Blaming Republicans for the bailout's defeat even though 95 Democrats voted against the bill? Perhaps you would like to know how hard Obama fought to save the bill that was the subject of Pelosi's and Frank's histrionics. The New York Times reports:
"Aides to Mr. Obama said he had not directly reached out to try to sway any House Democrats who opposed the measure. But where Mr. McCain had accused Mr. Obama of taking a hands-off approach to the financial crisis, Democratic advisers said they believed that Mr. McCain now had a role in the legislation’s failure.
As aides to both campaigns pointed fingers, Mr. Obama sought to stay above the fray and maintain a steady demeanor that advisers maintain has set him apart throughout the financial turmoil. ...." http://www.nytimes.com/2008/09/30/us/politics/30campaign.html?_r=3&ref=politics&oref=slogin&oref=slogin&oref=slogin
So much for leadership when the country might actually need it. Even though I oppposed the bill, Obama should've still been out there getting his party members to vote for the bill if it was something he supported. Instead, the professor chose to "stay above the fray". Can't have the chosen one getting his hands dirty.
Tuesday, September 30, 2008
Blaming Republicans for the bailout's defeat even though 95 Democrats voted against the bill? Perhaps you would like to know how hard Obama fought to save the bill that was the subject of Pelosi's and Frank's histrionics. The New York Times reports:
Click Here to Read More..
Ok, the last 90 seconds turn into a campaign ad but the video is still true.
By the way, back in the 90's, didn't we get stuck bailing out Goldman Sachs while Rubin was Secretary when Mexico decided to devalue the Peso RIGHT AFTER Nafta was passed?
"The Fed threw $630 billion into the market before the vote, and yet the S&P 500 was down 40 handles anyway, and in fact tanked after the vote.
Note carefully - Paulson's plan was $700 billion, and Bernanke spent $630 billion - almost the entire amount proposed - but failed to fix the problem.
Now do you see what I've been saying?
We were about to piss $700 billion into a tornado and lose it forever.
Fortunately sane people prevailed in The House of Representatives and voted NO.
If they hadn't, we'd have had our proof but the money would be on its way into the vortex and you the taxpayer would have been utterly screwed.
IF we are truly facing an economic catastrophe you have just seen proof that Paulson's $700 billion will do nothing. It is my contention that to actually arrest this mess we'd need up to $5-7 trillion, and taking on that sort of debt would essentially destroy the value of our currency, cutting it in half (which means your cost of living doubles); that is, "fixing" this mess will be worse than doing nothing at all!
IF we are indeed facing a deep recession (or worse) then we will need that $700 billion to feed and house the displaced Americans here in our nation, and cannot afford to hand it to a bunch of rich (and pissed-off) bankers around the world who made bad bets and now are screaming with their hand out like a 2-year old who wants another candy bar.
Now let me make clear - I am not suggesting we do nothing, but I am stating clearly that we cannot print (or borrow) our way out of this.... "
Mr. Denningner on how the short-selling ban made the DOW sell-off worse:
"Finally, a large part of the decline today was due to the lack of shorts. I saw multiple instances this afternoon of bids literally disappearing on individual stocks - that's something that is the direct result of forbidding shorting, and it happened only on non-borrowable stocks. My best bet is that a solid 100 points - and maybe as much as 200 - of the DOW's decline was specifically due to the shorting ban........."
For those of you mad about the bill's defeat yesterday, I have one question: Did you actually read the bill?
Monday, September 29, 2008
I'd love to provide links to coverage or analysis of the bailout bill by Mississippi publications. The only problems is, there isn't any to provide. One would think The Mississippi Business Journal might be interested reporting on the bailout bill and the mess in our credit markets but such is not the case. The two blogs over at MBJ by Laird and Hartwick discuss everything BUT the collapse of Wall Street and the attempted government takeover. The MBJ Blog last week discusses the debate, gas prices, and the Apple Store in Ridgeland. Mr. Hartwick's blog recently opined on tax incentives for movies, Mississippi Supreme Court elections, and living in diverse communities. Perhaps the business writers at The Clarion-Ledger have something to say about something so important.
Kevin Richardson, who passes for a Business Columnist at the newspaper, writes some penetrating analysis: "Limited access to credit means fewer cars and homes will be sold. As fewer cars are sold, manufacturers will trim staffs and cut orders for supplies, costing more jobs...." The rest of his column was written at this level as it attempted to explain the economy to an audience of first-graders. Not one word on the actual terms of the bailout, how our financial markets got into this mess, or any learned commentary on the current events on Wall Street as they relate to Mississippi. The only thing missing from his piece was the crayons and snacks. http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20080928/COL0102/809280346/1303/biz
When it comes to business journalism, is this the best Mississippi can offer?
The Naked Capitalist website reports on a secret conference call Treasury had with financial analysts last night.
"Various readers wrote us, and it was confirmed by a detailed report on the call at DealBreaker, that the Treasury Department held a conference call this evening for analysts on the bailout bill. A memo was evidently sent to SIFMA members; others may have been contacted by other means. But the report I got from one person who was on the call was the the questions came from financial services industry members. In other words, this was most assuredly not intended to be a call open to the public at large. If anyone from the media or other member of the great unwashed was listening in, it was by accident......."
Here is a live blog of the call. You need to read this and give our Congressional delegation hell today. Emailing or calling the David Hampton and Sid Salter wouldn't' be a bad idea as well. This is garbage. As I wrote last night, this bill is loaded with bad things for Americans that have nothing to do with restoring confidence in the markets.
Here is a recording of the call. Bob Hoyt works for Treasury.
Note: Good comment below from someone who listened to the audio recording.
Karl Denninger of The Market Ticker blog read the bailout bill and gives his sober analysis. I read all 102 pages of the bill myself this morning and can say that he is on the money in his remarks. Sickening. Here are some highlights of his epistle today:
Section 3(9) – This permits the purchase of CDOs, CLOs, and credit default
swaps! ALL forms of derivatives have a potential zero value and credit default swaps have a potential negative value; that is, they can result in an obligation greater than their purchase consideration – in fact, they can result in obligations of 100 times or more their purchase consideration! This is outrageous and must not be allowed.... "
(Kingfish note: That is exactly what this section of the bill says. The Secretary can purchase " residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages..." That includes Credit Default Swaps. Notice the commercial mortgage provision. Is this a new crisis or a favor to the banks?)
Section 101(e) – Specifically allows Treasury to pay up to 100% of the original acquisition cost of an asset, irrespective of its current value in the marketplace, and such determination is nonreviewable.
None of these “troubled assets” are currently priced or valued there, or they
wouldn’t be “troubled.” There is no threshold to prevent the Treasury from overpaying for
these assets nor to keep sellers from gaming the system for acquisition! (Did you get that? Can we say kickback?)
(Kingfish note: Bill says (Secretary shall take steps) "preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset." In my opinion the bill is poorly worded in this section and shows an intent to keep firms from profiteering off of the sale of assets. However, Denninger is correct in that the Secretary could buy the assets for their original purchase price, not current market value. One can see the opportunities for financial mischief here. Remember, under the proposed judicial review provisions, any injunctive relief is AUTOMATICALLY STAYED until the Secretary can appeal.
The taxpayers will undoubtedly get ripped off because of this provision. The government will purchase mortgages that are based on overvalued appraisals. Lenders such as Countrywide OWNED the appraisal companies used for their mortgages, creating an egregious conflict of interest as it led to the widespread problem of these lender-employed appraisers creating fraudulent or bogus appraisals. Even worse, Fannie Mae had a program for several years that WAIVED appraisals altogether. Unfortunately, that is not the end of it as there is the second mortgage market that has completely collapsed. Second mortgages usually did not depend on appraisals at all or if they did, the lender relied on a "drive-by appraisal". Citi originated stated income second mortgages. GMAC underwrote 125% second mortgages, i.e. an unsecured loan based on an overvalued property. The Secretary could thus be forced to buy most of the second mortgages that are toxic while the lender actually gets full value for the bad debt. Nice deal if you can get it. This section is bad news for Americans. Period. Banks will take advantage of this clause to dump bad or fraudulent mortgages on the government, leaving it to figure out how to modify the mortgage or help the homeowner.)
Section 119 – This is an absolute travesty. Full protection under the law must be provided
to shareholders and bondholders. Absent this you will precipitate capital flight from these
instruments and institutions – guaranteed. This section is tremendously DESTABILIZING.
(Kingfish note: You REALLY need to read the entire section. He is not kidding one damn bit. The bill states:
INJUNCTION.—No injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, other than to remedy
a violation of the Constitution.....
(3) LIMITATION ON ACTIONS BY PARTICIPATING COMPANIES.—No action or claims may be brought against the Secretary by any person that divests its assets with respect to its participation in a program under this Act.... (Get government aid, surrender all legal rights to defend yourself )
(4) STAYS.—Any injunction or other form of equitable relief issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, shall be automatically stayed. The stay shall be lifted unless the Secretary seeks a stay from a higher court within 3 calendar days after the date on which the relief is issued.....)
Section 128 – This is touted by Bernanke as accelerating his ability to pay interest on reserves; that is not of particular concern. The problem with this section is that it also allows Bernanke to set the reserve requirement for banks to zero if he so chooses. Such an event would have a catastrophic outcome for our banking system. This section MUST NOT STAND AS WRITTEN AS IT RISKS OUR ENTIRE BANKING SYSTEM......"
Read the rest of Mr. Denninger's thoughts at http://www.denninger.net/letters/you-r-nuts.pdf. The address for the home page of The Market Ticker is http://market-ticker.denninger.net/.
Here is a link to the text of the bill itself: http://banking.senate.gov/public/_files/AYO08C04_xml2.pdf
Sunday, September 28, 2008
"Since the beginning of the year, I have been worried about the efficacy of reducing the fed funds rate given the problems of liquidity and capital constraints afflicting the financial system. As I see it, the seizures and convulsions we have experienced in the debt and equity markets have been the consequences of a sustained orgy of excess and reckless behavior, not a too-tight monetary policy.
There is no nice way to say this, so I will be blunt: Our credit markets had contracted a hideous STD—a securitization transmitted disease—for which lowering the funds rate to negative real levels seemed to me to be not only an ineffective treatment, but a palliative and maybe even a stimulus that would only encourage further mischief.
I was and I remain skeptical that lowering the fed funds rate is the most effective antidote for such a pathology, given that, in my book, rates held too low, too long during the previous Fed regime were an accomplice to that reckless behavior. A fed funds rate of around 3 1/2 percent—that was the level at which I began to stray from “the pen”—did not appear to me to be the principal problem, particularly with commodities prices soaring and incipient inflation coming to our shores from demand-pull pressures and rising labor costs in the countries that we use to source the inputs needed to run our manufacturing base and stock the shelves of our retail stores. ....." http://dallasfed.org/news/speeches/fisher/2008/fs080925.cfm
Heady stuff but he makes some good points if you feel like making the effort. ;-)Click Here to Read More..
McCain still using kid gloves. Should be hitting the Democrats with these videos.
Click Here to Read More..
Saturday, September 27, 2008
"Obama's performance was nothing short of pathetic, and only a Democratic-leaning analysts and voters with blinders on could suggest that Obama won the debate....."
The Nation Slams Obama
By the way, Mother Jones calls it a draw. Mother Jones
Friday, September 26, 2008
Working on a bottle of cabernet right now and shot some tequila as well. Finally, the event we've all waited for this week. We've had our share of drama with this debate this week but hey, a national event centered in Oxford needs some Faulknerian drama.
Wow. Daredevil just appeared on camera. Maybe Captain America or Spiderman will show up tonight as well. Wait, sorry. That was not Daredevil but Cindy McCain wearing a bright red pantsuit. Damn tequila already affecting my vision apparently. I'm watching this on Fox. Just don't feel like hearing Olberman whine about "McCain's social pornography". Somehow, I'm sure Keith is an expert on things that are pornographic.
My expectations? I've seen too many debates where the favorite didn't win as the underdog thought it was a damn fight and didn't know it was a show, to paraphrase Rocky. Remember Perot-Gore? I expect Obama to do very well. He will appear in command of himself and sound very eloquent. I think the debate will pivot on McCain's ability to get tough on Obama and bloody his nose when his jabs get through. McCain needs to take advantage of moments similar to the capital gains tax issue in the Hillary debate when it was clear Obama didn't' know what the hell he was talking about. McCain too often doesn't look strong in debates. He has to have a killer instinct without looking like a killer. Obama has to appear as a confident expert who wants to improve our lives, not a smug politician who thinks he is entitled to win and is morally superior to Mr. McCain. I will say that if this debate turns out to be like the Cheney-Lieberman debate, I will not be disappointed as it was a fairly civil and substantive debate instead of a plethora of sound-bites, talking points, and gotchas.
Lehrer just said he was going to include the global financial crisis. This is going to be very interesting. Still good on the cab.
Lehrer starting with the economy. Not wasting any time. "Where do you stand on the financial recovery plan?" Obama calls this the worst financial crisis since the Great Depression? Anyone remember the recession of 81 or late 70's? Obama is very forceful in his answer. Trying to tag in 8 years of Bush economic policies to McCain and uses the trickle-down reference. McCain graciously mentions Senator Kennedy's hospitalization. Starts out a little nervous. Discusses how important it is for both parties to work together. Lays out his core requirements for a bailout bill. Mentions energy independence.
Lehrer asks if they favor the plan. Obama punts, says he hasn't seen the language yet. Um, why NOT? Isn't he the leader of his party? Ok McCain. Obama is saying he tried to do something about the subprime problem. Hit him in the face here with your 2006 bill that would have reined in Fannie Mae as well as your remarks on the subject while he remained silent. Hit him here. McCain doing just that and attacks Washington as well, saying it has no accountability for failure and corruption. So far a draw. McCain not looking clueless on economy so far.
Lehrer asks about fundamental difference. McCain says "Republicans came to change the government and government changed us." Attacking spending and not shying away from Obama's earmark requests. Obama rebuts. Obama hits back on earmarks, pointing out its a small part of the budget. Good point. Now hitting him on tax cuts, saying he wants to help the wealthy. McCain needs to explain that small businesses file on their personal tax returns and that Obama's tax cuts will hurt them. Damn. McCain tags Obama, stating that his earmark requests stopped after he announced his candidacy. Obama comes back with populist rhetoric, saying he wants to stop jobs going overseas and bring affordable health care to Americans. Obama focusing on McCain's rhetoric about earmarks while McCain discusses government spending overall, not just earmarks. McCain showing a mastery of the government spending issue. Missed opportunity. McCain says at the end we should examine his definition of rich. Should have explored that more. Obama has a nice counter for McCain's point about corporate tax rates, saying corporations have loopholes. On this exchange they have gotten some jabs through. No heavy punches though. This debate might be a good one as they both show a willingness to stand in the middle of the ring and go toe to toe.
Oops, forgot I had a spellcheck function in this software. Damn, I've gone spastic typing.
Nice question. Lehrer asks what priorities they'd be willing to give up because of the bailout plan. Obama concedes the point, saying he'll have to postpone some plans. His base WON'T like that one. Discusses energy costs. McCain should hit him with the fact that a weak dollar has resulted in much higher energy costs and say he will strengthen the dollar and help Americans. McCain wants to cut spending and criticizes Pentagon purchasing? HUH? Pentagon spending had not really been an issue in this campaign. Not a word about entitlement spending. Obama has a nice comeback for being accused of having a liberal record, saying he was only voting against Bush's policies and has a nice judo move, saying he has worked with Senator Coburn. Nice move.
Obama needs to quit frowning or smirking when he hears something he doesn't like. Lehrer trying to get them to admit they will have to give up some of their plans because of the financial crisis. Obama admits LESS tax revenue because of a slowing economy. Um, does he know GDP increased 2.8% last quarter? His base won't like hearing him say that either. McCain talking about health care. Needs to refute Obama's charge he would tax health care benefits. Still hasn't done so. Obama linking him to Bush, 90% votes, and deficits again. Nice. McCain lists issues where he opposed Bush.
NOW we are on to foreign policy. My take? Both candidates on their game so far. Several jabs have landed on both opponents. No blood so far. Obama making a mistake here, saying we should've just focused on Afghanistan. WHAT? Did Obama say Al Qaida was stronger than ever since 2001? Osama's in hiding. We killed most of their leadership. We kicked their ass in Iraq. And he is saying AQ is stronger now? McCain should slam him here. He should also tell Obama you can't deal with terrorism one country at a time. Does Obama not know that Afghanistan is a NATO operation, which DOES fall under his subcommittee?
Obama getting some good shots on McCain's remarks in 2003 when we invaded Iraq. Obama looking frustrated but parries him nicely on tactics and strategy. They both need to quit arguing about whether the decision to invade Iraq was right. We are there NOW. They both need to focus on the future in Iraq, not the past. Obama coming out for timetable of 16 months. McCain should say the enemy doesn't have a timetable but make it clear we are bringing the troops home.
Obama discussing Pakistan now. Makes some good points and the Bush administration does deserve criticism over Pakistan. Nice. McCain points out how Obama's position on Pakistan is naive and will creat instability. On my last glass of this bottle of cabernet. Los Cardos by Don Paulo of Argentia. French grape grafted onto the vine. Kats carries it and available at Bravo! Slight edge to McCain on the Afghanistan/Pakistan issue.
So far, no mention of Iran. Or Russia. Or China.
Niiiiiiiiiiiiiiiiiiiice!!!! McCain points out his vote against Reagan's sending Marines to Beirut. Oh yeah. I love that one. Hell, I didn't even know that fact. He stood against Reagan as a Republican. Take that one, Obama. When did he ever stand against his party on such a substantive matter? I don't think anyone who watches McCain's performance will think he doesn't care about the troops. By the way, I think Obama does too. McCain screwing up a little here in explaining why America should not come home as a loser. He misses the point. Americans are TIRED of war. He needs to make a better point of why it is important to American and WHY their sacrifices are worthwhile. Don't paint it as a win/lose proposition. I'm not going to demonize him on this one because as a former soldier, I understand a soldier thinking this way.
Dayumn. McCain keeps pointing out Obama, like Bennie Thompson, rarely visited the fronts. In fact, Obama only visited once if I'm not mistaken.
Now we are talking.
McCain immediately brings up nukes. There ya go. put it on the table. Should bring up North Korea and Syria nuke project. Alludes to Iran's threats to wipe out Israel. Nice. McCain mentioning a League of Democracies. Considering most of the world is under some form of totalitarian government, not a bad idea. Flaw is, Europe is socialist to a large degree in character and philosophy and will not go along with such an idea. NICE!!! He hits Obama over the vote against naming the Iranian Republican Guard a terrorist organization. Obama trying to defend it but is vulnerable here somewhat as the IRG WAS operating against us in Iraq. Nice point by Obama as he says Iran helps Hezbollah and Hamas. Good thoughtful explanation by Obama about the value of diplomacy. Obama makes a nice use of Kissinger, a pillar of Republican foreign policy thinking. Damn. Obama calls Iran a "rogue regime". Nice. He is parrying McCain rather well on this issue. McCain making good points but Obama not looking clueless either. Nice job by Obama to mention North Korea helping Syria get nukes. Now I'm getting a good buzz going.
McCain comes back with a serious answer about speaking to Iran without preconditions. That is one weakness in Obama's position. Too often such meetings are used by dictators as photo ops to use against their populations. Obama keeps hitting him with Kissinger. Damn. McCain needs to point out that Kissinger thought the Beijing Massacre was ok. Nice comeback by McCain on Kissinger. Louis XIV is being very good and sleeping while I am watching this. Usually at this time of night he wants me to throw his toys for him to fetch.
Now we are on to Russia. The most important issue: Don't stop the free flow of Russian women to this country. Period. I want to know where the candidates stand on this very serious issue.
You guys are making good comments.
Nice job by Obama making fun of Bush. Bush deserves it. Obama doesn't say a thing about Georgia. McCain putting him down. There ya go. Showing a better understanding of Russia. DAMN!!! "I looked into Mr. Putin's eyes and I saw theree letters: K, G, and B". Damn. Brings up the pipeline and Russia using energy as a weapon. Obama neglected this. McCain is a little bit tougher towards Russia and bring up Ukraine. Showing a superior subject matter knowledge compared to Obama. Anyone want to bet Lotus and Ladd are talking about what a warmonger McCain is and how crazy he is? In my opinion, Obama not showing he is clueless about Russia, just McCain knows the subject better than he does. Wait! Obama warned Bush about Russian peacekeepers? When?
Wow. Obama says we should increase domestic and offshore oil production. Concedes nuclear energy, which McCain brought up first. Obama hits him on voting against alternative fuels 23 times. I'm willing to be those votes were over ethanol subsidies, which Dole and Archer-Daniels Midland pushed for and got for years. McCain missing out on the increased drilling issue: It will create more high-paying jobs and bring him in some union votes as well.
NICE. McCain shows up 9/11 Commission, which Bush opposed. One major flaw of the Bush administration was its top-down management style. THEY know best. Don't worry your pretty little heads about anything. What tipped me off after 9/11 is when Bush opposed arming the pilots, fighting it tooth and nail, and the creation of the 9/11 Commission.
McCain using specifics on homeland security, Obama speaking in more general terms. Obama says we need missile defense. McCain needs to point out his ad earlier this year was AGAINST it. I posted the video on this website. Obama focuses on how we are perceived. How bad will LSU beat MSU tomorrow night?
McCain again discussing why leaving Iraq is a bad idea in terms of won/loss terms. Needs to make it more personal and concrete for Americans. Americans don't want to hear their kids died for a scoreboard. Obama screwing up here, saying Al Qaida is resurgent. Sounds clueless to anyone informed on the subject. Obama trying to tie cost of Iraq excursion into economy.
End of debate notes. They both came off very serious, prepared. I enjoyed this debate much more than I did the Bush/Gore or Bush/Kerry debates. NICE! Obama talking about WHY his father came here. I like it. Something Reagan would've said and Clinton never did. If Obama is smart, he'll paint that vision of how he sees America as a land of opportunity, with government working for them (in his own way, of course).
Obama had a better closing statement than did McCain. I think both of them were polished, serious, well-prepared, thoughtful. I liked this debate. No animosity between the two even though it was spirited. This is what we expect of our leaders, not the crap we saw from Harrie Reid and Barney Frank earlier today.
Who won? Slight edge to McCain. Showed a superior mastery of foreign policy butu Obama held his own and made some good points. I think he was wrong on some of them, such as going into Pakistan and talking to Iran, but he was able to back them up with his reasons for thinking the way he did. McCain looked more experience, looked more expert of how Washington works, and that he cared as much as Obama did about the welfare of his countrymen. No knockdown punches, just a series of good jabs and some serious discussion by two people who deserve our respect.
I'm now drunk as anyone reading this can tell.
Click Here to Read More..
"House Republicans stood and supported the Petraeus surge so our troops would have victory in Iraq.
Today, House Republicans oppose the Paulson splurge so that we can have prosperity in America in the long run.
And make no mistake, we understand the gravity of this situation. But we will not engage in a rush to judgment that destroys the possibility of the free market and prosperity for American families for decades to come.
We will not walk out of this room after a forced vote, waving a piece of paper in our hands, claiming “fleece in our time.”
We will do the job we are entrusted with and we will get the job done."
Meanwhile Congressman Pickering and Senator Wicker "study" the problem and refuse to take a position. Great speech. Only 5 minutes.
"Britain’s five leading high street banks have as much as £95.3 billion ($175 billion) of distressed assets on their books that may qualify for the American bailout scheme.
If the British banks tap the rescue fund being set up by the US Treasury and the Federal Reserve to the maximum, they could secure one quarter of the $700 billion being made available. Under the terms of an outline agreement that appeared to have been reached by US policymakers last night, Britain’s lenders will be able to use the facility. .....
Combined, the five British lenders hold securities worth $175 billion, which they could transfer to a federally backed Treasury fund. Under the proposed terms of the rescue package, non-US financial institutions must have significant operations in America to qualify..........."
Click Here to Read More..
Meanwhile a certain left-wing local publication here in Jackson prints the headline: "McCain wants to cut and run from debate". The same publication that referred to Governor Palin as "white trash" in a headline this week.
Saturday is the big birthday for Kingfish! Everyone be sure to send congratulations.
Thursday, September 25, 2008
Kingfish note: Colonel Hapablap penned this little column.
First, a quick primer on the Federal Reserve and interest rates:
The Federal Reserve is a private bank, and like any other private company, has a balance sheet. The liabilities & equity side is filled with Federal Reserve Notes (Dollars) and the asset side is filled with U.S. Treasuries, Agency (GSE) paper, and other mortgage debt. The Federal Reserve's balance sheet is approximately $1 Trillion. As a part of its management of the money supply, the Federal Reserve conducts daily open market operations, loaning out dollars for short term duration, often one or 2 days. Collateral, in the form of Treasuries, Agency paper, or other mortgage paper, is required to be posted in order to receive one of these loans.
These overnight operations are the mechanism by which the Fed "sets" overnight interest rates. Ultimately, all interest rates are determined by supply and demand in credit markets. Despite what they might have you believe, the Fed doesn't just tell the market what overnight interest rate to use when they make a policy decision. If there is more money out there to be loaned than demand for that money, interest rates go down as lenders compete to lend available dollars to a finite group of borrowers. The interest rate moves until either more borrowers are drawn in by the lower interest rate or more lenders give up on lending at such low rates. Similarly, if there is more demand for money than there is available money, interest rates move up. So, in order to consistently maintain a given interest rate day after day regardless of minor fluctuations in the overnight credit markets, the Fed conducts open market operations, draining or adding liquidity (cash) to or from the system as is necessary to keep the rate where they want it.
Remember, the Fed has a finite balance sheet, so it can only play this game so much. For instance, the Board of Governors has no ability to force the overnight rate to 20% for tomorrow. With current overnight rates hovering in the 2% range, a massive amount of liquidity would have to be drained from the system in order to make the overnight supply and demand for money balance be 20%. Similarly, if the credit markets suffered a huge shock tonight that took the natural supply/demand balance up to 20%, there is no way for the Fed to bring it back down to 2% via open market operations with the balance sheet available to them.
Now that we all basically understand how all this mess works, and presuming that I haven't confused you even more than you already were, let's look at some interesting data from the last several days:
This is the Slosh Report. It shows, essentially, how much liquidity the Fed has outstanding on any given day. Noticee a few things. First, look at the amount of liquidity that has been drained (Net Add column) in the last 5 days. If you go to the page yourself, you can mess with the start date to show you liquidity going back for a while. Through most of August and the beginning of September, the Slosh hovered between $100B and $120B. Today's total was $63B. The Federal Reserve has DRAINED $60B of outstanding system liquidity. But why? I thought that the problem was a LACK of liquidity in the system. If there are financial institutions teetering on bankrupcy, one would expect the Fed to be ADDING liquidity to the system.
This is data from the Federal Reserve Bank of New York, showing historical overnight rates. As you can see, the overnight rate for the last 4 days has been markedly below 2%. In fact, it's been much closer to 1.5%. So, clearly, the Fed is unable to defend its target 2% rate. In fact, as I mentioned before, the Fed shouldn't WANT to defend the 2% rate, as it would require a liquidity drain that the system clearly does not need right now. So, why haven't we seen a target rate cut?
Now, I am generally not a Tin-Foil-Hat type of guy. In fact, that kind of stupidity generally makes me mad. But this is just inexplicable to me. The credit markets have already decided that the overnight rate needs to be no higher than 1.5%. Yet, the Fed continues - for a week now - to drain liquidity from the system in an effort to keep the rate higher than the market wants. And they're doing it at a time when Ben Bernanke and Hank Paulson are in front of congress, testifying under oath that the system is on the brink of collapse due to a lack of systemic liquidity. Why? Why would you engage in something that could very well cause the bank failures that you claim you want to prevent? Maybe for the same reason that you would, in the previous week, tell America that you had to get a financial bailout bill done before the markets opened in Asia on Sunday or else there would be financial calamity.
The easiest way to get something done in Washington is to create panic. I bet a few banks going under would do it.
Hattip to Karl Denniger on this one.
McCotter Bailout Plan, no cost to taxpayer
Congressman McCotter has created a plan that he says will stabilize the markets with no cost to the taxpayers:
"Expedited American Recapitalization -- Now" Act
1. Expedited American Recapitalization -- Now (EARN) Proceedings: A sunset bill that makes available to financial institutions a pre-packaged recapitalization (EARN) proceeding in which debt forgiveness is expedited. (This is similar to expedited bankruptcy proceedings....
3. Incentivize Private Recapitalization: If, within a limited one year window (commencing upon this legislation's enactment into law), a person invests in (i.e., recapitalizes) a financial institution that has undergone an EARN proceeding, this investment over its lifetime is subject to a ZERO capital gains tax rate. If, within the same one year window, a person purchases a toxic asset, this investment over its lifetime is subject to a ZERO capital gains tax rate. .......
4. Government Backstop: If no private capital is forthcoming, the government can take a preferred equity stake in an EARN financial institution. No dividends may be paid to any other investor until the taxpayers' claim is redeemed with appropriate interest. The government shall also hold voting rights, as determined by the percentage of its equity shares owned, in an EARN financial institution only until such time as the taxpayers' claim is redeemed with appropriate interest. (This addresses CEO salaries and bonuses without permanently vitiating the private sector's setting of compensation.)...
7. Market Transparency and Congressional Oversight: To ensure Market Transparency, the Secretary of the Treasury is empowered to examine any and all appropriate financial records at any time of financial institutions and individuals covered under this act; and Congress at any time may request of the Secretary of the Treasury any and all information required to protect the taxpayers' investment incurred under this act. ....
10. Ultimate Cost to Taxpayers: ZERO!"
Article on McCotter Bill
I still prefer the other alternative I posted a few days ago, reasonable alternative to bailout but McCotter's plan is an improvement.
At first glance, the Helix Nebula (aka NGC 7293), looks simple and round. But this well-studied example of a planetary nebula, produced near the end of the life of a sun-like star, is now understood to have a surprisingly complex geometry. Its extended loops and comet-shaped features have been explored in Hubble Space Telescope images. Still, a 16-inch diameter telescope and camera with broad and narrow band filters was used to create this sharp view of the Helix. The color composite also reveals the nebula's intriguing details, including light-year long, bluegreen radial stripes or spokes that give it the appearance of a cosmic bicycle wheel. The spoke features seem to indicate that the Helix Nebula is itself an old and evolved planetary nebula. The Helix is a mere seven hundred light years from Earth, in the constellation Aquarius. http://antwrp.gsfc.nasa.gov/apod/ap080904.html
Apparently the two main figures involved in Troopergate besides Governor Palin are guilty of a little domestic violence.
The head of the state police Governor Palin fired, Walt Monegan, had a restraining order placed on him and dislocated her shoulder (of course he claims they were just horsing around and it happened before they were married). The San Francisco Chronicle reported:
It turns out that well before he was jettisoned for what he says was his refusal to fire trooper Wooten at the behest of Sarah Palin, Monegan had his own share of domestic troubles - some of them spilling all the way down to the Bay Area.
In October 1994, Monegan's estranged wife, who had moved from Alaska to the Peninsula with the couple's two daughters after more than 10 years of marriage, sought a temporary restraining order against him - accusing Monegan of threatening to kill her, waving a gun at her and dislocating her shoulder, according to her declaration on file in Santa Clara County Superior Court.
In an interview last week, Georgene Moldovan said Monegan had threatened several times to throw her body in an Alaska river.
Monegan, 57, who has since remarried, vigorously denied Moldovan's allegations, both in court papers filed at the time and in an interview with us last week. "I'm not a door slammer - I don't punch walls," he said.
Monegan admitted to dislocating Moldovan's shoulder, but said it was an accident that had happened before they were married, while they "were wrestling and tickling." http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/15/BALE12T2N3.DTL
So Governor Palin fired a state official who had a history of domestic violence and refused to fire a state trooper who tased a 10 year old child and was drinking on duty. Yet Palin is the villain for actually trying to control her own department. Go figure.
Wednesday, September 24, 2008
From The Market Ticker:
"Throwing cold water on the "bailout now!" mantra, Berkshire announced it is going to invest $5 billion dollars this evening into Goldman Sachs:
"Berkshire is buying $5 billion of perpetual preferred shares, New York-based Goldman said today in a statement. Goldman, which this week transformed itself from the biggest U.S. securities firm to the fourth-largest bank by assets, also plans to raise at least $2.5 billion by selling common stock in a public offering."
But wait! Didn't Bernanke and Paulson just get done saying a few hours prior that private capital would not invest?
Well Comrade Paulson and Comrade Bernanke? It appears that indeed private capital will invest, if the terms are good and the company sound.
Heh heh heh, a free market solution! Warren comes in and sticks a big wad of cash into Goldman Sachs - something that you said wouldn't happen without you offloading all of this bad debt onto the back of the taxpayer.
I love it when one of the most-storied investors of our time turns our Treasury Secretary and Chairman of The Fed into a liar just hours after their "Armageddon Story" is run on national television............"
"Quiz: What Mississippi Legend is Calling Sarah Palin ‘White Trash’?"
The JFP will tell you a bit later today on our brand, spanking new Debate-Politics Blog. Stay tuned. posted by ladd on 09/24/08 at 01:52 PM
White trash reference
I called my representatives in Congress today to express my opposition to the bailout bill as currently written.
The lady who answered the phone at Senator Wicker's office informed me he had not taken a position yet and was trying to get as much information as possible. She also informed me that very very few people had called in favor of it but that calls had been running very heavily against it. Interesting.
Senator Cochran's office said he had not taken a position yet on the bailout bill as well. It must be noted that the person answering in the phone was not as friendly as Senator Wicker's staff and just seemed interested in keeping a tally and hanging up as quickly as possible instead of listening to what the Senator's constituents might actually have to say.
The same held true when I called Congressman Pickering's office as I was told by a staffer that he was reviewing everything and had not taken a position yet on the bailout bill either. Young man was very nice and was able to discuss the bill at some length. He also said the calls were running very heavily against the proposed legislation.
Note: If looking for alternate proposals, check out Congressman McCotter's bill, Expedited American Recapitalization Now Act or an earlier post that made a great deal of sense,
Sensible bailout alternative
Recap of bailout bill/housing implosion posts:
Great breakdown of Paulson bailout bill
Sensible alternative by a fund manager
1999 NY Times: Clinton Admin pressured Fannie to make subprime loans
Quick Primer on Current Financial Crisis
More evidence of Democrats/Fannie incest
2002 NY Times: Bush tries to reform Fannie & Freddie
McCain tried to reform Fannie and Freddie
Truth about FDIC
Thinking of blaming Bush for Fannie problems? Try again
WLBT reported last night on Jackson's attempts to frustrate The Kingfish's efforts to obtain the Heather Spencer case police reports through the Public Records Act. I haven't seen the video as I absolutely HATE seeing myself on camera. The reporter did a good job in the interview and in her print version of the story. As usual, Tom Hood has been very fair in his comments about this issue and has been active in helping the public gain access to what are its own records.
Here is the police report provided by Jackson:
By the way, since they linked my blog on WLBT's website, I have to stay respectable for a few days. Too bad, had a killer babe pic to post today.
Congrats to Tom Freeland, FOLO blogger, lawyer, master chef, blues aficionado, and sometime practitioner of jackassery. The Clarion-Ledger published an interview with him in last Sunday's edition. The interview is available at http://www.clarionledger.com/apps/pbcs.dll/article?AID=2008809210341.
Editoral Page Editor David Hampton discussed my fight to get Jackson to release the Heather Spencer case police reports in his weekly column, http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20080921/COL0408/809210336/1167/OPINION
Wow, are we finally becoming respectable?
Over at FOLO, Lotus is wondering about an "October Surprise" involving Osama. Have to love the circular logic: If Bush doesn't get Bin Laden, he's incompetent. If he does get him, he's trying to influence the election. http://www.folo.us/2008/09/24/this-oughta-be-worth-a-question-or-two-friday/Click Here to Read More..
Tuesday, September 23, 2008
From The Clarion-Ledger tonight:
An inmate in the State Penitentiary at Parchman died this weekend of cardiac arrest following a fistfight with another inmate.
Ricky Sykes, 43, died Saturday in Parchman’s Unit 30, where prisoners go for educational classes and drug and alcohol counseling, according to Mississippi Department of Corrections spokeswoman Tara Booth.
We can hope.
Karl Denninger, who has been on the money in predicting the fate of the markets and economy since the beginning of the year, breaks down the Paulson bailout plan, showing exactly why this is a really really bad deal for America. The full text of the bill is included so scroll past the bill to his comments.
If you think the cost of this bill is $700 billion, you're wrong. The cost is actually infinite and the entire bill constitutes a giant money-laundering scheme.
Paulson can (and presumably will) buy up to $700 billion of these "assets", then sell them. Let's say he decides to buy them at 60 cents on the dollar and sell them for 10. You, the taxpayer, will eat the fifty cents, for an immediate cost of $350 billion dollars.
Having done so, he is then authorized to do so again, since the $700 billion is no longer on the government's balance sheet.
In fact, he can do this without limit, other than possibly due to the federal debt ceiling, which of course Congress will raise any time we get close to it. Oh yeah, this bill does that right up front too. No need to bother with it the first time around.
Folks, $700 billion isn't even close to the total cost of this monster.
If Paulson and his successor decide to, they could literally cycle all $5.3 trillion of Fannie and Freddie's debt through this scheme, potentially sticking the taxpayer for 20% or more of the total, plus as much private debt on various bank balance sheets as they can manage to nationalize until (and possibly beyond) the point where the bond market tells him to go to hell.
Bottom line: This bill gives Paulson the ability to nationalize an UNLIMITED amount of private debt and force YOU AND YOUR CHILDREN to pay for it.
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
If you are a bank, investor, or other entity who is forcibly gang-raped by Secretary Paulson due to his actions as "King" (crowned by Congress) under this law, you are unable to seek redress in the courts or by administrative action......
In 2006, the president of the Federal Reserve Bank of St. Louis noted “Everyone knows that a policy of bailouts will increase their number.” This week, Congress is being asked to hastily consider a monstrous bailout plan on a scale nearly equivalent to the existing balance sheet of the Federal Reserve.
As an economist and investment manager, I am concerned that the plan advocated by Treasury is essentially a plan to bail out the bondholders of financial institutions that made bad lending decisions, with little help to homeowners that are actually in financial distress. It is difficult to believe that the U.S. government is contemplating taking on the bad assets of these institutions at probable taxpayer loss and effectively immunizing the bondholders (and shareholders) of these companies.
While it is certainly in the public interest to avoid the dislocations that would result from a disorderly failure of highly interconnected financial institutions, there are better ways for public funds to accomplish this, other than by protecting corporate bondholders while homeowners remain in distress. ....
What has happened in recent months is that this equity has become insufficient, so that the company technically becomes insolvent provided that the bondholders have to be paid off....
The appropriate solution is not for the government to replace the bad assets with public money, but rather for the government to execute a receivership of the failed institution and immediately conduct a “whole bank” sale – selling the bank's assets and liabilities as a package, but ex the debt to bondholders, which preserves the ongoing business without loss to customers and counterparties, wipes out shareholder equity, and gives bondholders partial (perhaps even nearly complete) recovery with the proceeds. ......
Very interesting read and very thought-provoking as well. Can someone explain why this wouldn't work?
Monday, September 22, 2008
Click Here to Read More..
FINALLY a Republican leader speaks out against this insane bailout conjured up by Paulson. This bailout is nothing but a betrayal of the conservative principles of free markets, moral hazard, limited government, and reducing government spending. The bailout bans any review of the bailout by a court or agency. In plain English this means the Secretary can act without ANY check on his authority unless the statute itself is changed. The bailout can run OVER 700 billion dollars, as it allows the Secretary to use $700 billion at any one time. Meaning, the $700 billion amount is a line of credit limit, not a hard one time cap. This bill bails out the Chinese and other foreign debt, not just American debt. You read right: The American taxpayers will be bailing out the Chinese.
Bondholders are protected. The holders of bad mortgage notes are allowed to dump them on the taxpayers and the Secretary can sell them at pennies on the dollar if he so desires. Translation: The Secretary can buy high and sell low while manufacturing an excuse about stabilizing the markets. It allows him to choose which financial institutions can act as "financial agents of the government". Can you say "crony capitalism"? This is the kind of crap seen in moribund Europe or Chicom socialism, not the American capitalist system that built up the highest standard of living in the world.
Republicans are supposed to stand for protecting the taxpayer and not engaging in such schemes, but here we are standing on the edge of the monetary abyss because President Bush and Secretary Paulson have "lost their nerve", as Speaker Gingrich put it so aptly tonight. It's about damn time a Republican called this treasury spade the poisoned dagger it really is. Already Bush is caving in to the Democrats as they seek to pile even more money on top of this monstrosity. Do you Republicans not remember 1994 when you stood against Hillary's attempted takeover of the American healthcare system? Do you remember the complaints about her plan? Unlimited liabilities. Too much power handed over to a bureaucrat with no limit on his power. No cap on how much money could be spent supporting a national healthcare system. The ability to levy unlimited taxes with no approval from Congress on all employers within a region. Back then you showed some guts in taking on the media and the Democrats in stopping Hillary's insidious scheme.
Where is the Phil Gramm today who will say "This will pass over my dead body" as Bob Dole prepared to surrender? Have all of the Republicans lost their nerve? Have they all gone wobbly? Is crony capitalism what Republicans now stand for? If the Republicans don't get some backbone and stand up to the Democrats and Bush, they deserve to get creamed in November.
Note: Don't worry if you don't understand everything about the bailout. Kingfish is going to take care of you and over the next few days, make sure you know everything you need to know about the bailout.
Newt's remarks on bailout in National Review online today
"Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
Jackson Disregards Ethics Commission Opinion, Only Provides One Police Report in George Bell, III Case
The City of Jackson apparently disregarded the recent Ethics Commission opinion directing the City to release copies of the two police reports I requested under Mississippi public records law. On July 25, 2008, I submitted a public records request to the City for a copy of the police incident reports for the murder of Heather Spencer and the kidnapping of Elizabeth Hall. Monica Joiner, Deputy City Attorney, denied my request, thus forcing me to appeal to the Mississippi Ethics Commission. The Commission ruled that under the new amendments to the public records law, Jackson should provide me with a copy of the reports. Jackson Denial Letter
In what can only be called a blatant disregard for the Commission's ruling, Jackson only sent the police incident report for the murder of Heather Spencer after heavily redacting it. The sanitizing was so thorough not even Heather Spencer's name is mentioned anywhere in the report. The city did not provide me with the report for the kidnapping, thus ignoring the Ethics Commission's ruling.
The City of Jackson has dealt with this matter in bad faith from the very beginning. The City refused my original public records requests despite the statute. The city claimed it did not have a police incident report form, even though the report is titled "police incident report". When I appealed Jackson's denial to the Mississippi Ethics Commission, the City stated in writing that the capital murder and kidnapping charges against George Bell, III had not been prosecuted as of August 6, 2008!!!
Cases already prosecuted. Second to last paragraph
When the Ethics Commission ruled in my favor, the attorney for the City said they would comply with the ruling. The City,however, only released one police report when the opinion states Jackson must provide both reports. Jackson has repeatedly acted in bad faith by lying (What else do you call saying the cases had not been prosecuted?) and avoiding its responsibility to the public.
Jackson's attorneys forget the government exists to serve us, not themselves. Jackson has a bunker mentality discouraging openness and accountability. From the Melton administration's junking of the Comstat crime reporting system to its refusals to provde the public with crime statistics (until forced to do so by media lawsuits), Jackson has engaged in a pattern of keeping Jacksonians from seeing how its government and police are run by its leaders. Sadly enough, the actions by the City attorneys are only more of the same as it ignores the Mississippi Ethics Commission, shirking its responsibilities to its own citizens.
Copy of Police Incident Report for the murder of Heather Spencer:
Ethics Commission Opinion
Previous Posts on this subject:
Greenwood Commonwealth Editorial
Clarion-Ledger Editorial on Ethics Commission ruling and Kingfish
Kingfish requests opinion from Ethics Commission
Jackson denies Kingfish's request for police incident reports
Sunday, September 21, 2008
Click Here to Read More..
This clip from The Soviet Story discusses the relationships between Nazism and Communism and how Marx and Lenin were the ideological foundations of the Nazi party. Interesting stuff. A little over five minutes long. Very interesting. Also something to throw back at liberals when they hurl the Nazi charge at Conservatives and Republicans.
Click Here to Read More..
This is the trailer for the documentary, Neshoba, produced by award-winning filmmaker and former Mississippi resident Miki Dickoff. It is currently shown at film festivals around the country. No information available when it will be be shown to the general public.
Ignore the spin and media histrionics. Do the research. Eventually the truth does come out as it always does. In this case, most if not all of the Fannie Mae trainwreck can be blamed on the Clinton Administration and the Democrats. OFHEO warned in 2006 Fannie was out of control and lying on its balance sheets. The Bush Administration tried to reform Fannie and Freddie in 2003 only to be stopped by Congressional Democrats such as Barney Frank who said there was no problem to fix. Senators Hagel and McCain tried to pass legislation tightening the supervision of the agencies in 2005. Meanwhile, former Clinton Administration officials-turned-Fannie Mae executives such as Jamie Gorelick, Frank Raines and others walked out of Fannie Mae with over $100 million in compensation after illegally manipulating earnings statements and engaging in Enron-type fraud. While lining their pockets, they and their Democrat allies were corrupting our mortgage system as The New York Times reported in 1999:
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits......
'Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'' (Frank Raines statement)......
By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings....
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' .......
Yet it's all Bush's fault.
Earlier posts on Fannie/Freddie Implosion and the role of the Democrats:
More evidence of Democrats/Fannie incest:
NYT 2002: Bush tried to reform fannie, Dem's opposed:
Thinking if blaming Bush? Try again.
McCain tried to reform Fannie Mae, Obama took $126,349 from Fannie Mae:
2006 OFHEO report warning of impending disaster at Fannie Mae:
Saturday, September 20, 2008
In light of the events on Wall Street this week and the opportunism shown by the campaigns, this lecture by Ayn Rand is strangely appropriate and not dated as her criticism applies to both candidates, even though this was recorded in 1960.
If link does not work, try this one:
Portico Magazine, a local publication, has been added to the Local Links/Blog Roll sidebar on the right side of the page.
My only suggestion is it would be nice if the publisher provided an online edition of the magazine, subscription-based of course.
It's like a cactus bat, but instead of nails and wood, you take an aluminum bat and punch triangular holes into it with a church key. Then you use needlenose pliers to pull the "tooth" back outside, letting it snarl..like shark's teeth.
It hits, and rips. Definitely sends a message..."I'm going to SHARKBAT that guy's face for getting in MY face."
Friday, September 19, 2008
Former Speaker of the Alaska House of Representatives. Gore Vidal type liberal. Totally owns the JFP-like interviewers.
From The New York Times:
"The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression. In talking with reporters and our noneconomist friends, we have been besieged with questions about several aspects of these events. Here are a few of the most frequently asked questions with our best answers....."
Thursday, September 18, 2008
Still trying to blame the Bush administration for the implosion of Fannie Mae and Freddie Mac as Obama and his lackeys are? The right-wing rag The New York Times reported in 2002 the Bush administration tried to reform the agencies while placing them under more adult supervision.
'Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates. ......
At the time (1992), the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families.....
The company is also likely to lobby against the efforts that give regulators too much authority to approve its products...... (We all know what happened because of this, don't we?)
Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.
Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.
''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said."
Is any comment necessary?
Thinking of blaming Bush?:
McCain tried to reform Fannie Mae 3 years ago. Obama took $126,349 from Fannie Mae:
2006 OFHEO report warning of Fannie/Freddie abuses and reckless management:
Looks like Farish Street isn't the only place where Performa is having problems. Black & White, Birmingham's City Paper, reports:
"After a no-show by Performa Entertainment CEO John Elkington at the July meeting of the Birmingham-Jefferson Convention Complex's board of directors, board members at the August 20 meeting buzzed with the anticipation of a progress report. Performa is under contract with the BJCC to create The Forge, an entertainment district of retail shops, restaurants, and nightclubs adjacent to the BJCC....
Then Elkington began his now-familiar refrain about how hard it is to secure funding and tenants for the space: "We're in the dog days of summer," Elkington intoned. "The environment we're in today is different; lenders are requering three years of tax statements and financials for each lessee." He vaguely mentioned "issues" of soils at the site, and talked about his "big concern" being "significant minority participation" in the project, by way of tenants, subcontractors, and others involved. Elkinton said it would be five to six weeks before his company ordered steel for the project (but he didn't specify for what portion).....
As he had at previous meetings, Elkington offered a litany of confusing excuses for why he hasn't provided the names of specific lessees: "If we were leasing to Applebee's, or Publix, it would be a different situation. . . . These are tough times." Oddly, Elkington brought up his company's work on a similar entertainment district in Jackson, Mississippi (called Farish Street), which has received attention for its lack of progress in the nearly 10 years since Performa said it would begin construction. Despite recent news that a Jackson bank is denying Performa $3 million in loans to finance the second phase of that development ("Bank Problems Mire Farish Project," Jackson Free Press, June 11, 2008, tinyurl.com/6ff5nk), Elkington dismissed Farish Street as if it were no big deal. "I'm no longer on that project, because I'm here," he said, talking about his search for a home within Birmingham's city limits..."
A couple of thoughts:
1. His complaining about lenders, *gasp*, requiring things like financial statements. A bank is going to loan you several million dollars and wants to see your financial statements. Imagine that. Is he that ignorant or has he had his nose stuck in the government money trough for so long he forgot how the private sector operates?
2. He is no longer on the Farish Street project? Oh really?
Jackson Free Press story cited in article:
Wednesday, September 17, 2008
Senator John McCain tried to reform Fannie Mae and Freddie Mac several years ago. Senators Dole, Hagel, McCain, and Sunnunu sponsored "The Federal Housing Enterprise Regulatory Reform Act of 2005". This bill would have created a new oversight board for the agencies that would have had more authority to investigate and discipline them. Naturally the Democrats blocked this bill in committee as they did everything they could for years to prevent Fannie and Freddie from being held accountable for their mismanagement and fraud.
McCain made the following remarks in 2005 as he urged passage of this bill:
"Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac—known as Government-sponsored entities or GSEs—and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation."
While McCain was trying to save the housing industry and the American taxpayers from the current crisis THREE YEARS ago, what was Barack Obama doing? Taking $126,349 in contributions from Fannie Mae and Freddie Mac. (Link)
When asked about the housing crisis now, Obama says, "Republicans and Democrats I think in Congress did not pay enough attention to the structural problem with Fannie Mae and Freddie Mac which was, they are quasi public, quasi private institutions." Gee Barack, where were you in 2005 when McCain was fighting for "change" in the housing industry? Why didn't he stand up to his Fannie Mae masters? In fact, when has he ever bucked his own party or campaign donors in a major fight? (Link)
McCain fought to reform Fannie and Freddie while Obama took $126,349 from them. That is all you need to know.
By the way, want to guess which candidate is making the most noise about the financial crisis and blaming the other party for it?
2006 OFHEO report on abuses at Fannie and Freddie:
Earlier post on Fannie/Freddie problems and how OFEO tried to alert Congress:
Congratulations to Nagoya. JJ readers voted the restaurant the best Asian cuisine-style restaurant in Jackson. Nagoya led the poll from start to finish. If you haven't been to Nagoya, try it. Order the Fried Nagoya roll. One further question. If Bonsai is the third or fourth best local Japanese restaurant, how come it is always the most crowded?
Here are the results (86 votes were cast):
1. Nagoya: 25 votes (29) 2. Little Tokyo: 17 votes (19%) 3. Thai House: 10 votes (11%) 4.Kyoto: 7 votes (8%) 5. Bonsai: 6 votes (6%) 6. PanAsia & Sukurabanna: 5 votes (5%) 7. China Bell 4 votes (4%) 8. Ichibans: 3 votes (3%) 9. O.E.C. & Sun Koon: 2 votes (2%) (HOW did Sun Koon get this many votes?)
The Greenwood Commonwealth published a story today on Kingfish's successful battle to open up police reports to the public last week:
"The days when officials in Mississippi could get away routinely with defying the rights of citizens to see government documents and observe government meetings may be coming to a close.
There's a new “sheriff” in town, empowered by a new state law that eliminates most of the financial leverage government officials formerly used to dissuade those who would challenge secrecy.The new law got its first test last week, and it was a great success.
The Mississippi Ethics Commission, now empowered to mediate disputes over open meetings and open records, said that the Jackson Police Department erred when it declined to provide a citizen with copies of incident reports involving the separate crimes of kidnapping and murder committed last year by the son of a prominent Jackson family.
The Ethics Commission said that although police officials are free to redact information from the incident reports that would compromise an investigation, it had to provide the rest of the reports.....
That point aside, however, it’s noteworthy that for the first time the public had a way to compel a government body to follow the state’s Public Records Act without having to go to the expense of filing a lawsuit.In the past, public bodies could simply dig in their heels if they wanted to shut out citizens or the press. They knew that only a few well-heeled media organizations would put up the money to pursue a lawsuit. Even though successful plaintiffs might be able to recover their legal costs, they still had to come up with the money to pay their lawyers up front. Meanwhile, whatever costs the public body had to fork out to defend itself were coming from the pockets of taxpayers, not the officials themselves, so they had no qualms about being defiant...." (Kingfish note: Yes, I was prepared to go to court. There is a reason I wasn't too worried about the expense of a court fight.)
Tuesday, September 16, 2008
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Some auroras can only be seen with a camera. They are called sub-visual and are too faint to be seen with the unaided eye. The reason is that the human eye only accumulates light for a fraction of a second at a time, while a camera shutter can be left open indefinitely. When photographing an already picturesque scene above Juneau, Alaska, USA, a camera caught green sub-visual aurora near the horizon. Auroras are sparked by energetic particles from the Sun impacting the magnetic environment around the Earth. Resultant energetic particles such as electrons and protons rain down near the Earth's poles and impact the air. The impacted air molecules temporarily lose electrons, and when oxygen molecules among them reacquire these electrons, they emit green light. Auroras are known to have many shapes and colors.
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Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).
Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.
Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".
In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.
In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.
Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.
Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!
This is definitely a Beaver production.
Note: Security provided by INS.
There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.
If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!
This is definitely a Beaver production.
Note: Security provided by INS.