Links 9/30/08

Obama Runs Constructive Criticism Ad Against McCain The Onion

Obama winning over ‘Wal-Mart moms’ Financial Times

The methane time bomb Independent

Mission Creep Dispatch: Winslow Wheeler Mother Jones News. A departure from our usual programming. On global Pentagon strategy.

NYT Promotes Hysteria on Bailout Bill Dean Baker

How I learned to love the Fed Steve Waldman

The end-goal of any bailout or government takeover John Hempton

Why Have Things Gone So Wrong? Roger Ehrenberg

Congress votes against bailout plan – but CFAs not actually huge fans either AllAboutAlpha

You Can’t Rescue the Financial System If You Can’t Read a Balance Sheet John Hussman (hat tip Cash Mundy), Nice piece, explains in some detail the observation we have made, that the Paulson plan accomplishes zero unless Treasury overpays for dud assets. Also offers a better rescue option, a so-called “super bond”.

Antidote du jour:

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  1. Richard Kline

    In the cases where the public authorities choose to fund rather than close solvency-challenged financials, I vastly prefer Hussman’s Sovereign Senior bonds to common equity warrants. I should add that such bonded capital injections should be required in the event of such a government intervention—to capture upside for the public, and let other stakeholders know where they stand—and the ultimate Interventionary Authority should have the powers to make such capitallizations _at government discretion_, even if this means they are involuntary on the part of the firm.

    Public intervention means that the government should be in the driver’s seat, but with transparent rules, and close Congressional oversight. A Treasury Tyrant such as Paulson proposed has none of those characteristics.

    . . . Cute little pups; little do they know that beyond their comfy Pail lies a vale of tears ringed by heights of folly—but look up and see the stars; yes, ever so.

  2. Richard Kline

    The Arctic seabed methane releases identified in the article in the Independent are . . . literally catastrophic. Reading this is like watching a sizable asteroid’s projected trajectory matched to an intersection with the Earth’s orbit. We’ve changed our world, and now we’ll have to try to ride the whirlwind.

    Remember those old science fiction films portraying impending global disaster?, A Crack in the World, the original Voyage to the Bottom of the Sea, where with global catastrophe impending a plucky and genius-striped band of (all white, WASP American) maverick Challengers step forward to avert The End?? Well, where the hell are they? ‘Cause the lights are down, the curtain’s up, and the credits have already rolled.

  3. agog

    RK has it exactly right about significance of the article in the Independent about seabed methane releases. The findings have not been peer-reviewed yet, I read, but if they are confirmed it will mark the crossing of the threshold into irreversible catastrophic climate change. Add to the undersea methane the methane that would then/is now be/ing released from the permafrost and it could all unravel very quickly.

    What is happening in the markets now is rivetting but in the scheme of things may look of little importance a few years from now no matter whether we have deflation/inflation or recession/depression.

    One of these days I really must work up the nerve to read Cormac McCarthy’s The Road…

    My compliments to YS on the suberb blog.

  4. doc holiday

    Another meal!

    Yes, puppies are cute, just as kittens are, and this bailout plan is going to be spun as a pro-patriotic mechanism which will be packaged into a product that will be marketed and re-designed to make it taste better, to have nicer texture, better wording, a new flavor, maybe less fat — but this Bailout Plan is still the same fuc-ing dog food that is tainted like The Old Roy dog food wal-mart used to sell which had the tainted shit in it from China ….

    That feels better..

    This fight should not stop and sleeping dogs should awake to the responsibility to protect America!! Placing a huge burden on taxpayers is not right and I hope people will continue to yell at the people that want to steal your future!

  5. doc holiday

    Not only is this Bailout Proposal flawed in every way, it now expands beyond political and begins to bring out racial fragmentation, in an effort to point blame at non-whites. I’m a guy who looks kinda like McCain, but I do not judge Congressmen or women on the color of their skin, I judge them on their actions as American leaders and I hope they are patriots that defend the constitution which they have sworn to protect:

    Re: Many of the GOP critics, such as U.S. Rep. Tom Price of Roswell, Ga., had an underlying ideological opposition to the idea of the federal government taking on bad mortgages from lenders.

    Price blasted the plan philosophically as an “egregious” undermining of American ideals and practically as an unacceptable hit on taxpayers.

    “It is unfortunate that congressional Democrat leaders insisted on pushing through this fatally flawed plan instead of considering free market alternatives,” he said.

    That free-market orthodoxy compelled a number of GOP “no” votes.

    At the other end of the spectrum, Pelosi, D-Calif., is getting some of the blame for the defeat. Pelosi voted for the measure but House leaders, Democrat and Republican, didn’t put together a winning hand. The bailout defeat drowned financial markets Monday.

    Pelosi also gave a charged speech before the House vote, blaming President Bush’s and Republican economic policies for the credit and finance disorder, saying they followed a “right-wing ideology” while hailing the Clinton administration. Banking deregulation and home ownership pushes blamed in part for the mortgage problems curently saddling banks, enjoyed support from the Clinton and Bush administrations, including some former Clinton economic aides now advising Barack Obama.

    Pelosi also called the original plan forwarded by U.S. Treasury Secretary Henry Paulson and Federal Reserve Bank chairman Ben Bernanke “arrogant” and hammered home criticism of Wall Street executives’ compensation.

    Despite supporting the bill, Pelosi spent much of her speech criticizing Bush policies and Wall Street and echoing some of the liberal criticisms of the bill. She spent less time saying why she was supporting it.

    Republicans said Pelosi’s speech and criticisms turned off some fence-sitting Republicans and emboldened more Democrats to vote “no” on the bill.

    Ninety-five freshman, Hispanic and liberal Democratic lawmakers voted against the bill.

    Ninety-five freshman, Hispanic and liberal Democratic lawmakers voted against the bill.


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