STOCK MARKET WATCH, Wednesday February 18

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday February 18, 2009

Bush Administration Officials Under Indictment = 0
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 1

AT THE CLOSING BELL ON February 17, 2009

Dow... 7,552.60 -297.81 (-3.94%)
Nasdaq... 1,470.66 -63.70 (-4.15%)
S&P 500... 789.17 -37.67 (-4.56%)
Gold future... 967.50 +25.30 (+2.61%)
30-Year Bond 3.49% -0.20 (-5.32%)
10-Yr Bond... 2.66% -0.22 (-7.63%)

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES..............................................S&P FUTURES

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

---

Handy Links

Economic Calendar    Marketwatch Data    Bloomberg Economic News    LayoffDaily    The Big Picture    Yahoo! Finance    Google Finance    Financial Sense    Calculated Risk    Naked Capitalism    Credit Writedowns    Brad DeLong    Bonddad    Atrios    LegitGov    Open Government

---

Read more: du

[ozymandius]

1. Market WrapUp

No Doubt: The Worst is Yet to Come
Can Protectionism be avoided?
BY FRANK BARBERA, CMT

Over the weekend, ‘60 Minutes’ did a lengthy piece on the “Buy American” clause which the Obama Administration at one point seemed likely to be including in the forthcoming stimulus package. Originally, the language in the bill stipulated that government funded projects use only US-made materials (steel etc.). Across the US, Labor Unions have understandably wanted the strong ‘Buy America’ provision, while companies with large-scale exports have opposed the initiative. During his campaign, Obama ads which ran in widely ‘labor-heavy’ states used the slogan, “Buy American, Vote Obama”. In viewing the 60 Minutes report, it was easy to see both points of view, with a senior executive at Nucor arguing that Chinese dumping of cheap steel is costing American jobs, counter-pointed by the CEO of Caterpillar who suggested that this kind of language could open the door to new found Trade Wars with other countries viewing the language as a move toward protectionism by the United States.

To that end, President Obama seems to be coming to the conclusion that risking this kind of bearish signal is simply too high a gamble and has now opted to settle on a middle of the road, watered down version in which the Buy American language only requires that the government spend funds in ways that which do not violate U.S. trade agreements. When interviewed, President Obama said that his change was prompted by concerns that tough ‘Buy American’ requirements could spark international trade wars. Speaking with ABC News, Obama stated that he was against provisions that ‘signal protectionism’ stating, “I think that would be a mistake right now. That is a potential source of trade wars that we can’t afford at a time when trade is sinking all across the globe, -- a downward protectionist spiral could be very dangerous.”

....

Thus to those Americans now losing jobs to low cost, unfair foreign competition, the outrage is palable, justified and understandable as too many Americans have been ‘thrown under the bus’ by the very corporations they work for. So the issue here becomes not whether there is a ‘right’ or ‘wrong’ at work. American workers have been wronged for far too long by short-sighted ‘profit maximizing’ policies thinly cloaked behind a veil of non-real world academic studies. Instead, the question of the day becomes, is “now’ the time to begin unwinding these policies with strong language; and on the matter of the timing issue, it is undoubtedly true that including potentially provocative language at a time when world trade is under massive pressure and the US is massively beholden to its foreign creditors, on this score, the timing is poor and Obama has likely made the right call.

If foreign creditors were to backlash against a change in the existing (unfair) terms of trade, simply boycotting government bond auctions in the coming months could send long term interest rates thru the roof and the US Dollar into a free fall. The resulting economic carnage from a currency crisis would make the entire recession seen to date as but the opening act of an even larger economic melt down. So, on that score, with the US moving to a Keynesian based ‘Deficit Spending” – “Solution” to the current problem - it is no time to begin what could only become yet another powerful and escalating tragedy. In the end, as we have noted for years, the specter of a currency crisis still looms large as the current stimulus spending and resulting deficits will more likely than not trigger currency problems two to three years down the line. For the US, and indeed the rest of the developed world, the looming forces of global rebalancing have set us on a path toward continued economic upheaval for some time from which there is likely no ‘pain free’ way out.

http://www.financialsense.com/Market/wrapup.htm

[Demeter]

62. If Not Now, When? If Not Obama, then Who?

There's no time like the present for unwinding the right-wing elitist conspiracy. It's never going to be easy, unless you think that after the nukes fall, cockroaches can organize an eglaitarian society...

[ozymandius]

2. Today's Reports

08:30 Housing Starts Jan
Briefing.com 525K
Consensus 530K
Prior 550K

08:30 Building Permits Jan
Briefing.com 520K
Consensus 525K
Prior 547K

08:30 Export Prices ex-ag. Jan
Briefing.com NA
Consensus NA
Prior NA

08:30 Import Prices ex-oil Jan
Briefing.com NA
Consensus NA
Prior NA

09:15 Industrial Production Jan
Briefing.com -1.5%
Consensus -1.5%
Prior -2.0%

09:15 Capacity Utilization Jan
Briefing.com 72.4%
Consensus 72.4%
Prior 73.6%

14:00 FOMC Minutes Jan. 28

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[UpInArms]

49. Aa--OO-GA!!! Housing starts falling at more than 100% annual rate!

07. U.S. Jan. housing starts plunge 16.8% to 466,000 rate
8:30 AM ET, Feb 18, 2009

08. U.S. Jan. housing starts, permits fall to record-low levels
8:30 AM ET, Feb 18, 2009

09. U.S. Jan. single-family permits down 8% to 335,000
8:30 AM ET, Feb 18, 2009

10. U.S. Jan. housing starts much worse than 525,000 expected
8:30 AM ET, Feb 18, 2009

16. U.S. Jan. housing starts down record 56% in past year
8:30 AM ET, Feb 18, 2009

17. Housing starts falling at more than 100% annual rate
8:30 AM ET, Feb 18, 2009

[UpInArms]

50. U.S. import prices down record 12.5% in past year

01. U.S. Jan. import prices fall 1.1%
8:37 AM ET, Feb 18, 2009

02. U.S. import prices down record 12.5% in past year
8:37 AM ET, Feb 18, 2009

03. U.S. Jan. nonfuel import prices fall 0.7%
8:37 AM ET, Feb 18, 2009

[UpInArms]

82. U.S. Jan. factory capacity utlilization lowest on record - U.S. Dec. ind production down rev 2.4%

22. U.S. Jan. factory capacity utlilization lowest on record
9:15 AM ET, Feb 18, 2009

23. U.S. Jan. capacity utlilization lowest since Feb '83
9:15 AM ET, Feb 18, 2009

24. U.S. Jan. capacity utilization 72.0% vs 73.3% in Dec.
9:15 AM ET, Feb 18, 2009

25. U.S. Dec. industrial production down rev 2.4% vs 2.0% prev e
9:15 AM ET, Feb 18, 2009

26. U.S. Jan. industrial production down 1.8% vs 1.7% est.
9:15 AM ET, Feb 18, 2009

[UpInArms]

125. FOMC minutes - we are so screwed

48. FOMC saw economy worsening in January
2:01 PM ET, Feb 18, 2009

49. FOMC saw gradual recovery in 2nd half of year
2:01 PM ET, Feb 18, 2009

50. FOMC saw economy shrinking 0.5%-1.3% in 2009
2:01 PM ET, Feb 18, 2009

51. FOMC sees inflation of 1.7% to 2% in the long run
2:01 PM ET, Feb 18, 2009

52. FOMC saw no recovery in housing
2:01 PM ET, Feb 18, 2009

53. FOMC surprised by speed of global downturn
2:01 PM ET, Feb 18, 2009

55. Bernanke says Fed not stoking inflation
1:00 PM ET, Feb 18, 2009

56. FOMC to publish long-range inflation goals, Bernanke says
1:00 PM ET, Feb 18, 2009

57. Fed can unwind 'extraordinary measures,' Bernanke says
1:00 PM ET, Feb 18, 2009

58. Fed expects 'quite low' inflation for some time: Bernanke
1:00 PM ET, Feb 18, 2009

---------------------------
if these guys are "surprised", we just don't stand a chance

:sigh:

[ozymandius]

3. The GM and Ford viability plans are available.

http://www.treasury.gov/press/releases/tg31.htm

hat-tip to radfringe

[ozymandius]

5. GM, Chrysler seek billions more, to cut more jobs

DETROIT – Billions of dollars in government loans to prop up General Motors and Chrysler won't be enough. The companies, which have received $17.4 billion so far, filed plans with the government more than doubling that request to a staggering total of $39 billion.

The requests, made in government-required restructuring plans filed Tuesday, were accompanied by plans for thousands more job cuts, slashing of models and brands, union concessions and the prospect of even further expense cuts.

In a dramatic acknowledgment that conditions in the U.S. auto industry have grown significantly worse in just two months, GM alone said it would cut 47,000 jobs globally by the end of the year — 19 percent of its work force. It also said it would close five more U.S. factories, although it did not identify them.

Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models.

http://news.yahoo.com/s/ap/20090218/ap_on_bi_ge/autos_bailout

[tclambert]

35. This is slightly slanted against the car companies.

When they say "a staggering total of $39 billion" my first thought was what adjective do you use for the $700 billion TARP bailout? The Wall Streeters are also asking, "Can we have some more, please?" without the please, again in hundreds of billions. The car companies seem to be asking for another $22 billion in loans. Have the financial and credit companies ever talked about paying us back the TARP money?

Maybe they deserve to get beat up about it. The question, "When will this end?" is a legitimate one and they WILL ask for thirds unless the overall economy changes direction right quick.

What makes me sad is they are on the brink of bringing out a new generation of greener cars. My son went to the North American International Auto Show. He said besides the Chevy Volt, GM has a Cadillac version of it slated to go into production in about 2 years. And with much less fanfare, Ford and Chrysler have been developing plug-in hybrids as well. They had a Ford Focus electric vehicle concept car on display that he liked, partly because his company's logo was plastered all over the insides.

Well, I suppose somebody will make these cars. Maybe just not Americans. And Americans may not be able to afford to buy them anyway.

[CatholicEdHead]

61. They seem to be following their SNL spoof pretty well

They need $X Billion this quarter, $X Billion this quarter and so on.....

http://videocafe.crooksandliars.com/heather/snl-spoofs-big-three-bailout-hearing

[tclambert]

148. And they do plan to build "safer cars, more fuel efficient cars, and gayer cars."

Last I heard the Mini Cooper was the last car to show an increase in sales. Apparently, Barney Frank is not the only one who thinks "they're adorable."

[ozymandius]

4. Oil stays below $35 after big drop overnight

SINGAPORE – Oil prices languished below $35 a barrel Wednesday in Asia as further signs the U.S. recession is deepening spurred investor concern over crude demand.

Light, sweet crude for March delivery fell 45 cents to $34.48 a barrel by midafternoon in Singapore on the New York Mercantile Exchange. The contract on Tuesday fell $2.58 to $34.93.

Investors are doubting whether a $787 billion stimulus bill, signed Tuesday by President Barack Obama, will be enough to jolt the U.S. out of its worst recession in decades.

....

OPEC has tried to bolster prices by cutting supplies, and the group's leaders have said they may slash output again at a meeting next month. The Organization of Petroleum Exporting Countries has announced 4.2 million barrels a day of productions cuts since September.

....

In other Nymex trading, gasoline futures fell 0.93 cent to $1.10 a gallon. Heating oil dropped 1.41 cents to $1.17 a gallon, while natural gas for March delivery slid 5.3 cents to $4.15 per 1,000 cubic feet.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

8. Crude oil is getting cheaper — so why isn't gas?

On Thursday, for example, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gas rose to $1.95 on the same day, its peak for the year. On Friday gas went a penny higher.

To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down that has left gas cut off from its usual economic moorings.

The price of gas is indeed tied to oil. It's just a matter of which oil.

....

At the same time, refiners have seen the same headlines as everyone else about job losses and consumer spending. They've slashed production just to avoid taking losses on gasoline no one will buy. Result: Higher gas prices.

http://news.yahoo.com/s/ap/20090216/ap_on_bi_ge/gas_prices_unhinged

---

Not one word on commodities trading in this article. It merely points to basic pricing structure weighted against specific oil resources and demand destruction - which really does not equate to price destruction at all. Reader beware.

[Loge23]

27. $1 billion on 21Black, please

The Great Oil Gouge, which saw barrel prices reach triple digits, was sold to us as the ever-encompassing "supply & demand" market mechanism.
It was only after the orgy ended when most of our suspicions were finally confirmed - it was speculation that drove the binge.
So here we go again.
Now it's the refineries turn.
The oil and gas gouge is perhaps the most tangible record we have of how essential financial transactions, throughout the world, have ceased to function as a market reaction. They are now in front in the cart and operate essentially as a carnival attraction.
Banking isn't about banking, commodities trading isn't about commodities trading, stock prices aren't about corporate value.
It's all about $1billion on 21Black. And it is this relentless roulette wheel bidding that has spun our very economic system out of control.

[Demeter]

34. And Fraud. You Forgot the Fraud. And Looting.

[tclambert]

36. Some good news about this, to partisan Democrats, anyways, is this hurts Sarah Palin.

Alaska's state government runs 90% on oil money. With oil selling at about 1/4 what it did, Alaska has something of a budget problem. What will the governor do? She may have to take time away from reading ALL the newspapers and do some governing.

[ozymandius]

6. Yesterday I quipped that someone should ask Greenspan what to do.

I did not expect anyone to take that idea seriously.

Recession will be worst since 1930s: Greenspan

NEW YORK (Reuters) – Former U.S. Federal Reserve Chairman Alan Greenspan said on Tuesday the current global recession will "surely be the longest and deepest" since the 1930s and more government rescue funds are needed to stabilize the U.S. financial system.

"To stabilize the American banking system and restore normal lending, additional TARP funds will be required," Greenspan said in a speech to the Economic Club of New York. The U.S. Treasury's Troubled Asset Relief Program designed to help bail out banks has been partially successful, he said.

....

Greenspan, a proponent of self-regulation, said he was "deeply dismayed" when in August 2007 the premise that firms had the enlightened self interest to monitor their own risk exposure "failed."

more comments from The Messtro...

[GoesTo11]

9. In other words "my bad"

"Sorry I acted like I knew everything. Sorry I endorsed and made policies that risked and lost all your money and left you tons of debt and no jobs."

It's ok, Alan. We forgive you. What do you recommend now?

[ozymandius]

12. His recommendations have been tantamount to filling one's mouth in with cement.

I've had way too much of this hack acting like his destructive policies can be summed up as an "oopsie" moment.

[GoesTo11]

15. His recommendations ...

From the article:

He still believes self-regulation is a first line of defense for market effectiveness.

"We need not rush to reform. Private markets are imposing far greater restraint at the moment than would any of the current sets of new regulatory proposals."

[ozymandius]

19. That's because they're insolvent.

Greenscam has never pondered what a zombie bank is, it appears. Housing prices are plummeting because banks will not provide loans due to self-preservation. The banks are hoarding cash infusions from Treasury to keep the body alive (sort of) while traditional, non-governmental revenue streams die.

[Pachamama]

48. "Filling Ones Mouth with Cement"...

:lol: I like that - never heard that one! :hi:

I also wonder if I'm not the only one that just wishes someone on MSNBC would have the guts to ask wife Andrea Mitchell what she thinks of Greenspans policies and how they may have played a role in the mess we are now finding ourselves in? Whenever I see her on the screen, I realize that the powers be and the people who make the decisions clearly still support Greenspan and his ways. :eyes:

[florida08]

51. well to be fair

there's plenty of blame to go around but it did begin with his meddling with the interest rates. Here are 24 more to blame.
http://www.time.com/time/specials/packages/article/0,28804,1877351_1878509_1878508,00.html
You can click on each name to see why they made the list.

[Hugin]

66. Would that be model cement or the aggregate kind? n/t

[Demeter]

16. Greenspan backs bank nationalisation Solution may be needed for some lenders

http://www.ft.com/cms/s/e310cbf6-fd4e-11dd-a103-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe310cbf6-fd4e-11dd-a103-000077b07658.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fworld


The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times.

In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers.

"It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.”

Mr Greenspan’s comments capped a frenetic day in which policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalisation.

“We should be focusing on what works,” Lindsey Graham, a Republican senator from South Carolina, told the FT. “We cannot keep pouring good money after bad.” He added, “If nationalisation is what works, then we should do it.”

Speaking to the FT ahead of a speech to the Economic Club of New York on Tuesday, Mr Greenspan said that “in some cases, the least bad solution is for the government to take temporary control” of troubled banks either through the Federal Deposit Insurance Corporation or some other mechanism.

The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”

But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.

”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”

Mr Greenspan’s comments came as President Barack Obama signed into law the $787bn fiscal stimulus in Denver, Colorado. Mr Obama will announce on Wednesday a $50bn programme for home foreclosure relief in Phoenix, Arizona. Meanwhile, the White House was working last night on the latest phase of the bailout for two of the big three US carmakers.

TINFOIL HATS ON! THEY HAVE FIGURED OUT A WAY TO GAME THE NATIONALIZATION!

[Demeter]

20. DID GREENSPAN JUMP, OR WAS HE PUSHED? China urges west to establish ‘bad banks’

http://www.ft.com/cms/s/0/444f98b8-fd25-11dd-a103-000077b07658.html

The US and Europe should follow China’s example and establish “bad banks” to manage toxic assets if they want to resolve the financial crisis, according to the head of China’s largest bad bank.




In a rare interview Tian Guoli, chief executive of Cinda Asset Management Corporation, urged western governments to act quickly to avoid slipping into a protracted, Japan-style recession and stagnation.

“Bad assets in a bank are just like a rotten spot in an apple – you must cut it out if you want to eat the apple and if you don’t get rid of it the rotten part will spoil the rest,” said Mr Tian.

“Japan waited too long to remove bad assets from their banks and when they finally set up a bad bank, it was too late.”

China’s financial system has been left relatively unscathed by the global crisis. It is barely integrated into the global system and the financial sector has been transformed in the past decade after near-collapse in the Asian crisis.

Two state-controlled lenders, Industrial and Commercial Bank of China and China Construction Bank, are the largest and second-largest banks in the world by market capitalisation and are among the most profitable after the humbling of groups such as HSBC and Citigroup.

“Who would have thought that these banks we used to revere, such as HSBC and Citigroup would have such big problems?” said Mr Tian. “Today, Chinese banks are beginning to have a voice in the world.”

Members of the US administration have advocated a bad bank that could be modelled on the Resolution Trust Corporation, established in the US in 1989 to deal with the fall-out from the savings and loans crisis. European governments are considering a similar solution.

China’s four bad banks, known as “asset management corporations” (AMCs), were established in 1999 and were themselves modelled on the RTC. Analysts say China’s decision to establish the AMCs was effective in revitalising the banks, but the problems were shifted elsewhere and have never been fully dealt with.

In the past decade AMCs have received a total of Rmb2,400bn ($350bn) in non-performing assets from the banks, with Cinda taking about Rmb1,000bn of that, according to Mr Tian.

China’s state auditor raised concerns last year that the AMCs were unable to repay the interest or principal on bonds issued to the large banks in return for their bad assets.

[Hannah Bell]

38. um, that "china construction bank"? BoA owns 19% of it.

& they bought part of it with TARP money.


"U.S. politicians could be forgiven a raised eyebrow or two. Bank of America took $15 billion under the U.S. Treasury's Troubled Asset Relief Program, known as TARP. Now its chief, Ken Lewis, is spending $7 billion of his spare cash upping the bank's stake in China Construction Bank, or CCB, to 19 percent. It might smack of TARP funds - borrowed by the United States from countries like China - going full circle back to the Middle Kingdom."

http://www.iht.com/articles/2008/11/18/business/views19.php


Some kind of shell game, i think.

[Demeter]

41. It Always Is, With these Clowns

[Dr.Phool]

67. We're taking economic advice from commies now, huh?

:rofl: :rofl:

Where's Joe McCarthy when you need him? There's at least 241 communists working in the Treasury Dept. And that Paulson guy sure looks a lot like Khrushchev.

[ozymandius]

21. "allow the government to transfer toxic assets"

That every taxpayer would own. Decent people should shun this Greenscam-thing.

[CLANG]

42. Who do I get to transfer my "toxic assets" too?

[RUMMYisFROSTED]

58. Your loved ones.

[Demeter]

22. NPR Misrepresents Bank "Nationalization" Yet Again

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=02&year=2009&base_name=npr_misrepresents_bank_nationa

NPR presented an expert asserting that the taxpayers would be liable for all bank debt when it takes over bankrupt banks. This is not true. The government has no legal liability for the bad debt of bankrupt banks. It has generally honored not only the deposits but also the bonds of banks that were taken over by the FDIC, but it has no obligation to do so. If the current crisis leaves such a large volume of bad bank debt, it would be under no legal obligation to repay all of this debt at 100 cents on the dollar (presumably it would make owners of subordinated debt take the first hit).

SO THIS IS HOW THE PTB INTEND TO SAVE THEIR ASSES AT OUR EXPENSE?

[ozymandius]

25. I have been disappointed with this area of coverage.

While I heard a piece yesterday about zombie banks that was good - I've heard disappointing features about other areas of economic reporting. This example you cite is a good one. It would be really invigorating if NPR would stray from "safe" choices to be on the expert panel.

[DemReadingDU]

33. NPR: Zombie Banks Feed Off Bailout Money

2/17/09 Zombie Banks Feed Off Bailout Money
Morning Edition, February 17, 2009 · In the continuing series on the lexicon of financial misfortune, Morning Edition introduces the term "zombie bank." A zombie bank keeps draining bailout capital from the government but doesn't respond with any meaningful lending that helps the economy recover. The prevalence of zombie banks made the long Japanese recession of the 1990s especially painful.
http://www.npr.org/templates/story/story.php?storyId=100762999


2/18/09 Is It Time To Declare Some Big Banks Dead?
Morning Edition, February 18, 2009 · As the government attempts to stabilize the nation's financial system, officials must decide whether to continue to prop up banks as private entities, nationalize them or shut them down.
NPR's Ari Shapiro asked economist Raghuram Rajan of the University of Chicago what determines whether a bank falls into the category of "dead men walking."
http://www.npr.org/templates/story/story.php?storyId=100786812

[TalkingDog]

109. I stopped taking NPR seriously when they started doing "soccer mom" news;

Digestable factoids devoid of context.

When I heard the first Wal-Mart sponsorships I lost the last vestages of respect.

of course, then came the Homeland Security commercials.... what's lower than no respect?

[Ghost Dog]

120. Rising anger. n/t

:thumbsup:

[Demeter]

24. Foreclosure: Why Are the Banks So Scared of the Market?

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=02&year=2009&base_name=foreclosure_why_are_the_banks

We know that the people who run Citigroup, J.P. Morgan, Wells, and other major financial institutions may not be the sharpest knives in the drawer, but how much do taxpayers have to cough up to make up for their ineptitude? David Leonhardt's discussion of housing bailout plans never seems to consider the possibility that we would just let large numbers of foreclosures occur and let the banks eat their losses.

Yes, many, if not most, of the banks will go under. So what? Why should taxpayers support convoluted schemes to protect these bank executives and their shareholders from their own ineptitude. We can protect homeowners by simply giving them the right to stay in their home as renters following foreclosure. It's a simple, costless and bureaucracy-free solution, but it screws the banks. So, the folks in Washington and the media apparently are not interested.

--Dean Baker

REMEMBER THESE TWO DATA POINTS:

HALF OF ALL ASSET-BASED SECURITIES (BUNDLED MORTGAGES AND OTHER LOANS AND DEBTS) HAVE ZERO VALUE

40% OF THE WORLD'S WEALTH HAS EVAPORATED IN PAPER LOSSES

[Demeter]

26. NPR Tells Us That the Question is Whether Taxpayers Pick Up All of Investors' Losses or Just Some of

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=02&year=2009&base_name=npr_tells_us_that_the_question

NPR Tells Us That the Question is Whether Taxpayers Pick Up All of Investors' Losses or Just Some of Them

Unfortunately, I am not kidding. In an incredibly poorly informed piece on the foreclosure crisis (they apparently still haven't heard of the housing bubble), NPR concluded with a quote telling listeners that, "We're really just trying to figure out who bears the loss. Do we want the government to bear it all, or do we want some of it to be pushed onto investors?"

Of course, that's the question. Investors can't be expected to know what they are doing, the little boys and girls need the government to help them out. After all, that is why we have the government. No one would want to leave wealthy investors' fate to the market. The only question is whether we bail them out completely, or maybe force them to suffer some loss due to their bad investments.

It's great that NPR framed the range of views that it will present on this issue so clearly. Of course there are people who think that the government should focus on helping homeowners rather than wealthy investors who are too dumb to know how to invest their money.

Some of us have advocated just temporarily changing the rules so that homeowners facing foreclosure would have the option to remain in their homes as renters for long periods of time. This would both give homeowners security in their home and give the banks real incentive to negotiate terms that allow homeowners to stay in their house as owners, since banks will not want to become landlords.

This proposal has the advantage of requiring no tax dollars, no new bureaucracy, and could take full effect the day that Congress passes it. But, it would not help the investors make up their losses which NPR tells is the real purpose of government, so you won't hear about it on Morning Edition.

--Dean Baker

I'M REALLY GETTING STEAMED HERE--IT SAVES ON HEATING COSTS, I GUESS

[bread_and_roses]

39. NPR does not stray out of the Beltway Box on anything important

-like politics, war, economy. My steam point is always Cokie Roberts and Maura Lyerson repeating exactly what I read reported here as the current talking heads babble (I don't watch the talking heads and rely on DU to keep up with what they are saying) and NPR calling it "analysis" - I suppose because they drawl it in those world-weary voices and use words of more than one syllable. On anything related to economics they they never challenge whatever Neo-Con spew is the day's talking point.

Their reporting on the stimulus was worthless and seemed to consist near entirely of letting Republicans repeat their idiotic talking points without challenge. They have time for trite "commentaries" and endless little feel-good stories but next to none for labor news. Your example - framing the options as wage-serf taxpayers assuming all or a little less than all of those poor investors' losses(can't have the upper 1-3% taking the fall for their own greed, now, can we?)is a perfect illustration of their typical frame. National Propaganda Radio indeed.

[sendero]

44. NPR went to the dark side..

.. around 2001. They have never really came back. I listen to them now only to laugh at the spin.

[Dr.Phool]

75. And Cokie Roberts has had her head up her ass for eternity.

[llmart]

146. Agreed!

I simply cannot stand that woman. She brings nothing to the party.

[Demeter]

32. ALREADY OUTDATED? Nationalization by Autumn, Bank on It By James Saft

http://blogs.reuters.com/great-debate/2009/02/13/nationalisation-by-autumn-bank-on-it/

February 13, 2009 "Reuters" -- -Like it or not the United States will be forced to nationalize large swathes of its banking system by the time the leaves fall from the trees in Washington.

The tragedy is that we will have to wait that long and that the costs will mount.

The plan to rescue the banks, or, er, the people, as enunciated by Treasury Secretary Geithner, is no plan, only an apparent set of contradictory principles: an ideological one not to nationalize and a political one not to subsidize too obviously.

The plan will fail unless the administration comes out in favor of either subsidy or seizure of failing banks. Either the United States will be forced to nationalize when that becomes apparent or perhaps it is waiting until that failure makes nationalization more politically palatable.

In either event, it is a terrible mistake and the cost will only grow, both in direct terms for taxpayers and more broadly for the growing number of people with too little income to pay tax.

Geithner laid out a plan to apply stress tests to large banks and require those that do not pass either to raise capital (from whom exactly, I hear you ask) or to accept an injection of convertible securities from the government on terms that have not been defined. Banks that take government coin will have limits placed on their compensation and other actions.

There is $500 billion to $1 trillion to fund an aggregator bank which will "partner" with private capital and set prices for distressed bank assets, presumably with some sort of insurance wrapper to limit private capital's downside. There are also measures intended to generate lending directly to consumers, house buyers and businesses.

All in all, it's a bit like watching a man trying to eat a steak without using his teeth.

"The financial system needs at least $1 trillion in tangible common equity to be sufficiently capitalized - the capital holes on financial balance sheets are just too large to be plugged with convertible securities with vague terms," Paul Miller, an analyst at FBR Capital Markets who has been very prescient, wrote in a note to clients.

"Another concern ... is that it does not adequately address the toxic assets on bank balance sheets. It does include a variation of a public/private aggregator bank, but private investors will want to buy assets at distressed prices and the banks will only sell assets at above-market prices."

Those two points form the crux of the issue; for the banking system to work without widespread failure and nationalization we either have to hand out huge subsidies to banks directly, in the form of cheap capital, or indirectly, by giving a subsidy to investors who will pass on part of it to banks as a condition of getting their share. The first is unfair, the second unfair and inefficient.

Playing the Long Game in A Short Life

Of course, it could have been worse. We seem to have escaped calls to magic solvency up by suspending mark-to-market accounting, which would have worked as well as making "six" the new "zero."

And in fairness we don't know how the stress tests will work or if it is possible to fail one. But President Obama did tell ABC News that nationalization "wouldn't make sense" because of the scale and complexity of the U.S. economy and capital markets would make it too tough to manage and oversee. He's right and government will do a terrible job of managing banks, but it will be forced to and may as well get on with it. They seem now to be hoping that the economy turns and bails them and the banks out of their pickle, but that is a dangerous bet.

By the time we figure out that it's not working, when whatever capital we have injected is swamped by falls in asset prices - and remember deleveraging and asset price falls go hand in hand - things will be that much bleaker and the United States will have less room to maneuver.

But ironically, maybe the most hopeful sign yesterday was the negative way in which the stock market and shares in banks reacted. Bank investors clearly thought that this raises the chances of them having their equity extinguished or at the very least their share of future profits diminished.

And Obama is not FDR coming in after a depression was already entrenched, he is leading a country which is only beginning to wake up and to suffer. It is just possible, though not likely, that the administration realizes it will have to take more drastic steps but needs more time to prepare the ground and make that politically possible.

One factor which may come into play is international pressure not to nationalise. What is just about possible in the United States would be far harder in economies such as Britain's with larger banking systems relative to their size and borrowing power.

[Ghost Dog]

68. Nationalize the Federal Reserve System too,

and then abolish it (again), that's my latest advice.

Replace the fractional reserve banking system with non-gold-backed paper fiat money (like 'colonial scrip') issued and carefully controlled directly by the Treasury.

Of course, the People would have to take back the Government, and the Media, for that to work... Note that any President who tries to do it tends to mysteriously soon die, History shows...

[Demeter]

70. That's so equitable, it just might work!

Would you believe someone is out there publicly bitching because after the Revolution, the US paid off the war bonds issued by the Continental Congress instead of repudiating them?

[Ghost Dog]

73. Hey, you guys must know more of this history that I do

(I'm only just beginning to research it) - cf. my late post yesterday: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3742485&mesg_id=3743952

Do tell me more! For example, I need to know exactly how the exact right amount of such a purely fiat currency, no more and no less, can be provided to a given economy.

[Demeter]

76. I was reading about how they did it , before Jackson was President

and how the Rothchilds and such undid it and started the Federal Reserve....can't remember the book. It was before Christmas....

[Ghost Dog]

98. Don't mention the Rothschilds!

:hanged man:

From wikipedia: http://en.wikipedia.org/wiki/Colonial_scrip

Colonial scrip was not backed by gold or silver and therefore the colonies could control its purchasing power. This was similar to the "tally stick" system used by the British Empire for over 700 years. It was different from the conventional European mercantilist system of money which required governments to borrow from banks and pay interest for those loans, as gold and silver were the only regarded forms of money. Colonial scrip, were "bills of credit" created by the government, based on the credit of that government, and this meant that there was no interest to pay for the introduction of money. This went a considerable way towards defraying the expense of the Colonial governments and in maintaining prosperity. The Governments charged low interest when it loaned out this paper money to its citizens, with land as collateral, and this interest income lowered the tax burden on the people, contributing to prosperity.

The currency was born when a lack of gold and silver in the Colonies made trade hard to conduct, and a barter system prevailed. One by one, the Colonies began to issue their own paper money to serve as a medium of exchange to make trade vibrant. The Governments could then retire excess notes out of circulation by taxing the people, helping some colonies generally avoid inflation. Each colony had its own currency and some were better managed than others. It was banned by English Parliament in the Currency Act after Benjamin Franklin had explained the benefits of this currency to the British Board of Trade. Outlawing the circulating medium caused a depression in the colonies, and Franklin and many others believed it to be the true cause of the American Revolution.

...

The Pennsylvania version of this currency was said to be the most effective, because they controlled the money supply and issued only enough notes so as to satisfy the demands of trade, preventing inflation. In 1938, Dr. Richard A. Lester, an economist at Princeton University, wrote that “The price level during the 52 years prior to the American Revolution and while Pennsylvania was on a paper standard was more stable than the American price level has been during any succeeding fifty-year period.” Pennsylvania established a "land bank" that allowed landowners to borrow scrip with their land as collateral. They could borrow twice the value of their land, half of it representing actual land value, and the other half representing production potential of the land. The loan was to be retired over a set period of years, with the land ownership being restored to the citizen upon payment. When the loan was fully retired, another loan could be taken out.

...

I'm coming at this also from another direction. My researches into So-called "Dark Ages" post-Roman Empire Europe (as viewed by a Brit in Spain)... The fact that almost all references to non-Graeco-Romano, non-Judeo-Christian, non-Northern European, essentially, factors in 'modern' cultural, social and, say, economic history (of an Age of (relative) Light elsewhere!) tend to disappear from, or at most be glossed over in, most contemporary accounts of the 'historical record' renders me curious, raises my suspicions (the above-referenced video jumps straight from Rome to 11th century England, for example): Someone ignoring or hiding something here? Why?

For example, here's wikipedia again (such a Pandora's Box, the knowledge and ideas spread by people using internet, but constantly arousing such a frustrating desire for further knowledge, cross-references, debate and refutation/confirmation that I'm maybe planning to head back to (an Open, Free) university): http://en.wikipedia.org/wiki/Islamic_banking

During the Islamic Golden Age, early forms of proto-capitalism and free markets were present in the Caliphate,<1> where an early market economy and an early form of mercantilism were developed between the 8th-12th centuries, which some refer to as "Islamic capitalism".<2> A vigorous monetary economy was created on the basis of the expanding levels of circulation of a stable high-value currency (the dinar) and the integration of monetary areas that were previously independent.

A number of innovative concepts and techniques were introduced in early Islamic banking, including bills of exchange, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms of capital (al-mal), capital accumulation (nama al-mal),<3> cheques, promissory notes,<4> trusts (see Waqf), startup companies,<5>, transactional accounts, loaning, ledgers and assignments.<6> Organizational enterprises similar to corporations independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced.<7><8> Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.<3>

...

The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart." or "to ensure equivalency in real value" and that "numerical value was immaterial." During this period, gold and silver currencies were the benchmark metals that defined the value of all other materials being traded. Applying interest to the benchmark itself (ex natura sua) made no logical sense as its value remained constant relative to all other materials: these metals could be added to but not created (from nothing).

Applying interest was acceptable under some circumstances. Currencies that were based on guarantees by a government to honor the stated value <“fiat money”> or based on other materials such as paper or base metals were allowed to have interest applied to them <9> When base metal currencies were first introduced in the Islamic world, no jurist ever thought that "paying a debt in a higher number of units of this fiat money was riba" as they were concerned with the real value of money (determined by weight only) rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back as 1050 dinars of equal aggregate weight (i.e., the value in terms of weight had to be same because all makes of coins did not carry exactly similar weight).

...

No Rothschilds, Fuggers and such in the economically thriving Islamic Golden Age, then? Hmmm...

[tclambert]

37. Isn't it already the longest and deepest?

We're in what, the 14th month of it, and 3 or 4 million jobs have been lost? So Greenspan is actually predicting the past, which is, of course, a good deal easier than predicting the future.

"Additional TARP funds will be required." Sigh. Never a please from the bankers. At least Oliver Twist said, "Please."

[ozymandius]

7. Asian stocks track US slide as bailout hopes fade

HONG KONG – Most Asian stock markets dropped Wednesday after U.S. benchmarks plummeted toward 5 1/2-year lows and investors began losing hope that governments can rescue the world's economies from slipping deeper into recession. European markets opened down.

....

Amid the growing evidence of decay, investors are still unconvinced that plans rolled out so far will arrest the steepest slide in the global economy in decades, and want more specifics and bolder measures from policy makers, analysts said.

....

As trade started in Europe, Britain's FTSE 100 was down 1.4 percent, Germany's DAX lost 1 percent and France's CAC 40 shed 0.7 percent.

In Asia, Japan's Nikkei 225 stock average fell 111.25 points, 1.5 percent, to 7,534.26, its lowest close in nearly four months. Hong Kong's Hang Seng, down almost 2 percent earlier in the day, recovered to gain 70.60 points, or 0.6 percent, to 13,016.00.

South Korea's Kospi was off 1.2 percent at 1,113.19. Markets in Australia, India, New Zealand and the Philippines also fell, though those in Singapore and Taiwan traded up modestly.

http://news.yahoo.com/s/ap/20090218/ap_on_bi_ge/world_markets

[Ghost Dog]

31. Record slump in Japan: a sign of deepening global recession

By Peter Symonds
18 February 2009

A dramatic slump in the Japanese economy in late 2008 is another ominous sign that the global economic crisis is continuing to snowball, with no end in sight. Economic data released on Monday revealed that the world’s second largest economy contracted at an annualised rate of 12.7 percent for the final quarter of 2008—the third straight quarterly fall and the steepest decline since 1974. Deutsche Bank in Tokyo bluntly predicted a “severe depression” in Japan, lasting at least until late 2010.

Just months ago, Japan was regarded among the best placed of the advanced industrialised countries to weather the international financial turmoil that erupted in the US in September. Hard hit by a collapse in global demand for its exports, however, Japan is now the worst affected. Its December quarter contraction eclipsed the sharp declines of 3.8 percent for the US and 1.2 percent for the euro zone.

...

Last year’s optimistic assessments of Japan’s economic prospects were based on the calculation that its banking and financial system was not heavily exposed to the mountain of toxic debt in the US that was creating havoc in global markets. But as the financial tsunami swept around the world, the sudden withdrawal of foreign funds needed to shore up institutions elsewhere undermined the already weakened Tokyo share market, and, in turn, hit the banks, which in Japan are permitted to include share holdings as part of their capital base.

...

The ruling Liberal Democratic Party (LDP) is confronting a deep political crisis that may well result in its defeat—for only the second time in half a century—at elections later this year. This week, the approval rating for Prime Minister Taro Aso collapsed to a new low of 9.7 percent. Sharp divisions have emerged inside the LDP over the government’s latest economic stimulus package. Another sign of the government’s disintegration was yesterday’s resignation of finance minister Shoichi Nakagawa after appearing, apparently drunk, at a G7 news conference last weekend.

The impact of Japan’s precipitous economic decline will be felt internationally. Significantly, the fourth quarter contraction in Germany, the world’s largest exporter, at an annualised 8.4 percent, was not far behind Japan’s. Both countries are exporters not only of vehicles and hi-tech consumer goods, but also of machinery and other capital goods. The sharp downturn in these exports is symptomatic of falling business investment around the world as companies axe plans for future expansion.

A sharp indicator of the decline in this sector is Japan’s falling exports to China and the rest of Asia. After expanding by 12 percent in the first half of 2008, exports to China began to fall in October and collapsed by 36 percent in December. Japanese exports of high-tech materials and production machinery to China was a major factor in lifting Japan out of the slump of the 1990s. These products were mainly used in Japanese companies for export back to Japan or to the markets in the US and Europe.

...

The falling sales of capital goods to China are part of a broader trend. Beijing announced on Monday that foreign direct investment in January had plunged by 33 percent compared to the same month last year—the fourth straight monthly decline. As global demand has fallen, so too has foreign investment in the world’s largest cheap labour platform. China’s growth rate has fallen from 13 percent in 2007 to 6.8 percent in the final quarter of last year and forecasts point to further declines in 2009.

US Secretary of State Hilary Clinton touched down in Tokyo this week as Japan’s disastrous economic data was being announced. Ironically she made her first foreign visit to Asia in order to underscore the region’s importance to the Obama administration, particularly in the economic sphere. The US is heavily dependent on funds from both Japan and China to cover its massive current account and budget deficits. China and Japan are the world’s two largest holders of US bonds. The collapse of Japanese and Chinese exports may well rebound on the American economy in form of a slowdown or even withdrawal of investment funds, further compounding the economic turmoil in the US.

Under conditions of a vast expansion of globalised production over the past three decades, the economic contraction registered in Japan is not simply an indicator of that country’s profound difficulties but another sign of the crisis reverberating throughout the interlocking international chains of production and finance.

/... http://wsws.org/articles/2009/feb2009/japa-f18.shtml

[Ghost Dog]

40. TOPWRAP 3-Germany backs law on bank nationalisations

LONDON, Feb 18 (Reuters) - The German cabinet approved a law on Wednesday letting it nationalise banks, setting aside a reluctance to seize private property in the latest government intervention worldwide to tackle the financial crisis.

The bill could lead to the forced nationalisation of struggling German lender Hypo Real Estate (HRXG.DE).

In setting aside a postwar commitment to respect private property, Germany became the latest government to edge away from free market policies, instead using state support to prop up flagging banks and industries.

...

Governments worldwide are struggling to find their own solutions to the financial crisis, while trying to avoid accusations of protectionism and state intervention that could slow global trade or undermine confidence in their economies.

...

But Germany has agonised over "Enteignung" (expropriation) of shareholders, a loaded term linked in the minds of many to Nazi seizures of Jewish property in the 1930s and East Germany's assault on private business after World War Two.

...

In China -- which many had hoped might be able to power the global economy out of the worst downturn since the Great Depression -- a trade union official warned against "hostile forces" stirring up trouble amongst its newly employed workers.

Beijing's Communist Party leadership has said legions of idle rural workers gathered in the country's struggling export hubs could pose a threat to the stability.

About 20 million jobs have been lost in southern China's manufacturing hub of Guangdong alone.

Sun Chunlan, vice-chairman of the state-backed All-China Federation of Trade Unions, said police had been rushed to all regions to "understand the situation with regional social stability". Beijing said it would increasingly use its $2 trillion in foreign exchange to support domestic growth and finance the expansion of Chinese companies overseas.

/... http://www.reuters.com/article/marketsNews/idINSP39696220090218?rpc=44&sp=true

[AnneD]

79. Morning Marketeers.........

:donut: and lurkers. A special thanks to my secret sweetheart-your too kind.

China threatens about outside agitation of labour forces. They were upset about the protesters during the torch run. Their current leadership, much like our previous administration, was more concerned with losing face and keeping up appearances. I have said in many previous posts that there has been many pockets of unrest in China and frankly, their rapid growth has been like adding fuel to the fire. What stabilized China in the past was that everyone was more or less in the same boat. Now there are glaring inequalities. Folks that play by the rules are punished and those that break them are rewarded. Families are divided. Farmers get nothing from their crops-and their children leave for the cities for a better existence and end up no better than slaves for factory bosses. They were the ones that made China's economic miracle.

And now that there is an economic downturn and it is hitting China-small wonder they are pouring so much money into their economic stimulus package-they risk undergoing a revolution if they don't figure a way out.

Happy hunting and watch out for the bears.

[Ghost Dog]

113. Small wonder, indeed.

Nice to see you, AnneD! You Ok, not too depressed, there in still-thriving Houston, I hope. :hi:

[AnneD]

118. I was knocked down by a bad stomach bug....

and was so busy with sick kids in the clinic for the last 2 weeks that it has been really rough.
Hubby is in Germany now for some brief business (Hoping he and DUer Katrina can meet up). He will be there for a week and the head to India for the wedding and to create a supply network for sitars. We will kick off his music school when he gets back. We have lots of friends that are donating services (web page, logos) and I will be able to furnish his school (paint, carpet, chairs-the works for under $150).

He is on the short list for a UTPD recruiter. It is a M-F day job that will allow him to preform on weekends and holidays and give lessons in the evenings. We will know soon enough.

Fortunately I am too busy to be depressed at the moment. We are getting by here in Clutch City. Thanks for asking GD:hi: I hate to miss a day here.

[Ghost Dog]

122. Good except for bugs, then.

Hope you've time to read thoroughly, meanwhile. ;)

Please do let me know if/when Hubby's planning to pass through either Barcelona or the province of Las Palmas in the Canary Islands: I'm sure we could set up a paying gig, especially here in the islands...

And with no intermediary wbankers required.

:hi:

[TheWatcher]

10. Good Morning ozy and All Marketeers.

A rare, if brief Morning Post from me.

How do you guys do this morning stuff? :)

At any rate, it seems like we may one of the Potential "Cover Stories" in case this is Happy Carnival Day in the "Markets." (If we can even still call them that with a straight face.)

Freshly Minted for distribution to the Tele-Screens IMMEDIATELY:

Obama plan seeks to save millions from foreclosure
Obama plan seeks to attack home mortgage foreclosures at heart of nation's economic crisis

* Mark S. Smith, Associated Press Writer
* Wednesday February 18, 2009, 3:22 am EST

PHOENIX (AP) -- His massive stimulus plan now signed into law, (THANK GOD IT PASSED!!!!1111 AGAIN!!!!!) President Barack Obama is turning to attack the home foreclosure crisis at the heart of the nation's deepening economic woes.

His goal is to prevent millions of American families from losing their houses because they can't make mortgage payments.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," Obama said Tuesday as he signed his tax cut and spending package into law.

The ambitious plan he was announcing at a Phoenix high school Wednesday was expected to offer government cash to mortgage companies that reduce interest rates -- and therefore monthly payments -- for homeowners in danger of default, according to several people briefed on the plan. What remained unclear was how the government will decide who qualifies for relief.

http://finance.yahoo.com/news/Obama-plan-seeks-to-save-apf-14394968.html

Go read the rest of it. It's a SCREAM. Yet ANOTHER, Plan, Scheme, Program, that they are "probably thinking about possibly convening over." Look for this to get retracted in a few days as "Well, we wanted to do it and were really enthusiastic about it, but gosh darnet, the COSTS were just too high! Who knew?"

And then there's THIS:

Obama cautioned that the initiative isn't "the end of our economic troubles. Nor does it constitute all of what we are going to have to do to turn our economy around. But today does mark the beginning of the end."

Well, unfortunately, there is at least ONE true sentence in that statement. Guess which one it is?

Good Luck In The Trenches Today, Marketeers.

And wear your Masks. Fairy Dust is bound to be at Hazardous levels today.

After All, it's "The Beginning Of the End!"

[Demeter]

13. It's Called Insomnia

I used to be a morning person. Now I'm just perpetually confused. If it ever warms up, my circadian rhythm may reset....

[TheWatcher]

18. I think you nailed it on the head.

Guilty As Charged. :)

I've actually been keeping up with the Economic Tidal Wave overnight in between Netflix viewings.

There is just so much going on, so much chaotic energy everywhere, it's hard to even relax. My remaining Cat is going nuts tonight as well. I think he misses his little brother. :( We're going to try and get him another kitten in March.

Have A Good Day. I'm going to try and rest my weary head for a bit.

[Pachamama]

53. You and me both Demeter....

PS: Thanks for turning me on to Automatic Earth and Chris Masterson.... More food for the perpetually confused and to keep me busy during my insomnia.... :hi:

[Demeter]

63. You Must See this Weekend Economists Article!

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=425152&mesg_id=425599

[Pachamama]

104. OMG!!! This article was written for me!!!

I laughed so hard when I read this article from the Financial Times because it was as if it was written with me in mind and that you thought of me when you read it and posted it on Sunday.

It's an interesting concept - we are all truly "connected" and the internet has helped provide us with the vehicle to do good and share, but its also a curse in that it can "feed" our anxiety....

Atleast it made me laugh at myself and take a step back to realize to not let the anxiety get to extreme....

:hi: Your great Demeter....an internet soul sister....and fellow insomniac... :hug:

[Ghost Dog]

107. Yeah. Wakefulness at 3 in the afternoon is a bummer.

;)

That, albeit that I have the dubious advantage of being 5 hours ahead of ET.

It's playing havoc with my supposedly creative research/meditating/writing schedule. I need a field to till.

[ozymandius]

14. Good morning.

:donut: :donut: :donut:

Operative word: responsible. To me, that excludes the irresponsible homeowners, such as the Alt-A applicants, who lied about their income to secure their mortgage. But does this plan do anything for those who, due to a procedural error that triggered the adjustable rate from a fixed one, buried in hundreds of pages of mortgage contract, lose their homes?

This morning stuff is not so hard when I need some extra time to adjust to the world before work.

[TheWatcher]

23. And that's what we don't know.

Once again, the details are vague, the promises broad (and probably empty), the substance thin.

Another exercise in Perception Management? Likely.

We shall see.

In the meantime I am keeping a close eye on what's going on with Ireland and Eastern Europe. Ireland could be the latest country to give up the ghost on it's debts and do an Iceland like Free Fall off a cliff.

:scared:

[DemReadingDU]

46. but it wasn't necessarily the homeowners who lied. it was the mortgage companies

I think it was on the CNBC special 'House of Cards'. They said people would come in for a loan with maybe $1000 per month in income. Then, the loan approver would change the income to $4000 per month, unbeknown to the applicants. Definitely irresponsibility on the mortgage companies, anything to sell another mortgage.


edit. Thanks for all the hearts!

:loveya:

[ozymandius]

117. Exactly.

Perhaps that was not clearly stated. What to do about the people who were not fairly treated in the contractual arrangement?

The conundrum just gets murkier.

[Ghost Dog]

123. Honest judges

used, occasionally, to be able to get a grasp...

Oh, wait.

[InkAddict]

52. Are loan application sites sitting around on the Net like empty

homes whose owners have walked away, because there are sites that continue to "hype" the no documentation mortgages - Responsible?

Example: http://www.bestnodocloans.com/

[Hugin]

71. "What remained unclear was how the government will decide who qualifies for relief."

I've said all along, if there -is- to be a mortgage relief package it must be available to any American holding a mortgage. (Even those who were wise enough not to get upside-down in the first place)

and here's why...

By selectively bailing out those in the worst trouble... It double punishes those who correctly fought their way through the system and have been doing so for a long long time. You can't reward malfeasance and expect it to disappear. Instead you must expect it to double. (Please understand, I'm not talking so much about the borrowers as the lenders.)

Think about what happens anytime there is a selective 'subsidy'... Health-care, Auto-insurance, Tuition... It soon becomes un-affordable to those who don't/can't game the system.

Is anyone out there still unsure of why Citi, BoA and several other of the worst banks are wildly endorsing this broken plan?

I really disapprove of how this effort is shaping up. It's as bad as 'The Bad Bank' crap.

Flame away.

[Hugin]

78. Obama Sets $75 Billion Plan to Stem U.S. Foreclosures (Update1) (Bloomberg)

By Alison Vekshin

"Feb. 18 (Bloomberg) -- U.S. President Barack Obama released a $75 billion housing program that will cut mortgage payments for millions of struggling homeowners and expand the role of Fannie Mae and Freddie Mac in curbing record foreclosures.

The plan will create a new program to help as many as 5 million homeowners refinance conforming loans owned or guaranteed by Fannie Mae and Freddie Mac, according to a fact sheet released by the White House. Treasury will buy up to $200 billion of preferred stock in each of the housing companies, twice as much as previously pledged, the announcement said.

“It will give millions of families resigned to financial ruin a chance to rebuild,” Obama said in remarks prepared for delivery at 10:15 a.m. in Phoenix. “By bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”

The program signals the Obama administration plans to take a more aggressive stance to halt foreclosures than the Bush administration, which supported voluntary industry efforts. Record foreclosures in the past year are swelling the glut of properties on the market, forcing down home values and undermining homebuilders’ efforts to revive demand and lighten inventory by cutting prices.

The Obama plan will have the government match lender reductions in interest payments that decrease borrowers’ payments to 31 percent of their monthly income. The Treasury will share in the cost when lenders reduce monthly payments by forgiving a portion of the borrower’s mortgage balance.

Incentives

Companies that service mortgages will get $1,000 for each loan that’s modified, and as much as $1,000 for three years when the borrower stays current, the government said. Homeowners also are eligible for $1,000 annually for five years for remaining current on their loans, according to the plan."

<more> http://www.bloomberg.com/apps/news?pid=20601087&sid=acZD302IjIb8&refer=home </more>

_________________________________________________________________________________________

Yep, what's not to love about this plan.... By the Banks. They get their money twice.

[ozymandius]

11. Stanford Attorney’s Withdrawal ‘Screams Fraud,” Spurred SEC

Feb. 18 (Bloomberg) -- As R. Allen Stanford assured clients last week that U.S. investigators were conducting “routine examinations” of his Texas investment advisory firm, a lawyer for his company’s Antigua affiliate was backing out.

The 58-year-old billionaire, now accused of running a “massive, ongoing fraud,” spent his final weeks at the firm struggling to soothe clients while disregarding subpoenas that sought to account for almost $8 billion of their money, according to a lawsuit filed yesterday by the Securities and Exchange Commission. Regulators pounced days after a lawyer at the Antigua bank at the heart of the case “disaffirmed” everything he had told authorities.

“The attorney’s withdrawal is a massive red flag” that “screams fraud,” said Peter Henning, who teaches criminal and securities law at Wayne State University in Detroit. “If the SEC hadn’t turned up the heat by that point, it did then.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7cCkC33mzbg&refer=home

[tclambert]

126. Apparently, Sir Allen is now on the lam!

From newsdaily.com:

Federal regulators said on Wednesday they do not know the whereabouts of billionaire Texas banker Allen Stanford, charged with a "massive" $8 billion international financial fraud.

"We are unaware of his whereabouts," Securities and Exchange Commission spokeswoman Kimberly Garber said from Texas.

Asked if Stanford may be outside the United States, she said: "Certainly that's a possibility, but we don't know."

http://www.newsdaily.com/stories/wat011000-us-stanford-whereabouts/


Wow. And SMW saw it coming. Way to go, watchers.

[Demeter]

17. Barclays shuts Equifirst US mortgage lender

http://www.ft.com/cms/s/0/49f6a788-fd30-11dd-a103-000077b07658.html

Barclays Capital has put up the shutters on its US mortgage lending business because of “market conditions” less than two years after buying it.

The decision to close Equifirst is embarrassing for Barclays, which bought the business from Alabama-based Regions Financial in a belated effort to break into the US mortgage market. The shutdown of Equifirst also marks the latest failure in a series of bank misadventures with acquisitions of high-risk mortgage lenders.

Deutsche Bank in December closed MortgageIT, which it bought for $430m (£302m) in January 2007, Merrill Lynch last year shut First Franklin, for which it paid $1.3bn in September 2006, and Wachovia, now owned by Wells Fargo, notoriously overpaid for its $26bn 2006 acquisition of California-based Golden West.

However, Barclays’ losses on the investment are lower than they might have been because the bank was able to cut the price it paid for Equifirst by two-thirds to $76m, between announcing the deal in January 2007 to closing it in April.

Equifirst, based in Charlotte, North Carolina, was one of the 20 top US subprime mortgage lenders in 2006, originating more than $10bn of home loans a year, according to Inside Mortgage Finance.

The company did not typically keep the loans it made on its own books but sold them on to investment banks that would package them into mortgage-backed securities for investors.

As the US housing market began to slow and mortgage originations plummeted, banks such as Barclays and Merrill Lynch scurried to buy originators that would bring a reliable source of new mortgages in-house.

But as the market for mortgage-backed securities began to evaporate amid rising late payments and defaults, many such deals foundered.

In 2007, Equifirst originated $3.8bn of subprime home loans. By the second half of 2008, the lack of buyers for such mortgages prompted the lender to convert to making loans conforming to Federal Housing Administration standards.

Just a few months ago Barclays executives were still pointing to Equifirst as providing the bank with a foothold in the market when it recovered.

Equifirst has stopped accepting new applications, but will honour its outstanding commitments.

Barclays’ mortgage servicing business, HomeEq, and mortgage-backed securities operations are not affected, the bank said.

[Demeter]

28. "25 Random Things" About the Stimulus Package

http://www.prospect.org/cs/articles?article=25_random_things




The stimulus package illuminated -- Facebook-style.


Terence Samuel | February 13, 2009 |


Rules: Once you've been tagged, write a note with 25 random things, facts, provisions, amendments, or implications related to the stimulus package. At the end, choose 25 members of Congress to be tagged.

1. It should have been called a "jobs bill." That would have made it harder for Republicans to oppose it.

2. It doesn't really matter how big it is. Passage at any size was the win the White House needed.

3, The 59 percent -- and rising -- approval for the bill among Americans may be the confidence builder the economy needs.

4. The 65 percent COBRA credit, which allows the recently unemployed to continue health-insurance coverage, on its own may be worth all the trouble.

5. The deduction for state and local taxes on car purchases should have been extended to used cars, too. Who can afford a new car?

6. The $2 billion for high-speed rail seems like a bad joke, especially if it goes to building a line from Los Angeles to Las Vegas.

7. In the overplaying-your-hand department, House Democrats are lucky that they have Republicans to make them look reasonable.

8. Judd Gregg, the commerce secretary who never was, should have voted for a package that he is going to have to work with and sell. Oh, I forget, he’s not going to do that on principle.

9. It showed that the president is not a "TD," a timid Democrat -- he’s got a little fight in him.

10. It showed that Congress can move fast when it is made to.

11. It reaffirmed the pointlessness of the Washington cocktail party, even one held at the White House.

12. It has probably convinced Obama that to get anything past the Congress, he needs to sell the American people first.

13. It reinforced the self-importance of moderate Republicans.

14. The $100 billion fiscal conservatives removed from the bill is coming back. After all, the president gets to present a budget soon.

15. Given the ferocity of the GOP reaction to the deal they struck with Democrats, Sens. Collins, Snowe, and Specter should be happy that Obama intends to close Guantánamo.

16. It may be the surest sign yet that Arlen Specter, the longest-serving senator in Pennsylvania history, will run for a sixth term in 2010.

17. The tussle between Harry Reid and Nancy Pelosi suggests we might be headed for some familiar Democratic infighting in the coming months.

18. In the end, it was the Republicans who reduced the money meant to go directly into people's pockets. That's called hypocrisy.

19. That no one can explain how exactly the package is going to work may be the best reason to be hopeful that it could actually succeed.

20. Obama should be very pleased that we're talking about the stimulus package instead of his Cabinet picks.

21. It exposed Obama as overly reasonable. He didn’t scare people enough: A 5 million job shortfall in the economy is, in fact, a catastrophe.

22. If The New York Times is calling your efforts at bipartisanship "futile," it may be time to stop extending the olive branch.

23. The bill will be a success as soon as it prevents the first home foreclosure.

24. The passage of the legislation now allows the administration to turn its attention to the more politically problematic issue of the banking crisis.

25. Obama is lucky that Tim Geithner was not the point man on this one.

[Demeter]

29. It's Time to Treat America's Homeowners as Well as We've Been Treating Wall Street's Bankers

http://www.huffingtonpost.com/arianna-huffington/its-time-to-treat-america_b_167429.html


If you were to make a pie chart showing the amount of attention given to the banking part of the financial crisis -- both by the government and by the media -- and the amount of attention given to the foreclosure part, the catastrophe being faced by millions of American homeowners would barely rate a sliver.

But we are facing nothing less than a national emergency, with 10,000 Americans going into foreclosure every day and 2.3 million homeowners having faced foreclosure proceedings in 2008.

When we put flesh and blood on these numbers, the suffering they represent is enormous and so is the social disintegration they entail.

.....
"The banks are too big to fail" has been the mantra we've been hearing since September. But when you consider the millions of American homeowners facing foreclosure, aren't they also too big to be allowed to fail?

Despite being treated like an afterthought, foreclosures are actually a gateway calamity: every foreclosure is a crisis that begets a whole other set of crises.

Someone loses his or her home. It sits vacant. Surrounding home values drop. Others move out. Squatters move in. Crime goes up. Tax revenues plummet, taking school budgets down with them...

So why hasn't the foreclosure crisis gotten the attention it deserves? A combination of perverse priorities and flawed thinking....Flawed thinking has been on full display in the way we have approached the foreclosure crisis -- particularly the notion that we can postpone dealing with the crisis while we focus our attention (and hundreds of billions of dollars) on saving Citi, JP Morgan Chase, Bank of America and Wells Fargo.

Clearly, this thinking has been deeply -- and disastrously -- flawed. The public interest -- people being able to keep their houses -- is not aligned with the banks' interest. Banks don't want to adjust nonperforming mortgages down to their actual current value because it would lead to marking down the value of the massive asset pools they have rolled the mortgages into.

This conflict between the banks' interest and the public interest is why the Wall Street-centric focus of Tim Geithner, Lawrence Summers, Ben Bernanke, etc. is so troubling. This focus has included the marginalizing of Sheila Bair, the chairman of the Federal Deposit Insurance Corporation (and a Republican) who has been ringing the alarm bell about the foreclosure crisis for two years now. She was ignored by George Bush and Henry Paulson -- and there are worrisome Washington whispers that Tim Geithner is following in their footsteps.

On Wednesday, President Obama is set to unveil his foreclosure relief plan in hard-hit Phoenix. According to David Axelrod, it will be a "good, solid" plan.

Given the enormity of the crisis, and the delay in finally putting foreclosures on the front burner, it needs to be good and solid and big and bold.

....
Until 1978, allowing cram downs was standard practice. Subsequent court battles eventually eliminated their use. The mortgage industry, not surprisingly (and for the reasons stated above), is vehemently opposed to bringing the cram down back. Helping fight that battle, again not surprisingly, are Republican members of Congress. A bill to bring it back was approved by the House Judiciary committee in late January -- but only after chairman John Conyers agreed to key concessions to the banking industry, including making the legislation only apply to existing mortgages and not to future ones (even though cram downs could help stabilize the residential mortgage market in the longterm....

It's time to start treating America's homeowners as well as we've been treating Wall Street's bankers.

[tclambert]

131. I would like to hear more about cram downs.

Not a very glamorous name, but it might be a worthwhile tool, depending on the details. I'm guessing it involves renegotiating the mortgage into something a little easier to pay, with less profit or possibly a small loss for the bank. Banks might not like it. If the choice is something less or nothing at all, though, they might take something less.

[tclambert]

134. Okay, here's a definition f rom teachmefinance.com:

"Cramdown - a court-ordered reduction of the secured balance due on a home mortgage loan, granted to a homeowner who has filed for personal bankruptcy. In a cramdown, the bankruptcy court splits the outstanding mortgage balance into two parts. The amount of debt equal to the current appraised value of the home is treated as a secured claim, which the borrower must continue to pay. The amount of debt in excess of the current property's value becomes an unsecured claim, which is usually not repaid in full. In areas where home prices have depreciated, cramdowns can result in significant mortgage reductions."

http://www.teachmefinance.com/Financial_Terms/Cramdown.html

There were a few other definitions of cramdown to confuse the issue, some of them also related to financial matters, not just pornographic.

[Demeter]

135. It has to do with reducing the principle

when a house has declined in value and the owner faces bankruptcy. Trying to make it affordable again, so the bank doesn't foreclose. I don't know, however, if the bank gets part of the proceeds in a sale...

[Demeter]

30. It's Not Just EFCA: Banks Spend TARP Funds on Anti-Consumer Lobbying

http://www.huffingtonpost.com/ian-millhiser/its-not-just-efca-banks-s_b_167531.html



As the Huffington Post's Sam Stein recently reported, three days after Bank of America accepted $25 billion in TARP funds, it hosted a conference call with movement conservatives and business heavyweights in order to organize opposition to a piece of pro-union legislation. But Bank of America's anti-worker crusade is only the tip of a much larger iceberg. As a recent report at Overruled reveals, the banking industry has continued a massive anti-consumer lobbying campaign, even as it took hundreds of billions of dollars in TARP funds to stave off insolvency.

TARP was enacted to ensure that credit markets would continue to operate and to prevent the collapse of America's financial industry. The industry, however, has chosen instead to spend a portion of its funds lobbying Congress on bills that would curb some of the banking industry's worst excesses. Among the bills which the banking industry lobbied on after it began receiving TARP funds are bills to prohibit abusive arbitration practices, such as the Arbitration Fairness Act, the Fairness in Nursing Home Arbitration Act and the Fair Contracts for Growers Act; bills to help foreclosure victims and prevent irresponsible mortgage lending, such as the Mortgage Reform and Anti-Predatory Lending Act and the Helping Families Save Their Homes in Bankruptcy Act; bills to prevent the exploitation of credit card holders, such as the Credit Card Holders Bill of Rights and the Stop Unfair Practices in Credit Cards Act, and even bills to hold TARP recipients accountable for how they spend taxpayer funds, such as the TARP Reform and Accountability Act.

The banking industry's anti-consumer lobbying campaign also highlights the importance of one issue in particular, binding mandatory arbitration. As I have blogged about in the past, one of the credit card industry's most abusive practices is the use of binding mandatory arbitration clauses, which force credit card holders to sign away their right to hold the bank accountable in court if it breaks the law---and instead shunts the cardholder into a biased, privatized forum. Credit card companies increasingly refuse to issue credit cards unless the cardholder signs an arbitration agreement, and when the cardholder does sign this agreement, they effectively give the company carte blanche to violate any laws it chooses. As one study of almost 20,000 arbitration decisions found, the corporate party prevails a massive 94% of the time in suits between a credit card company or debt collector and an individual cardholder. We now know that the banking industry has aggressively lobbied to continue this abusive practice even as they were relying on government handouts to avoid bankruptcy.

The full report on the banking industry's post-TARP lobbying activities can be read here:

http://overruledblog.com/2009/02/17/banks-spend-tarp-funds-on-anti-consumer-lobbying-campaign/

[Demeter]

43. Trouble at Treasury: Geithner gets the keys to the henhouse By Mike Whitney

http://informationclearinghouse.info/article22025.htm

February 17, 2009 "Information Clearinghouse" --- The Obama Team has a big problem on their hands; Timothy Geithner. Geithner was picked as Treasury Secretary because he is a trusted ally of the big banks and has a good grasp of the intricacies of the financial system. The problem is that Geithner can't handle the public relations part of his job. His big debut in prime-time last Tuesday turned out to be a complete dud. He was thoroughly unconvincing and looked like a nervous teenager at a speech contest. He fizzled on stage for 25 minutes while the little red box in the corner of the TV screen--which shows the current Dow Jones Industrials--plummeted nearly 400 points. It was a total disaster and one that is sure to be repeated over and over as long as Geithner is at Treasury. Not everyone can be a charismatic orator like Obama and nothing short of a personality transplant will fix Geithner. He lacks gravitas and doesn't inspire confidence. That's a problem since, the administration's main objective is to restore public confidence and get people spending again. They're just shooting themselves in the foot by using him as their pitchman. Eventually, Geithner will either have to be tossed overboard or strapped to Obama like a papoose so he can share in the president's popularity. Otherwise he will continue to be a millstone.

In truth, Geithner did us all a big favor on Tuesday by exposing himself as a stooge of the banking industry. Now everyone can see that the banks are working the deal from the inside. Geithner has assembled a phalanx of Wall Street flim-flam men to fill out the roster at Treasury. "His chief-of-staff is lobbyist from Goldman Sachs. The new deputy secretary of state is a former CEO of Citigroup. Another CFO from Citigroup is now assistant to the president, and deputy national security adviser for International Economic Affairs. And one of his deputies also came from Citigroup. One new member of the president's Economic Recovery Advisory Board comes from UBS, which is currently being investigated for helping rich clients evade taxes." The Obama White House is a beehive of big money guys and Wall Street speculators whose only goal is to nuzzle up to the public trough while strengthening their grip on political power.

The banking lobby has already set the agenda. All the hooplah about "financial rescue" is just a smokescreen to hide the fact that the same scofflaws who ripped off investors for zillions of dollars are back for their next big sting; a quick vacuuming of the public till to save themselves from bankruptcy. It's a joke. Obama floated into office on a wave of Wall Street campaign contributions and now it's payback time. Prepare to get fleeced. Geithner is fine-tuning a "public-private" partnership for his scotch-swilling buddies so they can keep their fiefdom in tack while shifting trillions of dollars of toxic assets onto the people's balance sheet. They've affixed themselves to Treasury like scabs on a leper and are now zeroing in for the kill. Geithner is "their guy", a Trojan Horse for the banking oligarchs. He's already admitted that his main goal is to, "keep the banks in private hands". That says it all, doesn't it?

Of course, the administration is not alone in their support for the banks and Wall Street. Congress has its fair share of bank-loyalists, too. That was evident last week at the hearings of the House Financial Services Committee. 8 CEOs of the nations biggest banks were marched off Capital Hill (ostensibly) for public rebuke. For a minute, it looked like Congress might do its job and actually grill the bastards who blew up the financial system. But, no, that's not what happened. The 7 hours of testimony produced few fireworks and no mention of accountability. For the most part, the bankers were treated like honored guests instead of the chiselers they are. That's because nearly every member of the committee rakes in contributions from the same banks that are being investigated. As Bill Moyers points out on Friday's Bill Moyers Journal, "Last year, the securities and investment industry made $146 million in campaign contributions. Commercial banks, another $34 million." The banks own congress just like they own the White House and anything else of value in the USA. They left the hearings unscathed.

Apart from the infrequent fulminations of congressmen clowning for the cameras, the hearings were tedious and unproductive. Same old, same old. The bankers remained stonefaced throughout, while the committee turned in their typical sub par performance. Congress doesn't do oversight anymore, and even if they did, there's no one with the cohones to apply the rules. Besides, no one in the House has the foggiest idea of how the financial system really works. If they did, they'd know that the banks HAVE actually been lending despite congress's spurious accusations. Some of the banks even produced documented evidence to prove it. This has been a flashpoint for taxpayers who think that they were duped by financial institutions that took the $165 billion TARP money and used it for bonuses or to buy smaller banks. Not so. The truth is more complicated.

The banks have been hoarding; that much is certain. In fact, The St Louis Fed's charts show that:

"Until September, excess reserves hovered at or below about US $2 billion, but have ballooned to over $600 billion as of November 19, 2008....The Fed has thrown money at the banking system, but the banks are hoarding the cash, they do not lend." (Axel Merk, "Monetizing the Debt") Excess reserves are reserves that are beyond the required capital limits. The steady buildup--which now exceeds $700 billion--suggests that the banks are hunkering down for long and deep recession. They are in survival mode. Still, that does not mean they are not lending. In fact, "Bank Credit expanded $459bn year-over-year, or 4.9%. Bank Credit jumped $356bn over the past 21 weeks." (Doug Noland Credit Bubble Bulletin) It's true; bank lending has actually increased even though standards have gotten tougher and consumers are saving for the first time in decades.

How can the banks be lending and hoarding at the same time; aren't the two mutually exclusive? And why is credit draining from the system in trillions of dollars if the banks continue to lend?

This is big mystery of the financial crisis, but one that can be solved by reviewing the facts. J P MorganChase's Jamie Dimon explained it like this:

"There's a huge amount of non bank lending which has disappeared which is the same thing to the consumer (as the banks)...Finance companies, car finance companies, money funds, bond funds..that withdrew money from the system (when the credit crunch took hold) making it much harder on the system. That created the crisis we now have."

The Wall Street Journal summed it up even more succinctly:

"Chairman Barney Frank's hearing was intended to flay the CEOs for not lending enough. It fell flat as political theater because banks have actually increased their lending in recent months. The people who aren't lending more are investors in nonbank financing such as asset-backed securities.

In fact, the nonbank credit market is normally much bigger than bank lending. But new issues backed by auto loans, credit cards and the like have been rare this year, as markets wonder how the government's next move will change the value of such investments. Buyers and sellers of existing securities are "sitting on the sidelines," according to Asset-Backed Alert, waiting for still another Washington recalibration of risk and reward." ("Committee on Doubt and Uncertainty" Wall Street Journal)


This is how the financial system really works--something which seems to be completely beyond the grasp of congress. A shadow banking system has grown up around the process of securitization, which packages pools of debt (mortgages, commercial real estate, student loans, car loans and credit card debt) and sells them as securities to foreign banks, hedge funds, insurance companies etc. Wall Street has muscled into an area of finance that used to be the domain of the commercial banks. According to Treasury Secretary Timothy Geithner, "40 percent of consumer lending" depends on this shadow system for credit. That's why he is determined to resurrect securitization whatever the cost. The Fed has already expanded its balance sheet to $2.2 trillion while providing loan guarantees for over $9.3 trillion dollars. The entire financial system is now backstopped by loans from the Fed without which the global financial system would collapse. The present Fed funding of financial markets forces us to rethink our outdated ideas of the "free market" which now exists only in theory.

A 40 percent decline in consumer credit is more than sufficient to push the world into another Great Depression. The sharp decrease in foreign exports, shipping, auto sales, and other vital areas of commerce--all in the 30 to 40 percent range--suggest that the global economy depends on Wall Street's credit-generating mechanism more than anyone imagined. The breakdown in securitization has sent tremors across the planet triggering a decline in asset prices and an accelerating fall in personal consumption. Before the Fed and Treasury try to restore securitization to its former glory, politicians and pundits should decide whether it is a viable system for long-term growth. There's reason to believe that transforming of debt into securities creates incentives for fraudulent loans and mortgages since they can be dumped on Wall Street and sold to gullible investors. The reason the mortgage lenders and banks bundled off crappy loans to the the big brokerage houses, is because they thought there was no risk involved. (for themselves!) They were wrong and now the entire market for structured debt is in a deep freeze. Geithner and Bernanke should suspend all funding for securitized loans until they can show that the kinks have been worked out and we won't fall into the same trap again. One financial meltdown is more than enough.

The TARP funds should not be used to exhume the corpse of a dysfunctional financial system. The money should be used to create more jobs, extend unemployment benefits, provide food stamps, public works projects or cram downs for struggling homeowners trying to avoid foreclosure. People don't need more credit; they need debt relief. That means higher wages and better jobs. Obama should realize this, even if Geithner and Co. don't. The Geithner-Paulson policy of limitless credit expansion is the path to ruin. That's why Geithner is the wrong man for the job. His fundamental worldview leads to economic calamity.

Geithner's resume alone should have precluded him from consideration as Treasury Secretary. He started his career at Kissinger and Associates, which speaks for itself. From there, he went to International Affairs division of the Treasury Dept. where he served under Robert Rubin and Lawrence Summers both of who were major proponents of deregulation. He's presently a senior fellow at the Council on Foreign Relations and served as director of Policy Development and Review Department at the IMF. In 2003, he became president of the New York Fed and was Vice Chairman of the FOMC. He's also a member of the G-30, an international body of financiers and powerbrokers, and the former chairman of the Bank for International Settlements. If there's an internationalist organization Geithner doesn't belong to, we haven't found it yet. He's been thoroughly marinated in a globalist culture that wreaks of banking conspiracies and clandestine junkets to Jeckyll Island. Is it really that hard to find a good economist who just wants to serve his country?

There was a revealing incident in the Senate Finance Committee last week when Senator Bernie Sanders challenged Geithner. Here's the transcript:

SENATOR BERNARD SANDERS: "In 2006 and 2007, Lloyd Blankfein, the CEO of Goldman Sachs, was the highest paid executive on Wall Street, making over $125 million in total compensation. Due to its risky investments, Goldman Sachs now has over $168 billion in total outstanding debt. It's laid off over 10 percent of its workforce. Late last year, the financial situation at Goldman was so dire that the taxpayers of this country provided Goldman Sachs with a $10 billion bailout.
Very simple question that I think the American people want to know. Yes or no, should Mr. Blankfein be fired from his job and new leadership be brought in?"

SECRETARY GEITHNER: "Senator, that's a judgment his board of directors have to make.
I want to say one thing which is very important. Everything we do going forward has to be judged against the impact we're going to have on the American people and the prospects for recovery. And every dollar we spend will have to be measured against the benefits we bring in terms of---"

SENATOR SANDERS: "Mr. Secretary, you're not answering my question. You have a person who made hundreds of millions for himself as he led his institution that helped cause a great financial crisis. We have put, as taxpayers, $10 billion to bail him out and we have no say about whether or not he should stay on the job?"

SECRETARY GEITHNER: "No, I didn't say that. I think there will be circumstances, as there have been already, where the government intervention will have to come with very tough conditions, including changes in management and leadership of institutions. And where we believe that makes sense, we will do that."

Predictably evasive, Geithner refused to say whether or not Blanfein should be fired. That's because Geithner believes that the function of government is to serve the interests of the big banks not the public. The lip-service to democracy is just rhetorical claptrap. It's meaningless. The government's role is to facilitate the exploitation of its people to fatten the bottom line of the top-hat capitalists. This is why Geithner never made any reference to regulations during Tuesday's speech. There was no mention of Glass Steagal, or reducing the amount of leverage financial institutions can use, or forcing all derivatives contracts onto a regulated exchange, or suspending off-balances sheets operations, or reclassifying all Level 3 assets so shareholders know how much garbage the banks have on their books, or even rethinking the whole securitization model which collapsed the financial system and thrust the world towards a 1930s-type slump. He stayed away from regulation entirely, just as he defiantly withheld details about the impending multi-billion dollar bank bailout.

But don't think that the slippery Mr. Geithner doesn't have a solution for our present economic malaise. He does! He would like to see Congress appoint an Uber-regulator that has the authority to monitor market activity and decide whether individual players pose a threat to the overall system.

Sounds great. And to whom should these sweeping new powers be entrusted?

You guessed it; the Federal Reserve, the wealth-shifting, price-fixing, social-engineering scamsters who preside over the bankers cartel which just blew up the financial system. Is there any doubt where Geithner's loyalties really lie?

[Tansy_Gold]

54. November 24, 2008

That's when I first warned of this shit.

Geithner was a disastrous pick for treasury. Absolutely disastrous.

Greenspan, via Geithner and Rubin and Summers, is STILL in charge of the economy.

:puke:



Tansy Gold

[radfringe]

45. Party of NOPe

[Festivito]

47. Debt: 02/13/2009 10,759,016,081,652.99 (DOWN 180,505,910.45) (Teeny tiny.)

(Four tiny days for public debt, then, today, one fairly big day, then back to a teeny tiny day.)

= Held by the Public + Intragovernmental(FICA)
= 6,453,497,486,531.27 + 4,305,518,595,121.72
DOWN 268,428,512.00 + UP 87,922,601.55

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,795,058 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,183.75.
A family of three owes $105,551.24. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 31 days.
The average for the last 23 reports is 6,309,182,330.64.
The average for the last 30 days would be 4,837,039,786.83.
The average for the last 31 days would be 4,681,006,245.32.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 18 reports in 24 days of Obama's part of FY2009 averaging -0.13B$ per report, 0.02B$/day so far.
There were 93 reports in 136 days of FY2009 averaging 7.90B$ per report, 5.40B$/day.

PROJECTION:
There are 1,437 days remaining in this Obama 1st term.
By that time the debt could be between 12.7 and 18.5T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
02/13/2009 10,759,016,081,652.99 BHO (UP 132,139,032,739.91 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 734,291,184,740.50 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
01/26/2009 -001,004,948,620.76 -- Mon
01/27/2009 +000,188,054,837.85 ------------********
01/28/2009 -000,240,130,414.24 ---
01/29/2009 +014,335,901,611.96 ------------**********
01/30/2009 +007,363,512,286.86 ------------*********
02/02/2009 +046,334,807,167.90 ------------********** Mon
02/03/2009 -000,138,225,404.41 ---
02/04/2009 -000,068,491,025.50 ----
02/05/2009 +046,668,131,793.54 ------------**********
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---
02/12/2009 +043,810,585,841.25 ------------**********
02/13/2009 -000,268,428,512.00 ---

156,915,693,599.00 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,094,384,278,393.92 in last 148 days.
That's 1,094B$ in 148 days.
More than any year ever, including last year, and it's 108% of that highest year ever only in 148 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 148 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3742485&mesg_id=3742527

[Festivito]

147. Debt: 02/17/2009 10,789,783,760,341.41 (UP 30,767,678,688.42) (28+2. Stimulus signed.)

(Four tiny days for public debt, then, today, one fairly big day, then back to a teeny tiny day, now a substantial 28B$ of public and a not so uncommon move in the FICA side. NOTE, however, the stimulus has passed and it must be borrowed. At least this time it will go where it is needed, and we'll know where it goes -- unlike what happened when ** was still in office mucking things up.)

= Held by the Public + Intragovernmental(FICA)
= 6,481,923,355,207.56 + 4,307,860,405,133.85
UP 28,425,868,676.29 + UP 2,341,810,012.13

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,819,743 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,281.51.
A family of three owes $105,844.54. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 32 days.
The average for the last 21 reports is 7,662,013,087.20.
The average for the last 30 days would be 5,363,409,161.04.
The average for the last 32 days would be 5,028,196,088.48.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 19 reports in 28 days of Obama's part of FY2009 averaging 0.11B$ per report, 0.08B$/day so far.
There were 94 reports in 140 days of FY2009 averaging 8.14B$ per report, 5.46B$/day.

PROJECTION:
There are 1,433 days remaining in this Obama 1st term.
By that time the debt could be between 12.8 and 18.6T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
02/17/2009 10,789,783,760,341.41 BHO (UP 162,906,711,428.33 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 765,058,863,429.00 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
01/27/2009 +000,188,054,837.85 ------------********
01/28/2009 -000,240,130,414.24 ---
01/29/2009 +014,335,901,611.96 ------------**********
01/30/2009 +007,363,512,286.86 ------------*********
02/02/2009 +046,334,807,167.90 ------------********** Mon
02/03/2009 -000,138,225,404.41 ---
02/04/2009 -000,068,491,025.50 ----
02/05/2009 +046,668,131,793.54 ------------**********
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---
02/12/2009 +043,810,585,841.25 ------------**********
02/13/2009 -000,268,428,512.00 ---
02/17/2009 +028,425,868,676.29 ------------********** Tue

186,346,510,896.05 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,125,151,957,082.34 in last 152 days.
That's 1,125B$ in 152 days.
More than any year ever, including last year, and it's 111% of that highest year ever only in 152 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 152 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3744485&mesg_id=3744611

[Pale Blue Dot]

55. I need your help.

I'm forming an Economic Crisis committee at my school. I spoke about it at our staff meeting last week, and I already have several other staff members who want to be involved. The group will be devoted to finding community-based solutions to the extraordinary challenges that parents, students, and teachers will be facing because of this economic mess. I believe we need to act urgently; yesterday, I found out that one of my students - a straight-A, hardworking, sweetheart of a kid - is going hungry because her family has lost all of their sources of income. We're hearing new stories like this every single day.

As has been pointed out to me on several occasions here, I've been all doom and gloom (rightly so on that account, I believe), but I haven't offered any solutions. This is because I don't HAVE any. This group is designed to help find some.

There's my problem: I have never started or run a group like this, or any group for that matter. How do I run the meetings so that they're productive, and not simply gripe sessions? What should I cover at the meetings? How do we generate ideas and then put them into action quickly?

Any help that you can give would be greatly appreciated. As I'm sure you know, there is simply know time to fool around anymore. I don't have any of the answers, but it is vitally important that we try to find workable solutions as quickly as possible. Thank you!

I'll also post this in GD, but I know that all of your in the SMW thread will have excellent ideas. :D

[ret5hd]

57. Buy several copies of "Roberts Rules of Order".

Elect/appoint one member as Parliamentarian. Elect/appoint one member as Sargeant at Arms. Understand the rules and make sure those two do their jobs and you have made good progress towards having productive meetings.

[willing dwarf]

60. Myself, I'd try Michael Sheehan's "Beyond Majority Rule"

Gives a view to the consensus approach that works so well for Quaker groups. -- If your not faith-based it's tricker, but it still gives you a good, non-linear approach where every voice is welcomed and inclusiveness is the goal.

[willing dwarf]

59. Setting the agenda is essential

I'd start the meeting by handing out index cards -- ask averyone to write anonymously what are their three largest personal concerns about the economy. And ask them to also list their 3-5 biggest public concerns (concerns of their neighbors, friends students etc).

Collect the cards, read them out loud and create a list of general topics.

Then Brainstorm approaches to find solutions.

Then ask who has energy to work on the various issues, using the brainstorm solutions as a springboard for action.

Then identify these groups as task forces. Ask them to come back the following week with three step initial action plan to begin to address the needs of their group.

At that meeting, check to see if there is overlap in work and approach so there isn't excess duplication of effort.

That's what I'd do.

[snot]

64. Off the cuff, I recommend:

Whoever chairs the meeting should work out a written agenda ahead of time. Invite and incorporate suggestions in advance. By or before the meeting starts, give all the members copies; when they see you have a lot of specific matters to cover, it helps discourage them from rambling too far off topic. You should have your own time estimates of how long you'll spend on each topic; some agendas actually state them.

You might want to keep in mind the possibility of time limits on individual speakers. I'd start withOUT limits, but if it looks like you're having problems with people getting too long-winded, other members on the committee will see that for themselves and may even be grateful to have time limits.

If you're mostly interested in brainstorming to come up with ideas, you might also want to organize something more like a "retreat" -- an all-day session.

Each meeting of whatever kind should result in written tasks or action-items with one or more particular individuals identified as being responsible for carrying them out and a clear idea of when they need to be done. These action items can of course just be to get more info so further decisions can be made.

Hope that helps.

[Demeter]

65. Schedule Gripe Sessions and Work Sessions

Make the Work Sessions more appealing by actually doing useful things--community gardens, canning parties, potlucks, sewing bees, house repair parties. Anything where several small contributions yield a larger, divisible result, or where recipients take turns.

Include Education Sessions, too. Let each age group/interest group organize, but have them all agree to some few basic rules.

Then start getting into the halls of government. The Right-wing succeeds for a reason, and there's no point in ignoring their expertise.

[Tansy_Gold]

69. Keep your group small to start

lay ground rules before you open it up.

[Hugin]

80. Terrific idea PBD!

It's ideas like this which will bring us through! :thumbsup:

Set a firm regular schedule and stick to it... I'd say no more than an hour.

[DemReadingDU]

96. They need to watch the Chris Martenson Crash Course videos

He recently had a mini-crash course on PBS WGBY. It's appx 38 minutes. It's an intro about himself, why he quit his high-paying job, what he saw going on around him, and the reasons for devoting his life to creating the Crash Course. Here's the link for the replay, about halfway down the page. Look for the Crash Course and Martenson's picture.
http://www.wgby.org/podcasts/index.html

Then the group should watch the complete excellent Chris Martenson Crash Course videos. They provide a baseline understanding of the economy, creation of money, debt, bubbles, energy, environment. This is a series of 20 video chapters, each video is between 3 and 18 minutes in length, meaning that all 20 chapters should take about 3 hours, but they need not be watched all at the same time. Try an hour a day for 3 days or 3 meetings. He sells DVDs now too.
http://www.chrismartenson.com/crashcourse

About Chris Martenson, PhD.
Executive summary: Father of three young children; author; obsessive financial observer; trained as a scientist; experienced in business; has made profound changes in his lifestyle because of what he sees coming.
In his bio, Martenson goes into detail how he arrived at his conclusions and opinions, and why he's dedicated to communicating them via this excellent series of videos and additional articles.
Please click the link to read the rest of his bio...
http://www.chrismartenson.com/about

Edit: Until everyone grasps the financial crisis, the implications, and the impending depression, you are going to be spinning around and around. Many people still are clueless, and won't be able to contribute solutions until they know the problems.

Spouse has taken the crash course, sees the economy tanking, but it has not personally affected him yet. So to him, there are no solutions, because he doesn't really understand the problem how he is to be affected personally.

He helps me do a few things, like setting up shelves for extra food, but he doesn't think we will ever need the food for the future. So he is eating it all up, now. He bought me a generator, but he truly believes we will never use it. The government will always somehow provide our electric, and water and gas to heat our home.

We sold our stocks and put money into bank CDs. If our bank fails, he still believes he will get out his money because the money is FDIC insured. What if there is a bank holiday because too many banks fail at once?

He thinks his pension will always arrive via direct deposit into the bank account. He thinks social security will always be there too. If the government runs out of money, they can print more. Otherwise, it is unthinkable what could happen (like civil unrest). No, the government would not allow people to be jobless and hungry, and riot.

Uh, I ask him...what about Katrina? He says that was under Bush, Obama's administration will provide.

So be prepared for even half-clueless people.

:eyes:

[specimenfred1984]

108. Running your group at school

My wife is a professional facilitator and has been organizing teams and running group processes for 25+ years. She strongly recommends the book by Ingrid Bens, Facilitating With Ease! A Step-by-Step Guidebook with Customizable Worksheets on CD-ROM.

The reason is that you can pick up this book with lots of templates and tools that will help answer some of your questions and concerns about how to keep things moving on the right track, and from disintegrating into gripe sessions. If you structure the process and then trust and stick to it, you will be set up for success. One of the most important things to remember when you are in this leadership role, is to recognize that the energy and impetus of the group will drive itself to a large extent. Think of it as an organic process (which is what you have described), and trust your instincts. If you are a teacher and have been running classroom processes, you have the basic set of skills that transfer. The difference is that working with adults is not the same as working with kids. The felt need is what drives the adults, and the participation in problem solving. Don't try to control, try to facilitate.

[tclambert]

139. You got hungry kids who need food.

I am kicking myself because I just heard a story on the TV a few days ago about a teacher forming a project to help with this at her school. But I only half listened so I can't remember important details. I remember she woke up to the problem when she found a child waiting for the bus crying because he had forgotten his apple in the lunchroom. She said, "Don't worry, honey, you can get a snack when you get home." And he said, "But my family doesn't have any food at home."

She realized this is a growing problem with so many people losing jobs, and it was happening in her own community. So she organized something to help these hungry children. And I can't remember who or where or what channel it was on, goddammit.

Okay, here's a similar story from Florida: http://www.wftv.com/9familyconnection/17982911/detail.html#-

Here's another, about the Blessings in a Backpack program: http://www.cbsnews.com/video/watch/?id=3370606n Don't know if you can hook up with them. They said this program has gone nationwide.

Here's a story about Kid's Cafe, a program in Rhode Island: http://www.rifoodbank.org/matriarch/MultiPiecePage.asp_Q_PageID_E_18_A_PageName_E_KidsCafe

And here's one from Canada about the problem of embarrassment preventing some kids from seeking help: http://www.canada.com/Schools+hungry+students/1301334/story.html

If you can't connect with one of these groups, maybe you can find others, or figure out how they did what they did and imitate it. You shouldn't have to invent this from scratch. But you will need scratch. At some point, someone has to ask someone for money and/or food donations. How to reach out to donors will be a key issue.

Another issue is how we SM Watchers and other DUers can get our donations of money and food to you. I can afford a little. Not as much as I could have before the Bush years, but a little.

[rfranklin]

56. U.S. stock futures point to modestly higher start...

U.S. stock futures point to modestly higher start

By Barbara Kollmeyer & Kate Gibson, MarketWatch
Last update: 8:59 a.m. EST Feb. 18, 2009NEW YORK (MarketWatch) -- U.S. stock futures on Wednesday added to early, modest gains after economic data had U.S. export prices up 0.5% in January and housing starts falling to a record low, with Wall Street looking to bounce back after the prior day's beating.
The Commerce Department reported the housing market's collapse accelerated last month, with new housing construction down 16.8%. Read more.
"Further declines in housing starts are an absolute given considering the state of the housing market and the continuation of foreclosure rates. The shame is that builders didn't accelerate the pace of the pullback earlier," said Dan Greenhaus, an analyst with the equity strategy group at Miller Tabak & Co.

-more-

http://www.marketwatch.com/news/story/Stock-futures-add-mild-rise/story.aspx?guid=%7b2411E397-483E-4387-8CB3-B9F1AC16CF4D%7d&print=true&dist=printMidSection


Housing numbers worst in memory and no reaction? Wall Street is so full of crap.

[Demeter]

72. Real World Report

I went to UPS Store to mail back boots that are too small. Clerk/owner commented that he was glad to see me. There's no shipping going on, and the franchise is starving....

[JNelson6563]

74. At least things aren't too horrible--at this point.

*peeking through my fingers, wincing*

[Demeter]

77. As the Man who jumped from a 50 storey building said, to the folks on the 25th floor

It's been fine so far!

[UpInArms]

81. How the Crash Will Reshape America (an article everyone should read)

hat-tips to Joanne98 and Danascot for a head's up on this one!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x57053

The crash of 2008 continues to reverberate loudly nationwide—destroying jobs, bankrupting businesses, and displacing homeowners. But already, it has damaged some places much more severely than others. On the other side of the crisis, America’s economic landscape will look very different than it does today. What fate will the coming years hold for New York, Charlotte, Detroit, Las Vegas? Will the suburbs be ineffably changed? Which cities and regions can come back strong? And which will never come back at all?

by Richard Florida

My father was a child of the Great Depression. Born in Newark, New Jersey, in 1921 to Italian immigrant parents, he experienced the economic crisis head-on. He took a job working in an eyeglass factory in the city’s Ironbound section in 1934, at age 13, combining his wages with those of his father, mother, and six siblings to make a single-family income. When I was growing up, he spoke often of his memories of breadlines, tent cities, and government-issued clothing. At Christmas, he would tell my brother and me how his parents, unable to afford new toys, had wrapped the same toy steam shovel, year after year, and placed it for him under the tree. In my extended family, my uncles occupied a pecking order based on who had grown up in the roughest economic circumstances. My Uncle Walter, who went on to earn a master’s degree in chemical engineering and eventually became a senior executive at Colgate-Palmolive, came out on top—not because of his academic or career achievements, but because he grew up with the hardest lot.

My father’s experiences were broadly shared throughout the country. Although times were perhaps worst in the declining rural areas of the Dust Bowl, every region suffered, and the residents of small towns and big cities alike breathed in the same uncertainty and distress. The Great Depression was a national crisis—and in many ways a nationalizing event. The entire country, it seemed, tuned in to President Roosevelt’s fireside chats.

The current economic crisis is unlikely to result in the same kind of shared experience. To be sure, the economic contraction is causing pain just about everywhere. In October, less than a month after the financial markets began to melt down, Moody’s Investor Services published an assessment of recent economic activity within 381 U.S. metropolitan areas. Three hundred and two were already in deep recession, and 64 more were at risk. Only 15 areas were still expanding. Notable among them were the oil- and natural-resource-rich regions of Texas and Oklahoma, buoyed by energy prices that have since fallen; and the Greater Washington, D.C., region, where government bailouts, the nationalization of financial companies, and fiscal expansion are creating work for lawyers, lobbyists, political scientists, and government contractors.

No place in the United States is likely to escape a long and deep recession. Nonetheless, as the crisis continues to spread outward from New York, through industrial centers like Detroit, and into the Sun Belt, it will undoubtedly settle much more heavily on some places than on others. Some cities and regions will eventually spring back stronger than before. Others may never come back at all. As the crisis deepens, it will permanently and profoundly alter the country’s economic landscape. I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life.

...more at this link...

[Hugin]

83. "The current economic crisis is unlikely to result in the same kind of shared experience."

Eventually it will... Eventually.

We just need to learn to listen again.

[antigop]

84. OK, Marketeers--my tin foil hat is working overtime

I've posted before about securities lending and 401(k)'s and have asked, "WHAT THE HELL ARE THEY DOING WITH OUR RETIREMENT MONEY?"

Then I read this article this morning:
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090218/REG/902189997/1036

Defined contribution plan participants have been exposed to more financial market risk by the increased use of target-date fund strategies as default investment options and away from more secure investments, according to a new study by Greenwich Associates.

According to the report, “U.S. Defined Contribution Pension Plan Research Study,” from 2007 to 2008, the share of plan sponsors using money-market or stable-value funds as their default investment option dropped to 19% from 35%, while the share of plans using target retirement date funds jumped to 53% from 35%.

Analysts at Greenwich reported a large number of employees took on exposure to financial markets in general and to equity markets in particular virtually on the eve of the biggest market collapse in 70 years, a news release about the study said.

“It’s like a bad Greek tragedy,” Chris McNickle, consultant at Greenwich Associates, said in the news release.

The move by plan sponsors to automatic enrollment has exacerbated this trend, the study noted, as more than 40% of large plans and 50% of small plans have implemented automatic enrollment.

Now I have bitched before on DU about the Pension "Protection" Act of 2006. There were automatic enrollment provisions in this bill and (I believe, will have to doublecheck), it allowed the default investment option(if you didn't pick something else) to be a target-date fund.

So surprise, surprise--the Pension Protection Act passes in 2006- and then from 2007 to 2008, "the share of plans using target retirement date funds jumped to 53% from 35%." Now does this timing look just a little bit suspicious?

So I will ask again, "WHAT THE HELL ARE THEY DOING WITH OUR RETIREMENT MONEY?"

[DemReadingDU]

97. That is scary

I don't have a good feeling about this at all. I even worry about my Treasury Bill funded money market account in my IRA. I don't know for sure that someone could be taking that money to fund something else. A money market account is just a bunch of people's money in the same fund. My name isn't personally on my piece of the pie. I am considering paying the penalty and taxes, and just cashing it out, just so I have the cash in my hands. Better to have some cash now, than nothing after the crash.

Maybe there is a way you could have a hardship scenario such that it gives you an excuse to withdraw your money out of the 401(k)?

[Dr.Phool]

100. Being disabled is one way.

I took an occupational disability from the railroad, and cashed mine out without the penalty. But, the occupational option is only available on the railroad. It just means that you can't perform the job you have.

[Ghost Dog]

115. Just another angle on the term 'sheeple' (lambs to the slaughter).

Didn't you already know to think (more than) twice about what the telescreen was telling you?

Me, I started running away as a teenager back in the 'sixties. And I ain't stopped since. My 'pension's' always been in my own hands, as far as possible... I've been down and out, but I've never been in debt, and I'VE NEVER TRUSTED THE 'SYSTEM'.

[UpInArms]

85. dollar watch

(better late than never?)



http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 88.152 Change +0.354 (+0.46%)

US Releases Point to Deepening Recession

http://www.dailyfx.com/story/market_alerts/fundamental_alert/US_Releases_Point_to_Deepening_1234967269301.html



Early morning US Indicator released point to continued deflation risk, deepening pressure in the housing market, and a decline in the manufacturing sectors. The recession continues unabated and no significant signs of economic improvement were shown today.

Import prices showed a decline of 1.1% in January, coming in slightly better than the survey estimate for a 1.2% decline. Year-over-year decline accelerated to a new low of -12.5% and marks a long reversal from growth of 21.4% last July at the height of the commodity bubble. The drop in prices for the 6th month reflects continued weakness in demand and downward pressure of commodities. Consumer prices will likely continue to decline as should the trade deficit which currently sits at a recent low of -$39.9B.

Housing data released today came in weaker than expected with Housing Starts at an annualized 466K and Building Permits at 521K; the two indicators had been expected to decline to 529K and 525K, respectively. Housing starts plummeted to the lowest level since the indicator was first measured in 1959 and has been in a downtrend since peaking at 2.273M in January 2006. Building Permits also dropped to the lowest level since recording began and have been in a continual slide since peaking at 2.263M in September 2005. The continuing weakness is a reflection of large inventories of unsold homes as well as price and lending declines that have kept builders from expanding production of new homes. Barack Obama is said to be unveiling a plan later today that will aid mortgage holders and possibly limit further downside in the housing market.

Industrial Production declined for the 3rd month by 1.8% in a general slide that began early in 2008; economists surveyed had expected a decline of 1.5%. Continued weakness in manufacturing reflects a contraction that does not appear to be easing. Capacity Utilization also declined to a new record low of 72.0% from 73.6% as companies scale back production amid expectations for weakness in future demand. The recession continues unabated and no significant signs of economic improvement were shown today.

...more...

Bank of England Remains Hesitant To Overshoot Interest Rate, Shifts Focus To Quantitative Easing

http://www.dailyfx.com/story/dailyfx_reports/top_fx_market_movers/Bank_of_England_Remains_Hesitant_1234957964338.html



GBPUSD – The Bank of England Minutes showed that the MPC voted 8-1 to lower the benchmark interest rate by 50bp to 1.00%, which is the lowest level since the central bank was established in 1694. As expected, BoE dove David Blanchflower voted for a 100bp, arguing that the lower bound for monetary policy should be reached without delay.

The release showed that the MPC remained hesitant to overshoot the interest rate as policy makers argued that a larger rate cut could have weighed on bank’s “willingness to lend at low levels of interest rates.” However, we may see the central bank lower borrowing costs further next month in an effort to simulate the ailing economy, which appear to be favored by Governor King, and voting members Charles Bean and David Blanchflower. In addition, the committee voted unanimously to seek governmental approval to conduct QE, and there have been reports that Governor King has already met with U.K. Chancellor Darling to ask for consent , and with that, there should be little standing in the way for the central bank to start expanding the monetary base and begin purchasing assets, which would include U.K. Gilts.

...more...

edited for html

[skoalyman]

116. wonder whys the dollar going up could it be a bubble?

would hate to see it pop:nuke:

[antigop]

86. Ex-prez of Switzerland reportedly bolts from Stanford board

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090218/REUTERS/902189991/1036

Former Swiss President Adolf Ogi was quoted as saying he is stepping down from the advisory board of Stanford Financial Group after Texas billionaire Allen Stanford and three of his companies were charged with fraud.

“I don’t want to have anything to do with something that could be dodgy,” Mr. Ogi told the Swiss daily Cash, according to its website on Wednesday. He added that he was stepping down immediately from the board.

“We never discussed the operational business in the meetings,” Mr. Ogi, who met Stanford while working as a U.N. adviser on sport, said of his participation on the advisory board.

Mr. Ogi was not immediately available for comment on the report.

[Hugin]

87. Anyone find Stanford's undisclosed location yet?

That gold plated helicopter can't be that hard to follow.

[antigop]

89. See my next post--he might still be in the U.S. n/t

[UpInArms]

91. wtf??? "We never discussed the operational business in the meetings," Mr. Ogi

- what the hell did they talk about in their "meetings"????

cricket????

these people should be in prison

:grr:

[antigop]

93. Yeah, pretty amazing, huh? n/t

[Ghost Dog]

124. “I don’t want to have anything to do with something that could be dodgy,”

Heh. I'd like to know exactly how to say that with such panache in Swiss-German, or was it in Swiss-French or Swiss-Italian, in the original version?

Entendu.

[antigop]

88. Report: Stanford Financial Chief tried to flee country

http://www.cnbc.com/id/29258074

The head of Stanford Financial Group charged with orchestrating an $8 billion fraud tried Tuesday to get a one-way flight out of the country, a source told CNBC.

R. Allen Stanford tried to arrange the direct flight to Antigua, where his offshore banking operations are based.

He contacted a private jet owner at 3 pm and attempted to pay for the flight with a credit card, but was refused because the company would only accept a wire transfer, a source in the private jet industry said. Stanford had asked to leave by 6 pm.

[Dr.Phool]

90. Maybe he rented a row boat.

[formercia]

92. Gold Demand Pushed Through $US100 Billion Barrier

http://finance.yahoo.com/news/Gold-Demand-Pushed-Through-bw-14394747.html
Gold Demand Pushed Through $US100 Billion Barrier as Investors Turned to Recognized Store of Value

* Wednesday February 18, 2009, 2:00 am EST

NEW YORK & LONDON--(BUSINESS WIRE)--Sustained investor interest in gold over the course of 2008 against a backdrop of the worst year on record for global stock markets and many other asset classes, helped push dollar demand for the safe haven asset to $102bn, a 29% increase on year earlier levels. According to World Gold Council’s (“WGC”) Gold Demand Trends, identifiable gold demand in tonnage terms rose 4% on previous year levels to 3,659 tonnes.

As shares on stock markets around the world lost an estimated $14 trillion in value, identifiable investment demand for gold, which incorporates exchange traded funds (ETFs), and bars and coins, was 64% higher in 2008 than in 2007, equivalent to an additional inflow of $US15bn. Over the year as a whole, the gold price averaged $872, up 25% from $695 in 2007.

The most striking trend across the year was the reawakening of investor interest in the holding of physical gold. Demand for bars and coins rose 87% over the year with shortages reported across many parts of the globe.

--snip--

[Ghost Dog]

94. E.Europe policymakers scramble to halt currency slide

Wed Feb 18, 2009 11:19am EST PRAGUE, Feb 18 (Reuters) - Central European policymakers eyed interest rates, market intervention and bailouts on Wednesday to dig out their battered banks and currencies, while the EU warned them not to exacerbate panic by talking too much.

Polish officials said the government had started talks with the European Central Bank on joining the pre-euro ERM-2 exchange rate mechanism, and its Finance Ministry said it had converted euros from EU funds on the market to support the ailing zloty.

A top Czech rate setter warned of higher interest rates and Hungary's prime minister pushed for a joint EU bank aid package and sought new means to defend the forint on Wednesday as policymakers sized up steep falls in their currencies .

In Romania, central bank Governor Mugur Isarescu said Bucharest may want to seek a deal with the International Monetary Fund and Serbia's said Belgrade could boost its $520 million IMF package to $2 billion .

The result was some relief for the region's currencies after investors stepped up a selloff this week, worsening a slide that has caused some small Polish firms to fail and squeezed millions across the region who have borrowed in euros and Swiss francs.

...

And earlier, officials said Warsaw had started talks with the European Central Bank on joining the pre-euro Exchange Rate Mechanism (ERM-2), although Polish central bank Governor Slawomir Skrzypek poured cold water on the government's plan to join the ERM-2 this year and adopt the euro in 2012.

"There are no economic reasons to enter the ERM-2 mechanism this year," Skrzypek told daily Rzeczpospolita. "We are not ready. The zloty exchange rate is not stable enough."

Most analysts surveyed in a Reuters poll expect ERM-2 entry only next year, with euro adoption in 2013.

Czech central bank Vice-Governor Miroslav Singer said his fellow policymakers may end a months-long easing cycle to interest rates and instead raise the cost of borrowing in response to the falling crown, which has lost 6 percent since the bank's last meeting and 9 percent this year .

"Cutting rates is not at all a matter for a debate with the current levels of the exchange rate," Singer told daily E15. "The question is (whether) to raise and by how much," he said.

The Czech crown surged 0.6 percent to 29.32 per euro after plunging to a more than three-year low on Wednesday.

Polish and Hungarian rate setters have also indicated currency weakness could limit interest rate cuts despite output slamming into reverse due to a collapse in euro zone demand for goods produced in the export-heavy region.

/... http://www.reuters.com/article/marketsNews/idINLI34480320090218?rpc=44&sp=true

[antigop]

95. R. Allen Sanford's private equity connections

http://blogs.wsj.com/deals/2009/02/18/r-allen-stanfords-private-equity-connections/?mod=rss_WSJBlog

he Securities and Exchange Commission’s complaint against Stanford International Bank and related entities includes many mentions of the firm’s involvement in the private-equity industry.

The complaint, filed Tuesday in federal court in Dallas, alleges financier R. Allen Stanford orchestrated a multibillion dollar fraud centering on an $8 billion certificate of deposit program. According to the complaint, the majority of Stanford’s money was invested not in liquid securities, as it had told investors, but instead in illiquid asset classes such as private equity or real estate.

Stanford International Bank’s 2007 annual report said its portfolio was invested 58.6% in equity, 18.6% in fixed income, 7.2% in precious metals and 15.6% in alternative investments, according to the complaint. However, the SEC alleges the bank’s portfolio instead consists of primarily illiquid investments, with “at least 23% private equity.” The SEC couldn’t be reached for additional comment. Stanford couldn’t be reached for comment, either.

People in the private-equity sector said Stanford isn’t a big private-equity investor. Two placement agents said they have never contacted the institution about any of their clients. “I have never heard of them, and I guess that’s a good thing,” one placement agent said.

A small venture firm in Louisiana, VCE Capital Partners, lists Stanford as a limited partner on its Web site. So does Catalyst Funds, an Israeli venture-capital firm, and AquaAgro Fund LP, a venture fund that invests in Israeli water, agriculture and clean-technology businesses.

[DemReadingDU]

99. Was this a ponzi?

Spouse hears something on TV, and now thinks all these frauds are ponzi schemes. But I'm not sure about this guy. Didn't he blatantly steal the money for himself?

:shrug:

[antigop]

102. Dunno. We'll have to keep following the story wherever it leads. n/t

[UpInArms]

137. go here and look at this!

http://www.webtvhub.com/cnbc-2008-interview-highlights-video-sir-allen-stanford-of-stanford-financial-group/

[Hugin]

138. There's that irritating "$$$ under management" on the scroller.

Lately, every time I hear or read that phrase the word "crook" goes through my mind.

:hmmpf:

[DemReadingDU]

143. ABC: Stanford May Have Laundered Drug Money for Mexican Cartel

2/18/09
The SEC's fraud charges may be the least of accused financial scammer R. Allen Stanford's worries. Federal authorities tell ABC News that the FBI and others have been investigating whether Stanford was involved in laundering drug money for Mexico's notorious Gulf Cartel.

Authorities tell ABC News that as part of the investigation, which has been ongoing since last year, Mexican authorities detained one of Stanford's private planes. According to officials, checks found inside the plane were believed to be connected to the Gulf cartel, reputed to be Mexico's most violent gang. Authorities say Stanford could potentially face criminal charges of money laundering and bribery of foreign officials.

Authorities say the SEC action against Stanford Tuesday may have complicated the federal drug investigation.

The federal investigation, however, did not stop Stanford from using corporate money to become a big man at last year's Democratic convention in Denver.

A video posted on the firm's web-site shows Stanford, now sought by U.S. Marshals, being hugged by Speaker of the House Nancy Pelosi and praised by former President Bill Clinton for helping to finance a convention-related forum and party put on by the National Democratic Institute.


Edit: There's more...
http://www.abcnews.go.com/Blotter/story?id=6907429&page=1

[DemReadingDU]

140. Hard work being a billionaire!

:rofl:


That video was added 2/17/09, not sure when that interview took place. It seems to me Stanford took people's money to enrich himself which is not necessarily a ponzi where new people are brought into the scam whose money is used to pay longterm investors.
:shrug:

[Dr.Phool]

101. Looting Social Security.

Looting Social Security
By William Greider

This article appeared in the March 2, 2009 edition of The Nation.
February 11, 2009


Is Social Security threatened by entitlement reformers? David M. Walker, president and CEO of the Peter G. Peterson Foundation responds to William Greider's essay here. Read William Greider's answer to Peterson's criticism here.

Governing elites in Washington and Wall Street have devised a fiendishly clever "grand bargain" they want President Obama to embrace in the name of "fiscal responsibility." The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system. They are also targeting Medicare and Medicaid. The pitch sounds preposterous to millions of ordinary working people anxious about their economic security and worried about their retirement years. But an impressive armada is lined up to push the idea--Washington's leading think tanks, the prestige media, tax-exempt foundations, skillful propagandists posing as economic experts and a self-righteous billionaire spending his fortune to save the nation from the elderly.

These players are promoting a tricky way to whack Social Security benefits, but to do it behind closed doors so the public cannot see what's happening or figure out which politicians to blame. The essential transaction would amount to misappropriating the trillions in Social Security taxes that workers have paid to finance their retirement benefits. This swindle is portrayed as "fiscal reform." In fact, it's the political equivalent of bait-and-switch fraud.

Defending Social Security sounds like yesterday's issue--the fight people won when they defeated George W. Bush's attempt to privatize the system in 2005. But the financial establishment has pushed it back on the table, claiming that the current crisis requires "responsible" leaders to take action. Will Obama take the bait? Surely not. The new president has been clear and consistent about Social Security, as a candidate and since his election. The program's financing is basically sound, he has explained, and can be assured far into the future by making only modest adjustments.

But Obama is also playing footsie with the conservative advocates of "entitlement reform" (their euphemism for cutting benefits). The president wants the corporate establishment's support on many other important matters, and he recently promised to hold a "fiscal responsibility summit" to examine the long-term costs of entitlements. That forum could set the trap for a "bipartisan compromise" that may become difficult for Obama to resist, given the burgeoning deficit. If he resists, he will be denounced as an old-fashioned free-spending liberal. The advocates are urging both parties to hold hands and take the leap together, authorizing big benefits cuts in a circuitous way that allows them to dodge the public's blame. In my new book, Come Home, America, I make the point: "When official America talks of 'bipartisan compromise,' it usually means the people are about to get screwed."

(more)

http://www.thenation.com/doc/20090302/greider?rel=hp_currently

-----------------------------------------------

Fasten your seatbelts kids. Here we go again.

[snot]

129. This deserves its own post (like many others in SMW, of course).

[antigop]

103. Sir Allen Works Washington--oh, boy

http://www.talkingpointsmemo.com/archives/2009/02/sir_allen_works_washington.php

As we look deeper into the Allen Stanford story and his alleged $8 billion fraud, his role spreading around money in Washington is becoming increasingly clear. A lot of it tied to his efforts to kill a bill back in 2001/2002 era bill that would have cracked down on offshore banks and money laundering. Elana Schor's got part one of the story.

As she'll explain in part two of the story, Stanford gave a huge mount of money to the Democrats -- who then controlled the senate -- to prevent the bill from ever coming to the floor.

Elana Schor's post is here:
Mr. Stanford goes to Washington, part one:
http://tpmdc.talkingpointsmemo.com/2009/02/mr-stanford-goes-to-washington-part-one.php

Our tale begins in the Clinton administration, when the 1998 bombings of U.S. embassies in Africa helped jump-start a legislative push to crack down on international tax havens. At that time, Jonathan Winer, a senior State Department official under Clinton, was well aware of Stanford's offshore activities.

"In the late '90s, Stanford came to my attention ... because he was reaching out to people in our government to say he was a good guy and we should be comfortable with him," Winer, now a senior vice president at APCO Worldwide in Washington, told me.

"He hired people to reform Antigua's banking system, which was overwhelmed by offshore banks and shell banks he was also regulated by the entity governing the sector that he was spending money to organize in what was characterized as a clean-up. We thought that was a conflict and inappropriate."

Meanwhile, as Time reported three years later, the attempt to tighten money laundering rules got pushback from ... guess who? (emphasis mine)
...
The Stanford Financial Group hired its first Washington lobbyists in 1999, at the time the anti-money laundering drive was gathering steam. And the company quickly learned how to cultivate pull in the Capitol -- between July 2000 and July 2001, Stanford and his employees doled out $448,000 in "soft money" contributions to senior lawmakers in both parties, according to a report by watchdog group Public Citizen.

Among the lawmakers benefiting from Stanford's largesse was Senate Banking Committee Chairman Phil Gramm (R-TX), who let a House-passed money laundering bill die a quiet death in his panel in the last months of the Clinton administration.

[Dr.Phool]

105. Looks like he was clipping a lot of wealthy Chavez opponents as well.

Via TPM

http://www.cnbc.com/id/29257314

Stanford Financial Has Deep Venezuelan Ties
By: Michelle Caruso-Cabrera, CNBC Reporter | 18 Feb 2009 | 10:33 AM ET

Big connections between Stanford Financial and Venezuela.

My sources in Venezuela tell me that Stanford Financial, the finance firm in the crosshairs of the SEC, has big connections with Venezuela. In fact, this morning regulators say Venezuelan exposure totals $2.5 billion.

A very senior executive in the country tells me R. Allen Stanford used to send a private jet to pick up his biggest Venezuelan clients and bring them to swanky parties he held.

Back in 2005, despite a wave of corporate nationalizations under Socialist President Hugo, Stanford Financial Group opened a dozen branches in Venezuela. You can see the article here from the NY Times.

You have to wonder, why? Perhaps to legitimize the company to wealthy clients with big pockets and who were working on ways to hide their money from socialist president Hugo Chavez?

(more)

http://query.nytimes.com/gst/fullpage.html?res=9F03E0DC153FF936A25755C0A9619C8B63

In marathon speeches peppered with quotes from Marx and accolades to Che Guevara, President Hugo Chávez repeatedly vows to do away with capitalism in Venezuela. But it turns out that Mr. Chávez's economic policies have been generating a boom for those most capitalist of institutions -- Venezuela's banks.

Record public spending, fueled by high oil prices, is flooding this flourishing economy with cash. Government currency controls are trapping much of that money in the country. The extra cash, in turn, is increasing consumer spending. The banks are taking advantage of that by handing out scores of loans, advertising on flashy billboards across Caracas.

And with interest rates lower than the rate of inflation, ''you would be stupid not to take out a loan right now,'' said Richard Francis, a director of sovereign ratings at Standard & Poor's.

As a result, bank profits grew 33 percent last year, led by increases of more than 100 percent in credit card loans and 143 percent in automobile credit, according to Softline Consulting, a financial analysis firm here. The banking and insurance industries' contribution to the gross domestic product rose 37 percent in 2006, the central bank said.

The market looked attractive enough two years ago that the Stanford Financial Group of Houston put political risk on the back burner to open a dozen branches here. Now, remodeling its office tower in the Caracas business district of El Rosal, the bank has seen its revenue in Venezuela grow fourfold, and its credit portfolio nearly tripled last year

[antigop]

106. Mr. Sanford goes to Washington, Part Two

http://tpmdc.talkingpointsmemo.com/2009/02/mr-stanford-goes-to-washington-part-two.php

Accused $8 billion fraudster Allen Stanford is making headlines today, but he's no stranger to D.C. politics. After government officials caught wind of Stanford's cozy relationship with the government of Antigua, where he maintained his offshore banking operations, the flamboyant Texas financier worked hard to make friends in Congress.

Between July 2000 and July 2001, Stanford was the single largest contributor to the unregulated "527" fundraising groups run by then-Senate Democratic leader Tom Daschle (SD) and then-House Democratic Caucus Chairman Martin Frost (TX), according to the watchdog group Public Citizen.

Stanford's company "gave soft money to Daschle, Frost, and the party committees at a time when it had only one lobbying objective," Steve Weissman, who was Public Citizen's legislative representative during that period, told me. "The people who received the money basically did nothing to advance the money laundering bill that was from the Clinton administration. Even if they were Democrats and it was the Democratic Clinton administration that wanted to push the bill, they complied with what the donor wanted."

[antigop]

110. Six degrees of Sir Allen

http://www.talkingpointsmemo.com/archives/2009/02/six_degrees_of_sir_allen.php

Zack Roth looks at the cast of characters in the orbit of Sir Allen Stanford and finds familiar names from other recent scandals popping up again and again -- from Abramoff to Blagojevich.

We've also dug up photographs from a 2005 congressional junket to the islands sponsored by the Inter-American Economic Council, which Stanford backed financially. Here's Sir Allen and former Florida Secretary of State and then-congresswoman Katherine Harris:

http://tpmmuckraker.talkingpointsmemo.com/2009/02/six_degrees_of_allen_stanford.php

Here at TPMmuckraker, the more we think about the Allen Stanford saga, the more it seems like a kind of harmonic convergence of recent high-profile muck.

The emerging story's range of ties -- some incidental, some more substantive -- to some other high-profile scandals of the past few years, from Bermard Madoff to Jack Abramoff to Rod Blagojevich -- is pretty striking.

[DemWynner]

111. K&R

I had to go to the bottom to see this. It needs a kick!

[DemWynner]

112. Hey, I got a heart!

Thank you!:loveya: :loveya: :loveya:

[Ghost Dog]

128. DU's SMW is all heart,

don'cha know.

With brains, friends and teeth. :evilgrin: :hi:

(self)-edited.

[RUMMYisFROSTED]

114. I'm sensing a corner.

No facts to back it up.

[UpInArms]

127. I hope it's not like this one

[Hugin]

136. I got a black eye walking into a corner once.

:silly:

:klutz:

: ow :

[DemReadingDU]

142. OMG, I did this klutzy thing just last week....

I was bending over trying to let in one dog with muddy feet while trying to keep the other dog outside with its muddy feet. Somehow the doorknob smacked me in the forehead which resulted in a huge bump. Ouch. Thankfully, it wasn't my eyeball.

[ozymandius]

119. The Day the Markets Stood Still

..almost..

Dow 7,555.63 Up 3.03 (0.04%)
Nasdaq 1,467.97 Down 2.69 (0.18%)
S&P 500 788.42 Down 0.75 (0.10%)
10-Yr Bond 2.728% Up 0.066
NYSE Volume 6,714,408,000
Nasdaq Volume 2,096,646,000

4:30 pm : A government plan to stem foreclosures and a restructuring plan from General Motors (GM 2.06, -0.12) did little to pull investors away from the sidelines, leaving stocks to spend the session trading sideways in choppy fashion.

As part of an effort to stem foreclosures and promote an attractive mortgage market, the government is increasing funding to Fannie Mae and Freddie Mac by expanding the allowable size of the GSEs' retained mortgage portfolios to $900 billion from $850 billion, while also purchasing Fannie Mae and Freddie Mac mortgage-backed securities. Fannie Mae and Freddie Mac will receive increased preferred stock purchase agreements from the Treasury as well.

The plan aims to help certain homeowners refinance GSE conforming mortgages, and offers banks incentives to reduce payments for borrowers. Still, the news did little to stir a reaction among market participants, who continue to wait and see what other plans will be unveiled to help restore conditions in the housing market, financial sector, and broader economy.

Economic data remains bleak. January housing starts were lower than expected, falling to their lowest level in decades. Industrial production in January was also worse than expected. Monthly building permits and import prices were generally in-line with expectations, but were still uninspiring.

According to the minutes from the Jan. 28 FOMC meeting, the Federal Open Market Committee believes monetary easing has lowered lending rates, but that has been offset by widening credit spreads, more restrictive lending standards, and dysfunctional credit markets.

Separately, reports indicate former Fed Chairman Greenspan indicated the current global recession will be the longest and deepest since the 1930s, while Chicago Fed President Evans stated the U.S. economy is shrinking at a disturbing pace, and conditions call for more stimulus. To that point, Fed Chairman Bernanke noted the Fed has developed a second set of policy tools that involve the provision of liquidity directly to borrowers and investors in key credit markets.

General Motors unveiled its viability plan, which indicated the company could need as much as $30 billion from the U.S. government, including the $13.4 billion the company has already received. The company is planning heavy layoffs and focusing production efforts on a smaller fleet of autos as part of its effort to stave off bankruptcy, which the company indicated would not be an amicable scenario. Displeased with the plan, investors sent shares of GM lower.

Earnings announcements from Comcast (CMCSA 12.36, -0.53) and Deere (DE 32.23, -1.26) also failed to inspire market participants. Comcast had posted better-than-expected results and increased its dividend. Deere fell short of the consensus earnings estimate.

Though limited, the session's buying efforts were focused in the consumer staples sector (+0.7%) and the technology sector (+0.4%). They were the only two sectors in the S&P 500 to finish higher. In the consumer staples, Wal-Mart (WMT 50.00, +1.76) traded as a leader for the second straight session, while large-cap tech helped the tech sector.DJ30 +3.03 NASDAQ -2.69 NQ100 +0.2% R2K -1.3% SP400 -1.2% SP500 -0.75 NASDAQ Dec/Adv/Vol 1711/952/2.09 bln NYSE Dec/Adv/Vol 2195/883/1.43 bln

[Hugin]

121. The volume is still kinda high...

Based on pre-Bear_Stearns levels. (Typical 4-Billion Days)

:shrug:

Oh, and they dumped my individual uncontrolled retirement allotment in there today.

:tahtah: :hi:

[Ghost Dog]

130. True. I recall we noted here the significant rise in volume

... not much more than a year ago, was it?

Churning (round and round) the downturn, I call it.




And I repeat this 3.5 hour (doubtlessly flawed, but essentially true, the bell rings for me) video link: The Money Masters - How International Bankers Gained Control of America (and not only America).

[Demeter]

132. What a Nifty, Erudite Title for Your Post!

I feel a warm fuzzy (because I finally have a clue. what somebody is talking about!)


AND~~I have good news! The Snowdrops are blooming! They weren't there yesterday, but today there's a whole bunch. I stared at them, stupefied, trying to figure out what that beautiful, bizarre thing poking through last year's rotten leaves was, and then from the dim recesses of memory came an echo of last year....Last year the first snowdrop appeared on March 1.

All I can say is, good! We were supposed to get 5 inches of snow, but got half an inch of rain instead. the weather man is trying to bluff again, saying the snow will fly tonight. I'm hoping that winter's back is broken and winter, which started 6 weeks too early on November 11, is finally leaving...

[Ghost Dog]

133. End note: You wanted to see more

mayhem resistance in the European Eurozone Union? Let me call your attention to this threaD.

Music/visuals: http://www.youtube.com/watch?v=dmDDyDH1JAo

edit: ¡Please Wake Up!

[Ghost Dog]

144. Damn. How weird. Not my style (forgot to post the link):

(Mikas's) here: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3744634

(Green shoots, what, Demeter?); :silly:

[TheWatcher]

141. Disturbingly Anemic Day.

I have to admit, I thought that the $75 Billion dollar lifeboat to homeowners (And when I say lifeboat, think TITANIC) would have been good for a 2-3% Propaganda Pop, at least.

After the way they jammed the overnight futures, one would have thought The Frat House would have been rockin', the beer flowing freely from the kegs, and the half-naked, dancing under-grads would have been frolicking in their specially issued CNBC undies embroidered with "Bottom's IN!" on the, well.....bottom. :)

What we got was another big volume, day that aside from a Fairy brunch, was pretty flat. The Futures, after taking an initial dive off a cliff, have quickly been jammed and we are seeing another overnight Party developing. There is clearly a big attempt to build a floor at this support level, at least for the time being. It isn't going to work of course, but it's not supposed to. The Frog (US) must be boiled slowly.

The news of course continues to deteriorate.

Today's latest proposed scheme, which was emphasized with the usual Gun-To-The-Head Panic Language ("This must be done now, or the Earth itself will split in two, filling every home with hot liquid Magma") Upon further inspection, it's vague on details, and full of cautionary spin and weasel language about who exactly would qualify, won't save every home, must have realistic expectations, but we'll all surely die if it doesn't pass now, etc.

Just another day of cheap threats, theatrics, and Economic Terrorism.

I wonder how long it will be before they come out on page A-16 and break the news to all of us that they scrapped the plan.

Meanwhile, The Fed said things are going to be much worse, Russia continues to collapse, (no word whether their exchanges have re-opened), Hewlett Packard laid ANOTHER egg, Madoff's Evil Twin Stanford has disappeared (I love the Propaganda GoebbelsVision floated about him trying to get on on a Private Jet, via Credit Card. SUUUUUURE He did. Yes, a guy who pulled of THAT big a scheme is going to be stupid enough to put a Private jet flight on his CREDIT CARD. My guess is he skipped the country days ago. He paid CASH.), and reportedly Babylon 2.0 (Dubai), The Shining City that accentuated all the corruption and greed on the Planet, is quietly becoming a GHOST TOWN (!). Oil Continues to deteriorate, YET Gas Prices are above $2.00 here on the West Coast. INTERESTING.

And everyone seems befuddled as to what to do with the Autos.

Thye one thing I would like to hear addressed is how exactly we are going to unwind the entire unfunded liabilities of the US, which is reportedly $66 Trillion.

The ENTIRE GDP OF THE PLANET is $65 Trillion.

Yes, The Stimulus will save us ALL.

Now, without further ado, I would like to proudly introduce the New National Anthem for Wall Street. Personally I don't think a better choice could have been made:

http://www.youtube.com/watch?v=bb2tGQ_7KUI

Peace Be, Marketeers.

[Ghost Dog]

145. I think their coke supply's runnin' short, Watcher,

and they're feelin' depressed.

That music's Ok. :)

(If, again, I sound a little crazy, again, the other day I watched Apocalypse Now Redux, for the first time, all on my own ("wife"'s away travelling...)).