makes sense to me

Ian, today I heard on my local progressive radio station that the Alabama Public Employees retirement fund crashed this weekend….. I can’t find anything about it on the google….

Ian for PREZ

Well Bush is the “First Idiot” so it’s no wonder he wants his government to follow his lead.

Ian – want to thank you for all you’ve contributed here over the last few days.

WOW! And when I was in Alabama, that was one of the strongest in the country (late ’90s time-frame).

Stirling’s plan, not mine. And what he’s doing is synthesizing from a bunch of people’s proposals – Roubini, Robert Reich, and Larry Summers, for example, have all suggested the FDIC be used for the bailout. HOLC, of course, I have been suggesting for months.

Also, I’m Canadian. ;)

Kee-ripes. If you do, please link. Good god.

I was doing yard work and listening to the radio …. should of ran in and wrote it down….. but wouldn’t a lot of PER (Public Employee Retirement) funds be in trouble when they may have invested in the bad securities which were based on bad mortgages even though they were rated AAA?

It seems to be a new definition of trickle down economics….. How many union retirement funds have invested in these bad securities?

ABC evening news is stating that Dems are for the bailout and to get what they want like help for homeowners that will be another bill…… Ok what that tells me is that they give away the bank and then close the barn door after the mule has run away…

No, Democrats need to reverse-Shock-Doctrine this. “If you want your bill, Mr Paulson, here’s what has to happen.” They are in control, damn it, and time is of the essence. They need to spine up!

And the repubs will run against them on this issue.

This is from 9/9 Op-ed from Birmingham News on Alabama Retirement System

If that happens, kiss your butt goodbye. Whatever you get (and it may be nothing) will be cents on the dollar.

This financial crisis is no accident.

The Neocons have had this crisis on the drawing boards for years.

Both Paulson and Bernanke, the prime movers and shakers of this conspiracy, should be fired.

We should close the Federal Reserve Banking system and take back control of our money supply.

And, most importantly, rid ourselves of foreign central bankers.

Right, they’d gotten so used to kow-towing they continued to do it even after regaining the majority in ‘06. They need to buck up now because Obama can’t fix everything all by himself come January.

Have agree with most of this Ian. I would also add that all senior executives of these companies must be sacked immediately with no parachutes of any sort, refund all extra compensation and bonuses for the past 2-5 years, and lose all stock options they have been given since their hiring including paying back those they have already exercised. Those who created the mess must substantially pay to clean it up. Be nice if we could also prosecute them for criminal fraud, since they obtained their exorbitant compensation under false pretenses. I would also like to see the investors take it in the short in a big way, given that they benefited richly from these shenanigans.

Ab-so-fucking-lute-ly!

The Drill, baby Drill hit Arizona protection of native art….. in N. AZ & Utah the canyons where thousands of pictographs which are ancient native people art on the rocks are being damaged by natural gas exploration and drilling. They showed the damage by pollution, drilling companies painting “NO Trespassing” notices over art and cracks in the rocks from the heavy truck traffic…..

This does not sit well with native Americans….

Nor with archaeologists and other anthropologists, I might add. Only slightly against federal law (antiquities act among others).

Here’s what Obama said today:

“We must work quickly in a bipartisan fashion to resolve this crisis to avert an even broader economic catastrophe. But Washington also has to recognize that economic recovery requires that we act, not just to address the crisis on Wall Street, but also the crisis on Main Street and around kitchen tables across America.

As of now, the Bush Administration has only offered a concept with a staggering price tag, not a plan. Even if the U.S. Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering. And in return for their support, the American people must be assured that the deal reflects the basic principles of transparency, fairness, and reform.

First, there must be no blank check when American taxpayers are on the hook for this much money.

Second, taxpayers shouldn’t be spending a dime to reward CEOs on Wall Street.

Third, taxpayers should be protected and should be able to recoup this investment.

Fourth, this plan has to help homeowners stay in their homes.

Fifth, this is a global crisis, and the United States must insist that other nations join us in helping secure the financial markets.

Sixth, we need to start putting in place the rules of the road I’ve been calling for for years to prevent this from ever happening again.

And finally, this plan can’t just be a plan for Wall Street, it has to be a plan for Main Street. We have to come together, as Democrats and Republicans, to pass a stimulus plan that will put money in the pockets of working families, save jobs, and prevent painful budget cuts and tax hikes in our states.”

Reminds me of when the Taliban took over Afghanistan.

Do you have a link for this? I would like to share it with some of my archaeologist colleagues who may not be aware of what is happening down there.

This is for katymine@19.

How would you like to run for office? (We won’t mention that C*n*d**n thing if you won’t.)

Do you think the rethugs give a rats ass

This whole thing is making me sick…. I knew it was coming…. Elmore and I planned our yearly trip to Europe to be jammed backed because no one knew when the pooh was going to fly and resources would need to be devoted to just surviving….. somehow I thought that BushCo had enough Bushbots with all their fingers in all those leaks in the cracking dam of our economy…… and expected that on 1/20/2009….poof there goes the whole system and blame it on Democrats…..

Either this situation was way worse than BushCo thought and ran out of bots…. or this is the big FU to Democrats as Elvis leaves the building……

Ian Econ Schwarzenegger /s

TRS did. We’re pulling it out and trying to figure where to put it.

Can’t eat gold.

Land?

Oh, and I can tell when someone’s pissin’ on my leg and calling it rain.

As a lawyer with a bit of experience with the regulation of public utilities, I’d like to make a modest amendment to your suggestion, Ian: i.e. That Congress take a careful look at law it unwisely repealed in 2005 after doing considerable service for 70 years. This law is the Public Utility Holding Company Act of 1935. The present crisis resembles the crises(pl) created by the public utility holding company in many ways. In its day, the public utility holding company was the complex derivative of its day, called “pyramiding”, or the excessive use of debt as leverage to acquire control, which was one of the obstacles to economic recovery after 1929. This law was a complex law but was custom made to straddle banking, antitrust and public utility regulation.

The feature which Congress needs to consider is the simplification procedures which forced the holding companies and many if not most public utilities as in effect federal corporations and to file plans of reorganization to simplify the overly complex features of the holding company systems. Congress stipulated that holding companies which were more than two degrees removed from operating utilities, so called great grandfather holding companies, had to be dissolved and their stock- and bondholders paid off in the securities of underlying companies.

Like the present mess, the holding company mess was created by the investment banking industry, which even then managed to escape regulation. Now that this industry has finally disgraced itself, it needs to be brought under regulatory control and supervision. Now that I’ve read a little more about the present crisis, it appears that the issue is not so simple as the underlying mortgages which are a distinct problem. While mortgages on foreclosure need to be addressed as part of any solution, the problem seems to be that finance is frozen because no one wants to accept these toxic, complex securities which have been derived from the underlying mortgages.

Lehman Brothers and the memebrs of Congress, regulators, investment banks and insurance companies whch have gotten themselves and us into this mess, have forgotten the fundamentals of corporate finance which is that capitalization of corporations are based on reasonable projected earning capacity. Reasoable expected earning capacity is not based on some mathematical model but on hard facts of what borrowers are likely to repay. From what I have read in the financial press, the problem and the fear is that finance has now been frozen just because the corporate securities and bonds issued by these investment banks are not based on any earning capacity but on these mathematical models which bear no relation to reality and earning capacity. In a sense, these people have gotten caught up in the fallacy that supply creates its own demand and money put out on loan will automatically be repaid in full with interest.

What is required is a type of reverse engineering of the present industry to simplify it and restore it to its simple origins just as Congress forced the simplification the utility industry beginning in 1935 in the Holding Company Act (most of the simplification did not occur until 1945-1952 and some procedures were not concluded until 1970). Except now you cannot give it to an agency like the SEC which is headed by an idiot or crook like Chris Cox.

Drilling and Utah’s Nine Mile Canyon
Pictures of the canyon
link to the news segment

shoot..if we can have Kissinger in the Cabinet, then we can have ian…

I really like that and am going to send it around. Thank you.

I disagree I think this is one of the last hurrahs in an attempt to transfer the potential for future wealth to a bunch of greedy bastards who need to be cut off at the knees.

What you say makes sense to me, and I don’t understand a lick of it.

Thanks, jonerik.

Thanks. I will forward these.

NO shit. They raped the treasury and now they’re making sure there’s nothing left.

hurry ,hurry…there is a green paper MUSHROOM cloud forming over WALL STREET

I like what reader DP said at TPM.

As a Wall Street guy I am sort of glad that this bailout is being organized. However, what seems unfair to me is that there are absolutely no provisions for homeowners. Moreover, this morning on Stephanopulous I saw Hank Paulson talking about homeowners taking out mortgages that were higher than they could afford and about them needing to live up to their obligations.

I find it incredible that he would use language like that while asking taxpayers to send a trillion dollars to Wall Street because investment banks made irresponsible investments and aren’t able to live up to their obligations.

In any loan transaction there are at least two parties. If I give my unemployed and uneducated brother-in-law a half a million dollar loan wouldn’t I be just as irresponsible giving it as he is taking it? Moreover, a large majority of borrowers did not have financial training to be able to understand complex mortgage terms and risks of the underlying investments. Investment banks have armies of Ph Ds working for them that helps them analyze market risks and credit exposure. They got it wrong too! It strikes me as strange that unsophisticated borrowers are being held to much higher standard than ultra-sophisticated bankers.

here’s a suggestion from calcluated risk that i like:

“In an effort for transparency, I’d like to see a website that listed each transaction purchased by the government. This could list the details of the asset, the PAR value, the selling institution, the underlying characteristics, the originators of the loans, the price the government paid (and eventual sold the asset for) and any other relevant detail.”

actually just read it on the open house listserv.

With the mood I am in, that kind of news could actually make me cheer.

Moreover, a large majority of borrowers did not have financial training to be able to understand complex mortgage terms and risks of the underlying investments.
——————–
Bada BINGO

Transfer of wealth AND killing all entitlements.

hahahahahahahaha
and CONDILIAR came out and said…nobody could have predicted such an occurence

Commission. They got their fooking commission. That’s all they were thiking about.

goddess forbid they give high schoolers classes in mortgages,check book balancing,and what the different intrest rates mean

Okay…none of those suggestions say what you will do about the people who these companies have “illegally” through illegal behaviors forced into foreclosure??

There are millions. Follow my links, read the stories. This is the truth about what has gone on. My loan was not adjustable rate. The media is only reporting on those who knowingly took out bad loans. None of these stories deal with the fact that many of these servicers were violating the law.

Read my story for the truth about the behaviors of these banks.

http://www.dailykos.com/story/…..609/601449

Not to mention that in addition, a substantial minority of people cannot read well enough to understand the forking documents.

(Fern gets down from her literacy soapbox.)

I had a series of lenders try to sell me on this type of mortgage over a three year period when I was looking for a loan. These creeps would lay it all out and it was all BS. I remember that three of them were actually yelling at me over the phone cuz I wouldn’t buy their pile. Yelling at me!

also this from Robert Weissman, seems like good advice – we can’t wait to push for re-regulation:

As the Federal Reserve and Treasury Department careen from one financial meltdown to another, desperately trying to hold together the financial system — and with it, the U.S. and global economy — there are few voices denying that Wall Street has suffered from “excesses” over the past several years.

The current crisis is the culmination of a quarter century’s deregulation. Even as the Fed and Treasury scramble to contain the damage, there must be a simultaneous effort to reconstruct a regulatory system to prevent future disasters.

There is more urgency to such an effort than immediately apparent. If the Fed and Treasury succeed in controlling the situation and avoiding a collapse of the global financial system, then it is a near certainty that Big Finance — albeit a financial sector that will look very different than it appeared a year ago — will rally itself to oppose new regulatory standards. And the longer the lag between the end (or tailing off) of the financial crisis and the imposition of new legislative and regulatory rules, the harder it will be to impose meaningful rules on the financial titans.

Yup. I hope they took out these kinds of loans themselves and find themselves in a world of shit now.

…or child rearing…

Hell you would need an advanced finance degree to understand some of the loans they were packaging and forget about understanding the mortgage backed securities and other financial voodoo they came up with.

The pictograph of the Desert Bighorn is the cover graphic of my fathers book about the bighorn and has a family symbol for years…… too bad Dad lost a lot of those in the fire…..

What are th assets that our dollars would we be buying – residual goodwill from Enron. Who will determine the value of the shit, the former CEO of Goldman. Will Goldman be benefitting. This anyone want to buy some eau de skunk

they need to be RICOed

yup

I hope you gave them a piece of your minmd before you hung up on them.

they want Merkins stoopit and pliable

Stupid is a profit potential for the assholes

Over 60% of those who got subprime loans qualified for conventional loans at better terms. The lenders gave hefty commissions and put heay pressure on loan officers to push the bad loans.

its WRONG on so many levels

No. Just a good bull shit detector. *g*

you got it…sadly yes

Hey! That’s not tested for NCLB. (And with good reason. The whole purpose of NCLB is to dumb down the middle class.) Went to a workshop a couple of weeks ago whereby fourth-sixth graders learn the formulas for finding the volume of cylinders etc. by rote memorization. Countless hours spent teaching these formulas for the TEST.

My question was, when was the last time you ever figured out the area of a cylinder? And for what purpose?

good thing the pukes built LOTS of prisons

I’ve read it, wavpeac, and saw that you have consulted lawyers. Makes me just ill.

And that is working out real well. No child left informed…

more criminality….Neil

Paulson: Individual responsibility for thee, but not for me.

Why is he STILL the Treasury Secretary? This failed tenure must end, and now.

And for this fuckery, they should pay. In cash, since that’s all they seem to care about.

Had an almost heated argument with a libertarian over this months ago….. she started out with the “people need to take personal responsibility” crap and then when asked if she had ever bought a home……. “a No” …… this woman had NO idea on the process, how many papers they give you to sign, how they seem to push you to get through the stack if you insist on reading every page….. Many of these personal responsibility types have never experienced these very issues, just spew the talking points…..

RICO……..jail

The whole purpose of NCLB is to dumb down the middle class.

And there you have it.

Yelling at me!

How sweetly can you did you tell them to fuck off and die?

As far as putting the FDIC in charge that dog just ain’t gonna hunt. As someone who survived the eightees in Oklahoma i have seen the FDIC up close and personal. Talk about someone who operates outside the law you might as well put blackwater in charge.

good xtians no doubt/

Mute is your friend….. McPalin is on my TeeVee….

Also,
All of these companies need to purchase bailout insurance, prorated on their business practices.
That money goes into an interest acct till needed.

I believe that if America is going to make Wall Street whole, we must make foreclosed borrowers whole. It’s really simple fairness. I don’t understand how Paulson can say otherwise. If your home is gone, you need to be made whole, from the assets of the companies that profited on your sorrow. It’s only fair.

And yes, it is a kind of socialism. So is what Paulson proposes. Any of their objections can be thrown back at them: “But that’s what you’re doing for your rich friends on Wall Street and in Greenwich!”

If you take a gulp every time she lies, you’ll be dead before she’s done.

Under RICO, a person who is a member of an enterprise that has committed any two of 35 crimes—27 federal crimes and 8 state crimes—within a 10-year period can be charged with racketeering. Those found guilty of racketeering can be fined up to $25,000 and/or sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of “racketeering activity.” RICO also permits a private individual harmed by the actions of such an enterprise to file a civil suit; if successful, the individual can collect treble damages.

When the U.S. Attorney decides to indict someone under RICO, he or she has the option of seeking a pre-trial restraining order or injunction to temporarily seize a defendant’s assets and prevent the transfer of potentially forfeitable property, as well as require the defendant to put up a performance bond. This provision was placed in the law because the owners of Mafia-related shell corporations often absconded with the assets. An injunction and/or performance bond ensures that there is something to seize in the event of a guilty verdict.

In many cases, the threat of a RICO indictment can force defendants to plead guilty to lesser charges, in part because the seizure of assets would make it difficult to pay a defense attorney. Despite its harsh provisions, a RICO-related charge is considered easy to prove in court, as it focuses on patterns of behavior as opposed to criminal acts.[2]

There is also a provision for private parties to sue. A “person damaged in his business or property” can sue one or more “racketeers.” The plaintiff must prove the existence of a “criminal enterprise.” The defendant(s) are not the enterprise; in other words, the defendant(s) and the enterprise are not one and the same. There must be one of four specified relationships between the defendant(s) and the enterprise. A civil RICO action, like many lawsuits based on federal law, can be filed in state or federal court. [1]

Both the federal and civil components allow for the recovery of treble damages (damages in triple the amount of actual/compensatory damages).

Although its primary intent was to deal with organized crime, Blakey said that Congress never intended it to merely apply to the Mob. He once told Time, “We don’t want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas.”[2]

[edit] RICO offenses
Under the law, racketeering activity means:

Any violation of state statutes against gambling, murder, kidnapping, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in the Controlled Substances Act);
Any act of bribery, counterfeiting, theft, embezzlement, fraud, dealing in obscene matter, obstruction of justice, slavery, racketeering, gambling, money laundering, commission of murder-for-hire, and several other offenses covered under the Federal criminal code (Title 18);
Embezzlement of union funds;
Bankruptcy or securities fraud;
Drug trafficking;
Money laundering and related offenses;
Bringing in, aiding or assisting aliens in illegally entering the country (if the action was for financial gain);
Acts of terrorism.
Pattern of racketeering activity requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity. The U.S. Supreme Court has instructed federal courts to follow the continuity plus relationship test in order to determine whether the facts of a specific case give rise to an established pattern. Predicate acts are related if they “have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.” H.J. Inc. v. Northwestern Bell Telephone Co. Continuity is both a closed and open ended concept, referring to either a closed period of conduct, or to past conduct that by its nature projects into the future with a threat of repetition.

I am in deep need of help. I am 41 married with children, lost my lucrative job and now in the process of losing my job. I need $11,156.00 to get out from under the big financial institution of CHASE, the worst financial company known to man. They will not work with me. They don’t care what happened with my loss of income. I am working again, not making as much because my job went overseas. I don’t know what to do, I am need of help..can anyone recommend something..or send me $1.00 – $ 5.00 to help me keep my children’s home.

Ian in this bailout is there a risk to any of us who do have Ok loans but with a bank like WaMu which is at risk can be forced to repay our mortgage on demand even if they are in good standing like they have done in the credit card industry?

I am not sure I want to see these fu…ers in jail. Take every dime they earn above poverty and force them to live in the most obnoxious slums in the country and have their kids go to the most detestable schools. Don’t get mad get even

Never realized that mannerism that McCain has…. I think the twirling of his wedding ring is done when he knows he is telling lies…..

works for me,yea,why should THEY get 3 squares a day,on our dime

Never realized that mannerism that McCain has…. I think the twirling of his wedding ring is done when he knows he is telling lies…..

Could be. He’s told some whoppers when it comes to matrimony.

My on inclination is to seize all of the assets of the executives of these companies and use them to pay to clean up the mess. Then ban them from ever serving in an executive capacity in any publicly traded company (and yes, the SEC really can do that). Let the bastards spend a little time living on the streets with the folks they fucked over.

I asked for the names of their supervisors, but got more BS. Then I had one outfit try to sell me a plan that included life insurance whereby I’d be a millionaire at age 91!!

707

Considering that that ring is the product of lies to Carol and his children, I am not surprised. It is the lie he appears to be ashamed of, so perhaps he twists it to mentally compare this new lie he’s telling with the old lie: nope, not so bad, go ahead and keep lying.

I put this up earlier but is still apropos here:

What Treasury should be doing at the moment instead of this $700 billion boondoggle is assessing what the various tranches of mortgages are worth. As the bubble became more frenzied, less and less info and credit worthiness were needed for the loans. Then the individual loans were combined and mixed good and bad to get an acceptable rating from the ratings agencies. So in general the later tranches are likely to be more toxic than their earlier counterparts.

Treasury can start by saying something like the base value of any tranch is the face value minus 40% minus a figure based on a sliding scale of tranches of various ages. Now this may seem arbitrary (because any valuation will be to some extent) but it would allow holders of mortgage backed securities to actually come up with a real value for these assets and provide an agreed upon basis for financial companies around the world to see how good or how poor their positions are.

Under the current plan, Paulson would be buying the securitized instruments not the mortgages themselves. This is insane. If the money is going to be spent, then the government should get title. This would also help in turning around financing to long term fixed rate mortgages on these properties.

Now if these mortgages are going to be so converted to fixed types, somebody is going to have to write those mortgages. This means forcing regular banks to make such loans and hold a certain percentage of them for their life. If others are passed on, then there have to be strict rules about how they are bundled and rated, and to what extent any leveraging can be done off them.

Next I would plain and simply nullify the credit default swaps. I would require that companies that sold these refund the fees to buyers.

I would then give financial institutions 30 days to assess their exposure based on the guidelines I had set up.

And only after I got a chance to look at and run the numbers would I start talking ballpark figures for the money I thought I would need to address the problem.

Along with this, I would re-impose Glass-Steagall, usury laws, and leverage limits and increase reserve requirements for financial institutions. I would limit derivative exposure of an institution to some figure, say 25% of its net worth. I would require transparency to the government and stockholders on the positions that an institution holds. Finally, more for commodities markets, I would limit who could trade in them, i.e. keep the commercial and physical speculators and throw out the non-commercial traders.

You can’t get me to disagree. It’s high time we sucked some justice out of our predatory financial elite. Divites este!

If the money is going to be spent, then the government should get title. This would also help in turning around financing to long term fixed rate mortgages on these properties.
————–
this sounds right to me

Oh, that’s rich! I promise to be at your 91st BDay party!

Agreed. I don’t want to pay for them to be in jail with the full health care many Americans are not afforded.

I read somewhere about people committing crimes intentionally so that they would go to prison just for the health care.

Along with the incessant blinking.

digg

Among the poor and homeless, it is not uncommon to get put in jail to have a place to live and free meals. Wonderful country we live in, isn’t it?

it is almost unbelievable

that or go to EYERAQ with no body armour

Title to what – they are going to sell the good will shit and every thing that can have no ultimate value.

We could put the to work clearing IEDs in front of armored patrols. Unfortunately, they would be responsible for buying their own body armor and other supplies. A little hard on the (Iraqi) minimum wage we would pay them.

Nah. That’s too much like something the Bush administration would do has been doing to poorer Americans.

Pelosi’s response is great news. Thanks Ian.

Which is all the more reason to send some of their Wall Street executive buddies over to share the fun.

We hope so…but there’s still plenty of room for another eleventh-hour capitulation. I’ve learned from bitter experience not to trust Pelosi until the deal is done.

I’m pretty sure the answer is no. Not with any mortgage I’ve heard of.

Yeah, that’s essentially what I suggested for mortgages. Agreed.

This our last big kick in the ass by Bush as he strolls out the door-laughing all the way back to Texas. And if a majority of Americans are STUPID enough to vote for gramps, then they deserve what they get.

Anyone care to place any bets on how many days it will take for the Dems to completely cave? I say 2 days, max.

I only can hope it is the last Kick in the ass

Agree completely.

CNBC is now reporting that the LIST of banks getting bail out money is out.

That’s how much Paulson believes this thing is going to fly through Congress with no hang ups. Wow.

Kinda reminds me of the WMD and mushroom cloud. Figure they’ll scare us all to death and our resolve will collapse.

Shoot me now please.

I have other targets in mind. Got to save my ammunition, ya know.

We should stop paying the Fed Tax on our phone bills, utility bills and anything that we pay monthly for that has a Fed Tax. Attach a note with your payment each month stating that you are withholding the Fed Tax because you object to the federal government not doing proper oversight in implementing the bail out of the financial institutions. Insist that they follow the guide lines as outlined in Obama’s statement about proper oversight and something for home owners. Be sure to put the taxes in a bank account that you can keep separate, and note in your correspondence that you will pay the back taxes once the federal government agrees to the peoples demands.

I don’t think they can turn off your service with this kind of protest.

Spread it around, spread it far. Let’s do this.

Dave
Viet Vet

From the link to Pelosi:

Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.

“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.

Hopefully she keeps that promise and I wanna believe her.

And it’s almost funny – only it’s not – when the Republicans bray on like a hungry goat about the “Free Markets”, because Wall Street keeps getting enabled with cash like a heroin junkie by Congress and the Fed. Robert Kutner testified before the House Financial Services Committee in Oct of last year (Sorry about the length but it reinforces her point):

Of course, there are some important differences between the economy of the 1920s, and the one that began in the deregulatory era that dates to the late 1970s. The economy did not crash in 1987 with the stock market, or in 2000-01. Among the reasons are the existence of federal breakwaters such as deposit insurance, and the stabilizing influence of public spending, now nearly one dollar in three counting federal, state, and local public outlay, which limits collapses of private demand.

But I will focus on just one difference — the most important one. In the 1920s and early 1930s, the Federal Reserve had neither the tools, nor the experience, nor the self-confidence to act decisively in a credit crisis. But today, whenever the speculative excesses lead to a crash, the Fed races to the rescue. No, it doesn’t bail our every single speculator (though it did a pretty good job in the two Mexican rescues) but it bails out the speculative system, so that the next round of excess can proceed. And somehow, this is scored as trusting free markets, overlooking the plain fact that the Fed is part of the U.S. government.

When big banks lost many tens of billions on third world loans in the 1980s, the Fed and the Treasury collaborated on workouts, and desisted from requiring that the loans be marked to market, lest several money center banks be declared insolvent. When Citibank was under water in 1990, the president of the Federal Reserve Bank of New York personally undertook a secret mission to Riyadh to persuade a Saudi prince to pump in billions in capital and to agree to be a passive investor.

In 1998, the Fed convened a meeting of the big banks and all but ordered a bailout of Long Term Capital Management, an uninsured and unregulated hedge fund whose collapse was nonetheless putting the broad capital markets at risk. And even though Chairman Greenspan had expressed worry two years (and several thousand points) earlier that “irrational exuberance” was creating a stock market bubble, big losses in currency speculation in East Asia and Russia led Greenspan to keep cutting rates, despite his foreboding that cheaper money would just pump up markets and invite still more speculation.

And finally in the dot-com crash of 2000-01, the speculative abuses and insider conflicts of interest that fueled the stock bubble were very reminiscent of 1929. But a general depression was not triggered by the market collapse, because the Fed again came to the rescue with very cheap money.

So when things are booming, the financial engineers can advise government not to spoil the party. But when things go bust, they can count on the Fed to rescue them with emergency infusions of cash and cheaper interest rates.

WS keeps getting enabled, and take bigger and bigger risks because of the Fed and Congress, so hopefully Congress finally sees the light and repeals all/most of the deregulation laws passed in the last 25 years and stops this insanity NOW. Because this costs us $Trillions

They can start with everything that has Phil Gramm’s name on it

Gotta keep that powder dry. I know.

Lost in all of this is the fact ol’ Henry sprang into action once Goldman found itself in the cross hairs of the short sellers.

On his Wiki, his wealth is estimated by some at over 700 million.

I’m sure a huge chunk of that is Goldman stock.

WS keeps getting enabled, and take bigger and bigger risks because of the Fed and Congress, so hopefully Congress finally sees the light and repeals all/most of the deregulation laws passed in the last 25 years and stops this insanity NOW. Because this costs us $Trillions

As the excellent article by Sen. Sanders said “Too big to fail is too big too exist.”

They can start with everything that has Phil Gramm’s name on it

Amen, brother!

Truer words have not been seen on this (or any other) blog today.

The US gov certainly shouldn’t purchase any derivative which most of this paper is.

Here in lies the problem. The paper is worthless. It’s IOUs and bets and so forth. There’s no there there regardless of how many zero’s are in the stated value.

The gov should ONLY purchase collateralized loans/debts which are based on tangible assets which have been appraised.

Who’s gives a rat’s ass about buying AIG’s debts and bets?

Derivatives, and futures should be outlawed. The whole risk management business is how this mess got started.

You can’t manage risk with made up positions and bets for and against the market in the future.

Let’s get back to reality. You have something to sell TODAY? What is the asking price? FINISHED.

No way Dems should agree to dime one, until Bush announces we’re pulling out of Iraq and Afghanistan.

Poor Hank lost 200M last week I read somewhere.
WHAT. A. SHAME. But hell, he’s got 500M left-probably liquidating it pronto and putting it in Swiss banks. But if it all stock I’m not sure it’s worth anything today.

I haven’t finished my Ph.D in economics. lol

How important does Paulson and Wall Street think this bailout is?

The whole risk management business is how this mess got started.

Risk management?

What ‘risk management’?

The same ‘risk management’ that looked the other way as these investment brokerages loaded up on leverage to the tune of an average 27 to 1 as of 2007?

Speaking of wasted money (on the risk mgmt. departments) WTF was up with the various Board of Directors?

What I want to know is where the heck Paulson, Bernake et al have been while this was all going down. Moving their money out of the country???

I mean, this little issue didn’t just pop up last week.

Long ago I knew the FDIC was a respectable/responsible organization and banks quaked at its mention. Is it still? Of course, anything is better than Paulson flying solo.

I am not at all confident in Congress’ ability to administer anything in an open and forthright way. Just not in its dna.

It is less “managing” risk than hiding it and selling to to someone else, which is the source of our current problem.

Well if gramps wins, old Phil will be the next Sec. Treasury.

So then we may as well pitch tents because there won’t be a thing left for us regular people.

Poor Hank lost 200M last week I read somewhere.

Well, looky looky. What a Sunday night surprise.

The Federal Reserve said Sunday it had granted a request by the country’s last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.

The link at Yahoo is here.

Looks like Hanky Panky’s 200 million dollar hit is bringing some changes.

I believe the FDIC doesn’t have enough $ to cover customers if more than 3 banks fail.

I’m starting to believe that they-dems, rethugs, bankers, are all in cahoots with each other to get rich and elected.

Gramm has screwed up so much of our economy, we should be chasing him through corn fields with torches and pitchforks.

I have some ideas on the proper “care and feeding” of the Phil Gramm. Don’t think he would enjoy them.

When was the last time someone was tarred and feathered

Bonnie and Clyde need to be kicked out of this country with all the damage they’ve done. Go back to London.

[presumably Pelosi’s statement] makes sense to me

Isn’t it amazing how simple things can be if only it’s done right. Heh.

The whole purpose of NCLB is to dumb down the middle class.

And there you have it.

circa some time in the Republican fantasy:

A union? What’s a union?
A social safety net? What’s that?
FDR? What’s that, fudder?
Voting?
Buddy, you’re talking some foreign language and I’m here to tell you we don’t stand for that around here.

Yes, you would give some of that 700 billion to them. they’re going to need it, even if Hanky gets his money.

I oppose the bill having the Administration buy 700 billion dollars of relatively worthless assets. Attached is an email to Representative Harry Mitchell of Arizona asking him to oppose it.

Dear Representative Mitchell,

I am a constituent of yours living in the Shalimar neighborhood of Tempe, and I am writing to you to request that you resist and vote against the proposed bill by the Bush Administration to use tax payer funds to purchase real estate related securitized debt obligations, or other financial products, from private banks or any other seller. If the Treasury Department wants to use taxpayer funds to repay FDIC insured accounts fine. If the Treasury Deparatment want to use tax payer money to make loans to consumers or business as a market participant because the existing so called finance industry now refuses to do so fine. But to buy worthless assets with tax payer funds (that will be itself borrowed) that enrich private commercial interests (why do you think the stock market just went up) is outrageous. The Administrations conclusory argument that we have to do this or we get a depression is not substantive. They have not made public any coherent argument that that is the case or that buying worthless assets is a solution. The meeting with congressional leaders where supposedly everyone was scared with non-public information sounds like the same type of non-public and false information given out in the meetings before the Iraq war and look where that got us. Low stock prices is not a crisis, its either an accurate reflection of companies’ values or a buying opportunity. The only companies that need a high stock price or their fundamentals fail are frauds like Entron and that is the vibe this whole thing has. You don’t fix an Enron problem by throwing money at Enron. We have had 200 years bankruptcy law in this country, put it to work for the non-commercial banks, and have the fed take over insolvent commercial banks just as it did in the late 80’s. The liquidation value of these mortgage backed securiites will be determined in these processes and they will be sold to private investors, not taxpayers for insane premiums. One of the reason stated for this whole effort is to stabilize home prices. Using taxpayer money to prop up inflated home prices (prices that have disconnected from the peoples incomes to carry the debt service on them) is awful policy. Ironically none of these measures enables homeowners to restructure their home loans based on the liquidation value of their homes like one can do with nearly every other type of loan due to an exception secured by the lending industry in the bankruptcy code. If you struck that exception you would have given homeowners all they need to stay in homes that they can actually afford without a dime paid by the taxpayer. Finally, its my sense that you pretty much do whatever the Congressional leadership tells you to do. I am sorry if this perception is incorrect, but if it is incorrect please show some indepedence now and push back against this godawful 700 billion dollar trainwreck being rammed down our throats. Pardon the harsh tone of this email but it is a very important issue, maybe along with the Iraq war funding bills, one of the most important votes of your career.

Mark Giunta