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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© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.


© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

Church Sign Generator

Church Sign Generator

Amazing technology!

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

Palin hates America

From a 2008 article:

"'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.')"

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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?
© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

Sarah Palin Doodles - Featured Picture on BuzzFeed

Sarah Palin Doodles - Featured Picture on BuzzFeed

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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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© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

Popular Pictures

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.

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.
© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.
© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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/

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.
© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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

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

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.


© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.


© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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?
© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.

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.

© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.