Tuesday, September 30, 2008
From The Holy Crap Files
ARLINGTON, VA—Today, Doug Holtz-Eakin, McCain-Palin 2008 Senior Policy Adviser, issued the following statement on the SEC’s plan to relax mark-to-market accounting requirements:
“John McCain is pleased to see that the SEC has finally decided to permit alternative accounting methods to mark-to-market accounting for securities where no active market exists. There is serious concern that these accounting rules are worsening the credit crunch, making it difficult for small businesses to stay afloat and squeezing family budgets. In March, John McCain called for a meeting of accounting professionals to discuss whether mark-to-market accounting was magnifying problems in the financial markets.”
All I can say is, why didn’t they do this a week ago?
Oh yeah, it seems the bailout was still percolating it’s way through Congress at that time.
Now that that has died, perhaps a more market based approach can be allowed to work? Yeah I know, that’s probably silly.
Liar’s Poker
Dale Franks over at QandO explains the reason why Warren Buffet was for the dead bailout plan:
I keep hearing over and over again-and I’ve even said it-that no one knows what these mortgage backed securities are worth. But let’s be clear here: the reason we don’t isn’t because the price is mystifyingly unknowable. It’s because they haven’t even tried to sell them off yet. We already know it’s possible to find out what the price is, simply by offering them up for sale. Indeed, we did it in July when Merril Lynch sold off its entire MBS portfolio.
The reason we’re not doing it now is because the holders of MBS paper expect a government bailout, and they expect to receive through it a price significantly higher than they would in the secondary market. If it were otherwise, they’d already be auctioning them off.
Arnold Kling explains it further and even throws in a poker analogy:
Think of the mortgage securities market as the World Series of Poker. In fact, a great book about it is Liar’s Poker, by Michael Lewis. Lewis was a trainee at Salomon Brothers, and he learned phrases like “Big Swinging D___,” which describes a swaggering, aggressive mortgage banker. Henry Paulson fits the model.
The best players in this World Series of Poker are the folks at Goldman. They hired Fischer Black and other geniuses back when the markets were first getting going. They have typically had the best squad of geeks around.
Buffett just bought a stake in Goldman. That stake would be a lot more valuable if there were actually a poker game—that is, if mortgage securities were still trading. Right now, they’re not trading. So Goldman is sitting there ready to play and no one is ready to play with them.
Along comes Uncle Sam, who wants to take a one-hour lesson in poker and then sit down and play in the World Series with $700 billion in chips. And whaddaya know? Warren Buffett thinks Uncle Sam really has to get in the game.
I’ve been playing poker for the better part of three decades; a few years ago now I decided to give up my career in academia and play poker full time - what that says about academia I will leave it up to you guys to decide - and I can say that when someone who has “read a book” or taken a quickie poker lesson sits down at the poker table and tries to play with “big boys” those self-same “big boys” (and I am one) start salivating because we know they are going to lose all their money to at least one of us.
Kling and Franks underline the current problem facing us; we have no idea what these mortgage backed securities are worth because as of right now no one is selling them anticipating the all-powerful federal government would have bought them for a higher price than what the current valuation of them is. That the current valuation is at this point essentially zero is irrelevant.
With the bailout, for the moment, dead perhaps these “toxic loans” need to be brought to market to see what price the market will set for them. Then and only then should any kind price be fixed on these instruments sale, either to the federal government or another entity.
And for the record that 700 billion price tag was made up out of whole cloth.
Monday, September 29, 2008
Bailout failed…..
.....and.....so what?
I recognize that the markets have to have liquidity. I also realize that, beyond a shadow of a doubt, that there will be a package put together by the Congress within two or three weeks....they want to get this done.....
....right?
OR....do they let this package go, play up the failure to pass, and let the media continue telling everyone that there is a ‘serious’ problem?
See....I’m not of the opinion that there is a serious problem.....I’m of the opinion that this situation is more of a correction than a failure. This is the prices of housing returning to where they should be, as opposed to where they went when the subprime lending (championed by Fannie Mae, Freddie Mac, and their Democratic enablers in Congress) made real estate a falsely-hot commodity.
In short, the value of real estate was falsely inflated by the amount of buyers....a lot of demand, and prices go up....but many of these people had no real ability to pay what they were being loaned. By many, I mean 8-15%, tops.
Now, 15 out of 100 home loans aren’t going to go into foreclosure...here’s some information. Here is the latest rate of foreclosures to homes:
Nevada: 1 in 91 homes
California: 1 in 130 homes
Arizona: 1 in 182 homes
Florida: 1 in 194 homes
Michigan: 1 in 332 homes
Georgia: 1 in 422 homes
Ohio: 1 in 444 homes
In fact, the rate of foreclosures to homes is 1.03% (thanks to RealtyTrac(dot)com). (URL fixed by Drum.)
Question is, what does this mean?
This is a needed correction. I have no problem rescuing companies in danger or making sure there is liquidity in the markets, but auto loans? We, as Americans, are not responsible to make sure our brother is smart with his money.
And, in related news, here are home tax rates in certain states. Kinda follows a pattern.
San Fran Nan is already blaming the GOP
The bailout Bill just failed passage in the House, 205-228, and Nancy Pelosi is blaming the whole mess on the Republicans.
But according to the voting breakdown provided by FOXNews, the facts say otherwise…
But many lawmakers continued to oppose the plan for a variety of reasons, including the massive price tag that would expand the national debt, and GOP members said their constituents were calling 10-1 in opposition to the bill, which had been described as too much government intervention. Of 235 Democrats, 140 supported the legislation. Of 199 Republicans, 133 opposed it.
Let’s do a little math here. There are 235 Democrats, resulting in a split of 140 Yeas, 95 Nays. That means that Nancy could only get 3/5 of her own party (59.57%) to follow her lead! They have a majority of at least 30 seats, but they can’t get legislation passed, and it’s the Republican’s fault?
Boy, it looks like that 9% approval rating is too high…
Found on the web
Over at AOSHQ are these two links, the first showing video that you won’t find on the Lame-stream Media, and the second showing where the money went…
First, the video. If you suffer from hypertension, better not watch it.
Second, the link from Opensecrets.org, showing where Freddie and Fannie were spending their lobbying dollars.
Remember that the list dates back to 1989, and yet Barry O! is already in third place, behind the Chairman of the Senate Banking Committee and John “Failure” Kerry, but just ahead of the Cankled Hildebeest. 16 of the 25 - and ALL of the Top Five - are Democrats, and you’ll especially enjoy finding out who is at #16 and #22.
Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president.
Run for President AS A DEMOCRAT, I should point out, since no Republican Presidential candidate appears on that list, AFAICT.
Call your Congresscritters. Call your Senators. Remind them that you are not only a citizen and a constituent, you are a VOTER.
Hey, I’m putting together a list
... of questions I want to ask my Congresswoman, Mary Bono Mack (the recently remarried widow of Sonny Bono) (CA-45), and was wondering if you guys had any questions you would want me to include?
I’ve finally accepted that she’ll never spend any sit-down, mano-a-hermana, tete-a-tete time with insignificant little old me, but I was invited to submit written questions via fax that would be vetted and (if not offensive), hopefully handed to the Congresswoman to answer when time permits.
(I’m hoping she will actually answer them, rather than having some staffer hand off the traditional non-answer answers...)
Anything you would like me to ask her? (Be polite, nothing obscene or insulting.) Any that are worthwhile WILL be included, since I will be faxing the entire list with a cover letter in a day or so.
So don’t dilly-dally, dolly.
Sunday, September 28, 2008
Second verse, same as the first
You realize that any taxpayer-funded bailout plan that does not repeal the CRA (or at least the 1995 amendments thereto) simply pushes the problem down the road a few years, because THE BANKS AND MORTGAGE COMPANIES WILL STILL BE REQUIRED TO LOAN OUT MONEY TO BAD FINANCIAL RISKS.
That law hasn’t changed, folks.
This one is important. If they don’t get rid of the cause, there will be the same result.
The option that Barry “won’t take off the table”
Yeah, he talked tough at the 1st debate, and was as hawkish as his nature would let him be, saying that he “would take no option off the table”. He was implying that he would go all John Rambo on the Iranians if they weren’t immediately cowed by the sheer brilliance of The O!ne’s smile.
But that presupposes we still have a military worth fearing.
Just see what the Messiah wants to do to our military…
Maybe we can call the UN for peacekeeping forces…
The Great Bailout
Ahh… here we go.
It seems that an agreement has been reached in The Great Bailout of 2008™.
Under the rescue plan, the government would pump as much as $700 billion into beleaguered financial firms that are starving for cash, taking over huge amounts of devalued assets from the companies in the hopes of unlocking frozen credit.
The proposal is designed to end a vicious downward spiral that has battered all levels of the economy, in which hundreds of billions of dollars in investments based on mortgages gone bad have cramped banks’ willingness to lend.
“This is the bottom line: If we do not do this, the trauma, the chaos and the disruption to everyday Americans’ lives will be overwhelming, and that’s a price we can’t afford to risk paying,” Sen. Judd Gregg, the chief Senate Republican in the talks, told The Associated Press on Sunday. “I do think we’ll be able to pass it, and it will be a bipartisan vote.”
A breakthrough came when Democrats agreed to incorporate a GOP demand—letting the government insure some bad home loans rather than buy them—designed to limit the amount of federal money used in the rescue.
Another important bargain, vital to attracting support from centrist Democrats and Republicans who are fiscal hawks, would require that the government, after five years, submit a plan to Congress on how to recoup any losses.
I can’t remember where I read it (it might have been here), but taxpayers are looking to lose $800 dollars from their checkbooks in order to bailout the practices of shady lenders. Here’s how I look at it: we’re damned if we do, and we’re damned if we don’t. I don’t want to spend the money. You hear me constantly bitching about how the government takes too much of my paycheck already. But if we don’t do something, our economy is going to collapse. I’ve heard a lot of ultra-conservatives talking about how the market will fix itself over a period of time. That’s womderful if you’re already settled and you don’t have much to worry about, economically speaking. If you have that attitude, there’s a good chance you have a lot of money, own a house, and have relatively few bills. Fine, that’s cool, good for you. But for the rest of us, it sucks. We’re going to be spending more money to fix what should have never happened in the first place. This is straight socialism.
This whole thing could have been avoided if there were ethics in business (remember when those used to exist?) and if the Democrats didn’t have a wild hair up their ass to be politically correct and encourage people who couldn’t afford homes to buy them. The Democrats gave them everything---assistance getting loans, down payment assistance, easy application processes. There are some people who shouldn’t own homes. I hate to say it, but it’s true. The California market has been hit the hardest. Why? We have expensive houses. I have a great job, I make a lot of money, and there is no way in this day and age that I could afford a house in Metro Los Angeles. Yet, people who make way less than I do, who also have to support their kids (and possibly other family members) are buying these houses on little or no down payment, while getting wrapped-up in monthly mortgage payments that devour their entire paycheck.
Does that sound smart? Not at all. Does the connection between Freddy/Fannie Mae’s corporate donations to the Democrats make a little more sense now? It was all a ponzi scheme for them to make money. And they did. Now they’re taking the money and running. And who is here to fix their mess? Us, the taxpayers. Dirtbag businessmen are sitting on a blowup floaties drinking pina coladas while we lose an additional $800 dollars.
So does this make me mad? It makes me very mad. I’m mad that the economy is in the crapper over shady business practices, I’m mad that I have to spend money to fix it, and I’m mad that the free market allowed greed to win in the end.
UPDATE: Fearless Leader Drumwaster makes note of the “NINJA” loans. In his own words, he explains:
I’ve heard those loans described as “NINJA loans”.
No Income, No Job? Approved!
Doesn’t that make you sick to your stomach?
Saving the Princess
Yep… sounds right to me.
I’m pretty sure this is how it would go if I went on an adventure and risked life-and-limb to save a princess.
(From Cavalcade of Comedy Cartoon)
Saturday, September 27, 2008
Fair Winds And Following Seas
Paul Newman has passed away at age 83.
Friday, September 26, 2008
First impressions
I just got my Voter’s “Sample Ballot and Information Pamphlet” covering the November 4 elections.
I normally don’t comment on these because I always get my appointment letter (working for the Registrar of Voters) before my pamphlet arrives, so I am not allowed to comment on any issue or candidate that appears on the ballots in my area of responsibility.
However, this time I got the pamphlet first. 
Ready?
Starting at the top, we have:
- President & Vice President - Since I would rather get cancer than see that empty suit asshat from Chicago in office, and since I disagree with John McCain on several important policy issues (in fact, we only share one - the Global War on Terror), I am (as of this writing) going to leave this spot blank.
- U.S. Representative - Mary Bono Mack is the Republican incumbent, and since we agree on more issues than those on which we are opposed, I will endorse her (even though she never did return my request for an interview).
- Proposition 1A (High Speed Rail Bond Act - NO. If there was enough of a call for this, there would be commercial investments quietly buying up the land. There is no need to assume an extra billion dollars a year in debt for a railroad between LA and the Bay Area…
- Proposition 2 (Standards for Confining Farm Animals) - Not just “No”, but throw in a “get off my property, you ignorant fuck!” to boot. This is on a par with laws regulating the size and shape of the mandatory toys in the pig pens in European farms. I think any person who votes for this bill should be forced to go tend a large flock of chickens for a summer. (They are nasty little fuckers, the avian equivalent of minks. Ever seen a pecking party?)
- Proposition 3 (Children’s Hospital Bond Act/Grant Program) - No. I will always vote against Bond issues, even when it might benefit me individually, because the State of California is BROKE. They don’t need to be picking up any additional debts, no matter how sympathetic the cause.
- Proposition 4 (Waiting Period and Parental Notification before Termination of Minor’s Pregnancy) - Yes. Our schools can’t give our kids a fucking aspirin without a written note from a parent, yet they can walk into a hospital and have fairly serious surgery without the parent’s ever being told? This is not a ban, it just requires a 48-hour delay from parental notification to “procedure”. This is reasonable.
- Proposition 5 (Nonviolent Drug Offenses, Sentencing, Parole and Rehabilitation) - Yes. This changes the sentences for nonviolent drug crimes from incarceration to treatment programs. There is a one-time fee of about $2.5 billion, and annual expenditures of appx $460 million for the programs, but there is an offsetting savings of appx $1 billion per year in incarceration costs, so it will have paid for itself within five years and reduced prison overcrowding to boot.
- Proposition 6 (Police and Law Enforcement Funding. Criminal Penalties and Laws.) - I need to research this, because they are tying together increased spending for police (just shy of a billion dollars per year allocated) with around 30 changes in the criminal code. I do not know what those changes are, and since this is an additional spending bill, I am already against this, but only a little (since this will help police forces across the State). If the laws are desirable, the price might be worth it. If not, then… well, Not.
- Proposition 7 (Renewable Energy Generation) - No. This requires government-owned utilities to provide minimum percentages of the energy from “renewable sources”, and since this failed so miserably the last time it was tried, I don’t see the need to try it again. Any attempt at regulating the energy grid has always been disastrously expensive for the common Joe.
- Proposition 8 (Eliminates Right of Same-Sex Couples to Marry) - Yes. (Again.) Since this had already been passed, only to be overturned by a sedan-load of judges, this is the second - and final, since this will write it into the State Constitution - attempt to define what “marriage” is, as far as California is concerned.
- Proposition 9 (Criminal Justice System. Victim’s Rights. Parole.) - Yes. This will allow the victim of a crime to be involved in the parole process of said criminal, so I vote Yes.
- Proposition 10 (Alternative Fuel. Vehicles and Renewable Energy.) - No. This is an attempt to spend bond money (roughly $10 billion over 30 years) to provide rebates to people who buy hybrids and to fund research. That is not the State’s job, and especially not when the State is already broke.
- Proposition 11 (Redistricting) - I need to research this a bit more, but it sounds good, since it is taking power away from the government and bringing it back down to the people.
- Proposition 12 (Veteran’s Bond Act 2008) - No. Even though this might benefit me later on, it would be at the expense of funds this State does not have.
There you have it. Make of it what you will and YMMV. 
Let’s take this viral
Be prepared to hit the ‘Pause’ a lot, because you won’t want to miss a single thing.
Let’s get the word out. NOW.
Sign Of The Impending Apocalypse
John Hawkins and Markos Zuniga of the DailyKos actually agree on something! 
Thursday, September 25, 2008
Agreement On The Bailout? (UPDATED and BUMPED)
According K-Lo over at the Corner there is:
Agreement on Principles
1. Taxpayer Protection
a. Requires Treasury Secretary to set standards to prevent excessive or inappropriate executive compensation for participating companies
b. To minimize risk to the American taxpayer, requires that any transaction include equity sharing
c. Requires most profits to be used to reduce the national debt
2. Oversight and Transparency
a. Treasury Secretary is prohibited from acting in an arbitrary or capricious manner or in any way that is inconsistent with existing lawb. Establishes strong oversight board with cease and desist authority.
c. Requires program transparency and public accountability through regular, detailed reports to Congress disclosing exercise of the Treasury Secretary’s authority
d. Establishes an independent Inspector General to monitor the use of the Treasury Secretary’s authority
e. Requires GAO audits to ensure proper use of funds, appropriate internal controls, and to prevent waste, fraud, and abuse
3. Homeownership Preservation
a. Maximize and coordinate efforts to modify mortgages for homeowners at risk of foreclosure
b. Requires loan modifications for mortgages owned or controlled by the Federal Government
c. Directs a percentage of future profits to the Affordable Housing Fund and the Capital Magnet Fund to meet America’s housing needs
4. Funding Authority
a. Treasury Secretary’s request for $700 billion is authorized, with $250 billion available immediately and an additional $100 billion released upon his or her certification that funds are needed
b. The final $350 billion is subject to a Congressional joint resolution of disapproval
If only 2(b) had been in place before all this mess then the ride might have been bumpy but the landing might have been smoother.
Paulson gets his 700 billion, but not all at once, so that’s good.
Section Three just needs to go the way of the dodo in my opinion. You bought a house you couldn’t afford? Aww, too bad.
Look, I don’t like this any more than Drum does but the bottom line is this is/was going to happen one way or another. And it seems, at least if K-Lo is correct, that the GOP did get something out of the deal, stronger oversight, which they have been calling for at least since 2003. Could it be better? Sure it could.
This thing could still blow up, and in all probability it will at some point, but such is the way of “good government”.
Update: McCain blew it up:
Sources tell ABC News’ George Stephanopoulos that Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting.
Earlier today Paulson walked into the room where Democrats were caucusing, and pleaded with them ‘please don’t blow this up,’ Stephanopoulos reports.
House Financial services Chairman Barney Frank, D-Mass., was livid, saying ‘Don’t say that to us after all we’ve been through!’
Democrats believe that House Republicans are torpedoing the framework deal. The House Republicans have come with a new proposal that Paulson opposes.
Democrats involved in the negotiations are reportedly very upset that the nearly-agreement now appears to be in jeopardy.
“No agreement,” said Senate Majority Leader Harry Reid spokesman Jim Manley outside the White House. “There are still sticking points to be worked out.”
Frank told Democratic colleagues that McCain’s involvement has destroyed chance of an agreement.
Frank compared McCain’s involvement to: “Richard Nixon blowing up the Vietnam peace talks in 1968,” ABC’s George Stephanopoulos reports.
Well if Barney “Hey, there’s nothing wrong with Freddie Mac/Fannie Mae” Frank is unhappy with McCain’s involvement, I can only view his participation as A Good ThingTM
Barney Frank Playing Politics Update: Well it seems Congresscritter Frank was either lying before or he is lying now:
Rep. Barney Frank (D-Mass.) said that “nobody mentioned McCain” during the several-hour-long meeting on the $700 billion market rescue plan, other than Frank and that his Republican colleagues “winced” when he did.
“He’s been irrelevant to the process. He remains to be,” said Frank. “I was afraid that his dropping in here, like Andy Kaufman’s Mighty Mouse—’here I am to save the day’—I thought that would slow things down. I didn’t see any sign of our Republican colleagues paying any attention to him whatsoever.”
So which is it? Either McCain torpedoed the deal much in the same way Nixon torpedoed the Vietnam Peace Talks or McCain has had no input whatsoever.
Personally I find it hard to believe that a man running for the presidency; who came back to D.C. after receiving a call from Paulson and suspended his campaign has been ignored by other Republicans.
McCain might be fighting the Democrats attempts to pork this bill up and that could very well be the reason why Frank is talking out of both sides of his mouth.
And leave us not forget that it is Frank who has his fingerprints all over this mess:
So Barney please allow me a polite f*ck you.
You shouldn’t even be a part of these negotiations, you should be investigated and thrown out of office you miserable f*ck.
New Hotness Update: K-Lo has the new outline of a plan from House Republicans: (below the fold to spare the front page)