Tuesday, September 30, 2008


I found the summary on Pete Defazio's web site. I assume language of the bill is being drafted and does not exist in a fleshed out form at this point.

The first three points are technical rules about trading which I do not understand the implications of. But the meat of the Bill is in the 4th point which proposes a paper shuffle to infuse assets into the banks balance sheets without actually giving them any cash. This is the way it is worded in Defazio's summary,

For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.
This is the option that Paul Krugman favored before reluctantly signing on to the Paulson Plan.

Krugman uses the example of Wachovia buy-out to explain how this works.

First, a real-world example, the rescue of Wachovia. The FDIC got Citi to take over Wachovia’s assets and liabilities with a deal under which the feds limit the losses — they will cover any losses on mortgage paper over $42 billion — in return, basically, for receiving a share of ownership, in the form of warrants and preferred stock. No actual money changed hands, which illustrates a fundamental principle: recapitalization doesn’t mean laying out real money, at least initially — it just means having taxpayers take on some of the risk.

A large-scale recapitalization would probably take the form of a giant swap of debt for equity: the Treasury would issue several hundred billion dollars’ worth of bonds, and give them to financial firms in return for preferred stock. The bonds wouldn’t have to be sold to outside buyers — they would simply be credited to firms’ balance sheets.

The effect would be that if the financial firms did well, taxpayers would share in their good fortune via those stock holdings; if firms did badly, they could meet their obligations by selling some of those bonds, which would cut into the value of all their stock, including the stuff Uncle Sam owns. So as in the case of Wachovia, what’s really happening is that the taxpayers are taking on some of the risk.
I don't pretend to understand all of this. But, if the banks can be recapitalized without the government borrowing 700 billion dollars and handing over the cash to a bunch of greedy and corrupt sons of bitches then it has to be a better alternative.

The idea that we might borrow, or print, 700 billion dollars out of thin air scares the hell out of me. I am truly worried about what this will do to the value of our dollar. Hyper inflation is a real phenomenon, just ask South Americans, and it is not pretty for anybody.

We must defeat this bailout and the only way we do it is by proposing something better. What are you all reading out there?

Anybody in finance that cares to jump into the conversation and shed some light on these options your input would be welcome.

Monday, September 29, 2008

Cry babies

Take a look at this clips.

The first is a clip of Nancy Pelosi's closing speech. The second is the Republican Party press conference after the vote where the blame Pelosi's speech for causing the vote for the bailout to fail. What a bunch of wimps. The majority of their members voted against the bill. The should take credit for killing the bill, instead once again they don't want to assume responsibility for their own actions.

I am glad the bill failed. I have been very unhappy with Pelosi pushing, what I consider to be a disastrous bill, on the American people. But I have to say that her speech today was spot on. The disaster we face now is the direct result of the disastrous economic policies, or lack of policies, of the last eight years. If the Republican's don't want to hear that, too fucking bad, they can just eat shit as far as I am concerned. I hope that Mrs. Pelosi follows through with that speech and forces through the next Congress the kind of bills we need to reign in the cowboy capitalism that is running rampant today. And, I hope we have the votes to pass them without a single Republican vote. The sound of Republicans crying the blues then will be sweet music indeed.

Listen to both clips. It is simply astounding to listen to these wounded puppies complain that Pelosi's partisanship insulted their virgin ears. They were not voting on her speech. If they supported the bill, they should have voted yes. If they did not support the bill they should own up to the fact that they defeated the bill.

Their talk of Partisanship is just too much to bear. These same bastards wrote bills, where they did not even let a single Democrat participate in the drafting of the bills, and then passed them using the most openly corrupt manner possible. Bribing members on the floor of the house, or threatening to fund opposition primary candidates on the floor of the house, to coerce their own members to vote yes. They did all this so that they could pass bills with little or no support from the Democrats. Now they want preach partisanship and lecture Pelosi about leadership, Please!!

Sunday, September 28, 2008

Deep (Escatological) Thought

The McCain campaign is so inept, so corrupt, so cynical, it makes Bush/Cheney look like a Mother Teresa outfit.

Tuesday, September 23, 2008

Ben Bernanke can kiss my ass

In his testimony today in the Senate he said "This (the 700 billion dollar blank check proposed by Paulson) is a precondition for a good, healthy recovery of our economy". We are not asking the banks to do us a favor. They are asking for us to bail them out, if the crisis is real. They cannot put conditions on what they will accept, we can put conditions on what we will do. Somebody needs to explain this to Bernanke. His threats of a recession are hollow. Does he not think that this massive bailout will not severely weaken the dollar and cause massive, possible run away inflation. Is not inflation the supposed boogie man the Fed, which Bernanke heads, constantly tries to minimize? The Fed has caused recessions in this country to keep down inflation. Now the chair of the Fed raises the specter of recession to pursue a very inflationary policy? What gives?

If he thinks he can scare us into giving him and his pals 700 billion dollars with no oversight, and no possible challenge, legal or otherwise, for how the money is used, he can kiss my ass.

Monday, September 22, 2008

Newt wants to implement more "free market" reforms to fix the problems caused by past "free market" reforms

Naomi Klein has a post today on Huffington Post which worth a quick read. It points out that the "right" uses the failure of their policies to push for the enactment of more of their policies.

Don't believe her? Take a look at what Newt suggest we do now to "solve" the current crisis.

We can stop this only be calling bullshit on these sons of bitches and start publicly pinning the causes of this crisis on their policies. To continue implementing their policies after so many failures would be like telling a person that is slowly dying of Arsenic poisoning that the cure for his illness is more Arsenic.

Thursday, September 18, 2008


The Democratic leadership in their effort to prove to the business elite in this country that they can also be trusted to serve the elites' interests are now pushing a bill which would pre-empt state insurance related (health care insurance is exempted from the bill) consumer protection law if it conflicted with an international treaty. Here is the summary of the bill (from the Congressional Research Service):

Insurance Information Act of 2008 - Directs the Secretary of the Treasury to advise the President and Congress on domestic and international policy issues regarding all lines of insurance except health insurance.
Establishes within the Department of the Treasury the Office of Insurance Information, headed by a Deputy Assistant Secretary, to: (1) collect, analyze, and disseminate information and issue reports regarding all lines of insurance except health insurance; (2) establish federal policy on international insurance matters and ensure that state insurance laws are consistent with agreements between the United States and a foreign government or regulatory entity; and (3) advise the Secretary on major domestic and international insurance policy issues.
Extends the authority of the Office to all lines of insurance except health insurance.
Preempts inconsistent state law.
Requires the head of the Office to report to specified congressional committees on the financial state and meaningful trends of the insurance industry.
Establishes the Advisory Group to the Office of Insurance Information.

For those of you who do not know why many people object to the WTO and the so called "Free Trade" treaties. People object because many of the provisions of these treaties are designed to overturn local or state regulations that international corporations see as an impediment to trade, and the WTO has the authority to punish (levy fines, which are enforced by the US federal government) local and state entities that continue to enforce their regulations. These bothersome regulations include such things as zoning, environmental, consumer protection and labor laws.

Because of the massive resistance to NAFTA and similar trade agreements Democrats have publically stated they oppose "free trade" bills, although many of these so called opponents of free trade continue to support and vote "yes" to every free trade bill which comes up.

This bill HR 5840 introduced by Democrat Paul Kanjorski in April (with Brad Miller as a co-sponsor) of this year will allow similar attacks on insurance related consumer protection laws. This bill has not moved much, yesterday it was still in committee. However, with the current failure of one of our largest insurance companies the Democratic leadership in the House wants to bring this bill to the floor.

According to a letter to Congress from Public Citizen this bill has been placed on the suspension calendar. I am no expert on the intricacies of Congress but I understand this operates kind of like a consent agenda, it allows a bill to pass quietly with little or no publicity. The letter is worth reading, it give a much more in-depth description of the problems with the bill, but this excerpt from the letter summarizes the issues well.
Never before has the U.S. government allowed a federal agency to interpret or enter into international agreements on subject matter under the authority of the legislative branch, and then preempt states through rule-making on the basis that state policies are in contradiction to those agreements. HR 5840 would allow the Treasury to "coordinate federal efforts and establish federal policy
on international insurance matters" and then preempt state law via administrative action upon its own determination that the state law is "inconsistent with such policy.".

This is the same kind of bullshit we have grown to expect from the Bush Administration. The use of some emergency to quickly pass an unpopular law which will actually make the crisis worse. We simply cannot afford to let the Democrats think they can get away with this shit.

The meltdown of our financial system was brought about by the deregulation of the 80's and 90's followed by the rampant corruption of the 2000's. What is needed now is more regulation, not less. Self regulation did not work. It is time for the Federal Government to reign in the cowboy financiers and prosecute the crooks which have stolen our treasury. It is not the time to further deregulate any aspect of the financial industry, including the insurance companies.