1 Let us hammer this with the thousand hammers of Thor's descendents!

2 Heard it on XM on the way home from work.  Just e-mailed it to all my friends.

3 HELP!!!11

4

hey Ace.  does this economic mess count as one of the multiple twists and turns you predicted for this election?

I am still betting that Team McCain responds better than Team Obama....

....because Head Moron McCain with all his flailing should still womp Head Zombie Obama.

I mean, when I get nervous, I just remember good ol' HairPlugs.

5 Frank and Dodd needs to be dragged out of the Capitol building and [edited so as to prevent unwanted visits by various alphabet.gov agencies to my house].

6 And this is why I say let the fuckers sink. NO taxpayer money. They eat the loss and they suffer the repercussions from their shareholders.

7 Great summery Ace.
You forgot the name Jamie Gorelick.

8 so barack actually did do something while in senate...

9 I think a time line would be very helpful in explaining this to the Public. Start with the Community Reinvestment Act in the Carter administration and bring it up to the present. Even Bill O'Reilly could understand it, McCain too. But, I'm not sure it would help Michelle's kids.

10 >>Wall Street's contribution? They stupidly bought up derivatives based on these junk mortgages, thus putting themselves, and the entire financial system, at dire risk. My only quibble, Fannie and Freddie were guaranteeing these mortgages and cooking the books to make it appear as if all was well and the derivatives safe. Should they have been more dubious? Maybe. Probably. But their job was to make money for their shareholders and government in the form of the F & F's were guaranteeing them. The government is primarily at fault for this mess, and mostly Dems in the government. If the government caused this mess, isn't the government morally responsible for fixing it?

11 And finally the bubble bursts...

This is the other shoe dropping in the *awesome* Clinton Economy. (Remember when the MSM/Clinton cheerleaders called it the "New Economy" because it was so awesome and new and 21st century?) The first shoe to drop was the dot.com bubble burst, and finally the other shoe, the irrational-exuberated-driven inflated housing market, dropped.

12 7 Great summery Ace.
You forgot the name Jamie Gorelick.

Yeah she has Really screwed this country over good, Thanks BIMBO !!!

13 waaaah, waaaah - you're blaming the victims Ace. 

Funny how the all the stupid laws the Demos pass to help the poor actually end up hurting them in the end.  The law of unintended consequences bites us in the ass once again.

14 GarandFan,

A $30 trillion lesson that we all have to live through might or might not be worth watching them eat shit and die.

I hate to say it, as a Concerned Christian and all, because I agree with you, but a total meltdown is a dangerous thing.  I'd like to think my own M1A will carry me through, but I don't live in the most strategically secure of locations, topographically.

15 Yowsa! Investigators start search for fraud at Fannie Mae, Freddie Mac, Lehman Brothers and AIG, sources say. Run Obama Advisors Run ... http://tinyurl.com/3hza5

16 Hmmm. Tiny url did not work for me. Oh well, CNN and FOX are both reporting. Check their web sites.

17 Ohhhhh, look honey, our boy's a genius! He's rigged a pulley system so he can eat sausage and work on his stupid drawings

/badmovieref

18 Can the Obama bus accommodate all those people that Barry O is gonna toss under it?  Inquiring minds what to know!

19 Wall Street is a lot of things, but "gullible" isn't one of them. They knew exactly what they were doing. Maybe the party ended a little earlier than they expected, maybe a few got caught a couple payments short on the Porsche, but otherwise they went into this with eyes wide open. And it's really tough to give the Republicans a completely free pass seeing as they were in charge of the regulatory apparatus for nearly eight years. Probably the only one who comes out looking good is McCain. Maybe the old guy has some mavericky goodness in him after all. Didn't see that one coming.

20 "Democrats blocked it" That is something that people understand. The Republicans tried to fix it before it exploded, and the Democrats stopped them.

21 Was there a bubble? Of course!

Was there a bubble where a $150K home was going for $350?

Nuh uh. That may have been exaggerating to make a point, but it is quite the exaggeration.

More like a $350K mortgage was for a home now valued at $310K, or even $280K.

Still a loss, but the problem isn't so much the loss as the fact that the bank has a house which is illiquid and the banks need cash. Every month a bank is holding a property waiting to sell it is a month where all of the money represented in the value of the house is completely unavailable to the bank. It can't be used to make loans by the bank. It can't be used to make money for the bank.

If you take a whole lotta loans and have them be net 20% losses for the bank coupled with taking away the banks' ability to maneuver by turning all of their assets into non-liquid form, you have a problem.

22 Hey Bart- Who do you think was charged with enforcing this stuff at DOJ? Obama's good buddy and our governor. Here's an example of how the Clinton White House worked with banks to help them understand the benefits of lending to people who should never have had a mortgage. http://tiny.cc/89IG0

23
It was Barney Frank, Chris Dodd, ACORN, Franklin Raines, Penny Pritzker, Jim Johnson, and of course Barack Hussein Obama who actually built the bomb.

Yeah, good luck getting anyone to report on that...

24 Was there a bubble where a $150K home was going for $350?
Nuh uh. That may have been exaggerating to make a point, but it is quite the exaggeration.

You obviously haven't been to California lately. That type of bubble actually did exist, and it drove me out of the state.

25 Soooo..........What are the odds we get some nice Frogmarch action before the Election?

Gee that would be swell.

26 As long as we're naming names, these programs deserve a mention.

Basically, they take money from the seller to get around those inconvenient down payment requirements and then do the old switcheroo with another set of sellers and buyers.  Note: this would be illegal if you didn't basically launder your money through one of these programs.

The buyer pays the sellers down payment, gets the money back by asking slightly more for the property, the program gets around 10% for playing middleman and the bank just got an inflated loan and lost even its minimal assurance that the lendee has the financial ability to save money.

And, guess what, there is a list of these FHA approved programs right on their website!

27

McCain's foolish like a fox.  He needs PUMA votes to win this election, and, um, Goldman Sachs is on Wall Street, right?

And McCain does have a functional party who can hammer the hell out of democrats for him while he avoids pissing off all those Hillary voters who are currently planning on voting for him.

28 "The buyer pays the sellers down payment", my bad, I obviously switched the parties above.

29 Together we can, JackStraw.

Together we fucking can.

30 Libby Dole was on fire during her opening statement at the Paulson an Bernacke hearing today.  I've never thought much of her, but she stepped up today and drilled the Democrats.  Hope the video makes it YouTube.  Mel Martinez was good too.

31 Ah, someone pass the cyanide, please.

And, yes, the government underwrote the subprime market, which collapsed. Remember Enron? Yeah, well, DOMINO, bitches!

32 Nuh uh. That may have been exaggerating to make a point, but it is quite the exaggeration.

Nuh uh. My Southern California house, refi'd at the top of the market valued at over $700K (in order to buy my ex-wife out) is now worth about half that. While it might make "economic sense" to walk on my $580K loan, I can't, because a) a 2-year court fight with my ex to buy a house that had been in my family for 4 generations and b) no one held a gun to my head when I signed the papers... so I am morally obligated to pay this loan.

33 Wow.  I feel so bold.

34 But you express so italically.

35 Fannie and Freddie weren't always bad.  They were necessary in order to make a market to turn mortgages into bonds.  The problems, similar to the Fed, is that whatever regulations they do have are so ridiculously vague that they really are vehicles with unlimited borrowing/mortgage backing power.  However, they all still need facilitators, aka members of Congress.

36 This housing debacle also hurts people who played by the rules and got stuck with a property they can't sell. A friend of mine who makes decent money and is an honest hard working professional is stuck in her place because the value collapsed. She wants to move, but is facing a huge loss if she sells. She didn't get a subprime loan. But, she is getting screwed.

37

Ace,

you are wrong on a point.  Wall Street not only bought these loans they repackaged them and sold them to Pension funds, local government, forgien governments, money market funds, mutal funds etc.   FM and FM made the loans, true.  but it was Wall Street that made the market for these loans to be taken off the books of FM anf FM and fed into the entire economic system of not only the USA but also the World.  By Wall Street taking these loans off of FM and FM's books, they enabled the two companies to recapitalize and to increase the amount of loans they could make.  If not for Wall Street this problem would never have gotten this big and would never have impacted the entire world economy.

 

think of FM and FM as the virus and Wall Street as the delivery means for that virus.  What Wall Street did could be defined as an HIV infected person knowingly having sex with a non infected person.   

38 I should also have mentioned, if you read that legal settlement between the US government in the form of the Clinton administration and Northern Trust, they required that Northern Trust of Illinois funnel money to the Chicago Urban League for loans to the "under served" communities. The Chicago Urban League has a habit of giving political donations to candidates they support. Deval Patrick who argued this case for the government is the current governor of MA and a client of David Axelrod. In fact, Obama was accused of lifting parts of Patrick's speeches earlier this year. Any of this starting to sink in?

39

One sad part of this bad debt bailout is that the CRA will likely remain intact.

What politician is going to stand up to media/ democrat demagoguing about "stealing the American dream from the poorest among us"?

40 Come on...you know Barney Frank heard Freddie and Fannie in the same sentence and being the complete lisping moron he is he thought he heard Freddie's Fannie......
 so he thought it was just another party invitation............

41

Because he's [Barney Frank] fucking stupid. As are most Democrats. They have no idea how money is made or how services and goods are exchanged.

How true.  Memory has it that the only business Barney has ever had a hand in he denies knowing even existed - an escort business, or sorts, run out of his Georgetown flat by his roomie/mate.

 

 

42 Barney Fag isn't stupid.  He and others worked to destroy the financial system so that the government would have to intervene.  We are seeing the nationalization of the financial system.  Can healthcare be far behind?

43

Liddy Dole?  Mel Martinez?

naahhhhh ... LOL  that is awesome.  It's going to be hard for the MSM to call Liddy and Mel ultra-conservatives.  Did any of the repubs request subpoenas for under oath testimony from Dodd and Frank yet?  

/i know, i know

44 I think it was indecent that Dodd actually got to question others when he should have been questioned himself.............That guy needs a Frogmarching.

45 Finally!! this has been driving me crazy since the whole mess blew up. I wonder if it is too late to affect public opinion. As usual, the democrats were off the starting blocks immediately blaming Bush and the republicans for it. And as usual, the republicans have an incredibly delayed reaction that might be as good as nothing.  And the opinion polls reflect this quite well. When will we learn.
The democrats have this down to a science: As soon as it looks like they are going to be caught with their pants down, launch an all out assault accusing the republicans of walking around in their underwear. Unfortunately is has been working for a long time.  

46

dang it, I liked feeling bold.  back to timid chicken, I suppose

 

47 I wonder if the weeks events played a role earlier, in the Deem primary?

After all, Dodd really didn't seem to be trying all that hard to win the big prize, after actually doing the groundwork to actually get in the race...........One wonders if he knew the train was rolling, and the time is was coming into station.

48 Hit the easy targets hardest - I got married in 2000.  I had a house as did my wife.  We put my house up for sale.  Sat on the market for about 6 months, then finally got an offer.  Problem was the 1st time home buyer couldn't make down payment, but magically there was a way to get around it.  I jack up the price a bit, then pay the downpayment for them, then take a tax deduction for the program.  Presto, chango everybody errrrr... wins???

49 What Wall Street did could be defined as an HIV infected person knowingly having sex with a non infected person.  

More like a crackhead stealing from grandma, actually. The government imported some of that CIA-extra-good shit into the Manhattan ghettos and Keith and Kevin 'ooted the hell out of it on the backs of some dead hookers, and then, well, guess what?

Still, same thing. Market economy is between buyer and seller. Competition is good. Socialism is buyer through government through seller, which dicks everything up. Gooey, drippy corruption and white-hot greed without hard work, that's socialism. Capitalism is sweat. Hand me the loafa.

50 #42 Barney Fag isn't stupid.  He and others worked to destroy the financial system so that the government would have to intervene.  We are seeing the nationalization of the financial system.

Bingo! The govtards can't advance their pissant agenda unless everyone is too panicky to notice the arrival of the Socialist Express. Set 'em up and knock 'em down. Welcome to Venezuela, enjoy your stay.

51 I agree with unseen in regard to Wall Street.  There were lots of investors that sprung up that weren't Fnma and Fhlmc because Mortgage Backed Securities were everybody's darling for a while.  The weirdest part of it was that the subprime loans were the ones that were premium while the best loans weren't worth as much.  I think your average person can figure out that we were headed for disaster when we were relying on people with bad credit to pay their mortgages in order to finance people's pension funds.  The people who sold MBSs on Wall Street were super optimistic and believed their own BS.  I don't think you can let them off the hook so lightly.

52

Eh, I am a cold-hearted bastard that thinks we should let everyone sink or swim without the Fed's help. But that probably won't happen. 

In terms of my chatting with my friends as a McCain moron I think I will try something along these lines:

The Dem's (and Obama!) caused this by giving anyone easy money for houses which went bust over the last 15 years. Now Obama wants us to pay for it all (with higher taxes!).  McCain saw this crisis coming, and attempted to avert it (his 2005 blocked reforms!).   Another fine example of Mr. Community Organizer's performance.

 

 

53 Pretty fair assessment of Representative Frank's viewpoint on life, and too many on the left. Who cares who gets hurt, as long as they're rich? Who cares if the poor suffer the most in a bad economy, once they've managed to get everything in place - straight up flat out communism, in essence - the poor won't suffer any more. Small price to pay to achieve their goals.

54

Anybody know if Bill Clinton could be in any legal jeopardy for any of this?  It's the only reason I still worry that Hillary might step in if Biden develops "health problems" soon.

Or if the people who could face serious charges have some extra juicy info on Billary, etc.

Moronic question maybe?:  why don't the banks that are holding these crap mortgages just drop the price on the properties low enough to sell them quick?  I've seen tons of repos sit empty for a year now because the banks won't drop the price or accept reasonable offers.  The houses go to shit, the pools get nasty and stinky, the health department sends fines and nastygrams to the banks, but still they hold firm on the price.  I don't get it.

55 The democrats have this down to a science: A big part of this has to do with the MSM carrying their water for them.  This is why the nutjobs hate Fox so much.  When will we see this part of the story in the MSM? Never.

56 Don't worry, though, the polls show the public trusts Obama to "solve" the crisis.

57 The Media has smoked the Obama dope.

58 Rockhead, yep, that's exactly what I'm talking about.  It's actually illegal if you don't go through one of those programs.

A buddy of mine was doing low end rehabs for awhile and I'd help him out with some paperwork when he needed it in exchange for beer.

First time I came across one of these I said, "Dude, I'm pretty sure that's illegal."  Contacted the AG's office to see what they thought and was told, paraphrasing, off the record, "It's legal if FHA approves it."

59 > If the federal government were guaranteeing a trillion new dollars for no-money down car purchases with no credit checks or proof of employment or income, what do you think would happen to the price of cars? They'd triple. For a while. Very clear way to put it. Of course, it happens all over the place (subsidies increasing price). Fror example, look at the price of college tuition. It goes up and up. Look at what the govt. does. It keeps finding ways to subsidize the tuition. Loans, grants, tax breaks - all sorts of things to make colege more affordable. When I started writing this comment I was going to say that this is a strange bubble because it isn't going to burst. Then I realized how it couild pop When it becomes too hard to pay off those college loans! oh those poor collegians! LURED into predatory loans! (you can fill in the blanks.)

60 "why don't the banks that are holding these crap mortgages just drop the price on the properties low enough to sell them quick?"

Accounting, funky. If they dumped all of their properties, that would take those potential losses from potential to very, very, um, very real.

Plus if you liquidate, you suddenly depreciate everyone else's property (appraisals), too, so the losses actually increase. It's like a run on the bank, but with equity, not cash.

I'm sure there's other reasons too, some good, most bad, but those are the ones that come to mind first.

61 HA says Reid says McCain voting for bailout. Allah seems to buy it.

62 One of the Fannie Mae profiteers was Jamie Gorelick.  Could Jamie send Billary to prison? 

63

"Finally: Republicans Finger Democrats as Responsbile for Fannie/Freddie Meltdown"

Fingering is a good start, but what they need is a public buggering.

64 You guys realize that fat cat, face stuffing, bond traders told to play mortgage traders have been trolling the streets for 25 years in search of property with owners that were about to default, then push it over to the feds to party with Freddie and Fannie and wake up the next morning as a 60 cent on the dollar sale price for an asset that could be flipped in a day for 100 cents on the dollar.

OK.  So THEY only trolled the streets for a month until the interns started arriving, but still the story pretty much sticks from there.

I want to get the bad guys too, but I may have to start with the Benedict Arnold's with offices in my wing.

65

Rockhead, yep, that's exactly what I'm talking about.  It's actually illegal if you don't go through one of those programs.

A buddy of mine was doing low end rehabs for awhile and I'd help him out with some paperwork when he needed it in exchange for beer.

First time I came across one of these I said, "Dude, I'm pretty sure that's illegal."  Contacted the AG's office to see what they thought and was told, paraphrasing, off the record, "It's legal if FHA approves it."

and now, for my second one-phrase post of the night (ignoring this metacommentary, of course

 

PERVERSE. INCENTIVE.

66 community organizer = shakedown artist / slumlord?

67 It is stuff like this that helps common street thugs say, "Yeah, I'm a thief, but at least I admit it." Maybe the movie "They Live!" was not so far off the mark. Most people have no clue about any of this.

68 > #54 funky chicken said: > Moronic question maybe?: why don't the banks that are holding these crap mortgages just drop the price on the properties low enough to sell them quick? Drop the price of House #1, the value of neighboring houses #2, 3 and 4 also drop and now their mortgages are worth less than the value of the house. The 'ol death spiral. But I don't know why the banks aren't RENTING the houses. Keep 'em occupied - keep them viable. Hell, rent them to the people who lost the house by foreclosure. They save on moving expenses!

69 Ace, I know you hate praise, but you just hit it out of the park, dude. If there were any justice in the universe, this post would be required reading tomorrow morning in every high school and college in America.

In all sincerity, this is some of the best off-the-cuff economic writing I've seen. Next time I see you, remind me I owe you drinks.

70

Vercingetorix, yeah, I see that, but having crappy empty houses deteriorating lowers all the surrounding property values too.  It just seems like if they sold the repos it might be a short shock but then the market could get back to normal much more quickly?

Of course if you think the government will step in so you don't have to really take a loss anyway, you will just hold out as long as possible?

 

71 "Loans, grants, tax breaks - all sorts of things to make college more affordable."

Who said the Democrats weren't into Capitalism?  I'd love to increase the supply, but when I am increasing it, shouldn't the price be decreasing.

If I really wanted more kids to go to College I would just lower my standards of entry for students and teachers.  Or we could spend money trying to fix the system with a yield that makes me have to turn my universities into mcdonald's state.

72 Anybody up for storming the Bastille Rayburn Office Building?

73 Renting foreclosed houses would at least pay for the property taxes accrued by the banks............sounds like a solid plan.

74

59.

I was thinking exactly the same thing, Arthur.  I'm sure "Student Loan Amnesty" will be high on President Hopey Changey's agenda should he manage to get enough GOP votes DQ'd in Ohio and elsewhere.  Can't pay-back loans with bong resin, now can you?

75 Fannie Mae (FNM/NYSE), the nation's largest source of financing for home mortgages, today announced that its acquisition volume of specially-targeted Community Reinvestment Act (CRA) loans passed the $10 billion threshhold in the second quarter of 2001, reaching that milestone more than one and a half years ahead of schedule. "Our approach to our lenders is `CRA Your Way'," Gorelick said. "Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination; and we'll create customized CRA-targeted securities. This expanded approach has improved liquidity in the secondary market for CRA product, and has helped our lenders leverage even more CRA lending. Lenders now have the flexibility to use their own, customized loan products," Gorelick said. http://tiny.cc/c5RDj

76

Those seller financed downpayments come from a loophole in the FHA as it was set up by Congress (I guess?)  Any seasoned FHA Underwriter will tell you that someone sneaked a special deal for a friend into the FHA rules.  It is completely against the spirit of FHA and Underwriters hate it.  I think the first one was called the "Nehemiah Program" look up who thought of that and I bet it is a Democrat.

The current FHA kinda scares me.  That truly is a government agency and more and more loans are being written as FHA now.  Huge loans in CA with average credit and 97% equity - cash out up to 95%!  No one else would touch that.  Why are we using the FHA to bail out other bad investors?  I dont disagree with helping people stuck in bad loans, but cash out loans are a BIG part of this and we are still doing them.  For everyone who bought a house only to have it drop there are 3 who had equity and cashed it out and now owe too much.  Hard to feel that as sorry for them.

77

But I don't know why the banks aren't RENTING the houses. Keep 'em occupied - keep them viable. Hell, rent them to the people who lost the house by foreclosure. They save on moving expenses!

A little bit on a limb here, but:

i dunno about banks, but I know that in west central fla, a lot of those built-out subdivisions which were standing two-thirds empty are now being rented out by developers and/or slumlords.

to section 8.

in my line of work, I visit a lot of those houses. more specifically, their neighbors.

and of course, there's no homeowner's association to stop it.

so bob and jane sixpack who took their responsible loan and bought their responsible starter home now have the worst, hugest, most welfare-guzzling, horrible families possible as neighbors. look for the problem to get worse.

i'm actually surprised it hasn't hit the news.

78 That kind of story would be horribly racist jdub, cant have that.

79

It should be noted that "Republicans" do not include "McCain."

Just figured that out, huh, ace?

sorry. pissed off today. i know what you meant.

still, fuckim.

 

 

80 The housing bubble had an extra element. Many of the homes were new construction and hence added to the nations housing inventory. These homes in most cases were on the upper middle end especially out here in Commiefornia. Eventually lesser homes started piling up in the unsold category. This put pricing pressure on homes in the middle tier from the lower tier. When housing in the $350-$450000 range started to suffer foreclosures the lower tier prices dipped and left middle tier housing dangerously exposed. $450000 homes have sold for $250000. The market just collapsed around that new dollar level.

Excess supply results in dropping prices and that is exactly what has happened. No more mania. Just steel eyed reality.

The REAL problem is coming when the property tax bills start to shape up around the new lower average receipts. The counties/cities budgets have been built around the higher numbers and they are gonna suck air.

81

Wow, this post is the best summary I've read about this whole mess.  Great job, ace.

BTW, I hit the tip jar and Amazon says it has less than $6k.  And that's for a long time, like years.

Hint, hint.  Let's give the man his due.

82 Switch to renting? Now, would that be an example of irony? This whole thing supposedly started to decrease renting and increase ownership. Also, the rents would have to be below the mortgage payments That would decrease rental rates. Another collapse.

83 So THEY only trolled the streets for a month until the interns started arriving, but still the story pretty much sticks from there.

I'll see you that and raise you an ACORN. Listen, if you break the law, get punished, and those Wall Street-types, they should suffer, too. But the blame goes first to government, next to the accountants, next to the guys making money. If the government didn't encourage this malfeasance, what Wall Street did do would have been illegal. And so now we have a meltdown in which nearly every crime against common sense was probably quite legal. Not just legal, but subsidized and encouraged, even cheered.

84 Nehemiah Program - it was on the tip of my tongue, that's the one that was used in my case.

85 jdub, "Perverse incentive."

You're 100% correct.

86 > Was there a bubble where a $150K home was going for $350? Not too long ago (but at least a couple months ago), I heard this was becoming somewhat common in housing developments. (Disclaimer: I only heard this in one place and don't remember where, so treat it as highly anecdotal.) The idea was that people would come in looking for homes near the actual market value, and some would get bid up above it. Later, more people come in and comparative market analysis shows the prices that similar homes in the neighborhood are going for, and prices rise more, until over time it gets pretty crazy.

87

WASHINGTON —  Wall Street powerhouse Goldman Sachs has a long list of alumni who have gone onto government service, and it looks like it's about to give up one more of its protégés with the nomination of Chairman and CEO Henry M. Paulson Jr. to head the Treasury Department.

The move won't be uncommon for Goldman Sachs employees. At least among its financial competitors, Goldman Sachs appears to be head and shoulders above the rest when it comes to putting former employees into the halls of government. For years, résumés around Washington have sported the company name, and those with the job experience have gone on to positions as Cabinet officials, agency analysts, advisory board members and even U.S. lawmakers.

"I don't know of any other company in the United States who has quite this tradition. Certainly not on Wall Street," said Stephen Hess, a senior fellow at the Brookings Institution, a liberal-leaning Washington, D.C., think tank.

With the ease of an Internet search, it's easy to cobble together a list of Goldman Sachs current and former executives, partners and board members who have moved on to serve in the public sector. Most of the job posts involve economics, but some have broadened their professional portfolios by serving in an array of other government policy positions.

A the top of the list are names like New Jersey Gov. Jon Corzine, White House Chief of Staff Joshua Bolten and former Treasury Secretary Robert Rubin. Corzine was CEO of the brokerage before he won a Senate seat in 2000. Until taking up work with the Bush-Cheney campaign in 2000, Bolten was executive director for legal and government affairs at Goldman Sachs International in London. Rubin was co-chairman of Goldman Sachs until 1992, when he was confirmed for his Cabinet seat in the Clinton administration.

But company officials have filled in heavy-lifting posts in less visible areas, too.

The Goldman Sachs' alumni who have served in government include Deputy Secretary of State Robert Zoellick; former president and chairman of the Export-Import Bank of the United States Kenneth D. Brody; chairman of the President's Foreign Intelligence Advisory Board and former director of the National Economic Council Stephen Friedman; Reagan Deputy Secretary of State John C. Whitehead; and Reagan Assistant Secretary of State for Economic and Business Affairs Robert Hormats. Goldman Sachs' graduate James Johnson served as president and CEO of quasi-government housing lender Fannie Mae.

Part of the reason for such prominent roles might be due to a corporate culture that pushes it. A letter to the company's investors accompanying the 2005 annual report notes that "Goldman Sachs has a long tradition of public service. Many of our people have gone on to significant positions in government and the not-for-profit sector and their achievements are a source of pride for all of us."

http://www.foxnews.com/story/0,2933,197554,00.html

It just seems rather odd to me. 

88

 That kind of story would be horribly racist jdub, cant have that.

Trash is trash, no matter what color.

And i do sincerely feel for the people i visit who won't let their children out to play with the other neighborhood children.

These people didn't move into fucking cabrini green.

but it sure moved out to them.

the government's subsidizing them to live in 1400-2000 sq foot homes, free, so their fucking bestial horrible lord-of-the-flies children can roam the neighborhood otherwise occupied by people who raised themselves up and out, did everything right, started as baggers at Publix and worked up to managers, etc, so they could raise their kids without those influences.

someday i'll post my big section 8 expose. i have some expertise in the matter.

someday.

89

Is their any way to assure that Jamie Gorelick never holds any important post ever again?  If there is no legal way I am going to have to kidnap her and keep her in the basement for the good of the country.  Seriously, is there one person who has f'ed up more spectacularly than her?

90 Present.

91

susanita,

they were premium because they paid the highest interest.  the paid the highest interest because they were the most risky loans.  Yet the people bought into the myth that since all the loans where bundled the risk of default was nil.  Since they believed that if one or two loans went bad in the package the rest would cover them.  What really happened is by bundling the good with the bad, the bad posioned all the loans.  I guess they never read about the rotton apple fable?

 

92 The Ben Stein article today was scary

93 Of course if you think the government will step in so you don't have to really take a loss anyway, you will just hold out as long as possible?

And then there is that. Sigh. The obvious one which I missed.

94 If they find a guilty democrat, I'll be surprised.  Expect lots of republicans under the culture of corruption umbrella though. 

95 I wonder how many pension funds are actually worth dog spit.

96 By the way, any thoughts on how, if we do go into a full fledged meltdown, how much ground we're going to lose in the Long War? This was one of Obama's - sorry, Osama's - goals; drive us into a financial catastrophe a la the Soviet Union and pick up the pieces - or so Messr Anonymous, Mike Scheer, keeps telling us.

97

But I don't know why the banks aren't RENTING the houses. Keep 'em occupied - keep them viable. Hell, rent them to the people who lost the house by foreclosure. They save on moving expenses!

 

Because the banks don't know who owns the houses.  There are no deeds.  the MBS were so sliced and diced that tha banks can't find the deed that goes to each property.

see:

In a written opinion, Judge Christopher Boyko accused lenders of creating confusion about who holds the mortgages of houses in foreclosure so they can collect interest on default judgments while avoiding the cost of maintaining empty houses.....

....

The lenders, he said, rush to foreclose on delinquent buyers. But when taking back the properties, they delay recording the deeds, leaving cities to board up empty houses and mow lawns.

Boyko's harsh words, written in an opinion issued last month, were footnotes in his explanation for dismissing 14 foreclosure cases filed by Deutsche Bank National Trust Co., a trustee for pools of mortgage-backed securities.

The pools, some containing bad loans like the 14 from Deutsche Bank, are bought and sold electronically by Wall Street investment firms, leaving behind little or no paperwork showing who holds the notes.....

 

 

98 What's frying me right now is McCain bitching about Cox at the SEC (which has next to nothing to do with the crisis). So instead of trumpeting his efforts and those of other Republicans to rein in the 2 FMs, he's making himself look like a dolt.

Oh, and promoting Andrew Cuomo as the person to take over SEC (as if that mattered) is just making him look even dumber.

I know he's pissed at Cox, but using the financial crisis to pursue a personal vendetta will cost him the Presidency. And, sorry to say, maybe it should.

99 "This initiative builds on the best strengths of cities, lenders, Fannie Mae and Access Capital in an entirely new approach to directing much-needed investment capital to American cities," Raines said. "Access Capital will provide the funds that will purchase Community Reinvestment Act (CRA) loans made by lenders, and Fannie Mae will guarantee the loans. This should help both lenders and investors meet their CRA requirements, and help mayors serve the needs of their neighborhoods." http://tiny.cc/DBhGF Guarantee. Fannie Mae. The government. I'm still not getting why people think Wall Street is equally responsible for this mess. Fannie Mae guaranteed these loans. Fannie Mae is a quasi-government institution. Fannie Mae has been engaged in systematic cooking of the books for years, making it appear all was well. How should Wall Street have known this was all crooked when nobody, not even the overseers in DC, had a clue anything was amiss?

100

Are the Dems delaying for political gain?  The Washington Prowler thinks so.

 

http://www.spectator.org/dsp_article.asp?art_id=13927

101 http://http://news.yahoo.com/nphotos/Gov-Sarah-Palin-Ray-Abrams-New-York-Afghan-President-Hamid-Karzai-Sarah-Palin/ss/events/pl/082908govsarahpalin/s:/ap/20080923/ap_on_el_pr/palin_leaders/im:/080922/480/49cb9c46a63140c98e3527bf513a5ba6/#photoViewer=/080922/480/49cb9c46a63140c98e3527bf513a5ba6

102 damn it, take out the extra http://
trying to use the link thingy

103 Most of the underlying loans are still good, and being repaid.  This is a liquidity crisis, not an equity crisis.  Once we get through it, valuations will return to normal and the taxpayers short-term outlay will be repaid.

Cushioning the markets by buying up undervalued securities and later re-selling them (possibly at a profit) hurts no one.  In fact, if we buy them now for 50 cents on the dollar at distressed rates, and re-sell them later at 80 cents on the dollar based on their actual peforming status, the taxpayer actually makes a profit.

And if some of you are thinking that you are immune from this crisis, think again.  A banking/liquidity crisis will throw millions of people out of work who have nothing to do with either the underlying mortgages, or the business sectors most directly affected (banking, housing).

Like it or not, we are all in this together.  And I say this as someone who doesn't approve of the policies that got us into this mess, but is unwilling to sacrifice his own job on the altar of ideological purity. 

104

When I started writing this comment I was going to say that this is a strange bubble because it isn't going to burst. Then I realized how it couild pop When it becomes too hard to pay off those college loans!

Yeah, that's already happening. College keeps going up. Saw a story somewhere a ways back saying it'll cost upwards of 200K just to go to get a BA in the near future. Can you imagine the cost of medical school? What, a million bucks just to get your MD? That'll be added on top of the aforementioned 200K for the undergrad degree. What's more, if the Dems introduce socialized medicine, as they most likely will, doctors can forget about raking in the big bucks. What do you get when doctors start making much lower salaries coupled with sky high tuition? A helluva lot less doctors=even higher medical costs that will require even more confiscatory taxation to pay for it all.

105

JackStraw,

 

The lenders, he said, rush to foreclose on delinquent buyers. But when taking back the properties, they delay recording the deeds, leaving cities to board up empty houses and mow lawns.

Boyko's harsh words, written in an opinion issued last month, were footnotes in his explanation for dismissing 14 foreclosure cases filed by Deutsche Bank National Trust Co., a trustee for pools of mortgage-backed securities.

The pools, some containing bad loans like the 14 from Deutsche Bank, are bought and sold electronically by Wall Street investment firms, leaving behind little or no paperwork showing who holds the notes.

Boyko ruled that without written proof, Deutsche Bank has no right to foreclose. As part of the ruling, he complained that lenders display a condescending attitude that this is the way they always do business and that the court just doesn't understand the world of high finance.

"Finally put to the test, their weak legal arguments compel the court to stop them at the gate," he wrote.

Boyko's colleague, Judge Kathleen O'Malley of the U.S. District Court of Northern Ohio, threw out 32 foreclosure cases this week for the same reason.

In federal court, written proof of who holds the mortgage must be presented at the time the foreclosure is filed. In county common pleas courts, proof must be presented before a judgment is issued.

link

wall Street didn't even bother to get the deeds to the property that they were selling in the MBS.  there was no paperwork, no oversight, no min of fudicary responsibility.  Because of that the powers could not just weed out the 5% of bad loans.  Thus 1005 of the loans are considered bad because Wall Street packaged these loans that FM and FM made. 

106

JackStraw,

Because it wasn't just those loans.  There were tons of other loans too.  The jumbo loans, and stated income loans, subprime loans, and negative amortization loans did not all count towards CRA.  You have to be in certain areas with certain median income.  I would say, from my admittedly limited perspective, that the jumbo loans from wealthy areas like most of CA are causing a disproportionate share of the problems. They wouldn't have been CRA loans and I don't think FNMA dealt with those.  There were other investors and they sold MBSs too.

107 jp, go to tinyurl.com for long addresses like that.  It'll give you a shorter one address that goes to the same place.  Long addresses fuck with Ace's borders I guess.

By the way, when you're using this little interface here, highlight a word that makes sense for what you're talking about vis a vis the link (as in, Go here to read the rest), then hit the link button above the comment box.

108

The lenders, he said, rush to foreclose on delinquent buyers. But when taking back the properties, they delay recording the deeds, leaving cities to board up empty houses and mow lawns.

Bingo.  I'm in the middle of trying to hunt this down for a personal injury case.  There's a huge trail of paperwork and everyone is trying to shift blame to someone else.  We ended up suing 15 entities and are in the middle of a huge discovery fight to answer who the actual owner of the house was.  It's ridiculous. 

There's also a problem with tax liens.  If the deeds aren't recorded and the home goes into tax foreclosure, well, good luck getting that from the company.

109

jp sez,

LOL!! I haz commentz hand gr3naid! Wanna C pin? LOL!!1!!

*snicker*

Oh, but for lack of an edit option, there go I...

110

o/t - Obama's Pakistan connection

http://www.thenews.com.pk/daily_detail.asp?id=108690

111 alexthechick, just go to the register of deeds, they'll sort you right out.  You like microfiche and odd books filled with bad handwriting indexing other odd books filled with more odd handwriting, right?

112 unseen and susanita- Guys, I'm not saying Wall Street was pure. Anyone who has ever dealt with them knows they are far from it. But there is one thing and only one thing that caused the credit crisis we are now in, one that has caused defaults in other types of loans and securities, and that is the the subprime debacle which has as it's core CRA and the misguided, multi-culti crap of the Clinton White House. CRA and the wild lending it forced, and important point, it literally forced this new market, caused the housing bubble. It put the housing market into hyper speed and bursting of the bubble has caused defaults in all types of loans, including jumbos. I'm not saying there isn't blame to go around. Wall Street, house flippers and on and on. All these problems existed before CRA and would have existed without it but we never would have the kind of nightmare we now have. But the root of the problem was at the grassroots, the community activist level. Race and class based politics being inserted right into the middle of a free market system enforced with a government mandate and guaranteed by the government. Results were predictable.

113

testing link pasting

link

114

Bingo.  I'm in the middle of trying to hunt this down for a personal injury case.  There's a huge trail of paperwork and everyone is trying to shift blame to someone else.  We ended up suing 15 entities and are in the middle of a huge discovery fight to answer who the actual owner of the house was.  It's ridiculous. 

There's also a problem with tax liens.  If the deeds aren't recorded and the home goes into tax foreclosure, well, good luck getting that from the company.

What could go wrong, then, with introducing the federal government into the equation even further?

Why, I'm sure they're more scrupulous and efficient than private citizens!

What possible problems could there be in handing $700,000,000,000 to the government which provides such transparency and ease of use?

OK, I know noone's claiming it would be perfect... but i think some of the bailout proponents aren't thinking all the way through as to how bad it could be, either.

(not a shot at you, alexthechick... just making a point.)

115 This argument is bullshit.  How many poor people did you see on Flip This House?  How many poor people have 2nd and 3rd homes with 2 mortgages each?

Yeah, loaning money to people that can't pay it back is the root cause of this problem.  Thing is, it's all of us that are to blame, not the ACORN commies.

116 The Republican Party amounts to today's Whigs. Their candidate for president, John McCain, is trying to run away from his own party -- as one might shrink away from a colony of importuning lepers. I label the Republicans "the party that wrecked America," because I believe that is truly how the popular strain of history will regard them when (maybe if) the wreckage of their ministrations ever clears. Lets not forget the Keating 5. Charles Keating was a mentor of John McCain, donating vast sums of money to his senate campaigns.

117 Ace, please fix the formatting of this thread. Someone doens't know how to make a good link. Geesh.

118 Can we be entirely certain that Barney Frank, along with Andrew Sullivan, doesn't have the infliction of AIDS-induced dementia?

119

JackStraw,

No that was not the cause of the credit crisis.  If it was just a bubble in housing that could be worked thru with little problems. 

Look at the bubble in dot.com.  Yes people lost money the world moved on.  It was contained.  Yes FM and FM and government enabled the bubble to grow.  But it was Wall Street that carried that bubble into EVERY corner of our financial system. 

 Unlike the dot.com bubble that only impacted certain locals, and certain companies.  The MBS scam impacted EVERYTHING that dealt with money.  Short term commercial loans, pension plans, banks, money market accounts, savings accounts,  finacial houses, forgien capitals, union plans, local governments. 

  Wall Street spread it to everything and everyone.  And most in the last two years did so knowingly trying to keep the ship afloat.  They knew they were bad as early as last march.  Because it impacts everything the entire system is afraid of the posion coming into there companies and thus will not trade with anyone.  It was Wall Street that made an outbreak into a pandemic.

120

I read Newt's presser.

Let. It. Fail.

It's the only way this mess is going to be restructured into reality.

And, please, REPEAL THE COMMUNITY REINVESTMENT ACT.

This outrage is the source of this mess and should be repealed by the next Congress, and I don't care if they shut the damn gubmint down to do it. Just do it.

Next up: offshore drilling.

After that: voter ID (unrelated by I am sick of this fraud crap by Democrats every fucking year).

 

121

susanita

 

and don't forget about the subprime college loans, the zero % credit cards given to anyone and everyone.  the car loans to keep GM afloat. 

122 I agree government(democrats) started this mess but please how many mba's do we have in wall street that bought into these derivatives they should go to jail. Extremely poor management of money. I am a home buyer and refused to buy into inflated home prices I just couldn't do it, I could not pay 350000 for house worth 150000 I don't care if the bank was willing to give me the money it wasn't worth it. I waited and a finally got what I thought was worth the price. I just feel like there is something else, I mean you are telling the guy running AIG made this kind of risk, it just doesn't make sense. Everybody and their grandmother knew the housing market was about burst. How can you possible insure these high high risk mortgages. Was the government making them?

123 There, first money I ever gave a blogger...............Thats for rescuing the editorial staff of the NRO from a public lynching, plus all the cursing...........I love cursing.

124 I've got news for you.  Even if the houses are worth the same price paid for them it doesn't mean they are in the same condition.  The house next door to me has been on the market for 6 years.  Large house, brick, good condition, too closer to a main drag to appeal.  The owner was approached by the local high school officials asking him to rent the house to a black family whose son they wanted to play football.  He did.  Worst mistake of his life.  This family lived in the house for a year.  They were only supposed to live there 9 months.  They didn't pay the last three months rent.  They trashed the house to the tune of $20k.  Of course, the local high school officials did nothing. What could they do?

125

This argument is bullshit. 

Which one?

the one which you made just now where you overgeneralized from a freaking TV show, then took turn #3 into the non sequitir?

how, exactly, are we "all to blame?"

and i'm not sure anyone mentioned "poor vs speculator" until you did.

i call troll.

the name's totally not a giveaway or anything, either.

shouldn't you have added something about being a conservative christian?

126

Is their any way to assure that Jamie Gorelick never holds any important post ever again

 

Oh, you didn't hear?  She was put in charge of nuclear weapon deployment and security.

 

127

Off Topic: New HairPlug Gaffe Alert!  Punch

"He has never, never, never, never, never, never, never shared the values set that you share," Biden said. "He's an honorable, decent man, but John McCain truly believes, truly believes that you are corporate America's problem," he said to the trial lawyers. "And thank God you are."

Biden said that he's "done more than any other senator combined" for trial lawyers.  "

I love Joe.

128

[frantically ringing the moby bell]

 

129 The NYTs pays Rick Davis back.  New article about his ties. 

130 It be the White Whale?

131 Obama is wrong. There must not be any bailout of any sort. Wall Street must be abandoned to collapse. That has to be the plan. If Obama can't understand that, then his Harvard education didn't make him smart after all.

132 Here's what I don't understand.  Why is there the notion, expressed even by Ace in his post, that "Wall Street" was acting greedy?

As I understnad it, and I'm not saying I do, but Fannie and Freddie served as a tacit guarantee agency whereby banks could make mortgage loans they wouldn't otherwise intelligently make because FAnnie and Freddie stood ready to buy them from them.  Fannie and Freddie did so, in turn reselling them to Wall Street Investment banks (?) with the tacit understanding (?) that they'd guarantee the mortgages that went belly up.

If that's accurate, why wouldn't any human being jump into the position of a seller to freddie ala any mortgage agency bank or a buyer ala any investment bank?  How is they way anyone responded to Freddie and Fannie's guarantee anything less than the a rational profit seeking response?

Now I know that can't be right, because I understand that teh $700 blillion is to go to the buyers of peopel who bought Freddie stuff (is this correct?)  But weren't those losses already guaranteed anyway?  Is this $700 billion just something teh government was already obligated to pay anyway given the Freddie Fannie guarantees or does it someow represent and new obligation previuosly unguaranteed becasue we want to avert "finacial crisis" aka lack of loan funds from the mortgage holders who would go under.

Willing to look at any links that sort out where the above is wrong and what was previously obligated and what wasn't.

133 No one is claiming the GOP deserves a free pass on this, but indeed this is the disaster that Barney Frank made... frankly he knew this was going to happen, since Mccain and others told him, and he laughed that he didn't care.  This is his idea of wealth distribution. those poor folk who can't afford their McMansion are democrats.  The taxpayers paying these mortgages are going to be Republicans (more or less).

The GOP was soft and lazy in many respects, and didn't fight the dems, and even had plenty of bad guys in its midst with these big banks... but Barney Frank made this mess, and the GOP is guilty of, at worst, letting him get away with it.

134

Crap.

Blown.

Thread.

135

Hey! I can still post.

With short babbles.

Happy!

136 I Told you I would shoot but you didn't believe me..Why didn't you believe me.

137

my computer has a really wide screen?

138 unseen- I lived the dot com bubble and have the scars to prove it. I agree that one was primarily a creation of VC's, not so much Wall Street but not so different that it's worth splitting hairs. This one is fundamentally different. This one was created in DC. Houses went up in value because there was so much easy credit available. That was a direct result of policies from the Clinton White House and a corrupt Fannie/Freddie giving false security to the market. Even Greenspan was preaching this to Congress 4 years ago. The housing bubble started to pop a couple years ago when ARMs started resetting and really picked up speed over the last year or so. The ARMs got popular because they were the loan of choice in low income markets which the gov't forced banks to loan into. The tipping point came when it became apparent that Fannie and Freddie had been cooking the books for years and thats why we are here right now. I don't think the Street is blameless. They probably should have been more leery of this whole thing. And if any of them committed fraud I hope they get the book thrown at them. But they aren't paid to be leery beyond looking at the government regs and guarantees. They are paid to make money. We know the government delivered fraudulent products and guarantees to them. That's the root of the problem.

139 Seriously, who the hell is asleep at the switch and hasn't edited the post that stretched the screen?

140

Assuming we still have something more than a 3rd world country after this all shakes out, the silvery (not silver, but more like tin) lining is that hugely expensive programs such as Universal Health Care, as well as de facto taxes such as cap-and-trade, carbon taxes and the like are gonna be impossible to sell politically.

OTOH boobs like McCain will push amnesty for illegals, arguing that getting 20 million illegals formally on the tax rolls will hasten the day we can pay our way out of this mess.

IOW we'll be told that NOT supporting amnesty is unpatriotic, that we will actually be making taxpayer patriots out of lawbreakers.

 

 

 

 

 

141

How come Barney Frank is such a huge cocksucker?

 

Oh yeah.

142

URL Cleanup on comment by:

 jp at September 23, 2008 09:52 PM (jlauK)

(~#102) please.

143 Heres the question for all the AOSHQ crack legal squad........Potentially, what laws were broken in this whole mess, and who is it that can be blamed for it?
Because I'm up for some Frogmarching and burning at the stake, and if I don't get it I'm going to be seriously peeved.

144 AOSHQ needs a finance blogger.

Cover mark to market as an ill-intended liquidity trap when there aren't any buyers.  Talk about the structural problems.  Talk about self-dealing.  Talk about past credit crunches.  Mention how Wall Street can fucking kill Main Street when it melts down.  Most importantly, talk about how we can't pretend this shit won't effect all of us if we don't get a handle on it.  Capital flight, tight to non-existent business loans, etc.

Anyone?

Okay, JackStraw then, fucking GOP operative.  I just don't trust that guy, what, with his GOP operative stink all up on himself. /hermit off

145 Hey JackStraw, all that's really happening in the bailouts is that the government is bringing the Democrats' affordable housing program onto the books.

Of course, they took down some good companies in the process and caused massive economic stresses threatening the very foundation of our economy. But what's a little detail like that compared to giving the dream of home ownership to people who couldn't possibly pay for the homes but could be counted on to repeatedly pull the lever for the people that made it all possible.

And also, thanks for reminding me that Messiah v1.0, Beacon Hill Edition, was involved in this, too. Yet another reason to hate the SOB.

146

Ace is out panic buying

valu-rite vodka.

147 Liquor, ammunition and canned goods.

You never go wrong panic buying those things.

148

quote about Biden's new verbal lawyer gaffe

"We've got Jimmy Carter and his brother Billy

 together on the Democrat ticket!!"

149 lol htetf

150

Latest Spam Email From Gov't Official needing your money

Watch for this and similar pleas in your in-box:

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

 

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude. I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@ treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

151

Then the McCain-Palin Campaign needs to change their approach then.

This crisis was never a non-partisan issue nor was it caused by Wall Street greed.  Greed is a constant element. What changed was politician started changing the rules of the free market as it relates to mortgages and rewarded shameless risktaking.

As many already know, Bloomberg ran an essay yesterday entitled, "How the Democrats Created the Financial Crisis" and it nails it about as concisely as possible (smoking gun stuff).

The McCain campaign needs to produce a couple excellent ads explaining to the American people what went wrong and why America cannot afford any more ME FIRST, COUNTRY SECOND, featherbedding politicians.

This is very serious business and with $1Trillion on the line taxpayers cannot afford to have Chris Dodd, Barney Frank, Barack Obama, and Bumbling Joe in charge of protecting U.S. taxpayers.  They've had their chance AND THEY ABSOLUTELY BLEW IT!

ONCE AGAIN, OBAMA WAS DEAD WRONG on a major issue confronting this country - one that will cost us trillions with a "T".

McCain needs to produce some 30/60 second video spots and print ads for paid publication/ broadcast; and some much longer ones (2-5 minute videos) to run on free media outlets such as blogs and YouTube.

Obama and his cohorts could have resolved this quietly back in 2005, avoided the crisis, and not be facing accountability today.  They didn't!  Let's not now be squeamish about placing blame where it belongs.  This is not a non-partisan crisis.  In 2005, it was DEMOCRATS that stonewalled John McCain’s reform bill in committee and let's not let anybody be confused about that REALITY.

 

152 Someone cal the WHAAAAAAABULANCE !!

http://tinyurl.com/4vxm6a

153 your urgent assistance is required! dear american: i cordially correspond today to request you to support an urgent secret business relationship with a transfer of funds of great magnitude. i am ministry of the treasury of the republic of america. my country has had crisis that has caused the need for urgently large transfer of funds of 800 billion usd. if you would assist me in this transfer, it would be most profitable to you. i am working with mr. phil gramm, lobbyist for ubs, who (god willing) will be my replacement as ministry of the treasury in january. as a former u.s. congressional leader and the architect of the palin / mccain financial doctrine, you may know him as the leader of the american banking deregulation movement in the 1990s. as such, you can be assured that this transaction is 100% safe. this is a matter of great urgency. we need a blank check. we need the funds as quickly as possible. we cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. my family lawyer advised me that i should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred. for this inconvenience you will be rewarded with grand fees of 1/1,000,000th of 1% of possible profits due to off shore laundering of skim funds due to reprinting of said funds. please reply with mother's maiden name, routing and account numbers of all of your bank account, ira and college fund accounts and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. after i receive that information, i will respond with detailed information about safeguards that will be used to protect the funds. yours faithfully, minister of treasury paulson

154

In this time of economic Armageddon I think we should remember that this isn't the first time he United States faced the prospect of a collapsing economy. For instance, one of the greatest money crisis in American history was the Panic of 1873.

The New York Stock Exchange was closed for 10 days. 89 of the country's 364 railroads went bankrupt. About 18,000 businesses failed over two years and by 1876 unemployment reached about 14%.This started the Long Depression lasting 23 years, twice as long as the Great Depression.

The Republicans in Congress was blamed and Democrats assumed the majority in 1875. This severely hampered Post-Civil War Reconstruction policies and blacks got royally screwed by the Democrats, a common theme for the past couple centuries.

But how many people are even aware this happened? Apparently the United States did not end and everything eventually corrected itself and all was forgotten. Maybe the same thing will happen in this event. It may seem like a big deal to us right now, but in the long run it may become just another minor entry in Wikipedia.

155 One thing I've been wondering about is if there is a chance that this whole mess isn't just an example of stupidity, corruption and greed, but an actual electoral ploy by the Dems that they lost control of.

Because nothing would generally suit the Donks more than a collapsing economy, a month and a half before a Presidential election.

156 Well said...

Republicans are showing some fine guts.

They began with drill, drill, drill, led by the fine President Bush, and won that issue.

Now, they turn to the legendary FAT COW of the Democrat Party, Fanny and FREDDIE.

Schumer, Dodd, Barney, Clinton, etc., should be thrown out now, as they again enabled a massive mess.

But McCain showed a bizarre folly last week, irresponsibly calling for the fine SEC COX firing?

Even declaring his preference for the failed ANDREW CUOMO?

Oh my...

McCain is so lost, and should NOT be the GOP Nominee.

157 Hit the easy targets hardest at September 23, 2008 10:45 PM (8/0ME)

Ok, I'm no expert, but I do invest.  This afternoon Buffett took a 5 billion stake in Goldman Sachs with another option for 5 billion more.  The afterhour trading in the market was very bullish.  Tomorrow, I will start buying as though the bailout deal is done, because I believe that is why Buffett bought.

158

JackStraw

I agree that the FM and FM and gov were at the root of the bubble.  however they were not the cause of the credit crisis.  That was Wall Street.  And Wall street also has a fudicary responsibility to manage their clients money in a safe and responsible way.  Wall street PAID standard and poors and moody's to rate these bonds as AAA.  Investors bought these loans from Wall Street thinking they were AAA the safest of investments.  Pension funds, State gov, local gov were all told that these bonds were AAA.  Wall Street hosted parties to sell these loans that they paid to have rated AAA.    I understand the relfex to defend Wall street but they were just as much to blame if not more for this mess.  

they had a responsiblity to stear their customers into safe investments if that is what their customers wanted.  It would be like selling a car that has been in a flood to a customers as a brand new car.  It was shamful what Wall Street did.  Add in what the insurers did by taking the premuins for these loans thinking that they would never have to pay on them and not keeping enough capital on hand to pay on the claims.  The insurence industry should be on the hook for these loans but they blew the money they should have been saving.  the underfunded their capital.  so when the loans went bad the insurance that people thought they had they didn't.  It would be like you paying on a life insurance policy for years, dying and your family not getting a penny.  

that is where the oversight comes in Insurers are reg by the state, rating agencies are regulated by you knows what, investment banks are regulated by the SEC (COX) and the commercial banks are regulated by the FED.  4 different regulator agenices and no one knew what the other was doing or the problems in each.

 

159 Andy- >>And also, thanks for reminding me that Messiah v1.0, Beacon Hill Edition, was involved in this, too. Yet another reason to hate the SOB. Depressing, ain't it.

160

Mike, you're the dumbest SOB in this thread so far.

You DO know that the Keating 5 was four Democrats with McCain thrown in so it would at least have one republican to look at, right?

And in the end, McCain walked out without a speck of mud on him, after he was told that he had used bad judgement. That's a whole lot better than what happened to three of the remaining three Democrats. So next time, why don't you tell the whole story??

 

161 Aaron, I was joking about the panic of 1907 on an earlier thread so I'm going to respond to you rather than pretending to have an actual reason for posting.

Long story short, there is a palliative outcome to most crashes.  To the degree that the palliative can be separated from the not so useful decade long breadlines, we might try and not have terrible doom visited upon our own heads regardless of what the grandkids might think later on.

Long story short, the black death made us all resistant to most rat born diseases.  I'm kinda hoping we'll stick with the vaccinations though.

162

Hayao

 

I agree buffet would not have bought if he didn't know something was up.  Very bullish sign.  But then again he got one hell of a deal.  GS was 230 two months ago he is picking it up for 115.  50% off.  plus he gets 10% inerest on that 5 billion for life.

163

Ray Midge,

So, you think it is ok for highly educated Wall Street people to put your pension fund into MBSs that they know are shaky but do it anyway because of the possibility of a government buyout? if they did that, isn't that the definition of greedy?

164 Ace: "It was Barney Frank, Chris Dodd, ACORN, Franklin Raines, Penny Pritzker, Jim Johnson, and of course Barack Hussein Obama who actually built the bomb." Tell y'all what: Ace, if it makes you feel and the Tools feel better to make believe that 20 of 28 years of Relobbicans in the White House and 12 of the last 14 of Relobbican majorities in both chambers of Congress make it all the fault of the Dems, then who am I to point out that you can't even lie straight in bed. Wheeeeeeeeeeeeeee!

165 fix the tags! I need a widescreen monitor to read the various ramblings and natterings

166 unseen- We're gonna have to agree to disagree. It will all come out in the wash. Frankly, I'm too depressed at being called a GOP operative and a McCain supporter to care about living.

167 unseen

And we all could have had GS at 90 if we had the nerve last week.  What makes this a bit more bullish for me is that Buffett had dumped his financials  two weeks ago and sat out the collapse in the first of the week.  Now he's getting back in.

168

I'm a Palin operative myself.  but to each his own. 

169

hey Diderot's dogshit

Save us time. What was the last fucked up thing the Dems were responsible for? We can put it in the Ace Of Spades Stylebook and Liquor Cabinet© for quick reference, and then we won't need your dumb ass anymore.

Do a brother a solid.

170

i, on the other hand, as a deeply conc...

aw hell, nevermind.

171   This is classic Marxist liberalism. For any problem, they demand government intervention. Once granted, the new regulation makes everything worse, as it always does, so they demand... more intervention.
  It was poverty in the 60's,  health care in the 70's, energy in the 80's, now the mortgage business. And, you may have noticed, those are all still the big issues today,with the Democrats in each case calling for still more government intervention. They never get enough regulations to actually fix anything, do they!
   The regulations congress wrote are directly responsible for this mess, yet when they scream "This is due to DE regulation!" half the country agrees.

 I blame the Chinese canned goods from the dollar store. They must have lead in them.  

172 Oh, and meanwhile 5 separate polls have shown 3 in five Americans blame Relobbicans for putting the country into the economic crapper, one blames the oil sheikhs in Saudi and Canuckistan, and one is hiding under his bed praying that Ace is right and McCain's only lying to avoid being tortured by Black's lobbyists for being so easy to catch lying.

173 JackStraw, totally kidding about the GOP operative thing.  You're talking sense as far as I'm concerned.  Hermit Dave was acting a bit squirrelly before so I thought I'd bust his balls a little.

174

Hayao

been in cash for awhile now myself.  buying once in a while for a quick day trade.  I'm up about 25% in my IRa for the year, about 6% in my 401k and up around 42% in my individual stock account.  I still won't go all in because I don't think the gov will agree on this.  They would rather see the entire Americian economy go into the toliet that lose an election.  I blame the dems mostly but their ar esome Reps that are so hard headed that they can't see what it will cost in terms of anyhting bu theit fundemental beliefs.   So in cash I sit.  Was going to buy some gold and oil but they went up to far to fast.  looking at maybe buying some financials tommorrow if they don't open up to high for a quick day trade.   The longer this circus goes on in capital hill the more I want to short retailers.

 

175 So to sum it up this is caused by affirmative action run amok!  Not enough poor people own a home so let's give them a loan and see what happens and the local politician gets to play the race card and say hey, I'm looking out for my peeps by giving them access and forcing loans from banks that didn't want to and in the end the idiot middle class who follows the rules foots the bill.  Sweet!  Great plan.  Fucking politicians.

176 Oh, and Ace: Are you gonna let the Tools know that the biggest winner in the Fannie Freddie giveaway was McCain's campaign manager, Rick Davis, who until this month was making $15K a month off a $2M "thanks" bonus to his lobby firm to keep McCain from going after the Fannie Freddie Piggie Bank? - - [In fairness, a good portion of the $2M signing bonus may have been spent recently on the 20 truckloads of industrial strength lipstick to pretty up the Piggie Bank and Sarah's homestate issues. None for Sarah, of course.]

177 So, you think it is ok for highly educated Wall Street people to put your pension fund into MBSs that they know are shaky but do it anyway because of the possibility of a government buyout?

Well it depends and that's my question.  If there was some governmental guarantee that they would be paid back then there's nothing malevolent about it. 

Say there are two banks.  One offers a savings account with 2% interest, one with 10%.  Because I know the FDIC will cover my $100K, wouldn't if be foolish not to put my money into the 10% because I was worried that with that rate they'll soon go insolvent?  That's the whole point of the governmental guarantee.  I don't have to worry.   Am I being "greedy"?  Um, yes, but that sort of greed is endemic to human nature and capitalism.  If there was an explicit promise to back those up then I say do it.  The USA stands behind its obligations.  It sucks, but thats, that. 

But what was the guarantee that was made to the buyers of mortgages by Freddie?  Was there no guarantee and now we are just worried about the consequences of "banking" system failure so no one will be able to borrow money and the economy tanks?  (My inclination is to sill say, bite the bullet.  That's capitalism, but I understand the arguments against).

Was there a guarantee?  Wasn't there?  Was it only a sort-of guarantee?  Do even have the outlines of the issue correct?  Was anyone a "greedy bad guy" here?

178 Oh Ace, just to spare you the trouble I'll just pass on that the Rick Davis as conduit for the Fannie-Freddie $2m "incentive" has beejn on page one of the New York Times most of the day, along with a reminder that McCain lied his friggin head off about it not three days ago.

179 unseen

You and I are doing the same thing. I've been in cash all year and playing the volatility.  Not going all in until the housing market rebounds, but I will test the market for a fall rally.  I hate Buffett and his liberal take on many things, but his moves do swing the market and for him to make this move gives me some confidence.  Besides, I figure this whole bailout thing is really a Goldman bailout.

180 Well, that didn't take long. http://michellemalkin.com/2008/09/23/kill-the-bailout-phones-ringing-off-the-hook/ > student loans, car debt added to proposal

181 hit the easy targets- Wasn't trying to ping you. I was just kidding.

182

Mr. Easy Targets:

It's cool ... everyone is entitled to their own opinions.  Me, I'll just kick back now, let the bailout happen (it's gonna no matter what anyway, one way or another), and trade this disaster from the short side in 2009 and beyond.  My short-side profits from the last year are more than enough to fund that and make sure that no matter what happens me and mine will be fine.

I'll be happy to  revisit this in three years or so...believe me, I have screencaps ... if I'm wrong, and this bailout doesn't exacerbate the problem, I'll be  happy to eat all the crow you like.

See you back in the econ threads, if ace has the balls to post any, in 2011 or so.  At that point, should McCain win, I believe the GOP will be the most reviled party  in the history of this country, due to the depression we'll be sunk in.  Will that be fair?  Of course not, as the Dems did largely create this mess. 

But hey, keep looking at the next three steps ahead rather than looking up and seeing the huge train coming down the tracks at you, it's all good to me.

183 What's not being talked about in this whole mess is that the first thing Congress has to do is raise the debt ceiling to accommodate  the 700 billion.  My question is, can anyone ever recall the debt limit being retracted?

184

Planet Moron @#19: Wall Street is a lot of things, but "gullible" isn't one of them. They knew exactly what they were doing. Maybe the party ended a little earlier than they expected, maybe a few got caught a couple payments short on the Porsche, but otherwise they went into this with eyes wide open.

Horseshit.  Wall Street has as many zeitgeist-chasers and shit-brained arrogant assholes as any group of average morons.  If you don't believe me, take a look at a one-year chart of CROX.  I guarantee some schmuck bought it at $75 and still owns it at $4.

I won't deny that maybe a ton of smart investors rode it up and sold before the fall, a couple of whom maybe intentionally manipulated it higher and then left a bunch of dummies holding the bag, but "Wall Street" didn't conspire in this mess.  If you haven't noticed, more than half the people who make up "Wall Street" are now unemployed or working for someone else than they were ten days ago.

 

jp (THE THREAD-BREAKER) @#92: The Ben Stein article today was scary

Link?  And try embedding it this time, jackass.  It's. Not. That. Fucking. Hard.

185 Diderot's dog, I'll see you Rick Davis and raise you James Johnson. (Google it!)

But, then again, you're a moron. FOAD.

186

Hayao

Good luck.  My best investment over the last year has been canned goods.  Almost a 30% return compared to today's prices.    I really worry that the dollar will be useless if this bailout doesn't pass.  that is my biggest worry that and the short term commercial paper not trading.  I could really care less if GS, MS, citibank go away or not but it is the ramifications to main street that has me worried.   I think people just hate Wall Street too much and forget what ties Wall Street to main street. 

 

the really sad part of this is that the gov could have solved this problem last year for one hell of lot less than $700b if not for the people that were shouting moral hazard.

187

uh, hayao, hermit dave, jackstraw,

all you guys with all this money in the market...

can i have some, please?

figured as long as the rest of the country was asking, yknow... couldn't hurt.

188 Hayao, so many people have gotten fucked by trying to emulate the Oracle.

If you're into him, don't follow him, just look for undervalued stocks with good management teams and good cash flows.

His secret is to pretend every stock is a dividend payer and invest in the good ones.  If continued growth follows, great, if not, you're not holding a dog.

Hard to match his results if you can't buy entire companies on your own terms, but still, not that bad a way to wade through the small caps.

189 Hit the easy targets hardest

Thanks for the advice.  I hate that bastard as much as I hate Soros and I don't buy the stocks he buys because they are already overpriced by the time the news hits.  However, watching what he does will give you an indication of which sector is about to heat up.  In the meantime, I do buy when everyone is afraid and sell when everyone is happy.

190 Hayao.  Brought to you with the assistance of the pinko-commies at Google.

History of the Debt Ceiling.

Damn, was that a rhetorical question?

191 Hermit D, hey, we're both short all over, I'm guessing.  One of your comments made me think you were thinking about overnight exchanges.  I'm not giving you the stink eye in the pit.

JackStraw is talking wonkity wonk though.  As in, let's pretend you ran all this shit, what would you do?

192 rockhead

thanks for the link and yes it was

193 seen- Thanks for asking. No. But follow this advice. >>just look for undervalued stocks with good management teams and good cash flows. No charge.

194

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.  We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."
--Adam Smith, "The Wealth of Nations"

'Nuff said.

195

Mr. Easy Tarkets --

I'm not gonna revisit the Jack Straw thingy ... I said what I had to say in the other post, and it's done.  I'm not reading his posts anymore, as I consider it a waste of my time,so I have no idea what he's said in this thread.

And actually, I have exactly zero position right now (yeah yeah, everyone has a position even if it's cash under the mattress, but you  know what I mean).  It's  just way too political and the short term volatility could easily put a dent in me when I'd rather save my ammo for where I trade well.

If I ran this shit?  What, you want a fucking novel in AoS comments?  Short story ... continued massive  liquidity, slowly let companies go bankrupt, eat a medium-to-severe recession as house prices adust back to fundamentals (they're gonna anyway, just depends on when), and try like hell to avoid a panic and depression, without just kicking the can down the road.

I doubt I can put it any better than that without getting really arcane or writing a novel.

196 all that's really happening in the bailouts is that the government is bringing the Democrats' affordable housing program onto the books.

Thread winner

197 I should note I agree completely with the overwhelming majority of Tools posting on this - that Congress should tell Paulsen & Bernake to go pull Bush out from under the bed in the Lincoln bedroom & inform him Congress has arrived at a bipartisan "sense" that for the good of us all he should shove his Bush Bailout up his rectal canal. - - This is NOT uniform crisis- as some folks have noted here, its playing out differently depending on which state you're in and the economic mix of your home state. There are a number of states Paulsen & his buddies in the mercantile banking biz gave up on years ago, like South Carolina, West Virginia, Michigan, Ohio, and of course every state east along the Gold Coast highway between Texas and Georgia [not Delaware; but Joe and the boys should be fine]. Intrastate banking in over 80% of the states is mostly through post-Keating 5 S&Ls and regional "true" banks. The folks that are really sweating are in the large employee pools of large nationally financed mega businesses, especially those with an ongoing need to recapitalize equipment and vehicle fleets [airlines being the extreme case]. Just about everyone within 3 counties of me is directly or close to it employed in a federal government agency or contract support business, or one of the colleges. The two biggest plants have been bulltits up since before this year started, but bothof them were pretty much state-guaranteed [or so we been told to believe anyway] The question here is which gives out first: the needs of the American fightin man for the tools to get the job done or the tastes of the politicians in Washington, and either way that old money printin machine won't be quittin soon. Some of the bigger federal contractors are feeding the local papers editorial content, which we can tell because we're not used to more than one a day and now we get 3 or 4, with different spelling than folks here are used to for some words. But even the folks working them figure if it comes to it they can get a job with FEMA, where there's lots of openings.

198

I've been really bad at predicting what stories will make an impact this election cycle, but I don't see how the Republicans are going to shine the light on Democrats with this. 

Most voters have no idea what's going on, they just know that the economy is suffering and Bush is President. 

199 If I ran this shit?  What, you want a fucking novel in AoS comments?  Short story ... continued massive  liquidity, slowly let companies go bankrupt, eat a medium-to-severe recession as house prices adust back to fundamentals (they're gonna anyway, just depends on when), and try like hell to avoid a panic and depression, without just kicking the can down the road.


I'm with you brother.  Let the market cull the weakness and we'll be much better off in 5 years.

200 Oh come on, I know this is an experiment in credulity for you, but do you really think the morons will buy the idea that bad loans for ghetto real estate led to a world-wide credit crisis?

201 It's hard to type with one cock in your mouth and one in your ass, but I shall endeavor to persevere.

202 If the ghetto/trash was living down the street they would.  Now that house sits empty.  In and out in 9 months...

203 In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. ... Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. -- NYT September 30, 1999

204

Someone call 911 - Diderot's Dog just overdosed!

205 Someone call 911 - Diderot's Dog just overdosed!


Seriously.  That was some weird shit.

206 Tulips in the Netherlands centuries ago; Tech stocks a decade ago; Santayana was right.

207 For all of you saying let them fail, I have one small nit to pic...

The problem with the markets isn't equity it is liquidity.  No one trusts anyone in the financial sector to loan each other money.  If some deal doesn't go down, your employer won't have the $$ to pay your payroll on the 30th.  Most companies don't keep cash in... cash.... they borrow on a LOC to make payroll and count on float to cover it.  The LOC will be dropped to -0- and then the cash flows are screwed. 

Think of it this way... I make all of my purchases on my credit card and pay it off each month.  My paycheck covers that plus my other bills.  But on Friday my card is declined (the bank has canceled all credit transactions for everyone) and I am forced to pay for stuff in cash til my next paycheck, including the total of the credit card from the prior month that has now come due plus whatever is on the card this month before the bank acted.  So my cash flow takes a big hit because I am no longer allowed to put anything on the card like I'm used to doing.  I have two choices: make no additional purchases and only pay my bills, (how am I gonna eat, drive, etc) or eat and not pay my bills.  I'm fucked either way....

Once you fuck with cash flows, the corporate layoffs will start a contagion like you've never seen.  Not to mention their ability to purchase goods for sale, manufacture, etc.  Whole ball of wax melts....

That in a nutshell is the problem. 

208 >>just look for undervalued stocks with good management teams and good cash flows.

Easier said than done. Especially over time.

Best thing I ever did was admit to myself that I couldn't pick direction on a stock to save my life. I started trading options after that, and I doubt I'll ever trade an individual equity again, unless it's part of an option strategy like a collar.

I've been doing pretty well in this environment, even through the recent white-knuckle ups and downs, but I was getting a little queasy last week when the SEC issued their anti-short selling edict. It fucked with the option market makers' ability to hedge their positions in the affected stocks for a few days until the SEC came to their senses* and decided not to wipe out the options industry on a whim.

Volatility is high and bid/ask spreads are wide right now. Both make it a lot harder to make money on the strategies I trade, so, except for one little-bitty one that's up about 20% right now, I am in cash just waiting for this storm to pass.


_{* Partially, anyway. They could have just put the damned uptick rule back in place instead of going all star chamber and deciding who could and couldn't be shorted.}

209 I see that.  Think of this, though.  If nothing changes, then we will continue to be a credit society and the economy will always be held hostage by that.  There has to be a reset sometime, now or in the near future.  Its one thing for companies to work off of commercial paper due to the amounts they are dealing with.  Its another thing for the consumers to live on credit and it will never change if there is no pain.  The economy is unsustainable as it is.  No amount of money is going to change the inevitable collapse.

210 I hereby guess that Andy once wrote at a blog with an atheist slant and sent me an email because I wrote a retarded blog that occasionally revealed I was a trader using software he was involved with.

What was the name of that software Andy?  My intern could work with it but I just said things like, "Look at all the pretty charts."

The option talk was the tip off.

211 Hit the easy targets hardest

I tried that software once.  I woke up with the dog licking my face.  Mesmerizing....

212 >>The problem with the markets isn't equity it is liquidity. No one trusts anyone in the financial sector to loan each other money. If some deal doesn't go down, your employer won't have the $$ to pay your payroll on the 30th. Most companies don't keep cash in... cash.... they borrow on a LOC to make payroll and count on float to cover it. The LOC will be dropped to -0- and then the cash flows are screwed. Thank you. >>Once you fuck with cash flows, the corporate layoffs will start a contagion like you've never seen. Not to mention their ability to purchase goods for sale, manufacture, etc. Whole ball of wax melts.... >>That in a nutshell is the problem. Yep. Which is why those of us who have been saying for as long as others who have been stalking us in the comments section, arguments about socialism are secondary to the indisputable fact that without government intervention at this point we will be in for a depression not rivaled since the beginning of last century. Everything else is just talk. >>Easier said than done. Especially over time. I never said it was easy. I said it was the best way to make money in the market. To quote Tom Hanks: It's supposed to be hard. If it wasn't hard, everyone would do it. Its the hard that makes it great.

213 Okay, I remembered it, the World Wide Rant.

214 Ummm ... no.

215

Every time Barney Frank opens his mouth, I  close my eyes. It's nauseating
to think about where that mouth has been. I feel the same way when some-
one offers me a cigar. Thanks to the Democrats I brush three times a day
and haven't smoked since Monica was knee-high to a grasshopper.

 

216 Credit should be lessened, but only over time... otherwise meltdown.  And commercial paper is a good thing.  If the meltdown comes, the first to be hit are the corporations, not the overextended consumers.  Then when it does hit the consumers, the corps have no sales... bad mojo for keeping the wheels turning.

Liquidity is the grease of the economy, not the sludge.

217 Ehhh, sorry Andy, I guess I'm just looking for people who will talk shit about beta decay with me again.

Beta decay.  Good times.

218 There will either be a reset...meltdown...in the economy or we will soon have a European style socialist economy.  Every time the governments bails out private enterprise, we get closer to it.

219
 
Shouldn't the bailout plan include reparations to all those people who failed to obtain a sub-prime mortgage?

I want a riot of my own.
 
 

220 The 700 superlarge is an infusion of cash to keep the gears spinning.  At this point the economy is about 2 quarts low and about to seize up.  The equities the government is demanding is the collateral for the cash. 

The problem is that the collateral usually has a known value, this time it isn't as cut and dried. 

Mental exercise...

A goldmine is a proven producer.  You plan to bid on 10 sf. of the mine.  How much should you pay?  And which 10 sf. should you buy?  That is the problem the mortgage tranches are causing Wall Street right now....

221 I'm with you JackStraw. Just adopted a different style based on aptitude at one thing and sucking really badly at another. Or, as Clint would say, a man's got to know his limitations.

222 Truthfully, I think this is all just a mental exercise.  I think the fix is in for the bailout and it will include auto loans and school loans and we'll trip merrily along into oblivion.  Watch for Detroit to be bailed out next and then a new round of rebate checks.

223 One more note and I will get off my soapbox...

Everyone remembers the Chrysler bailout.. everyone thinks we bailed out an evil corporation and the taxpayers paid for it with nothing in return.  What most don't know is that the government demanded and got an equity share in Chrysler and actually made $$ on the deal when they cashed it out....

224 I guess I'm just looking for people who will talk shit about beta decay with me again.

Beta decay.  Good times.

Heh, you should see my wife's eyes roll back in her head when I show her one of those purty graphs in Thinkorswim. She just wants to know how many pairs of shoes she can buy this week.

225

Beta decay?  Damn, that's old school.  I've gone all the way around the block three times already and only use options for leverage now, as God intended it.

Sorry, I'm done being serious.  You couldn't find a worse place to discuss this shit than AoS comments.  And I say that with all due respect to ace .. this site rocks, but not for econ/trading.

226 What most don't know is that the government demanded and got an equity share in Chrysler and actually made $$ on the deal when they cashed it out....

I think this is exactly what's going to happen with AIG this time. Between Love Client No. 9's running Hank Greenberg out of there and last week's Atlas Shrugged-esqe looting of the company by the feds, AIG's stockholders have been screwed by the government but good.

227 Ohhh... shoes... I keep DSW in teh black every month....

What - doesn't everyone need 300 pairs of shoes?  Call me the Imelda Marcos of the South!

And after my play on the course today, I think Callaway will be in the black this month in golf ball sales alone.  Fucking water hazards....

Just doing my part to keep the economic wheels turning.  And the guys on the course buzzing about the F*ckin women on the F*cking course...

228 It will come back to par, eventually... AIG, I mean... not my golf score... just hold on to the shares and look back again in about 2 years...

229 >>There will either be a reset...meltdown...in the economy or we will soon have a European style socialist economy. Every time the governments bails out private enterprise, we get closer to it. For the love of..... Will you guys stop this France shit. Do you understand economics at all? Do you get that Fannie and Freddie are gov't institutions that guide the real estate market? We have had government as a partner in this economy forever. >>Dec. 6 (Bloomberg) -- In the U.S. bond market, the housing bubble has burst. >>Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default. Boom. >>``We've been hearing about risks of a house price bubble, easy credit and loans to borrowers that really don't qualify, and now in the last couple of months we're starting to see things turn for the worse,'' said Joseph Auth, a bond fund manager who helps oversee $135 billion at Standish Mellon Asset Management in Boston. ``We don't know if it's going to be a hard or soft landing.'' Boom, Boom. >>About 13.4 percent of all mortgages at the end of June were to borrowers considered most likely to default, such as those with high credit card balances, up from 2.4 percent in 1998, according to the Mortgage Bankers Association. The Washington- based trade group's 2,700 members represent 70 percent of the home-loan business. Boom. Boom. Boom. >>``Employment drives credit conditions in subprime loans and as long as we see a robust labor market we should not expect deterioration in subprime performance,'' said Youngblood, who expects the default rate to reach 5.75 percent by August. Boom. Boom. Boom. Boom. >>November 1985 was the last time any prime borrower paid 12 percent on a 30-year fixed-rate mortgage, according to Freddie Mac. Von Toussaint now pays 7.1 percent, compared with about 5.25 percent for a so-called prime customer. >>``Paying bills on time is the big fear because I've been disorganized,'' said Von Toussaint, who now has her payments deducted automatically from her checking account. Boom. Boom. Boom. Boom. Boom. >>``Froth'' in housing markets may be spilling over into mortgage markets, Fed Chairman Alan Greenspan warned an American Bankers Association convention in September. A rise in interest- only loans that initially don't pay down principle and the introduction of ``exotic'' variable-rate mortgages ``are developments that bear close scrutiny,'' he said. Crash. http://tiny.cc/qdtaO For about the nineteenth time, this is a crisis that was built by bad policy in DC and fostered by corrupt Dems who cooked the books both at the loan guarantors and in the oversight branch. Wall Street was a delivery tool with some culpability but they were not the cause. Good God, how much plainer could this be?

230

@10 (Jack Straw)

"The government is primarily at fault for this mess, and mostly Dems in the government. If the government caused this mess, isn't the government morally responsible for fixing it?"

 

Oh, they'll *fix* it alright.  Given their level of incompetence and devotion to Marx, that's sorta the problem....

231 I've watched all the coverage and I am still left with an uneasy feeling that they're not telling us everything. They are hidding something and it stinks! I also think congress told these guys they would give them what they want, but first they would have to be tortured with a congressional hearing. Two or three days would give everyone time to move money off shore and shred documents. We're being played for fools. If I'm going to suffer, then everyone of these bastards had better suffer...big time! Let the chips fall and the strong will survive.

232

"Finally: Republicans Finger Democrats as Responsbile for Fannie/Freddie Meltdown"

Fingering is a good start, but what they need is a public buggering.

No...they need the "Anal Intruder with Gorilla fist action" for their role in this fucking mess.

233 68/ Arthur "But I don't know why the banks aren't RENTING the houses. Keep 'em occupied - keep them viable. Hell, rent them to the people who lost the house by foreclosure."

Lack of imagination and energy and mental horsepower.  Which is why they're bankers in the first place.  Plus there's probably some stupid regulatory barriers, but any banker too stupid to get around those should probably find something even easier to do. 
Seriously, why can they not buy out or partner up with a real-estate management firm to do exactly that? 
97/ Unseen, i.r.t. #68 (oh it does pay to read ahead before posting)
"Because the banks don't know who owns the houses.  There are no deeds.  the MBS were so sliced and diced that tha banks can't find the deed that goes to each property."

That's after the bundling takes place, right?  Clearly they need to stop selling off the mortgages to the bunglers, er bundlers at FNMA.  But then that fucks up their re-capitalization and liquidity.  BUT is does conserve the capital they actually own.  Do they not have the option of holding on to their own mortgages?

71/ Sutherland "If I really wanted more kids to go to College I would just lower my standards of entry for students and teachers."

Are you saying they haven't done that?  Please.  How the hell do you think they even CONSIDERED hiring me?

82/ Eman "Also, the rents would have to be below the mortgage payments That would decrease rental rates. Another collapse."

Collapse is what we're having now.  Compared to this, that would be more of a "slump." 

99/ Straw "I'm still not getting why people think Wall Street is equally responsible for this mess. "

Because "Wall Street" rhymes with "Main Street" making for the kind of retarded bromide that gets repeated and repeated and .... ahem.  It's because they keep hearing it, Jack.

131/ Midge "Why is there the notion, expressed even by Ace in his post, that "Wall Street" was acting greedy?"

Wall Street is SUPPOSED TO act greedy.  Gordon Gekko was right about that, no matter how bad it sounds.  It only becomes a problem when the powerful engine of greed is fueled with toxic waste like the C.R.A.-spawned mortgage-based derivative instruments.  These things are to "bonds" what pepperoni is to "meat."

"I understand that teh $700 blillion is to go to the buyers of peopel who bought Freddie stuff (is this correct?)  But weren't those losses already guaranteed anyway?"

Actually, no.  There was an "implicit guarantee," but for a real full-faith-and-credit guaran-goddamn-tee, ya needed to be buying GNMA bonds, not FNMA.  Too late now, because they're retroactively making good on their heretofore fake-ass "implicit guarantee."  They should all die in a fire.

156/ Hayao "Tomorrow, I will start buying as though the bailout deal is done, because I believe that is why Buffett bought."

Just a tip:  Whatever Buffet buys will be immediately jacked up in price by copycats.  If you want a bargain, find a same-industry competitor of whatever company he's buying, and buy that instead.  For instance, right after be bought BNSF was the best time since 1869 to buy Union Pacific. 

170/ PHenry "This is classic Marxist liberalism."

Sigh.  Back in the day, this would have been universally recognized as an oxymoron.  Nowadays, semantic decay has eroded our once-precise English language to the point where this statement is actually accurate. 

199/ Icus "do you really think the morons will buy the idea that bad loans for ghetto real estate led to a world-wide credit crisis?"

Mandatory bad loans for ALL KINDS of real estate has done exactly that, yup.  Sorry to see you're still trying to paint all of the deadbeats and house-flippers with that racist outlook of yours, you worthless cunt, but believe me, lots and lots and lots of them are whitey-white-white.  Or don't believe me, whatever. 

234 207/ Andy "They could have just put the damned uptick rule back in place instead of going all star chamber and deciding who could and couldn't be shorted."

Boy howdy, amen.

235 From the New York Times, September 30, 1999:

"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

"In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

...

"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's." 

236

Jack Straw and Itch Cube, what was this $300 billion mortgage rescue package from late July

Snip:

“We already have a rescue package for homeowners,” says Nariman Behravesh, chief economist at Global Insight, sounding a bit dumbfounded by the development. “Things get so weird in a presidential election year.”

Among the provisions of the Housing And Economic Recovery Act of 2008 is the Hope for Homeowners program, which was designed to provide up to $300 billion for the refinancing of about 400,000 mortgages whose default might lead to foreclosure. The program starts Oct. 1 and runs for three years.

Expensive, too. Put together, The Hope for Housing program alone and the Wall Street mortgage securities bailout plan being driven by Treasury Secretary Henry Paulson total $1 trillion.

What’s also odd about the current debate is that The Hope for Homeowners program, closely resembles the Depression-era Home Owners' Loan Corp, which Congressional leaders have cited as a model for today’s problem.

http://www.cnbc.com/id/26839037

Here's the document with the highlights of HERA of 2008. Bush signed it into public law on July 31, 2008:

http://www.mbaa.org/files/ResourceCenter/HERA/MBAHERASummary.pdf

Housing and Economic Recovery Act of 2008 FAQ

Q: How will the law help struggling homeowners keep their homes?

A: Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages. The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property's current value.

Q: When will the program begin?

A: The program will begin on October 1, 2008 and sunset on September 30, 2011. Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.

Q: Who is eligible?

A: To be eligible to participate in this program, a borrower must:

* Have a loan on an owner-occupied principal residence. Investors, speculators, or borrowers who own second homes cannot participate in this program.

* Have a monthly mortgage payment greater than at least 31 percent of the borrower's total monthly income, as of March 1, 2008.

* Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.

* Not have been convicted of fraud.

Q: How can a homeowner access this new program?

A: Homeowners or a servicer of an existing eligible loan need to contact an FHA-approved lender. The FHA-approved lender will determine the size of a loan that a borrower can reasonably repay and that meets the requirements of the program. If the current lender or mortgage holder agrees to write-down the amount of the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage. Loans provided under this program must be 30-year fixed rate loans.

Q: Are lenders required to participate in this program?
A: No. The program is completely voluntary for lenders, investors, loan servicers, and borrowers.

Q: How does this law help neighborhoods that have been hit by the foreclosure crisis?

A: The impact of the current crisis has not been isolated to individual borrowers or investors, but has been felt broadly by neighbors, communities, and governments across the nation. The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties, and stabilize the housing market.

Q: Will this law be a bailout for speculators, homeowners, investors, and lenders?

A: No. It is narrowly tailored to keep families in their homes. For example:

* Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.

* Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum.

* In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.

* Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.

Q: Will this law reward families who bought homes they could not afford?

A: Many homeowners facing foreclosure were misled, were deceived, or were in other ways the victims of unfair lending practices.

To prevent future abuses by lenders, this law will establish a nationwide loan originator licensing and registration system to set minimum standards for all residential mortgage brokers and lenders. It also strengthens mortgage disclosure requirements to help ensure that borrowers understand their mortgage loan terms.

Q: How will this law make it more affordable to own a home?

A: There are a number of provisions that will make homeownership more affordable:

* Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).

* Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.

* Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500. Because of the high cost of housing in California, a majority of the state's residents were previously shut out from these programs. Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.

* Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).

Q: Does the law provide help to those who still cannot afford to own a home?

A: Yes. The bill includes a number of provisions to increase the supply of affordable housing, which has been a major problem in California pre-dating the current foreclosure crisis. For example:

* The bill creates a new permanent affordable housing trust fund – financed by Fannie Mae and Freddie Mac and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas.

* In addition, the legislation provides a temporary increase in the Low-Income Housing Tax Credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives.

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

 

I need to know from those in the know, the differences and the effect of this on the present bill .

 

Ace, this is what pisses me off.  On memeorandum, they have an Emptywheel header piece:  Bush mouthpiece lets slip they've sat on a bailout plan for years.  Then they go on to say "it was stuck in a column' as if it were hidden.  What idiots.  Off course he sat on it, since 2001, the first of 18 times they tried to bring it forward and who stopped it?  Exactly. 

To add the strait jacket, they quote lovingly of Barney Frank, Schumer, Obama, Dodd, others.  Clueless I tell ya.

I don't know why (whether masonic, CFR, Louie's mothership or Illuminati... or just Rastafarians), Mc can't get off his keester and launch on this stuff (oh, I forgot, the left said his aides company received Fannie money... I guess thats the same as all the head dems on committees and a guy that's been to the floor twice since sworn in, but has nearly as much as a guy who's there decades... directly)..  Socialists!

Put all their asses in jail.

 

237

"Because he's fucking stupid. As are most Democrats. They have no idea how money is made or how services and goods are exchanged. All they know is they want to distribute those services and goods more "fairly."

This is the problem. It's like freakin' play money to them. There is no concept of what it is to really make an HONEST living (not an escort or graft services {aka Frank's political career}).  

How DO these people not get voted out of office? (rhetorical rant).

We have got to give more money to the election efforts, bc I WANT - I need to see this clearly presented for people who do not have time to blog!. We need a clear, concise hammering of the truth by a steady march of McCain surrogates....are you listening Rick Davis?

238 Finally: Republicans Finger Democrats
Crap.  I was hoping they would use the whole fist.  I'm sure Barney Frank did, too.

239

McCain bitching about Cox ??

Cox was the man on the switch. I mean....asleep at the switch, anyway.

240 Please release the semen-stained Barney Fag shirt from when he was under the desk blowing Clinton and they both were  Fuc#ing the public..

241 nice post buddy thanks for sharing
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242 It is nice that people can buy homes, that normally couldn't but at the same time it's important not to give out loans to individuals that simply can not afford to make their monthly payment.