Deleveraging

What Does 'Deleveraging' Really Mean Cutting Our Addiction to Debt: Tech Ticker, Yahoo! Finance

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Azurik Halloween Costume

Aaron Hefner made this awesome Azurik costume:

That is bad-ass!
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The World According to AmericanGoy: Is this country run by idiots? Bailout of whom, exactly?

The World According to AmericanGoy: Is this country run by idiots? Bailout of whom, exactly?

All I can do is point to this guy's blog entry. He couldn't be more right about this Bailout nonsense.

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Calculated Risk: Comparing Stock Market Crashes

Calculated Risk: Comparing Stock Market Crashes

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Mr. Christopher Walken makes me laugh

Fatboy Slim |MTV Music

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Netflix streaming goes HD on Xbox 360

Netflix streaming goes HD on Xbox 360: "Netflix has announced that Xbox 360 owners who are subscribers to the rental service will be the first to receive HD streaming capability for Netflix's 15,000 strong streaming library.

The feature will be added on November 19th with the launch of the 'New Xbox Experience' dashboard update.

According to Steve Swasey, vice president of marketing at Netflix, 300 HD titles will be available at launch and that Microsoft is implementing a soft rollout for the service."

Yummy!

A hookup between Netflix streaming and TiVo was announced as well.

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Shocked!

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Microsoft Announces 'Azure' Cloud Services

Microsoft Announces 'Azure' Cloud Services - News and Analysis by PC Magazine

Wow! What an honor! Microsoft has named their new Cloud Services after the Xbox game Azurik!

How cool is that?

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McCain camp hits back at 'diva' Palin - Politico.com

Ben Smith's Blog: McCain camp hits back at 'diva' Palin - Politico.com: "Responding to the grumblings from Palin's camp in my story this morning, McCain's camp hits back in conversations with CNN:

McCain sources say Palin has gone off-message several times, and they privately wonder whether the incidents were deliberate. They cited an instance in which she labeled robocalls -- recorded messages often used to attack a candidate's opponent -- 'irritating' even as the campaign defended their use. Also, they pointed to her telling reporters she disagreed with the campaign's decision to pull out of Michigan.

A second McCain source says she appears to be looking out for herself more than the McCain campaign.

'She is a diva. She takes no advice from anyone,' said this McCain adviser. 'She does not have any relationships of trust with any of us, her family or anyone else."

This is so cool my brain can hardly stand it. They went out looking for a Washington outsider and found one in Sarah Palin. She and John McCain brag about the times they have "gone against" their own party and this proves their independence.

Now, Sarah Palin is doing what Pit Bulls do - whatever they want! What did the campaign expect? She has no ties to anyone!

Personally, I think this is brilliant on her part. Before this, she might have just faded away after this election. Now, I'm not so sure.

Of course, she will have offended so much of the Republican party structure that she'll have to start her own party ... but maybe that would be a good thing, since the Republican party is imploding anyway.

This this article about the Sarah Palin insurgency for more juiciness.
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Microsoft announces Cloud Computing OS - Applications will be called Vaporware

Microsoft announces Cloud Computing OS - Applications will be called Vaporware.

Ba Dum Dum.

Thank you very much. I'll be here all week.


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Krugman's Baby Sitting Co-op

Slate - The Dismal Science - Aug. 13, 1998: "Well, it turned out that there was a small technical problem. Think about the coupon holdings of a typical couple. During periods when it had few occasions to go out, a couple would probably try to build up a reserve--then run that reserve down when the occasions arose. There would be an averaging out of these demands. One couple would be going out when another was staying at home. But since many couples would be holding reserves of coupons at any given time, the co-op needed to have a fairly large amount of scrip in circulation.

Now what happened in the Sweeneys' co-op was that, for complicated reasons involving the collection and use of dues (paid in scrip), the number of coupons in circulation became quite low. As a result, most couples were anxious to add to their reserves by baby-sitting, reluctant to run them down by going out. But one couple's decision to go out was another's chance to baby-sit; so it became difficult to earn coupons. Knowing this, couples became even more reluctant to use their reserves except on special occasions, reducing baby-sitting opportunities still further."

He goes on to describe how issuing more script solved the problem of hoarding. Inflation for the win!

Unfortunately, his story is too simple. For instance, if the baby sitting coop is really trapped by a lack of liquidity, then perhaps the Co-op management should introduce a market for baby-sitting chits. Clearly, people are hoarding their baby-sitting coupons because they feel they have a certain value. If that value could be converted into cash, via a market-mechanism, then it would become clear what the true value of the baby sitting coupons was. And if the value of these coupons is too high, then it will benefit couples to hire outside babysitters. Or, if there was a market for baby-sitting coupons, then perhaps couples would feel free to use up their coupons, because they knew they could buy some (if the price was right) in an emergency.

Anyway, you can go on and on and on and on and on about secondary markets, futures markets, arbitrage, and so on, in the context of babysitting coupons. In Krugman's example, he assumes that babysitting coupons are the sole mechanism for baby sitting exchange and leaves out the larger world. I think that is why I don't buy his argument that it is okay to simply inflate one's way out this problem. And as he says,

Eventually, of course, the co-op issued too much scrip, leading to different problems ...

but one has to ask - how does one know when they have issued the right number of coupons? And what if the people issuing the coupons are themselves members of the baby-sitting coop? What's to keep them from printing coupons for themselves?

Really, the only solution for money problems like these is multiple competing sources of money. Whoever issues the money has the power, so to keep money-issuers honest, it is necessary to let competition keep inflation and greed and corruption in check. It needs to be easy to switch to another currency if you lose faith in your current currency.

You and I can't switch currencies very easily, but world wide money traders can, and they can vote with their money as to which currency they think is the best managed. That currency may not always be the US Dollar. In fact, if we, as a human race, are in fact in the process of switching to multiple currencies, then one can expect a fairly large amount of disruption as the US Dollar loses power. In particular, the ability of the US Government to solve problems by simply printing more money may significantly diminish. And in that case, the $10 trillion in debt the US Government holds may need to get paid back in something other than Dollars. And if that happens, I think there will be significant deflation, because the value of the Dollar has been purposefully inflated over the years.

On the other hand, if all of the governments get together and decide on a "new banking policy" then we may end up with a worldwide currency, which would be a very bad thing, as it would centralize monetary policy in a way we have not ever seen before. Luckily, it is unlikely these thugs will agree on much at all, except that they want less dependence on the US Dollar.

You know the Chinese curse, "May you live in interesting times"? Well, here we are. Although, in the greater context, it seems that the times are frequently interesting, as this story from the Wikipedia article states:

Some years ago, in 1936, I had to write to a very dear and honored friend of mine, who has since died, Sir Austen Chamberlain, brother of the present Prime Minister, and I concluded my letter with a rather banal remark, "that we were living in an interesting age." Evidently he read the whole letter, because by return mail he wrote to me and concluded as follows: "Many years ago, I learned from one of our diplomats in China that one of the principal Chinese curses heaped upon an enemy is, 'May you live in an interesting age.'" "Surely", he said, "no age has been more fraught with insecurity than our own present time." That was three years ago.

— Frederic R. Coudert, Proceedings of the Academy of Political Science, 1939

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Phil Gramm: the worst of the worst

Phil Gramm - the worst of the worst. The video, unfortunately, leaves out how Gramm snuck in a new account rule:

Foreclosure Phil:  But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.

He apparently can't find work in the United States:

Years before Phil Gramm was a McCain campaign adviser and a lobbyist for a Swiss bank at the center of the housing credit crisis, he pulled a sly maneuver in the Senate that helped create today's subprime meltdown.

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Greenspan’s Lament

Greenspan’s Lament - Floyd Norris Blog - NYTimes.com: "Mr. Greenspan is right on one thing. The “whole intellectual edifice” collapsed. But he is wrong to blame it solely on the wrong inputs. It is too bad that Mr. Greenspan never appreciated the work of Hyman Minsky, who understood that stability is destabilizing, and that there will come times when the very calmness of markets, and lack of apparent risk, causes investors to take ever greater and greater risks.

What was missing was a regulator who understood markets, rather than worshiped them."

In a true free market system, everyone assumes every deal is corrupt or at least corruptible, because there is no big government to bail you out.

It's just like the internet - you must assume you are always under attack; that all web sites are potentially infected; that all communication is potentially sniffed. Your only choice, if you want to use the internet, or the 'free market', is to take defensive measures that lower the risk of a successful attack. There are a number of ways of doing this in the market including insurance and credit and/or reputation monitors; requiring a certain amount of transparency and auditing; spreading risk among multiple vendors; creating public markets; and so on.

If history shows anything, it is that there is always someone out there trying to game the market. The federal government is not smart enough or adept enough to stop this level of attack and it is a bad idea to depend on them for that level of service. In fact, it is easy to con them into putting a rubber stamp on the latest scheme. It was a bad idea for the government to go "hands off" without replacing their regulatory authority with either a big sign that says "these bonds are risky" or enabling some third-party to properly judge the value of the bonds (possibly via a public market).

The problem we have here is that a lot of people were told that their investments were safe - AAA rated - when they weren't. How any credit reporting agency could certify a bond as AAA when the company issuing it was leveraged 30:1 is beyond me. The point we're at now is that nobody trusts anything - and guess what - there is no reason for them to trust anything. Pumping money into the economy may grease things - I don't know - but the fundamental problem that it was possible to create a huge number - 10's of trillions of dollars in the least - of falsely rated AAA rated bonds needs to be solved.

Right now, I haven't heard of any proposal to solve this problem - to get a proper, reliable accounting of what is really happening. Until that washes out, one way or another, uncertainty is the order of the day, and I suspect the markets will continue to bounce up and down.

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The Limits of Statistics by Nassim Taleb

Edge: THE FOURTH QUADRANT: A MAP OF THE LIMITS OF STATISTICS By Nassim Nicholas Taleb: "Figure 2 The graph above shows the fate of close to 1000 financial institutions (includes busts such as FNMA, Bear Stearns, Northern Rock, Lehman Brothers, etc.). The banking system (betting AGAINST rare events) just lost > 1 Trillion dollars (so far) on a single error, more than was ever earned in the history of banking. Yet bankers kept their previous bonuses and it looks like citizens have to foot the bills. And one Professor Ben Bernanke pronounced right before the blowup that we live in an era of stability and 'great moderation' (he is now piloting a plane and we all are passengers on it)."

The link is to a great article about the limits of statistics as used by financial modeling people - who consistently underestimate the chances of a penny coming up heads 10 times in a row.
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Greenspan Concedes Error on Regulation

Greenspan Concedes Error on Regulation - NYTimes.com: "“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”"

Even so - he's not admitting that he helped change the rules on the amount of leverage investment banks could take on. So his 40 years of evidence was useless in the face of the new rules.

At one point, Mr. Greenspan appeared to question the efficacy of increased oversight over the financial system, noting, “I think that it’s interesting to observe that we find failures of regulation all the time.”

“If we are right 60 percent of the time in forecasting, we’re doing exceptionally well,” Mr. Greenspan said. “That means we are wrong 40 percent of the time. We at the Federal Reserve had a much better record forecasting than the private sector, but we were wrong quite a good deal of the time.”

Mr. Greenspan is confusing active regulation with setting the rules. He actively promoted the idea that these banks could overleverage. So he changed the rules, and then told everyone to go for it! When did the real rules about leverage change? As a matter of fact, never, but he convinced himself that with computers and computer modeling that these investment banks would not fuck it up. But what is missed was that with all the leveraging, is that if they did fuck it up, the results would be devastating. So, sure, you can fly your kite next to the powerlines and hope it all works out, but the fact is, if you make one mistake, you're dead.

That's why, after hundreds of years of experience, the amount of rational leverage was set fairly low. (Some would argue we shouldn't allow it all - they might be right.) But certainly a change from 3:1 to 33:1 is just begging for trouble.


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Netflix: Just 6 Percent of Subscribers Want Blu-ray - News and Analysis by PC Magazine

Netflix: Just 6 Percent of Subscribers Want Blu-ray - News and Analysis by PC Magazine: "DVD rental company Netflix Inc said on Monday it expects about 500,000 of its 8.7 million subscribers will be Blu-ray subscribers in the current quarter.

Netflix this month began adding $1 to monthly membership fees to provide unlimited access to high-definition Blu-ray movies. Netflix said the additional charge, to reflect the higher cost of Blu-ray discs, will be automatically added to billing statements on or after Nov. 5."

So much for Blu-ray. We'd have $99.00 HD-DVD players by now with disks costing the same as DVD. But no, Sony has to try to control the market. *Sigh*.

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Bush, Bernanke support new stimulus - Stocks & economy- msnbc.com

Bush, Bernanke support new stimulus - Stocks & economy- msnbc.com: "WASHINGTON - Momentum is building for a fresh dose of economic stimulants to boost the country out of the doldrums — perhaps by putting more money in Americans’ pockets. The White House said Friday that President Bush was open to some sort of action after Federal Reserve Chairman Ben Bernanke warned the slump could drag on without the extra bracing tonic."

You know this is just a bribe for all of us moronic citizens that just got taken for over a trillion dollars in government borrowing. "Hey look, you guys got some free money too, so quit complaining!"
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Guy in a suit calls out Paulson and Bernanke

Damning Paulson and Bernanke 'Grotesquely Conflicted' and 'Most Lenient': Tech Ticker, Yahoo! Finance

It's a video. Watch it. I agree with everything the guy on the left says (that's the left of the screen, not the political left). Paulson in particular is a nightmare. I like how this guy lays out his concerns.
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Paulson regrets mistakes on economy: Financial News - Yahoo! Finance

Paulson regrets mistakes on economy: Financial News - Yahoo! Finance: "WASHINGTON (AP) -- Treasury Secretary Henry Paulson on Thursday expressed regret for the many errors made that led to the biggest financial crisis in seven decades, but he insisted the administration is pursuing the correct course now to end the debacle.

'We're not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here,' Paulson said in an interview on Fox Business Network.

But he said he had 'no regrets' about the steps the government is taking now to address the problem.

'We will mitigate the impact on the real economy and we'll get this financial system working again,' he said."

I really don't get why we have the guy who caused most of the trouble - at the very least signed off on it all - in charge of fixing it. Why don't we get one of those guys that warned a couple of years ago about the inherent insecurity of letting firms leverage themselves 30:1? How does Paulson go from dumb to smart so fast? (Well, obviously, because the people above Paulson have even less of an idea what is going on.)

The markets clearly have no confidence in him - they are jumping up and down (mostly down) as crazy computer models trade like mad with no actual data to guide them.

This whole thing won't settle out until a proper accounting has been done and the real value of these crazy bonds has been identified. Nothing Paulson has done is speeding that process along.

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Treasury's Paulson- subprime woes likely contained | Markets | US | Reuters

Treasury's Paulson- subprime woes likely contained | Markets | US | Reuters:

"NEW YORK, April 20 (Reuters) - U.S. Treasury Secretary Henry Paulson said on Friday the housing market correction appears to be at or near its bottom and that troubles in the subprime mortgage market will not likely spread throughout the economy.

'We've clearly had a big correction in the housing market. Retail housing was growing for some time at a level that was not sustainable,' Paulson said in a speech to The Committee of 100, a business group in New York promoting better Chinese relations.

'I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained,' he added."

That's from April 20th, 2007.

And this nincompoop is in charge of the bailout?
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Superstitious Pigeons

Superstitious Pigeons

Very important to know.

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The Reckoning

The Reckoning - Taking Hard New Look at a Greenspan Legacy - Series - NYTimes.com

“Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.” — Alan Greenspan in 2004

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”
And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

*Sigh*.

Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken.
The problem is not that the contracts failed, he says. Rather, the people using them got greedy.

No, really? What are the odds of that?

The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Theoretically intended to limit risk and ward off financial problems, the contracts instead have stoked uncertainty and actually spread risk amid doubts about how companies value them.

$531 trillion. And nobody is expected to get greedy? Maybe we should just abolish all laws and let people do whatever the fuck they want. Jesus, these people are dick-heads.
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The Crisis in Context

^GSPC: Basic Chart for S&P 500 INDEX,RTH - Yahoo! Finance



See? Things aren't so bad, historically speaking.

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Netflix Tacks on $1 Surcharge for Blu-ray Movies - News and Analysis by PC Magazine

Netflix Tacks on $1 Surcharge for Blu-ray Movies - News and Analysis by PC Magazine:

"Just in case Sony's uphill battle for market domination hasn't already been enough of a struggle, Netflix has made the life of the Blu-ray a bit less sweet. The online movie rental site today announced that it would be adding a $1-per-month fee for access to its Blu-ray library.

The notice was sent out in an email to Netflix susbscribers on Wednesday morning."

I unchecked the box. Blu-ray isn't worth even the miniscual $1.00 extra that Netflix wants. The pictures don't look much better, if at all, and I only have one machine that I can watch them on (as opposed to at least a dozen DVD compatible devices).

Hopefully Netflix will use the subscription information they get from this $1.00 surcharge to manage their Blu-ray collection. And hopefully we'll get a press release in a few months that says how few people want Blu-ray disks.


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Global rate cut does little to calm markets - Eye on the Economy- msnbc.com

Global rate cut does little to calm markets - Eye on the Economy- msnbc.com:

"Until the credit crisis burst into the open in August 2007, the Fed largely confined its occasional market calming moves to setting short-term interest rates and lending money to banks through its 'discount window' — a quaint reference to the days when bank tellers stood behind barred windows to dispense cash. In just the past few months, the Fed has converted that window to a warehouse loading dock, offering over $1 trillion in loans to just about anyone who wants one."

Maybe I should call up and try to get a giant loan.

The reason this isn't working is that the original problem was way too much credit; way too much borrowing; way too much leveraging; and so on. And the cause of that was too much money available, according to the "Giant Pool of Money" theory.

Japan had a near zero percent interest rate for years and years because there was too much money. If money is cheap, then interest rates are low.

So there's tons of money available, but no one is loaning it out, because there aren't enough dependable businesses to loan it to, and because money was so cheap, people took insane risks, and so on and so forth. And the dumb-ass credit bureaus said this was all okay and gave businesses that were levered 30:1 AAA credit ratings.

People will start loaning more money out after they start genuinely checking out the credit worthiness of the businesses that want the money.

In the meantime .... major pain and suffering.

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Red vs. Blue on the economic meltdown ...

Red vs. Blue

"Apparently buying houses we couldn't afford with money we didn't have from banks that weren't paying attention was a bad idea."

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Church Sign Generator

Church Sign Generator

Amazing technology!

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Palin hates America

www.VPILF.com:

"'My government is my worst enemy. I'm going to fight them with any means at hand.'

This was former revolutionary terrorist Bill Ayers back in his old Weather Underground days, right? Imagine what Sarah Palin is going to do with this incendiary quote as she tears into Barack Obama this week.

Only one problem. The quote is from Joe Vogler, the raging anti-American who founded the Alaska Independence Party. Inconveniently for Palin, that's the very same secessionist party that her husband, Todd, belonged to for seven years and that she sent a shout-out to as Alaska governor earlier this year. ('Keep up the good work,' Palin told AIP members. 'And God bless you.')"

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Lehman's Fuld: Where was our bailout?

WRAPUP 4-Lehman's Fuld: Where was our US bailout? | Deals | Regulatory News | Reuters:

"Richard Fuld, the disgraced head of Lehman Brothers (LEHMQ.PK: Quote, Profile, Research, Stock Buzz), said he would wonder 'until they put me in the ground' why the U.S. government did not rescue the 158-year-old Wall Street firm and claimed regulators knew the full scale of its condition far before its collapse."

Maybe he didn't pay off the right people?
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Sarah Palin Doodles - Featured Picture on BuzzFeed

Sarah Palin Doodles - Featured Picture on BuzzFeed

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Sarah Palin Beauty Pageant Fun Continues! It's Evening Gown Time!

Fresh Intelligence : Radar Online : Sarah Palin Beauty Pageant Fun Continues! It's Evening Gown Time!:

"What she fails to mention is that the minute she got into the Governor's office, SHE FIRED EVERY SINGLE ONE OF THOSE UNGRATEFUL MOSQUITOES. (Don't look so comfy, mountains. Your day will come.)"

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Popular Pictures

From Random Blts

Click to see the full graph.

My castle pictures are very popular. Krogroth Gameboy is creeping up and of course Japan at Night is always popular with the Facebook crowd who like to use it as a background.

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At least one person was against the bailout

A Curious Coalition Opposed Bailout Bill - NYTimes.com

"“The choice we faced was between pursuing an informed response or panic,” Mr. Shelby said. “Unfortunately, we chose panic and are now about to spend $700 billion on something we have not examined closely. Yes, in the end, we will have ‘done something.’ At the same time, however, we will have done nothing to determine whether it will accomplish anything at all.”

Mr. Shelby, in his speech, laid out a modern history of the American housing, mortgage and securitization markets, explaining how a bubble in home values was fueled by loose lending standards, exotic mortgage products and complex financial instruments, pushed by financial firms that were leveraged heavily to maximize profits.

And in many ways, he was already dishing out “I told you sos.”

“We did not get to where we are today by accident, it was a path we chose,” he said. “My warnings about the risk of basing credit decisions on well-intended social mandates rather than sound, fact-based underwriting were dismissed. My concerns about the inadequacy of the regulatory structure put in place in the financial modernization legislation went unacknowledged. My efforts to ensure that bank capital standards were designed to ensure safety and soundness, rather than industry concerns, were conducted largely alone.”"

Free money! Who can argue with that? Apparently a few do. God bless 'em.

And ... Shelby stuck to his principles.

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How do you stop hyperinflation?

Zimbabwe FAQ - why the hyperinflation? how do they fix it? | Cape Town news:

So what is the best strategy forward for Zimbabwe?

That’s the trillion dollar question. However, we do have Bolivia as an example. In 1985, they eliminated hyperinflation within a few months by enacting the following measures:

* they linked their currency to a stable foreign currency (in their case, the United States dollar)
* they froze government spending
* they stopped printing currency
* they lifted all price controls
* they deregulated their economy

This information might be important in the near future.
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Paulson fucked us

Too much leverage

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

And the rest, as they say, is history.

Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.

33 to 1 ! Holy crap.
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My Gal

SHOUTS & MURMURS: My Gal: Humor: The New Yorker

Explaining how she felt when John McCain offered her the Vice-Presidential spot, my Vice-Presidential candidate, Governor Sarah Palin, said something very profound: “I answered him ‘Yes’ because I have the confidence in that readiness and knowing that you can’t blink, you have to be wired in a way of being so committed to the mission, the mission that we’re on, reform of this country and victory in the war, you can’t blink. So I didn’t blink then even when asked to run as his running mate.”

Isn’t that so true? I know that many times, in my life, while living it, someone would come up and, because of I had good readiness, in terms of how I was wired, when they asked that—whatever they asked—I would just not blink, because, knowing that, if I did blink, or even wink, that is weakness, therefore you can’t, you just don’t. You could, but no—you aren’t.

That is just how I am.

The entire article is written in the style of Sarah Palin and it's quite funny.

In summary: Because my candidate, unlike your winking/blinking Vice-Presidential candidate, who, though, yes, he did run as the running mate when the one asking him to run did ask him to run, which that I admire, one thing he did not do, with his bare hands or otherwise, is, did he ever kill a moose? No, but ours did. And I would. Please bring a moose to me, over by me, and down that moose will go, and, if I had a kid, I would take a picture of me showing my kid that dead moose, going, like, Uh, sweetie, no, he is not resting, he is dead, due to I shot him, and now I am going to eat him, and so are you, oh yes you are, which is responsible, as God put this moose here for us to shoot and eat and take a photo of, although I did not, at that time, know why God did, but in years to come, God’s will was revealed, which is: Hey, that is a cool photo for hunters about to vote to see, plus what an honor for that moose, to be on the Internet.

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The incomprehensible Sarah Palin

Other Palinisms are not so tractable. From the Charlie Gibson interview:

I know that John McCain will do that and I, as his vice president, families we are blessed with that vote of the American people and are elected to serve and are sworn in on January 20, that will be our top priority is to defend the American people.

I didn't stop to marvel at the mad thrusting of that pet political watchword "families" into the text. I just rolled up my sleeves and attempted to bring order out of the chaos:

I had to give up. This sentence is not for diagramming lightweights. If there's anyone out there who can kick this sucker into line, I'd be delighted to hear from you. To me, it's not English—it's a collection of words strung together to elicit a reaction, floating ands and prepositional phrases ("with that vote of the American people") be damned. It requires not a diagram but a selection of push buttons.

From: http://www.slate.com/id/2201158/

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Paulson panics ... and we eat it

The Reckoning - As Credit Crisis Spiraled, Alarm Led to Action - Series - NYTimes.com:

"That Thursday evening, however, time was of the essence. In a hastily convened meeting in the conference room of the House speaker, Nancy Pelosi, the two men presented, in the starkest terms imaginable, the outline of the $700 billion plan to Congressional leaders. “If we don’t do this,” Mr. Bernanke said, according to several participants, “we may not have an economy on Monday.”"

And yet ... we did. This whole thing is a big con job. It's very annoying.
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They screwed us anyway with more to come

The World According to AmericanGoy: The bailout happened and you all missed it

*Sigh*. You give someone the power to print money and what do they do? Print money.

Duh.

(Thanks Braeden for the link.)
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Ron Paul: Buying bad debt is the wrong solution - CNN.com

Ron Paul: Buying bad debt is the wrong solution - CNN.com:

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Thomas L. Friedman is naive and silly

Op-Ed Columnist - Rescue the Rescue - Op-Ed - NYTimes.com:

"This is a credit crisis. It’s all about confidence."

Dude - confidence comes from reality. If these dumb-ass companies hadn't leveraged themselves 10 to 1 then there would be plenty of confidence to go around. You can't just tell people to be confident because that will somehow "fix" the credit crisis.

"Yes, Hank Paulson and Ben Bernanke need to accept strict oversights and the taxpayer must be guaranteed a share in the upside profits from all rescued banks. But other than that, give them the capital and the flexibility to put out this fire."

Sure. Just like the Congress gave Bush authority to invade Iraq on the assumption that power would be used wisely.

Sure.

Mr. New Age also says:

"We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy."

Maybe that asshole made the leak and he's making it bigger. Throw that fucker overboard.

We're going to be more connected when I have to pay another $5,000 on top of all the other debt my government is carrying to bail these fuckers out. We're going to be connected by my $5,000.00.


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The empty houses

Bailout ignores all the empty houses - The Red Tape Chronicles - MSNBC.com:

By every industry measure, foreclosure is a huge problem. Earlier this year, the financial services giant Credit Suisse estimated that there will be 6.5 million U.S. foreclosures during the next five years.

There's nothing to be done about the millions of empty homes except let the market lower the price. Then, just as the dark fibre laid during the Internet bubble has been brought to life and put to use, so too will these houses be acquired for reasonable prices.

All of this bailout crap isn't going to solve this problem. Sure, it might help some banks with their liquidity issue, but then again, it might not. Nobody can say without a proper accounting. Now with the most recent rule change that banks don't have to value their loans at market prices, it will be even harder to do any bookkeeping to figure out what the frick is going on.

To address that problem, David Colander, a professor of economics at Middlebury College, has another idea. He wants part of the $700 billion bailout to go directly to U.S. consumers in the form of housing vouchers. The vouchers could be used to pay off loans, or even better, to persuade some renters to jump into the homeownership market. Nothing greases the housing market quicker than turning renters into owners, he said, calling it a "trickle-up policy."

Free homes for everyone! Brilliant. Just fucking brilliant. Meanwhile I'm hit with a $5,000 bill for this $700 billion bailout so my neighbor can get a free home. Just great.


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Paulson is a Christian Scientist. Shit.

Hank Paulson's Secret Life - January 12, 2004:

"By choice, the Paulsons are not part of the high-society whirl of CEO-dom. 'We aren't very social,' says Paulson. 'We've never joined a country club.' In their free time they often head for exotic places like Belize and Brazil to see wildlife. Paulson's particular favorites are birds and animals of prey: 'I'm fascinated because they're at the top of the food chain.' If they're healthy, he adds, the ecosystem is healthy. When he handles creatures such as raptors, snakes, and spiders, he seems completely unfazed--and some connect that courage to Paulson's religion. 'Christian Science is a religion in which you emphasize love as opposed to fear,' he says, adding, 'I think fear in young kids is the biggest inhibitor to success.'"

Says the man peddling more fear than Osama bin Laden.

You know, since there isn't really a crisis, but our government is scaring us to death about another Great Depression, then when this bailout is passed, and the crisis fails to materialize, then Paulson et.al. will take credit for avoiding the crisis that never really existed.

It looks like a Win-Win for Paulson to me.

Did you know that H.R. Haldeman and John Ehrlichman, two of Nixon's main henchmen, were Christian Scientists?
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The Bail Out Stinks says John Dvorak

The Bail Out Stinks

Let regular folks buy up the depressed mortgages instead of the government, says John Dvorak, chief Cranky Geek.

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