Tuesday, April 28, 2009

Senator Spector

Arlen Spector has now gone from being a RINO to a DINO.

Is this really a cause for celebration?

Monday, April 27, 2009

"Holy Crimes"

The following is copied directly from "Joe. My. God.".

Please follow the link to the blog.

It's all about "Holy Crimes" -- it has nothing to do with straight or gay -- it's just reporting:

Monday, April 27, 2009

This Week In Holy Crimes

Over the last seven days....

Indiana: Salvation Army Pastor Jonathan Hartman arrested for molesting three girls, youngest was 13, one is pregnant.
Alabama: Pastor Randall Pardue arrested for securities fraud.
Rev. Arcadio Larry Pineda and wife sued by congregation for embezzling over $100K.
North Carolina: Bishop Anthony Linwright charged with tax evasion, mail fraud, perjury for evading hundreds of thousands in income tax while driving a $175K Bentley.
California: Pastor
Allen Harrod sentenced to life in prison for multiple charges of interstate transportation of minors for sexual activity.
New York: Father Steven Valenta charged with sexual assault on adult female family member.
Mexico: Father Rafael Muñiz Lopez arrested in bust of kiddie porn ring.
South Dakota: Pastor Timothy Stewart busted as peeping Tom.
Indiana: Pastor Chester Mulligan pleads guilty to stalking the 14 year-old girl he'd allegedly been fucking.
Arkansas: Pastor David Pierce arrested for sexual indecency with a minor.
Delaware: Pastor Timothy J. McDorman charged with rape of 16 year-old and possession of child pornography.

This week's winner:
Maryland: Pastor Kevin Jerome Pushia charged with murder-for-hire for putting a hit out on the blind and disabled man in his care. Pushia allegedly used $50K in church funds to pay for the murder so that he could collect the victim's life insurance settlement. Lemuel Wallace was found dead in a park restroom with multiple gunshot wounds. A notation in Pastor Pushia's daily planner read that day: "L.W. project completed."

Sunday, April 26, 2009


I've been reading about the "soon to be recovery" all over the place. Some folks seem to be SOOOOOO "happy". At the same time:

From Bloomberg: "Insider Selling Jumps to Highest Level Since 2007 (Update2)

By Michael Tsang and Eric Martin

April 24 (Bloomberg) -- Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

Gap Inc.’s founding family sold $45 million of shares in the largest U.S. clothing retailer this month, according to Securities and Exchange Commission filings compiled by Bloomberg. Daniel Warmenhoven, the chief executive officer at NetApp Inc., liquidated the most stock of the storage-computer maker in more than six years. Sales by the co-founders of Bed Bath & Beyond Inc. were the highest since at least 2001.

While the Standard & Poor’s 500 Index climbed 28 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show. That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc.

“They should know more than outsiders would, so you could take it as a signal that there is something wrong if they’re selling,” said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. “Whether it’s a sustainable rebound is still in question. I’d prefer they were buying.”

Insiders Sell

Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients.

That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the 17-month bear market that wiped out more than half the market value of U.S. companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992.

The index rose 1.7 percent to 866.23 today after the Federal Reserve said most banks that underwent stress tests hold enough capital and companies from Ford Motor Co. to American Express Co. posted better-than-estimated results.

Looking Forward

The S&P 500 has jumped 28 percent in 33 trading days, the sharpest rally since the 1930s, on speculation the longest recession since World War II will soon end.

Stocks rebounded as President Barack Obama outlined a $787 billion package of spending and tax cuts to stimulate growth, the Treasury unveiled plans to finance as much as $1 trillion in purchases of banks’ distressed assets and the Fed pledged to buy more than $1 trillion of Treasuries and bonds backed by mortgages to drive down interest rates.

With corporate America stuck in its seventh straight quarter of earnings decreases, the longest in seven decades, executives may have become too cautious, said Penn Capital Management’s Eric Green.

Investors are looking to the final quarter of the year, when S&P 500 companies will increase operating income by 71 percent, according to analyst estimates compiled by Bloomberg. They forecast profits will fall 33 percent in the second quarter and 21 percent in the third.

“Things are a lot better than they were,” said Green, director of research at Penn Capital, which oversees $3 billion in Cherry Hill, New Jersey. Recent history also shows that “insiders have been wrong,” he said.

Confidence Game

Jeffrey Immelt, CEO of General Electric Co., purchased 50,000 shares at prices from $16.41 to $16.45 on Nov. 13, when the stock closed at $16.86. The shares have since fallen 28 percent after the Fairfield, Connecticut-based company reduced its dividend for the first time since 1938 and lost the AAA credit rating from S&P that it held for more than 50 years.

Insiders of consumer and technology companies have been selling the most stock relative to the amount they purchased this month, data compiled by Washington Service show.

John Fisher, Robert Fisher and William Fisher, whose parents Donald and Doris Fisher founded San Francisco-based Gap in 1969, sold a combined 2.99 million shares at between $15.11 and $15.36 a share on April 3 and April 17, SEC filings show. Gap rebounded 55 percent from its low on March 6. The stock gained 1.1 percent since the Fishers’ last sale.

Reasons to Sell

Gap spokesman Bill Chandler said that “from time to time, based upon the advice of financial advisers, the members of the Fisher family will decide to sell stock.”

Warren Eisenberg and Leonard Feinstein, who founded Union, New Jersey-based Bed Bath & Beyond in 1971, sold 1.05 million and 1.1 million shares at $30.90 apiece on April 9, the most since at least December 2001, the filings show.

The offerings came one day after Bed Bath & Beyond surged 24 percent, the biggest advance in nine years, on a smaller than estimated decline in fourth-quarter profit. Spokesman Ken Frankel said Eisenberg and Feinstein, who currently serve as co- chairmen of the largest U.S. home-furnishings retailer, sold for “estate-planning purposes and diversification.”

At NetApp, Warmenhoven sold 1.25 million shares, the most since at least 2002, for about $21.3 million between April 3 and April 21 at prices from $16.10 to $18.10 a share, the SEC filings show. Shares of the Sunnyvale, California-based company, up 49 percent from $12.52 on the March 9 stock market low, gained 3.3 percent since then.

Moving On

Warmenhoven sold shares he received from exercising stock options that were due to expire next month, according to an e- mailed response by Lindsey Smith, a spokeswoman for NetApp. He reaped a profit of about $7.3 million selling the shares at an average price of $17.08 apiece, based on the conversion price of $11.25 for options he held, the data show.

“They’re going to say, ‘Thank you very much,’ and move on to cash or something else,” said David W. James, who helps manage about $2 billion at James Investment Research Inc. in Xenia, Ohio. “This is not a situation that suggests to us we’re seeing an economic recovery.”

To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: April 24, 2009 16:50 EDT

So, we're being told it's a "recovery" -- while folks running the firms are bailing out.


Saturday, April 25, 2009

I've been away from the computer all day -- so, I missed #'s 28 and 29. Sorry, it's just that I haven't been feeling well -- though I realize that's not a great excuse.

Bank Failure 28: First Bank of Beverly Hills, Calabasas, California

Bank Failure 29: First Bank of Idaho, Fsb, Ketchum, Idaho.

First of Beverly Hills was a decent sized bank: "First Bank of Beverly Hills, as of December 31, 2008, had total assets of $1.5 billion and total deposits of $1 billion. It is estimated that the bank has $179,000 of uninsured deposits.
First Bank of Beverly Hills is the 28th FDIC-insured institution to fail this year and the fourth in California. The last bank to be closed in the state was County Bank, Merced, on February 6, 2009. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $394 million.

That's four today. They didn't need "stress tests".

It's not over by a long shot.

Friday, April 24, 2009

It's Friday -- #26, 27, and a credit union

Tell me all about the "recovery". Two "smallish" banks and a good sized credit union.

Bank Failure 26: American Southern Bank, Kennesaw, Georgia.

Bank Failure 27: Michigan Heritage Bank, Farmington Hills.

The National Credit Union Administration (NCUA) today assumed control of the operations of Eastern Financial Florida Credit Union, a state-chartered, federally insured credit union headquartered in Miramar, Florida.
Eastern Financial Florida Credit Union was originally chartered in 1937 and today serves Broward, Miami-Dade, Palm Beach, Hillsborough, Pinellas counties and the Jacksonville area. The credit union has approximately $1.6 billion in assets and just over 200,000 members.

The National Credit Union Administration (NCUA) is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government...

Wednesday, April 22, 2009

Another Suicide

Wonderful year -- another kid (11 yrs. old)killed himself over bullying - homophobic bullying. Still the "religious" right opposes any anti-bullying laws -- after all, it might just stop them from killing children.

What a stupid waste - kids bullyed to the point of suicide. Ending their lives because they can't go on -- and no adult authority figure can be bothered to even TRY to stop it.

Stupid, stupid, stupid. Let them all rot in hell - except, there is no hell, there is no God. If there were - this crap would not happen.

"Let insolvent firms fail"

Fed's Hoenig: Let insolvent financial firms fail

By Alister Bull

WASHINGTON (Reuters) - Insolvent financial firms must be allowed to fail regardless of size, a top Federal Reserve official said on Tuesday, as two prominent economists urged Congress to break up the biggest U.S. banks.

In blunt criticism of the government Federal Reserve Bank of Kansas City President Thomas Hoenig told Congress' Joint Economic Committee that the design of a $700 billion bank bailout last year sowed uncertainty and slowed recovery.

Citing the costs of the economic crisis, Nobel economic laureate Joseph Stiglitz and former IMF chief economist Simon Johnson also told the panel that it was in the interest of taxpayers to dissolve the largest U.S. financial institutions.

"The United States currently faces economic turmoil related directly to a loss of confidence in our largest financial institutions because policymakers accepted the idea that some firms are just 'too big to fail.' I do not," Hoenig said.

"Yes, these institutions are systemically important, but we all know that in a market system, insolvent firms must be allowed to fail regardless of their size, market position or the complexity of operations," said Hoenig, who will be a voter on the Fed's policy-setting committee next year.

U.S. anti-trust rules should be used to break up the biggest banks to safeguard the economy, said Johnson, a professor at the Massachusetts Institute of Technology. He added the costs of the financial crisis already dwarf the damage done by industrial monopolies in the last century.

"The use of anti-trust (laws) to break up the largest banks will be essential," he said. "This is a very serious, imminent danger that needs to be addressed."

Stiglitz made a similar point, arguing that the American people had not received anything like sufficient benefits from allowing such large financial firms to grow, versus with the costs of the crisis.

"They should be broken up unless a compelling case can be made not to that," Stiglitz, a Columbia University professor, told the committee.

The biggest 19 U.S. banks are being subjected to a battery of so-called stress tests to restore confidence in their soundness, with guidelines on the process due on Friday and the results on May 4.

Stocks fell sharply on Monday amid fear that some of them still face massive losses, as the severe U.S. recession forces loan default rates to continue rising.

U.S. Treasury Secretary Timothy Geithner has signaled that no firms will 'fail' the stress tests, but Hoenig said this would be a mistake.

"Actions that strive to protect our largest institutions from failure risk prolonging the crisis and increasing its cost," Hoenig said.

"Of particular concern to me is the fact that the financial support provided to firms considered "too big to fail" provides them a competitive advantage over other firms and subsidizes their growth and profit with taxpayer funds," he said.

Nodding to anger among ordinary Americans over multi-billion dollar bailouts for rich bankers, Hoenig said some of these firms were simply too complicated, and too well-connected in Washington, for the good of the country.

"These "too big to fail" institutions are not only too big, they are too complex and too politically influential to supervise on a sustained basis without a clear set of rules constraining their actions. When the recession ends, old habits will reemerge," he said.

Hoenig also criticized the government's Troubled Asset Relief Program, or TARP, which was also separately chided on Tuesday by the Treasury's watchdog.

"In the rush to find stability, no clear process was used to allocate TARP funds among the largest firms. This created further uncertainty and is impeding recovery," Hoenig sai

Tuesday, April 21, 2009

On Health Care

Here's a MUST READ from The Nation.

It really is a "System From Hell"

"A System From Hell
By Kate Michelman

This article appeared in the April 27, 2009 edition of The Nation.
April 8, 2009

It was a crisp and brilliant autumn day last October when the medical and financial crises with which my family had successfully, if barely, coped for seven years became a catastrophe.

My husband had been diagnosed with Parkinson's disease in 2002, a year after our daughter was paralyzed in a horse-riding accident. His balance had deteriorated until he fell two or three times at home last summer. In the face of his diminishing physical condition, a single fall could result in disastrous injury. We scheduled an appointment with his neurologist in Washington.

We pulled up to the main entrance of the hospital after the two-hour drive from our home near Gettysburg, Pennsylvania. My husband opened his door, grabbed the roof of the car and began to pull himself out as I walked around to help him. I was too late. In an instant--time slowed enough for me to see the danger but raced ahead too fast for me to reach him--he lost his grip and fell to the concrete, shattering his hip, breaking his femur and causing internal bleeding that kept him in the hospital for months.

My husband is a retired college professor, and what the teaching profession lacks in salary it often makes up for with generous benefits. His health insurance would cover most of the emergency costs related to the fall--the surgeries, the hospitalization, the drugs. But in the astronomical sums the cost of medical care often entails, "most" is not a reassuring word. Months later, as his discharge from the hospital drew near, I sat in my living room looking at the bills piling up on the table. The co-pays, uncovered care and other costs had already reached $8,000, and we had virtually nothing left.

Seven years of caring for my husband and our daughter, who had no insurance at the time of her accident, had all but exhausted our savings. As my husband's condition deteriorated, I was caught in a trap. We needed my income, but the kind of political consulting work that was my forte was incompatible with the demands of caring for him. It was simply not possible for me to be available for him 24/7 and simultaneously to work overtime, traveling for days or weeks on the campaign trail, to bring in the income that would keep us afloat.

The fraying financial thread by which we were already hanging was now certain to snap. When I heard the awful sound of my husband's body hitting the concrete outside the hospital, I knew the modicum of independence to which he had clung for so long was gone. He was discharged into an assisted-living facility, where most of the cost was excluded from both his private long-term-care insurance and Medicare. At $9,000 a month, the bills accumulated quickly.

Recently, we decided to bring him home, although the doctors would have preferred that he stay at a facility with full-time supervision. But this was a mathematical decision, not a medical one: we do not have the money it costs to keep him there. I had already stopped working, to care for him; our savings are nearly depleted; and his pension is not nearly large enough to pay the bills.

Today he needs nearly round-the-clock professional help at home--less than the cost of the assisted-living facility but still far more than we have. I have spent recent weeks looking for a job that can add at least enough to my husband's pension and our Social Security benefits to cover the cost of his care. It is a dilemma familiar to so many women--finding work that can pay for care but also leave time for providing it.

The time is drawing near when, job or no job, the expenses will simply be more than we have. I am coming full circle, back to where so many women's lives begin and end--and where my career as an activist began: jobless, unsure how to pay the next month's bills, caring for a family that depends on me for survival--and utterly and deeply determined that something about our country must fundamentally change.

That was in 1969. My first husband had abruptly left my three young girls and me, stranding us without financial support. Our family was in crisis, and when I found out a few weeks later that I was pregnant too, I knew it was impossible to give a new baby--whose father had already deserted it--what it deserved while also giving my daughters what they needed. So in 1969 I made the difficult decision to have an abortion. Because state law radically restricted access to the procedure, that decision had humiliating consequences. I was forced to obtain permission both from the man who had abandoned my daughters and me and from an all-male hospital review board. The board's interrogation in a hospital conference room covered subjects like whether I was capable of dressing my children in the mornings and whether I had been satisfying my husband sexually.

That experience sparked a lifetime of activism that eventually took me to the front ranks of the prochoice movement, where I forged deep and lasting friendships with some of the most powerful political figures of the past thirty years.

Not many Republicans were among them. But there ought to have been more--because in a distant era fast receding in time, theirs was the party of moderation and individual rights, and also because, ironically enough, I have led precisely the life Republicans claim to value. I started as a single welfare mother, then worked my way through college en route to a successful career. My second husband and I have sustained a traditional and loving marriage for thirty-five years. He purchased quality health insurance, including long-term-care insurance, so he would not be a financial burden to others. He enjoyed a long and steady career at an institution that would pay healthcare costs and a modest pension for life. Between his salary and mine, we achieved a reasonable degree of economic comfort--never wealthy but independent, self-sufficient, responsible.

Then came our daughter's accident

We got the call in 2001. She was pursuing her lifelong love of horses as a trainer in upstate New York. One day in May her horse got spooked, reared up and fell over backward on top of her, crushing three of her vertebrae and paralyzing her for life.

The weeks and months that followed included multiple surgeries, a long hospitalization and extensive rehab. The bills were exorbitant, to say nothing of the fact that our daughter probably would never again be able to support herself through full-time work.

When the bills came in, it never occurred to me that walking away from them was an option. I cashed in the IRA on which we were depending for retirement and paid them myself.

My husband's diagnosis followed just as our daughter was beginning to stabilize. Eventually I had to leave work to care for him, and our financial independence deteriorated on a parallel track with his health. The story is familiar: the medical crisis that becomes a financial one. Still, we were able to hold things together, moving from one crisis to the next but finding a way to get by.

That ended in October. We quickly learned that not even the most frugal planning is enough to cope with surging healthcare costs. The long-term-care insurance barely covers a fraction of his long-term care. I will care for him at home, but a time will come when even our home might be at risk: if he needs nursing home care, Medicaid will pay for it only after we have liquidated most of our assets. Consequently, a blessing--my husband could live like this for years to come--is also likely to bankrupt us.

I do not tell this story because it is unique. On the contrary, the point is precisely that countless people across the country are living it. And millions more are a crisis away from joining them--one lost job, a diagnosis, an accident. Most people do not have the luxury of being able to call, as I do, on powerful friends for help. Not even these friends, of course, can change the predicament my husband and I face. Nor will the situation change for anyone until political leaders get serious about comprehensive healthcare reform.

By "comprehensive," I mean that piecemeal approaches will not work--not economically, not morally. The healthcare crisis is not a series of isolated problems. The problem is not just the uninsured. It is not only the underinsured. It is not the young or the old. My husband had excellent health coverage; our daughter had none. He faces chronic illness in the twilight of life; she suffered a terrible injury just as her adult life was beginning. Between them, they span the complete spectrum of healthcare economics in America, but when crisis struck, they found themselves in the same place.

Our story also illustrates the unique challenges women face in the healthcare system, as in the economy at large. Women are paid less and given benefits less frequently--yet they are the ones on whom the responsibility of caretaking disproportionately falls. In addition, women disproportionately, but hardly exclusively, understand the perverse economic choices the healthcare system imposes. In my case, I had to quit working to care for my husband, only to arrive at a point at which he needs care I can afford only if I can find a job. The bills, meanwhile, are often inexplicable, sometimes contain mistakes and are always impossible to resolve without encountering a thicket of red tape.

Even on the other side of that thicket, the insurance companies cannot answer the most vexing question my husband and I--and so many others--ask: if "health insurance" does not pay for healthcare when people need it, then what exactly do those words mean? And all this says nothing about the fact that my husband had the foresight to purchase long-term-care coverage. The problem is that it nominally covers long-term care but does not cover its actual cost.

I am often told there is a shocking quality to our story--it prompts a realization that if this could happen to someone like me, it could happen to anyone. But of course there is little that ought to surprise us; political connections are bound to be of little avail in the face of a problem politics has refused to address.

If there is an upside to the country's healthcare crisis, it is that the problem is hurtling toward a point at which it absolutely cannot be ignored without immediate and disastrous consequences. If there is an upside for me, it is this: returning to those difficult days of poverty and fear in 1969 also means returning to a place where anger inspires activism. I was a young woman then, of course, with a lifetime of battles ahead. I am not so young now. But I have enough years left to have one more fight in me. Healthcare is it."

Sunday, April 19, 2009


Yesterday's game was a disaster! 22-4 is something that didn't even happen to the old St. Louis Browns.

Someone is a lousy judge of talent -- I think they need a new pitching coach. Isn't dave Eiland the genius who said both Hughes and Kennedy were ready for the big leagues? He doesn't seem to have helped Wong, nor has Jobba progressed the way he should have.

Something is not right with the pitching staff -- and talent evaluation.

It's hard to watch a decent team losr so badly.

Saturday, April 18, 2009

"America Is Being Looted"

This from Chris Martenson by way of Jesse's Cafe Americain. You can follow the link to the original.

Just reading this stuff scares the crap out of me. Once again, I get to the idea of an America of rich and not-rich --- with little inbetween. Not the USA I grew up in.

America is Being Looted
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Tuesday, April 14, 2009, 9:20 am, by cmartenson

As cynical as I am, I just can’t keep up.

That sentence is a paraphrase of a quote by Lily Tomlin that reads, “No matter how cynical you become, it's never enough to keep up.”

I have long been a cynic of the bailouts, and, unfortunately, I cannot detect even the slightest sliver of daylight between the prior and current administrations. The reason, I fear, is captured by this quote from Simon Johnson, the former Chief Economist at the IMF and current professor at MIT’s Sloan School of Management:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

The unfortunate conclusion here is that our system and processes are fully “captured” by a tangled web of interests that serve themselves over everything else. Your future, my future, and our future is being systematically ruined by a self-interested group of insiders that can no longer distinguish between their good and the common good.

Here’s the latest string of outrages from this week.

First, it is vitally important not just that conflict of interest be absent when big money is involved in policy decisions, but also that the appearance of conflict of interest be absent. Our system of money is based on confidence (after all it is a Ponzi scheme) and therefore it is vital that our checks and balances assure that the public good is not abused by a few at the expense of the many.

In order for the average person to pull hard on the yoke of life, straining to earn their daily wage, that wage has to be worth something. What is money “worth,” if some of us have to work to exhaustion to obtain it while a very small minority can literally conjure trillions out of thin air and distribute it amongst themselves?

Money is a social contract, especially fiat money, and abusing the trust inherent to making that money system work is the gravest of all possible errors. I am not exaggerating here.

This week I found out that, even as Lawrence Summers, in his role as President of Harvard University, was excoriating professor Cornell West for shirking his professorial duties by making a spoken-word audio CD, he was himself moonlighting for a hedge fund and various Wall Street banks earning millions. Here’s Frank Rich in the NYT:

Lawrence Summers, the president’s chief economic adviser, made $5.2 million in 2008 from a hedge fund, D. E. Shaw, for a one-day-a-week job. He also earned $2.7 million in speaking fees from the likes of Citigroup and Goldman Sachs.

Those institutions are not merely the beneficiaries of taxpayers’ bailouts since the crash. They also benefited during the boom from government favors: the Wall Street deregulation that both Summers and Robert Rubin, his mentor and predecessor as Treasury secretary, championed in the Clinton administration.

This goes well beyond “the appearance of” a conflict of interest. If Summers were a judge, he’d have to recuse himself from the case. Nearly $8 million in a few years from Wall Street is a conflict of interest. A massive one.

However, if smoking guns are more your thing, then this next bit of information from the same article will be to your liking:

Summers had done consulting work for another hedge fund, Taconic Capital Advisors, from 2004 to 2006, while still president of Harvard. He tried — and, mercifully, failed — to install the co-founder of Taconic in the job of running the TARP bailouts.

Think of the judgment of a person, long in the public eye, who has apparently learned nothing from his past scrapes with public perception, who attempts to install a past patron in a plum post involving public money being distributed to private, already wealthy recipients.

Think of the character of a person who can rationalize the act of publicly excoriating a professor for doing something that he is secretly doing himself, but on a much grander scale.

That person is Lawrence Summers, the man chosen by the Obama team to coordinate the bailout efforts.

Rahm Emanuel, the current White House Chief of Staff, comes similarly burdened:

…the banking industry recently paid Rahm Emanuel $16 million for about two years of work. That investment was recently paid back when, as President Obama's chief of staff, Emanuel led the January campaign to release another $350 billion in bank bailout funds.

But it goes deeper than that. Rahm Emanuel also took what I consider to be a lot of money serving on the board of Freddie Mac, a company that is certain to cost taxpayers hundreds of billions of dollars.

Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

Before Timothy Geithner (“Turbo Tax Timmy,” as he’s called in some circles) was appointed to the Treasury position, his career and connections were explored in depth in an excellent article in Portfolio.com by Gary Weiss:

After the Bear deal, the Fed wound up with $30 billion in collateral, mostly in the form of subprime-mortgage securities. Even Paul Volcker, the former Fed chairman who served on the search committee that picked Geithner and who still holds him in high regard, has expressed queasiness about the way the deal was structured. In a speech to the Economic Club of New York, Volcker said the Fed took actions that “extend to the very edge of its lawful and implied powers, transcending certain long-embedded central-banking principles and practices.” Volcker later leavened this harsh assessment a bit, telling me that the Fed’s intervention “was a proper action, but it was extraordinary—something that’s never been done before, in terms of calling upon that emergency power. It tells you how seriously they took it.”

Still, misgivings about the deal are hard to ignore, no matter how catastrophic the consequences of not intervening might have been. It doesn’t help that the deal is teeming with connections that are sure to raise questions. Dimon is one of the three class-A directors of the board of the New York Fed, and its head is Stephen Friedman, a former Goldman Sachs chairman, who still sits on the investment bank’s board. The New York Fed’s board also includes Richard Fuld of Lehman Brothers, a firm that is another oft-rumored potential candidate for a bailout. Fuld is a class-B director, meaning that he is elected by member banks, astoundingly, to represent the public. (Friedman is also supposed to be looking out for you: He was “appointed by the board of governors to represent the public.”) Thus Geithner reports to a board that is composed of people who are not only under his purview but would also benefit from any potential bailouts. The structure of the New York Fed’s board bears more than a passing resemblance to that of the New York Stock Exchange in the bad old days, when member firms, regulated by the N.Y.S.E., were heavily represented on its board.

Even more intriguing is Geithner’s informal brain trust, loaded with Wall Street luminaries. Since coming to the Fed in November 2003—recruited by then-New York Fed chairman Pete Peterson, co-founder of the Blackstone Group—Geithner has learned the ways of the financial industry at the feet of some of its biggest legends. He was almost immediately taken under the wing of Gerald Corrigan, a gregarious former New York Fed chief who is now a managing director of Goldman Sachs. Corrigan describes his relationship with Geithner as close, and it has flourished since Geithner’s first days at the Fed. Another frequent adviser—“you don’t want those things to get too formal,” Corrigan notes—is also a preeminent banker, Merrill Lynch C.E.O. John Thain, a Goldman alumnus and former head of the N.Y.S.E.  Over the years, Thain has often talked to Geithner—“sometimes I talk to him multiple times a day,”

Given this extensive set of interconnections, you might think that he’d be careful to project the right image when stepping into the Treasury role - but instead he saw fit to place a Goldman Sachs insider in the position as his top aide last January (before anybody was paying too much attention to all this insider self-dealing):

WASHINGTON — Treasury Secretary Timothy Geithner picked a former Goldman Sachs lobbyist as a top aide Tuesday, the same day he announced rules aimed at reducing the role of lobbyists in agency decisions.

Mark Patterson will serve as Geithner's chief of staff at Treasury, which oversees the government's $700 billion financial bailout program. Goldman Sachs received $10 billion of that money.

Just a few months later, in March, when questioned about the appearance of conflict of interest, Geithner bristled at the suggestion:

"I am just asking the questions," Waters said, "because the talk is...that this small group of decision makers at the center of it is Goldman Sachs and that's what's causing a lot of the distrust, because people are thinking or believing that Goldman Sachs, because of the connections, have had a lot to do with the decisions that are being made."

Geithner took umbrage.

"I think it's deeply unfair to the people who are part of these decisions to suggest that they were making judgments that in their view were not in the best interest of the American people," Geithner said.

Apparently Mr. Geithner found it completely confusing why anybody would see anything at all wrong with a regular revolving door between positions of extreme financial power over public money and the firms set to benefit from public money.

To me, that is a sure sign that someone is too deeply embedded, too deeply conflicted, too detached from reality to even know where to draw the line. Timothy apparently cannot distinguish between the “best interest of the American people” and Goldman Sachs raking in billions of undeserved public dollars. To him, those are one and the same thing and that's a major reason why I have grave doubts that the bailouts will succeed.

Now let’s cross into the surreal. One of the more grossly mismanaged companies on the face of the planet, the one that will cost taxpayers close to a trillion dollars when all is said and done, is Fannie Mae, the Government Sponsored Enterprise, or GSE. Last night (Monday, April 14th, 2009) this came across my newswire:

7:30 [FNM] Fannie Mae Chief Executive Herb Allison to run TARP: WSJ

So who is it, do you suppose, that picked the CEO of Fannie Mae to run TARP? Could it be Summers and Geithner and Emanuel?

You bet. That’s the vetting team.

As far as I am concerned, the CEO of Fannie Mae should be defending himself in court, not running a massive wealth redistribution program.

Meanwhile, Goldman Sachs reported strong earnings yesterday, much of them based on the fact that Goldman Sachs received full payout from side bets it had made with AIG, on which it should not have been paid a single dime. Goldman Sachs is a business run by grown-ups, who knew that making bets on the unregulated OTC derivatives market did not come with any public guarantee. Nonetheless, Goldman was immediately bailed out, in full, on these side-bets, by the Treasury Department.

The funny thing is, Goldman Sachs actually did the prudent thing and hedged their side bets with AIG (presumably by shorting AIG stock…that way, if AIG failed to pay off their side bets, the stock price of AIG would slide, thereby covering some of the losses for Goldman Sachs). So they were already "made whole" on these losses by their hedging activity.

So you might wonder how is it that a company that is not in danger of failing and has strong earnings and has prudently covered (or hedged) its bets comes to receive tens of billions of dollars of public money anyway? How can this be? More importantly, what does this tell us about the prospects for the bailout?

Here’s where we simply need to return to the opening quote:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

My cynicism stems from the fact that, as I string together the dots comprising this entire bailout fiasco, I can come to only one conclusion: Our “public policy” is not being conducted in the interests of the people, by the people, and for the people.

Public policy appears to be in the grip of a very powerful and self-interested cabal that seemingly has no concern for the future or the health of this country and does not even see the need to be cautious enough to mask its efforts.

The fact that the bailout trajectory did not waver in the slightest while passing from the Bush to the Obama administration indicates that the bailout is not a function of who’s in political power, it is a function of something else, of some other power.

I fear that Simon Johnson has nailed it: “[The] recovery will fail unless we break the financial oligarchy that is blocking essential reform.”

By continuing on our current path, using the same people who created the mess to clean up the mess, we are wasting time, we are wasting money, and we are wasting opportunity. Worse, we are risking the very sort of public backlash that has been thankfully missing from our cultural landscape for a long, long time.

Now, if you’ll excuse me, I have to go jogging to see if I can catch up with my cynicism.

Friday, April 17, 2009


Another one bites the dust -- another one dead, another one gone -- another one bites the dust

Bank Failure 25: Great Basin Bank of Nevada, Elko, Nevada

Great Basin Bank of Nevada, Elko, Nevada, was closed today by the Nevada Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2008, Great Basin Bank of Nevada had total assets of $270.9 million and total deposits of $221.4 million. In addition to assuming all of the deposits of the failed bank, Nevada State Bank agreed to purchase approximately $252.3 million of assets. The FDIC will retain the remaining assets for later disposition.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $42 million. Nevada State Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives. Great Basin Bank of Nevada is the twenty-fifth FDIC-insured institution to fail in the nation this year, and the second in Nevada. The last FDIC-insured institution to be closed in the state was Security Savings Bank, Henderson, on February 27, 2009


Bank Failure 24: American Sterling Bank, Sugar Creek, Missouri.

From the FDIC:

American Sterling Bank, Sugar Creek, Missouri, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Metcalf Bank, Lee's Summit, Missouri, to assume all of the deposits of American Sterling Bank.
As of March 20, 2009, American Sterling Bank had total assets of approximately $181 million and total deposits of $171.9 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund will be $42 million. ... American Sterling Bank is the twenty-fourth FDIC-insured institution to fail in the nation this year. The last FDIC-insured institution to be closed in Missouri was Hume Bank, Hume, on March 7, 2008.

Ties To Wall Street DOOM Bank Rescue

This from Bloomberg

Stiglitz Says Ties to Wall Street Doom Bank Rescue

By Michael McKee and Matthew Benjamin

April 17 (Bloomberg) -- The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.

The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. “The bank restructuring has been an absolute mess.”

Rather than continually buying small stakes in banks, the government should put weaker banks through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said.

Nobel Prize

Stiglitz, 66, won the Nobel in 2001 for showing that markets are inefficient when all parties in a transaction don’t have equal access to critical information, which is most of the time. His work is cited in more economic papers than that of any of his peers, according to a February ranking by Research Papers in Economics, an international database.

Financial shares have rallied in the past month as Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. all reported better-than-expected earnings in the first quarter. The Standard & Poor’s 500 Financials Index has soared 91 percent from its low of 78.45 on March 6.

The Public-Private Investment Program, PPIP, designed to buy bad assets from banks, “is a really bad program,” Stiglitz said. It won’t accomplish the administration’s goal of establishing a price for illiquid assets clogging banks’ balance sheets, and instead will enrich investors while sticking taxpayers with huge losses, he said.

Bailing Out Investors

“You’re really bailing out the shareholders and the bondholders,” he said. “Some of the people likely to be involved in this, like Pimco, are big bondholders,” he said, referring to Pacific Investment Management Co., a bond investment firm in Newport Beach, California.

Stiglitz said taxpayer losses are likely to be much larger than bank profits from the PPIP program even though Federal Deposit Insurance Corp. Chairman Sheila Bair has said the agency expects no losses.

“The statement from Sheila Bair that there’s no risk is absurd,” he said, because losses from the PPIP will be borne by the FDIC, which is funded by member banks.

Andrew Gray, an FDIC spokesman, said Bair never said there would be no risk, only that the agency had “zero expected cost” from the program.


“We’re going to be asking all the banks, including presumably some healthy banks, to pay for the losses of the bad banks,” Stiglitz said. “It’s a real redistribution and a tax on all American savers.”

Stiglitz was also concerned about the links between White House advisers and Wall Street. Hedge fund D.E. Shaw & Co. paid National Economic Council Director Lawrence Summers, a managing director of the firm, more than $5 million in salary and other compensation in the 16 months before he joined the administration. Treasury Secretary Timothy Geithner was president of the New York Federal Reserve Bank.

“America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street,” he said. “Even if there is no quid pro quo, that is not the issue. The issue is the mindset.”

Stiglitz was head of the White House’s Council of Economic Advisers under President Bill Clinton before serving from 1997 to 2000 as chief economist at the World Bank. He resigned from that post in 2000 after repeatedly clashing with the White House over economic policies it supported at the International Monetary Fund. He is now a professor at Columbia University.

Critical of Stimulus

Stiglitz was also critical of Obama’s other economic rescue programs.

He called the $787 billion stimulus program necessary but “flawed” because too much spending comes after 2009, and because it devotes too much of the money to tax cuts “which aren’t likely to work very effectively.”

“It’s really a peculiar policy, I think,” he said.

The $75 billion mortgage relief program, meanwhile, doesn’t do enough to help Americans who can’t afford to make their monthly payments, he said. It doesn’t reduce principal, doesn’t make changes in bankruptcy law that would help people work out debts, and doesn’t change the incentive to simply stop making payments once a mortgage is greater than the value of a house.

Stiglitz said the Fed, while it’s done almost all it can to bring the country back from the worst recession since 1982, can’t revive the economy on its own.

Relying on low interest rates to help put a floor under housing prices is a variation on the policies that created the housing bubble in the first place, Stiglitz said.

Recreating Bubble

“This is a strategy trying to recreate that bubble,” he said. “That’s not likely to provide a long-run solution. It’s a solution that says let’s kick the can down the road a little bit.”

While the strategy might put a floor under housing prices, it won’t do anything to speed the recovery, he said. “It’s a recipe for Japanese-style malaise.”

Even with rates low, banks may not lend because they remain wary of market or borrower risk, and in the current environment “there’s still a lot of risk.” That’s why even with all of the programs the Fed and the administration have opened, lending is still very limited, Stiglitz said.

“They haven’t thought enough about the determinants of the flow of credit and lending.”

To contact the reporter on this story: Michael McKee in New York at mmckee@bloomberg.net; Matthew Benjamin in Washington at Mbenjamin2@bloomberg.net

Class Warfare

This from "Angry Bear". Someone has finally said some of the stuff I've been uneasy about. Things I have not been able to articulate, stuff I'm just uncomfortable with.

While all this bail-out of the rich goes on, it becomes ever more clear that us not rich folks (today there's only rich or not rich) are being played. "Tea Party's" where the not rich are lied to, where they (we) are goaded into acting against our own self interest -- simply because some "other" MIGHT get $.25 more than they get. People who know little or nothing about their country, its history, acting in ways that insure their future slavery to the all-powerful Corporations.

The America I had such hope for, and faith in, is disappearing before my eyes

Friday, April 17, 2009
The Bail-Out as Class Warfare

by cactus

The Bail-Out as Class Warfare

The argument for bailing out AIG essentially amounted to this: Goldman, Welfare, Queen & Sachs the counterparties need to be helped.

I don't have much sympathy for this argument. See, about a decade ago, my sister had a small business exporting cosmetics from the US to South America. She was doing OK, in a small business edge-of-the-abyss kind of way. And then came the Brazilian devaluation. Overnight, a number of her customers were driven out of business, several of them owing her what to her was a substantial amount of money, though to the folks on Wall Street, of course, it was a mere pittance. The result was she liquidated her stock, wrapped up what was left of the business, got a job in the corporate world, and like most people there, is today worried about keeping that job.

Now, none of the Welfare Queens on Wall Street who has been helped by this whole charade of a bail-out would ever suggest bailing out small businesspeople like my sister, even if the source of the problems faced by these small businesspeople was, for lack of a better term, their counterparties. So for this to be viewed as something other than favoritism, class-warfare of the crudest, most basic form, someone is going to have to show why providing small businesspeople the same help that the Welfare Queens on Wall Street got, or simply handing out equivalent sums of money to the rest of us, would have resulted in an outcome worse than what we've seen, are seeing, and will see. I don't think it can be done.

Saturday, April 11, 2009

From Jesse's Cafe Americain

Follow the link. Bookmark this site. Though you may not agree with everything posted -- it's still a place to go for information on the economy.

11 April 2009
G7 Industrial Production Crashing

The production of real goods in the developed nations is plummeting. Even the mighty export driven economy of Japan appears to be heading lower.

Countries must begin to encourage consumption in their own economies. To do this, they ought not to be stimulating the old credit/speculation machine called the neo-liberal financial system.

Real economic growth is to be found in a broad employment and consumption, and an increase of the median wage.

This is the deep flaws in much of the third world economies, especially in Asia and Latin America. Economic health can be measured by the size and well being of the middle class in a relatively free society.

The reason is simple. Individuals can only borrow so much before they are unable to service the debt. And the greedy few can only spend so much on consumption using the wealth which the tax and financial system has delivered to them from the many.

Gaming the system so that it overtaxes the income of the many for theincreasing benefit of a few has natural limitations, unless one can enforce a type of involuntary servitude. This model has its roots far back in history, in empires like Rome, Egypt, and Sparta.

As the elite few accumulate real assets using their surplus, they will find that holding on to their wealth as the rest of society deteriorates in a downward spiral of privation can be a bit of a challenge.

Until the financial system is reformed and the economy is brought back into a balance, there will be no recovery, and the fabric of order will remain fragile.

If things continue on as they are, despite all the stimulus and fine rhetoric, the madness will once again be unleashed on the earth, and the people will wonder from whence it came, as they do each time it rises from the same sources and ravages civilization: unbridled greed, malinvestment, and corruption.

This From Bloomberg

I guess the housing slump isn't over quite yet:

Hamptons, N.Y. Home Sales Plunge 67% in First Quarter (Update1)
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By Oshrat Carmiel

April 9 (Bloomberg) -- Home sales in the Hamptons, the New York oceanside communities favored by financiers and celebrities, plunged 67 percent in the first quarter from a year earlier as Wall Street job cuts and investment losses stifled demand for second homes.

Across 11 eastern Long Island towns, 96 homes sold in the three months ended March 31, marking the biggest percentage drop in at least 27 years, property broker Town & Country Real Estate said. It was the biggest percentage drop in their records, which date to 1982. In the same quarter of 2008, 287 homes sold.

“We are a luxury item, and people don’t want to spend money,” said Judi Desiderio, president of Town & Country. “I don’t think anybody was thinking about buying a second home if they’re watching the stock market fall off a cliff.”

The Standard & Poor’s 500 Index fell 40 percent in the year through March. Banks and securities firms have eliminated more than 180,000 jobs in the Americas, according to data compiled by Bloomberg, while mortgage-related asset writedowns and losses now top $1.29 trillion. Wall Street bonuses declined 44 percent in 2008, according to state Comptroller Thomas DiNapoli.

“We’ve always been umbilically connected to Wall Street,” said Desiderio, who estimated that 50 percent of Hamptons buyers work in the securities industry and that 70 percent of sales are bought as second homes.

Prices Plummet

The median sales price fell 28 percent from the year earlier to $698,461, Town & Country said. The decline was largely due to fewer sales of $5 million or more.

The total value of all real estate sold in the Hamptons in the first quarter fell 78 percent to $140.2 million.

In Southampton Village, home to the most expensive property sale in 2008 at $60 million, transactions declined 85 percent in the quarter to just three houses. The total value of all homes sold in the village was $2.8 million, a 98 percent decline from the year earlier, when $166.3 million in property changed hands.

In East Hampton Village sales fell 81 percent, also to three houses. The total value of all homes sold there was $4.1 million, a 95 percent decline.

“Those are your iron-clad, been-there-for-over-a-hundred- years, been-used-by-the-Kennedys areas,” said Desiderio. “It’s the blue-chip, best-of-the-best. I would never expect that.”

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.

Whoops! I missed #22

Whoops!! -- TWO banks failed. I didn't list #22.

Bank Failure 22: Cape Fear Bank, Wilmington, NC

"Cape Fear Bank, Wilmington, North Carolina, was closed today by the North Carolina Office of Commissioner of Banks, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Federal Savings and Loan Association of Charleston (First Federal), Charleston, South Carolina, to assume all of the deposits of Cape Fear Bank.
As of March 31, 2009, Cape Fear Bank had total assets of approximately $492 million and total deposits of $403 million. In addition to assuming all of the deposits of the failed bank, First Federal agreed to purchase approximately $468 million in assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and First Federal entered into a loss-share transaction on approximately $395 million of Cape Fear Bank's assets. First Federal will share with the FDIC in the losses on the asset pools covered under the loss-share agreement. ...

The FDIC estimates that the cost to the Deposit Insurance Fund will be $131 million. First Federal's acquisition of all deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives. Cape Fear Bank is the twenty-second bank to fail in the nation this year. The last bank to fail in North Carolina was Crown National Bank, Charlotte, on May 20, 1993."

Yankees look good

My Yankees are looking good. Pettitte pitched a good game, Cano made some nice plays in the field (and at bat), while Swisher continued to hit, and Teixeira continues to look good. Posada looks great.

There is hope for the season.


Bank Failure 23: New Frontier Bank, Greeley, CO. Go to link for full story

From the FDIC: "New Frontier Bank, Greeley, Colorado, was closed today by the State Bank Commissioner, by Order of the Banking Board of the Colorado Division of Banking, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC created the Deposit Insurance National Bank of Greeley (DINB), which will remain open for approximately 30 days to allow depositors time to open accounts at other insured institutions. ...

All insured depositors of New Frontier are encouraged to transfer their insured funds to other banks. ...

As of March 24, 2009, New Frontier had total assets of $2.0 billion and total deposits of about $1.5 billion. At the time of closing, there were approximately $150 million in insured deposits and $4 million in deposits that potentially exceeded the insurance limits. ...

The cost to the FDIC's Deposit Insurance Fund is estimated to be $670 million. New Frontier is the twenty-third bank to fail this year and the second in Colorado. The last bank to be closed in the state was Colorado National Bank, Colorado Springs, on March 20, 2009"

Friday, April 10, 2009

Accounting Tricks by Wells Fargo

This From "The Economic Populist" -- follow link for the entire post. Will give you another view of what's happening.

Another wave of foreclosures is approaching

* real estate housing bust

Well Fargo announced today $3 Billion in profits. It was fantastic news and it sent the stock market soaring.

However, one thing that didn't get talked about was why they made so much money.

Wells Fargo CFO Howard Atkins discusses the banks $3 billion reported first quarter 2009 earnings. Atkins hypes the impact of mortgages to the bottom line, due to low interest rates and foreclosure selling no doubt, but shockingly admits at the 7:45 mark that with the writedowns that would have been required by Mark to Market the bank actually lost money on the quarter.

To put it another way, Wells Fargo made money because the government allowed them to play "let's pretend your assets are worth something".

The reason why the government back-tracked on requiring banks to price their assets to market value was the premise that those assets are actually worth more than the market says they are. In other words, the banks are smarter than the investors.
That's a pretty shaky premise to believe. It requires us to accept the idea that those trillions of dollars worth of mortgage-backed securities are actually worth something close to face value. For this premise to be true you have to believe that the housing market is about to bounce back. It has to bounce back to historic highs in the midst of the deepest economic downturn since the Great Depression. Does anyone really think that is going to happen?

"I refer to the American housing market as “the big slum.” A slum is where the market value has fallen below the replacement value. It doesn’t make sense to fix anything. You don’t fix it, you just let it go to hell. There’s no way to get your money back."
- Eric Janszen

One person who has been consistently correct about the housing implosion, Mr. Mortgage, believes otherwise.

Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs....
Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days.

11 year old hangs self

11-Year-Old Hangs Himself after Enduring Daily Anti-Gay Bullying

GLSEN Calls on Schools, Nation to Embrace Solutions to Bullying Problem

NEW YORK, April 9, 2009 - An 11-year-old Massachusetts boy, Carl Joseph Walker-Hoover, hung himself Monday after enduring bullying at school, including daily taunts of being gay, despite his mother’s weekly pleas to the school to address the problem. This is at least the fourth suicide of a middle-school aged child linked to bullying this year.

Carl, a junior at New Leadership Charter School in Springfield who did not identify as gay, would have turned 12 on April 17, the same day hundreds of thousands of students will participate in the 13th annual National Day of Silence by taking some form of a vow of silence to bring attention to anti-LGBT (lesbian, gay, bisexual and transgender) bullying and harassment at school. The other three known cases of suicide among middle-school students
took place in Chatham, Evanston and Chicago, Ill., in the month of February.

"Our hearts go out to Carl’s mother, Sirdeaner L. Walker, and other members of Carl's family, as well as to the community suffering from this loss," GLSEN Executive Director Eliza Byard said. "As we mourn yet another tragedy involving bullying at school, we must heed Ms. Walker’s urgent call for real, systemic, effective responses to the endemic problem of bullying and harassment. Especially in this time of societal crisis, adults in schools must be alert to the heightened pressure children face, and take action to create safe learning environments for the students in their care. In order to do that effectively, as this case so tragically illustrates, schools must deal head-on with anti-gay language and behavior."

Two of the top three reasons students said their peers were most often bullied at school were actual or perceived sexual orientation and gender expression, according to From Teasing to Torment: School Climate in America, a 2005 report by GLSEN and Harris Interactive. The top reason was physical appearance.

"As was the case with Carl, you do not have to identify as gay to be attacked with anti-LGBT language," Byard said. "From their earliest years on the school playground, students learn to use anti-LGBT language as the ultimate weapon to degrade their peers. In many cases, schools and teachers either ignore the behavior or don’t know how to intervene."

Nearly 9 out of 10 LGBT youth (86.2%) reported being verbally harassed at school in the past year because of their sexual orientation, nearly half (44.1%) reported being physically harassed and about a quarter (22.1%) reported being physically assaulted, according to GLSEN’s 2007 National School Climate Survey of more than 6,000 LGBT students.

In most cases, the harassment is unreported. Nearly two-thirds of LGBT students (60.8%) who experience harassment or assault never reported the incident to the school. The most common reason given was that they didn’t believe anything would be done to address the situation. Of those who did report the incident, nearly a third (31.1%) said the school staff did nothing in response. While LGBT youth face extreme victimization, bullying in general is also a widespread problem. More than a third of middle and high school students (37%) said that bullying, name-calling or harassment is a somewhat or very serious problem at their school, according to From Teasing to Torment. Bullying is even more severe in middle school. Two-thirds of middle school students (65%) reported being assaulted or harassed in the previous year and only 41% said they felt very safe at school.

Carl's suicide comes about a year after eighth-grader Lawrence King was shot and killed by a fellow student in a California classroom, allegedly because he was gay.

GLSEN recommends four simple approaches schools can take to begin addressing bullying now.

Said Walker in the Springfield Republican: "If anything can come of this, it's that another child doesn't have to suffer like this and there can be some justice for some other child. I don't want any other parent to go through this."

GLSEN, the Gay, Lesbian and Straight Education Network, is the leading national education organization focused on ensuring safe schools for all students. Established nationally in 1995, GLSEN envisions a world in which every child learns to respect and accept all people, regardless of sexual orientation or gender identity/expression. GLSEN seeks to develop school climates where difference is valued for the positive contribution it makes to creating a more vibrant and diverse community. For information on GLSEN's research, educational resources, public policy advocacy, student organizing programs and educator training initiatives, visit www.glsen.org.

Wednesday, April 8, 2009

From Bill Moyers Journal

Bill Moyers & Michael Winship: Changing the Rules of the Blame Game

A cartoon in the Sunday comics shows that mustachioed fellow with monocle and top hat from the Monopoly game – “Rich Uncle Pennybags,” he used to be called – standing along the roadside, destitute, holding a sign: “Will blame poor people for food.”

Time to move the blame to where it really belongs. That means no more coddling banks with bailout billions marked “secret.” No more allowing their executives lavish bonuses and new corporate jets as if they’ve won the megalottery and not sent the economy down the tubes. And no more apostles of Wall Street calling the shots.

Which brings us to Larry Summers. Over the weekend, the White House released financial disclosure reports revealing that Summers, director of the National Economic Council, received $5.2 million last year working for a $30 billion hedge fund. He made another $2.7 million in lecture fees, including cash from such recent beneficiaries of taxpayer generosity as Citigroup, JP Morgan and Goldman Sachs. The now defunct financial services giant Lehman Brothers handsomely purchased his pearls of wisdom, too.

Reading stories about Summers and Wall Street you realize the man was intoxicated by the exotic witches’ brew of derivatives and other financial legerdemain that got us into such a fine mess in the first place. Yet here he is, serving as gatekeeper of the information and analysis going to President Obama on the current collapse. We have to wonder, when the President asks, “Larry, who did this to us?” is he going to name names of old friends and benefactors? Knowing he most likely will be looking for his old desk back once he leaves the White House, is he going to be tough on the very system of lucrative largesse that he helped create in his earlier incarnation as a de-regulating Treasury Secretary? (“Larry?” “Yes, Mr. President?” “Who the hell recommended repealing the Glass-Steagall Act back in the 90s and opened the floodgates to all this greed?” “Uh, excuse me, Mr. President, I think Bob Rubin’s calling me.”)

That imaginary conversation came to mind last week as we watched President Obama's joint press conference with British Prime Minister Gordon Brown. When a reporter asked Obama who is to blame for the financial crisis, our usually eloquent and knowledgeable President responded with a rambling and ineffectual answer. With Larry Summers guarding his inbox, it’s hardly surprising he’s not getting the whole story.

If only someone with nothing to lose would remind the President of that old story – perhaps apocryphal but containing a powerful truth – of the Great Wall of China. Four thousand miles long and 25 feet tall. Intended to be too high to climb over, too thick to break through, and too long to go around. Yet in its first century of the wall’s existence, China was successfully breached three times by invaders who didn’t have to break through, climb over, or go around. They simply were waved through the gates by obliging watchmen. The Chinese knew their wall very well. It was the gatekeepers they didn’t know.

Shifting the blame for the financial crisis to where it belongs also means no more playacting in round after round of congressional hearings devoted more to posturing and false contrition than to truth. We need real hearings, conducted by experienced and fiercely independent counsel asking the tough questions, or an official commission with subpoena power that can generate evidence leading, if warranted, to trials and convictions – and this time Rich Uncle Pennybags shouldn’t have safely tucked away in his vest pocket a “Get Out of Jail Free” card.

So far, the only one in the clink is Bernie Madoff and he was “a piker” compared to the bankers who peddled toxic assets like unverified “liars' loan” mortgages as Triple-A quality goods. So says Bill Black, and he should know. During the savings and loan scandal in the 1980s, Black, who teaches economics and law at the University of Missouri, Kansas City, was the federal regulator who accused then-House Speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L’s in exchange for campaign contributions and other perks. They got off with a wrist slap but Black and others successfully led investigations that resulted in convictions and re-regulation of the savings and loan industry.

Bill Black wrote a book about his experiences with a title that fits today as well as it did when he published it four years ago – "The Best Way to Rob a Bank Is to Own One." On last Friday night’s edition of BILL MOYERS JOURNAL, he said the current economic and financial meltdown is driven by fraud and banks that got away with it, in part, because of government deregulation under prior Republican and Democratic administrations.

“Now we know what happens when you destroy regulation,” Black said. “You get the biggest financial calamity for anybody under the age of 80.”

What’s more, the government ignored warnings and existing legislation to stop it before the current crisis got worse. “They didn't even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what we did successfully in the savings and loan crisis,” Black said. “Even while the institutions were reporting they were the most profitable savings and loans in America, we knew they were frauds. And we were moving to close them down.”

There was advance warning of the current collapse. Black says that the FBI blew the whistle; in September 2004, “there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle.”

But after 9/11, “The Justice Department transfers 500 white-collar specialists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents.” So today, despite a crisis a hundred times worse than the Savings and Loan scandal, “there are one-fifth as many FBI agents” assigned to bank fraud.

Treasury Secretary Timothy Geithner “is covering up,” Black said. “Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have massive losses, and that they're fine…

“They're scared to death of a collapse. They're afraid that if they admit the truth, that many of the large banks are insolvent, they think Americans are a bunch of cowards, and that we'll run screaming to the exits… And it's foolishness, all right?

“Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, ‘We just can't let the big banks fail.’ That's wrong.”

Black asked, “Why would we keep CEO’s and CFO’s and other senior officers that caused the problems? That’s nuts… We’re hiding the losses instead of trying to find out the real losses? Stop that… Because you need good information to make good decisions… Follow what works instead of what’s failed. Start appointing people who have records of success instead of records of failure… There are lots of things we can do. Even today, as late as it is. Even though we’ve had a terrible start to the [Obama] administration. They could change, and they could change within weeks.”

He called for a 21st century version of the Pecora Commission, referring to hearings that sought the causes of the Great Depression, held during the 1930’s by the US Senate Committee on Banking and Currency.

Ferdinand Pecora was the committee’s chief counsel and interrogator, a Sicilian émigré who was a progressive devotee of trust busting Teddy Roosevelt and a former Manhattan assistant district attorney who successfully helped shut down more than a hundred Wall Street “bucket shops” selling bogus securities and commodity futures. He was relentless in his cross-examination of financial executives, including J.P. Morgan himself.

Pecora’s investigation uncovered a variety of Wall Street calumnies – among them Morgan’s “preferred list” of government and political insiders, including former President Coolidge and a Supreme Court justice, who were offered big discounts on stock deals. The hearings led to passage of the Securities Act of 1933 and the Securities Exchange Act of 1934.

In the preface to his 1939 memoir, “Wall Street under Oath,” Ferdinand Pecora told the story of his investigation and described an attitude amongst the Rich Uncle Pennybags of the financial world that will sound familiar to Bill Black and those who seek out the guilty today.

“That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt,” Pecora wrote. “Indeed, if you now hearken to the Oracles of The Street, you will hear now and then that the money-changers have been much maligned. You will be told that a whole group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few. You will be assured that they had nothing to do with the misfortunes that overtook the country in 1929-1933; that they were simply scapegoats, sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob….”

According to Politico.com, at his March 27 White House meeting with the nation’s top bankers, President Obama heard similar arguments and interrupted, saying, “Be careful how you make those statements, gentlemen. The public isn’t buying that…. My administration is the only thing between you and the pitchforks.”

Stand aside, Mr. President, and let us prod with our pitchforks to get at the facts.

Sunday, April 5, 2009

US watchdog calls for bank executives to be sacked

US watchdog calls for bank executives to be sacked

* James Doran in New York
* The Observer, Sunday 5 April 2009
* Article history

Elizabeth Warren, chief watchdog of America's $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration's approach to saving the financial system from collapse.

Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade." She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said.

She said she did not want to be too hard on Geithner but that he must address the issues in the report. "The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous."

The report will also look at how earlier crises were overcome - the Swedish and Japanese problems of the 1990s, the US savings and loan crisis of the 1980s and the 30s Depression. "Three things had to happen," Warren said. "Firstly, the banks must have confidence that the valuation of the troubled assets in question is accurate; then the management of the institutions receiving subsidies from the government must be replaced; and thirdly, the equity investors are always wiped out.

Saturday, April 4, 2009

The Credit Bubble

Follow the link to Jesse's Cafe Americain for the rest of this post. In fact, bookmark the site and read it for yourself.

The Credit Bubble Was a Ponzi Scheme Enabled by the US Dollar

It was the US dollar that was monetized, or more specifically US debt obligations, which are now substantially worthless and will have to take a significant haircut in real terms. This is similar to the Japanese experience in which they monetized their real estate.

Ironically, those expecting this deleveraging to result in a stronger dollar could not be more mistaken. The Obama Administration is scrambling to obtain relief from Europe and Asia, getting them to inflate their own currencies through 'stimulus,' in order to continue to hide the unalterable truth - the US must partially default on its debt as expressed in the dollar and the Bond........................

Wednesday, April 1, 2009

Down 742,000 - forget the "Smiley Faces"

A quick summary of the ADP report. This from Mish's Global Economic Trend Analysis.

Please follow the link to get all the info. It also has a direct link to the full ADP report.

ADP Reports March Nonfarm Private Employment Decreased 742,000

Nonfarm Private Employment Decreased 742,000 according to the March ADP National Employment Report®.

Nonfarm private employment decreased 742,000 from February to March 2009 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from January to February was revised down by 9,000, from a decline of 697,000 to a decline of 706,000.


* Total Nonfarm employment fell by 742,000
* Service sector employment fell by 415,000.
* Employment in the goods-producing sector declined 327,000, the twenty-seventh consecutive monthly decline.
* Employment in the manufacturing sector declined 206,000, its thirty-seventh consecutive decline.
* Construction employment dropped 118,000. This was its twenty-sixth consecutivemonthly decline, and brings the total decline in construction jobs since the peak in January 2007 to 1,135,000.

Sharply falling employment at medium and small-size businesses clearly indicates that the recession is spreading aggressively beyond manufacturing and housing related activities


It's April Fools Day -- no news posts today. There is so much screwy stuff going on , I'm afraid I'd believe damn near anything reported by anyone ("Bank of America to buy G.M." -- well, why not? - as Judy Tenuta said, "It could happen".)