Sunday, September 28, 2008

Is it live, or is it Memorex?

Here are excerpts from Sarah Palin's interview with Katie Couric. Which ones are real, and which one is the Saturday Night Live spoof? Sadly, it's difficult to tell in some places.

Friday, September 26, 2008

McCain Wins Debate!!

Aw dang, those pesky Republicans went and spoiled the ending. Now what I am supposed to do tonight?

What is the bailout really about?

Something that's been noticeably absent from all of the fear-inducing rants about the absolute need to ram through Congress a bill to throw $700,000,000,000 at Wall Street to save them from themselves is any substantive discussion of why that specific amount of money? What will it be used for? What will we, the taxpayers, get in return for mortgaging our grandchildrens' futures? Treasury has already told us that that number was "not based on any particular data point" and that they "just wanted to choose a really large number" (how very like the Bush administration to use their "gut" in place of real analysis), which should be enough to set the "terrist threat level" to "severe with sprinkles on top".

Devilstower and Hunter over at DailyKos have been asking these questions and the conclusions they reached are very disturbing. Here's Devilstower's take:

"This crisis was brought to you by subprime mortgages. We know that because we're told it many, many times each day. So how big is the problem?

The total value of all home mortgages has risen steeply over the last few years as the housing bubble drove home prices up and lax lending rules roped more people into the pool. Home mortgages were valued at $7 trillion in 2003 but were up to $11.1 trillion by last year.

How many of those were "subprime?" It depends on how you define it. Funny thing: the initial definition was loans that didn't meet Fannie Mae or Freddie Mac qualifications, meaning that those institutions shouldn't be holding any subprime loans. But as a term, subprime is now more often applied to any loan where either the applicant's credit fell below the mid-range of "good" or where the lender did an abbreviated credit check. That kind of loan really came and went rather quickly. They were 8% of loans in 2003, topped out at 20% of loans in 2005 and 2006, and were back to 3% of loans in 2007. According to the Joint Center for Housing Studies at Harvard, $139 billion of subprime loans were handed out in the last quarter of 2006, but this was down to $14 billion in the matching quarter of 2007

Now the real question: how many of those loans are in trouble?

Foreclosures were up a steep 79% in 2007, reaching just over 1% of mortgages. The numbers are up again so far in 2008 (though not as steeply). We could top 2% in default this year or next. There are some expectations that foreclosures could triple from today's historically high levels, meaning ultimately 3% of mortgages could be in trouble.

And that's where we get that math problem. 1% of all mortgages -- the amount now in default -- comes out to $111 billion. Triple that, and you've got $333 billion. Let's round that up to $350 billion. So even if we reach the point where three percent of all mortgages are in foreclosure, the total dollars to flat out buy all those mortgages would be half of what the Bush-Paulson-McCain plan calls for.

Then we need to factor in that a purchased mortgage isn't worth zero. After all, these documents come with property attached. Even with home prices falling and some of the homes lying around unsold, it's safe to assume that some portion of these values could be recovered. In the S&L crisis, about 70% of asset value was recovered, but let's say we don't do that well. Let's say we hit 50%. Then the real outlay for taxpayers would be around $175 billion.

Which, frankly, is a number that Wall Street should be able to handle without our help. After all, the top firms on Wall Steet payed out $120 billion in bonuses alone between 2000 and 2006. If they've got that kind of mad money, why do they need us to step in now? And why do they need twice as much as all the mortgages that are even likely to implode?"

So there's a little problem with the math. Would that mean that this really isn't about the subprime collapse? Hunter explains.
"...despite what we've been told, then, we can only presume that the problem is in fact not all the bad, scary subprime mortgages. And it's not. Yes, a lot of people are finding themselves upside-down on their houses right now, but Paulson isn't proposing we do squat to solve that -- and even the "controversial" Democratic counterproposal, that we actually do at least a little something to help those people, after they've already gone bankrupt, is pathetically weak.

Instead, we're getting a Wall Street bailout not of the mortgages, but of the absurd, speculative, economy-wrecking derivatives based on those mortgages, derivatives that investors and banks ravenously sold each other at unsupportable and quite-probably-crooked prices. Those derivatives, generally speaking, are "bets" on the state of the underlying mortgages. And they didn't just bet wrong -- they bet irrationally, based on presumptions of near-zero risks to those underlying mortgages. And worse, the big banks even -- bafflingly -- got special permission to overleverage themselves 40 to 1, all but assuring collapse if those derivatives went south. Which they did.

Fine, then, but how is that self-induced bubble an unweatherable economic crisis for the rest of us? Yes, those banks may fail -- as they should. It'd be a crime if they didn't, given their mismanagement of their accounts. But the real problem is that those banks are, literally, too big to be allowed to fail. Their failure would present a liquidity problem for the rest of the market. They can do anything -- they could even burn money on the street -- and the strong preference of government would be to bail them out for it, because the alternative is financial chaos.

The subprime mortgages aren't the problem. And the overleveraged firms shouldn't be a problem. The problem is keeping the rest of the economy afloat no matter what happens to the firms in trouble."

So we're being lied to. This bailout has nothing to do with the subprime market as we're being led to believe. This is about the smoke-and-mirrors derivatives market. It was an elaborate Ponzi scheme that allowed the same assets to be used as collateral for different investments many times over. So where do we go from here?

Thursday, September 25, 2008

False dichotomy

So Dubya was all over teh teevee last night mongering fear. Again. The sky is falling (even though the economy was strong just last month) and something drastic must be done. Everyone knows the story by now: we absolutely must give $700 billion to Henry Paulson immediately so he can save us all from imminent disaster, nevermind that he helped create this whole mess in the first place, both as CEO of Goldman Sachs and as Secretary of the Treasury. It's the way Republicans do government: they allow the people who create problems, due to either gross incompetence or willful action, to determine and implement the solutions to the problems they themselves created. If Paulson gets his way, what he will do with this money will be left to his sole discretion, and Congress won't even be allowed to ask because we're told that doing so would hinder the recovery process. Or something.

The choices are clear, Bush and his merry band of thieves are telling us: we must either give a huge pile of American taxpayer dollars to Wall Street -- even to the banks and investment houses that have been successful, and to foreign banks -- so they can continue the party, or they will wage a scorched earth campaign on the economy. This is a false dilemma. We are going to have a major recession as a result of their planned meltdown and there's nothing we can do about it. Giving $700 billion to Wall Street won't prevent that. This raid on the treasury is just Dubya's parting gift to the ultra wealthy. It will also have the effect of preventing the next president from pursuing his agenda since there simply won't be any money left because the "fiscal conservatives" have bankrupted the entire country. By the way, that $700 billion figure, by Treasury's own admission, was pulled out of someone's ass because they just wanted to choose a really large number.

I say don't give them a damn penny. It's their mess, let them clean it up. The fact is, Wall Street neither needs nor deserves a bail out. Many smart financial experts, including Warren Buffet, warned years ago that derivatives were "financial weapons of mass destruction", but their words were ignored because they were immensely profitable. Wall Street is trying to use this crisis (and it really is a crisis) to further increase their already massive wealth when we pay for the clean up. These people are flush with cash.

Just last year, Wall Street’s top five financial firms — including names such as Lehman Brothers, Morgan Stanley and Bear Stearns — awarded $39 billion in bonuses at a time when stockholder value in those companies fell by $74 billion.
Read that again: $39 billion in bonuses were paid to Wall Street's top five financial firms last year. And now they say they need a bailout? I don't think so. They're just holding a gun to our collective heads. This is nothing but extortion, plain and simple.

A recession is coming. Giving more money to Wall Street will do nothing but prevent those of us most affected by their greed from weathering the coming storm.

Wednesday, September 24, 2008

Did Palin have affair with husband's business partner?

I've never bought a copy of The National Enquirer in my life because they are just not a reliable news source. However, they did nail John Edwards' affair. Could they have another scoop?

No less than three members of the man’s family including one by sworn affidavit have claimed that Sarah Palin engaged in an extramarital affair with hus­band Todd’s former business partner, Brad Hanson.
I report. You decide.

Tuesday, September 23, 2008


Dear Congress:

I ran up $5,000 on my credit card betting at the dog track. Can I have $700 billion too?

Saturday, September 20, 2008

McCain is every neocon's wet dream

Gabriel Nathan Schwartz was a delegate to the Republican party national convention. This means he is your typical wingnut. He's not just any wingnut, however, he's a neocon. He's the kind of wingnut who thinks George Bush is a misunderstood genius. And Schwartz loves him some John McCain. He has masturbatory fantasies about a McCain presidency that go something like this:

In an interview filmed the afternoon of Sept. 3 and posted on the Web site, Schwartz was candid about how he envisioned change under a McCain presidency.

"Less taxes and more war," he said, smiling. He said the U.S. should "bomb the hell" out of Iran because the country threatens Israel.

Asked by the interviewer how America would pay for a military confrontation with Iran, he said the U.S. should take the country's resources.

"We should plant a flag. Take the oil, take the money," he said. "We deserve reimbursement."
So there you have it. McCain means more bombs, more killing, more American imperialism. Our economy, which took a huge interest in the "homeland defense" industry under Bush, will turn into an all-out war economy under McCain. And his base drools as the prospect.

Friday, September 19, 2008

Palin busted lying by ABC

OMG Sarah Barracuda got so PWNED!!!!!!1!ELEVEN!

An internal government document obtained by ABC News appears to contradict Sarah Palin's most recent explanation for why she fired her public safety chief, the move which prompted the now-contested state probe into "Troopergate."

Fighting back against allegations she may have fired her then-Public Safety Commissioner, Walt Monegan, for refusing to go along with a personal vendetta, Palin on Monday argued in a legal filing that she fired Monegan because he had a "rogue mentality" and was bucking her administration's directives.

"The last straw," her lawyer argued, came when he planned a trip to Washington, D.C., to seek federal funds for an aggressive anti-sexual-violence program. The project, expected to cost from $10 million to $20 million a year for five years, would have been the first of its kind in Alaska, which leads the nation in reported forcible rape.

The McCain-Palin campaign echoed the charge in a press release it distributed Monday, concurrent with Palin's legal filing. "Mr. Monegan persisted in planning to make the unauthorized lobbying trip to D.C.," the release stated.

But the governor's staff authorized the trip, according to an internal travel document from the Department of Public Safety, released Friday in response to an open records request.

The document, a state travel authorization form, shows that Palin's chief of staff, Mike Nizich, approved Monegan's trip to Washington D.C. "to attend meeting with Senator Murkowski." The date next to Nizich's signature reads June 18.

Last week a legislative panel approved a subpoena for Nizich to be interviewed by Stephen Branchflower, the prosecutor hired to conduct the Alaska Legislature's inquiry into Troopergate. The Attorney General informed the Legislature earlier this week that Nizich and other state employees subpoenaed in the matter would not submit to interviews.

Nizich did not respond to a message left Friday afternoon.

In Palin's court filing Monday  to stop an investigation by her state Personnel Board she earlier had requested  her lawyer, Thomas V. Van Flein, included numerous emails from her staff expressing confusion and incredulity over Monegan's planned D.C. trip. None of those emails were sent by or to Nizich, although he was cc'd on several.

Contacted Friday, Monegan confirmed the travel authorization was to pursue funding for the anti-sexual-violence program. He said the travel authorization form was completed in a fashion consistent with practice, even though it showed no expenditures. The signed form approved the travel, he said, and authorized him to use a government credit card or seek reimbursement for expenses he incurred during the trip.

Monegan said he didn't know why Palin's chief of staff approved a trip that confounded her other aides. "It sounds like it's a breakdown of communication internal to the governor's staff," he said.

The McCain-Palin campaign did not respond to requests for comment.

Now we're socialists?

After years of Republicans telling us how bad government is, that regulation stiffles the market, and that everything needs to be privatized, the market has destroyed itself. So the Bush administrations answer is, naturally, for the government to buy up the corporations whose greed had caused them to collapse, and to pay billions more for them than they are worth.

This is a pivotal moment for America’s economy. Problems that originated in the credit markets — and first showed up in the area of subprime mortgages — have spread throughout our financial system. This has led to an erosion of confidence that has frozen many financial transactions, including loans to consumers and to businesses seeking to expand and create jobs. As a result, we must act now to protect our nation’s economic health from serious risk.

Bullshit. These problems just didn't happen out of nowhere and they could have been, and were, predicted. Milton Friedman must be laughing hysterically right now. This is nothing more than a massive transfer of wealth from the middle class to the wealthy. You and I are paying for this shit. The people who caused it are leaving with golden, multimillion dollar parachutes. The same people who caused this problem are still viewed as the wise and serious people who will save us from their crimes. Why is the federal government in the commercial banking, investment, and insurance businesses now? Does this mean that once these companies recover, they'll be "sold" at bargain prices to corporate interests?

Wednesday, September 17, 2008

Why is Texas being ignored?

In case people aren't aware, Hurricane Ike left devastation in its path that is not being covered due to a media blackout ordered by the Bush administration. There is absolutely no excuse for this situation. These people are in trouble and need help from their country. There is no power or water, and little gas and food. This needs much more national attention.



Monday, September 15, 2008

Republicans: the party that wrecked America

They need to be branded with this every day between now and the election. Republicans: the party that wrecked America.

It turns out the real hurricane blew through Wall Street last week, not Galveston. This morning, Manhattan is strewn chest-deep with the debris of banking and at this hour (seven a.m.) nobody knows how far, deep, and wide the damage will spread. The fear, of course, is that we are witnessing a classic "house-of-cards" or "dominos-in-a-row," situation, and that the death of Lehman Brothers and Merrill Lynch will cascade into a generalized collapse of the entire consensus of value that supports mediums of exchange.

At least one thing ought to be clear: this has happened due to the negligence and misfeasance of the regulating authorities, namely the Republican Party, and that now all the hoopla surrounding Sarah Palin can be swept away revealing that group to be what they actually are: the party that wrecked America.


Some group of somebodies will have to clean up this mess. Moving toward a major election, it is hard to imagine the American people giving the clean-up task to the very group that created the mess -- no matter how many cute little faces Sarah Palin can make on TV. Both parties have so far managed to ignore the gathering crisis of banking and money, but they can't ignore the sequoia trees crashing down around their ankles and shaking the earth they stand on.

At issue now will be the question of legitimacy in all its human social dimensions. Is our money legitimate? Is the authority of our elected officials legitimate? Are our values and ideas legitimate? These are the things that will determine what kind of future we find ourselves in.
John McCain wants us to believe that he will fix the problem:
"We will never put America in this position again. We will clean up Wall Street. This is a failure."
However, let's remember who enabled this and how it was done.

If McCain wants to hold someone accountable for the failure in transparency and accountability that led to the current calamity, he should turn to his good friend and adviser, Phil Gramm.

As Mother Jones reported in June, eight years ago, Gramm, then a Republican senator chairing the Senate banking committee, slipped a 262-page bill into a gargantuan, must-pass spending measure. Gramm's legislation, written with the help of financial industry lobbyists, essentially removed newfangled financial products called swaps from any regulation. Credit default swaps are basically insurance policies that cover the losses on investments, and they have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions.

Lehman's collapse threatens the financial markets because of swaps. From Bloomberg:

Bond-default risk soared worldwide as the collapse of Lehman Brothers Holdings Inc. sparked concern than the $62 trillion credit-derivatives market will unravel....
Lehman, the fourth-largest securities firm until last week, has been one of the 10 largest counterparties in the market for credit-default swaps, according to a 2007 report by Fitch Ratings. The market, which is unregulated and has no central exchange where prices are disclosed, has been the fastest-growing type of so-called over-the-counter derivative, according to the Bank for International Settlements.
"The immediate problem is the derivative default swaps market, in which a plethora of institutional accounts and dealer accounts are at risk,'' Bill Gross, manager of the world's largest bond fund at Pacific Investment Management Co. in Newport Beach, California, said in an interview with Bloomberg Radio yesterday. "It induces a tremendous amount of volatility and uncertainty.''

Barclays Capital analysts have estimated that if a financial institution with $2 trillion in credit-default swap trades were to fail, it might trigger between $36 billion and $47 billion in losses for institutions that traded with the firm. So the Lehman fiasco--caused in part by the use of unregulated swaps--could lead to ruin elsewhere in the economy.

Gramm is responsible for the rise of the wild and woolly $62 trillion swaps market. And he was chairman of the McCain campaign and a top economic adviser for McCain--until he dismissed Americans worried about the economy as "whiners." After that comment, McCain dumped Gramm. But was Gramm truly excommunicated from McCain land? Last month, he attended a meeting of McCain's top supporters in Aspen, Colorado. And at a dinner that day, McCain singled out Gramm for praise. Last week, failed Republican presidential candidate Ron Paul revealed that Gramm, now an exec for Swiss banking giant UBS (which also lost billions of dollars due to subprime loans and swaps), had recently called him as part of a McCain effort to win Paul's endorsement. Paul turned Gramm down.
Given that today John McCain once again said that the "fundamentals of the economy are strong," I think it's clear that he doesn't even recognize that there is a problem. His campaign is being run by lobbyists, but he wants us to believe that he'll be a reformer? I simply cannot understand why anyone who isn't filthy rich supports this guy. Given what happened today, I can't see why even wealthy people support him.