Whitehall Street, Atlanta. Black Union soldier posted at slave auction house during General Sherman's occupation of the city in the fall of 1864.
Ilargi: They had us all fooled there, didn’t they? Don’t be too hard on yourself, we all thought that Washington was discussing the economy. We were all wrong. They are talking about the laws of physics.
Later today, the US Senate will vote on a proposal to suspend gravity. For pigs.
Rumor has it that there is a bi-partisan effort going on, as we speak, to assess whether lipstick looks good on sheep. If the test turns out successful, gravity for them will also be lifted.
The reasoning behind the plan is that it will allow the government to make Americans believe that pigs can fly.
Once they believe that, the sky, obviously, is the limit. It is now widely understood that before the elections, all graphs pertaining to the US government and financial institutions will under law have to be viewed upside down. In addition, the Federal Reserve has demanded all red ink will be changed to black, and vice versa. Since the need for red ink has grown exponentially, and shortages are foreseen, all involved agree that this is a great idea.
Banks will be allowed to hold zero reserves. For the sake of fairness, the same will apply to all citizens. To stimulate acceptance of the new zero line, all deposits will be removed from bank accounts. After all, they won’t be needed anymore.
In return for their deposits, Americans will receive a computer model developed by a renowned Wall Street investment bank that will let them set a value of their choice for all assets they own.
Since the only thing really wrong with the economy is sentiment, the fact that every US citizen will live in a marked-to-model million dollar home by Christmas has raised expectations for the holiday shopping season to new record levels.
In initial talks, Europe is reported to be enthousiastic about the new legislation, though there are worries among French and German politicians that the population in their countries will be harder to convince that lipstick does indeed look good on sheep.
China is expected to be a harder sell. Since the Chinese eat far more pork per capita, there would be an unfair disadvantage for them related to the time spent trying to catch the pigs. Negotiations are ongoing.
Regulators Ease Securities-Valuation Rules
The Securities and Exchange Commission and the U.S. accounting-standard setter issued guidance that will allow companies to use more flexibility when valuing securities in a market that has dried up, a move the banking industry hopes will relieve pressure on company balance sheets.
Tuesday, the SEC and Financial Accounting Standards Board issued "clarification" to accounting rules that require companies to value securities at the price for which they can be sold in the market, known as mark-to-market, or fair value, accounting. FASB said it is preparing additional guidance for later this week.
The clarifications allow executives to use their own financial models and judgment if no market exists or if assets are being sold only at fire-sale prices. They were welcomed by banking and financial-services groups that have lobbied the SEC and FASB to change the rules. Those efforts were ramped up in recent days as Congress was drafting a rescue bill.
Because of the credit crunch, the industry has said both the accounting treatment and how it is interpreted by auditors was too conservative and resulted in losses at financial institutions that were bigger than they should have been. They said the rules forced companies to write down assets tied to companies that had no chance of defaulting largely because there were few buyers or sellers.
The move Tuesday addressed many of their concerns. The SEC and FASB stopped short of bowing to pressure from some lawmakers and lobbyists who were seeking a complete suspension of fair-value accounting. Congressional leaders are considering codifying the SEC's move in a new version of the legislation the Senate could vote on Wednesday.
The SEC and FASB, along with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, have objected to suspending fair-value accounting since it would make a company's position harder for investors to judge and would also likely postpone banks from taking their losses.
Mutual Distrust Freezes Lending Among Banks
At the core of the financial crisis is a simple problem: Banks don't fully trust each other. So they hoard cash and only lend to each other if the borrowing bank pays enough to justify the risk. The best indicator of the simmering interbank distrust is an obscure-sounding interest rate known as Libor, which is flashing red. Libor, or the London interbank offered rate, is the rate that banks worldwide charge each other for short-term loans.
Yesterday, the annualized rate for those overnight loans spiked by more than four percentage points, to 6.9 percent, its highest level ever. Normally, Libor on dollar loans is not much higher than what it costs the U.S. government to borrow short-term money, which yesterday was nearly zero.
That tells experts that banks around the world are basically unwilling to lend to each other at any price. It means that cash is not flowing to places that need it. And, if sustained, would ultimately lead to higher borrowing costs for ordinary U.S. households and businesses.
"The interbank markets are a fundamental part of the plumbing of the financial world," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech yesterday. Many variable-rate mortgages, corporate loans, and other forms of debt adjust relative to Libor.
"This contraction in availability and rise of the cost of credit have worsened . . . for corporate and business borrowers," Lockhart said. "We've heard anecdotes confirming this from contacts throughout the Southeast. In short, Main Street is being affected." When the Federal Reserve lowers the interest rate it directly controls, it helps stimulate the economy. But the rise in Libor, economists say, is likely to have the opposite effect, slowing the economy at the worst possible time.
The high lending rate reflects banks' fears: They have no confidence that the other guy will be able to pay the money back, even when the loan is only for a single day. "There's just an environment of distrust right now, and that's the core of this entire crisis," said Ward McCarthy, managing director of Stone & McCarthy Research Associates. "These anxieties have to be relieved and a level of confidence has to return for us to get out of this."
The difficulties in the lending market between banks both result from, and can exaggerate, the crisis. The banks from which people are withdrawing money have the greatest need to borrow cash from other firms, yet the breakdown in that lending market makes it all the more likely that they won't be able to get such loans, and thus increase the chances that they fail.
The problem appears to be most severe among European banks. In the United States, bank regulators have been aggressive about engineering buyouts of troubled banks -- most notably Washington Mutual and Wachovia -- without wiping out their lenders. Meanwhile, the Federal Reserve has taken aggressive steps to try to flood U.S. banks with cash. Last Wednesday, the Fed had $189 billion in loans out to banks for that purpose, and Monday it announced an expansion of those efforts. "On the domestic side, the Fed has absolutely opened the floodgates," McCarthy said.
But the market for cash among banks is global, and in Europe, government interventions have been unpredictable, with different countries taking different tacks to try to prevent a spiraling crisis in the financial system. Ireland yesterday, for example, effectively put a government guarantee behind its biggest banks for the next two years, while authorities in France, Belgium and Luxembourg injected $9.4 billion into Dexia, a bank that operates in the three nations.
"Does an Italian bank trust a Spanish bank?" asked Albert Kyle, a finance professor at the University of Maryland. "Not as much as a U.S. bank trusts another U.S. bank." The Fed has also taken novel steps to try to inject dollars into foreign banks, though so far it apparently hasn't been enough to settle the lending environment among them. Monday, it said it would expand those steps, such that foreign central banks will have access to $620 billion to try to inject dollars into the banks in their respective countries
Congress, White House Weigh Increase in Deposit Insurance
Congress and the Bush administration are hashing out an agreement to raise the level of consumers' bank deposits guaranteed by the government, an idea they hope might bring enough support to revive President George W. Bush's planned rescue of financial markets.
The Senate will vote on a new version of the rescue bill Wednesday if a compromise can be reached on this and other issues. Congressional leaders expect the vote could build momentum for passage of the bill in the House, which stunned Washington Monday by rejecting the $700 billion banking-rescue package.
Congressional leaders were also considering changing an accounting rule known as "mark to market" that some lawmakers blame for the financial system's volatility. The legislation would back up the Securities and Exchange Commission, which Tuesday gave companies more leeway to figure out the value of assets for which there are no buyers. Other possible additions: jobless benefits and homeowner tax breaks.
The move to boost deposit-insurance limits, which the White House has raised with industry players, received a boost Tuesday when presidential candidates Sens. John McCain and Barack Obama endorsed the idea. Both candidates planned to return to Washington Wednesday for the possible Senate vote. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., which oversees the program, said she would support temporarily raising the coverage.
"I'm willing to do this given the exigencies we're looking at," said Sen. Christopher Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee. "This is a matter I normally want to give a lot more consideration to than 24 hours." Mr. Dodd said the Senate would vote on raising the FDIC limit to $250,000 from $100,000 for one year. Final details were still being worked out and could change.
These seemingly minor moves are part of an effort by White House and congressional leaders to rescue the president's proposal by giving it a running start in the Senate. Mr. Bush has said the plan is vital to ensure the proper functioning of the financial system. The proposal was defeated Monday in a stunning revolt by rank-and-file lawmakers, sending global stock markets reeling.
It's not clear if the measures will be enough to reverse Monday's defeat, although initial indications suggest they will attract lawmakers to the legislation. The moves wouldn't fundamentally change Treasury's proposal to buy troubled assets, but would add a populist tinge at a time when voters appear enraged at what many see as a bailout of Wall Street, not Main Street.
Federal law generally insures depositors up to $100,000 when banks fail. The limit hasn't been increased in more than two decades. Proponents of raising the limit say runs on deposits, fueled by consumer fears about the economy, have contributed to recent financial turmoil, and played a part in the collapse of IndyMac and Washington Mutual Inc. They say higher limits will restore confidence in the banking system by comforting consumers who might otherwise take their money out.
Congressional aides said a new proposal could build support among centrist Democrats and Republicans by addressing concerns that the Bush-backed bill needs more protections for Main Street. Such a measure would also win the backing of community bankers, who have lobbied heavily on its behalf.
The U.S. government recently began insuring money-market mutual funds temporarily. Bankers argue that takes away one of their advantages over those funds, which offer better yields than bank deposit accounts. The community banking industry is a powerful force behind the scenes in Congress and its clout could sway some lawmakers to support the bill.
The Dow Jones Industrial Average, buoyed by general comments from lawmakers suggesting a new deal could be reached this week, rebounded Tuesday after Monday's record 777-point plunge. The blue-chip measure soared 485.21 points higher, or 4.7%, to close at 10850.66, off 4.4% for the quarter. The new proposals also came as Ireland moved to buttress its banking system, and three European nations bailed out another major lender this week.
Adding to the pressure on Congress to act were some of the nation's biggest corporations, including Verizon Communications Inc., Microsoft Corp. and General Electric Co. GE Chief Executive Jeffrey Immelt is actively lobbying politicians and finance officials in Washington to complete the financial-rescue bill, said a company spokesman. To back up his message, Mr. Immelt directed his staff to compile evidence of the "negative ripple effects" throughout America from the crisis on Wall Street, including information on what is happening to customers and employees in all 50 states.
The unexpected failure of the $700 billion bill in the House exposed deep skepticism in both parties with the planned rescue and sparked a bitter round of finger-pointing over which party was to blame for the collapse. In the aftermath Tuesday, the nation's political leadership at both ends of Pennsylvania Avenue offered renewed pledges of cooperation. At the White House, Mr. Bush vowed to "work closely with leaders of both parties," a commitment echoed by Speaker Nancy Pelosi (D., Calif.) and Senate Majority Leader Harry Reid (D., Nev.)
Congressional leaders are focusing on improving the bill that failed Monday in hopes of enticing enough lawmakers to change their votes -- 12 would need to switch, assuming all other votes stayed the same. In a series of private discussions Tuesday, the biggest focus was adding an amendment that would raise deposit-insurance limits for banks.
It's not clear why the idea of raising deposit insurance was left out of the original bill that failed. Republicans say they pushed it, only to be rejected. Democrats counter that it wasn't floated during the last round of negotiations over the weekend. One problem: Raising the deposit-insurance limits could require that the FDIC levy higher fees to fund the program, which might have to come from the struggling banking industry. An alternative would be to temporarily waive the premiums that banks pay to the FDIC and have the Treasury be liable for covering losses.
The FDIC's deposit-insurance fund is already at a historically low level, with roughly $1 backing every $100 of insured deposits. One concern among several government officials skeptical of the idea is that it could be politically impossible to reduce the insurance ceiling after the crisis subsides.
The FDIC insured roughly $4.5 trillion in deposits as of the second quarter, and had $45 billion in the actual fund. In supporting the move, the FDIC's Ms. Bair said it "would provide the dual benefits of providing additional liquidity to banks for lending as well as provide some additional reassurance to depositors above the current limits." She raised the idea of "potential borrowings from Treasury" to set up such a program, which would eventually be paid back through fees charged to the banking industry.
In the days after Hurricane Katrina, small banks along the Gulf Coast endured deposit runs, prompting calls by bankers in the region for a temporary increase in deposit-insurance limits. Depositor fears subsided, and the bankers backed off of their request. Amid the current market turmoil, similar runs have created problems for regulators and bank managers. "What we're seeing, in general terms, is almost irrational behavior on behalf of some consumers who are panicking," said Scott Polakoff, the senior deputy director at the Office of Thrift Supervision, which regulates savings and loans.
The House and Senate, in observance of the Jewish New Year, did not meet Tuesday for formal business. With Capitol Hill largely emptied, senior lawmakers and their staff found much-needed breathing room to begin discussions of how best to build consensus for Mr. Bush's plan. That plan envisions spending $700 billion to buy up the tainted mortgages, securities and financial assets that are undermining market confidence and threatening to tilt the U.S. into recession.
Congressional leaders have other options, in addition to the FDIC concept. Among Democrats, for example, there was interest in adding new assistance for unemployed workers, as well as a new $1,000 tax deduction for homeowners who don't itemize deductions, a move that could help address concerns the original bill wasn't focused on helping "average Americans."
Late Tuesday, the Senate leadership signaled its intention to fold into the market-rescue bill a package of business and individual tax proposals, including a measure to ease the bite of the so-called alternative minimum tax on middle-class families. House Minority Leader John Boehner (R., Ohio) "gave the green light" to the idea, believing the tax package will appeal to House Republicans, a Boehner spokesman said. But the move carries risks, since such tax proposals have been unpopular among moderate Democrats in the House.
Rep. Steve Cohen (D., Tenn.), who voted for the original bill, said adding a deposit-insurance increase might help pick up some conservative Democrats and Republicans. "I think you're going to find Republicans looking for a reason to vote for something that is a little bit different," he said.
Camden Fine, chief executive officer of the Independent Community Bankers of America, a trade group representing local banks, noted that the federal government bailed out two major banks -- Wachovia Corp. and Washington Mutual -- moves that effectively protected all funds held by depositors. That worries smaller banks, that fear consumers may leave them for larger institutions. Thirteen banks have failed this year, the most since the end of the savings-and-loan crisis in the 1990s.
On the question of the SEC's mark-to-market accounting rule, the agency issued guidance Tuesday that could give management more flexibility in valuing securities when there isn't a regular market for them. Over the past year, some financial firms have had to write down the value of assets; under the accounting rule, if there is no active market, an asset's value would have to be cut substantially, even if it might be worth something in the future. That has eroded firms' capital base, making them more vulnerable to downturns in the market and reducing confidence among investors.
The SEC said on Tuesday that in some circumstances it might make more sense to judge assets not on what the market will bear, but on their intrinsic value -- for example, if they're from a highly respected company that is unlikely to default. The move is less expansive than that desired by some business groups, which wanted the rule suspended altogether. But its implications are nonetheless significant, potentially giving financial firms a way to revive the value of assets that were previously considered worthless.
Critics have charged that such a move would paper over problems and make opaque markets even harder to judge. House Democrats who voted against the bill received thousands of calls yesterday from constituents. Most members' staffs said the callers agreed with them. Rep. Tom Udall of New Mexico, a five-term Democrat, received 831 emails in the 24 hours after the vote, as well as 300 calls to his New Mexico offices and 100 calls in D.C. "Both calls and emails are two-thirds to 75% opposed to the bailout bill as it stood yesterday," said Mr. Udall's spokesman Sam Simon.
White House spokesman Tony Fratto declined to discuss specifics, but suggested the president is flexible. "There's no single silver bullet here," he said. "There are lots of good ideas that can help the financial-services industry and our financial markets, and we're going to look at all of those ideas."
Ireland puts up €400bn to protect six big lenders
Ireland announced yesterday that the state would safeguard all deposits, bonds and debts in six banks and building societies for two years following a huge share sell-off on Monday.
The €400bn package covers Allied Irish, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society, and the Educational Building Society. British depositors with accounts in their UK branches will be covered, as will savers at the UK's Post Office whose deposits are run by Bank of Ireland.
The department of finance in Dublin said it was still considering whether the scheme could be extended to subsidiaries of Irish banks in the UK; it was awaiting a ruling by Ireland's financial regulator. Opposition leaders warned that if the scheme failed it had the potential to bankrupt the republic. In Britain, ministers were also critical, suggesting it could breach European Union state aid rules.
Brussels made it clear yesterday that it was refusing to suspend such rules to meet the crisis Britain, Belgium, France, Germany and other states have all notified Brussels of their bail-outs, with European Commission officials promising urgent and swift decisions.
Another European bank was bailed out yesterday, the third within 48 hours, as €6.4bn was injected into Dexia. An emergency overnight meeting saw the Belgian government agree to invest €3bn, an amount matched by the French state which is to become a 25% shareholder. Luxembourg is supplying the remainder.
Dexia is the world's biggest lender to local government, but also has more than 5m retail customers. Its shares fell 30% on Monday. Other banks exposed to the US mortgage market also suffered deeply. Dexia has undertaken to improve the way it is governed. Paris said it had acted to guarantee financing for local governments for which Dexia Credit Local was the main lender, as well as to stabilise the French and European financial systems; it insisted its main banks were solid.
U.S. Factories Contracted at Faster Pace in September
Manufacturing in the U.S. contracted in September at the fastest pace since the last recession as sales slowed, signaling the credit crisis is spreading beyond Wall Street.
The Institute for Supply Management's factory index dropped to 43.5, the lowest level since October 2001 and less than economists anticipated, the Tempe, Arizona-based group reported today. A reading of 50 is the dividing line between expansion and contraction.
The housing slump has already spread to autos, and other industries may soon follow, as mounting foreclosures, tougher lending rules and rising unemployment choke off consumer spending. While exports have so far kept manufacturing from slipping much more, weakening economies around the globe are also causing overseas sales to slow.
"Manufacturing could be on the brink of a collapse," said Lindsey Piegza, a market analyst at FTN Financial in New York. "There are no orders, no jobs and there is really no incentive for businesses to invest. The credit crisis is compounding the problem." Stocks added to losses after the report and Treasury securities extended gains. The Standard & Poor's 500 index fell 1.8 percent to 1,145.6 at 10:42 a.m. in New York. The ISM index was projected to drop to 49.5 from August's 49.9, according to the median of 72 economists' forecasts in a Bloomberg News survey. Estimates ranged from 48 to 51.1.
Other reports today signaled the U.S. continues to lose jobs. ADP Employer Services said companies in the U.S. cut an estimated 8,000 workers from payrolls in September after a 37,000 decrease in August, according to figures based on payroll data.
ADP said today's estimate didn't take into account a strike by about 27,000 machinists at Boeing Co. or the job losses following Hurricanes Gustav and Ike. Firing announcements increased 33 percent in September from that same month last year, Chicago-based Challenger, Gray & Christmas Inc. said in a statement.
The Commerce Department also reported that construction spending stalled in August after a revised 1.4 percent drop the previous month that was more than twice as large as previously estimated. Private residential building increased for the first time since March 2007 and work on commercial projects fell for a fourth month. Orders from overseas have weakened as economies abroad falter. ISM's export gauge fell to 52 from 57 the prior month.
The purchasing managers' gauge of new orders for factories decreased to 38.8, also the lowest since 2001, from 48.3 the prior month. The production measure dropped to 40.8 from 52.1. "I just can't imagine that we'll see a lot of strength in the index in the next few months," Norbert Ore, chairman of the ISM survey, said in a conference call. "It appears to be very similar" to the last recession in 2001, he said.
The index of prices paid plunged to 53.5, the lowest since January 2007, from 77. Energy prices have retreated from their peaks in July, when a barrel of crude oil reached $147. The employment index declined to 41.8, the lowest since 2003, from 49.7 in August. Companies are cutting back on investments and hiring as consumer spending wanes. A deteriorating labor market also is causing Americans to limit purchases to necessities such as food and fuel.
Chrysler LLC, the third-largest U.S. automaker, said last week that it planned to fire about 250 workers as part of a plan to cut 1,000 salaried positions by Sept. 30. The Auburn Hills, Michigan-based company's U.S. sales dropped 24 percent through August, more than twice the industry's 11 percent decline.
The U.S. economy, the world's largest, probably grew at a 1.2 percent annual rate during the third quarter, down from 2.8 percent the prior three months, according to a Bloomberg survey of economists from Sept. 2 to Sept. 9. Since then, economists at JPMorgan Chase & Co., Morgan Stanley and Deutsche Bank Securities Inc. have cut their forecasts as consumer spending stalled and the credit crisis brought down Lehman Brothers Holdings Inc., American International Group Inc. and Washington Mutual Inc.
A narrowing of the trade deficit as exports jumped and imports fell was the biggest contributor to growth in the second quarter, adding 2.9 percentage points, the most since 1980. That is likely to diminish as economies in Europe and Japan falter.
ECB Drains 173 Billion Euros After Deposits Surge
The European Central Bank drained 173 billion euros ($242 billion) in overnight funds from money markets after being swamped with record deposits from banks.
The ECB had offered to remove up to 200 billion euros at a fixed rate of 4.25 percent. Banks yesterday deposited a record 102.8 billion euros with the ECB overnight and borrowed 15.9 billion euros at the emergency marginal rate, the most since 2002. The ECB's deposit rate is 3.25 percent and the marginal lending rate is 5.25 percent.
"We're seeing a kind of market failure," said Michael Schubert, an economist at Commerzbank AG in Frankfurt. "The ECB can do nothing but treat the symptoms. The situation won't normalize as long as we see negative surprises in the financial sector."
Commercial banks are refusing to lend to each other after the U.S. housing slump caused the collapse of New York-based Lehman Brothers Holdings Inc. and forced governments to bail out banks in the U.S. and Europe. Central banks including the Federal Reserve and the ECB are injecting billions into global money markets in an effort to keep them functioning.
The Frankfurt-based ECB today raised the amount of dollars it is offering banks overnight to $50 billion from yesterday's $30 billion. It allotted the full $50 billion after banks bid for a total of $70.9 billion.
Too Big To Fail
Before you throw this letter into the proverbial round file, let’s be clear: this is the first time I have ever asked for a bailout from the Federal Reserve. I know what you’re thinking. Why do I deserve your largesse, and I do mean largesse, since I’m asking for five million big ones? The answer is simple.
Like many of our nation’s financial institutions, I am simply too big to fail. If investors were allowed to witness the collapse of Freddie, Fannie, and then Andy, I can’t begin to describe what havoc it would wreak on their already frayed nerves. Actually, I can describe it: global financial calamity. I think we can both agree that, to dodge this bullet, ten million dollars is a small price to pay. (I know that I originally asked for five, but since I started writing this letter my financial situation has deteriorated in grave and unexpected ways.)
Why am I too big to fail? It’s important to grasp the critical role that I play in a wide-ranging but fragile web of economic relationships. If I go belly-up, I will no longer be able to tip my doorman when he gets me a taxi. This is not a hypothetical situation. I have studiously avoided tipping him for a solid month now. Consequently, he no longer has cash to spend at the liquor store after work, and the liquor-store owner no longer has money to spend on Internet porn.
Given that Internet porn is the only fundamentally sound engine of the American economy, we’re playing with fire here. If that stalwart industry is allowed to fail, Asian porn companies will rush to fill the void, offering porn that is both cheaper to produce and way hotter than ours. What will it take to keep this from happening? There are no guarantees, but sending me a check for twenty million dollars would buy us all valuable time.
How did I find myself in this hole? Like most financial crises, mine had its origins on a slippery slope. First of all, I made the mistake of logging on to iTunes when I was high and downloading every Electric Light Orchestra song ever recorded. Second, I created my own e-commerce site, the ill-fated DressYourBadger.com.
I mistakenly believed that a Web site for people who kept badgers as pets and wanted cute outfits to dress them up in would work as a subscription-based service, especially if I charged subscribers a thousand dollars a month. When there were no takers, I switched to an all-advertising model, not realizing that I was plunging headlong into the jaws of an epically weak advertising market, particularly for products relating to pet badgers.
I have never borrowed money from anyone before, and, if you don’t believe me, ask any of my friends. Only don’t ask Bo. You should not ask Bo for two reasons. First, Bo is under the impression that I did borrow money from him, when all I actually did was let him pay for a pitcher of Stella when it was my turn to pay, and then ran out of the bar before he figured it out.
The other reason you should not ask Bo is that Bo is a ginormous dick. In fact, if Bo writes to you looking for a bailout, i.e., he wants to be made whole for that pitcher of Stella, please feed his letter to the nearest high-speed shredder. I promise you, no investor on the planet will give a rat’s ass if Bo goes under.
By now, I’m fairly confident you’ve already decided to give me that bailout, but, just in case you haven’t, here’s one more good reason: there’s a better than fifty-fifty chance that at some point in the next ten years I’ll be elected Vice-President of the United States. I wouldn’t have guessed that a few months ago, but apparently now they’re letting anybody run. How is this significant for you?
In addition to presiding over the Senate and attending state funerals, one of the Vice-President’s duties (as I see it) is to badmouth the Chairman of the Federal Reserve to the President. This is a situation that could get, shall we say, rather awkward for you. But why even contemplate such a scenario when it could all be avoided by sending me a check? It’ll be the best billion dollars you ever spent.
30 comments:
Hello,
I find it unfortunate that when someone expresses a simple doubt as to the veracity of the affirmations of Karl Denniger, people question whether the proficiency in English of the doubting person is sufficient.
We should all be doubting Paulson, Bernanke, Bush, Denniger and, gasp, even Ilargi and Stoneleigh. Ilargi would be the first to say (and he has already said) that we should all make up our own minds.
So, as pertains to Denniger, I will listen to him as always, bemoan the xenophobic aspects and reserve judgment until I can obtain at least a second opinion or confirmation.
Ciao,
François
Thanks once again for all the analysis. I think I'm finally really starting to understand all this. I gave you a donation today.
Linda S
A question - when people say the threat is to create a run on US currency, does this mean that they would be selling their US Treasury Bonds en mass or changing the world's reserve currency or is this the same thing? If it's different, could someone explain the difference to me?
Thanks.
Linda S
What would one say to a Dennis Kucinich or someone who is likely to vote no no matter what? It seems this may be the first and last time, fringe politicians may actually be able to make some difference and have their message be heard by quite a few?
I feel that gun to our head and I want to give them my wallet because it is scary.
I have my baby on my lap and they are telling me this is the only way to guarantee formula for her. Takes a certain level of evil that funny enough Christians might be called upon to talk about more clearly.
Seems a laymans sermon on wolves in sheeps clothing would help people wake up from this deep sleep.
Conservative Republican who found you when a very liberal Democrat took the time to let me tell him my gnawing suspicions without talking about how stupid I was to ever trust the people holding the gun. I am well aware of that mistake and think more people admit what is happening if they weren't going to get punished for the mistake of believing these people might have been looking out for them.
I think right and left have finally found the issue they can come together on and I fear they won't do it. My message is stop campaigning with this and join with people of all politics to make this stand.
Thanks to all the far left folks who have shown restraint with those who woke up late. I hope better late than never.
Does anyone else find it wonderfully apropos that the bail out bill is an amendment/substitution of the law requiring equity in the provision of mental health and substance-related disorder benefits?
Rick
FB,
I find it unfortunate when people from outside the country interpret what is in a US bill, and a bill that would benefit them. They voiced an opinion based on zero facts, and their "opinion" only, and it concerns MY money.
I have seen the same opinion at TickerForum from foreigners. Guess how they are treated there ;).
If that person does not have a grasp of english, which allows them to understand United States legal bills, then the shoe fits or it doesn't. Its not just WHAT the bill says in legal terms. It is also WHAT it does not say. When a bill does not specifically say, then you look to who holds the authority and will interpret. That will be Paulson. Paulson has already stated the Bill will be Vetoed unless that provision is intact, as is. Paulson is also granted Authority and will not be responsible when he does so. Sherman moved to have this clarified. He tried to add only a clarification, because he TRULY thought it was an oversight, "only property in the US will be allowed" This "simple" clarification was pushed aside with basically a sneer from Paulson. He needs this, its not just a simple thing, It appears this is the basis for the friggin bill.
Why is that, can you give me a reason Paulson would not let go to get what he wants. With only that small simple change. A change people thought was a simple oversight.
Have you read section 112 Francois?
Did you watch the video of the Kudlow show, where all of this was laid out.
This person, and you? Make the claim,.. its Denniger this originates from.
Again this is wrong and if they had done their homework, they would have known this. If they had watched the video they would know where this comes from.
This wasn't Dennigers "veracity", this came from CA. SHERMAN DEM, He made the claim on the show as he went DIRECTLY to Paulson about it. On the show with him was a Rep that went on to say he knew of this and approved
There is no way out of this mess Francois, but having an outsider who benefits from MY money tell me he doubts the obvious. It will become like the old days and the old ways. A trip to the waterfront, a ring, and Sabat. Though I don't have pointy shoes, but I do need a cane sometimes, lol. That is where they wish us to head.
There is not time for BS and distraction in my opinion. Posts like that could very well be intentional, if not really caused by ignorance.
Why
Well sir, I don't tell the French tax payer how his money should be spent. Care to guess what I think about French taxpayers/govt. telling me how I should give them my money for their Banks/Govt problems.
This is serious stuff, not a "no harm" brain "board" game. Its real, and there is serious evidence of wrongdoing going on in my country. And around the world.
I rightfully questioned his ability to read and understand the bill. He made his statement. I asked him to back it up. I didn't question his intellect, and I guess from this statement from you, "people question whether the proficiency in English of the doubting person is sufficient"
So you're saying I should have questioned his mental faculties also. Hey, go ahead and be rude if you wish to, but don't piss on me and tell me the winds blowing.
Francois, if you read Denninger, do you know what the evidence is of what they think is happening. I had already been following posts about the buys and correlations from the foreign govts. But when somebody starting looking at the dollar, and asked if anyone knew about the foreign govt buys etc. This guy who had been trying for weeks for someone to explain what he was seeing told him what he had seen for weeks.
Voila, a smoking gun with no fingerprints. And it makes sense.
Prove it, hey you take a govt to court, whoops I mean world govts.
And think about this. When this POS bill gets shoved through and does contain this provision. Well, when the American people find out about it. Anyone from a foreign country that says this is right, and there are several articles from foreign countries that make the claim, the US started this, they owe us. What do you think the reaction would be.
Well Francois, that is part of the game too.
You know where I stand on this, and lets drop it "here" on the board, or you can email me at. I would love to see where Denniger started this first, and the proof that the bill as last written does not contain restrictions to Paulson's power to carry this out legally.
Inputting incorrect information into a "war" from an outside source that benefits. Where do you stand on this Francois, you looking for your country to get a little jack from the American taxpayer.
Sidneytawl at Rock dot com
theModernMystic first thought of a margin call on the US:
http://www.youtube.com/watch?v=Z6Rug5bE7HI
then had an interesting second thought:
http://www.youtube.com/watch?v=c1yY2cEjsxw
I could only view the first video. The second just "spun" and never started, must be traffic.
Anyway, Its good, but he is incorrect on a couple of things.
Tickerforum posts show that people were afraid of this when P and B did the dog and pony in front of Congress. However if you listed to Sherman he claims that P&B told them that this was not part of the plan. Remember the first bill was only on the table at that Time. The language now discussed is from the second Bill.
second perhaps the Mystic should realize he was giving the finger to his audience for the last minute or so. I laughed my ass off, he didn't know, or appeared not to. Big flying american eagle right into the lens. LOL.
Hopefully the second video will appear, I like the accent if nothing else.
I can testify from private correspondence that Francois' mastery of English is greater than my own - but, then, I was born in New York City.
Ilargi - you mean pigs can't fly? Jeez.
Todd - you got another house to sell? Preferably one built over a toxic land fill with a Hankenstein alter in the back yard to scare kids on Halloween.
I think that the passage of the Grand Theft America Bill, due to the fact that TPTB and their full court press MSM attack has been unable to persuade the vast majority of American citizens, will mark the end of even a semblance of democracy in the FSA (Fascist States of America). I listen to Rush, and I thought you had to convert to Islam to be a fascist. My learning curve is so steep in these interesting times :-(
As to Denniger, he is an obnoxious libertarian and has as much empathy for the typical citizen as a great white shark. He is also apparently a xenophobe. His statement that the GTAA is a bailout of foreign debt holders, so they don't put a run on the dollar, is probably correct. When I was listening to foreign correspondents this morning who were shocked that the House failed to pass the GTAA on the first go round, I was sort of hoping that they would volunteer personally to buy up the toxic waste themselves. As the average American is also a xenophobe, particularly the few that know that there are, in fact, other countries in the world beyond the borders of Kansas, then his xenophobic tilt might have a certain short term expediency.
the Modern Mystic's second video muses that it was foreign banks Not foreign governments that made "the Call" to Hankie Pankie.
He is very amusing when describing "The Call", well worth a watch.
He thinks Denninger is too focused (obsessed, cough) on 'foreign' governments.
Are EU governments as big a 'Tool' to their bankers as the US government is to Wall St?
I don't know. Anyone from Europe care to comments on this?
I'm leaning towards the MM's take on this.
The EU bankers say "jump", the EU Governments say "how high"?
The EU bankers say "jump", Hank Paulson says "how high"?
Blue Monday
"As to Denniger, he is an obnoxious libertarian and has as much empathy for the typical citizen as a great white shark. He is also apparently a xenophobe"
I dunno el pollo, I kinda like the guy. I looked at that video with myforeign eyes and it made sense to me that the American citizen is getting a full body tutsi fuitsi. That foreign banks and bankers went along with the scam with full knowledge one would have to be a simpleton to think otherwise. So tell me why Denninger should have a kind word about these foreign interests or governments. Me I am anti-American-Government as far as many of your country's foreign policies but that sure as hell doesn't mean I am anti American. (Also happen to be anti-Canadian Government in part thanks to that aggressive war in Afghanistan).
Blue Monday mentions that:the Modern Mystic's second video muses that it was foreign banks Not foreign governments that made "the Call" to Hankie Pankie.
and
He thinks Denninger is too focused (obsessed, cough) on 'foreign' governments.
That's merely a matter of a lack of focus not necessarily of xenophobia on Denninger's part.
Attention all Rednecks:
Two Canadian Foreign Devils run this blog.
So its a funny place to soapbox US economic nationalism and exclusivity.
America right now is the fart in the elevator, and claiming that its OK because its your elevator doesn't solve the stink.
CR
Actually, I don't follow him closely enough to know whether he is xenophobic or not. He did sound this way on this particular video. But that is just an aftertaste. He is probably correct in his basic facts and presumptions presented on this video. And as mentioned in my previous post, I was kind of pissed when these foreign financial correspondents were outraged that the House rejected the GTAA (Grand Theft America Act).
Well, we all may hope against hope, and I got kind of a thrill when it happened, but we all knew the fix was in and the Da Boyz would pull out the Lugers and the Al Capone autographed baseball bats for the second go around.
I particularly enjoyed Diane Feinstein's (Dem flavored scumbag from CA) comment tonight which essentially said that the founders gave Senators a six year term so that they could give the great unwashed the finger with relative impunity.
I love the humanity that comes out during a sudden recognition that we are deep in a crisis. "The American people did this and therefore deserve to be punished." THAT is a fairly funny reading of global finance over the past few decades. As if all the social architecture that brought us to this point was built through a series of national plebiscites in the United States of America. Or that the people in the United States, got together at the local bar and thought, "Hey ... let's screw some villagers in Norway out of their money." Let's not be silly. There are about 305,000,000 people in the United States of America, nearly ten times the population of our Neighbors to the North. -- Although (blush) just about 3/5 of the population of the EU. -- The national government as well as the financial industry in the USA may act in tandem ... but my reading has been that they do so in spite of the roughly 300,000,000 people who also just happen to reside within these national boundaries. And if you bring up the 'representative government' nonsense then, I say you know little about that wonderful American invention (propaganda, renamed PR in the 1920's), mass communication, and the two party duopoly. Moreover, you know even less about the possibility of responsive republican government in a country of 305,000,000 souls (how's that responsive federal gov't working for Ya'll again in the EU? -- have a constitution yet?)
Now that I got that rant out of the way...how 'bout another ... Consider the naked class warfare in all of this. We are reliable told by those in the know that this mess is the people's fault after all, no one to blame but the fellow staring back at you in the mirror each and every morning. This narrative fits so wonderfully into what the elite would have us believe that those elites who lurk here must flush with pride each and every time someone advances this claim. "Never mind that man behind the curtain!" This ... blame the slavish worker for his or her own poverty has always been a favorite tool of capitalist set to maintain their political and economic hegemony (well that and owning the company store that sells all of the food ... but I digress)
.
The raw contempt these elites have for "the people" has been on full display this past week leading up to and after the House of Reps defeated the bill on Monday. You could almost hear the collection of well-coiffed serious-men-about-town on CNN shout Monday night ... "*You Stupid Slovenly Fools,*" "*How Dare You Interfere in OUR Business.*" "You will be severely punished by the markets!" Their contempt for the many who called to register their opposition to this bill was palpable.
What I came away with was the following, this IS class warfare, naked...aggressive...and with no quarter for anyone who stands in the way of the financial class. Everyone beyond the comfy club of financial insiders is expendable in this situation. Why else would people who appear in the mass media voice such full-throated support for a patently stupid bill. A bill that, with even a rudimentary understanding of the SCALE and COMPLEXITY of the current GLOBAL financial crisis, cannot possibly "bailout" the financial system. What's more, a bill that grants full authority to the Secretary of the Treasury to decide who wins and who loses with this new investment bank of the United States of America. Authority vested in a man who only two years ago was one of the very barbarians scaling the walls of Rome is search of his personal fortune for Christ's sake!
I mean come off it people! The bill will pass, I have no doubt ... but the global crisis will continue ... Banks in China and Europe can sell a few crappy stacks of paper to the US, taking a nice profit along the way. But the mountain of crap they currently sit on will be little diminished in the transaction. And, next time they go looking for carrion to ensure their survival, the US Treasury will not be available for their raiding. That will force these others to eat their own ... and they will do so gladly ... starting with the most vulnerable and working their way up the social strata from there.
Laugh at, complain about, or loathe "The American People" all you want. Give the men and women who put us all in this situation another pass. They will turn their currently badly unmet addiction for ever more wealth and power on you and yours soon enough.
I'll weigh in with my two cents on the debate about foreign assests being purchased by the Treasury.
I think an equally plausible explanation is that teh banks that Hank favors happen to hold large portfolios of ABS and MBS from places like Spain and flats in London. Their values are falling through the floor and dragging on the big banks balance sheets. Hanky Paulanky doesn't want to exclude those toxic pieces of paper from the sweet deal he has cooking through the legislative branch right now.
It could be a combination of the two, or big European Banks, and otehr factors unknown to me.
My son sent me the following link with the heading:
10 cowrie shells on "Bank of America"...any takers?
http://www.techcrunch.com/wp-content/uploads/2008/09/septembermadnessb.jpg
To which I replied:
I don't know. With Hankenstein, Goldman has pole position for the next couple of months. Actually, I put my shells on JP Morgan Chase, between Morgan and David Rockefeller (who is still vaguely alive), you have some truly evil mothas.
Jeez Diowe,
You can really write well! I agree with everything you say despite the fact that I grow occasionally sarcastic with the intentionally dumbed down state of the USA population.
There will be no FDR this time and there will be a class war within the decade - highly trained and equipped Blackwater sociopaths versus the American people.
TRavelled around Syria yesterday and got a first hand look at what "Bulgaria Model " looks like! To imagine living this way,day to day, is very distubing! Yet along the route I met cheerful children,incredibly gracious Syrians. And the wonderful food,healthy nutrious,abundant without chemicals.The average Cdn doesn't eat this well!
Ilargi, a bow to the dark humour of your opening comments!
Also I'd like a list of the 25 courageous senators who voted no to this bill.
Let's try this again
Senators who voted NO
http://tinyurl.com/4sypfg
List of all Senators who voted
http://www.politico.com/news/stories/1008/14196.html
Hello Sydney (Bicycle mechanic),
Just so that things are clear, I will say that I have, from the beginning, deemed the Paulson plan to be contrary to U.S. interests. When I say I reserve judgment on Denniger's "foreigner" argument, that does not mean I approve of the plan and even less that I am interpreting the bill. No, I am reserving judgment on one argument and I never said that Denniger was the origin of that argument. Nor did I input incorrect information.
On the basis of the available (and highly inferential) information, I would not fight the plan using the as yet unconfirmed interpretation of Karl Denniger. There are many good reasons to oppose the plan and it seems to me that Denniger is weakening his case by latching on to the "foreigner" argument. Just look at the reactions of many people on this site.
Mr. Sherman is certainly a sincere person, but my impression is that what we all need right now is more time and some calm. In short, I do not think that we need to introduce here the agitation that currently reigns in Washington. The various arguments are not as "obvious" as some would purport.
For your information, there is very little real analysis of the plan in the European press. Even reputable organisations such as Le Monde and Spiegel seem to be unaware of the actual workings and consequences of the plan. They assume that it will be beneficial to the U.S. and consequently to the world.
Nowhere whatsoever have I seen indications or allusions that other countries will profit unduly from the U.S. Treasury.
So though the press may be wrong, people here would appear to sincerely believe that the plan will help the U.S. first and foremost and that it should go through. Again, they may be wrong, but I do not detect any ill will. They essentially want the U.S. to pull itself together, in the interest of everyone on the planet.
To sum up, I personally oppose the plan because there are serious reasons to do so (see Denniger's earlier arguments). There is also the "foreigner" argument based essentially on inference. To my mind, that requires further study.
Last comment, if this plan is as bad as I think it is, a few foreign banks may briefly profit, but the rest of the world in general will suffer with the U.S. as it goes down. So no, I do not expect or hope for any "jack" from the U.S. taxpayers.
Ciao,
François
I agree that Karl is missing the point, or perhaps he cynically believes that a little nationalism will help get the opposition fired up.
I can see no reason that Paulson would have bailing out foreign banks as his primary goal. I think he just wants as much leeway as possible to save his friends, wherever they may be. The kinder interpretation would be that he recognizes that the credit crisis is worldwide, and thus believes he needs to be able to save anyone to truly restore confidence.
But confidence won't be restored. This time he's got a squirt gun in his pocket, and the credit markets seem to be a bonfire. So either way it amounts to the same thing - he, or his successor, gets to pick who lives and who dies, and I'm guessing most will have to die.
El pollo,should you be correct,and this robbery descend to class warfare,please remember that the people will win.Eventually.I have never before seen the outrage expressed by my fellow Americans.This bill has J.Q. Public bone mad.They will remember.
Congress can only make sausage like this when the people are not paying attention.This bill will still happen,but when the true nature of the rape becomes apparent,the political consequence for those like the senator Feinstine will be amusing to watch.
snuffy
You're a rare bird el pollo. I think you will have no problem building that nest in the mountains of Peru:)
Around here I think it is getting to be time to start growing the hair long again, just more in earnest this time.
Up the evolution!
Is it strange that I might find it slightly comforting that the money might be going to pay off foreign debtors first? I like it in the sense that the last thing I want to do is to give 1 billion Chinese citizens more reason to hate the USA than their own government. Doesn't make me happy, but at least I think it helps alleviate one major future problem.
Linda S
Recently an insurance company nearly wind up....
A bank is nearly bankrupt......
Who fault?
The top management of the Public listed company ( belong to "public" ) salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......
Sign a petition to your favourite president candidate, congress member again and ask for their views to comment on this, and what regulations they are going to raise for implementation.....If you agree on my point, please share with many people as possible....
http://remindmyselfinstock.blogspot.com/
Sheesh POT Sask Potash has dropped 32 points to 104, at the risk of seeming to lack any feeling, all I can say is: "Oh the humanity!"
Around here I think it is getting to be time to start growing the hair long again...
CR,
Wish I had the hair! ;-)
Gee Ric you just had to wake me from my beautiful dream dint ya? Me too that hair - a distant memory!
What happens when the system can't grow any more:
http://tinyurl.com/3ert6a
And there's no safety net except prison or the Marine Corps.
Post a Comment