Expect more, not less acrimony as things go forward.
- From Glenn Reynolds: Obama threatening the licenses of TV stations that run NRA ads.
- From NRO: “At today’s cabinet meeting, John McCain did not attack any proposal or endorse any plan. John McCain simply urged that for any proposal to enjoy the confidence of the American people, stressing that all sides would have to cooperate and build a bipartisan consensus for a solution that protects taxpayers. However, the Democrats allowed Senator Obama to run their side of the meeting. That did not work as the meeting quickly devolved into a contentious shouting match that did not seek to craft a bipartisan solution.”
- From the Politico: “Treasury Secretary Down on One Knee Before Pelosi”
It was McCain who had urged Bush to call the White House meeting but Democrats made sure Obama had a prominent part. And much as they complained later of being blindsided, the whole event turned out to be something of an ambush on their part—aimed at McCain and House Republicans. “Speaking professionally,” said one Republican aide, “They did a very good job.” When Bush yielded early to Pelosi and Senate Majority Leader Harry Reid (D- Nev.) to speak, they yielded to Obama to speak for the assembled Democrats. And it was Obama who raised the subject of the conservative alternative and pressed Paulson on what he thought of the idea. House Republicans felt trapped—squeezed by Treasury, House Democrats and a bipartisan coalition in the Senate. And while McCain spoke surprisingly little after asking for the meeting, he conceded that it appeared there were not the votes for the core Paulson plan without major changes.
- From ABC News’ George Stephanopoulos says that “Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting, sources say”.
Paulson walked into the room where Democrats were caucusing after today’s meeting at the White House and pleaded with them, “Please don’t blow this up.” Rep. Barney Frank, D-Mass., chair of the House Financial Services Committee was livid saying, “Don’t say that to us after all we’ve been through!” House Speaker Nancy Pelosi said, “We’re not the ones trying to blow this up; it’s the House Republicans.” I know, I know,” Paulson replied.
Who you gonna call? Who you gonna believe? Bailout anyone? A crisis creates an incredible opportunity to play partisan politics. ‘Want me out of the way? Buy me off.’
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110 Comments
1. Lifeofthemind:If there was a recording made of the meeting, and if there were more then three people in the room there probably was, then it will come out. The report now is that the Democrats demanded a $100,000,000 payoff for Acorn. That is the Soros sponsored vote fraud machine that Obama did legal work for. That was just about the only real legal work he ever did.
Now the Democrats are threatening to lift the licenses of stations that broadcast advertising from the National Rifle Association. Monday they threatened the tax exemptions of Jewish charities unless the invitation to Sarah Palin was retracted. These people know that if Obama gets in all investigations stop. They can commit murder in broad daylight but if they can drag Obama across the finish line they win. They are desperate, reckless and dangerous.
Sep 25, 2008 - 10:33 pm 2. Dave:The problem now is that some parties, primarily Democrats, are simply incapable
of a straight deal. They have no idea of how to steal anything fair and square.
Thus we have ACORN standing in line for $100 million up front and 20% of debt retirement proceeds. We have Harry Reid trying to reinstate bans on offshore drilling and shale oil production (both scheduled to expire 1 Oct.) And on and on and on.
Underlying it all is a desire to have a total financial/economic collapse. Gotta save the planet from human prosperity, you know. Be sure the dollar is worthless so it won’t be used as a reserve currency and there can be no imperialism thereafter, just free-market utopia. Ad infinium, ad nauseum.
All very Wagnerian if you ask me. Imbeciles have not figured out that a genuine gotterdamerung will be very painful on themselves.
The crisis is a medical one. We have an epidemic of CRIS. (Cranial Rectal Inversion Syndrome.)
Sep 25, 2008 - 10:40 pm 3. Mad Fiddler:There are some folks who have never learned the point of the proverb “Sow the wind, reap the whirlwind.”
Sep 25, 2008 - 10:46 pm 4. Dave:Here is how I think things should be handled:
Secretary of the Treasury should be authorized to issue up to $1.5 trillion (face value) in REVENUE bonds.
Revenue bonds are bonds that pay interest and return principal when, as, and if, earned.
Thus the taxpayer cannot be soaked to make these bonds good.
The bonds should pay a hefty 10% to 15% on the face value. Tax-free of course. In addition, they should be sold at a 20% to 25% original discount. That means the buyer has to pay only $750 to $800 for each $1000 bond. This translates into a cash yield of 12.5% to 20% provided said cash flow is earned. Finally, if the bonds are held to maturity, a 20% to 33% capital gain provided the redemption amount is earned.
The proceeds from the sale of these bonds, along with some of the bonds themselves, will be used to satisfy the statutory requirements of those FNMA and FRDMAC mortages that have been sold to other parties. Also to pay the legal requirements of those derivatives proven to be “insured” by AIG. Unsold/unused portions of the $1.5 trillion to be held in reeserve for 6 monhts in case something else pops up and then issuing authority is withdrawn.
The interest and principal on these bonds are to be paid from income accuring to FNMA and FRDMAC and the “investment banking” division of AIG.
Fannie and Freddie are both in incredibly strong cash flow positions. They still hold over 45% of ALL American mortages and over 80% of the subprime junk is still being paid
along with 99% of the quality paper. And the derivaitve branch of AIG still has some change coming in.
Put them together and there should be no problem both servicing these bonds and retiring them within 20 years, maybe 10.
But just in case unforseen problems do arise, then those holding the bonds can surrender them at face value in lieu of taxes owed. The worst case basis is a reduction in revenue and that beats the pants off of actual cash outlays.
That should take care of immediate concerns. Future legislation, not regulation, will be needed to be applicable to how finances are handled in this century. That is a topic for another time.
Sep 25, 2008 - 11:16 pm 5. trangbang68:Inherent flaw in plan: the chicken stealin’ grifters, sharpies, reprobate skunks ,scalawags, larcenous kleptocracy and ticks and weevils who inhabit Congress are already salivating over it. They ought to bring in the Orkin man and spray that bunch first and then straighten this mess out.
Sep 25, 2008 - 11:40 pm 6. twolaneflash:This is refilling the hog trough for the fellow travellers. The bailout is Soviet-size, and just as Marxist as the path that got us here. Which reminds me: where are we going and why are we in this handbasket?
Community Organizer = Communist Party Leader
Reagan did not kill communism.
Sep 25, 2008 - 11:52 pm 7. ledger:With the dems wrecking the banks to bait the trap it is no wonder why McCain got ambushed.
How democrats start bank runs.
[Jerry Bower]
“…Chuck Schumer is no FDR. He doesn’t stop bank runs; he starts them… The collapse of Indymac bank, the second largest bank failure in American history, began with a letter from the office of Senator Charles Schumer on June 27… Director Reich concluded that Senator Schumer had ‘given the bank a heart attack’…”
See: Schumer starts bank run
Sep 26, 2008 - 12:09 am 8. Wadeusaf:http://www.cnbc.com/id/25654303
Sounds eerily like what the Dems did to President GHW Bush. Remember the no new taxes pledge and the joint budget meetings in which the Pubs promised and delivered on taxes, and the Dems promised and reneged on everything.
Don’t trust them, don’t trust them, don’t trust them. Just get the real story out about their behavior. The people of America can take it from there. Get the real story out.
Acorn? to blunt the illegality of their actions prior to stealing another election? No, No. let the planet’s economies go up in flames. No brown shirts and no more lies. I like the new Euro non resident ID cards. It is the stuff we are doing in Iran, thats being done in Europe and should be getting done here with out Acorn.
Sep 26, 2008 - 12:14 am 9. OldSalt:I know that a lot of jobs, probably including mine (a lot of our clients are hard up), are on the line. But as much as I want the Fed to act and stop a financial run (set in motion by the political leadership at Freddy Mac and Fannie Mae), I’d rather just say “no” and let the market freefall. It sounds suicidal, and probably is. But no more the ceding to a $Trillion more debt just to keep the lard-filled pols happy (Dems and some Pubbies alike).
I can’t recall which columnist made the point, but the whole issue is a matter of trust. American’s don’t trust ANYONE in their own government any more. GOP GWBs Treasury Secretary comes up with a novel plan to solve the financial crisis: SOCIALIZE THE MORTGAGE INDUSTRY! Hmmm… I don’t quite get it. How about letting the markets fall, and awarding half that cash as new mortgage money with REAL WORLD eligibility requirements? And, maybe eliminating Cap Gains taxes for the next 5 years? We GOT TO THIS POINT due to government interruption with the capital markets, why do we want to fully insource the solution to government.
Sep 26, 2008 - 12:38 am 10. wretchard:Jim Demint says Harry Reid is trying to sneak in a ban on shale oil development.
It is usually assumed that crisis brings out the best in people. What is less often recognized is that crisis also brings out the worst in humanity. In every disaster you’ll find the heroes right alongside the looters. It’s not a party thing. It’s a human nature thing. When the lights go out, hang on to your wallet.
Sep 26, 2008 - 12:43 am 11. wretchard:I can’t recall which columnist made the point, but the whole issue is a matter of trust. American’s don’t trust ANYONE in their own government any more.
I tried to make that point a couple of posts back. For laughs I recorded a YouTube version of the post. I think the written word is better.
Sep 26, 2008 - 12:55 am 12. Dave:Old Salt: That is why I am saying to use
those REVENUE bonds to meet the required obligations. In no way does this “socialize the mortage market”.
Instead, spendthrifts with a big allowance get/are forced to mend their ways by sending
a portion of their incoming cash to those who got them out of trouble.
It is like a bill consolidation loan. And the “vigorish” is ours.
Sep 26, 2008 - 1:23 am 13. weSwinger:Letting a global depression occur because the best available solution is not to your libertarian/free market ideals is like being the dog in the manger. A lot of people would be hungry for a lot longer. (It would be for me anyway – 9 years from retirement age – and I estimate that recovery would take at least 10 years and 1 major war.)
Dave’s idea of revenue bonds is a good one, but does he have anyone’s ear? (Beside us). The fact remains either way that a lot of the assets involved in the bailout are going to perform in the long run. Even if they just broke even, the bailout would be self-financing, and taxpayers not out a nickel. The extension of credit is a serious issue that has already seen reflected in the bond and oil markets. A long term commitment to balancing the budget (amendment anyone?) would obviate those issues.
The demagogues, shysters and logrollers deserve to be publicized and punished at the polls. Those who administer this effort need to be watched like hawks.
I’ll admit I may be over-sensitive to the dangers of allowing banks to fail, but if any of you read Amity Shlaes’ “The Forgotten Man” you would share my concern. The stupidity of the Hoover and Roosevelt administrations was amazing. These were the grandparents of our current f***-up Ivy League elites. If they are allowed to go down that path again, stupidity becomes criminal.
Sep 26, 2008 - 1:36 am 14. ledger:“Sounds eerily like what the Dems did to President GHW Bush.” –Wadeusaf
I agree.
If the dems can ruin the economy most voters blame the President and his party. It’s a tried and true strategy.
They are going to hurt a lot innocent Americans who have 401Ks and other investments.
The dems make me want to vomit.
Sep 26, 2008 - 2:20 am 15. Ex-fetus:Saracuda needs to call a time out and make them all go stand in a different corner.
There are many GOOD plans out there, we just need to have a public debate on it. The Panic mongers are trying to rush things along for fear the world will end or something.
Lets find out. Shut down Wall street for a day or two and see if the world ends.
I figure Wretched will let us know, since it is already tomorrow there.
No, if the market is closed it can’t crash. So close it and call Congress into an emergency session. Lock ‘em in, order pizza and don’t let them out until they have a deal that will pass that doesn’t involved giving a Trillion dollars to the very guys that created this mess and waving them off into the sunset.
After they get a bill thru, open Wall street back up and see what they think of it.
I am not worried about a general meltdown. Worse comes to worse and the FDIC will cover the failed banks for normal people. NOT ALL BANKS wil fail. Even in ‘29, there were banks that didn’t fail. Banks that weren’t over-leveraged. Banks that were well managed. The normal people, those with less then 100,000 in their accounts, will just move it to a well run bank, one that hasn’t failed. That will give them LOTS of capital. Not all businesses failed in ‘29 and they won’t all fail in ‘08. Those that are well managed will make it and they will have customers with FDIC checks to see them thru.
So I think Congress should call their bluff. It would be much better to shell out millions of 100,000 $US checks then one biggie for 700 BILLION. I know the first number is larger, but all those little checks would find their way back into the system. NOBODY can say what will happen to that 700 BILLION. Is there a name on that check or is it made out to “CASH”?
The SEC started an investigation on the 19th. Congress needs to get into the act, as well as the FBI. A joint task force to determine EXACTLY what happened and who did it. A REAL commission not a Warren or 9-11 type cover-up commission.
Sep 26, 2008 - 2:43 am 16. wretchard:One thing that has died, though its demise has not been widely reported yet, are all the grand Hope and Change plans of Barack Obama. Nationalized health care, a youth corps, Carbon taxes, the mandatory tithe to the UN that he wants. Reparations. Free health care for illegal aliens and drivers licenses for everybody. All of that is gone. Finito. Over. Out. It will be a job just to keep social security going. This crisis should be the death knell of the RINOs and the big spenders. If the Democrats win in 2008 it’ll be like a dog that’s caught a truck. What do they do then? Or maybe the argument is that because government sponsored “affordable mortgages” helped cause the problem, then more government can fix it? Blogs for McCain says the ‘Agreement in Principle’ proposed by the Senate Democrats included earmarks for ACORN, National Council of La Raza and potentially the National Urban League. Even supposing these illustrious organizations deserved it, where would the money come from?
No matter how the media gilds the lily, the core ideology of ever-more government intervention and largesse is really pushing up daisies. Spin, meet reality.
Sep 26, 2008 - 2:51 am 17. 3Case:Permitting a mirror (edited):
Letting a global depression occur because the best available solution is not to your socialist/central command market ideals is like being the dog in the manger.
Sep 26, 2008 - 3:11 am 18. 3Case:…and how does $100M for ACORN help rectify the financial instability? And, if you admit it does not, then who do you suppose is fiddling in the midst of the conflagration?
If it is time to burn it down, then, I guess, it is time to burn it down…or, perhaps, Atlas is shrugging….
Sep 26, 2008 - 3:16 am 19. slade:This is what I think should be done:
Replace Hank Paulson with Chris Whalen
Sep 26, 2008 - 4:23 am 20. slade:The Whalen “Plan”, which doesn’t require $700B to “restructure” toxic debt, is to arrange for an orderly failure of bad banks, which have to be removed from the system. He guarantees there will be buyers of the properly valued bank assets, which will be possible once the markets reconnect price to value.
Good banks will continue business as usual.
Use the WAMU failure as a template.
The American taxpayer not required to take ownership of “toxic” debt.
Sep 26, 2008 - 4:52 am 21. Sebastian:Thanks for the link Wretchard. Been reading Belmont Club for years, though I almost never comment.
Obama has gone further with trying to silence ads against him that even I would have imagined. Threatening the licenses of broadcasters seems very Putinesque, and you’d think that would scare more than bitter clinging gun owners.
Sep 26, 2008 - 5:24 am 22. Marsh Arab:What am I missing here? Aren’t the Democrats in the majority in both houses of Congress? Doesn’t Bush, the face of the Executive Branch, support the bailout? So just how can a minority in the House of Representatives stop a bailout that has the support of the majority in the Legislative Branch and the Executive Branch?
Sounds to me that the Democrats might have already ‘caught the truck’ on this one – but just don’t have the balls to do with it what they want without some ‘bi-partisan’ cover.
Funny that the Dems are apparently allied with the evil chimpy Bush administration. Seems a good opportunity for McCain to stand up for some real change and demonstrate that it is the Obama crowd who represents moreofthesame.
Sep 26, 2008 - 5:29 am 23. wretchard:Sounds to me that the Democrats might have already ‘caught the truck’ on this one – but just don’t have the balls to do with it what they want without some ‘bi-partisan’ cover.
This is just like one of those stories where the characters are paralyzed in indecision between greed and fear. An acquaintance of mine from the old days related how, after they had robbed something or other, they all repaired to their hideout to divvy up the loot. These were petty, no account crooks who had made a “big” score. One guy kept disappearing into the bathroom and the rest of the gang were curious about that. Finally they snuck up on on the bathroom when he did one of his disappearing acts the gang peered in through the chinks to see what he was up to. They guy in the bathroom just kept looking at the bag with his share of the loot, his eyes bugging out. It had a hypnotic effect on him. It was like a drug.
Money in the vicinity of lowlife is like blood to a shark or meat to wolves. They just can’t help circling around it. It’s almost like a sickness. So when Kathryn Jean Lopez reports that even ACORN was trying to peel of a slice, I was not surprised. It was all in character, nothing unusual there.
Man, if the nickel and dime grifters are this upfront, what are the big timers up to? And who do you think ACORN’s ex-lawyer is? Wouldn’t you know.
Sep 26, 2008 - 5:43 am 24. Doug:Marsh,
The Dems could pass it whenever they pleased, w/o any help from the Pubs.
With calls coming in 100 to 1 against it, however, all they can do is Bluff.
…as the MSM makes star players out of two folks most responsible for the Mortgage Mess, Franks and Dodd.
Franks asking for 100 Million for Acorn.
—
—
All Deliberate Speed: Constitutional Fidelity and Prudent Policy Go Hand in Hand in Fixing the Credit Crisis
The Responsible Experts
Sep 26, 2008 - 6:00 am 25. wretchard:Washington Mutual’s final press release actually says:
(HT NRO) Then this paragon of political correctness went bankrupt. When did this insanity start? How on earth did serious organizations come to keep score with such a corrupted point system? In the days before the French Revolution, the aristocrats amused themselves by staging plays in which they played shepherds and shepherdesses. An elite which has completely lost touch with reality truly comes to believe their actions have no adverse consequences; that their s**t don’t s***k. Reality always gets the last laugh; until the end it was “let them eat cake”. ACORN, huh?
Sep 26, 2008 - 6:04 am 26. slade:Man, if the nickel and dime grifters are this upfront, what are the big timers up to? – Wretchard
The refusal of House Republicans to approve current version of Paulson Plan is being spun as politics by a “senior Democratic Staffer” sending e-mails to reporters and/or as Democrats showing “Leadership”.
The public opposition (split 50% no & 50% h^ll no) having no influence.
The structural formulation of the buyout having no influence.
The advantages of alternative plans having no influence.
The “Big Timers” know that timing is all.
Sep 26, 2008 - 6:15 am 27. Doug:Washington Mutual had the most extravagant Convention ever held at the Wailea Marriot last year!
Sep 26, 2008 - 6:19 am 28. Doug:Apple used to have decadent extravaganza’s in the good times, followed by near death.
Sep 26, 2008 - 6:23 am 29. programmer:Apple however, having switched to a good OS and product line, carries on.
Okay, all you financial geniuses who have been discussing the oncoming financial “Twilight of the Gods” (I only used that phrase because I couldn’t figure out how to put an umlaut into Götterdämmerung). I have a simple question for you. But first, a small digression.
It appears to me that the United States no longer makes (i.e. creates) anything (hyperbole, ok). We have outsourced most of our manufacturing. We buy our energy from other countries. Software (to include data warehouses) is being developed and managed “offshore”. We no longer make anything anybody wants to buy. So how do we generate income to buy houses for our huddled masses?
Anyway, here’s my question? Is it a good investment decision to buy/found a company here in the USA that MAKES something to actually be sold? It seems a better bet than leaving money in stocks to depreciate, money markets to inflate or collapse, …well, you get the picture. So, if you say yes, what kind of company. (I’m kind of leaning towards health care so I could make money off all the old Boomers accumulating around the country.) Anyway, stop dooming and glooming and give me some good advice. Actually, what is a good survival strategy for an either case scenario. If the buyout goes through, where will the smart money be? If it fails, where should the smart money be?
The last programmer in America (nobody wants to be a programmer anymore, they all want to be System Architects).
Sep 26, 2008 - 6:31 am 30. RWE:The biggest problem with dealing with this issue is that it was not caused by any one group of people or policies. There are hundreds of thousands of people involved, even millions.
Groups like ACORN and the NAACP lobbied for years for lower cost loans to help poor people buy homes. But then when suitable instruments were devised those same loan types were used not only by poor home buyers but by those looking to upgrade to a nicer place – and especially people looking to buy houses and flip them to produce large profits. The banking and construction industries then monomaniacally followed the pack, never asking if all those people could afford two or three houses. Just on my street there are a couple of huge new homes that have never been completed and 4 other new houses that are for sale, some of which have never even been occupied. I saw the crash coming 5 years ago.
Unfortunately, what a politician would have to do to address this problem is point out that it is not just the CEOs of certain companies that are to blame, and not just their managers, and not just the politicians and community activists that encouraged all this, but especially all those “little” people who bought beyond their means. And no one will do that.
Sep 26, 2008 - 6:41 am 31. slade:but especially all those “little” people who bought beyond their means. – RWE
Assuming your thesis is true (which it is not), then the “Little Timers” will pay the piper as well as the “Big Timers” – with no “Plan.”
Which is as it should be.
One thing to remember: the vast majority of mortgages – 90% to 95% (depending on whose numbers are correct) – were underwritten by responsible lenders and are owned by solvent buyers.
The Question becomes – how did a 5% to 10% problem in one industry sector magnify into a trillion dollar freeze now associated with global recessionary forces?
Sep 26, 2008 - 6:53 am 32. hdgreene:We are not going to solve our problem without recognizing what the problem is.
Central to our problem is Washington’s propensity to organize producer Cartels. Cartels exist to benefit the “partners” but are presented to outsiders as a public good. Because cartels distort market signals, purely private cartels normally collapse or are supplanted by new players in a fairly short time frame. To endure, Cartels need the participation of Government — and, of course, the political establishment. It is the participation of the ruling elite that enables a cartel to withstand market forces and act as a parasite on the larger society for an extended period. Of course when the crisis comes, it’s an eight or nine point — not a four point — shake to the foundation of society.
Cartels are hard to attack because everyone wants one of their own. They appeal to people’s need for “control.” A professional organization can cut down on “unruly” competition, protect the more inept or unlucky practitioners and gain favors from government. A Union can act as a Cartel for labor. In the long run, as Cartels spread, the cartels will even impoverish many of its own members as Society itself becomes poorer. Of course, by that time the insiders are wedded to the system.
Since most folks in a position of influence hope to profit from a cartel, they are sympathetic to blaming the free market, and will ignore the existence of a Cartel at the center of the problem. OPEC, an openly declared Cartel, raises prices? It’s the fault of the oil companies (which are part of the over all “energy international” cartel, to be sure). When Politicians stop oil companies from building a refinery, are they standing up to Big Oil? Or increasing the value of their old refineries and limiting competition?
Of course our Cartels in the US are never presented as such, and are indeed illegal without deep government involvement — which is convenient for our politicians. We have an Education Cartel that requires massive infusions of resources to produce scant positive results — which disappear as soon as our attention wanders (the resources remai, of course, and need increasing).
Fannie and Freddy were part of our Real Estate industry Cartel, along with much of our congress and much of the Federal Bureaucracy. Every twenty years or so it requires huge infusions of money to keep it staggering forward.
The solution here is to demand an end to the Cartel in return for the bailout, and a return of any money the government “clears” from the rescue effort direct to the exploited taxpayer — do not allow it to be recycled into the Cartel.
Most of all, we need to educate voters on what government organized cartels are, and how they are parasitic on society even as they are sold as being symbiotic. But first, we need to recognize them ourselves. They often are, as Adam Smith might say, Government organized conspiracies against the Public Interest — and we all hope to profit from one.
By the way, Health Care is another example of a Government organized Cartel in the US — though not yet fully emerged and “rationalized.” Once it is, it will create incentives to intensely treat well people and speed the death of the severely ill.
Sep 26, 2008 - 6:57 am 33. steveaz:RWE:
“The biggest problem with dealing with this issue is that it was not caused by any one group of people or policies.”
Think proxies, or if you like, layers and layers of onion skins.
Hezbollah/Iran.
Pakistan/Taliban.
FanMac/Democrats
Think “Plausible Deniability” – a phrase first popularized by Al Gore.
I’m wishing I’d taken Australian citizenship when given the chance at age 16…our second political party makes me sick.
This deadlock will ruin our country. I hope the DLC wing abandons the Communists and comes back over to America’s side. And soon.
Sep 26, 2008 - 7:01 am 34. Obamacus Curiae « Civilian Irregular Information Defense Group:[...] Obamacus Curiae From The Bitch Girls, via Snowflakes in Hell, by way of Chief Reynolds, which I found at Chief Wretchard’s [...]
Sep 26, 2008 - 7:10 am 35. slade:Mr. System Architect:
Do you have a mattress?
My personal view is the one I have “clung to” for the last year as neither my Bible nor my gun seemed of much comfort. These GSE messes will be cleaned up and hopefully removed from government (along with Barney Frank and few choice other hard-core patronage politicians). My family will, unfortunately be at the receiving end of some of the write-down, through no fault of their own investment strategy but that’s another story.
We – here and abroad – and not considering the 50-50 odds of nuclear incident – here and abroad – will experience growth, just slower at 6% to 8%. If this Plan gets killed or reformulated, then our way of life will continue to include equities as an investment vehicle. I just don’t see that going away, but it’s possible if government gets in.
As to the specific industry sector, I happen to agree with one of the points made by Conrad Black in previously linked article that USA has done itself deep disservice in allowing transition from manufacturing to service-based economy. That’s just me. Especially when I think of the quality of service I get from the Voice Help Menu.
Obviously health care and consumer staples increase in value during economic recessions. But just as obvious is the reliance on advice from a qualified investment banker. I prefer no load low cost mutual funds – short term and long term. In fact I don’t do short-term investing. But if stocks are your deal, homework or a personal adviser you trust, is the only way. Two things I hear over and over from people with money is diversify and hold. Stale as sliced bread but the message consistent over 30 years. (The markets have to be stabilized from the volatility of speculation for the “hold” part to work. Those advisers who aren’t openly advocating cash & bonds are saying that active trading is the only way to play equities right now. And that’s a pro’s game or someone with the time to study.)
The bend in the road ahead is energy. In my opinion oil will continue to rise because I believe the world is at or near peak – with little preparation outside of China who seems to be doing a lot, just as a cursory observation.
At any rate, options abound. Irrational exuberance will replace this valley of irrational pessimism (heard on news this morning), which is why this Right Now Plan was so disconcerting. Sure the markets are ugly, but imagine something worse if we charge in with eyes wide shut.
I am just convinced that personally I would rather expose myself to the consequences of the do-nothing plan or the do-it-next-week plan rather than the one under consideration.
Sep 26, 2008 - 7:18 am 36. Doug:Government intervention and meddling, Slade:
Sarbanes Oxley requires “Mark to Market”
The Congressional Black Caucus and corrupt liberal white Clingers like Barney and Chris mandated Mortgages to those that could not pay to own.
Reno threatening Justice Department action against those banks that did not comply.
Then the CDO abuse scandal multiplied a 4 trillion dollar problem into a 46 trillion “dollar” disaster.
—
Mark to Market means the 47% of Calif real estate sales made through foreclosure devalues CA Real Estate on the books to the tune of hundreds of millions, US Dollars.
—
Buffett’s time bomb goes off on Wall Street
EASY MONEY
When the credit default market began back in the mid-1990s, the transactions were simpler, more transparent affairs. Not all the sellers were insurance companies like AIG — most were not. But the protection buyer usually knew the protection seller.
As it grew — according to the industry’s trade group, the credit default market grew to $46 trillion by the first half of 2007 from $631 billion in 2000 — all that changed.
Sep 26, 2008 - 7:22 am 37. slade:It was a rhetorical question, Doug, but I take your point and take issue with SOX (2002) requiring Mark-to-Market. I could be wrong but the MTM idea is integral to FASB code which Enron circumvented (with Mark-to-Model and Mark-to-Fantasy accounting) resulting in Statement 157 effective Nov 2007.
As you know (from Trish’s posts), CDO abuse soared when SEC determined that certain classes of securities could be leveraged up to 30 and 40:1.
And that was that, as she would say.
Sep 26, 2008 - 7:40 am 38. Benj:Mac’s “suspension” of his campaign was a transparent ploy. He had no constuctive role to play since he didn’t have heavy weight with House pubs who are the fourth leg. But. He could pump up recalcitrance on that score by indicating there was a presidential candidate who MIGHT carry water for them…
Here’s the TIMES account of the meeting – the account of the timing of Boehmer’s intervention has not been contested by anyone…
But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.
Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand…
As per Rod Dreher – the conservative columnist – “Leadership! Er, not so much. Boy, is this not turning out well for Mac.”
Noticed Dreher’s line on Mac because he’s also faded out on supporting Palin (whom he once loved). The Couric interview did her him for him…
“Couric’s questions are straightforward and responsible. Palin is mediocre, again, regurgitating talking points mechanically, not thinking. Palin’s just babbling. She makes George W. Bush sound like Cicero. This is one of the more coherent passages:
Couric: You’ve said, quote, “John McCain will reform the way Wall Street does business.” Other than supporting stricter regulations of Fannie Mae and Freddie Mac two years ago, can you give us any more example of his leading the charge for more oversight?
Palin: I think that the example that you just cited, with his warnings two years ago about Fannie and Freddie – that, that’s paramount. That’s more than a heck of a lot of other senators and representatives did for us.
Couric: But he’s been in Congress for 26 years. He’s been chairman of the powerful Commerce Committee. And he has almost always sided with less regulation, not more.
Palin: He’s also known as the maverick though, taking shots from his own party, and certainly taking shots from the other party. Trying to get people to understand what he’s been talking about – the need to reform government.
Couric: But can you give me any other concrete examples? Because I know you’ve said Barack Obama is a lot of talk and no action. Can you give me any other examples in his 26 years of John McCain truly taking a stand on this?
Palin: I can give you examples of things that John McCain has done, that has shown his foresight, his pragmatism, and his leadership abilities. And that is what America needs today.
Couric: I’m just going to ask you one more time – not to belabor the point. Specific examples in his 26 years of pushing for more regulation.
Palin: I’ll try to find you some and I’ll bring them to you.”
Dreher goes on: I remember the morning I woke up in my college dorm room and went in to take my final exam in my Formal Logic class. I knew I was unready. Massively unready. And now I was going to be put to the ultimate test. I sat down in Dr. Sarkar’s class and resolved to wing it. Of course I failed the exam and failed the class, because I had no idea what I was talking about. I wasn’t a bad kid, or even a stupid kid. I was just badly unprepared, and in way over my head. Seeing the Palin interview on CBS, I thought of myself in Dr. Sarkar’s exam. But see, I was a college undergraduate who had the chance to take the class again, which I did, and passed (barely). I wasn’t running for vice president of the United States.
Shttp://blog.beliefnet.com/crunchycon/2008/09/palin-debacle-on-cbs-evening-n.html
Why did Mac resort to his hail mary suspension – He was falling behind and he had Rick Davis prob AND the continuing saga of Sarah Palin who was obviously “getting worse” – More and more folks on the right are seeing what should be pretty obvious to all…
Sep 26, 2008 - 7:48 am 39. Benj:Forgot to add – Mac was also falling sharply in the polls PS SteveAS – “plausible deniability” was a phrase first popularized by Nixon’s men!
Sep 26, 2008 - 7:52 am 40. programmer:Slade, thanks for the promotion, but I must respectfully decline. I’ve been a programmer since I got out of the army and have avoided promotion like the plague ever since. I know who the snipers look for.
I agree with your analysis, since I knew several people when I was growing up, who went through the Great Depression and came out on the other side wealthier than when they went in, so to speak.
However, money and money instruments are epehmeral in the sense that they can fluctuate wildly in value and in the end, are worth literally, only the paper they are printed on, to be used to start a small bonfire to warm one’s hands for a brief moment. (I have a friend, retired now, who was a vice president of a large Chicago financial firm and when I say things like the above, he turns kind of reddish color and his eyes bulge, but since I help him with his computers, he eventually calms down.)
What I am pondering is, what object or thing (in a programmer’s sense of an object) is valuable in and of itself. Oil is valuable, for example, because of all the utility that can be derived from it. Corn is valuable likewise. Cattle, less so. My father, a farmer all his life, once told me, “Son, don’t ever invest in anything that eats feed!”. It seems to me that salvation, or redemption perhaps, may lie in the realm of SMALL business. Anyway, I will cease clogging up the bandwidth for the nonce and continue to read what everyone has to say, thereby expanding my knowledge in an area in which I am woefully deficient.
Programmer (and I’m still not a System Architect)
Sep 26, 2008 - 7:58 am 41. Charles:This 10 minute utube video does an outstanding job of explaining what happened with fannie and freddie–and all the players between.
Its also a brilliant use of google search. As a search guy myself — I’m impressed by the way these guys have searched and stitched together this story.
Warning you do need to hit the pause button on utube because the info will start to pass quickly.
Sep 26, 2008 - 8:03 am 42. slade:Burning Down The House: What Caused Our Economic Crisis?
I see, Programmer – you were diving deeper and I was still mired in my shallow little money-centric world for which I may or may not be pardoned since the hyperventilation only recently ceased to spike in synchronous harmony with market volatility. As Harry Anderson’s father would say, “I’m feeling much better now.”
Which is a long prelude to saying I have no insight to the small versus large in an economic landscape except to say, let’er rip. Government needs to take care of the plumbing – clean up the clogs created by GSE’s and in general patronage programs. The guiding principle of security nets – and the phrase remains popular – has to be parsed if I can use a tekkie term – to refine the intent and allocate specific functions to specific players.
If the plumbing works, the business will do what it will do.
The Que Sera Sera Model of Capitalism.
Sep 26, 2008 - 8:15 am 43. slade:what object or thing (in a programmer’s sense of an object) is valuable in and of itself – Programmer
I would also add that from my limited reading I know that theorists have been toying with the Contingent Valuation concept as a means of assigning value to “The Commons”. It began as a way to objectively include environmental issues as line items in cost-benefit analyses. I don’t understand exactly how the process is applied, but the point is that new methodologies will be required to assign market value to the new “objects” as they emerge in an evolving world. If the markets can’t value it, then the pricing mechanism fails and the business model collapses.
Sep 26, 2008 - 8:23 am 44. Dai Alanye:It appears certain that if mark-to-market were suspended that liquidity would immediately increase, giving time to work out a better solution to the “crisis.” i guess that’s too easy, however.
It’s also apparent that the Dems are determined to make political capital out of this but afraid to pass the bailout without cover from a majority of the Repubs. The Republicans are in control for the time being, and must hang tough for both economic and political reasons. Capitulating to Dem propaganda will kill the economy in the long run, and McCain’s candidacy in the short run.
Sep 26, 2008 - 8:28 am 45. Joe Buzz:“More and more folks on the right are seeing what should be pretty obvious to all…”
Yes that the Bush admin and Repubs including “Mac” called for tightening up on Freddie, Fannie and their sub prime ways a couple of years ago but Frank and friends said “all is well” and now want ACORN to get a new nut.
Sep 26, 2008 - 8:45 am 46. slade:Two things I hear over and over from people with money is diversify and hold.
Not that anyone here needs to read that, but I think, an instinctive reaction to the obligatory end-question to every interview, particularly disjarring during the last two weeks:
So Mr X what do you think of the Plan to Light and Heat the Planet Forever?
Mr X yadda yadda yadda
And so Mr X what stocks would you be right now?
And with that bit of bad humor, I will bow out now.
Sep 26, 2008 - 8:47 am 47. Uncle Jefe:Fine, benj, you’ve had your attack at McCain and Palin…
Sep 26, 2008 - 9:27 am 48. Uncle Jefe:Now let’s hear your defense of obama and fannie mae, what with Acorn, Raines, Johnson, $$ collected from FM…
What about obama’s very large role in getting us to this point?
As to the trap that was sprung on McCain, Powerline had this to say…
Sep 26, 2008 - 9:33 am 49. peterike:http://www.powerlineblog.com/archives2/2008/09/021613.php
Benj, I’m a little too busy to respond right now, but if you need me to, you can call.
Sep 26, 2008 - 9:37 am 50. wretchard:Two things have to happen without fail. The financial system must keep going and it must do so without excessive moral hazard. The value of most everything we own depends on the whole economic system continuing to function. A car would rapidly lose all value if you couldn’t buy gas or drive it on roads. A car’s value depends on there being functioning gas stations and working pothole-fillers. Financial instruments are no different. Crash the system and things which would be valuable in use become valueless in a wrecked system. So a bailout in some form will be necessary.
To keep the financial system going, assets to which the market can presently assign no sufficient value need to be propped up so that credit can continue to be made available on the “value” of these assets. So that the assets themselves don’t lose value. There are several ways to do this. As I understand it, the Paulson plan calls for replacing these assets with money, via their purchase at some price. The moral hazard lies in determining what that price will be. If the market can’t value them, how can Treasury?
But as some have noted, the assets need not be purchased at all. They can be insured, which is what some House Republicans are suggesting, so they can be notionally treated as retaining valuable because they have contingent worth. This really means the commitment is to “buy” assets on a case-by-case basis when they are put to the proof. On the surface at least, the market plays more of a role and moral hazard is reduced.
I’m not going to plump for one or the other alternatives. But the issue always seems to come down to the question of how to keep the system liquid without handing unimaginable amounts of money to bad economic actors. Complicating the situation is the circumstance that the bad economic actors have an enormous incentive to corrupt the process. Therefore there will be a huge push to do the wrong thing simply because the opportunities for ripoffs are so great.
Sep 26, 2008 - 9:54 am 51. Dai Alanye:>So a bailout in some form will be necessary.<
Let’s be careful with our terminology. A “fix” might be necessary, a “bailout” is not, in my opinion.
Sep 26, 2008 - 10:00 am 52. wretchard:Ok. “Bailout” is probably a poor choice of words because it implies rescuing someone who made a bad business decision. But as applied overall, it is a rescue of the system from a failure by assuming the risk. The insurance scheme seems, to a nonpro like me, to be similar to picking up the risks of Fannie and Freddie “for just a little longer”. You can see there are dangers in that approach. You don’t a new derivatives market to arise from the resuce package guarantees or purchases themselves. That would be perverse.
Sep 26, 2008 - 10:08 am 53. hdgreene:So, Benj agrees with Couric that our problems started with our failure to strengthen the Interstate Commerce Commission. Instead, we eliminated it back in the Reagan Administration.
Couric is an idiot, as she herself proves.
You’ve said, quote, “John McCain will reform the way Wall Street does business.” Other than supporting stricter regulations of Fannie Mae and Freddie Mac two years ago, can you give us any more example of his leading the charge for more oversight?
That was the key to preventing this trillion dollar snafu. I think Dreher would have done better studying conventional, self serving, inside the beltway wisdom rather than formal logic — with the emphasis on the formal.
What we now see in our financial system is what I call “Deregulatory Collapse.” That’s when years of heaping new regulations on old builds a rickety structure that is about to topple over. At that point a half hearted process of deregulation begins — and then the process of deregulation is held responsible when the collapse occurs. It is a bit like blaming lung cancer on the “chemotherapy” the patient undergoes rather than thirty years of smoking cigarettes.
The Democrats blaming deregulation in this case is a mighty stretch, especially since the Bush administration tried to extend regulation to an obese Fannie and a hyperactive Freddie. But according to Congressional Democrats and their Main Stream Media coconspirators, it was the rearranging of the regulatory deck chairs on the financial titanic that caused the current inundation. And the ship officers were congressmen — mostly Democrats — who now say they were not properly consulted by the stewards.
Sep 26, 2008 - 10:10 am 54. Konyok:@Benj,
Do you have a response to the ACORN earmark allegation?
I woke up this morning ready to tear into the House Republican “Deadenders.” But, as I’ve read the accounts of yesterday’s events my righteous anger has subsided somewhat.
Did I experience a moment of clarity and then retreat into the warm comfort of groupthink? Or, did I refine my opinion after processing additional information. Only my hairdresser knows for sure ….
What I can say for certain is that Sarah Palin’s performance with Katie Couric is somewhere like the 127th priority for my attention today.
Sep 26, 2008 - 10:14 am 55. Dave:Programmer: Let us now pause for a rhinoceros
moment.
Carbon fiber has the potential to replace most, although not all, metal used in manufacturing. Not just in airplanes, everything.
Getting the material together, rough-cutting and laminating it is not too difficult but it is time consuming. Then everything has to go into an autoclave for three days in order to gain and maintain the necessary amount of
heat and pressure to complete the process.
Thus far, Lockheed, Boeing, et al are trying to do all this themselves in the same facility as the assembly line. Very slow and awkward and necessarily limited to big ticket, high markup items like the F35.
Seems to me that there is a chance to go into the rustbelt and convert some abandoned facilities to carbon fiber component factories to operate on contract to the makers of consumer goods.
This is but an example of potential that goes begging unless the “big shots” provide seed cash.
What is needed is a stock exchange like the old mining exchange where anybody and everybody could go and buy new issues of cheap stocks, 99 and 44/100% of which are guaranteed to fail. But once in a Blue Moon
one of these issues will work out (Homestake Mining) and add greatly to the general prosperity. In the meantime, people lose minor amounts of cash maintaining an environment conducive to financing innovation.
You do not have this because some decades ago your government decided to protect you—-out of everything you own.
Sep 26, 2008 - 10:20 am 56. Dave:BTW Programmer: Let us resolve to give that poor old rhinoceros a break.
Instead let us all go and get ourselves a
RINO license. Them things are always in season and there is no bag limit.
And if they go the same route as the Dodo Bird and Passenger Pigeon, I’ll feel for them,
Sep 26, 2008 - 10:25 am 57. Brian:but will remain unable to reach them.
I have no idea how great the threat of catastrophe is, but as I watch all the nonsense in Washington I can’t help but feel that we’re watching a modern day economic Manzikert unfold. Immediate partisan interests are completely dwarfing any sense of the overall longterm good.
Sep 26, 2008 - 10:31 am 58. Dave:Slade: Got an idea. Let us change the tax system. I have long contended that business taxation should be based on adjusted gross income. Gross income minus refunds and other taxes directly collected and remitted by the business in question. And, this tax/those taxes should be paid ahead of everything else, including the payroll.
My reason for coming up with this was to maximize revenue while cutting down on governments ability to play favorites and divide and conquer. However, now that you mention it, this would also greatly reduce the ability to defraud. If crooked firms had to write checks totaling even 1% of non-existent income, they would be out of business
Sep 26, 2008 - 10:36 am 59. wretchard:before appreciable damage could be done and almost all of that damage would be inflicted on willing and knowing participants in the scam(s). Comments?
I have no idea how great the threat of catastrophe is, but as I watch all the nonsense in Washington I can’t help but feel that we’re watching a modern day economic Manzikert unfold. Immediate partisan interests are completely dwarfing any sense of the overall longterm good.
The moral hazard problem is the biggest reason why the risks should be assumed, as much as possible, on a case by case basis. After Lehman went down, some of its assets were snapped up because they were great value. A taxpayer purchase of assets in one go is like a wholesale purchase sight unseen. Insurance is more like “file the claim” and then we’ll see. However, finance being what it is, you can turn the fact of insurance into value token, which you want in some sense (to create liquity) but not in other senses (to create yet another derived instrument). In any event the devil is in the details. And those specifying the details are in large part responsible for the problem in the first place.
You can’t write moral hazard out of the equation. In my view, any “rescue” has to explicitly create an openly verifiable method for dealing with moral hazard that will create a financial penalty (maybe the market can enforce this) for securities laden with such hazard and other sanctions (criminal liability) for anyone who attempts it. I have few hopes for criminal liability. The only real hope for justice is to sweep away the institutions (and hence the fortunes) of the bad economic actors. It is often forgotten than any “rescue” package should aim to destroy as much as to preserve. To a large extent overseeing the orderly demolition of what caused this in the first place is the most important element of the whole process. The danger with any “bailout” is that it may preserve the cancer rather than excising it.
Sep 26, 2008 - 10:46 am 60. Steve J. Nelson:“Why did Mac resort to his hail mary suspension – He was falling behind and he had Rick Davis prob AND the continuing saga of Sarah Palin who was obviously “getting worse” – More and more folks on the right are seeing what should be pretty obvious to all…”
Indeed, and in the foreign policy debate tonight, we probably won’t hear about McCain’s undying support for Saakashvili or pointless antagonizing of Russia, because Obama knows so little about the Russians as well.
U.S. to Kremlin: please continue to invest more of your sovereign wealth funds in the U.S. while we slap you in the face politically. But alas, the Russians may be running short themselves after injecting billions to stabilize their own stock market.
Sep 26, 2008 - 10:54 am 61. Wadeusaf:WAMU’s employment policy is not the issue, it is their business that is.
The 700B is a bad idea right now because we have not see a written statement. I believe that Senator McCain has learned from the Immigration reform debacle, at least one thing, on major legislative efforts where bi partisan solutions have been sought, it is very important to seek out the approval of the people at large, because we don’t trust the Congress or the Senate of the US to actually design and vote for legislation in our best interest. It is as simple as that. keeping the ball moving is only part of the program for McCain moving the right ball along is even more important.
That is what his leadership and presence sought to accomplish. We’ll see if it was correct.
Sep 26, 2008 - 10:58 am 62. programmer:Dave,
Sep 26, 2008 - 11:03 am 63. Wadeusaf:KABOOOM! The sound of a rhinoceros rifle clapping.
Benj,
I guess we saw two different interviews. I don’t expect Governor Palin to be a fiduciary expert, and I do not want her to be an expert on every major reform that Senator McCain has championed in the past 26 years.
She will get better at handleing the questions better, with stuff like I’m not an expert on the every move the Senator has made, but if you really need me to I can have someone send you some examples, Katie.
That was minor stuff. We’ll see how quick a study Governor Palin is, it is early yet.
Sep 26, 2008 - 11:04 am 64. slade:RE My Econ 101 lecture above (more like 99 or 50 in this forum)
Motivated by a subconscious juxtaposition in my mind of the prudent financial behavior that still exists as testimony to vast majority of businesses with good value, good books, good management, but bad stocks in a “stressed” market environment (same prudence in the consumer sector) versus the “wildcatters”. Prudence and prudish share the same etymology but it’s worth noting that the vast majority of people and businesses conduct their lives in a prudent manner. Maybe we need to be reminded of this at least before falling before the alter of We are One Street, We are All at Fault. Simply not true in my opinion.
One bright light is the increasing intensity and redirection of anger against Congress for failing to address problems with long and public histories.
[PS to Programmer/Systems Architect - joke not jibe - object-oriented humor doesn't code well over the aether of digital space.]
Sep 26, 2008 - 11:10 am 65. slade:It is often forgotten than any “rescue” package should aim to destroy as much as to preserve. To a large extent overseeing the orderly demolition of what caused this in the first place is the most important element of the whole process. – Wretchard
Exactly what Chris Whalen was proposing in early morning interview, if I understood correctly – find a way to arrange for orderly failure of distressed institutions and sell the assets. It is not necessary that the taxpayer assume ownership of the assets, especially since it is still undetermined exactly what mechanism will be used to value them. To my mind that is just a sucker’s play with too much reliance on the technical experts. What good are transparency and oversight if there are too few people who understand the mechanics? The mechanics of bank closure are well understood. Once the markets stabilize, valuing the assets can be done in the normal manner. Furthermore, if I understood what I heard earlier correctly, this kind of approach is favored by the floor traders [must be confirmed but the general idea is out there.]
Remember, while Programmer was taking weight training classes, I was dissecting frogs.
But something amphibian about the taxpayer assuming ownership of these “trouble” assets.
Sep 26, 2008 - 11:19 am 66. slade:Dave -
I am absolutely opposed to using the tax code for implementation of social policy. One of the distressing (pun intended) aspects of the pending energy transition, which should be stimulating and exciting, is the business reliance on subsidies to start moving into alternatives. Talk about not curing the cancer. I like your idea of a market exchange for small cap start-ups as a better way of “encouraging” the technical innovation at the leading edge of new business development. Tinkering with taxes and propping with subsidies – not so much.
As for tax code revisions, my take on how “we do things” is that gridlock has indeed destroyed the functionality of Congress. I have been told that comprehensive tax reform is simply impossible – never going to happen. So the problem becomes two-pronged – what to do and how to do it.
Maybe ask programmer how to shoot a charging rhinoceros?
Sep 26, 2008 - 11:29 am 67. slade:I also agree that coming in under the radar are huge improvements in materials technology – all over – alternative materials for strength reinforcement are big. To be jump-started with nanotech. The interesting thing is the regulatory hurdle – getting the ASTM standards developed and getting the local, regional, state, and federal agencies to update their code. Designers won’t budge and regulatory entities are positively obstinate about the inherent liability, courtesy of our service-oriented economy sustained by insurance and lawyers.
Sep 26, 2008 - 11:46 am 68. JAK:I’d like to know more about what the Democrat leadership tried to cram through before McCain got there. Reid himself said that everything was going smoothly with their republican allies until McCain came to town.
I’m looking forward to the debate.
Sep 26, 2008 - 11:48 am 69. Dave:Slade: Got another long-time brainstorm to talk about. How about alteration/repeal of Regulation Q of the Federal Reserve?
For those of you unfamilar with this subject, Regulation Q effectively outlaws amortized loans for the purchase of securities.
I believe that such a blanket prohibition is in grave error and its ill effects, while unseen/publicized are enormous.
I think that a person should be able to save $25G, use it for a downpayment and get a $75G
loan in order to buy $100G worth of income-producing securities. Note the words “income-producing”, this is not a speculation.
Regular savings then amortize the debt while the interest and dividends earned go to procure more shares. If there is a problem in making the monthly payments, then the dividends and interest can both service and retire the debt.
What this does is to use leverage to accumulate wealth. Beats the pants off Socialist Insecurity.
Reasons given for maintaining it? Usually incoherent mumbling. Original justification seems to have been that the stock market would soak up too much bank credit thereby leaving not enough for home loans, car loans etc.
Of course forcibly channeling available funds to one place instead of the other leads to
inflated prices in the recipient area.
So your government loves you, boy. They have protected you from having to pay 12% on a $50G mortage by giving you a really affordable 6% on $300G.
This is called a Massachusetts Hot Dog. Now don’t tell me you have never heard of a Barney Frank. Or is that Baloney Frank?
Sep 26, 2008 - 11:52 am 70. Dave:Slade; Absolutely agreed that the tax code should not be a tool for social engineering schemes. Just “pluck the goose in such a manner as to gain the maximum amount of feathers with the least amount of squawking”.
That is the spirit behind my adjusted gross proposal. Get the tax man out of the way first then everybody has to figure out how to get by on the remainder. Very few people will feel themselves abled to be privileged by statist favortism, I hope, and thus will cease and desist from seeking same. I pray.
Sep 26, 2008 - 12:02 pm 71. slade:Equanimity is a wonderful thing or so I’ve been told.
Comes and goes like a hot potato in this environment of spin. The news now being populated by very somber voices disparaging Main Street’s economic IQ for failing to understand “credit markets” and the need to keep them active, as per the whole “bailout” implications.
Main Street understood very well what was happening. The issue is that nobody else did (or too few).
So now we will have a “Plan” with some oversight, some accountability, some transparency, and the credit bunny comes back to life.
Who’s not understanding what about this picture?
Sep 26, 2008 - 12:02 pm 72. slade:Dave -
I’d like to repeal Barney Frank. And I thought I was having a Bad Decade.
Reg Q is a “pay grade” issue with me. You’ll have to go looking for Buddy on that one.
Sep 26, 2008 - 12:12 pm 73. Habu:A few observations:
•Revenue bonds pay only if there is a revenue stream from a facility such as a toll road. Mortgages are so bound up in the complexity of the various derivatives that no one can price them ; thus the credit crunch If the toll road doesn’t collect any tolls, no revenue. No revenue and the bonds become less valuable and could possibly fade to zero worth.
Sep 26, 2008 - 12:19 pm 74. sirius_sir:•Democrats is a misnomer. It should be Socialist- Democrats. As an example, every member of the DemBlack Caucus is also a member of the Democratic Socialists of America, a communist front group. http://www.dsausa.org/dsa.html Nancy Pelosi was also a member until she began to rise in the ranks and finally became speaker. Needless to say Bernie Sanders is a member. There entire Democratic Party is nothing but a fifth column in the US.
•Re: The bailout or whatever name it gets. Charles Schwab wrote in his first book that the biggest thing that moves markets is investor psychology. I believe that psychology after twenty years of Wall Street destroying trillions in OPM is razor thin. But in reality we are not and have not been since FDR a capitalist country. We are a socialist country where the Congress collects and then redistributes OUR money…”From each according to his abilities to each according to their needs” A saying familiar to all here I am sure. Out brand of socialism is the softer Swedish model as opposed to the old Soviet model, but it is socialism…when you have 888 pages of tax code and a Federal Register weighed by tonnage you have socialism….. .Even Mad Maxine Waters slipped up a few months ago and said they were going to nationalize the oil industry. We are now nationalizing the final vestiges of capitalism.
•The conundrum. If we don’t do something the probability that there will be a Depression greatly increases, and given that the world invested in the mortgage derivatives in all their different manifestations it could easily be global.
•Insuring the mortgages v. buying them….. Instead of owning the means of production you simply confiscate any wealth generated.
Comments are closed for the previous thread, so with apologies I offer here what I’d written for there.
What is our strategic interest in fighting in A-stan?
Afghanistan, in and of itself, is of arguable value. But I’d argue it’s self-evidently important as a symbol and, as such, much to our benefit not to allow it to once more become a staging area for terrorists. In any event, if we leave prematurely, Al Qaeda will claim victory–the propaganda coup AQ hoped for but failed to find in Iraq, increasing its prestige and once again revealing our inconstancy and fecklessness. Who will be judged the strong horse should that happen?
A friendly Afghanistan, in combination with a stable and allied Iraq, places us in a stronger position relative to Iran. A friendly Afghanistan, in combination with a stable and allied India, places us in a stronger position relative to Pakistan. (Don’t think just militarily, but culturally–idealogically and economically–as well.)
Redeeming Pakistan may of itself be the single best reason to stay and succeed in A-stan. But give up on Afghanistan, and we may as well give up on P-stan. The two are inextricably linked and either one has the potential to take the other along with it. The question therefore is do we improve and leverage A-stan as a means to secure a friendly and democratic Pakistan, or do we abandon them both to the gyre of Islamic extremism?
At bottom, do we fight for and alongside our democratic allies or abandon them in the midst of conflict?
Additionally, the following excerpt gives the flavor of a piece in the OpinionJournal which deserves reading:
President Hamid Karzai and the new democratically elected president of Pakistan, Mr. Asif Ali Zardari, are firmly committed to fighting terrorism in a united front, as common allies of the United States and victims of terrorism. As part of this struggle, we need to find new ways to deny terrorists the opportunity to capitalize on abject poverty that engulfs the tribal regions of Afghanistan and Pakistan.
This is crucial: People who are well fed are not desperate. People who have confidence in public education do not turn toward political madrassas to educate their children. People who have good jobs do not shelter terrorists. In other words, prosperity is one of the most important predictors of political stability, which in turn is the single most critical element in the containment of fanaticism and terrorism.
http://online.wsj.com/article/SB122238726795877141.html
Sep 26, 2008 - 12:24 pm 75. Cyber Johnny:Wretchard notes that some say “… the assets need not be purchased at all. They can be insured…” I think that such an insurance “system” would probably never go away once put in place, and wouldn’t such Federal insurance tend to incentivize the reckless behavior that got us into this fix? I’m just thinkin’…
Sep 26, 2008 - 12:24 pm 76. Habu:Although the thread is closed there is still meat on the table for the previous thread.
Biggest question..what was it I could have been tasked to do that allowed all those events to occur? Think about it. I gave hints.
Sep 26, 2008 - 12:27 pm 77. slade:Speaking of IQ, I see that President Bush has received another unflattering title which I won’t repeat, but I reserve the vast majority of my scorn for Congress. And I am a mild-mannered person. I am guessing most readers are familiar with the concept of “technology transfer”. I would submit that Congress needs an “economics transfer” from almost anybody, my kid sister. We’ll see the outlines of a final Plan maybe by end of day but just consider the past revelations of “crisis” warnings for the last 15 years, and the recent revelations of earmarks (!), Paulson’s unreviewed spending authority, and the nearly burgeoning suite of alternative “plans” that were never considered – because the American people don’t understand the relationship between blah blah blah.
Congress obviously needs “a haircut” but more than that it needs to refocus on repair of the economic plumbing. Paulson says the regulatory code is out of sync with modern markets. I don’t doubt that at all. But the social agendas that support elections trump the plumbing that sustains markets at every turn. In this – very narrow – respect, the American people can be blamed, I think. What is the psychological description – co-facilitators in a self-destructive relationship. That has to stop.
Sep 26, 2008 - 12:34 pm 78. whiskey:Contrary to Wretchard, I think a Dem Congress and President Obama can spend whatever they like on reparations and global poverty.
Simply abolish the military. They want to anyway, this is an excellent excuse. Recall they will be funding La Raza and ACORN to billions. So those organizations will dominate society. Hard Left all the way.
America will look like Venezuela in a few years. Everyone required to have a picture of “the One” in their house. Prison for those who “lie” about “the One.” Dem Prosecutors in Missouri are already going after (for libel) anyone who says anything critical of “the One.” Threatening extensive jail time and fines.
America may have no way to fight back after being nuked, which is doubtless Dems and Obama’s goal in the first place.
Sep 26, 2008 - 12:38 pm 79. Habu:I think if we can get through this economic problem and convince Gen Petreus to run for President in 2012 we can solve a good many problems.
Sep 26, 2008 - 12:50 pm 80. Morton Doodslag:“One thing that has died…”
Obama doesn’t know this yet. At the moment that the infamous White House Meeting was being set up, Obama addressed Clinton’s CGI forum, and only passingly mentioned the looming financial crisis. Talking to the assembled socialists, he proceeded to tout several global initiatives, including American taxpayers shouldering the responsibility for educating the world’s poor. My jaw dropped. In the midst of a great financial crisis, this lout got on TV and touted a messianic project to educate the world’s children. He should be running for President Of The World. Let him get his tax revenues for his staggeringly stupid communist boondoggles from all the other Citizens Of The World over which he’ll preside. Let the celebrities of Hollywood, Citizens Of The World, hand over all their loot to pay. Let the millions of leftists in America, fellow Citizens Of The World, let them pay. Let the Citizens Of The World who inhabit Europe pay. Let Bono and Madonna pay. I want none of it. I’m tired of seeing messianic projects from America, from both the Left and the Right shelling out our taxes to third world basket cases so their populations are now soaring out of control. They don’t appreciate anything we’ve done. Having subsisted on handouts from the faceless soulless NGOs which have proliferated in recent decades — they have been taught to expect and demand more. When they don’t get it, they’re filled with hatred for us — no love.
We can’t fix the third world. We certainly shouldn’t be doing everything in our power to explode their populations further. But Barack Obama, in a week when the wheels are coming off the American Enterprise, suggests more trillions be poured down the thankless maw of those who will happily annihilate us if/when the chance arises.
Sep 26, 2008 - 12:53 pm 81. programmer:Slade asks:
Maybe ask programmer how to shoot a charging rhinoceros?
programmer suggests:
Perhaps the same way you stop a democratic congress.
Aim for the credit card.
Sep 26, 2008 - 12:53 pm 82. Dave:Did somebody just say that mortage payments cannot be used to service revenue bonds?
Of course revenue bonds carry risk. That is why they pay such high interest and get sold at original discounts.
I would estimate that bonds secured with 45% of the mortages in existence are fairly low risk.
And determining their value? Take each mortage. Find out how much principal is owed. That is their nominal value. How much could each one be sold for? That is their current market value. Add the principal amounts for Column A. Add the selling amounts together for Column B. That gives you a good picture of what things are worth. Saying that value cannot be determined because of derivatives is like saying that all those options means that nobody knows what IBM is selling for.
Reminds me of yarns about Bush 41 climbing into the backseat of a SR 71 for a fast trip to England where he and the same pilot then comandeered a BAC 111 to continue to the meeting with the Ayatollah Khomeni to delay the release of hostages until Reagan was elected. And the Ayatollah managed to meet in secret with Bush while making public appearances in Tehran. Allahu Akbar!
Sep 26, 2008 - 1:04 pm 83. slade:How do you value a dead rhinoceros?
Very carefully.
Sep 26, 2008 - 1:10 pm 84. ledger:After reading about Acorn’s ex-lawyer and WaMu’s perfect score on “Human Rights” score, I agree the blame rests with dems and their proxies.
Finally, it is unethical for Democrat Chuck Schumer to accelerate bank runs for political and financial gain.
It’s time to get the book on Barney Frank, Chuck “the liquidator” Schumer, Soros and Obama.
If they or their proxies are destroying people’s homes and retirement accounts for political gain they should pay for their misdeeds.
Sep 26, 2008 - 1:19 pm 85. Charles:OT: An analogous system is in effect with the US financial markets:
This comes from freerepublic–as does the comment:
http://www.freerepublic.com/focus/f-news/2091200/posts
Some Jihadistas blow up.
http://s45.photobucket.com/albums/f59/martinphoto1/?action=view¤t=Oops.flv
This wasn’t a result of Allied counter-battery fire. First, counter battery isn’t that dead-on accurate even with the latest back azimuth radar firing solution computers and second, the return fire would have been a hell of a lot more powerful than what you saw erase that jihadi. They fire an 81mm mortar at us, they get a 155mm back. The camera footage wouldn’t have survived.
This was a tube detonation as the result of improperly stored mortar rounds. The explosive inside the round is like a waxy paste like Turtle Wax auto polish. Over time, the explosive can develop cracks in the ‘wax’ composite explosive slurry just like you’d find opening an old can of Turtle Wax that had been left in the corner of your garage for a year after alternately baking a freezing through the seasons.
You drop a round like that down the tube and the kinetic force of the propellant pushing the round out can cause the imperfections in the explosive mixture to self-detonate.
That’s why the NATO X-rays every mortar round our member nations make to check for air bubbles and imperfections at the time of manufacture and USMC/USN/US Army ammo technicians have strict chains of custody and storage procedures for our ammo dumps. High explosives have expiration dates, just like milk.
Those jihadis don’t have that luxury and they pay the price for it.
MORAL OF THE STORY: Don’t be careless with high explosives. Blow your flippin’ head off, man.
Sep 26, 2008 - 1:20 pm 86. slade:FWIW I agree ledger.
Tolerance dictates that complex problems be treated with conservative blame assessment; hence the “we’re all responsible” theme. Not quite so. The outlines of this episode suggest some clearly delineated bad guys and wrong thinking. As part of Main Street, I will not take responsibility for SEC, GSE’s, or the five investment banks that got green-lighted under SEC for 40:1 leveraging of certain classes of securities. Borderline criminal to gloss over the wrong-doing with a Healing Moment of leveraging blame throughout the population.
Sep 26, 2008 - 1:28 pm 87. Habu:Dave
That was me. Now I should mention that aside from the Marines, CIA , I concluded my working career as a stockbroker for three houses. Lehman Bros, Smith barny , and finally Merrill Lynch.
I do want to say in all candor it was the worst decision I ever made. I hated it but the money from the mid eighties up until I retired in 2006 at 58 was excellent.
I was never in on any bond pricing because that usually took some folks with CFA degrees, Certified Financial Analysts. Takes years to get, and lots of study. I was always told it was a complex operation…I can’t confirm that but I was told it wasn’t explainable in three or four paragraphs. No slight meant to you…BTW it doesn’t look like we’re ever gonna get around to what I did at CIA during part of my career that allowed me to be here, there etc..well here it is…I was a clandestine courier. I got to act and dress as a semi long hair. I would get to site X deliver the goods and then go to site Y. If the station chiefs at any of those places needed support I was, as were the other eleven of us available for helping out. We were all former military with combat experience and other training. So that’s how it was done. I never said I flew the SR-71 but it was in my sphere…I would often take the briefing orders to the crew, wait for the mission e.g. Operation Long Reach and then escort the film canisters’ back to NPIC, etc. Many times I was in the room during briefings on projects. I held every clearance one could hold save for one which the President held. Angola came to me via Zaire and weapons delivery. Other places the tasks were different. Later in my career I moved on to other things. I was in every place I mentioned and then some, usually out of CONUS over 320 days a year. But we were all selected because of our backgrounds and capabilities to make do with what have and not get caught. At that time between the KGB and the GRU the Soviets had us outmanned 10:1 so sometimes it got dicey as all get out. There it is. I must say when I was young and invincible it was a blast.
Sep 26, 2008 - 1:45 pm 88. Tcobb:The Dems have the power, and they claim they have the wisdom. They don’t need the Republicans to pass whatever kind of package they want to pass. If the Republicans had any kind of sense they would hammer the message again and again that “this is the party that YOU, the voters, put into power, and now in the midst of a deep crisis, they act like the proverbial deer in the headlights…ineffectual, clueless, and impotent. This is the party you wanted, this is the party you got. You can put up with such incompetence, or you can make a difference on election day. Its your choice . . .”
Sep 26, 2008 - 1:53 pm 89. OldSalt:Old Salt: That is why I am saying to use those REVENUE bonds to meet the required obligations. In no way does this “socialize the mortage market”. – Dave
I’m pretty much in agreement, at this point, and it’s the direction that the GOP appears to be heading. Even though National debt seems to have no owner or accountability, debt DOES constrain. If the government sends out piles of cash, that is fungible. It’s tougher to control and account for cash than it is to manage debt.
Ollie North takes a different angle, but the way, in his latest column siting wholesale counterfeiting of US currency by N. Korea and Iran, using Chinese and Russian embassies as distribution points. Kind of like a new take on “Crime International, Inc”. If that’s not an act of war, I don’t know what is. Again, as I have said, I don’t advocate a military solution lightly, but we’ve got to drop an iron fist on Iran at some point to make the point that they cannot conduct irregular warfare against the U.S.A. without paying a price in Iranian lives.
Sep 26, 2008 - 2:20 pm 90. steveaz:RE: Burning down the House.
My sister gave me a collection of Alfred Hitchcock movies for Christmas last year. Yesterday I watched a couple of them.
“Sabotage,” Hitchcock’s movie about a terrorist living in hiding in London while he sabotages the city’s infrastructure made me stop in my tracks. The parallels to the financial crisis we’re all reeling from today were uncanny.
Layers of deniability, late-to-the-game detectives, innocent pawns, and multiple provocateurs with no humane sense of responsibility caught my attention. Mr. Verloc and his nameless contact are foreigners bent on making England hurt. Mrs. Verloc rounds out the innocent, naive front that her husband hides behind. The pet-store owner who brewed the bomb looked wholly like Barney Frank. Stevey, perhaps resembling Bill Clinton, carries a terrible package to its target not knowing its contents. And the handsome Scotland Yard detective who sniffs trouble early on plays the role of those politicians who warned the Democrats of the impending sabotage.
The movie begins with a close-up of a dictionary definition of the word, “sabotage.” And the definition fits the Democrat’s meddling in our credit markets perfectly. Sabotage, public alarm, disruption of essential services, antagonists smugly confident that the ends justifies the means…it’s all there in today’s crisis.
Hitchcock was brilliant.
Sep 26, 2008 - 2:28 pm 91. OldManTook:Off Topic, but what do you think of this?
http://www.logictimes.com/Who-Will-Bill-Clinton-Vote-For.htm
Sep 26, 2008 - 2:52 pm 92. Mad Fiddler:So, Benj, would it have been a “transparent ploy” if the Shining One had condescended to return to Washington to participate in the ambush the Democrats set up?
Sep 26, 2008 - 2:55 pm 93. trangbang68:Hey Vladimir Stephen Nelsonivitch, Screw Russia.
Sep 26, 2008 - 3:28 pm 94. Mad Fiddler:Dear Wretchard,
It would be illuminating to know how’z cum you cut off any particular thread. We assume it was not a bandwidth / memory issue.
Was it something I said?
Of course, since it’s YOUR blog, you clearly have the right to do things without splaining to the likes of me.
Sep 26, 2008 - 3:51 pm 95. el gordo:The Paulson quote was reported differently on ABC news:
Pelosi … reportedly said, “We’re not the ones trying to blow this up. It’s the House Republicans.”
Paulson replied, “I know, I know; it’s both sides,” according to a Treasury Department spokeswoman.
A significant difference, no?
Sep 26, 2008 - 4:33 pm 96. Tony:Mad Fiddler,
I think you’ll get better results if you address your requests to Dear Professor Wretchard, master of this Poetry, Philosophy and Current Events blog.
Speaking of the SR-71, it flew out of Okinawa, it took a string of 11 tankers to get it over Southeast Asia and back. How cool is that? Oxcart it was called.
Re: Petraeus for Prez, why not. He’s Ulysses S Grant to Bush’s Lincoln. The Copperheads really came out in this war in Iraq. Just goes to show you that Jimmy Carter wasn’t the first surrenderist Democrat.
We’ll see tonight if McCain shrugs off the traditional Republican mumbles to proclaim both Bush’s and his own efforts to address this crazy financial situation years ago. I’ll be surprised if he does, he’s a mumbler like Bush.
Sep 26, 2008 - 4:34 pm 97. Richard Fernandez:It would be illuminating to know how’z cum you cut off any particular thread. We assume it was not a bandwidth / memory issue. Was it something I said?
At some point things start getting off topic. And instead of cutting off one party or the other the best way I thought to handle things was to simply end the thread. No taking sides. Just trying to get the conversation to move on.
Sep 26, 2008 - 4:58 pm 98. Benj:K- Guess I owe you – running now – but doubt Acorn had much to do with House pubs buying out…Hear you re priorities but I htought I was responding to Wretch’s implicit claim that partisan hackery – or really Dem/MSM partisanship – made it impossible to get a fix what’s going down in the negotiations. Seems the timeline is pretty clear and that Mac’s presence added nothing (but probs)…Hear you re pub “Deadenders” -Think their objections are ideological – political in the, ah, moral sense of the word. Surely good reasons for principled objections – I’ll link below to Greider’s plaints from the left which seem pretty well-taken…
http://www.thenation.com/doc/20081006/greider3
@ Wade – What can I say – Hope you are at least noticing the number of conservatives who think Palin is “getting worse.” Try the Atlantic’s Ross D. He was about where I was a couple weeks ago. Figured Palin would do fine in interviews but…Are you really cool with that re-up on Alaska and Putin and “air space”? (It’s going to be another laugh line.) Or that AMAZING answer when asked how we should promote democratic vlaues in the world – to which she replied (essentially)…”We should promote democratic values in the world.” Couric didn’t even underscore. Yes – but I asked HOW… Or her response when asked for “pros and cons” on the current budget deal…Nada. Did she really sound, to use your word, “solid”? Thought Ed Rollins had it down – “SHe’s lost her confidenc.”
What’s saddest to me is that the only real emotion she offers now is ressentiment…Course that will always play wiht some folks (I guess). I recall here wondering at a poster who was VERY upset about the Mac/PC ads…Guess he HATED that image of the Mac slacker/hipster. ANd I thought I HATED hipsters…
Square biz.
Sep 26, 2008 - 5:17 pm 99. peterike:That nattering nabob of negativity (a.k.a. twisted psycho) Andrew Sullivan put up a video of Ms. Palin — then Ms. Heath — in a beauty pageant swimsuit competition. The good gentlemen at Powerline have provided us a link to it.
http://www.powerlineblog.com/archives2/2008/09/021620.php
Well worth a look, fellas. A hubba hubba. No wonder the NOW crowd hates her guts.
Meanwhile, I realized I’m just about burnt out on politics. I can’t take it anymore, I really can’t. I’m gonna go postal if I keep it up. So I’m losing myself in poetry and fiction for a while.
Suitability
If biology is destiny then why
Are we always startled when we die?
If nature is nurture then how
Do we think about anything that’s happening now?
If bad things happen to good folks
Then it seems to me something odd
To cast our prayers up to heaven
In hopes of a redemptive God
If Allah casts his great magic
And makes all the world just so
Perhaps he’s shocked when his minions
Are spending eternity below
If reason is logical when
Do events stop being beyond our ken?
If everything’s textual where
Is the answer book open so we can all share?
It seems at the end of the day
(A phrase very trendy I’m told)
That wisdom comes not from the young
And God knows comes not from the old
Perhaps there’s just nothing to do
Sep 26, 2008 - 5:36 pm 100. Ex-fetus:To make sense of earth or above
The hell with it all then I say
I’m giving it all up for love
It’s been three days now since we were doomed if we didn’t do something RIGHT NOW! Wrtecherd has the world ended yet?
Sep 26, 2008 - 5:38 pm 101. programmer:Since you are a day ahead, you will be the first to know.
I still want to close the stock market. It can’t crash if it’s closed and normal people won’t even notice. A bunch of high rollers will not get their jolies for a couple of day, but That is their problem.
Get rid of the IRS and go to a value added tax. That extra money on the paycheck will be enough to let some of the mortgages get caught up.
There are a lot of Ideas out there, we just need to slow down and have a ntional debate over the best way to fix this problem. When that is done, we can fix the blame and settle that issue.
Meanwhile, the market didn’t crash today, despite the fears of some “Experts”. It looks like someone’s FUD campaign isn’t working .
I’m negotiating for an interest in a bar. The worse it gets, the more customers I’ll get.
In a depression you stick with the basics. Food, Booze, shoes.
Speaking of poetry – Here is a link to a poem I picked up at the NRO Corner John Derbyshire provided
http://www.johnderbyshire.com/Readings/gods.html
Seems to fit the occasion and the mood.
Sep 26, 2008 - 5:48 pm 102. Doug:Gov. Sarah Palin to be in Carson at Home Depot Center for rally …
Sep 26, 2008 - 6:01 pm 103. Wadeusaf:Sarah Palin will be in Carson for a rally on Oct. 4 at the Home Depot … Tickets are available by e-mailing california@johnmccain.com
—
Spread the word.
I will accept the blame, Gladly Mr. Fiddler and move on.
Sep 26, 2008 - 6:02 pm 104. Dave:Old Salt: Fortunately, counterfeit of that high quality cannot do the kind of damage it could have done in the past. That is because only a fraction of the money supply
consists of coins and currency. Not to downplay what Ollie is talking about but things could be worse.
We just had a Las Vegas case in which $100 dollar bills were good enough to fool casino scanners. However, the manner in which winnings/change has to be cashed in tripped the passers up. The perps were Chinese, other than that do not know anything about them.
I have a feeling that the Russian and Chinese individuals involved are, more or less, free lancers. Their superiors are not “officially” informed of their activities. More important, those superiors are not getting a cut.
However, those superiors are counting on the next interest check arriving on all those U.S.
Treasury Bonds they hold. If an interest check or three is witheld, the superiors might chastise their subordinates.
And if the witheld interest should buy up a whole lot of Georgian wine which US Diplomats would serve to their Russian counterparts, somebody might take the hint. As to the Chinese connection, don’t you think Falun Gong would appreciate a donation?
This doesn’t directly touch the Iran/NK bunch
Sep 26, 2008 - 6:08 pm 105. Dave:but it would deprive them of co-conspirators.
Peterike: Andrew Sullivan no play-a the game, he no make-a the rules.
Sep 26, 2008 - 7:49 pm 106. exhelodrvr:Habu,
Sep 26, 2008 - 11:00 pm 107. Bob Murphy:What SR-71 det were you with in Peshawar?
@Habu
You are a blowhard and a wannabe.
I have never met anyone that did 10% of what you claimed to have done who would talk about it to anyone other than peers.
And no one I know would have operated with anyone that says the kind of stuff you do.
You either have a screw loose, bad PTSD or you are bullshitting.
Bombast like you sprout would have got your ass killed in any decent organisation that did not expel you first.
And congratulations. You are the only person I have seen on BC that is in to big noting pissing contests.
Those who know don’t say. Those who say don’t know.
Sep 27, 2008 - 9:03 am 108. Bob Murphy:Or on BC those who know only say what is necessary in a given thread to illustrate a point.
And they don’t big note.
Sep 27, 2008 - 9:05 am 109. NahnCee:If I was gonna have to choose between reading a Habu post and a Bob Murphy post, I’d choose the Habu one. He seems more knowledgeable, more flexible, and quicker mentally on his feet. Bob Murphy, in contrast, is a (ick, blech, yuck, *ptoooooey*!) journalist. (Not that there’s anything wrong with that.)
Interesting that the alpha males of Belmont Club seem to be ganging up on poor little Habu.
Sep 27, 2008 - 10:25 am 110. Bob Murphy:I can see why you would, Nahncee.
Sep 27, 2008 - 3:07 pmYou’re both gratuitously dualist and thus alienated from the world that you intellectualize about.
And you dehumanize a lot of the people you imagine threaten your intellectual framework, especially if they are people who grew up in places like Afghanistan.
That makes you both part of the problem, dear.
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