From the Daily Record:
Corzine: No new budget cuts, at least for now
New Jersey will not follow New York City in reopening its budget to make additional spending cuts in response to the Wall Street turmoil, Gov. Jon S. Corzine indicated Wednesday.
New York Mayor Michael Bloomberg Tuesday directed city agencies to cut spending by about $500 million in the fiscal 2009 budget year, which began July 1. Bloomberg’s order for more spending cuts came after $1.3 billion was already removed from this year’s budget, said Marc Lavorgna, a spokesman for the mayor.
“Approximately 10 percent of all city tax revenue comes from Wall Street,” Lavorgna said.
Financial services are also a major sector of the New Jersey economy. According to state labor department statistics, some 266,000 New Jerseyans work in the sector — down 8 percent in the past year, but still accounting for one of every 15 nonfarm jobs.
Corzine has called New Jersey “vulnerable” to the Wall Street turmoil and has projected a sharp decline in tax revenue coming to the state. Nonetheless, he’s holding off for now on making more budget cuts, his staff said.
“The governor had the foresight to recognize that the national economy was in a downturn, and he took unprecedented measures to ensure fiscal responsibility in his budget by reducing overall spending, cutting the size of government and dedicating money to reduce state debt,” said Robert Corrales, Corzine’s spokesman.
In a prepared statement Tuesday, Corzine himself said this year’s budget is the first one in state history to cut hundreds of millions of dollars of spending. He said he had not seen numbers to warrant reopening the budget but added “we will take responsible action as the facts unfold.”
Across the Hudson River, New York City Budget Director Mark Page in a letter to city agency directors predicted there will be fewer finance sector jobs well into the future and cautioned this will hurt the city’s budget because of its reliance on tax revenue from workers in the financial services industry.
Even though the full effect of the financial crisis on the city’s budget won’t be known for some time, Page told department heads that New York must start cutting costs now because forecasts show billion-dollar budget deficits in each of the next three fiscal years.
“(O)ur forecast future deficits will not be cured, as has been the case for the last few years, by an improvement in that forecast and higher than expected revenues,” Page wrote.
“We assume that every job loss on Wall Street causes two other job losses somewhere else in the city economy,” Lavorgna said.
Assemblyman Joseph Malone III, R-Burlington, reiterated his call Wednesday to reopen the state’s current budget and look for potential areas to cut.
“If Bloomberg can do something similar to what I’m asking for, why can’t the governor do it?” asked Malone, who sits on the Assembly Budget Committee. “I’d hate like hell to wake up in two months and have serious financial problems in the state because we didn’t stand up and take a look at our budget.”
From Bloomberg:
Short-Sale Ban Fails to Save Ambac, Farmer Mac From 50% Plunge
Ambac Financial Group Inc. and Federal Agricultural Mortgage Corp. tumbled more than 50 percent in the past four days. And you can’t blame short sellers.
Their stocks are among 942 that the Securities and Exchange Commission prohibited investors from betting against because of concern speculators were unfairly punishing the shares. Of the total, 44 percent underperformed the Standard & Poor’s 500 Index since the SEC unveiled the list of banned stocks Sept. 18, according to data compiled by Bloomberg.
“Taking the short sellers out of the market doesn’t change the fundamentals,” said Dean Gulis, part of a group that manages about $3 billion for Loomis Sayles & Co. in Bloomfield Hills, Michigan. “It’s wrong to say that short selling of shares was the biggest contributor to the financial crisis.”
From Bloomberg:
FDIC May Need $150 Billion Bailout as Local Bank Failures Mount
Deborah Horn tugs on the handle of the glass-paned entrance of the IndyMac Bancorp Inc. branch in Manhattan Beach, California. The door won’t budge. The weekend is approaching, and Horn, 44, the sole breadwinner in a family of three, needs cash.
A small notice taped to the window on this Friday afternoon in mid-July tells her why she’s been locked out. IndyMac has failed, the single-spaced, letter-sized paper says; the bank is now in the hands of the Federal Deposit Insurance Corp.
“The Receiver is now taking possession of the Bank,” the sign says.
…
Americans have gotten used to the idea that bank failures were as rare as a category five hurricane. No banks went bust in 2005 or 2006. Seven collapsed in 2007 as the credit crisis began to exact a toll. So far in 2008, 12 more, with total assets of $42 billion, have fallen — that’s the worst wave of bank failures since 1992.
IndyMac, which had $32 billion in assets when it went into receivership, is the most expensive bank failure the FDIC has ever covered. And that record may not stand for long.
By the end of 2009, about 100 U.S. banks with collective assets of more than $800 billion will fail, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors.
“It’s not going to be Armageddon,” says Mark Vaughan, an economist and assistant vice president for banking supervision and regulation at the Federal Reserve Bank of Richmond, Virginia. “But it’s going to be bad.”
From the WSJ:
WaMu Explores Being Bought By a Private-Equity Player
By ROBIN SIDEL and PETER LATTMAN
Washington Mutual Inc., scrambling to find a way out of its financial woes, has approached a number of private-equity firms to gauge their interest in a potential takeover of the Seattle thrift, according to people familiar with the situation.
Among the private-equity firms that are considering a possible transaction are Carlyle Group LLC and Blackstone Group LP, these people said. The two firms would team up with Texas billionaire and longtime bank investor Gerald J. Ford. Mr. Ford reaped huge profits on Golden State Bancorp, a California thrift sold to Citigroup Inc. for $5.8 billion in 2002.
It isn’t clear if those discussions will result in a deal, and WaMu is plowing ahead with other efforts that include a sale to another financial institution.
The list of potential bank buyers has thinned in the past few days, with Spain’s Banco Santander SA pulling out, and Toronto-Dominion Bank of Canada expressing tepid interest, according to people familiar with the matter. J.P. Morgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. also have conducted fact finding, or due diligence, but are reluctant to absorb WaMu’s loans.
WaMu declined to comment. People familiar with the thrift said it is pursuing a wide range of options, including a capital infusion, sale and government-assisted transaction. WaMu has more than $300 billion in assets and more than 2,200 branches.
The push comes amid pressure from federal regulators, who are actively involved in the process. Regulators are continuing to solicit interest in a potential government-assisted transaction.
US home sales, prices fall in August
The median sales price fell 9.5 percent to $203,100, the largest price decline on records dating to 1999. As prices fall, buyers are taking advantage of steep discounts, especially in hard-hit markets like California, Nevada and Florida.
The inventory of unsold homes fell 7 percent to 4.3 million, down from the all-time record of 4.6 million in July. That’s a 10.4-month supply at the current sales pace.
Home sales, prices decline in Northeast cities
But barring a national economic meltdown, the Northeast is likely to emerge from its housing slump before other regions in the country, said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies.
The reasons are twofold: The region didn’t experience the ambitious overbuilding plaguing the Southwest, California and Florida and the Northeast also isn’t suffering from a severe economic downturn like the Midwest.
“I can see the Northeast working through its excess of inventory and trolling around the bottom for a while,” Retsinas said. “I can’t even think about when that will begin to happen in those other areas of the country.”
Retsinas pointed out, though, that job losses on Wall Street could eventually hurt home sales and prices surrounding New York city. In August, sales fell nearly 26 percent, the AP-Re/Max report showed, while the median price slipped less than 5 percent to $460,000. The numbers include Suffolk, Nassau and Westchester counties, but not New York city.
Can Washington stop home price declines?
“If the government — as the mega-investor — can speak with one voice … there can be big changes in the rate of foreclosures,” said Alan White, a law professor at Valparaiso University and a longtime consumer attorney.
The downside, however, is that in many areas like California and Florida, where prices soared and are now falling precipitously, homes in many cities remain unaffordable — even for well-paid professionals.
For example, Paul Castor, a corporate attorney, is reluctant to buy a home for his family in San Diego at current prices.
He has a down payment of more than 20 percent and has made two offers in recent weeks, but the sellers’ asking prices “were unrealistic and I wasn’t going to budge.”
If nobody accepts his offer, Castor is more than willing to keep renting and hope home prices fall further.
From MarketWatch:
U.S. losing financial superpower status: Steinbrueck
Germany’s finance minister on Thursday laid the blame for the global banking crisis on the Anglo-American free-market model’s quest for ever-higher near-term profits, predicting the United States would soon lose its role as the world’s dominant financial power.
“The U.S. will lose its status as the superpower of the global financial system, not abruptly but it will erode,” Finance Minister Peer Steinbrueck told the lower house of Germany’s parliament in Berlin, according to published reports. “The global financial system will become more multi-polar.”
Steinbrueck criticized the United States for failing to adequately regulate investment banks and said free-market policies embraced by the United States and Great Britain that emphasized a short-term “insane drive for higher and higher profits” were partly to blame for the crisis.
“Wall Street will never be what it was,” he said.
Slightly older article,
Meltdown Ripples Across Hudson
LAST Monday, when the financial tornado on Wall Street first hopped across the river to roil the economy here, Mayor Jerramiah T. Healy sounded a bit like someone hit by flying debris — stunned, and still patting himself down to check for missing parts or grievous wounds.
Mr. Panepinto, along with other developers and the financial-services firm Cushman & Wakefield, said that prime office space in Jersey City often costs less than half of what comparable space in Manhattan does. Ken McCarthy, Cushman’s director of research, said that the average cost of first-class office space on Jersey City’s waterfront is $33.13 per square foot , while in Manhattan, it is $84.18 per square foot. For residential real estate, the difference is roughly the same.
At Trump Plaza Jersey City, a 55-story condominium tower, finishing touches are just now being put on an amenity floor with a lavish spa featuring a rain-forest simulator, a fitness center and an indoor golf room. Questions are percolating about how well the building will sell in light of the loss of some of the highest-paying local jobs, contractions on Wall Street, and the mortgage credit crunch.
So far, said Dean Geibel of Metro Homes, the builder and partner with Trump Enterprises on the project, about 200 of the 440 units have sold — with only “a handful” of those who signed contracts unwilling or unable to close.
Wow, Trump has sold less than 50% condos. With Credit tightening and WS job losses, who will buy remaining 50%. They should convert them to Hotel or something.
Good Morning…
I posted this on yesterday’s thread this AM…Some ideas from Luigi Zingales “Why Paulson is Wrong”
I apologize in advance if it was already viewed by everyone.http://blogs.ft.com/wolfforum/2008/09/why-paulson-is-wrong/
What a klutz – I’ll try again…
http://blogs.ft.com/wolfforum/2008/09/why-paulson-is-wrong/
Jack Welch on Squawk, in the tank for the Three Stooges.
Disgusting.
“In a prepared statement Tuesday, Corzine himself said this year’s budget is the first one in state history to cut hundreds of millions of dollars of spending. He said he had not seen numbers to warrant reopening the budget but added “we will take responsible action as the facts unfold.”
Pret is Corzine!
With last night’s sudden change in tactics by M, it seems clear that he is not a Maverick, but rather sees himself as the Lone Ranger.
Oh Bama! will fix everything. Not to worry folks, soon we will be socalized!
Paulson, Corzine, GS; anybody here see a pattern?
“The U.S. will lose its status as the superpower of the global financial system, not abruptly but it will erode,” Finance Minister Peer Steinbrueck told the lower house of Germany’s parliament in Berlin, according to published reports. “The global financial system will become more multi-polar.”
This damn finance minister needs to be slapped for letting this come out of his mouth. Some of the Europeans need to be closely watched as they’re fair weather friends; they’re with us as long as there’s sunny weather and want to run for the exits at the first hint of clouds in the sky. The damn Germans are starting to match the french on the pantywaist scale. We don’t need to forget their stance against us on Iraq.
You know what? There’s been enough talk about the bailout and it’s now time for action. Congress needs to shut the hell up and just give Paulson the damn money and whatever else he wants. The longer this goes on the more Omama will try to make hay.
Omama is really showing who he really is. Rather than suspend his campaign like Mac is doing, he’s wants to continue and force a debate when it needs to be delayed. Liberal scumbag.
Oh Bama! wanting to still debate It is as much a political game as MickeyC picking Paylynn
Thats okay, the dems will throw out Slyden and replace him with Sillyry
“Not to worry folks, soon we will be socalized”
Isn’t that just a coy way of saying we will be given a social disease?
“Short-Sale Ban Fails to Save Ambac, Farmer Mac From 50% Plunge”
[1],
The shorts are the only bidders.
22,
Meant to say are/were.
Perhaps we could keep each other up to date
on the status of major banks in NJ.
TB, Pnc, Valley, etc.,,, lets not get caught holding the bag.
“Wow, Trump has sold less than 50% condos. With Credit tightening and WS job losses, who will buy remaining 50%. They should convert them to Hotel or something.”
SG [8],
Office condo’s?
Maybe, former IB’s, who opt not to get into the toaster business, starting a hedge fund or boutique IB?
A little birdie told me to avoid Provident.
16 RE-
“There’s been enough talk about the bailout and it’s now time for action. Congress needs to shut the hell up and just give Paulson the damn money and whatever else he wants.”
Wow someone’s in a rush. RE do you dream of lunch in Red Square? does waiting in line give you a high? do you crave warm bread and cabbage? and finally, please explain… “and whatever else he wants.” Shirley you can’t be serious.
“Oh Bama! will fix everything. Not to worry folks, soon we will be socalized!”
tbw,
Not an O admirer. That said, did you get your hands on the new book; Paulson’s Manifesto.
This damn finance minister needs to be slapped for letting this come out of his mouth. Some of the Europeans need to be closely watched as they’re fair weather friends; they’re with us as long as there’s sunny weather and want to run for the exits at the first hint of clouds in the sky. The damn Germans are starting to match the french on the pantywaist scale. We don’t need to forget their stance against us on Iraq.
________________________________________________
I was over in Dubai for business a couple of weeks ago. All the money is going over there. It will be Wall Street in 10 years. Sorry to say, we better get used to the idea.
Dubai will look like Manhatten in 10 years. I have seen the construction.
Shore – Sorry I can’t stay up past 9:00. I posted a response to our conversation from last night this AM on yesterday’s thread.
Basically, I too am glad everything is now out in the open..
I can no longer plead “But the public didn’t know about it..”
assuming this stupid bailout happens … how long will the dead cat bounce last?
the last few have been a couple of days, maybe a week … what will $700 trillion buy Paulson? Two weeks?
i cannot even fathom the shitstorm that will happen after that bounce ends.
because there’s NOTHING left after that. nothing.
BC: Nope. I really wanted to like O’ when he first appeared – a young, energetic candidate is just what this country needs…some new ideas are good. Unfortunately he is too far left and does not speak for conservative democrats.
The ink is not even dry and the vultures are ready to suck the blood out of the taxpayers.
Skep,
Hell of a plan. Give the equity tranches to the taxpayers, let them pay hold to maturity prices and we’ll then scoop it up at market prices. If this wasn’t so damn sad it would be comical.
Lehman, Bear, Merrill, Goldman, etc.. could not price the junk. They have already tried to set up a Super SIV. It failed since they could not price it. Now an economics professor and a front man for GS will price it? Total insanity.
Put your money where your mouth is? If this is such a damn good plan, step up to the plate and buy the lowest rated tranches. Better, yet, pull a Goldman.
“The investment bank, which raised $5bn from Mr Buffett’s Berkshire Hathaway plus a further $5bn from institutional investors, will use the money to buy assets either from the US government’s planned $700bn bail-out fund or from banks directly.”
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3075323/Goldman-Sachs-to-spend-Warren-Buffett-billions-on-distressed-assets.html
Faber on Bloomberg
http://www.bloomberg.com/avp/avp.htm?N=av&T=Faber%20Sees%20%60Watered%20Down'%20Bailout%3B%20Bets%20Dollar%20to%20Rise&clipSRC=mms:
Says a better plan is take $200B buy excess homes and plow them under.
Jack Welch on Squawk, in the tank for the Three Stooges.
Disgusting.
Why doesn’t CNBC show on TV what Gross and Welch stand to LOSE if the bailout DOESN’T happen?
Millions or billions, I’m sure. Isn’t that relevant? I’m disgusted in the Wash Post for letting Gross of Pimco write a lame editorial cheerleading the thing. He didn’t write it for the WSJ because he knows he already has those dumb readers in his back pocket.
AH [28],
Yep. Dubai, Shanghai, Mumbai or bye-bye.
“Says a better plan is take $200B buy excess homes and plow them under.”
he [33],
I agree. I’ve stated that the only chance of success, the bailout plan MUST include a bulldozer.
Funny, all the hoopla, lies, half truths, etc.. I still have not heard anyone talk about the crux of the problem. The underlying collateral, attached to this crap, continues and will continue, to decline. Everthing else is a smoke screen.
From MarketWatch:
U.S Aug durable shipments fall 3.5%, biggest since April ’01
U.S. Aug. durable-goods orders down 4.5% vs fall 2.0% expect
U.S. Aug. durable-goods orders ex-defense fall 5.0%
U.S. Aug. durable goods orders ex-transportation fall 3.0%
U.S. Aug. core durable goods down 7.5%, shipments down 2.8%
grim – what does your birdie say about Commerce Bank?
and Mcccaine isn’t only trying to avoid the debate because SPalin’s not ready and he’s trying to buy her more time. He still is enjoying the initial bounce from her, and he knows she’ll be exposed in the debate, even if it is buy a guy who didn’t know TV wasn’t around in 1929.
From MarketWatch:
U.S. weekly initial jobless claims rise 32,000 to 493,000
U.S. weekly jobless claims shot to their highest level in seven years, the Labor Department said Thursday, as people in the hurricane-hit states of Louisiana and Texas filed for benefits. First-time claims for unemployment benefits jumped by 32,000, to 493,000 for the week ending Sept. 20. The four-week average of claims also jumped, by 16,000, to 462,500, the highest since November 2001. Continuing claims were at 3.54 million for the week ending Sept. 13, a five-year high. The four-week average of continuing claims also remained at a five-year high, of 3.48 million.
Paulson, bush, and Ben remind me of a group of kids at a deserted camp in a 70s slasher film. The zombies keep getting closer and all the kids have are six shooters. The kids have fired most of their bullets and may have a handful between them bur have realized they will not likely stop the zombies. It is no longer of whether someone will get eaten, but whom, and how grisley it will be.
Economic reports were abysmal. Anyone know the breakdown of how the job claims were geographically?
Did you guys see the testimony of Oszrag, director of the Congressional Budget Office, on the bailout?
Best damn explanation of everything by anyone in my opinion. I wrote up a bit about it but I’m trying to add the video along with it.
Real questions, real answers. Not like the show Paulson and Bernanke put on.
Little birdie wonders why anyone would use Commerce for anything but checking, and only if you absolutely needed a branch with their hours. After all, you are paying dearly for that convenience.
Special for Frank:
Asking 619k, purchased for 620k 3 yrs ago
http://hudson.fnismls.com/publink/default.aspx?GUID=ba00dda6-b757-40f9-a4fa-d5b866284a94&Report=Yes
http://tax1.co.monmouth.nj.us/cgi-bin/m4.cgi?&district=0905&block=188&lot=36&qual=C0002
Stu,
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Way to go NJ, number two, right behind Puerto Rico.
The highest insured unemployment rates in the week ending Sept. 6 were in Puerto Rico (4.9 percent), New Jersey (3.3), California (3.2), Michigan (3.2), Oregon (3.2), Nevada (3.1), Pennsylvania (3.1), South Carolina (3.1), Rhode Island (2.9), and Arkansas (2.8).
The major issue I have with the Bailout plan is the timing chosen by Administration. They waited for last 2 weeks before congress goes to recess, before pulling out their proposal.
I am of firm opinion that last 2 weeks stock market movements was well planned event. The Bond market did not crash in just last 2 weeks, they happened long time ago. By doing all these in last few weeks, the Administration did not want to give much chance to congress to poke holes into the plan. The administration knows, it is running on low credibility, and unless fear is injected, nothing would pass. This includes Republican opposition as well. There is simple saying,
Haste makes Waste.
“Stop the $700 billion stampede. Despite the table pounding by Treasury Secretary Henry Paulson, the world, even Wall Street’s world, won’t come to an end if Congress doesn’t pass a plan next weekend to bail out the nation’s financial system.”
“There’s no good reason for Congress to pass this “rescue” plan without nailing down the details. And I can think of three good reasons that our representatives should take big, calming breaths before committing $700 billion of our money.”
“If we don’t nail down these details, we risk: (1) creating this mess all over again; (2) giving Wall Street executives a free pass on any criminal acts they may have or might commit; and (3) putting the same Wall Street companies that got us into this mess in charge of the cleanup.”
http://articles.moneycentral.msn.com/Investing/JubaksJournal/lets-not-rush-to-blow-700-billion-dollars.aspx?page=1
Hi Grim, unmod #44, thanks
They are finally figuring out how to make the Service Economy Work. All laid off Americans will be shipped overseas to clean houses in China, etc. It just dawned on them that the Service has to be colocated with the Product.
Re CNBC,
I would just once like to hear somebody ask Gross how much he benefitted from the Fannie/Freddie bailout and how much he’ll benefit from this bailout.
CNBC is a bunch of bulls patting themselves on the back. The Steve Leisman douchebag makes me want to throw a brick through the tv everytime he opens his mouth.
Why does Congress need a Recess? They don’t work anyway? Maybe we could replace them during Recess, with non union employees?
“All laid off Americans will be shipped overseas to clean houses in China, etc.”
Damn, I was really hoping I could be a wet nurse. Better brush up on my sweeping and mopping skills.
(46) SG “Haste makes waste.”
(48) BC “nailing down the details”
Sanity in an insane world….
Bill Heard Chevrolet is closing 14 dealerships around the country. http://www.ajc.com/business/content/business/stories/2008/09/24/bill_heard_closes.html?cxntlid=homepage_tab_newstab
Little birdie wonders why anyone would use Commerce for anything but checking, and only if you absolutely needed a branch with their hours. After all, you are paying dearly for that convenience.
Pass along to birdie it is just for checking, but with ING and Emigrant pushing up against the FDIC limit, the spillover just goes to Commerce and Wachovia.
#51 Joe asked Bill that question awhile ago – as I recall, Bill said that his fund had “a seven billion dollar day.”
“Why does Congress need a Recess? They don’t work anyway? Maybe we could replace them during Recess, with non union employees?”
They need to go campaign.
Everyone write your congressmen and tell them you’ll vote for them if they stay in washington if they work on the plan so it doesn’t screw us over.
“Little birdie wonders why anyone would use Commerce for anything but checking, and only if you absolutely needed a branch with their hours. After all, you are paying dearly for that convenience.”
They have those change machines. I keep a big bucket on a shelf where I put change cause I don’t like fishing for it on line or carrying it around. When the shelf breaks I take the bucket to get bills. That way I have money for a new shelf and beer to drink while I fix it.
I smelt my change and sell it scrap.
This is the USof A. We are known for our good ideas. We ought to be able to salvage this mess. Isn’t that what creative destruction is all about?
Destroy shadow banking…
Create….oh, I don’t know… Real banking where you hold on to your risk instead of trying to pass it off on everyone else?
Any ideas?
I heard that they’re expecting record bonuses on Wall Street this year. I mean, everyone worked hard, it’s not their fault that the economy went soft.
Crap screwed up the link sorry for the repost…
Did you guys see the testimony of Oszrag, director of the Congressional Budget Office, on the bailout?
Best damn explanation of everything by anyone in my opinion. I wrote up a bit about it but I’m trying to add the video along with it.
Real questions, real answers. Not like the show Paulson and Bernanke put on.
http://www.bergenjerseyforeclosures.com/blog/info/entry/cbo_s_orszag_uncertain_on
Hello NJ, we need you today (big protest planned at bowling green at 4 pm – please come by if you can)
Also call!
http://www.congress.org (input zip and get phone # of elected officials – writing is good, calling better)
Media contacts (ask for the newsroom so you’ll get a body):
http://www.congress.org/congress…sorg/dbq/media/
Bailout protest under way in nyc:
http://www.naomiklein.org/shock-…wall-st- protest
this protest plan has been covered in the wall st journal, wired, biz week etc – I think it’ll be pretty big -pls come by NYC/NJ/CT/PA people
http://www.paradisepost.com/ci_10548937
“The only palliative is to send enough folks to prison to make the remaining swindlers think twice.”
O.K. I finally got somebody else with me who wants mandatory prison terms written into the bailout bill.
By the way, the word swindler has been underused in the media.
Pat,
Not saying people shouldn’t go to prison, but this bill isn’t the place for it.
Plus, I don’t think prison is the answer. Shadow bankers should go to a CIA shadow prison.
In case anyone missed this late yesterday. I have already made sure it is floating around the Hill in DC. It makes one numb to see people own up to this kind of decision making process:
how the $700 billion figure got selected — per Treasury:
“It’s not based on any particular data point,” a Treasury spokeswoman
told Forbes.com Tuesday. “We just wanted to choose a really large
number.”
http://www.forbes.com/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html?partner=email
@grim:
NJ has highest taxes and highest unemployment.
Why do I want to live here, again?
“Why do I want to live here, again?”
Cause NJ real estate is immune to the nation’s housing prices. :)
Shore,
You didn’t answer my question from yesterday. What is it you do in Washington?
For all the ripping that everyone does to Greenspan, he often provided the warning before the disaster. This was the case with the tech bubble as well as our current credit crisis. Sorry for the length of this post, but the excerpts I posted are well worth reviewing. Admittedly, he seems to be going senile ever since he stepped down from the FED.
Here’s a link that gives the
testimony of Alan Greenspan to the Senate Committee on Banking, Housing and
Urban Affairs on April 6, 2005.
http://www.federalreserve.gov/boarddocs/testimony/2005/20050406/default.htm
Here are the good parts…
The strong belief of investors in the implicit government backing of the
GSEs does not by itself create safety and soundness problems for the GSEs,
but it does create systemic risks for the U.S. financial system as the GSEs
become very large. Systemic risks are difficult to address through the
normal course of financial institution regulation alone and, as I will
stipulate shortly, can be effectively handled in the case of the GSEs by
limiting their investment portfolios funded by implicitly subsidized debt.
. . .
But the higher prices that these two GSEs pay for mortgages are only a small
part of their subsidy, as evidenced by their persistent and
well-above-market returns on equity capital. Their annual return on equity,
often exceeding 25 percent, is far in excess of the average approximately 15
percent annual returns achievable by other large financial competitors
holding substantially similar assets. Virtually none of the GSE excess
return reflects higher yields on assets; it is almost wholly attributable to
subsidized borrowing costs.
. . .
When these institutions were small, the potential for such risk, if any, was
small. Regrettably, that is no longer the case. From now on, limiting the
potential for systemic risk will require the significant strengthening of
GSE regulation and the GSE regulator. Determining the suitable amount of
capital for Fannie and Freddie is a difficult and technical process, and in
the Federal Reserve’s judgment, a GSE regulator must have as free a hand as
a bank regulator in determining the minimum and risk-based capital standards
for these institutions.
Beyond strengthening GSE regulation, the Congress will need to clarify the
circumstances under which a GSE can become insolvent and, in particular, the
resultant position–both during and after insolvency–of the investors that
hold GSE debt, as well as other creditors and shareholders. This process
must be unambiguous before it is needed. Current law, which contemplates
conservatorship and not receivership for a troubled GSE, requires the
federal government to maintain GSEs as ongoing enterprises, but other than
the symbolic line of credit at the U.S. Treasury, provides no means of
financing to do so. Left unresolved, such uncertainties could threaten the
stability of financial markets.
. . .
On the other hand, if we fail to strengthen GSE regulation, we increase the
possibility of insolvency and crisis. We at the Federal Reserve believe this
dilemma would be resolved by placing limits on the GSEs’ portfolios of
assets, perhaps as a share of single-family home mortgages outstanding or
some other variation of such a ratio. Almost all the concerns associated
with systemic risks flow from the size of the balance sheets of the GSEs,
not from their purchase of loans from home-mortgage originators and the
subsequent securitization of these mortgages.
. . .
As I concluded last year, the GSEs need a regulator with authority on a par
with banking regulators, with a free hand to set appropriate capital
standards, and with a clear and credible process sanctioned by the Congress
for placing a GSE in receivership, where the conditions under which debt
holders take losses are made clear. However, if legislation takes only these
actions and does not limit GSE portfolios, we run the risk of solidifying
investors’ perceptions that the GSEs are instruments of the government and
that their debt is equivalent to government debt. The GSEs will have
increased facility to continue to grow faster than the overall home-mortgage
market; indeed since their portfolios are not constrained, by law, to
exclusively home mortgages, GSEs can grow virtually without limit. Without
restrictions on the size of GSE balance sheets, we put at risk our ability
to preserve safe and sound financial markets in the United States, a key
ingredient of support for homeownership.
“Shore, What is it you do in Washington?”
Ambassador of Zimbabwe?
In yesterday’s eharing Paulson was asked if pension funds would be included in the bailout.
He didn’t say they explicitly were but his answer didn’t exclude them.
I have a feeling hedge funds might be bailed out too but can’t confirm it.
I don’t know, Tom. Some folks want blood. Heads on spikes. Reassurances right now, today, that if indeed the situation is as dire as “everybody” is testifying, then those “everybodies” should be willing to acknowledge that there is blame and that justice will be paved in a wide swath.
What, everybody is innocent and *poof* our entire way of life is at risk?
Stu,
My feeling has always been that Greenspan seemed to do and say the right things but that some how he was asleep at the wheel when things got out of hand.
I read something where he blocked a request by a governor of the fed to increase regulation in subprime lenders in 2000.
But there was another post way back when in the washington post that said near the end of his term someone slipped him a not to let him know that subprime mortgages were 20% of the market and he was surprised it was so high.
Maybe I’m wrong, but it kind of feels like they used Greenspan’s credibility to get him to get certain things done but he wasn’t paying attention to see that things didn’t get out of hand.
I wouldn’t be surprised to hear if one of his aides was flipping houses by using his credit. “Here Chairman Greenspan, we need you to sign these forms before your nap.”
“Some folks want blood. Heads on spikes. ”
Tom/Pat,
In the interest of convincing the population that the Government is looking after them and going after “bad actors,” which should send Tom Cruise and some others deep into a bunker, I would not be surprised to see a half dozen Wall Street types rounded up in full view of cameras. Some will likely be rousted from their mansions, some in penthouses, some in bakn offices, and maybe even a few right on the trading floor, as that would be a great visual.
#56
Pass along to birdie it is just for checking, but with ING and Emigrant pushing up against the FDIC limit, the spillover just goes to Commerce and Wachovia.
What do you mean by this?
I know that emigrantdirect.com just launched another online savings unit – dollarsavingsdirect.com. The latter has a minimum of $1,000 and a rate of 3.75% vs 3% on emigrantdirect, which has a $1 minimum.
I’m looking at transferring from A to B for the higher rate.
But couldn’t find anything about this new unit, or why the rate was so much higher when the service looks to be identical in terms of online features.
I’m also pondering human behavior. Sometimes, if repercussions are required, then sometimes the wailing changes a little.
If it doesn’t, and the panic talk continues at the same gale force wind, then maybe there’s true conviction behind it.
nd how long will it take the same residents who want to deny bech access to the below $1MM a year set access to the shore to call for state and federal spending to protect THEIR property?
http://www.app.com/apps/pbcs.dll/article?AID=/20080925/NEWS/80925003
TRENTON — Garden State residents are bracing for a coastal storm that’s threatening to deliver strong winds and heavy rain.
Areas away from the coast can also expect windy and rainy conditions.
A high surf advisory is in effect along the coast. Forecasters say strong northeast winds will produce rip currents and cause some beach erosion into Thursday evening.
The National Weather Service has issued a coastal flood warning for Atlantic, Cape May and Cumberland counties from 4 p.m. until 9 p.m. Forecasters say there’s a chance for minor to moderate flooding around the time of high tide.
A coastal flood advisory is posted for the rest of the state.
Pat,
You put people’s head on a spike on display at the national mall and the bleeding hearts will put an end to it.
People start dissapearing, it’s a whole nother story.
Opened a new batch of listings this morning and still not too far off peak prices. It’s f*cking hilarious! I have no idea what idiot would even consider buying at close to asking.
“Ambassador of Zimbabwe?”
That job comes with flashier clothes and a lot more zeros in the paycheck than I see. Of course a trillion of their dollars are worth, what, ten US$?
The banking system needs another $500 billion to survive beyond the $700 billion rescue plan being contemplated by Congress, said Pimco founder Bill Gross.
Gross said on CNBC that the government bailout plan will help free up bank balance sheets so they can start lending again, but will provide only about $50 billion in real capital to the system.
“The plan goes far but it doesn’t go far enough in terms of capitalization,” he said. “The banking system and the investment banking system in total really requires about $500 billion more. Where that comes from is still up in the air.”
This guy is comical.
(83) Make
If you Wiki “shadow banking” the first three posts are: Pimco, Pimco, Pimco
Iraq All Over Again: Bush, Paulson and Bernanke are Just Crying Wolf
Talk about déjà vu. Remember when Bush and his cabinet officers were running all over in late 2002 crying wolf about Iraq’s supposed nukes, and threatening that inaction on a war resolution by the Congress would leave them to blame when the “mushroom cloud” appeared over some American city?
But here’s the thing. Just as nobody else in the world was freaking out about Saddam Hussein’s alleged nuclear threat, nobody is particularly panicked about the US or the global economy. If investors, who are supposed to be all wise about things economic, were worried that the roof was about to cave in, they’d be selling stocks as fast as they could dial their brokers. And the institutional investors—those with the real inside information—not to mention the managements of companies, who really know the true state of affairs of their own firms—would be unloading shares at fire sale prices. The stock market would be falling like it fell in 1987, or, if what these administration con artists are claiming were really the case, even farther. That is to say, we’d be seeing a 3000-4000 point drop in the Dow.
“For all the ripping that everyone does to Greenspan, he often provided the warning before the disaster.”
Stu,
Go to the archives.
Can’t find the links now;
Derivatives help reduce risk by dispersing risk.
How about Americans preference for long term, fixed rate mortgages means they are paying more than necessary. There would be a great benefit if lenders provided an alternative. 2004?
Lowball!
From the Record:
‘The sale of my lifetime’
Ilija Pavlovic, a 20-year township resident and owner of ECTC Inc. in Ramsey, which makes power trains for Chrysler vehicles, bought the 45,000-square-foot mansion through another of his companies, L.P. Homes LLC, for $8.88 million, less than the nearly $11 million it listed for and the $25 million that developer-owners Darlington Associates tried to privately sell it for years before.
The majestic dwelling, modeled after an English castle nearly a century ago, rivals the robber-baron mansions in Newport, R.I., and overlooks the Ramapo Valley from 12 1/2 acres off of Ramapo Valley Road.
“We weren’t disappointed,” said Herbert Schlesinger, one of the remaining Darlington Associates partners, regarding the lower sale price. “It’s what the marketplace was and we had to accept it, period.”
Shore,
I’m not trying to pry. It’s just that since the conversations have been a bit more political lately and there has been gonverment involvement in the bubble… It may be a good idea to disclose any affiliations. Especially when you talk about politics.
I think it’s pretty cool to get an inside perspective but it’s not like we’re a bunch of guys hanging around a campfire drinking. Thousands of people visit this site a day.
Tom, Pat
Live telecast of Investment banker water boarding???? We can save bernanke and paulson for the grand finale.
Then its off to gitmo when the show is over
Why is keeping property values high the ultimate goal or what seems like the goal to a non-expert? Who are we helping? Bubble means that an irrational market drove up prices. Prices are out of touch with income. Are we helping someone if we keep them in a home that they really can’t afford? Is keeping someone “one paycheck away from financial disaster” helping someone? Wouldn’t housing prices in check with income be more helpful? A ranch for $150,000 for example.
“People start dissapearing, it’s a whole nother story.”
Tom,
It becomes an interesting debate. On the one hand, many authortarian governments used secret police to great effect. The general fear kept the population down. On the other hand, it also has adverse effects on the productiveness of society. Using a variant of “heads on pikes,” LCN and associated groups as well as some governments have found great value in maiming people and allowing them to limp, sometimes literally, through life in front of the rest of society as a stark reminder of what happens when one steps out of line.
Cherry picking folks to face prosecution for financial crimes, think Martha Stewart, is a less savage way of the latter. The congress and administration are feeling that there is such anger in the hinterlands right now that it would not surprise me to see them try to make some quick examples of some domestic financial “evil doers” before election day.
If the Paulson Putsch, or its progeny, fail to fix what ills the economy (and who actually believes it will do the trick?) it will be all the more important for the folks in DC to have taken some action to punish the people at the root of the collapse.
Latest Bailout Plan Spin: Its a Money Maker!
Most people are unfamiliar with the evolution of financial management over the years. It began as a clubby old boys network, who you knew mattered more than what you knew. It evolved over time. Starting in the late 1970s, retail stock brokerage became a telemarketing sales business. Although that model is clearly changing, there is still trillions of assets under management today that got that way via the cold call.
The reason I bring this up today is due to the latest sales pitch from various people, aggressively pushing the bailout plan. The newest spin on the massively expensive plan is “Hey, its a jumbo money maker!”
The spin reminds me of the classic retail stock jockey. The guy has buried his clients in a series of bad trades, bad judgment, poor risk management — all motivated by his self-interested, commission-generating trades. The only way out of the money losing mess, pitches the broker, is a big, Hail Mary trade.
BC Bob,
I don’t know about derivatives but regarding adjustable rate mortgages he was talking in the past tense from what I saw. He said that if borrowers took adjustable rate mortgages 10 years ago, they would have been better off. I don’t remember him saying people should do that in the present tense.
I think people should have bought PCU a few years ago before they announced their big divident payment. That doesn’t mean I think it’s something they should do now.
“Why is keeping property values high the ultimate goal ”
If “we” fail to keep inflated prices inflated, even people who get a workout will go underwater and none of this recent activity will save the economy.
“Why is keeping property values high the ultimate goal or what seems like the goal to a non-expert? Who are we helping?”
[90].
The same dolts that are holding worthless paper and want to pass it on to us.
renter,
A ranch for $150,000? BWAAAHAHAHHAAA!! This is prestigous Northern NJ! It’s close to NYC and you know, they’re not making anymore land. No, that ranch will list for $539,000. If one can’t afford to live here, then one should consider moving out of state. That’s what I’ve been told.
“He said that if borrowers took adjustable rate mortgages 10 years ago, they would have been better off.”
Tom,
I was referring to the statement he made in/around 2004, when the fed was in the process of raising rates. Remember, the fed does not care about you and I, only their constituents. He made the statement, regarding adjustables, for a specific purpose. Unfortunately, the future note holders and those refinancing were not on his radar screen.
People tell us to move “Go back to Cleveland if you want a ranch for $150,000.” I would be on my way but unfortunately he is a tenured academic and that isn’t a situation that is easily changed.
FDIC May Need $150 Billion Bailout as Local Bank Failures Mount
By the end of 2009, about 100 U.S. banks with collective assets of more than $800 billion will fail, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors.
“It’s not going to be Armageddon,” says Mark Vaughan, an economist and assistant vice president for banking supervision and regulation at the Federal Reserve Bank of Richmond, Virginia. “But it’s going to be bad.”
New home sales down -11.5%
Possible future FDIC injection?
OMG!
How do I send the following message to the senators?? Anybody knows?
The $700B won’t solve the problem. The financial crisis, bankruptcy –all the root cause is housing price is down, people can not afford the current price. If house price down another 10%, Citigroup will also go to bankruptcy.
Do you think $700B will help people afford the current price? The normal American people won’t get a penny from the plan. Most of money will go to the bank share holders—all the rich, CEOs pay.
How the normal American people can afford to buy a home? Price has to be down further. No rescue plan!! Don’t vote.
Tom (75) says:
“My feeling has always been that Greenspan seemed to do and say the right things but that some how he was asleep at the wheel when things got out of hand.”
I 100% agree. Those who were smart enough to listen to the old kook would have done very well. When he was spouting off his irrational exuberance speeches, I was watching closely for the tech bubble to pop. I got out pretty close to the top and profited handsomely. Same thing with the credit crisis. I waited for the first signs of the crisis to show and ran for shelter. Both times, I saved my ass. The real shame of it is that our federal government never seems to listen to the experts they appoint. This is the case on both sides of the aisle.
From Gramm/Rudman to the Hart/Rudman report on homeland security to Walker’s repeated calls for help and to the generals requests in Iraq as well as in Vietnam, to reports on global warning to reports on our lack of offshore oil resources. Now we witness the same crap going on with the Paulson Plan. The experts are once again being ignored at the peril of the U.S. taxpayer.
What do the lawyers in the congress and the senate know about any of these issues? Yet they continue to ignore the advice of the experts they commission. I am not surprised by anything anymore. All I can do is listen to the experts and act on their advice while ignoring anything that comes out of the mouths of all elected officials. And people wonder why the populace has become so apathetic to government affairs (except for marital affairs).
From MarketWatch:
U.S. Aug. new-home sales down 11.5% to 460,000 pace
U.S. Aug. new-home sales weaker than 505,000 pace expected
U.S. Aug. new-home sales weakest in 17 years
Supply of U.S. new homes 10.9 months in Aug. vs 10.3 July
Paulson Didn’t Score Points With Lawmakers
Emerging from the session behind closed-doors that Republican House Members had with Secretary of the Treasury Hank Paulson yesterday, lawmakers I spoke to said that sentiment in their ranks was moving significantly against the Administration’s proposed $700 billion financial bailout.
“Right now, I would say that about a third of the House Republicans are probably behind it, another third are strongly against it, and another third say ‘no way, no how,’” Rep. Tom Feeney (R.-Fla.) told me late yesterday afternoon. The onetime speaker of the Florida House described himself as “somewhere between the latter two.”
Listening to Paulson, it was very evident, he has not done selling for long time.
Fortunately for our hero, the sherrif has set up a meeting with some of the prominent townsfolk so the Lone Raner won’t find himself with nothing to do.
Tom,
I am just a guy, who used to hold a very minor position in the Reagan Administration (and worked on some other campaigns), who grew up poor, who busted his tail to get an education (working about 50 hours a week during my undergraduate days and the same whilst getting my masters), who scrimped and saved and did all manner of disgusting jobs to get by until I could use my education, and who now runs a couple of small legitimate businesses that bring me into contact with some interesting government/military (and related) characters here and overseas and whose views and analyses have been sought from time to time by various TV, radio, and other news media outlets here in the US and overseas.
I am not in any position of power, I hold no policy-making position, nor do I hold elective office. I am just a reasonably informed guy who does some work that brings me into contact with some interesting people and who has an interest in the current RE situation.
“Why is keeping property values high the ultimate goal or what seems like the goal to a non-expert? Who are we helping?”
Everything is apparently tied to housing.
When people talk about being highly leveraged this is the scenario I see.
People buy houses and take out mortgages. Those mortgages get pooled and securitized.
Companies buy those securities because they pay high yeilds. Your debt is now their asset. Companies then need their own money to finance operations. They don’t want to liquidate their assets so they use those securities as collateral to get financing.
So if you’re underwater on your home, don’t feel bad, you’re not alone. Someone else is underwater on your home too.
Gary #96,
Don’t forget, $539k is chump change to the Wall Street crowd with their big bonuses. They will sustain the market for homes in northern NJ. Especially once the bailout plan is finalized. :)
“So if you’re underwater on your home, don’t feel bad, you’re not alone. Someone else is underwater on your home too.”
Tom,
The difference is that “you,” Joe or Jane Main Street, do not matter, wheras the “ones underwater with you” do.
re: 28 & 35
It’ll never happen. Their internal, unstable cultures will implode.
Our culture & geographical location is what helped us become the leaders of the finance world. Don’t get me wrong – the US will not stay on top forever, but I don’t think those areas will ever be tops.
Rich52,
Indeed!! Long live the USSA!!
rent (98)-
Stop whining and deal with it. You’re becoming tedious.
Even worse, the market is heading your way. Have a drink and relax.
BC Bob: Greenspan is not my hero, but unlike Bergabe, he didn’t lie regularly. Bergabe, more than anyone knows how bad the situation was an is, but still does not project the dire consequences. Greenspan seemed to speak honestly based on the market conditions at the time. Of course it made him seem wishy/washy, but I’d rather that to our current Fed chief who has yet to see or say anything even remotely negative.
Here is an article I googled which puts the ARM preference debate in a clearer light. Unfortunately, the conclusion is inconclusive.
MSN:
Did Greenspan push risky home loans?
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/DidGreenspanPushRiskyHomeLoans.aspx
Wendy (101)-
“Don’t vote.”
Don’t plan to. We just found out who’s in charge of everything, and that particular official is not elected.
You are right. I have gotten this out of my system. Time to get back to my life.
Good luck to everyone.
Is there anything this administration can get right?
http://abcnews.go.com/Blotter/Blotter/story?id=5882866&page=1
‘Catastrophic Consequences’ Could Befall Weapons Lab
Former Counterintelligence Official: DOE Misleading Congress on Security
By EMMA SCHWARTZ
September 25, 2008—
The Department of Energy is misleading Congress about security at the nation’s nuclear weapons labs and left unchecked it could lead to “catastrophic consequences,” a former counterintelligence officer at Lawrence Livermore National Lab wrote in a letter to a top member of Congress this month.
“Congress is being misled on the true nature of the effectiveness of counterintelligence within the Department of Energy,” wrote Terry Turchie in a Sept. 1 letter to Rep. John Dingell (D-Mich.), chair of the House Committee on Energy and Commerce.
The problem, he wrote, is last year’s consolidation of the two counterintelligence offices at the Department of Energy into the broader Office of Intelligence and Counterintelligence. That change, he wrote, has diminished the emphasis and management of the agency’s efforts to ferret out espionage.
“Counterintelligence capabilities have been greatly undermined,” wrote Turchie, who headed Livermore’s counterintelligence from 2001 to September 2007 and was one of the lead FBI agents investigating Unabomber Theodore Kaczynski. “As a result, the vulnerability of DOE personnel and facilities to hostile intelligence entities has increased exponentially.”
Security at DOE’s weapon’s labs has long been a concern. But the new allegations, which will be among the topics addressed at a hearing Thursday by Dingell’s committee, raise questions about one of the more recent changes to DOE oversight.
“Mr. Turchie’s letter raises a number of concerns about how merging the counterintelligence and intelligence functions at the Department of Energy may have impaired the Department’s counterintelligence capabilities,” Dingell said in a statement.
A Department of Energy spokesperson defended the consolidation and noted that it had been mandated by Congress. The office “provided and continues to provide the Secretary and other decision-makers within the Department, other government agencies, and Congress timely, technical intelligence and counterintelligence analysis on all aspects of foreign nuclear weapons, nuclear materials and energy security issues worldwide,” Andrew Beck said in a statement.
[snip]
By the way, it was always my belief that the biggest thing this plan would do was raise confidence. Which is important to prevent further problems.
The massive amount of debt it seems will also devalue the dollar. That will make these already low stocks even more attractive to foreign investors now that they know the bad debts are coming off the books and help recapitalize them.
Wall St kinda screwed up. By having Paulson come out so strong for this plan they raised expectations and if we don’t do something confidence will plummet. Self fullfilling prophecy.
Now we just need congress to grow some balls and stand up for us to get some decent provisions so they cough up to make up for their profiteering.
To paraphrase what someone else said… Congress needs to say…
You can loose some money now or you can loose your money later.
Tom #107,
They wouldn’t have liquidate their assets if people continued to make payments on their loans, which as you can probably assume from all the foreclosures that people are not. Doesn’t matter that the home owner is underwater or not.
Shore,
Just to clarify, I wasn’t questioning your motivation, just the possible perceptions of your motivation.
http://abcnews.go.com/Video/playerIndex?id=5883497erhaps this is how Paulson plans to leave town if it comes to pitchforks and torches:
http://abcnews.go.com/Video/playerIndex?id=5883497
http://abcnews.go.com/Video/playerIndex?id=5883497
Perhaps this is how Paulson plans to leave town if it comes to pitchforks and torches.
IMHO, not GW, not HP, not BB can reveal to the public the real truth behind this massive dollar injection.
Pressure coming from outside the U.S.
Rich52,
These borrowers couldn’t keep making their payments, especially ones that had ARMs that saw their mortgage payments double. The banks didn’t care that the borrowers couldn’t pay. Foreclosrue meant profit from resale and profit from writing new loans.
It wasn’t until people decided or were forced to stop playing this game that it became a problem for the banks.
My blog post today was pretty long so not sure that many will read it, but I included a comment that JP Morgan’s CEO made and he seems to share my view.
I’m paraphrasing (didn’t get a chance to type it all up as he was saying it) James Glassman, CEO of JP Morgan Chase who I heard earlier this morning say ‘I don’t blame rating agencies, brokers, builders, homeowners that thought they were going to be bazillionaires, it’s our responsibility.’ That was very refreshing to hear.
Orion,
This is clearly an issue. The administration is walking one heck of a tight rope and I am not sure they are up to the task.
On the one hand are actions that bail out the banks, but those hit the dollar, which then hits the economy. On the other hand, they defend the dollar, but that hits the economy.
“Put your money where your mouth is? If this is such a damn good plan, step up to the plate and buy the lowest rated tranches. Better, yet, pull a Goldman.”
#32
BC– the plan is not and will not be perfect. nothing is. but what is the alternative? do you recall the chorus of people in the early 30s who said just let the market correct, do nothing, let the excess be wiped out? How did that work? Sometimes the tower gets built so high that letting it collapse will destroy everything around it. the idea is to go in and take it down piece by piece
Morgan, re: Neutron Jack:
Jack Welch Shows His True Colors – Teams with Paulson
Now we have Jack the Knife Welch on GE owned CNBC talking about the markets. Here’s a guy from Wall Street who made hundreds of millions of dollars and walked away with huge exit bonuses. So Jack doesn’t want us calling it a bail out. And Jack doesn’t want us calling it a check for Wall Street. Jack “LOVES” this plan. Jack is a jackass.
Jack wants us to use the word ‘restructuring.” Look Jack, I don’t care what you call it. We are going into a Depression. No matter what you call it, we are broke. It is guys like you that drove us into this hole. There are a dozen different names for the mortgage packages companies like Goldman created and sold to the world. You can call them whatever you want, but they are all toxic waste.
Jack wants to spread some sugar on this ka-ka, and shove it down our throats. But there is a better plan. I heard one guy this morning who said we should loan Buffet or Gross the $700B and let them manage the mess. I like that idea, providing they put up “everything”: they are worth as security. And I mean everything, like they are asking us to do. I’d ask Jack the Knife to join this trio and put his money where his mouth is. Hey, you don’t hear anything from George Soros after the whack he took with Lehman. But what is interesting about Soros, is he was in the Depression Camp, so his Lehman investment is very confusing . . . unless there is something we don’t know.
skep-tic,
“the idea is to go in and take it down piece by piece”
Show me where Paulson or Bernanke said anything resembling that.
banks you may want to be wary of due to their very high texas ration:
Citizens Community Bank Ridgewood NJ
ISN Bank
Cherry Hill NJ
Tom,
It is not our problem the buyers elected to choose a specific financing option over another. Bottom line, they could not afford the purchase to begin with. Yes, Glassman is right, it is their own fault, for loaning people money who couldn’t pay it back. Well, now suffer the consequences.
Heard McCaln decided to suspend his campaign to help fix this financial mess.
Yipee! We’re saved! Hallelueah!
Mr. “Economics is Something That I’ve Really Never Understood” is gonna put his nose to the grindstone and save us!
Maybe his economic advisor Gramm gave him the secret. Just undo everything Gramm did when in Congress.
The thing that impressed me most from both candidates is that they came together one one big subject. They both tried to take credit for inviting the other to work together.
#47
“I am of firm opinion that last 2 weeks stock market movements was well planned event. The Bond market did not crash in just last 2 weeks, they happened long time ago. By doing all these in last few weeks, the Administration did not want to give much chance to congress to poke holes into the plan.”
SG– you really believe the president controls the stock market?
“BC– the plan is not and will not be perfect.”
skep,
Did you see the article? It seems like it’s perfect for Goldman. The govt buys at marked to maturity prices from Goldman and then Goldman comes back and scoops up at vulture, marked to market prices. Who’s the winner?
Rich52,
The consequences for a buyers is they lose their house and ruin their credit.
The consequence for banks giving bad loans is they increase our national debt and screw up our economy. Maybe the execs retire early with big severance packages.
Who do you think had greater responsibility?
Tom– they have said this is a 2 step process. step 1 is stop the panic. that is what they are trying to do now. step 2 is address the longer term structural problems. that is disassebling the tower
I’m not sure what you mean by “loosing their house”. What qualifies it as “theirs”. When someone buys with no money down and defaults early on in the loan, I don’t consider that really owning anything. It’s not “their’s” until the mortgage is paid for in FULL.
BC,
Congress seems to have a lot of respect for the director of the CBO. He made it very clear that if congress wants to get the best price they do a reverse auction and gave some details to make sure it’s fair. The representatives asked about that a lot.
Paulson/Bernanke have been talking about fire sale prices and liquidity as if they just want to clear the books and get some cash. If the bill lets them price mark-to-maturity I wouldn’t be surprised but this is one of the things I’m willing to hold my breath doesn’t happen.
Rich52,
You’re just arguing semantics now.
Keptic,
Has any western government, in the last 100-200 years been able to “slowly” unwind a bubble without making things worse in the attempt? I do not know of 1 example, do you?
A free market does tend to be very efficient. The complaint here is that it is not efficient in the manner that is politically acceptable, as an efficient market is often a ruthless one. I would rather have ruthless efficiency then government bungling.
hey guys, there are already laws on the books against fraud. by all means, let’s prosecute anybody who broke them. not sure what new criminal law you might want here. in any case, law can’t be applied retroactively, so even if you think of a new useful one, it won’t hurt the bad guys in this scenario.
skep-tic,
Please provide a link to them saying that. I googled “disassembling the tower” with both paulson and bernanke and did not receive a single hit.
Everything I’ve heard out of their mouths has been the opposite of what you’re saying. They’re saying they want to stabilize housing. Not let it fall gracefully. Once housing is stabilized and credit is flowing again, outside investment will come in and raise capital and the economy will start growing again.
Check any video of their congressional testimonies.
They want to call bottom so we can start recovery.
#131
BC– there are the distributive issues and the macro issues. which is more important here? some malefactors are going to come out better than they would have if there was no bailout. this is inevitable (just try to think of a way to solve the problem without unduly benefitting someone). but prioritizing punishment over the bigger issue is to me letting anger overcome reason.
Stanley O’Neal at Merrill who was an assembly line worker at GM before Merrill and Sallie Krawcheck at Citi a lady in her mid thirties on her second husband with a few babies in diapers and pretty well dressed Erin over at Lehman were not part of the old boys network but through diversity and a need to have fresh non WASPY faces in the c-suites were pushed up too quick. If they stuck to their guns and hired more qualified people Merril, Citi and Lehman might be a lot better off.
Tom– I’m not going to provide a link for you, sorry. You may be determined to dislike this plan– that is your right. The testimony of Bernanke is out there if you care to look.
“in any case, law can’t be applied retroactively”
Oh really?
# Rich52 Says:
September 25th, 2008 at 10:41 am
I’m not sure what you mean by “loosing their house”. What qualifies it as “theirs”. When someone buys with no money down and defaults early on in the loan, I don’t consider that really owning anything. It’s not “their’s” until the mortgage is paid for in FULL.
—————
In that sense, then only a percentage of people who buy cars on terms really own their cars. And since if you don’t pay real estate taxes, your house, even if fully paid , can be auctioned, then no one really owns any real estate, by this reasoning. I know I’m being flippant. It’s just that you do really own your house, but it secures a debt that you have. That does not mean that you do not own it. Your house effectively secures your real estate taxes, since it’s a direct claim on the property. In fact, it’s even a superior lien compared to mortgages. By your reasoning, the government, even if you had fully paid for your house, still owns it, because failure to pay your real estate taxes can lead to an auction sale of the property to satisfy the debt.
Skep is either:
a) incredibly naive
b) a man with an agenda
My vote is for “a”. As his arguments grow thinner, at least he isn’t crossing the line into hysteria and petulance. That makes me think he’s an honest guy.
“BC– the plan is not and will not be perfect. nothing is. but what is the alternative? do you recall the chorus of people in the early 30s who said just let the market correct, do nothing, let the excess be wiped out? How did that work? Sometimes the tower gets built so high that letting it collapse will destroy everything around it. the idea is to go in and take it down piece by piece”
They didn’t sit back and let if fall in the 30s. They just came up with all kinds of stupid policies to keep things afloat. They got the genius idea of bulldozing all our crops and slaughtering our cattle to keep prices “stable”. All that did was starve a lot of Americans.
The comotase haven’t lost anything. They bought a free call with zero $ down. The call is now worthless and expired. Sorry the call was not perpetual.
Move on to a place you can afford. Why burden yourself with overhead you can not afford. Does it matter if you walk now or walk later. Release the chains, start spending again, help revive the economy. We don’t need any more parasites. The world is full of them.
skep-tic,
The issue I have right now is your misrepresentation of the plan. I’ve heard the testimony I’ve read the news.
You’re claiming they’re saying things they didn’t say. They didn’t even imply that. Unless that’s your opinion of reading between the lins and thinking that’s what they’re really up to while saying something else. But that’s not what you are claiming.
skep (140)-
“…just try to think of a way to solve the problem without unduly benefitting someone…”
Skep, we posit the best solution here, day after day. Good guys win, bad guys get carried out on their shields. However, as vodka noted, many people have no stomach for it.
Mr. Market can sort this thing out just fine…if we let him.
“Has any western government, in the last 100-200 years been able to “slowly” unwind a bubble without making things worse in the attempt? I do not know of 1 example, do you?”
Norwegian bank crisis. I studied this one in my macro-economics class since it was an unfolding current event at the time. All of a sudden, I feel slightly older.
Tom (148)-
Anyone who “reads between the lines” on Bergabe and Klink’s testimony can only conclude that they are paid shills of the financial industry and are lickspittles, sent forth to perform the errand of creating the cover of darkness and confusion necessary for the financial criminals’ getaway with the loot.
At BC Mr. Coast played against an intermural basketball team called BOHICA. I think it would be a perfect name for the 700b bailout plan. (Bend Over Here It Comes Again)
Norway? Don’t they barter sardines for necessities?
“Mr. Market can sort this thing out just fine…if we let him.”
Clot,
Wake me up when Mr Market decides to wear its jockstrap again.
#121
“IMHO, not GW, not HP, not BB can reveal to the public the real truth behind this massive dollar injection.
Pressure coming from outside the U.S.”
I agree
Stu, 150,
would you care to elaborate a bit on how that worked out and the quick and dirty of the underlying issues?
NJC,
LOL.
The last time I played intramural bb at BC, I went to the hole against a 320 LB., All American tackle. Problem was, for me, he thought I was a running back for Notre Dame.
Clot,
I don’t think it’s fair to conclude that the only option is that they are paid shills.
Let’s not fail to consider other options:
– There is some blackmail or extortion
– Wall St might have kidnapped their kittens are demanding them to get this plan through
– Mind Control
Jim Rogers calls the bail-out a band-aid on a cancer patient.
#143
““in any case, law can’t be applied retroactively”
Oh really?”
Tom, I was talking about criminal law. google is not a replacement for actual knowledge
Come to think of it, I’ll probably be moving to a barter-and-trade model myself pretty soon.
Great skep. Current laws and processes are so effective that we’re entering global thermo nuclear financial meltdown.
Hurray for the laws on the books. Move along and pass the bill.
Skep,
Free market is the only way.
No one wanted to lehman at the price Fuld was happy with and not because the market was “iliquid”. Lehman went under, market plunged, people walked away with boxes and an uncertain future.
Barclay came in and scoope the pieces and 10,000 people retained their jobs. Japanese did the same thing.
Lessoned learned “don’t risk everything you have just to beat the street estimates by a nickle”
Free market worked.
Because Bush senior got screwed by allowing a recession on his watch, Junior has concluded that recesion and free markets are a political nightmare.
Fear mongering the public is a old phenomenon but bush is perfecting it. First iraq and war on terrorism so that his Haliburton and Oil frieds can make billions and now the fear of the financial markets another $700B for his friends down at Wall Street.
One thing you have to admire about this administration is that they take care of their own.
Skeptic,
to put things into perspective, letting the ever vaunted market, actually work this out would indeed be painful for many, including myself and my family. Infact for anyone with family members nearing retirement age. But i still feel that is the better option
SG– you really believe the president controls the stock market?
Not president, he is puppet to all Wall Street CEO’s. The influence that Wall Street CEO’s and Hedge Fund managers on Washington is huge. How much does it take to have a small group of Wall Street honchos to stage a little market event? After all, Market went down and came back to the same level within one week. In the process, you got public to support 720 billion of their hard earned money. All this doesn’t have to explicit, but implicitly understood.
to add to 163
if you were stupid enough to build or set up shop next to a fundamentally flawed tower then you deserve to get crushed when it fails.
Why should I bail you out when I was smart enough and paid extra to stay away from the fundamentally built tower of mass destruction.
Oh, JB forgot to note in header that it’s rip skep day.
you guys can call me naive or suggest that I am dishonest. that is fine. but in my opinion, many of you are now revealing yourselves to be the extremists that you have denied being when so many trolls came on this board and accused you of this over the past couple of years. I am not out in left field here. Your hero, Volcker, proposed a version of this plan. The ultimate take your medicine guy. The leaders of both political parties are on board. Most economists are on board. Mr. O, the sage one, is on board. Nearly everybody in the mainstream world is on board. So I think the question you should ask yourself is why all of these people are naive or dishonest and you are not.
renter Says:
September 25th, 2008 at 10:05 am
People tell us to move “Go back to Cleveland if you want a ranch for $150,000.” I would be on my way but unfortunately he is a tenured academic and that isn’t a situation that is easily changed.
Than do not complain as you are traiding job security for living in NJ and paying a lot for it.
I am wating another year and moving. (want to be fully vested in soon to be worth nothing 401k plan and pension…)
Skep,
Ewveryone was on board with the fact that house prices only go up in value.
Your argument means nothing. If everyone is saying it then it must be true ha?
“to put things into perspective, letting the ever vaunted market, actually work this out would indeed be painful for many, including myself and my family.”
kettle,
It will be painful for many if we allow Mr Market to realign. I may be out of a job. However, it’s the best tonic for the country in the long run. Artificial price controls, manipulation, distorted prices, etc., will only make matters worse in the long run.
Here is an interesting comment I found on CR.
“A2/P2 spread of 4.09
Armageddon, folks; 3 times the level of 81-83. Why so high? Because the “bailout” will make ST paper worse. You heard me, worse. Propping up long-term MBS will draw money from other markets – including short-term CP, requiring even higher yields. In addition, the bailout is large enough to raise questions about the US’s and the Reserve’s stability, making them less able to support short-term paper with auction windows.
We’re going to spend 700 billion to worsen the recession/depression.“
This bill would directly
HURT: children, the poor, and responsible savers
HELP: rich folks, old folks, and irresponsible debters
And the help for those folks would be temporary.
Skep,
We are not all suggesting you are naive or dishonest. 2 people can have different opinions on a debated subject and without either being naive, or extremist etc. if nothing else, the debate itself is enlightening as it forces both sides to further develop and explore their stances.
I for one appreciate the debate
“Most economists are on board.”
Skep,
We have heard that before.
http://www.gold-eagle.com/editorials_01/seymour062001.html
Jim Rogers had an interesting comment to make on this situation.
It seems that Japan faced a similar situation in 1966 and it allowed all the financial institutions to fail. It suffered for a short period of time (I am not sure how long), but it became an economic powerhouse in the next 20 years.
I have not done my research on this, just repeating Jim Rogers.
For the video – go to the Bloomberg main page.
BC,
Regarding our discussion of energy analysis: been swamped with work, plan to get back on that in a week or so. thanks for the input!
Oh, and once you schedule free’s up let me know. :)
skep-tic,
Since the plan has been proposed I’ve listened to I believe everything that paulson and bernanke has said publicly.
I have not heard them say anything anything like what you’ve been saying ehse past couple of days.
If I’m wrong, show me. I would much prefer it if that was the plan.
I think too many alarms have been sounded and we have to do something or there will be a run on the banks now if we don’t.
I just don’t like their plan.
skep (168)-
“So I think the question you should ask yourself is why all of these people are naive or dishonest and you are not.”
I don’t think twice about that. It just happens to be the way things are right now.
Just because the honest and the principled are outnumbered doesn’t mean their stance is any less valid. This time around, the bad guys just happen to hold the highest offices and be the richest players.
On a bigger level, this crisis can be viewed as the curtain being pulled back on a very sick, crumbling and corrupt culture in its death throes.
Ok, dumb question but I want to know – how EXACTLY will we as taxpayers pay for this bailout. Will we see an increase in property taxes (assuming we are homeowners and not renters…)? Income taxes? Sales tax?
Where will the $17K/household that I’ve seen as the actual cost of all these bailouts come from exactly?? (BTW – The $17K I is probably way underestimated, given that the $700B is revolving, not fixed).
Clot/Tom/Bc/Skep:
I think for the most part we all agree that something must be done to halt panic which often undervalues the true market value of the country the indexes represent. To not act and just let the cards fall where they may is just plain ignorant and stupid. Kind of like dancing on a grave in my opinion.
Paulson’s plan was rushed to stop the panic in the market. It was successful. The Congress is acting surprisingly well (so far) to ensure that the plan is enhanced or completely redone to attack the underlying issues properly.
A balance somewhere in the middle between Skep’s view and Clot’s view is probably where we need to be.
Punishment for those responsible is less important than figuring out how to keep the problem from occurring again in the future. Focusing too much on the punishment or the search for who to blame (which admittedly is the fun part, right?) may lead us to not concentrate enough on the remedy. Ask most families who have witnessed the murderer of a loved one be executed. Initially, there is the feeling that justice is served, but it soon turns into a feeling of great guilt.
Three things must occur in order of priority:
1) Treat the cause. (How can we stop housing values from falling or how can we the taxpayer best wait for the recovery of housing so the toxic paper can return to value?)
2) Ensure there is not a relapse. (Real regulation)
3) Reward the non-participants. (this is a much better solution than punishing those responsible. If you ever raised kids, there is no need for explanation on this one.)
skep-tic Says:
September 25th, 2008 at 11:13 am
you guys can call me naive or suggest that I am dishonest. that is fine.
skep: I’m still trying to figure out how the Fed and Treasury are charged with the responsibility for idiot-proofing the economy and all financial transactions contained therein…..I guess those are the breaks….
skep (168)-
Not surprised to see Volcker co-opted by the dark side. They’ve also gotten to Buffett, Welch and a pretty good chunk of Congress.
“Most economists are on board.”
I posted a protest letter from the most renowned economists in the country. Here it is again –
http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
Fantastic!
Parsing The President
http://nakedshorts.typepad.com/nakedshorts/2008/09/parsing-the-president.html
If the system was good enough when everything was going up, it’s good enough on the flipside.
Let it burn.
U guys mind if I ask an RE related question?
Due to some family cirumstances, I may not be able to move to some of the towns I initially planned. I was looking in line first at Summit, Chatham, or Millburn. Now I need to find a nice house and will be willing to move further out to get more bang for the buck. I also am looking for a town that is fairly decent in catering to kids w/ special needs. It appears my youngest may have some issues going forward. He is only 9 months old. I would need to commute into Manhattan and would like to keep that to a 1hr bus or train ride. I was thinking about Princeton Junction or Princeton. Seems like they are nice towns and I can get decent value out there. Can someone give a synopsis on their thoughts of Princeton? Also maybe some guidance on special needs kids. Thanks in advance.
“Punishment for those responsible is less important than figuring out how to keep the problem from occurring again in the future. “
The main source of “punishment” I want to see right now is compensation limits to these executives that need bailing out because they did not do a good job. I also want some sort of provision that when wall st improves, we’re not just left holding the bag.
Basically, I think we’re stuck with having to do something but I don’t like the plan, and I would much prefer if the plan was as skeptic describes. To gently carry us down to the bottom as best that can be done.
I’m willing to say we’ll buy those junk assets from Wall St. But when they’re delivered I want them wrapped in golden parachutes and assurances they won’t pay themselves so much they cannot handle market fluctuations.
Food for thought:
American economist Douglas Reynolds, suggests that the Soviet Union had not collapsed because it lacked democracy or free markets, even though, bureaucracy and the huge military expenses had helped. It had collapsed because of peak oil. Soviet Oil production had peaked in 1987, together with the crash of oil prices in the world market. Without the revenue coming from oil exports, the Soviet Union simply went bankrupt and disappeared.
The USA may be experiencing the same decline just not due to energy. The US may be seeing the same collapse due to having run out of new markets to inflate to bubble status. The housing bubble was the greatest bubble so far and now we are at a loss as to how to replace it. Politicians and bankers are desperately grasping at straws as they look for a new market to inflate. All they have come up with is an attempt at re-inflating the housing market with government money to the tune of 700 billion.
The US has been using bubble markets to generate massive amounts of money for the last 20+ years. There is nothing but crumbs left to inflate. this last bubble was parasitic in that it also inflated the consumer that it was based on. Just like housing the american consumer, the core driver of the entire system, is now left with little to no assets and huge amounts of worthless debt.
The American public will move on and continue about their lives, but the system must change at a fundamental level as there is nothing left to drive the Bubble train and no source of capital left to initiate a new inflation.
vodka (189)-
Now you’re right at the rotting core of this whole mess.
Nothing to do but let it all burn down and start over.
kettle1 (156):
I really don’t have the time and all the details, but the Finish Banking crisis was eerily similar to what we are experiencing today. Everything was honky dory until the economy suddenly ground to a halt killing credit availability as everyone battened down the hatches. Banks were failing and businesses and consumers were feeling the squeeze. Unemployment reached 20%. The solution was to tax all and it caused a lot of pain. I think the tax bill was equal to about 10% of their GDP. Many small and medium sized businesses failed, but most banks stayed solvent and the economy came back a few years later. Had the banks been left to die, the economy probably would not have come back as credit is the key to growth. I know I haven’t done this an ounce of justice, but I’m too busy today. Google it to learn more. The crisis also impacted all of the Nordic countries from about 1988-1992.
Let’s deliver an immediate and direct response to the president’s call for this enormous bailout: NO!
Volunteers will host actions in cities and towns across the country with a simple message: “America says NO Bush Bailout!”
Find an event (or *create* a new one if there’s not one already — we must lead ourselves)
Thursday, Sept. 25th
http://truemajority.wiredforchange.com/o/8/t/107/event/search.jsp?distributed_event_KEY=5
Confessions from Bank Employees. How do we show this to Paulson and Bernanke ?
http://www.cnn.com/2008/LIVING/personal/09/25/money.pushers/index.html?iref=mpstoryview
http://www.nytimes.com/2008/09/25/business/25voices.html
Thousands to handfuls, the American people hate this.
Therefore, expect it to pass.
Stu 181
1) Treat the cause. (How can we stop housing values from falling or how can we the taxpayer best wait for the recovery of housing so the toxic paper can return to value?)
Really????????? when did you start to drink the coolaide? this is THE core reason why the entire debacle is doomed to failure. There is nothing to support housing at its current price level. prices are at record highs (still), Housing is most likely over supplied, and the consumers are facing a declning job market and declining wages!
Ok, dumb question but I want to know – how EXACTLY will we as taxpayers pay for this bailout. Will we see an increase in property taxes (assuming we are homeowners and not renters…)? Income taxes? Sales tax?
Where will the $17K/household that I’ve seen as the actual cost of all these bailouts come from exactly?? (BTW – The $17K I is probably way underestimated, given that the $700B is revolving, not fixed).
Lena,
It will be paid through inflation.
Make, and that is the problem, we need to cut the military expense and RAISE taxes. The stupid IRAQ war, with the money we spent destroying what was left of their infrastructure we could have built some here.
#184
“We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function.”
Victorian, I think we are talking past one another. I think it is fine to be flexible on the details, but fundamentally, the gov’t needs to step in. The Chicago economists you quote agree.
#183
“Not surprised to see Volcker co-opted by the dark side. They’ve also gotten to Buffett, Welch and a pretty good chunk of Congress.”
Maybe it is not some kind of voodoo, but that they actually agree.
That’s it – they’ll have to print more money and we’ll be paying $15 for a loaf of bread (eg).
This is when I take advantage of my Canadian citizenship and get out of Dodge. I need to shop for a tundra parka that’s not made in China…
Where do we go now? The USA has been ruined by its government.
Corzine you know if he isn’t cutting spending he will be raising taxes to make up for it.
198 –
But they are advising us to take a long hard look at the plan. This cannot be done over a week. We have not even looked at alternatives.
You said that you believe Paulson is not a crook, the point where we disagree is that Paulson is obviously a crook. We cannot trust him with the bailout. We need an independent board to do it.
#146
“They didn’t sit back and let if fall in the 30s. They just came up with all kinds of stupid policies to keep things afloat. They got the genius idea of bulldozing all our crops and slaughtering our cattle to keep prices “stable”. All that did was starve a lot of Americans.”
Ben, maybe I am wrong on my history here, but my understanding is that massive gov’t intervention didn’t occur until the Great Depression was well underway. In the early stages, gov’t policy was actually counterproductive (restricting money supply). My understanding is that Bernanke and Paulson are trying to act before thinks unravel too far too fast
lena,
Late last week I said ” Buy Goldman and sell USA”
Buffet listened.
To you I’m saying” Buy foreign currency and/or gold and sell USD. Borrow as much USD as you can. stay away from RE or anything thats denominated in USD.
This bill will pas and provide releif for a few months and then we’re back again to the fundamental problem of housing being too expensive and not in line with income.
I too have a foreign citizenship and a valid foreign passport.
“But they are advising us to take a long hard look at the plan. This cannot be done over a week. We have not even looked at alternatives.
You said that you believe Paulson is not a crook, the point where we disagree is that Paulson is obviously a crook. We cannot trust him with the bailout. We need an independent board to do it.”
here is what I think: if there is not a plan by next week you are going to see a financial meltdown like we have never seen. the market expects it and for there to be a serious delay now will cause many to wonder whether a solution is coming at all.
“Housing is most likely over supplied, and the consumers are facing a declning job market and declining wages!”
kettle,
Funny, no discussion regarding the root cause. The underlying collateral, attached to these loans is/will continue to decline. In addition to this, real wages are falling and 70% of our economy, consumer spending, is in the s*itter. All this other crap is just pissing in the wind.
Two choices; 1) buy the septic tanks at market, with a few pesos and let the market unwind. 2)Let Ben fly a 747, helicopter is too small for this, inflate thru the roof and “officially” bring in Mugabe to run our fed. If we infalte now, the future repercussions will be more severe.
#176
Jim Rogers is a smart guy, but isn’t he massively short all U.S. banks and the dollar and didn’t he give up his citizenship? Seems to me he would do a backflip if we had an economic collapse
Skeptic 204,
In order for beranke and paulson to forestall what is happening and what comes next, they would have had to begin acting in 03-04. As everyone here seems to agree, it takes time to upwind the kind of gordian knot we have seen grow during the housing bubble.
Just like the depression of the 30’s the government is trying to act after the fact. No one wanted to stop the party while everyone was making big $$$$$. but they all want mommy and daddy to clean up the mess as soon as the party stops
My understanding is that Bernanke and Paulson are trying to act before thinks unravel too far too fast
Skep,
They don’t care if it unravels to quick to fast. These guys just want to give their friends $700B before they leave office.
Hank said he’s leaving in January too. When they ask him why not 150-200B now and then in January we’ll look at it again he said no I need all the money now and I promise not to spend it unless I deemed it necessary.
If you can’t see this guy is a con, snake, and a thief then only time will tell.
#46 Grim Somehow unemployed in Puerto Rico sounds good to me.
this just in…breaking news,
Ben Bernanke was spotted flying a B2 bomber fill with cash. I have a feeling he’s heading towards Wall Street.
Those poor bankers are late on Masserati payments.
Go Ben Go.
Hard Place 187
get my e-mail address from grim. I have a few friends who work in the special needs field and can ask them.
skep-tic,
any chance you deal in intellectual property?
I want to Trademark the phrase “The Bridge Loan to Nowhere”
Jim Rogers is a smart guy, but isn’t he massively short all U.S. banks and the dollar and didn’t he give up his citizenship? Seems to me he would do a backflip if we had an economic collapse
Skep,
We will have an ecomic collapse. The only difference her eis that if it’s goona be a 1991 type recession or Japan.
make money: so, would you bail on this country?
Kettle1: I have not swallowed the kool-aid. I know we can’t stop the fall of housing prices (and would like to see it finally come to our area actually), but we do need to do something with the toxic paper rather than watch it wreck our society in a non-systematic fashion.
It’s like preparing for a Hurricane. In Katrina, the politicians pretty much let the cards fall where they may. The costs were tremendous.
In Ike, the politicians (after witnessing the aftermath of Katrina) acted proactively which significantly diminished the costs to the US taxpayer.
I choose Ike over Katrina as well as a well though out plan to systematically handle the upcoming recession over mass chaos.
make 212
Ben over wallstreet
http://tinyurl.com/dgw3q
Tom– I want to address your point from above because I think it is a fair one. Bernanke/Paulson/Congress have not in so many words presented this as an unwinding— I am inferring it, and maybe I am wrong. But I believe this must be the intent because of the underlying, fundamental problems that everyone here agrees upon. I just think these problems are so huge that it is impossible to explain it to the public without instigating the kind of panic that they are trying to avoid. I actually think Bush came a little too close to doing this last night, even though he didn’t begin to describe how far these problems extend. Bottom line is that I do not think these people can get on TV and tell Americans that your standard of living is going to decline substantially and permanently.
stu 217,
katrina/Ike is a very interesting analogy. A large part of the devastation from katrina came from the failure of safe guards that were the governments responsibility ( the failure of the leeves). The government was warned for years that they needed to be modernized and upgraded, but it was continually differed.
When Ike came The leeves did not fail (they weren’t severely tested as the storm struck NOLA in a weaker manner then katrina did). So i suggest that it was not the government that saved people but the fortunes of the storms track making less severe. Although do credit the government with taking Preventive measures that would have saved lives if the leeves failed.
The direct analogy to the housing mess is that katrina just happened. The government failed to enforce financial regulations for years and deferred taking action. The financial katrina hit and the levees have failed.
skep [208],
You are now stepping back into piles of it. Exactly when did Jim Roger’s view and/or trading strategy, regarding the dollar,
change?
“The U.S. dollar is a terribly flawed currency. I’m trying to get all of my money out of U.S. dollars.”
Although the United States faces perhaps its most daunting economic challenges in at least a generation, “in America, most people do not understand that there is a problem.”
“America is now the largest debtor the world has ever seen.”
“Although the central bank seems intent on engineering a U.S. economic rebound by creating an ultra-weak dollar, no country in history has ever emerged from a serious financial crisis by “debasing its currency.”
The bottom line: The strategies that the central bank is currently employing are nothing short of “outrageous,” Rogers said.
“You know, I’ve read the Federal Reserve Act,” he said. “Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment – to help employment. But nowhere does it say: ‘Bail out investment banks.’”
http://www.moneymorning.com/2008/04/08/exclusive-interview-investment-guru-jim-rogers-predicts-more-pain-for-the-greenback-and-the-failure-of-the-federal-reserve/
Laughing
What do you mean by Emigrant pushing up against its FDIC limits?
How times change
2006 buying a 600K POS Cape with nothing down is an investmemt
2008 buying the subprime underlying 600K mortgage on that 2006 cape at 30 cents on a dollar is a bail out.
McCain wants a delay because they believe the bailout saves the dems. If they do bail it out it should be the end of the dems in office.
In the mean time Queue the drama queen democrats dog and pony shows opposing and delaying but will still approve the bailout using the excuse of I didn’t see any other alternatives. Watch for hands behind the backs with their fingers crossed.
Obama would have a clear cut case of how the dems threw away the country’s tax dollars and how the dems spending habits are out of control.
Lets throw away the 700 billion so we can get back to talking about drugs in baseball.
Idiot CUNY and Union workers on Broad Street protesting bail out, they want extended unemployment benefits and guarantees on their “hard earned” pensions. I guess they aren’t mad about the trillion being spent they are just made it is not being spent on them.
Grim 224 in mod. TKS.
Bob– I said Rogers is smart and he is obviously right about many things. He just personally strikes me as someone who has much to gain from our downfall, so I read what he says skeptically. And if he doesn’t want to be an American, I say good riddance.
Skeptic,
<i.I actually think Bush came a little too close to doing this last night, even though he didn’t begin to describe how far these problems extend. Bottom line is that I do not think these people can get on TV and tell Americans that your standard of living is going to decline substantially and permanently.
This is exactly what needs to happen. until the public understands what they face the will not take action. Why change what you are doing when everyone is saying it’s all ok? Making such a statement to the public could be the end of a political career, and that is why we need real leaders who believe in the country enough to come clean so that we as a nation can make a concerted effort to but our nation back onto a sustainable course.
I find it somewhat shocking that you are advocating that the politicians running the country need to deceive the general public for their own good. That is classic fascism.
#96 gary;If one can’t afford to live here, then one should consider moving out of state. That’s what I’ve been told.
I have a feeling the realtor or realtors who used that line will nto be using it any more.
http://www.youtube.com/watch?v=Bjpor8iBe58
Skep,
Watch this video and tell me what you learned.
skep,
I thought I read, your post, that he was not short the dollar? If not, my mistake.
BC Bob Says:
September 25th, 2008 at 12:04 pm
Funny, no discussion regarding the root cause. The underlying collateral, attached to these loans is/will continue to decline. In addition to this, real wages are falling and 70% of our economy, consumer spending, is in the s*itter. All this other crap is just pissing in the wind.
Bost: yessir….let’s just move on….next….who’s out there lowballing?
Anything going on in NNJ RE this week?
repost for clarity
Skeptic,
I actually think Bush came a little too close to doing this last night, even though he didn’t begin to describe how far these problems extend. Bottom line is that I do not think these people can get on TV and tell Americans that your standard of living is going to decline substantially and permanently.
This is exactly what needs to happen. until the public understands what they face the will not take action. Why change what you are doing when everyone is saying it’s all ok? Making such a statement to the public could be the end of a political career, and that is why we need real leaders who believe in the country enough to come clean so that we as a nation can make a concerted effort to but our nation back onto a sustainable course.
—————————-
I find it somewhat shocking that you are advocating that the politicians running the country need to deceive the general public for their own good. That is classic fascism.
I am not saying deceive, I am just saying you need to let people down slowly and calmly, rather than slap them in the face and say our entire economy is a house of cards that nobody should have any faith in. We are talking crisis management here.
oops trying again…
Skeptic,
I actually think Bush came a little too close to doing this last night, even though he didn’t begin to describe how far these problems extend. Bottom line is that I do not think these people can get on TV and tell Americans that your standard of living is going to decline substantially and permanently.
—————————-
This is exactly what needs to happen. until the public understands what they face the will not take action. Why change what you are doing when everyone is saying it’s all ok? Making such a statement to the public could be the end of a political career, and that is why we need real leaders who believe in the country enough to come clean so that we as a nation can make a concerted effort to but our nation back onto a sustainable course.
I find it somewhat shocking that you are advocating that the politicians running the country need to deceive the general public for their own good. That is classic fascism.
Kettle– I see your point, I just think there are different ways of presenting facts and the right and the wrong way to communicate as a leader in a crisis.
Skeptic 238,
with all due respect i find that argument hollow at best. using your argument means that by the time you inform the citizens that the titanic is going down, all the bankers and politicians have already filled up and launched all of the life boats, leaving the public with nothing but a string quarter to play as the water rises
Thanks kettle1. Appreciate the assist.
Grim – can you fwd the address when you have a chance?
3139 Tom: They’re saying they want to stabilize housing. Not let it fall gracefully.
Housing is falling either way,regardless of what either one of those 2 say.
skeptic,
we shall agree to disagree . i respect your opinion even if i disagree with you. we should give the poor equine corpse a rest
Another way of looking at it is yelling fire in a crowded theater. Even if there is a fire, you may want to not yell it out so more people don’t get hurt in the stampede
kettle [241],
All props to pesch/pesche/pesh?
“At least the Titanic had a band”
“If one cant afford to live here, then one should consider moving out of state. Thats what Ive been told.”
3b,
Some months ago, perhaps someone here can put a date and name to the comment, an aide to Corzine stated, on the record, something to the effect that everyone in the state earning less than $100k is a drain on the state and the state would do better without them.
That comment may point to why so many blue-collar public employees in NJ bring in over $100k, with OT.
Skep,
Then there are thise who, when they become aware of the fire, slink out and just before exiting the building start screaming.
#225
Scribe, I believe Laughing meant he/she was personally pushing up on the $100k FDIC limit. Nothing to do with Emigrant…
[225] scribe,
Banks are subject to a deposit limit that prevents any one bank from controlling a sizeable percentage of US deposits (if memory serves, no BHC can control 10% or more of US deposits).
I find hit hard to believe that Emigrant and ING are coming close to approaching those limits though. Only Citi and BOA came close in recent memory. But stranger things have happened lately.
Comp buster:
15 Applewood Drive in Upper Saddle River
bought in 2005 for 2.35mm
for sale – 2.199mm
#171 Al:I am wating another year and moving. (want to be fully vested in soon to be worth nothing 401k plan and pension…)
In another year, prices will be very affordbale in NJ. Now property taxes, that is another story.
[249] doyle
That makes more sense. Wasn’t how I read it when it came up way back, and I didn’t reply because I thought that it couldn’t be right, ING and Emigrant getting that big that fast.
Allowing this bailout plan is like freeing all the convicted rapists out of prison to help increase the population.
225 scribe & 250 nom,
all he was saying is that his Emigrant account is maxed out at the $100k FDIC insured limit. he doesn’t want to go above this threshold.
Notice how W, BB and HP won’t use the D-word (“Depression”)? Is that because they don’t want to start another panic? Why not use that word to garner support? These guys warn of a “deep recession.” Okay. To the average person, is that really so horrible that we have to shovel $700 billion at the problem? We had a recession in the early 1990’s, and everyone came out okay. Depression? Okay, now you’ve got peoples’ attention.
#107
Shore, didn’t you plan D1 College Football? How the h*ll did you work 50 hrs a week? Off-season? This must have been a long time ago, you’d never get away with that nowadays!
[218]
I don’t think Rogers renounced his citizenship, but if he was going to do so, he did it before the new expat tax went into effect in June. If he does it now, he owes Uncle Sam a boatload of money.
Since I have an interest in investor/consumer psychology, I wonder how Americans will deal with a decreased standard of living. Humans have an incredible ability to get used to increased standards of living quickly and raise expectations accordingly. How will all the Boomers react when they find their net worth isn’t and won’t be anywhere near what they thought it would be? How will they feel when they won’t be able to retire as they had thought?
3b Says:
September 25th, 2008 at 12:43 pm
#171 Al:I am wating another year and moving. (want to be fully vested in soon to be worth nothing 401k plan and pension…)
In another year, prices will be very affordbale in NJ. Now property taxes, that is another story.
If prices come down I might stay… I was just explaining why am I not moving right now, while advicing him to move…
Plus it is better to stay in well established position/company untill after the election and all these financial mess.
Even though I am very tempted to get as high Mortgage as I can possible handle (strech as much as possible) as I believe there will be huge onset of inflation in coming years.
Wall Street Area
NO BAILOUT Rally
When: Thursday, September 25: 4pm
Where: Southern end of Bowling Green Park, in the plaza area
What to bring: Banners, noisemakers, signs, leaflets, etc.
PLEASE MEET US AT THE SOUTH SIDE OF THE BULL 9/25/08 AT 4PM. BROADWAY & MORRIS STREET, 2 BLOCKS SOUTH OF THE NY STOCK EXCHANGE.
No blank check for Wall Street.
Take action now!
This is it. We have one day to make our voices heard.
This week, the White House is putting unbelievable pressure on Congress to authorize an unprecedented giveaway of $700 billion to the Wall Street tycoons who steered our financial markets into a maelstrom.The bailout includes no new regulation or oversight to help avoid this kind of crisis in the future, no public interest givebacks to help people in danger of losing their homes, and no equity stake for taxpayers.
Over fifty thousand of you have already joined the fight online. Now it’s time to take it to the streets.
Let’s rally against this bailout in the heart of the financial district! Gather at 4pm, this Thursday, Sept. 25 in the plaza at the southern end of Bowling Green Park, which is the small triangular park that has the Wall Street bull at the northern tip.
Please do whatever you can to put a stop to this bailout — attend the rally, bring your friends, families, and colleagues, spread the word far and wide.
Since Wall Street is asking us to give them money for their worthless investments, some of our creative friends are planning to bring their OWN junk to Wall Street to see if they’ll buy it.
[255]
Got that, and for safe parking, he should consider:
1. Other banks, such as ING or HSBC
2. Joint accts, if there is a spouse
3. Treasurydirect (state tax benefit not sufficient to offset dismal yields, but saaaafe.)
I use all of the above.
IN additon, it seems that for me affordable means something different from most on these board. You all are looking for houses to come down from 600-700K to 400-500K range…
I can not possibly afford it with salary of 100K and a wife and a kid. For me affordable would be is 200-250K for a 3bed/1bath ranch, as cape cods can not be 3 bedrooms – I do not count attik space where I can not stand up straight as a bedroom, in town with good schools and low crime rates.
I just do not see it coming to New Jersey. I face reality and see that I simply not make enough money to stay here.
#74 Tom. I believe Greenspan got a bad rap. He contributed but takes a lot more blame then he should. A lot of finger pointing but I believe one area is to blame and that’s basics.
High or low rates toxic loans got approved that never should have. They would have anyway whether Greenspan raised rates or not subprime ignored the fact they cant afford the home. They used the mentality like credit cards that the best customer is one who cant afford to ever pay off their debt and will forever be making interest payments.
Greenspans only plan would be to lower rates so when subprimes reset they wouldn’t be worse. If he raised you have even more chap/forc. Again problem still comes down to toxic loans on homes they shouldn’t have been approved for.
The difference is filing chap 11 on credit debt isn’t as tempting as filing chap 11 when your home’s value has dropped through the floor. Most wont file for Chap 11 on credit debt because they have ambition to buy a house. Once they do buy the house and the plan falls out chap 11/foreclosure doesn’t seem like such a bad plan. Especially since zero down sub prime allowed you to own at no risk and cheaper than renting and the possibility to walk away in 2 years with cash. Oh well didn’t work out back to renting after all its cheaper in a lot of instances. It will probably take 7-8 years anyway before the house values return to what they paid back then anyway.
Now were going to give them 700 billion from everyone and the people who could afford their mortgages and in turn will wind up putting a whole new group into distress because inflation has already them borderline and they cant even sell to downsize.
Dumb(Toxic Loans) and Dumber(Congress if approved)
The bailout disgusts me.
I’m going for my pre gym coffee.
#247shore: i guess that aide to Corzine will need ot modify that statement in light of all the 100K Wall St jobs in NJ that are being wiped out.
190 – Princeton is nice but the commute to NYC is longer than 1 hour. We were actually just there over the weekend and it took us an awfully long time to get there and back (we are in Hoboken). I once interviewed out there and was told that some people do the commute to/from NYC, but that it was awfully long.
Good luck to you with your little one!!!
Mark-to-Paulson Accounting –
“The plan goes like this: Treasury will pay financial institutions above-market prices for garbage assets nobody else wants. Then, through the magic of mark-to-Paulson accounting, everybody else that owns similar stuff will use those same prices, or marks, to value the trash on their own balance sheets.
Shazam! Banks and insurance companies write up the asset values on their books. They post big profits. Their capital goes up. Everyone gets fooled. And nobody knows the difference. ”
http://www.bloomberg.com/apps/news?pid=20601039&sid=aK6vnh_5ZknM&refer=home
The Democratic-controlled Congress, acknowledging that it isn’t equipped to lead the way to a solution for the financial crisis and can’t agree on a path to follow, is likely to just get out of the way.
. . .
One reason, Senate Majority Leader Harry Reid said yesterday, is that “no one knows what to do” at the moment.
What this means to me that our representatives are being told to get out of the way of using public debt to buy up TITLE to be transferred into PRIVATE hands.
This is a way for our representatives to be able to say that they were NOT responsible for whatever happens.
You wanna get re-elected then vore YES!
Marsh was just informed today that they are going to a 40-hour work week, up from 35 hours. No increase in pay and vacation stays the same (no surprise there). I wonder how many other companies with 35 and 37.5 hours will do this?
#263 Al: I think you will get there, or close to it. I really do.
In my so called prestigious Bergen Co train town, there are at least 10 listings now that are below 400K. One was just dropped to 359K, from an original price of 449k. They are all by the way just sitting,a nd will continue to drop. Once you get into that 350k range, it is my opinion, that you are than not really all that far off from getting someting at around 300K, or less.
According to some long time realtors in my town you would never see a house again in my town for sub 400K.
late sept/early oct: Market booms
mid oct: market starts slowing down as people pay attention to the election
early nov: election
late nov/early dec: MARKET TANKS
oct/nov/dec/jan: real estate market does NOTHING because nobody buys houses traditionally in these months.
what a joke. well be pulling our money out of the stock market in the next 6 weeks after this spike subsides.
“Why is keeping property values high the ultimate goal ”
1- If it drops fast a lot more people will walk away. A lot more chap11/foreclosures will happen.
2- Most will still make the payments if the properties around them are holding or they believe they will hold or go up in only a few years.
Its like stocks when lose 1% a day your less likely to get rid of the stock. Lose 10% in a day and panic sets in and there is a selloff.
“Why is keeping property values high the ultimate goal ”
Because it is an election year and families all cozy in their over priced, over leveraged homes will get votes on both sides. Any candidate that says that many americans may be better off renting now and should let go of “their homes” would lose by a landslide.
Main street, meet Wall street.
190.Hard Place Says:
September 25th, 2008 at 11:34 am
U guys mind if I ask an RE related question?
New Providence was always Special Needs Friendly, in fact the old Hillview School was converted into the Morris/Union Jointure for Special Needs.
Why any company would have a 35 hour week is crazy in this economy. My favorite was when I worked for Shearson in 1988 they went to a mandatory 45 hour week with no OT. Totally legal for exempt employees. Since everyone worked 5 more hour a week they laid off one in 8 employees and still get same work done.
Yankee Gal Says:
September 25th, 2008 at 1:06 pm
Marsh was just informed today that they are going to a 40-hour work week, up from 35 hours. No increase in pay and vacation stays the same (no surprise there). I wonder how many other companies with 35 and 37.5 hours will do this?
I am looking for houses to come down from 1.5 million to one million.
Al Says:
September 25th, 2008 at 12:53 pm
IN additon, it seems that for me affordable means something different from most on these board. You all are looking for houses to come down from 600-700K to 400-500K range…
I can not possibly afford
skep, “I am not saying deceive, I am just saying you need to let people down slowly and calmly, rather than slap them in the face and say our entire economy is a house of cards that nobody should have any faith in. We are talking crisis management here.”
Plenty of us have been trying to tell people that the economy is a house of cards for a few years now. All we’ve heard from the majority of Americans is that “we’re nuts”. How much longer do we have to tell them before we just slap them in the face anyway?
U.S. STOCKS SURGE TO DAY’S HIGH AS SENATE BANK CHIEF HAILS ‘FUNDAMENTAL’ BAILOUT AGREEMENT
YES WE HAVE SAVED THE DAY> If this was not passed we may have been forced to see lowly C-class, 3 series and God Forbid Employee Pricing CTS in the driveways of BC. This has saved the oh mighty 2009 E-class and 5 series sales!!!!!!!
“Plenty of us have been trying to tell people that the economy is a house of cards for a few years now.”
Ben [277],
When I told friends/family that I was selling in 2005, they looked at me like I was a freak. Today, some friends, are pissed that I did not “convince” them to sell. Go figure.
Watched CNBC for few minutes. They showed all Democrat congress finance leaders in one room. The smile on their faces, gave it all away. They are just rejuvienated that they will get the credit for bailout.
This isn’t Armageddon
http://money.cnn.com/2008/09/25/news/economy/colvin_economy.fortune/index.htm?postversion=2008092510
off real estate
tenafly ford
bigalow motors, bellville
closing as of tomorrow.
sad day,,, both have been in bus many years
no more floor planning financing available
Bergen county GTG?????
we have talked about it many times how about we do it?
Who’s in , time, place?
Oct 1 ?
263 Al, I am already seeing 3bdr short sales in suburban essex county(Brookdale in bloomfield for ~250k) so I don’t think all is lost yet, first the rough houses go down than the nicer ones.
“In the coming days, Congress may authorize $700 billion to buy bad debt from financial institutions. Even if all challenges of the plan were to be overcome, the plan does not address one of the fundamental reasons why credit markets don’t function properly: the under-capitalization of financial institutions. Under-capitalized financial institutions may seek to repair their balance sheet rather than engage in lending activities. If securities are purchased at market value, all the Treasury Department’s plan achieves is to provide liquidity to the markets. This is a worthy goal to allow the rolling of debt, but does not guarantee that banks will start to lend again, nor does it provide a floor under the housing market. The plan is fraught with risks that include lower economic activity and a lowered standard of living for all Americans should creditors demand higher interest rates for the sharply growing appetite for debt of the country.”
http://www.merkfund.com/merk-perspective/insights/2008-09-25.html
What do you mean by Emigrant pushing up against its FDIC limits?
FDIC insures up to 100k.
if you have 150k in there, you stand to lose 50k if the bank goes under.
279,
Bob, no doubt, more people get in tune with what’s going on every day. That doesn’t change the fact that CNBC analysts have been saying the economy is great the past 2 years. People need a smack in the face right now. It’s still an uphill battle. We just recently had a presidential candidate tell us that the “fundamentals of the economy are strong”. Most people who are blind and vote party lines regardless of policy will believe it if they say it.
A semi-agreement on the bailout has been reached.
http://biz.yahoo.com/ap/080925/financial_meltdown.html
just seen on CNBC
US Mint no longer selling some 1 ounce buffalo coin.
WM down almost %30….
Does anyone have any opinions on the reverse repo from the Fed this morning?
Yikes is all I can say.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anZHfo6tQi60
U.S. mint suspends sales of 24 ct gold American Buffalo coin as demand exceeds supply
Congress: We have deal
http://money.cnn.com/2008/09/25/news/economy/deal_reached/index.htm?postversion=2008092513
f#284 jcer:first the rough houses go down than the nicer ones.
Absolutely correct. Patience alwasy pays off. As mcuh as a real estate Bear as I have been the last few years (I expect prices to return to 2002/01 levels),
I have heard some commentators as well as people on this blog stating that they expected to see prices revert back to 1999/98 levels, even I scoffed at that,and said no way. However the way things are unfolding, I no longer scoff.
saw someone mention investing in foreign currencies. which ones are you guys looking at?
Our masters are not happy with us.
China banks told to halt lending to US banks-SCMP
http://www.reuters.com/article/marketsNews/idUSPEK16693720080925
“U.S. mint suspends sales of 24 ct gold American Buffalo coin as demand exceeds supply”
Renting [292],
Either the US govt does not want any more paper or they don’t have the supply they say they do. Sold out or leased to the market? They wouldn’t lie to us, would they?
According to the FDIC website, and if its on the internet I believe it, Joint accounts are insured up to $100,000 for each depositor ($200,000 total). Of course, then you can wait for all your money if you are in the wrong one.
http://www.fdic.gov/deposit/Deposits/insured/ownership3.html#joint
# BC Bob Says:
September 25th, 2008 at 1:19 pm
When I told friends/family that I was selling in 2005, they looked at me like I was a freak. Today, some friends, are pissed that I did not “convince” them to sell. Go figure.
*****
Tell me about it BC. When I was selling in 2005, I think they thought that I lost it or something was wrong and they felt sorry for me. Now I feel sorry for some of them…
#263 Are they short sales done from the bank that issued the loans or short sales done from crooks? You know the “We buy houses” people.
Jay[299],
Friends/family were convinced that I either lost my job or listened to Clot and bet the ranch.
Bc,
I am hearing the negotiating phase.
“yes the housing market is over priced, but i have to sell for X because that’s my retirement!”
I wonder how many of these titles are in paulson and friends library:
Taking the Risk Out of Democracy: Corporate Propaganda versus Freedom and Liberty
Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry
PR! – A Social History of Spin
Age of Propaganda: The Everyday Use and Abuse of Persuasion
Influence: The Psychology of Persuasion
Media Control, Second Edition: The Spectacular Achievements of Propaganda
yes, those are real books ;)
Shine your shoes/light your fuse
Can you use/them ol’ U.S. Blues?
I’ll drink your health/share your wealth
Run your life/steal your wife
Wave that flag
Wave it wide and high
Summertime done
Come and gone
My oh my
To fight for New Jersey Tax Reform please join http://www.njtaxes.org/ . Together we can reduce property taxes.
“Most illiquid bond assets are illiquid because they are not worth anything.”
Ron Paul
Market reaction to compromise seems quite muted so far. I expected another explosion to the upside. I supposeinvestors have actually taken some time out of their dancing with the Stars viewings to watch the news to find out what the bailout really means.
So THE DEAL is a tentative deal between Rs and Ds on the Hill. It seems they still need to hear from the executive branch.
Shore Guy:
Yes THE DEAL is not a deal just yet. Can’t see how Paulson could say no without further panicking the street.
Can’t take credit for this one;
New Bill;
Securitized Housing Investment Trust-[S*IT]
Hobocondo –
According to NJ Transit website it states about 55-60 minutes commute to NY Penn Station. Than tack on the subway ride to whereever else you need to go. For me that is mid-town and another 15 mins.
I was just talking to a co-worker who said Princeton schools are not as good, since most of the wealthier just send their kids to private school. Not sure about the truth to that opinion.
doyle, nom, randy
Thank you!
Confused in NJ,
Thanks for the info on New Providence. I’ll have to dig into that further. It’s actually good because this is closer to most of my friends and family. I even look at the listings in NP from time to time. While my younger one is still only 9 months and it hasn’t been fully determined he will need the special needs resources, it remains a fairly high probability. I just want to be prepared in case that it does happen and not have to move more than once.
Thanks!
https://njrereport.com/index.php/2008/09/25/spending-our-dollars-when-everyone-else-is-slashing/#comments
Clot is this you?
Dodd on Bloomberg Radio now
They have a deal.
Must be passed full House and Senate.
Missed most of the details about the amount of $$ and how much authority Paulson gets.
Pelosi says housing bailout includes another stimulus package.
It’s pure conjecture, but I’d be willing to bet that since the executive branch won’t agree to executive pay limits then we’ll just send another round of checks to the masses to shut them up over it. Of course, the masses don’t realize that they are paying themselves.
Congress is spineless!
Here is a nice little book to keep handy for the days ahead.
http://www.gutenberg.org/files/15464/15464-h/15464-h.htm
I might do a small print run and start handing them out.
Shares of Pfizer Inc. (PFE) were up over 4% midday Thursday amid rumors that the world’s largest drugmaker may be poised to make more job cuts as part of its on-going restructuring plan. The company has said it plans to make about $800 million additional cuts in its overhead by the end of the fourth quarter.
From the WSJ:
After a three-hour meeting, lawmakers agreed to legislative principles that would approve Treasury’s request for the funds, but would break it into installments, according to people familiar with the matter. Treasury would have access to $250 billion immediately, with another $100 billion to follow if needed. Congress would be able to block the last installment through a vote if it was unhappy with the program.
The agreement could require all companies participating in the program to agree to limits on executive pay—such as restrictions on “golden parachutes.” It is also likely to give the government equity warrants in all participating companies.
Still unresolved is whether or not to include changes to bankruptcy law that would give judges the right to change the terms of mortgages. Democratic Sen. Dick Durbin of Illinois made a plea for it to be included, even though many lawmakers and the White House are hotly opposed.
http://online.wsj.com/article/SB122235295272975207.html
#291
“Sept. 25 (Bloomberg) — Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.
“We are in the same boat, we must cooperate,” Yu said in an interview in Beijing on Sept. 23. “If there’s no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.” ”
*********
but you must remember, this is just Wall Street’s problem……..
For Greenwich, ‘This Is Our Katrina’
With markets continuing to swoon, the next shoe to drop is likely to be hedge funds. That means tough times for hedge-fund filled Greenwich, Conn. (As Nick Paumgarten wrote in the New Yorker magazine recently, “If New York City is the heart of the marketplace, Greenwich is the liver, where toxins are processed and rich bits collect.”)
A sunbather in Greenwich, Conn., enjoys the solitude and cool breeze off Long Island Sound.
Greenwich collected so many rich bits in recent years that its small population of about 60,000 contributed nearly $600 million in state income taxes in 2006. In other words, Greenwich pays 13% of all state income taxes in Connecticut with only 1.8% of the population.
According to an article by Christopher Keating in the Hartford Courant, the town and state are bracing for lower tax revenue. There are no signs yet that Greenwichers are hurting–Saks, Tiffany and Brooks Brothers are still busy and the local Rolls Royce dealers (there are two) say their clientele is largely immune.
Yet local residents like Lehman Brothers’ Dick Fuld–he of the $700 million stock loss–just won’t be writing the big tax checks that they used to. Charities are expecting a lighter haul this year.
There also is the human cost to the financial floods, the collective psychological breakdown that occurs when Greenwich’s billionaires become mere millionaires.
“It’s the human toll that is frightening,” said State Rep. Livvy Floren, a friend of Mr. Fuld. “Dick Fuld has spent 39 years of his life doing this. It’s more than just money. They’re not going to be in the streets starving….I think the man worked 24/7. His family and Lehman are his life.”
A deeper analysis was offered by local Democrat Ned Lamont, who in one fell swoop compared Greenwich’s money woes to the Japan malaise, Asian tsunami and the New Orleans flood.
“It really is a financial tsunami, and it could go either way,” said the multimillionaire telecommunications mogul who ran for the U.S. Senate in 2006. “It took Japan 20 years to recover from their buying binge. How long does it take us to work through excessive leverage? That could take years not months. This is our Katrina.”
I leave it to you, readers. Is this Greenwich’s Katrina? The tsunami of Fairfield County? The Japan of the east coast?
Stu,
This Democratic congress is spineless. It has been amazing how they have caved time and time again. Bu-sh v congress hs been like Rutgers v. Giants.
That said, bu-sh is beaten on this. He knows that if he does not give in on the oversight, executive pay, etc., he will have no positive legacy because things will be back to 1930.
I believe that he believes the rest of his presidency will be looked at favorably in future years. He is deluded, but he seems to honestly believe that. But, he also knows that an economic collapse wipes out everything else.
PDF Alert:
http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf
I cant vouch for the objectivity or reputation of this group, but found it interesting. Enjoy!
Proposed $700 Billion Bailout Is
Too Little, Too Late to End the Debt Crisis;
Too Much, Too Soon for the U.S. Bond Market
Executive Summary
New data and analysis demonstrate that the proposal before Congress for a $700
billion financial industry bailout is too little, too late to end the massive U.S. debt
crisis; and, at the same time, too much, too soon for the U.S. Government bond
market where most of the funds would have to be raised.
I. Too Little, Too Late to End the Debt Crisis. Congress should
1. Disregard data based on the list of troubled banks maintained by the Federal
Deposit Insurance Corporation (FDIC). The FDIC’s list currently has 117
institutions with $78 billion in assets. However, based on a broader analysis of
recent FDIC call report data, we find that institutions at risk of failure include
1,479 FDIC member banks and 158 thrifts with total assets of $3.6 trillion, or
36 times the assets of banks on the FDIC’s list.
2. Think twice before providing a broad bailout for U.S. debts given the wide
diversity of mortgage holders and the great magnitude of the total debts
outstanding in the United States. Just-released Federal Reserve Flow of Funds
data show that, beyond mortgages, there are another $20.4 trillion in privatesector
consumer and corporate debts, plus $2.7 trillion in municipal securities
outstanding.
3. Recognize that, among banks and thrifts with $5 billion or more in assets, there
are 61 banks and 25 thrifts that are heavily exposed to nonperforming
mortgages.
4. Get a better handle on the enormous build-up of derivatives held by U.S.
commercial banks.
5. Base any legislation on (a) realistic estimates of the loan amounts already
delinquent or in default, and (b) reasonable forecasts of how many more are
likely to go bad in a continuing recession.
6. Recognize the inadequacies in already-established safety nets, such as the
FDIC for bank depositors, Securities Investor Protection Corporation (SIPC)
for brokerage customers, and state guarantee associations for insurance
policyholders.
There should be no illusion that the $700 billion estimate proposed by the
Administration will be enough to end the debt crisis. It could very well be just a
drop in the bucket.
The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092402799_pf.html
http://4.bp.blogspot.com/_9ZzZquaXrR8/SNvV0TKhtNI/AAAAAAAABuM/SuwS3_sRBis/s640/hooverville-154.jpg
Gold Coast circa 2012
Gold Coast Circa 2012
http://4.bp.blogspot.com/_9ZzZquaXrR8/SNvV0TKhtNI/AAAAAAAABuM/SuwS3_sRBis/s1600-h/hooverville-154.jpg
Anybody know of a good site to order checks?
It’s clear by now that the Paulson plan, the $700 billion one that will cost $7 trillion, was not hastily put together. It had been on the shelf for a long time, waiting for the right time to hit the stage lights, much like a lurking killer influenza virus. The right time is the one, today, when the economy is at its weakest, when people are filled with fear about something they do not understand. They’re not trying to save the economy, they’re trying to liquidate it, and take it over.
This is the time the US political system has chosen to unleash the tried tactic of Shock and Awe upon its own people. This is what Naomi Klein calls disaster capitalism. Pick up a copy of her Shock Doctrine. The same thing has been played out by the US, the IMF, the World Bank and all their accomplices throughout the planet, for decades. It’s not the Shrub cabal that’s behind it, this has been going on under Democratic rule just as much. And now it will be tested at home.
The underlying message for the public eye is that the housing market must be stabilized. But that is impossible at present price levels. At these levels, not nearly enough homes can be sold. Not now, and not ten years from now. Yet, if prices come down to affordable levels, perhaps as much as 50 million American home owners will own as much as 5 times more on their mortgages than their homes are worth. That means debt servitude, which means poverty and misery and mass foreclosures as well as mass unemployment.
Note: On September 30, a walloping amount of US corporate debt needs to be refinanced. The Friends of Hank will start robbing the corpses of their jewelry and golden teeth October 1st.
Sure, those prices are just dropping like a rock.
http://www.realtor.com/search/listingdetail.aspx?ctid=91244&mnp=31&typ=1&sid=6c21dd9a4c2a4ac693e02c9f499b6b88&pg=2&lid=1101802447&lsn=20&srcnt=94#Detail
“It’s clear by now that the Paulson plan, the $700 billion one that will cost $7 trillion”
It’s the king of no doc’s/liar loan’s. This will give a whole new meaning to the term exploding arm’s. Who said subprime lending was dead?
BC (297)-
The gubmint involved in leasing gold?
Oh, my. That would mean they’re helping short it.
They would never do that.
[sarcasm off]
Besides, they’ve already sent tons of gold to China, in those secret shipments.
Watch and throw up..
VPILF on the bailout
http://www.youtube.com/watch?v=npUMUASwaec
We are all barking up the wrong tree, this bailout is about health care!!
if only Mr. O had picked a hot chick for running mate, the decision to switch teams would be so much easier
#329 guy: Yet, if prices come down to affordable levels, perhaps as much as 50 million American home owners will own as much as 5 times more on their mortgages than their homes are worth.
And it is happening already.
#330 gary: Your continued skepticism is amazing!!!
Enthusiastic supporters of the bailout;
http://www.newsweek.com/id/159439
Victorian (328)
I tried ordering checks from an online company a couple of weeks ago and a $20 order quickly became $50+ with a order processing charges, shipping, handling, etc.. I called my bank and they sent me free checks.
For the biz, we order from Deluxe.
Victorian:
For a one time order, use those cheapy companies that you see offers for in the ValPak coupon mailers. They are dirt cheap for the initial order. I did that twice with two different vendors, but the third time I ran out of options and also tried the online experience and experienced the same problem at prtraders2000. I also broke down and ordered from Deluxe. Damage was like $40 which is complete highway robbery, but what are you going to do. I look forward to the day when I could bill pay online for everything.
Hedge Funds Hoard $600 Billion in Cash
http://www.minyanville.com/articles/lehman-GE-citigroup-jpm-schw-money/index/a/19174
Dear Friends:
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market’s attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I’d only be repeating what I’ve been saying over and over – not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration “is working with Congress to address the root cause behind much of the instability in our markets.” Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that “low interest rates” led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or “wildcat capitalism” (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: “Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.”
Doesn’t that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn’t that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn’t the federal government shown that the “many” who “believed they were guaranteed by the federal government” were in fact correct?
Then come the scare tactics. If we don’t give dictatorial powers to the Treasury Secretary “the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.” Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end… It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a “rescue plan”? I guess “bailout” wasn’t sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you’re supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects – the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty,
Ron Paul
top 10 complainers today:
29 BC Bob
28 Tom
26 kettle1
21 skep-tic
18 Shore Guy
16 Clotpoll
15 Stu
13 grim
12 make money
11 SG
Thanks Stu and prtraders2000.
ING has a nifty feature where you can mail a check to anybody for free. They even take care of the postage charge.
I am changing my payroll direct deposit from WAMU to BOA. BOA wont give me free checks. Looks like I will go with ING. I just need one damn void check to set up the deposit.
Section 8 of the Bailout bill:
“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.”
Basically, its saying that after the govt writes the check for 700 billion, nobody can ever review it, review to whom written, review why written. And to add insult to injury, no courts can ever prosecute anyone, for anything, granting total and complete immunity.
Now ask yourself, what would you do with a 700 billion check written to you and your friends, knowing that no matter what you do with this money, you will never have to be accountable to anyone and never have criminal charges if you so choose to spend it illegally.
Does the govt, Federal Reserve, and Treasury Dept have the citizens & taxpayers best interests in minds? no.
What we are about to witness w/ this bill w/ one pen stroke, will be the total & complete elimination of the middle class via higher taxes & hyperinflation.
Like I’ve been saying for 2 years now, I hope you like oatmeal, because that is all you will able to afford 3x/day.
SAS
147#,
the answer is c):
c) skep is THE most reasonable poster here.
> Skep is either:
a) incredibly naive
b) a man with an agenda
My vote is for “a”. As his arguments grow thinner, at least he isn’t crossing the line into hysteria and petulance. That makes me think he’s an honest guy.
“if only Mr. O had picked a hot chick for running mate, the decision to switch teams would be so much easie”
Skep,
Would it help you if Gary lent Bi-den his cheerleader uniform?
better get yourself some pyrex
“Heart Disease, Diabetes Linked to Plastics”
http://tinyurl.com/43tfuo
bi,
I am impressed that you took the time to run the posting stats.
SAS,
Right out of college I worked in the plastics manufacturing industry. After that experience, I refuse to heat anything in plastic. Glass is easier to clean anyway.
the reason people are so hostile to me lately is that they know I am making a ton of loot at Bi’s hedge fund (we are also a direct deposit source for Bank of Henry)
SAS,
I can’t download the whole article but it seems to be about BPA. I don’t know if the article provised this information but, I think the plastics with BPA are the #7 plastic.
“House clears $25bn for carmakers”
http://tinyurl.com/487kv3
“Would it help you if Gary lent Bi-den his cheerleader uniform?”
if bi-den is as feisty as gary, we might have something there
Hey, SAS. Lasr week that seemed like a big deal. Now, chump change.
“China banks told to halt lending to US banks-SCMP”
http://tinyurl.com/5xkcr9
Skep,
Oh hand him some pom pons and I bet Bi-den would be pleanty feisty.
sas(356)
This could get ugly fast.
bi (345)-
“c) skep is THE most reasonable poster here.”
Skep should be jumping with delight upon receiving your wonderful endorsement.
#344 SAS:Like I’ve been saying for 2 years now, I hope you like oatmeal, because that is all you will able to afford 3x/day.
100K houses in the NYC metro area with 22% interest rates.
Attn: Hard Place:
Hanover Twp (Whippany and Cedar Knolls) is a nice small town and has an excellent special needs program. You can find starter homes for under $400K (you never saw that two years ago) to McMansions over $1m and everything in between. Taxes are more affordable than other towns, but since Lucent is moving, I don’t know how much longer that will last. As for commuting, you can take the Lakeland Bus in Parsippany, which is a 35-45 minute ride (depending on traffic), the train from Morristown (1 hour ride) or you can drive to Jersey City and take the PATH.
No deal!!!
even buffett believed that this bailout bill would be passed with some modification, why don’t just follow the money for your own benefits? at least i don’t think it is smart to hold SKF unless it is for the purpose of hedging.
“Sept. 25 (Bloomberg) — As chief of staff of the Federal Deposit Insurance Corp. from 1999 to 2002, Mark Jacobsen was responsible for a safety net that protects U.S. savers. He now runs a company that critics say is designed to stretch that net to its breaking point.”
“Jacobsen, 42, is president and co-founder of Arlington, Virginia-based Promontory Interfinancial Network, a company that makes it easy for a wealthy depositor to keep FDIC-insured cash in separate accounts at multiple banks. It offers customers up to $50 million of FDIC insurance, 500 times the single-account limit approved by Congress.”
http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=aBaYKQD_UPcE
Even better, I think Mercedes should dump their small Chrysler stake and for all of 2009 and 2010 all GM, Ford and Chrysler car loans should be tax deductable and hybrid tax credits should be only for GM, Ford or Chrysler cars. Sounds crazy but credit card and car loan interest back in the early 80’s used to be tax deductable and more lower and middle class folks buy american cars so it is helping joe six pack finance a car rather than help Mr. Old Greenwich finance a 7 series.
September 22, 2008 – Proposal to Allow Treasury to Buy Mortgage Related Assets to Address Financial Instability
http://assets.opencrs.com/rpts/RS22957_20080922.pdf
September 23, 2008 – The Cost of Government Financial Interventions, Past and Present
http://assets.opencrs.com/rpts/RS22956_20080923.pdf
#364
Interesting idea, but the big 3 regularly offer 0 pct financing these days, so would deductible interest really make a big difference?
I like this plan much better :)
The Birk Economic Recovery Plan
Hi Pals,
I’m against the $85,000,000,000.00 bail out of AIG. Instead, I’m in favor of giving $85,000,000,000 to America in a “We Deserve It Dividend”.
To make the math simple, let’s assume there are 200,000,000 bona fide U.S.Citizens 18+. Our population is about 301,000,000 +/- counting every man,woman and child. So 200,000,000 might be a fair stab at adults 18 and
up..So divide 200 million adults 18+ into $85 billion that equals
$425,000.00.
My plan is to give $425,000 to every person 18+ as a “We Deserve It Dividend.” Of course, it would NOT be tax free.So let’s assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads.
Put away money for college – it’ll be there
Save in a bank – create money to loan to entrepreneur
Buy a new car – create jobs
Invest in the market – capital drives growth
Pay for your parent’s medical insurance – health care improves
Enable Dead beat Dads to come clean – or else
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces. If we’re going to re-distribute wealth let’s really do it…instead of trickling out a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed by
one of our candidates for President.
If we’re going to do an $85 billion bail out, let’s bail out every adult US Citizen 18+!
As for AIG – liquidate it. Sell off its parts.Let American General go back to being American General. Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.Here’s my rationale. We deserve it and AIG doesn’t. Sure it’s a crazy idea that can “never work.” But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom?
I trust my fellow adult Americans to know how to use the $85 Billion “We Deserve It Dividend” more than I do the geniuses at AIG or in Washington DC .
And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.
Ahhh…I feel so much better getting that off my chest. Kindest personal regards,
T. J. Birkenmeier, A Creative Guy & Citizen of the Republic
PS: Feel free to pass this along to your pals as it’s either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!
ok, hear me now:
come this summer min $200/oil.
if escalation with Iran or bad hurricane season $270.
I remember a year before it happened, I called $110/ barrel oil and you blokes laughed, said “SAS, your plum loco”
Hark, I was wrong, I under shot dam naer $50. I didn’t think it would get to $150.
But now, in light of all that is happening.
you blokes better prepare now.
I’m serious now.
SAS
How should you prepare, you be the judge.
I know what I’m doing, if any you blokes care…I’ll gander some.
but I won’t reveal all the tricks up my sleeve.
SAS
I just love it.
Am running out to buy 5 mill home and will not pay any mortgage payments .Thank you good old taxpayers. Now who will pay for may 3 new cars and credit cards? Mrs.Sam?
I also am here now predicting food riots in this country. Laugh if you want…
I remember the gas shortages. It was damn ugly. Some will remember people getting into fistfights & stabbed, over gas. Yup, it happened.
SAS
sas (370) – Please share a few suggestions…
from the WSJ:
September 25, 2008, 2:59 pm
Small Businesses Can’t Get Cash
Two top U.S. Chamber of Commerce officials said Thursday some small and midsize businesses are having troubles securing finances for day-to-day operations.
Marty Regalia, the Chamber’s vice president and chief economist, said several member businesses who typically receive capital for daily operations from local commercial banks found those resources to be less accessible and contained higher prices.
“And it wasn’t a reflection of the businesses change in credit status, but simply a reflection of the fact that all banks are connected via the interbank lending facilities that the federal government operates,” Regalia said. When banks are hesitant to lend to the overnight market, “that limits banks ability to meet their customers’ demands,” he added.
President George W. Bush, lawmakers and both presidential candidates, plan to discuss a bipartisan agreement on the $700 billion financial rescue package that’s being drafted.
Chamber of Commerce executive vice president Bruce Josten said while Congress is in the midst of debating the rescue package, which is designed to prevent a collapse in the financial system, the link between Wall Street and Main Street has become more evident. “In fact, Main Street is dependant on Wall Street,” Josten said.
“Please share a few suggestions”
well Wag…
-I have a bag of silver coins (some planted in a garden)
-storable & canned foods to last several months
-month supply of water/person.
-radio w/ batteries & flashlight
-gasmask
-firearm (1 in house, 1 in the garden)
I think everyone should at least have the food and water.
Is it end of world, no, I ain’t doom and gloom neither. But, I do forsee food shortages. Lets hope I am wrong
SAS
you have two north jersey car dealerships
throwing in the towel.
Bigelow motors,,, Bellville
Tenafly Ford,, Tenafly
Yes, a small BC car dealer closing shop.
more to come
Lack of Financing
for firearm
best get a safety course, and if kids.. get a instant access pistol safe.
reagarding registeration, I know some like to follows the laws.. and some do not
SAS
plus, I actually do know of a few people whom bought living places in Costa Rica.
not this bloke, I’m here to stay.
(well, maybe move to CO)
SAS
speaking of food, I need a snack.
cheerio
: )
bi (362)-
Please explain how one hedges in a market that prohibits shorting of over 800 issues.
looks like the Katz is out of the bag on
the em’s .
somebody post the article.
por jon, caught again. Check must not have been enought.
max (381)-
The latest on the Commissar and the Skank:
http://tinyurl.com/4omodz
Buffet:
“Last week we were at the brink of something that would have made anything that’s happened in financial history look pale. We were very, very close to a system that was totally dysfunctional and would have not only gummed up the financial markets, but gummed up the economy in a way that would take us years and years to repair. We’ve got enough problems to deal with anyway. I’m not saying the Paulson plan eliminates those problems. But it was absolutely, and is absolutely necessary, in my view, to really avoid going over the precipice.”
link for above
http://www.cnbc.com/id/26867866/site/14081545
headline on WSJ that JPM to acquire deposits of WaMu
Shares of Pfizer Inc. (PFE) were up over 4% midday Thursday amid rumors that the world’s largest drugmaker may be poised to make more job cuts as part of its on-going restructuring plan. The company has said it plans to make about $800 million additional cuts in its overhead by the end of the fourth quarter.
darn. not good. a relative works there and pfizer is paying for their grad school right now.
Weiss Research paper on $700B plan:
http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf
anyone watching Fox News?
Apparently this White House meeting was a disaster, and the sides remain far, far apart.
Fox News (wife was watching, i walked in the room) quoted Bush as saying, ‘if we don’t agree, this sucker’s going down’ and he was apparently talking about the economy.
where has this clueless imbecile been for the last year?
wamu done?
http://dealbook.blogs.nytimes.com/2008/09/25/washington-mutual-to-sell-deposits-file-for-receivership/
Closer to winning my office deadpool with WM.
By my reckoning, that should also blow out the FDIC.
Good times! Gonna be an exciting Failure Friday.
Clot,
JPM “buying” their deposits/branches. Common/debt kaput.
shore SAS
regarding plastic.
why do you think pharma products can only be packaged in certain types of plastic containers?
The FDA actual enforces that the conatiners do not leach chemicals onto the medication. Apparently that is acceptable for foods. and yes i work in pharma.
BPA is nasty stuff It messes with the endocrine system and can it can mimic the action of estrogen in the body.
the following plastics DO NOT contain it, the type number refers to the recycling number on the bottom.
Types 1 (PET), 2 (HDPE), 4 (LDPE), 5 (polypropylene), and 6 (polystyrene)
i will also say that in my professional opinion the studies that the FDA based their safety decision on are essentially cherry picked and/or rigged. Very similar to how bovine hormone treatment to increase milk production was banned in europe and canada but the FDA says it is safe…. hurray for monsanto and friends!
Bush as saying, ‘if we don’t agree, this sucker’s going down’
Yeeha!.
http://www.marketwatch.com/news/story/jp-morgan-buy-wamus-operations/story.aspx?guid=%7B42316B59%2D4AB5%2D406B%2D808E%2D931513D5763C%7D&dist=hplatest
clot
did you see my earlier post. this current stuff is just warm up. there are close to 1500 banks on the verge of failing according to FDIC info and about 3.6 trillion in deposits amongst those banks.
(see my post around #324)
assuming about 70% of those deposits are insured by FDIC we have a minimum 2 trillion bill ahead of us!!!!!!
BC Bob,
JPM is buying WM with what money???? how much is the fed giving them for the so called purchase. JPM is just as broke as the rest of them.
So, an acquiring party can buy branches and deposits and prevent FDIC receivership?
JPMorgan Chase to Acquire Washington Mutual Deposits, WSJ Says
equity holders dead, did not say about debt holders, they never said chase bought wamu just they acquired the branches and stuff. Maybe they got it for free
SAS,
Very few people realize hoe nasty energy supply issues are going to get in the near future. the gas light has been on for years and we have been ignoring it.
just for fun…..
http://www.theoildrum.com/files/PU200808_Fig3b_0.png
John (398)-
Maybe WM just mailed the front door keys of the branches to Dimon.
btw chase has a an over a trillion dollar balance sheet. I should know I spent a year of my life validating their IS and BS and it is real stuff, not smoke an mirrors.
JPM Investor Presentation @ 9:15 877.238.4671 -814030
so basically … we’re f’d as a country. the dollar’s about to go in the tank, there are no more bailouts after this, the MOTHER OF ALL BAILOUTS, and it seems like only NJ reReport readers will survive.
1) load up on gold/silver
2) get strapped/pack heat
3) invest in foreign currencies (?)
4) save, save, save
403 Laughing
essentially………. YES
But there are actually a large number of blogs that discuss how to prepare for the coming turmoil (not its not Armageddon). Although that probably represents about 0.01% of the US population.
You also forgot: stock up on essentials such as food and medications
i love the internet
http://www.youtube.com/watch?v=R1X6RQLZtoA
the dark bailout
dark knight + bush speech
creative as F
http://washingtondc.craigslist.org/doc/art/852946963.html
skep-tic,
The reason you get so much heat here isn’t because people don’t like your opinion. It’s that you completely ignore or mistate the facts and present your opinions as fact.
Just like Frank who continualy talks about certain areas that are not in decline but refuses to reveal what areas or listings and ignores concrete evidence of declines in those areas.
We can all sit arguing over the facts and be respectful of people’s opinions and have a good time.
People who distort the facts do so because they have an agenda or because they have been so blinded to reality by being under constant bombardment by other with an agenda. They prefer to hear what they have to say than anything else because that’s what they think sounds good.
Tom, were you drinking Australian wine on that last paragraph?
Wow, I don’t look so nuts after all…
Hate to say I told you so…
59: but you can use the change machine without having an account… (the free gift you get if you guess the amt of money correctly is not worth it)
ps: wamu just got seized.
“Most economists are on board.
skep [170],
Hmmm? What about the FOMC?
“Sept. 25 (Bloomberg) — Dallas Federal Reserve Bank President Richard Fisher said the proposed $700 billion rescue of financial institutions backed by Fed Chairman Ben S. Bernanke would plunge the U.S. government deeper into a fiscal abyss.”
“The plan by Treasury Secretary Henry Paulson to buy troubled assets from financial institutions would put “one more straw on the back of the frightfully encumbered camel that is the federal government ledger,” Fisher said today in the text of a speech in New York. “We are deeply submerged in a vast fiscal chasm.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=abK2j4XZsBuU&refer=home
Laughing 405,
The Dark Bailout strikes me as disturbingly apt. Can we hire the joke as the american public’s lobbiest???
“Very few people realize hoe nasty energy supply issues are going to get in the near future. the gas light has been on for years and we have been ignoring it.”
kettle,
There is an alt viewpoint that claims oil is NOT a fossil fuel. That such opinion was never based on facts and was nothing more than propaganda perpetrated upon the unsuspecting by large oil interests and the rocky-fellow contingent to promote the idea of limited supply.
Oil wells that had supposedly been tapped out have been replenishing with oil. Also, the russians have been using deep drilling techniques and none of these wells have run dry. This suggests that oil is a natural resource that bubbles up from deep below – too deep to have come from dead dinosaurs.
“Tom, were you drinking Australian wine on that last paragraph?”
I’ll be honest, I’m not familiar with the reference.
I may not have been clear on my point. My fingers kind of go on autopilot at this point responding to the same things while my mind does other things.
What I was trying to say is that we can argue about some event, condition or other fact as to what the effects will be. But people that try and claim the event hasn’t happened are either deluding themselves or trying to delude others.
Imagine a man goes to a doctor and is told he has cancer and needs to have radiation. He goes for a second opinion, told he has cancer and needs chemo. A third tells him he has cancer and he needs this new experimental treatment. A fourth tells him he has cancer but there’s nothing realistically that can be done.
Finally, he goes to see a fifth doctor. This doctor tells him he doesn’t have cancer. He has this mass that resembles cancer that is caused by poor drinking water. After spending a month in his expensive clinic to detoxify and then purchasing an expensive magical filtration system, he’ll live forever. The man thinks to himself. “Whew!”
#373 Wag – Just start by having one extra of everything you use on a daily basis – one extra box of cereal, one extra pkg of tp, etc. Storing water can be a pain – start by washing out soda bottles then filling them with water and putting them in the freezer (you’ll need one besides the one in the refrigerator). It won’t take long to have an extra week or two of supplies.
Laughing[405],
L, no pun, MAO.
JPMorgan will pay $1.9 billion, the Federal Deposit Insurance Corp. said in a statement today. It won’t acquire liabilities including claims by equity, subordinated and senior debt holders, the FDIC said.
sapes [409],
I never thought you were nuts. As a matter of fact, I applied for the sheep grazier position. At this time, haven’t heard back from your HR dept.
REPO 413.
AHHH the old abiotic oil idea…… i suggest you dig much deeper on that subject before you try to back it up.
Its along the same lines as “the american public stands a chance at making money on the bailout”
FLASH— NY TIMES–
WAMU seized by FDIC -parts of it to go to JP Morgan Chase
Well…I heard Newt on Hannity say tonight that there is a very real chance the House Reps. won’t let a bailout go through. They are calling for a “work out.”
I found this snap shop on google..
http://www.youtube.com/watch?v=COEfYDvY9ps
Then – Dick Morris comes on and says there is no way the Dems. will fight what the Reps. put out there. The debate tomorrow night would be a fiasco if O has to defend his party’s choice to spend $700B tax payer dollars for a bailout when the Reps. M wants a “work out” where Wall street can borrow but not get the money free.
If anyone else has more info – let us know.
kettle,
I didn’t know if you were aware of it or not. I only brought it up to increase awareness of other potentials. As I’m sure you know, things aren’t always what they seem to be on the surface. I think it’s pretty much common knowledge now, that oil is a scarce fossil fuel. Such overwhelming consensus alone, is enough to make me suspect its accuracy.
Although I haven’t researched it thoroughly enough to make me convinced one way or the other. It does make some sense when you look at ppls motivations, and there are observed characteristics of oil that don’t fit the fossil fuel model.
How do you explain tapped out wells replenishing themselves from levels too deep for dinosaurs?
WAMU seized by FDIC -parts of it to go to JP Morgan Chase
And its not even Bank Failure Friday Yet!
Sapiens, in the past two months, since moving to rural MD, I’ve learned how to hum to alpaca, hike a pack goat, and find stray produce on the roadside.
My resume is much better than BC’s.
Plus, I can still do O.K. shooting. Better with glasses at my age.
And I travel well.
sas- whenever i see your posts, i think of this comic:
http://www.wanderingones.com/
(and i also hope that the comic remains fiction, not foreshadowing)
just sayin’
Oregon State 14
NO. 1 USC 0
5 mins to go in the 2nd quarter, Oregon State ball following a USC fumble
423.RentinginNJ Says:
September 25th, 2008 at 10:10 pm
WAMU seized by FDIC -parts of it to go to JP Morgan Chase
And its not even Bank Failure Friday Yet
If you remember the WAMU commercial where they humiliate the older conservative bankers by having them stand on a line naked, you can see how they failed.
This situation is getting crazy. Real crazy. 1929 does not compare to this in terms of the potential severity. At this point the very credit rating of the US is at stake. There’s absolutely no doubt about that.
A secondary and very real concern has to revolve around the finances of various states and muncipalities. They’re going to have to go the route of Argentina and place controls on bank withdrawals and securities sales.
It would be very wise to keep some cash at home. The definition of “safe” has changed…the operative definition of safety now is what is in the mattress.
The thing that is highly disturbing is the very quiet annoucement of the WAMU takeover. None of the news websites has this headlined as breaking news. Of course it’s no surprise that they’d be taken over, but the fact that it has been treated very quietly in the press at this point smacks of trying to prevent bank runs. I suspect that there’ll be some bank runs over the next few days. I really hope I’m wrong on that.
The $700B will be needed by the FDIC for the domestic bank failures.
REPO,
i dont want to hijack grim’s blog, but here is the quick and dirty:
the abiotic generation of oil is possible, as the proposed chemical reactions behind it are sound. The problem is that every commercial scale well ever tested has been biotic oil (produced from decay of microorganisms).
russian scientist have never been able to show a commercial well that wasnt biotic. they tell the difference by looking for marker molecules as biotic and abiotic oil would have slightly different compositions due to the base material they come from.
Oil wells are known to refill due to how oil is stored in porous rock. Oil is not just a giant pool in an underground cavern. it is absorbed in porous or fractured rock. imagine trying to pump all the water out of a sponge with a fish tank pump. you cant do it. similar issue, one you stop pumping and let the formation sit for a while more of he oil will seep to the bottom of the formation.
the ultimate issue here is rate of consumption. if we stayed at 1950 consumption rates then we have plenty of oil, but not at current rates.
Its also more complicated then that in real life. As the issue is not how much oil is there, but how much can be extracted at a high enough cost/energy ratio. it gets complex quickly.
the end point is we will never run out of oil. it will just become economically infeasible to extract it at the level we currently do as you rapidly reach a point where it would take more energy to get the oil out of the ground then you would ever get from burning the oil.
30% recovery is considered very good. i.e from ost wells we can only extract 30% of the total amount of oil in the ground due to geological reasons.
confused 429
yep, but that wont be enough. tr y2-4 trillion
Re101
“This situation is getting crazy. Real crazy. 1929 does not compare to this in terms of the potential severity. At this point the very credit rating of the US is at stake. There’s absolutely no doubt about that.”
YEP, glad you have seen the light, best of luck to you
Thanks to a comment left on my blog I now have the links to the video, transcript, charts and blog of CBO Director Orszag’s testimony to the House Budget Committee on the $700 bln bailout.
I urge every one to view it. It is long. But it will be the best 2 hours you will spend looking into this matter in my opinion. It’s better than anything Paulson or Bernanke has said in public to try and describe the situation.
Unlike Paulson and Bernanke who say things like this is very complicated just trust us, it’s bad and we need the money, he gives details on what the problem is and what the plan is supposed to address as well as how it might work, if it will work and what happens if it doesn’t.
Please, please please, everyone watch or read this.
Re, how much cash do you think would be enough?
Pat,
I think at least a month along with some food stockpiles.
Pat Says:
September 25th, 2008 at 10:40 pm
Re, how much cash do you think would be enough?
that is a month of living expenses
kettle1,
I’ve always suspected oil was not a finite source but I have a different explanation as to where it comes from.
It’s always been my beleif that oil is produced guilt induced rightwinger tears pass through the ground. For some reason those types of tears pick up the sludge and organic matter along the way and are converted to oil in the underworld.
Their ideological beliefs are directly tied to oil. After billions of incidents of teenagers who were unable to ubstain, who have just pulled up their pants after watching pr0n, who are utternly disgusted with what they just did at the men’s room at the mall, etc. they cry their eyes out feeling angry that they have dissapointed their lord. This replenishes the wells.
That’s why there’s so much oil in the deserts. Way back when God wrote the bible, you hear how bad people were and he had to lay waste to everything.
The native american’s here didn’t believe in God so they did not cry when they killed kittens and that’s why we don’t have much oil here.
Hmm… does having an odd sense of humor destroy my credibility when I’m being serious?
I suppose it doesn’t matter where the cash is, bank or home, at the garbage rates we get from our conservative bank. Although, sometimes now, I wish I’d converted to liquor. I went to my nephew’s house a week ago, and saw that he’d stocked liquor.
It’s hard to judge what a month of cash would be, exactly.
We don’t need food stockpiles, or water. We moved to a very rural area. Lots of wild food and fresh water. Lots of farm animals.
WaMu:
Common, preferred and the debt holders are wiped out, 30 billion in writedowns.
The bank had projected 54 billion in losses if there was a severe recession.
The old CEO, board and high ranking officers belong in a pound-it-in-your-ass prison!
WhaaaaaaaaaMoooooo
Here’s a great argument against any bailout:
WE’LL NEED THE $700B FOR THE FDIC!
but wait, John said the bailout was a done deal…??
a lot of John’s predictions lately have been wrong… I love his stories but his predictions and “inside sources” are better ignored.
Goodnight everyone. Let’s all get some sleep – we’re in for a h#ll of a ride in the next few days.
cindy – So the Dems want the bailout, but the Republicans have issue with it?
this CNN piece reads funny:
Instead, they issued a statement of economic rescue principles that calls for Wall Street to fund the recovery by injecting private capital – not taxpayer dollars – into the financial markets. Easing tax laws would prompt investors to put in their own dollars, they said.
The plan also calls for: participating firms to disclose the value of the mortgage assets on their books, ending Fannie Mae and Freddie Mac’s securitization of “unsound mortgages,” reviewing the performance of the credit rating agencies and having the Securities and Exchange Commission audit failed companies to ensure their financial standing was accurately portrayed.
House Republicans also want to create a panel to make recommendations for reforming the financial industry by year’s end.
anyone want to decode this? i saw ‘not taxpayer money’ and my eyes lit up
interesting times, indeed
i wonder how effective any ultra-low-ball offers would be this weekend? like $700 for a house listed at $999?
randy,
From what I’ve seen, insiders (lower case i) are not the best source. But Insiders (with a capital I), the ones at the top do know. The problem is sometimes if they tell the truth it scares the insiders into looking for new jobs instead of busting their butts to fix the problems. So the Insiders tell the insiders everything is hunky dory and the insiders think they have the Inside scoop and want to believe it and tell all their friends to impress them.
Not sure what John’s situation is and it sounds like he’s pretty high up, but if he was all the way up at the top he couldn’t legally say anything.
“The old CEO, board and high ranking officers belong in a pound-it-in-your-ass prison!”
Really, they just deserved to be sued into poverty. Poverty is worse than death for these kinds of people. They’ll probably kill themselves before being poor.
The Fed conducted 2 reverse repo operations this morning, pulling money out of the market. They were constricting the money supply to force WaMu out.
This was engineered to cause the ham and eggers to panic and support the bailout.
Where’s the earth shattering kaboom? I thought we were in great peril if we did not get the 700B bailout.
We did not need it then and we will not need it when they do the same thing to Wachovia next week.
The only kaboom that occured was for the bond holders. Goes to show you that the bailout was just for the rich.
One other thing, JPM wrote all the toxic crap to ZERO!!!! So much for stupid pricing.
Maybe this will shut Bill Gross up for a couple of days
Pat,
Actually, a rural environment is not a bad place to be right now, particularly if there is a lot of food and fresh water. That means that you’ll need less cash for those things along with having less concerns about safety.
This era will be definitely be a case study for business and economics students going forward. The era, if we look at it as a continum, basically spans the period from the early 80’s to now and IMHO really starts with the decline of our nation’s manufacturing base and the replacement of that activity with financial alchemy in the securities and real estate markets. This is what we’re paying for. That’s the main reason that this bailout is not going to do jack other than save Wall Street and perpertuate continued financial alchemy. That 700 billion ain’t going to bring manufacturing back nor good paying jobs.
To be honest, disappointment does not begin to describe how I feel about our government, particularly since it was obvious that this problem was coming years ago.
kettle,
Interesting, thanks for the explanation.
re101:
Boy have you changed your tune…
MJ Says:
September 25th, 2008 at 11:06 pm
“The old CEO, board and high ranking officers belong in a pound-it-in-your-ass prison!”
Really, they just deserved to be sued into poverty. Poverty is worse than death for these kinds of people. They’ll probably kill themselves before being poor.
____________________________________________
They can get sued while splitting rocks in Leavenworth prison.
toshiro:
There is a whole lot of manipulation going on like that, I’m sure. See below, too:
“I suspect that part of what we’re seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout,” said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory.“
#449 – I think you could extend the beginning of the era to the end of the Bretton-Woods agreement. With that they gradually let financiers more and more control over the monetary supply.
I want the FBI in all these companies, especially Goldman Sachs. And in Paulson’s office.
Bernanke I don’t think is even corrupt, just dumb as a bag of hammers. But better have the FBI check him out anyway.
I hope everyone here has diversified their cash.
#453 – MJ – I have no doubt the big boys are trying to force each other into the ground. It was just such an odd thing to see from the Fed this morning.
I could be jumping to conclusions, and I hope I am, but Section 8 of the draft proposal scared the crap out of me and got my “conspiracy” senses tingling.
A CEO note is up at the WaMu site.
I wonder what happens with my WaMu Visa? Do I still owe? Can I run down to B&H tomorrow for a “free” D3?
tosh,
you need a false flag operation before starting a new draft
Possibly, but we still had a gold standard under the Bretton Woods regime. IMHO,the door for the financiers was opened wide with Nixon coming off the gold standard and the popularity of securization, which began innocently enough as a way to even out credit market conditions across the country, but wound up being bastardized with all the crap that’s a problem now. Once intermediation began occurring in the securities market, the discipline of the local bank around extending credit went the way of the dodo bird.
toshiro_mifune Says:
September 25th, 2008 at 11:14 pm
#449 – I think you could extend the beginning of the era to the end of the Bretton-Woods agreement. With that they gradually let financiers more and more control over the monetary supply
dumb as a bag of hammers? No. Just innocent and naive. Manipulated. Like the boy genius.
#459 – How do i live in a world where the John Birch Society and Jello Biafra don’t sound like over-the-top hyperbole.
#460 – Then we are in agreement. Nifty!
i think someone on this board owes me a beer, I have been calling the collapse of WaMu for a year now.
what can I say.. when you are good…you are good!
:)
SAS
The NYTimes is reporting the accord is now shot, with Dodd calling it a “rescue plan for John Mcain”.
Boy is it going to be a fun day in the markets tomorrow. It should be interesting to see how the CDS play out, who was a bond holder, and which part of the house of cards fall next.
How much longer can we blame government for all of this. I’ve read here and heard from various experts and pundits who put this thing back 25+ yrs ago. Its the American people, not these nefarious entities like “the media” “the govt” etc. Personally I’m getting tired of it. At some point it comes down the character of a nations people.
alia,
hey bloke, your forgetting.
I served during wartime.
SAS
OH YEAH! Toshiro, that is MUSIC to my ears. SWEET SWEET music.
And I’m going for a 5DM2 this holiday season. And a 50mm f/1.2.
Barbara,
The foreclosures are the fault of the suckers who signed the mortgage papers.
The Wail St. failures are the fault of the companies themselves.
The government is responsible for the deadly bailouts.
And most of the people are to blame for the government — anyone who ever voted for any Democrat or Republican is at fault.
It is true that there’s plenty of blame to go around and the people are culpable. I don’t think that we can discount leadership however because strong leadership sets the example. This nation lacks the political and moral leadership to show the people the way. You and I may not require to be shown the way, but the vast majority of people do.
Barbara Says:
September 25th, 2008 at 11:37 pm
How much longer can we blame government for all of this. I’ve read here and heard from various experts and pundits who put this thing back 25+ yrs ago. Its the American people, not these nefarious entities like “the media” “the govt” etc. Personally I’m getting tired of it. At some point it comes down the character of a nations people.
Toshiro,
sweet. pick me up a 1Ds or 1D, hell even a a 5D. I’ll give you 10 bucks for each. :)
469,
We The People. At the end of the day, we vote these people in, we discount other candidates for superficial, petty reasons. Its our govt because we choose it, over and over again.
chifi’s been pretty quiet lately.
I was hoping he might come back to tell us about the impact of keynesian economics.
WaMu EBay stuff is already up.
Bernake is not dumb he is just doing what he believes will prevent the depression from happening again and is naive about his accomplices motives. The problem with the US economy is greed and too much of it. Bankers made loans they had no business making and consumers went on a spending binge with money they didn’t have. People abandoned working in actually productive fields and have largely left that to the chinese, and where we could actually use intelligence, science, medicine, engineering, technology, etc we are losing are lead. Instead of building infrastructure, we got fat, instead lazy unions have made the needs of the nation impossible to build. We should be engineering the solutions to the oil problem, more fuel efficient cars, trains, etc. We need rail infrastructure, roads, bridges, tunnels, telecommunication, etc. All of these people only have self interest they are not concerned about their country or their company it was all about me, my bonus, etc up and down the chain and thus the companies no longer exist. Who ever gets into office must grow a pair and change this.
Chi is no doubt busy telling clients to keep money in their accounts. This is a busy time for retail FA’s
Barbara,
I agree and yes, we base our vote on stupid superficial reasons. My argument is that we do that because that’s what the “leadership” presents. How much did we hear about “lipstick on a pig” two weeks ago? How many people know more about what’s happening on the latest “reality” TV show than what’s happening in their goverment? How many in depth news analysis shows do we see?
The brutal truth is that it has been designed for the people to think superficially mainly because that’s what’s fed to them. I don’t eat the crap and you don’t eat it, but the vast majority of the public does.
The nation’s problems, while many, revolve a lot around leadership or the lack thereof.
Barbara Says:
September 25th, 2008 at 11:45 pm
469,
We The People. At the end of the day, we vote these people in, we discount other candidates for superficial, petty reasons. Its our govt because we choose it, over and over again.
Reinvestor. 476
scarily enough i agree with you 100%!!!!!
the problem is how do you get the 98% of people who are busy ywatching “dancing with the stars” to pay attention?
Kinda creeps me out to have a 50.5 imposter…
Is anyone safe? Will Bi be the next victim?
There are simply no meds good enough to institute such a change.
In my own life, I’ve performed dramatic and drastic changes usually in response to crisis. It generally takes a crisis to force one to engage in critical intropection. As it is with individuals, so it is with nations.
The crisis that we’re about to undergo will have many turning off the TV and dealing with a new “reality” show. That will be a good thing.
kettle1 Says:
September 25th, 2008 at 11:59 pm
Reinvestor. 476
scarily enough i agree with you 100%!!!!!
the problem is how do you get the 98% of people who are busy ywatching “dancing with the stars” to pay attention?
476 reinvestor,
Stop sounding like a human being. You’ll ruin your reputation.
The problem is like you say.
People don’t want to or don’t have the time to spend on looking at what’s going on and a lot of it is very difficult. There are no definates but that’s what people want.
People don’t want to hear a candidate say “I don’t have all the answers but I’m going to work hard to find them. We may not always be right but we’re going to try and make as many right choices as we can. Many issues aren’t easy and we’re not going to pretend they are.”
Because if some candidate said that, a bunch of people would jump up and say “See! Seee! He admitted he doesn’t know what he’s doing. He doesn’t know what’s going on! Is that who you want in charge? Someone that doesn’t know what’s going on and doesn’t know how to proceed? My fellow American’s vote for me I know what’s going on and I gurantee to you I will do all the right things”.
People don’t want to hear the problems they want to hear there are solutions. A quick soundbite on the news then click over to watch people eating hotdogs jump through obstacles while trying to guess how much money is burried on a deserted island.
Now I’m convinced – re101 is grim
Now, now. Many folks have a play they like. Me too.
I’ve always felt that re and I see the same things. Just through a different bevel in the glass.
It’s almost time for a poem.
Tom,
I have often wondered how people would interpret something if the press would just report an event and not give their opinion. How many times have you sat and watched some “analysis” interpreting what you just saw with your own eyes?
I believe we’re controlled a lot by what we’re told to think. Most reasonable people don’t expect anyone to have all the answers per se and they don’t get up in arms about someone admitting that, it’s the press that does that.
Basically, we’ve been deliberately dumbed down and that’s needed in a society like ours in order to maintain control. Thinking is not required nor expected oftentimes–as a matter of fact, thinking can get one in a world of trouble.
476 reinvestor,
Stop sounding like a human being. You’ll ruin your reputation.
The problem is like you say.
People don’t want to or don’t have the time to spend on looking at what’s going on and a lot of it is very difficult. There are no definates but that’s what people want.
People don’t want to hear a candidate say “I don’t have all the answers but I’m going to work hard to find them. We may not always be right but we’re going to try and make as many right choices as we can. Many issues aren’t easy and we’re not going to pretend they are.”
Because if some candidate said that, a bunch of people would jump up and say “See! Seee! He admitted he doesn’t know what he’s doing. He doesn’t know what’s going on! Is that who you want in charge? Someone that doesn’t know what’s going on and doesn’t know how to proceed? My fellow American’s vote for me I know what’s going on and I gurantee to you I will do all the right things”.
People don’t want to hear the problems they want to hear there are solutions. A quick soundbite on the news then click over to watch people eating hotdogs jump through obstacles while trying to guess how much money is burried on a deserted island.
new PALAN video
http://tinyurl.com/3vwak9
Paulson Plan Aimed at Helping `Poorly Run’ Banks, Allison Says
Sept. 25 (Bloomberg) — U.S. Treasury Secretary Henry Paulson’s proposed $700 billion bank rescue aims to help “poorly run” companies and the primary beneficiaries would be Goldman Sachs Group Inc. and Morgan Stanley, said BB%26T Corp. Chief Executive Officer John Allison in a critique of the plan.
Treasury “is totally dominated by Wall Street investment bankers” and “cannot be relied on to objectively assess” the impact of government policy on the financial industry, Allison wrote in a Sept. 23 letter to Congress. The letter was verified by Bob Denham, a spokesman for BB%26T, North Carolina’s third- largest bank.
Allison, 60, said Congress should “hear from well-run financial institutions” as lawmakers consider the plan, which seeks to ease the credit crunch by buying troubled mortgage- related assets. Under Allison, Winston-Salem, North Carolina- based BB%26T avoided the subprime mortgage market, whose collapse led to the credit crisis. BB%26T has risen 26 percent this year, the best showing in the 24-company KBW Bank Index.
The BB%26T chief’s rebuke to the Paulson plan may be unique among U.S. regional banks. While lenders such as New Jersey’s Hudson City Bancorp and Minnesota’s U.S. Bancorp also have said they kept lending standards intact and avoided making highly leveraged loans, few have publicly opposed the bailout plan.
The American Bankers Association, the industry’s trade group, has urged members to lobby against “rash actions” including bankruptcy reform and new regulations that will hurt community banks. Members of the Washington-based group have taken various positions on the Treasury plan, both pro and con, spokesman Peter Garuccio said. He wasn’t aware of any letters from members similar to Allison’s. Spokespersons at U.S. Bancorp and Hudson City didn’t immediately return calls today.
`No Panic’
Paulson, the former chairman and CEO of Goldman Sachs, and Federal Reserve Chairman Ben S. Bernanke are working on a package that would be acceptable to Congress. President George W. Bush, in a national address last night, said the rescue plan is crucial to stabilize U.S. financial markets. Allison questioned the need for the bailout.
“There is no panic on Main Street and in sound financial institutions,” Allison wrote. “The problems are in high-risk financial institutions and on Wall Street.”
Treasury spokeswoman Jennifer Zuccarelli declined yesterday to respond to Allison’s letter, other than referring to comments Paulson made to Congress. Goldman spokesman Lucas van Praag and Morgan Stanley’s Mark Lake declined to comment.
Bernanke disclaimed allegiance to Wall Street in congressional testimony on Sept. 23 when he said the U.S. faces “grave threats” to its financial stability.
Smart People
“I don’t have those interests or those connections,” he said. “My interest is solely for the strength and the recovery of the U.S. economy.”
“This bold approach will cost American families far less than the alternative — a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion,” Paulson said.
“The Treasury has a number of smart individuals, including Hank Paulson,” Allison wrote. “However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry.”
Goldman and Morgan Stanley, both based in New York, said this week they are converting to bank holding companies. Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman’s tally stands at about $4.9 billion.
Allison’s Alternative
Allison is retiring in December after 19 years leading BB%26T, the 14th-biggest U.S. commercial bank, with assets of $136.5 billion. BB%26T avoided subprime lending, option adjustable-rate mortgages and complex debt securities that have slammed Wachovia Corp., Washington Mutual Inc. and other lenders.
Still, BB%26T more than tripled the money it set aside for loan losses in the second quarter, mainly because of loans to builders and developers in Georgia, Florida and the Washington, D.C., metropolitan area.
Rather than buying distressed assets, the U.S. government could offer a “significant” tax credit for home purchases, or even purchase vacant lots or houses under construction, Allison said. The market should be allowed to eliminate “irrational competitors,” he said.
“There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom,” Allison wrote. “It is important that any rules post-`rescue’ punish the poorly run institutions and not punish the well-run companies.”
He said the mortgage crisis was caused primarily by Freddie Mac and Fannie Mae. The government-chartered companies, which own or guarantee more than 40 percent of the $12 trillion of U.S. home loans, “distorted normal market-risk mechanisms,” and were abetted by a Federal Reserve that made the wrong decisions on interest rates, Allison wrote.
To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net
HANK PAULSON EXPOSED!!! Rep. Peter Defazio – “We should not be rolled by a Wall Street exec who is masquerading as the Secretary of the Treasury”
http://www.youtube.com/watch?v=ANGsBNMY1_c&eurl=http://www.itulip.com/forums/showthread.php?p=49468
Sec. HANK PAULSON EXPOSED!!! by Rep. Peter Defazio
watch this and spread it out !!!
HANK PAULSON EXPOSED!!! Rep. Peter Defazio – “We should not be rolled by a Wall Street exec who is masquerading as the Secretary of the Treasury”
http://xrl.us/or7yi
trey vde removed by youtube.
here it is in a different location
http://video.google.com/videosearch?q=Defazio+%22We+shouldn%27t+be+rushed+into+this!%22&hl=en&emb=0&aq=-1&oq=#
sorry , here it is!!!!
http://tinyurl.com/4tf23k
Paulson and friends must be getting nervous about this!!!! there are an awful lot of questions being asked now!
tom / jcer: I am around, but I was tied up for the bulk of the day…..GO METS!
486,
Oh snap.
I will forever refer to him as The FAAAAAZ.
Thanks for the link
WaMu is toast. No surprise here. Nice timing,
rescue plan just got a shot in the arm.Hmmmm.
“Kettle1 Says:
September 25th, 2008 at 7:53 pm
shore SAS
regarding plastic.
why do you think pharma products can only be packaged in certain types of plastic containers?”
Kettle,
I have no concern with using plastics for cool storage of non-acidic foods. The concern I have had for some years is the tendancy of the material to leech compounds whilst it is being heated — think microwaving.
I am not a “the sky is falling” person regarding the threat but, given an alternative, I will heat in something other than plastics.
Tard (449)-
Have you had a brain transplant?
Waaah! I want a new troll!
i was actually have dreams last night about what a depression would be like now. kinda scary. im hitting costco at 9 am saturday and loading up.
i know a lot of us feel that it would be better to just let the pain happen instead of screwing up the country for decades to come … i hope we’re right.
trey (485)-
Bingo.
“There is no panic on Main Street and in sound financial institutions,” Allison wrote. “The problems are in high-risk financial institutions and on Wall Street.”
I’ve claimed from day 1 that the toxicity does not extend to all banks. There are plenty of other banks- beyond BB&T, Hudson City and US Bank- that still make sane loans, don’t dabble in mortgage swill and don’t run like criminal rackets.
The world didn’t collapse overnight, and the sun came up today. I’m no conservative Republican, but the people blocking the criminal bailout deserve our thanks.
And I won my office deadpool.
WaMu can suck it.
From Morgan:
“Washington Mutual was shut down by the Fed last night. JP Morgan steps in . . . again. And the new WAMU CEO walks away with $20 million for less than three weeks work!!!!!
The FDIC was not going to shut them down until Friday night, but things were set to get out of control tomorrow, after the Bail Out plans failed tonight. We are over the edge, just waiting for the last bit of string to let go. I know it is getting scary.
Let me give you something to think about. My contacts told me a WAMU failure would cost the Fed as much as $70B . . . and maybe more. Most people are putting the loss at $30B. I have a few that say it could be even more than $70B . . . BUT there is no word in the FDIC releases about who is paying for the losses WAMU should be revealing.
We are in very scary times, but your trading positions are fine. If you want to put in closing position order ahead of the market tomorrow, it is advisable, as we will probably see a seize up in the systems tomorrow. It’s Friday and everything fell apart tonight.”
GMA just now: A republican congressman (not sure on name) held up a 5-page document that he said came from 200 of the world’s top economists that said Paulson’s plan was essentially sh!t.
The GMA guy goes, ‘what about Paulson, Bernanke, President Bush … what about your confidence in them?’
“There isn’t a whole lot right now.”
So even though the House Reps HAVE the votes to pass this thing – should they? The House Reps can then say “We had a plan that would put the onus back on the backs of Wall Street but you folks passed it onto the American taxpayers.”
Word is these guys have been inundated with the public saying “Do not pass this thing.”
There is supposed to be a debate tonight. So does O go to the debate saying – “I was with the President and wanted the $700B bailout of Wall Street while M stands there and says – I DID NOT want to bail out Wall Street – I wanted to protect the American taxpayer…
Someone on CNBC this AM saying Paulson failed to close the sale.
should have been – house DEMS have the votes to pass it…
Sorry, I’m trying to listen to the news – and type – They are playing “circus” music…
Supposedly, if you log into you ATM at WAMU this AM – you are greeted to “Welcome to JPMorgan Chase”
“This situation is getting crazy. Real crazy. 1929 does not compare to this in terms of the potential severity. At this point the very credit rating of the US is at stake. There’s absolutely no doubt about that.”
50.5,
Welcome aboard.
Pat [424],
Yes, it seems as if I have to beef up my resume. I get it, I’ll pretend I’m applying for a mortgtage, an ALT-A resume.
“I think at least a month along with some food stockpiles.”
50.5,
I have a year of cash, under the mattress, and an overseas safe.
“This was engineered to cause the ham and eggers to panic and support the bailout.”
tosh,
IMO, the whole show is orchestrated by Goldman/JPM. The supporters have bought it; hook, line and sinker.
Clot [498],
And the new WAMU CEO walks away with $20 million for less than three weeks work!!!!!
Golden Parachutes for everybody!
But seriously, I thought the short selling ban was supposed to prevent more bank failures. At least that’s what the guy on TV told me.
[sarcasm off]
50.5,
Who’s the impostor?
WaMu goes bye bye!
http://news.yahoo.com/s/ap/20080926/ap_on_bi_ge/washington_mutual_future
Clot [498],
You called it over a year ago.
So the House conservative Reps, who are listening to their constiuents, want insurance coverage for MBS instead of a bailout …What does that mean exactly..?
To avoid the spam filter.
Candidate A claims Candidate B is useless in the bailout negotiations. Candidate A’s party said Candidate B is bringing election politics in to the mix to get publicity at the expense of what’s important to the economy and to the american public.
Replace A and B with either name. It doesn’t matter.
“So the House conservative Reps, who are listening to their constiuents, want insurance coverage for MBS instead of a bailout …What does that mean exactly..?”
It means my house is on fire, sell me fire insurance.
So… if WaMu is gone,
Wachovia is really the only one left that’s really shaky.
The bigger names are staggering, but they’ll stand. And if one or two fall, so be it.
NO BAIL OUT AT ALL.
Last!
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