reserve and the US Treasury. Where else, but Washington would such massive failure be rewarded with more power and authority. The investment giants and the Federal Reserve are entirely responsible for the current meltdown. Currency deregulation brought foreign capital flooding into the equities and bond markets while the real economy suffered. Businesses were off-shored while good paying manufacturing jobs were moved overseas. Wall Street gorged itself on foreign capital while America was transformed into a nation of construction laborers and service industry workers. Now those jobs are vanishing by the millions and unemployment lines are swelling. The ratings agencies, prevaricating mortgage applicants, and appraisers all played a part, but it's Wall Street that's really to blame. They lobbied to deregulate the system so investment banks could merge with commercial banks and allow the world's biggest risk takers to have unrestricted access to the cheapest capital available: deposits. They even crafted a bogus ideology, "market fundamentalism"; touting trickle-down, free market, Voodoo economics that was entirely designed to further enrich the wealthy and savage the middle class. Earlier this week, former Senator Jack Kemp appeared at a whistle-stop with John McCain in Jacksonville, Florida. Kemp was one of the primary architects of "supply side" economics, the thoroughly discredited Reagan-era doctrine which has led us to our present economic catastrophe. Kemp's theories fit with Milton Friedman's "greed is good" Chicago School mumbo jumbo. Both Friedman and Kemp believe that what is good for the stock market is good for America, ignoring the shocking economic polarization that has divided the nation. Now, more and more people are beginning to see that Friedman was a charlatan who provided ideological cover for obscenely rich financiers and their dodgy investment scams. Economist and author Henry Liu summed it up brilliantly in a recent article in the Asia Times: "The collapse of market fundamentalism in economies everywhere is putting the Chicago School theology on trial. Its big lie has been exposed by facts on two levels. The Chicago Boys' claim that helping the rich will also help the poor is not only exposed as not true, it turns out that market fundamentalism hurts not only the poor and the powerless; it hurts everyone, rich and poor, albeit in different ways. When wages are kept low to fight inflation, the low-wage regime causes overcapacity through over investment from excess profit. And monetary easing under such conditions produces hyperinflation that hurts also the rich. The fruits of Friedman test are in - and they are all rotten. "Whatever headwinds the country now faces economically can be directly attributed to the inherently flawed ideology of market fundamentalism. Tuesday's 449 point bloodbath on Wall Street is the beginning of an unavoidable market crash. Regardless of Paulson's plan, there's more pain on the way. According to Bloomberg: "More than $19 trillion has been wiped off global stock market value since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression and a resulting global credit crisis slowed the world economy." All of the economic indicators point to greater losses. Once the system begins to deleverage, there's nothing anyone can do to stop it. Paulson can place himself in front of a market avalanche if he so chooses, but it won't change the outcome. Market corrections are as inexorable as the force of gravity. That's why equity bubbles cannot be allowed to develop without interest rate intervention. Responsible action by the Central Bank could have prevented the present crisis. On Wednesday, Forex.tv reported that the net long-term TIC flows came in below the consensus forecast, totaling $6.1 billion in July, while total TIC flows for the month fell to $74.8 billion, according to data released by the U.S. Treasury on Tuesday morning. Economists had been expecting net long-term flows to rise to $55.0 billion compared to the previous month's previously reported figure of $53.4 billion. $6.1 billion does not begin to meet the requirements of our current account deficit of $700 billion. The dollar is headed for a fall. On Wednesday, New York Mayor Michael Bloomberg warned that the "next wave" of financial pain may come from overseas if foreign entities stop buying U.S. debt. "It's not clear who's going to be buying our debt," said Bloomberg. "It may very well be that the next wave is going to come back and bite us." The New York Times tells a similar story except this time about Asia: "Asia’s savings have, in essence, bankrolled American spending for decades (but) Asian interest in American assets is wilting, a trend that seems to have started over the summer...Little-noticed data released by the Treasury Department on Tuesday showed that a sharp shift in international capital movements began in July. Private investors pulled a net $92.9 billion out of the United States, after putting $46.8 billion into American securities in June. ("Asia rethinks American Investments Amid Market Upheaval", Keith Bradsher, New York Times) Foreign central banks and investors have turned off the spigot. They can see that the US financial system is teetering and that the dollar is weakening. "The perceived risk of U.S. government debt, long held to be absent of any default risk, also climbed to a record yesterday as the government's involvement in bailing out financial markets weighed on its own balance sheet." (Bloomberg News) The "full faith and credit" of the United States government is slipping. US debt will be downgraded. Triple A is no longer guaranteed. America's stock just moved to Level 3 assets. The US is now a subprime economy on life support. Presently, "there is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion." (Mish's Global Economic Trend Analysis) $273.7 Billion is a paltry sum, insufficient to meet the needs of even a minor run on the banking system. The storm hasn't even touched ground in middle America, and already the system is buckling. 2009 is shaping up to be bleak, indeed. The battered and over-leveraged US financial system is facing its greatest challenge in the months ahead. The frantic search for capital has already begun, but with predictably disappointing results. Neither China nor the Saudi princes are buying any more failing investment banks. They'll leave that to the US taxpayer. What started off as a brilliant plan to offload garbage mortgage-backed paper to gullible investors around the world has suddenly backfired and now threatens to bring the entire system crashing down and change the geopolitical power paradigm for the forseeable future. On Monday night, Senate Majority Leader Harry Reid was briefed on the gravity of the financial situation in a secret meeting with the Treasury Secretary and Federal Reserve Chairman. Reid's remarks are the best summary yet of the troubles that lie just ahead. He said, "We are in new territory, this is a different game . . . . No one knows what to do."
Yesterday we were told that "for AIG, 85 billion may not be enough." "The world as we know it is going down" and "panic" is the word of the hour:
Traders abandoned the NYSE temple visually defeated and immune to the TV crews waiting. The disastrous closing prices were flickering on the ticker above the NYSE entrance: American Express -8.4 percent; Citigroup -10.9 percent; JPMorgan Chase -12.2 percent. American icons, abused like stray dogs. Even Apple took a hit . . . . The only thing that is certain is that the era of the unbridled free-market economy in the US has passed - at least for now. The near nationalization of AIG, America's largest insurance company, with an $85 billion cash infusion - a bill footed by taxpayers - was a staggering move. The sum is three times as high as the guarantee provided by the Federal Reserve when Bear Stearns was sold to JPMorgan Chase in March. The most breathtaking aspect about this week's crisis, though, is that the life raft - which Washington had only previously used to bail out the mortgage giants Fannie Mae and Freddie Mac - is being handed out by a government whose party usually fights against any form of government intervention. The policy is anchored in its party platform. "I fear the government has passed the point of no return," financial historian Ron Chernow told the New York Times. "We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams."
Tent cities are proliferating throughout the U.S., reaching levels not seen since the Reagan 80's. And a few brave (or foolish) souls are asking "Where's our bailout?" Suzan P.S. Yes, this is my 100th post at Welcome to Pottersville 2. I'm so proud.