naked capitalism

Matthew Dubuque says:

Matthew Dubuque

My sense is that it is closer in the House than in the Senate.

Do others share this view?

Matt Dubuque
mdubuque@yahoo.com

Matthew Dubuque says:

Matthew Dubuque

In response to your strident comment, I point out that the House, being up for election every two years, is generally more responsive to the people.

By the way. I don’t watch TV. Thanks for the ad hominem innuendo.

Matthew Dubuque
mdubuque@yahoo.com

eh says:

So Bush is actually going to give a primetime speech to tell taxpayers they’re about to be phucked over by plutocrats and they should damn well accept it, if not like it.

Man, is that ever disgusting. Which means Bush is the perfect President for the job. Wasn’t he saying not all that long ago that he wouldn’t sign a housing bill that ‘rewarded speculators’?

Lewis B. Sckolnick says:

Both Secretary Paulson and Alan Blinder think that the people who do not like the current prices of houses will like higher prices for the same properties in the near future. The market is speaking. The Paulson plan is a loss for We the People have already spoken. Housing is overpriced where it is and I think many people are looking to move to cities where there are services. We could be looking at the paper decades from now. This is a build your own long term Depression kit, the very reverse of Monopoly.

Anonymous says:

“Willingness to compromise?”
“Willing to talk a bit?”

These guys are so full of themselves it’s sickening. They’re willing? They don’t have a choice but to listen to us. They may think they have the unchallengeable power but that Section 8 hasn’t passed yet.

Dean says:

Le’s try again:

“….on this matter points to rejection by the people”.

Anonymous says:

Mr. Dubuque,

Just wondering here… about your “By the way. I don’t watch TV” statement, couple questions:

So is Cspan out?

Did you not watch yesterday’s Senate hearing?

What about today’s House hearing (that I could not even find on the Cspans)?

Do you draw the line somewhere or just don’t own a TV?

If you don’t own a TV where do you get your real_time_unfiltered congressional information?

Again, just wondering.

Anonymous says:

Very worth watching here folks IMHO:

Federal Reserve Bailout – Marcy Kaptur – CNN

Marcy Kaptur talks about the fat-cat bailout of wall…

http://www.youtube.com/watch?v=ZIE0ZyXEsKQ

Anonymous says:

http://www.thenation.com/blogs/notion/363876/bailout_increasingly_unpopular_in_congress

Anonymous says:

U.S. Treasury bill rates fell on Wednesday, with one-month rates briefly dipping below zero, as worries about passage of the government’s bank bailout caused a stampede into cash and safe-haven assets.
Lawmakers were holding a second day of hearings on the government’s proposed $700 billion bank bailout on Wednesday. Worries about the plan’s prospects curbed appetite for stocks and intensified safety bids for bills as well as longer-dated bonds, traders and analysts said.

Cash Mundy says:

Hanke-Panke plan (picked this up on clusterstock.com) is maybe a throwaway? Ask for complete world domination, settle for less, so in the end a plan still passes that protects Friends of Hank at the expense of everyone else, but doesn’t immediately suspend the Constitution?

But let’s not be hasty about the Constitution. Check this out from Todd Harrison at Minyanville, the headline article for today:

….The angst is palpable and tension is high as we edge towards what promises to be a very tenuous election.

Indeed, anticipation of social unrest may be the catalyst for the decision to transfer troops back to the States. Beginning October 1st, a military army brigade will be an “on-call federal response force for natural or manmade emergencies and disasters,” the first time an active unit has been given a dedicated assignment of this kind…..

Anyone else notice that large parts of the SouthEastern US are out of gas, and some have been for about two weeks? Read NYT and WSJ A-sections today, but this news is apparently not fit to print.

The whole system is behaving more chaotically. Doc Holiday isn’t the only one who won’t be too surprised if the elections need to be postponed until the outcome can be reliably predetermined.

realty-based lawyer says:

One point I haven’t seen made much if at all: both programs (Paulson/Bernanke and Dodd) cover $700B in holdings outstanding at any time. Unless I’m missing something, this means potential losses can far exceed $700B. The program would run for two years, so, assuming an average loss of 30%:
- Month 1: buy and sell $700B, loss $210B
- Month 2: buy and sell another $700B, cumulative loss $420B
Etc.

Unless I’m missing something…

schmidty says:

“finally they are NOT crying wolf….we almost imploded last week and credit markets worsen markedly over the past three days. Yikes!”

Paulson is crying wolf. The only thing that’s caused a crisis is money market fund investors freaking out, and starting redeem large amounts of shares last week, which drastically reduced demand for corporate commercial paper and corporations customer receivables. However, that is easily adressed by providing investors an FDIC type guarantee.

The crisis was provoked by Scy Paulson when Paulson decided to screw over Lehman bondholders, which hurt a money market fund that invested in corporate bonds. The fund only broke the buck by redeeming shares for 97cents rather than 1 dollar. But people are irrational, so they got spooked and started to redeem shares.

Paulson’s proposal is totally unrelated to the run on money market funds. It is like when Bush used terrorists as a justification for invading Iraq: a phony reason for Bush to pursue his own agenda.

Ben Bittrolff says:

Yes. Its true. (News from Bloomberg)

The real question is, who is copying who?

Kazakhstan Plans Paulson Style Bailout: Borat?

schmidty says:

One last point, the way to win the war on rhetoric against Paulson and Bernanke is to frighten people with the TRUTH that their way of life is threatened by their blank check corporate handout.

As the WWII propogandists used to say: “The people can always be brought to the bidding of the leaders. That is easy. All you have to do is frighten them with allegations their way of life is under attack and will collapse if they do not hand over their money. It works the same in any country.”

Bernanke and Paulson think they are like the US government selling the public on losing money by buying War Bonds. Not true. The public was only willing to lose money on buying war bonds for the greater good of fighting the Nazi’s. Once the public is well-informed, it will not intentionally lose money in order to provide a massive corporate handout.

Anonymous says:

But McCain’s surprise move, coming two days before the first of three long-scheduled presidential debates, offered him a high-risk chance to reshuffle the political deck heading into the final five weeks of the campaign.

If it works, he could cast himself as a decisive “presidential” leader above partisan politics, devoted to finding a solution to the crisis, eroding if not reversing the advantage that Obama has on the issue of the economy, now the top concern by far on voters’ minds.

Yet if McCain’s move fails, it could be seen as a desperate gimmick, raise questions about whether he’s prone to rash decisions and reinforce Obama’s image as the more cool-headed, deliberate leader.

“There is a risk there,” said Steven Schier, a political scientist at Carleton College in Minnesota. “There is the potential that he’ll seem a little hasty in his actions, that people will think this guy just flies off the handle, that he can’t multi-task.”

Abbot_Of_Iona says:

I apologies for any offensive language if previous comments

I understand that the USA does not like hearing the word FASCIST.

After all what would have been the point if having defeated Hitler (National Socialist) and Mussolini (Fascist), that word ever had to pass the lips of any American again.

What is the point of defeating an enemy if words like this can be presented to your leaders?

“Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

And the presenter of those words provides your leaders with seven days to comply or die.

The USA, its leaders political, religious and philosophical in The House of Representatives (representing the citizen) and in the Senate (having knowledge of history and the consequences of actions) need to consider it a possibility.

If my language is considered intemperate I beg your indulgence.

I will not call any man a FACIST.

I will call the desire to influence the actions of others in haste fascistic.

I know the USA does not like the word FACIST.

I know you don’t like the word FACIST.

I don’t like the word FACIST.

But Fascism is what Fascism is.

Paulson’s Plan is not “Imperial”, would become the King (or Regent) of $2T?

Paulson’s Plan required (or did require before the Senate Committee gave him a proper grilling) the transfer of the will of the Citizens of the democratic republic of the United States of America to be subservient to the will of an unnamed Corporate State or State Corporate.

You can put State before Corporate or the other way around if you wish. It makes no difference.

The State is NOT the Republic.
The State is NOT Democratic.

The Corporate is NOT the Republic.
The Corporate is NOT Democratic.

Where the State and the Corporate combine the Republic is dead and Democracy is dead.

Again, begging your indulgence.

$2T (and no I don’t believe its $700bn) ~ what’s the rush?

Let me see if I understand this correctly.

A thing called the “Money Market” froze.

A thing called “The CDS Market” is in spasm.

I understand that “Money” must flow. We all need a means of exchange to buy bread.

I understand that faith in “Money” is required or that I cannot trade it in exchange for bread.

I understand that “Money” can be stored in order that I can save my labour or enterprise and exchange it at some future time for bread.

Indeed, give us this day our daily bread.

While Wall Street and the State were inventing CDS, I don’t recall my opinion being asked about the possible damage to the Republic or the Democratic will of the Citizens of the Republic.

Now, Wall Street I can understand. What possible difference could it make to the Citizen if “Wall Street” was located in Lagos or Zimbabwe?

None what so ever.

If a bunch of gamblers want to gamble let them gamble. Where they do it is of no concern.

The difficulty is what they chose to gamble with.
Money ~ My means of exchange ~ My faith in the value of being presented with a fair price for my Labour/Enterprise ~ My store of value.

Hank Paulson was CEO/Chairman of Goldman Sachs (Corporate) for six/seven years prior to becoming Secretary to the Treasury.

Hank Paulson (while CEO/Chairman of Goldman Sachs) with the blessing of the SEC (State) created a new method of creating money.

Hank & the SEC did not ask my opinion on this new money.

Had they done so I would have told them that I cannot buy bread with a CDS and that I would be obliged it they didn’t use Money to play their clever game.

So,

Here’s my solution.

Support any Main Street bank that can still stand on its on two feet.

Nationalize and consolidate those that cannot.

In other words keep Money flowing.

The Recsession/Drepression that is coming is coming and throwing $2T at Wall Street won’t stop it.

Use the $2T to protect the circulation of Money on MainStreet.

And then,

Let the CDS MARKET DIE.

It China has a problem with that then ~ TO HELL WITH CHINA

It Europe has a problem with that then ~ TO HELL WITH EUROPE

It the United Kingdom has a problem with that then ~ TO HELL WITH THE UNITED KINGDOM.

It Goldman Sachs have a problem with that then ~ TO HELL WITH GOLDMAN SACHS

Ad nauseam.

The SEC, The Federal Reserve and The Treasury have already displayed a remarkable ability to waste Money.

Don’t give them another cent.

Anonymous says:

Jcc, go back to med school. The markets are not frozen, they are just behaving more reasonably [skeptically, that is] in light of current events.

Dean says:

Yves is right, but with the same breath I am telling you that a version of this bill will pass by Friday.

Therefore, we better adjust the focus of this discussion from “what should have been” to “what are we going to do the day after”.

doc holiday says:

Are these people stupid? Yes! This is not about MBS — it’s about the synthetic derivatives engineered to be linked, backed and connected to MBS. MBS in the future, which Buffett is stealing today, like Potter (in It’s A Wonderful Life) will have future value/cash flow — the synthetic shit being offered to taxpayers will be as worthless in 20 years as it is today!!!!!!!!

Anyone wanna fight?

Jesse says:

this has all the elements of deja vu doesn’t it?

Here vote for this or the next thing you will see is a mushroom cloud.

On the edge of the abyss and the futures are green.

http://tinyurl.com/3wkre9

Anonymous says:

John McCain Cancels Letterman Appearance, Keith Olbermann To Fill In

http://www.huffingtonpost.com/ 20…e_n_128998.html

RJMConsulting says:

Point of clarification: the “value at maturity” pricing is appropriate only for assets that reasonable buyers might agree are/were customized at creation.

Isn’t this the underlying problem? As much as structurers argued for commodification of the derivatives, they were largely individually “decorated” by the structurer, the asset manager/sponsor and the lead investors.

Finding a “market value” for a bespoke hybrid CDO with a monoline wrapper (now rated on par with the senior sub debt) taking the “mezzanine super senior” tranche is like finding the “market value” for that chopped beemer with the dual hemi’s and reverb woofers in the trunk … seemed like a good idea at the time. You may not like being seen in it anymore, but it gets you there and back… and it probably won’t break down.

R in NY

Cash Mundy says:

I am going to quote the Center for Responsible Lending’s position on this. It’s a whole page, but now stay with me here. They have been warning about the lending practices that led to this situation for years and trying to stop them.

It turns out that their position agrees with how it looks to me. Now, people have called this nuclear this and tsunami that and plane-crash or pseudo-whitewater the other thing, so let me add that it is like a fire burning down houses (literally in some cases) and still growing. Now, the Hanke-Panke Plan is to put all our effort into protecting the wealthy gated community which is in the path of this thing because if they freak out, they will suck all the oxygen out of the atmosphere to protect themselves and we’ll all die. More or less.

Well, call me naive, but it seems to me that you fight the fire at the FEBA, or in this case Forward Edge of the Fire Area, which would be houses in foreclosure, and in front of the fire, which would be houses at risk [this being "defense in depth" or "elastic defense" to mix in more tactical metaphors], and not way out ahead or off to the side or whatever, which is the Wall Street Resort community. The Hanke-Panke Plan is to load all our money on those big tanker planes and drop it not on the fire but on the resort. Won’t Help.

Obviously it is not possible nor desirable to support the bloated prices of houses, and it is desirable to let them deflate back to a reasonable ratio to prevailing wages and so forth, so people can afford to buy houses on terms that don’t guarantee foreclosure down the road.

The goal should be to stop foreclosures more or less completely for a short time to clear the backlog, and then allow the value of the houses for mortgage, tax and resale to drift downwards while minimizing foreclosures. Foreclosures may be the late great free market’s way of deflating housing prices, but if they are the best way, then basically we’re done and it’s time to go long on long guns and nitro-packed soybeans. People who really can’t afford the houses they are in even at a reasonable price should be given a way out with their credit intact so they can buy a cheaper house and thus both stay housed and support the housing market.

Any relief should only apply to owner-occupied first homes. People turning in their trophy houses is a good thing. Most of them should be torn down anyway. And investors in real estate know the rules of the investing game: risk and opportunity. No help for them, unless Hanke-Panke also wants to buy my SKF and financial puts at their prices just before they changed the rules on me.

As for systemically essential functions such as for example gasoline supplies to the SouthEast, the government lets it be known that any systemically essential enterprise that is unable or unwilling to perform its essential function will be nationalized for an indefinite period with no guarantee of compensation or anything, equity gone, executives fired. Not that I would trust this government to run a gas station, let alone a war, but if things get bad enough someone, meaning for want of anyone else probably the military and emergency services, would have to start running things or allow starvation, looting, chaos, and general mayhem and complete societal breakdown: Not Good.

OK now, stay with me here, folks: call me naive, call me crazy, call me anytime you want, but just remember: if this is what I’m thinking, just imagine what all those people who wouldn’t know a strike-price from stone soup must be thinking.

It’s just that simple.

Bailout Won’t Stop Foreclosures that Push Prices Down

Center for Responsible Lending
September 20, 2008

The government plan announced by Treasury Secretary Paulson and Fed Chairman Bernanke fails to deal with the root cause of the crisis—families in foreclosure—-and instead is purely and simply a bailout of the lenders who created this disaster. The bailout will not solve our economic problems because it will do virtually nothing to stop the foreclosure epidemic. Continuing foreclosures will drag down the economy even further.

A truly comprehensive plan must also benefit ordinary, hard-working Americans, the ones who already are bearing the brunt of Wall Street’s excesses. If it doesn’t, then any new plan is more of the same—-only with more taxpayer money at stake.

By forcing taxpayers to buy abusive and reckless loans from irresponsible lenders,taxpayers are funding a multi-billion dollar subsidy to private corporations. Yet the millions of families who have been unfairly pushed to the financial brink by these mortgages get nothing. Only by preventing the 6.5 million foreclosures expected in the next few years—and the $356 billion drop in surrounding property values that will result for an additional 46 million families—-will the economy begin to recover.

Don’t let anyone tell you the government will be able to prevent foreclosures by buying this troubled debt. Wrong. Mortgages of questionable value have been sold into highly complex securities, which have been carved up and sold to thousands of investors around the world. The government can’t put these Humpty Dumpty slices back together again because it won’t own or even control them all. Bailing out financial institutions is NOT the same thing as providing relief to foreclosure-plagued American families.

Regulators and lawmakers must implement solutions that benefit American families at least as much as banks, or nothing will change. Stopping the flood of foreclosures and adopting common-sense protections against predatory lending are the only lasting solutions.

A plan that addresses root causes must:

Lift the ban on judicial loan modifications. Voluntary loan modifications are not working, as the as mounting crisis attests. Today homeowners are barred from applying for loan changes through the bankruptcy courts if the loan is on their one and only home. Bankruptcy courts provide an existing infrastructure for supervising court-ordered loan modifications and addressing the many hurdles that prevent voluntary modifications. Judicial modifications are the best solution for preventing foreclosures that will drag down the economy further. This provides a fair, targeted way to make a real impact without requiring any tax dollars.

Cap consumer loans at 36% interest. This stops abusive interest rates that push vulnerable families back even further, and it also protects responsible lenders from unfair competition from abusive payday lenders charging 400% interest. This action alone would save America’s working middle class billions of dollars.

Read our 1 page analysis of

why this newest bailout plan for industry won’t allow for large-scale foreclosure prevention.

Judicial Modification of Loans Would Save 600,000 Homes: Purchase of Securities Will Save None

For more information: Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Sharon Reuss at (919) 313-8527 or sharon.reuss@responsiblelending.org; or Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org.

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About the Center for Responsible Lending

The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation’s largest community development financial institutions.