Tuesday, September 30, 2008

Mark-to-Market: Modified

SEC and FASB statement of today:

The current environment has made questions surrounding the determination of fair value particularly challenging for preparers, auditors, and users of financial information. [Doh!] The SEC's Office of the Chief Accountant and the staff of the FASB have been engaged in extensive consultations with participants in the capital markets, including investors, preparers, and auditors, on the application of fair value measurements in the current market environment.

...When an active market for a security does not exist, the use of management estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable...

...The results of disorderly transactions are not determinative when measuring fair value. The concept of a fair value measurement assumes an orderly transaction between market participants. An orderly transaction is one that involves market participants that are willing to transact and allows for adequate exposure to the market. Distressed or forced liquidation sales are not orderly transactions, and thus the fact that a transaction is distressed or forced should be considered when weighing the available evidence

...Transactions in inactive markets may be inputs when measuring fair value, but would likely not be determinative. If they are orderly, transactions should be considered in management's estimate of fair value. However, if prices in an inactive market do not reflect current prices for the same or similar assets, adjustments may be necessary to arrive at fair value.

...In general, the greater the decline in value, the greater the period of time until anticipated recovery, and the longer the period of time that a decline has existed, the greater the level of evidence necessary to reach a conclusion that an other-than-temporary decline has not occurred.

Determining whether impairment is other-than-temporary is a matter that often requires the exercise of reasonable judgment based upon the specific facts and circumstances of each investment. This includes an assessment of the nature of the underlying investment (for example, whether the security is debt, equity or a hybrid) which may have an impact on a holder's ability to assess the probability of recovery.

Looser, but not unreasonable.

Will there be fraud? Yup. But understand that you could get the same answer if you ask "Will there be rain?"

HT: RedState

Think There's a "Priest Problem?"


Each year, for a number of years, the activists in the graduating class from a major Catholic seminary near Chicago would visit me for a day just before their ordination, with questions about values, revolutionary tactics, and such. Once, at the end of such a day, one of the seminarians said, "Mr. Alinsky, before we came here we met and agreed that there was one questions we particularly wanted to put to you. We're going to be ordained, and then we'll be assigned to different parishes, as assistants to -- frankly -- stuffy, reactionary old pastors. They will disapprove of a lot of what you and we believe in, and we will be put into a killing routine. Our question is: how do we keep our faith in true Christian values, everything we hope to do to change the system?" --Saul Alinsky, Rules for Radicals

So my question: which Seminary Rector arranged THOSE trips? Or 'allowed' them?

HT: Dreher

Yup: Queen Nancy: "Let Them Eat Cake!"

Sure enough:

House Speaker Nancy Pelosi ordered her Majority Whip, Jim Clyburn, to essentially not do his job in the runup to the vote on Monday for the negotiated Wall Street bailout plan, according to House Democrat leadership aides.

"Clyburn was not whipping the votes you would have expected him to, in part because he was uncomfortable doing it, in part because we didn't want the push for votes to be successful," says one leadership aide. . . .

That's from The Prowler, found at The Other McCain

Two Excellent Essays on the "Bailout"

From What's Wrong With the World, two very good essays on the "bailout."

First, the overview:

...it is a certainty that a credit freeze would be a disaster in the short and medium term, to a degree that many people simply do not appreciate at all. I can't predict exactly what form the disaster will take, nor precisely how bad it will be, any more than I can predict exactly how the train cars will end up in a major train wreck. But I know it is very bad and should be stopped. It is every bit as important as any critical national security or natural disaster concern.

...It's really bad, and people ought to accept that it is really bad, and that it isn't just about those guys over there but is going to be bad for you and your neighbors. The populist nonsense about 'each house being robbed of thousands of dollars to bail out Wall Street' is just poppycock: this is about saving your own bacon as much as anyone else's, and it isn't going to cost you thousands to do it.

I completely understand Main Street cynicism on the point. A perfectly justified cynicism combined with a genuine clear and present danger is a toxic combination.

...The problem with the national debt is not that it exists, but what it has been spent on. To the extent that the national debt is at work on productive endeavors which expand the tax base and increase the flourishing of the country - a sadly small extent, I suspect - it is a good thing. Carrying debt is intrinsically neutral; it can be extrinsically good, or extrinsically bad, depending on circumstances. Averting a credit lockup by buying up valuable but illiquid securities is among the best reasons ever proposed for issuing government debt, comparable perhaps to issuing government bonds to finance a necessary defensive war.

And, of course, the capstone (as Sykes mentioned this morning...):

...the longer it takes to get to intervention the more expensive and socialistic it will be

That post (a lot longer than the excerpts here, and all just as good and reasonable) is followed by another one which 'splains the mortgage problem so even a complete moron MSM turkey can get it.

Suppose we have ten thousands banks, and each of those banks has in its possession a thousand bags of metal. Somewhere around eighty percent of the bags are known to contain gold. Somewhere around twenty percent contain lead. These percentages are not hard and fast, but they are roughly good numbers.

...The distribution of lead and gold amongst the banks is entirely unknown, but it is definitely not uniform. It is not even entirely clear how many bags a given bank has.

...On the other hand, if I have a large enough amount of capital to buy up all of the bags from all of the banks, it is perfectly reasonable for me to expect that 70% to 90% of them will contain gold. If I can buy bags on the open market for $20 right now, that represents a very good investment opportunity; only if I can buy substantially all of them. If I can buy them all, it is even well worth it for me to take out a loan to buy them all, because I only have to pay a couple of percent on the loan whereas my returns on the portfolio will most likely be quite a lot higher

Reading them both, in their entirety, should be quite helpful.

Housing Prices

Chicago is the nearest 'comparable' to Milwaukee --although Minneapolis is a contender. (-10%, -13+%, respectively.)

Surprising that Detroit is holding up as well as it is, considering...

HT: The Big Picture

Bachmann-Sensenbrenner Overdrive

OK. Puns are awful. But hey...

Sensenbrenner appeared with Sykes to 'splain his "no" vote--and his 'splanation was acceptable.

Here's what Michelle Bachmann (R-MN) had to say about her "no" vote:

...I support a plan that would have Wall Street bail itself out, not hardworking taxpayers, by requiring institutions to insure troublesome assets that are causing today’s credit crunch. It would suspend mark-to-market accounting, which forces companies to take losses on artificially devalued assets on an artificial timetable, to give investors more confidence.

The plan I support would break up Fannie Mae and Freddie Mac -- government sponsored enterprises that are at the heart of this crisis -- so that the encumbered taxpayer no longer backs them -- implicitly or explicitly -- and so that they do not artificially grow larger than the market will allow. We cannot pass legislation that sets America up for a Groundhog Day reprise of this mess and that means changing the problem at its core - the GSEs...

Onc suspects that Sensenbrenner would go along with this (as would Ryan,) but it "breaking up" Fan/Fred ain't going to happen--so that's likely a negotiating position.

HT: PowerLine

Like High Interest? You'll LOVE "No Bailout"

Within moments of the failure to pass the bailout:

The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said. The euro interbank offered rate, or Euribor, for one-month loans climbed to record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, advanced to a record

That's for overnight bank-to-bank loans. Typical business loans are written 3-5 point over that rate, and many are at 5-10 over.

Some, who are less-than-educated, think this is irrelevant. But when YOUR employer gets slapped with a 10% interest rate (or 12%) to borrow against receivables to finance YOUR paycheck, it will have an impact--possibly on you.

Queen Nancy Pelosi: "Screw the Economy!"

It occurred to me yesterday, as the vote totals emerged, that the Democrats have decided to let the economy go into free-fall--as that's a sure-fire way to win the next election.

And Karl Rove's analysis of the vote made it clear: that's exactly what their plan is.

Pelosi was short about 12 votes; Rove named 6 House Committee chairs who voted against the bill, observing that every one of those people literally owed their chair-position to Pelosi.

Think she didn't have them by the short hairs?

Instead, she set the tone with a rant about "Republican" errors (lying about 'deregulation', by the way) and in effect, told her Members that they could vote against it.

$1 trillion disappeared immediately thereafter. That's $1 trillion which will not be used for retirement income, for funding college aspirations, for expanding or purchasing businesses, or for consumption.

Well, Nancy, you got your way, and it's possible that you'll have the opportunity to take over the US economy in January.


Stupid News Stories

Apparently some Federal judge issued an opinion. They do that all the time--that's not 'stupid news.'

Here's the 'stupid':

The ruling immediately halts the practice of killing wolves that threaten livestock and pets in the three states.


It won't halt "shoot, shovel, shut up." It won't halt "shoot the ^%$# critter"--shovel or not.

But it will prevent DNR from doing the job that ordinary American farmers WILL do.

Monday, September 29, 2008

Mark-to-Market: A Rant

Found at Ace's Place: (cleaned up a bit...)

They (these distressed assets) have to be shown on the balance sheet and marked down to marked down to market value. This means that suddenly, normally healthy companies have assets that actually have value, but have been artificially and temporarily valued at **** zero **** dollars even if they bought them for several million. Even --and I want the market-valuation absolutists to read this very carefully -- even when those assets are ownership of actual real property that have intrinsic worth. Due to this rule, the credit markets are being affected in a way that is not tied directly to the fact that loans were made to itinerant phrenologists and spastic mimes. Those were the root cause. The problem with valuation of these loan packages including defaulted mortgages is a ****** multiplier.

Let's put it this way - think of the "credit drain" and bad things as a military force. The CRA loans to carnies and strippers with Tourette's Syndrome is like a company of infantry - pretty impressive. The problem with marking down to market prices is like giving each sonofabich a Davey Crockett nuclear howitzer.

This means that through temporary and artificial means, a company that would say own 30,000 houses/shitty mortgages, all with $3K worth of salvagable copper in them that could be torn out and sold- that they bought for $3 million - suddenly don't have jack shit on their books. All of it is valued at zero because no one will buy it. That isn't a rumor - that is actually happening.

Marking down to zero isn't done on a ***** whim. It is documented. People/entities with these assets that have intrinsic value cannot label them on their balance sheets as what they paid for them - they must write that they are worthless.

This makes huge companies suddenly in dire straits. They may not be able to make payroll NEXT WEEK. A number of companies, who might be loaded with these, will fail.

This is because they suddenly have to book a loss - huge paper losses - that have no real relation to the situation over just the next three months.

Let me repeat - healthy companies will be unable to prove they own enough assets to float a loan. Past liabilities will be dishonored. This will spread within 21 to 30 days up and down the food chain. Each 2 weeks will result in larger and larger cycles of shrinkage of asset valuation, sudden outlays for demand notes, inability to meet payroll, layoffs, and cancellations (with penalties) of contracts.

Distribution networks would be among the first hit. I haven't gone further than that in my research. But right there, we're looking at some severe dislocation. Severe as in diabetics having to stock up on insulin.

This does have the possibility of being retardedly bad - think what would happen if 1/3rd of the train and truck traffic ceased. Stopped without notice.

The problem is systemic - not just to the credit market - it is systemic to how we do business between states. It is systemic as in "No Produce Scheduled Until Next Week" type signs in your Safeway.

If it doesn't get fixed in 2 weeks, by January some communities will be isolated due to no diesel for the road crews. In New York.

It's formally called FASB 157, effective for fiscal years ending later than 11/2007. It applies to publicly-held companies.

Aside from making a good case for modifying "mark-to-market" or eliminating it, he sketches the basic problem that banks have if they're sitting on MBSs or CDOs. Same-o as other firms who might have purchased same for investment purposes--for example, a cash-rich company which was after good returns with 5- to 10-year excess funds.

Is it really TEOTWAWKI? Maybe. In the case of banks, it accounts for the sudden drop in interbank/overnight lending (countered by the Fed's massive tripling of available billions today).

In the case of banks, it makes Ryan's insurance plan look a lot better. In that plan, although the Bank would have to pay a premium, the Treasury would guarantee the value of the investment, meaning that the "mark-to-market" could clamber back into the 90++% range.

That's a lot of capital, folks.

Rumors and Ramblings on The Banks

Word on the street is that two major Milwaukee-area bank have told their lenders to stop lending.

Truth Squad Online Reporting Location

Just in case you need to make reports (Folkbum? Capper?), here's the place to do it.

HT: Grim

The Rest of the Story on the Bailout

Roeser has the details.

...As he was preparing for the debate, McCain got word that a huge bloc of Republican House members were unalterably opposed to the Bush-Paulson plan to rescue Wall Street with taxpayers’ money…and for good reason. They saw Bush-Paulson as having too little oversight: McCain agreed. They wanted a voice in the deal and felt left out by Bush and Paulson. They insisted on pay curbs for Wall Streeters: McCain not only agreed but insisted, pointing out that no one should be paid more than the president of the U. S., $400,000 a year (although the CEO of Goldman Sachs makes more than that in two days). They pointed out a hidden joker that would convey a slush fund for ACORN: McCain was appalled. They cited favoritism for the trial bar: McCain readily agreed. Most of all they wanted an FDIC-style insurance program for the toxic assets the rescue would address without taxpayer risk. He quickly assented.

...By intervening in behalf of the House Republicans, he saw that most of the issues they cared about got included in the final package. Much of the credit for the improved package should go to McCain-although due to the liberal media’s intransigence in blocking it, it won’t. But the p.r. he earned was awful

Roeser also makes short work of Barney Frank (D-Boys, Preferably Naked) in the post.

Calling a Spade a Spade: It's Bailing Out CONGRESS

Yah, the $700Bn goes to purchase the crap-sandwiches from banks.

But who MADE the crap sandwiches in the first place?

The Democrat Congress(es).

Not John McCain. Not GWB (although he certainly was a facilitator.) Not conservative Pubbies, who usually meet in a phone booth.

Barney Fthrank (D-Boys and Lovers from GSEs). Chris Dodd (D-Mozilo), Maxine Waters (D-Wackos), Lacy Clay (D-Whatever) Gregory Meeks (D-Twits).

And the GSE hotshots: Raines, Jefferson, and Gorelick.

Sunday, September 28, 2008

"I Have A Bracelet, Too--and They Don't Want Me to Wear It"

Ol' Barry doesn't stop at being a pol.

He's friggin' despicable.

Madison resident Brian Jopek, the father of Ryan Jopek, the young soldier who tragically lost his life to a roadside bomb in 2006, recently said on a Wisconsin Public Radio show that his family had asked Barack Obama to stop wearing the bracelet with his son's name on it

Radio host Glenn Moberg of the show "Route 51" asked Mr. Jopek, a man who believes in the efforts in Iraq and is not in favor of Obama's positions on the war, what he and his ex-wife think of Obama continually using their son's name on the campaign trail.

Jopek began by saying that his ex-wife was taken aback, even upset, that Obama has made the death of her son a campaign issue. Jopek says his wife gave Obama the bracelet because "she just wanted Mr. Obama to know Ryan's name." Jopek went on to say that "she wasn't looking to turn it into a big media event" and "just wanted it to be something between Barack Obama and herself." Apparently, they were all shocked it became such a big deal.

But, he also said that his ex-wife has refused further interviews on the matter and that she wanted Obama to stop wearing the reminder of her son's sacrifice that he keeps turning into a campaign soundbyte

I'll take Palin any day.

HT: The Hatted One

Saturday, September 27, 2008

Understanding Democrat "Truth Squads"

'Nuff said.

HT: Free Republic

Bp. Soto Talks Catholic!

Dreher carries a story from Bill Cork.

The occasion was the annual meeting of the National Catholic Diocesan Lesbian and Gay Ministries, an organization whose existence is, shall we say, at cross-purposes with Catholic teaching on sexuality

So what does Bp. Soto tell them?

"Sexual relations between people of the same sex can be alluring for homosexuals, but it deviates from the true meaning of the act and distracts them from the true nature of love to which God has called us all," Bishop Soto said. "For this reason, it is sinful. Married love is a beautiful, heroic expression of faithful, life-giving, life-creating love. It should not be accommodated and manipulated for those who would believe that they can and have a right to mimic its unique expression."

He did not endear himself to a number of attendees.

There's a Milwaukee-area Board Member of the Nat'l Ass'n LGMinistries. Wonder what he thought...

The Bailout: Considering Ryan's Plan

Just a rumination here...is it "valuation" or "gimme money"?

Paulson's original story was that The Bailout was created to 1) establish a value for troubled Bank assets, and after the 'value' was established by reverse-auction 2) the Treasury would buy the loans, giving the banks the liquidity they need to continue functioning.

OK. Nothing necessarily wrong with that, albeit the details were skimpy and there are a few negatives--such as delivering cash to banks which were (obviously) poorly managed, and getting not-too-much in return. If one trusts Paulson and his eventual appointees to the BailBoard, the deal will come out reasonably close to even, and maybe deliver a small profit. Some economists argue that the Gummint will come out ahead almost no matter what. Maybe. Maybe not.

But is it necessary to deliver cash to the banks? To buy them out of bad loans?

We have a note of skepticism from P-Mac, who writes:

House Republicans, including Wisconsin's own Paul Ryan, are proposing, ...to sell federal insurance against defaults to holders of possibly bad debt, something that transfers the risk and cost to people who made the bad loans instead of to taxpayers

P-Mac also cites a WSJ editorial which supports the Paulson plan:

Another reality is that taxpayers are already going to pay to refinance the banking system. The only issues are how and how much. If the Paulson plan fails, the Fed will still have guaranteed $29 billion for Bear Stearns, will still own AIG, and will still have a balance sheet that increasingly piles up ugly assets. Those are taxpayer obligations too. Meanwhile, banks will continue to fail, and the Treasury and FDIC will eventually have to come up with the capital to rescue those. One hope of the Paulson plan is that it will mean fewer such failures by letting banks sell bad assets for which there is now no market.

But P-Mac is not convinced by the WSJ's logic.

For good reason!

'Selling bad assets' actually does TWO things: it establishes a value for those assets AND sends cash to the banks, as we mentioned above.

But if 'valuation' is the principal concern, then what's the matter with Ryan's plan, which would establish value through Gummint insurance of 'bad' assets?

In other words, Banks legitimately argue that "mark-to-market" forces them to de-value assets to ridiculously low numbers, harming their capital ratios for lending purposes. That is true.

Ryan's plan insures the banks against losses, thus allowing "mark-to-market" valuations to float back to 100% of the face value (par) of the notes (or thereabouts.) The banks cannot lose on the bad loans, but they will pay an insurance premium for that privilege.

Best part: no cash is sent to banks. Bank shareholders pay the insurance premium; and if it is a large premium, shareholders will fire their management for being idiots.

There is no question that something must be done about bank liquidity. Ryan's plan is simple, focused, and transparent--which is all one wants.

And as a bonus, it does not allow for ChristmasTree crap that Barney Frank (D-Boys) and Chris Dodd (D-Not My Fault!!!) would pile onto the Paulson plan.

Definitely worth considering.

The Rest of the Wisconsin Vote Fraud Story

Headless, as usual, has the goods, which he got from McMahon.
The Wisconsin voter eligibility requirements are set up to facilitate vote fraud.

Gore Invented the Internet; Biden Invented Petraeus' Strategy

Bet you didn't know this:

"The fact of the matter is, the only thing succeeding in Iraq right now is the plan that Barack and I talked about that Petraeus is implementing -- giving local control in the very areas with a limited central government."

Saith Joe Biden, whose father was a coal-miner named Kinnock.....

So, as RedState puts it, are we to believe that:

...when Biden was pushing for Iraq to be divided into into three ethnically-homogeneous, unsustainable "states," then abandoned, he was actually working behind the scenes with the freshman Senator from Illinois and General Petraeus to craft a plan to make Iraq more unified and sustainable.

Well, why NOT?

Obama's Caddyshack AlQuaeda Policy

Likely the strongest McCain stomping of Obama-the-Young-and-Naive came when McCain made it clear that AlQuaeda/Afghanistan and AlQuaeda/Iraq are one and the same AlQuaeda.

(Too bad he didn't mention AlQuaeda/South America (the drug connection) in the process.)

Obama seems to think in Caddyshack terms--whack-the-moles one at a time; McCain thinks in system-wide terms--get them all at once.

Re-balance the US forces, yes (Bush has been doing that for more than 6 months, by the way.)

But to leave the 18th green alone while whacking the moles at the 9th?

Perhaps Sen. Obama should study another movie for foreign-affairs training.

"Mommy, Mommy, That's Not True!!"

That seemed to be Obama's principal retort last night.

One wonders how that might hold up in the real world.

Friday, September 26, 2008

Gwen Moore, Co-Sponsored by ACORN

Obama, Dodd, Moore, ACORN, Dodd, Obama.....

So Gwen Moore, Congresscritter WI., shows up on TV flogging a "foreclosure conference" or some such thing in November. It's for those who can't pay for their homes and need ed-yu-muh-cay-shun on how to fix it. Whatever.

BUT, if you can't wait until November, says Gwen, then be sure to call....



The ad didn't have a disclaimer, so it was not paid for by Gwen Moore.

So her face goes on TV, she talks about avoiding-foreclosure-classes, and ACORN pays for the ad.


Pirates Hit the Jackpot

Whoa! Look what I brung home, Mom!

A Russian warship on Friday rushed to intercept a Ukrainian vessel carrying 33 battle tanks and ammunition that was seized by pirates off the Horn of Africa

It was unclear whether the pirates who seized the Faina Thursday knew ahead of time it was carrying 33 Russian-designed T-72 tanks, plus ammunition and spare parts, bound for Kenya. Analysts said it would be extremely difficult to sell such weaponry as Russian tanks

Oh, I dunno. Throw in a lifetime warranty and 1,000 gallons of diesel---hell, that's a deal!! After all, "lifetime" for a tank may not last too long, especially with drivers who don't know what all those funny Cyrillic letters actually spell out...You could even offer E-Z credit terms, with a small $250K downstroke.

The Russkis sent a warship to chase the Ukrainian ship.

Middleton [a civilian analyst] said it was unclear how the pirates might react if confronted by military action, noting that they have fled from authorities in the past. On the other hand, he said, they are usually well-armed and organized and are based in an unstable country — Somalia.

"It could potentially get pretty messy," he said.

Ya think?

The Badger Speaks, So LissenUp!

AB puts thought to pixels and is, of course, correct.

The more efficient solution IMHO is to look at it on an asset class basis. Looking at things on an asset class basis would make it easier to try and value the paper...

With the idea that a value, ANY VALUE, is good.

...where you do the deal is not necessarily the best deal. But it’s a start, especially in the case where the assets are composed of many little assets i.e. mortgages, derivatives and synthetics that became a part of the problem

Congress and the Executive Branch look, from appearances anyway, to be working on a way to get something on the table. If there’s a market and profit component to the final structure, it may actually work

All I want is 1) simple; 2) focused; and 3) transparent.

Bp. Jos. Martino (Scranton) Lays It Out for You

Remarkable. Clear. No-Holds-Barred.

"Furthermore, public officials who are Catholic and who persist in public support for abortion and other intrinsic evils should not partake in or be admitted to the sacrament of Holy Communion. As I have said before, I will be vigilant on this subject."

"Catholics...are wrong when they assert that abortion....is only one of a multitude of issues of equal importance. ....the taking of innocent human life is so heinous, so horribly evil, and so absolutely opposite to the law of Almighty God that it must take precedence over every other issue. I repeat. It is the single most important issue confronting not only Catholics, but the entire electorate."

This is called "teaching." Bishops have that obligation--all of them.
And it should be read aloud at St. Norbert's College.
HT: Rocco

Who IS This B-Yotch, And Who Cares What She Thinks?

Kathleen Parker (of NRO):

Palin’s recent interviews with Charles Gibson, Sean Hannity, and now Katie Couric have all revealed an attractive, earnest, confident candidate. Who Is Clearly Out Of Her League

And after assorted moans, groans, whines, and perma-PMS-driven b-yotching, Kathleen unloads upon us her Sage Advice:

Only Palin can save McCain, her party, and the country she loves. She can bow out for personal reasons, perhaps because she wants to spend more time with her newborn. No one would criticize a mother who puts her family first

Ms. Parker, I have a suggestion for you. Find Mr. Parker and let him have his way with you just once this year.

Perhaps my suggestion is not "Beltway-Cool" enough? I have others which may be less rewarding for you, all involving the phrase 'where the sun never shines.'

HT: Cranky

Rome's New Cong. for Worship

Not only did B-16 bring on three new consultors--all true-blue men who understand liturgy very well; he also made another (less known) move:

... Also relevant to the appointments is the fact that all former consultants, appointed when Archbishop Piero Marini led the office of Liturgical Celebrations, have been dismissed since their appointments were not renewed

That's what's called the 'neutron bomb,' folks. The building stands, but no one's left inside. Rembert Weakland has no more pals at CDW.

Who are the new guys?

The new consultants include Monsignor Nicola Bux [and] includes Fr. Mauro Gagliardi, an expert in dogmatic theology and professor at the Legionaries of Christ's Pontifical Athenaeum “Regina Apostolorum;” Opus Dei Spanish priest Juan José Silvestre Valor, professor at the Pontifical University of Santa Croce in Rome; Fr. Uwe Michael Lang, C.O., an official of the Congregation for the Divine Worship and the Discipline of the Sacraments and author of the book Turning Towards the Lord -- about the importance of facing ad orientem during Mass; and Fr. Paul C.F. Gunter, a Benedictine professor at the Pontifical Athenaeum Sant Anselmo in Rome and member of the editorial board of the forthcoming Usus Antiquior, a quarterly journal dedicated to the liturgy under the auspices of the Society of St. Catherine of Siena

So what?

Here's what:

...Among the changes mentioned was the sign of peace, which could be moved, it was said, from its present position to the time between the Prayer of the Faithful and the Offertory. In fact, Pope Benedict had already indicated in Sacramentum Caritatis that he would let the CDW study this possibility. We now have confirmation that this is actually happening,

The New Rite (Ordinary Form) will undergo some long-needed surgery. And most likely this will only be the first of many changes.

That's what.

Why "The Bailout"? MPS Shows You

OK, so there's this big hoootchakoomiewowzer in DC. In a nutshell, there's a problem: a bunch of people spent more than they could repay. That caused other problems, leading to this hootchakoomiewowzer. Ugh.

Wanna see how that stuff starts?

MPS Board Member:

“I’m saying flat out that unless we change the (state) funding formula, we will be broke in about three years,” Falk said. “In about three years, the whole thing collapses.”

Looks like a money problem to me. How about you?

Less than 3 hours later:

...the board voted 7-2 to offer benefits such as health insurance to domestic partners of nonunionized MPS employees and put the board on record in favor of doing that for all employees.

A fig leaf was temporarily inserted, of course:

Petersons added to the proposal that the change should be “revenue neutral,” so there would be no additional cost to MPS

Does that mean that the "domestic partner" will pay their own premiums? Does it mean that they will pay the cost-escalation which will occur when they incur a major expense (say, heart surgery)?

Who knows? And frankly, Who Cares? That's a problem for the bunch which inherits MPS in "three years," right?

There you have it. "The Bailout" mutatis mutandis, 'splained.

Thursday, September 25, 2008

Woo Hoo Wa-Mu: History

Yesterday they were a $300++ Bn loser.

Tomorrow they will be part of Chase.

VW Tightens It Up

Next time you be-bop over to the VW dealer, be prepared.

Finance terms are getting tighter. Trade-in values are leaner, lease terms include less residuals--

Kinda what you'd expect when things are tight.

Mgr. Rossi of the National Shrine Embarrasses Self In Public

Oh, yes, Monsignor, we'll all just fuggeddaboutit.

Explaining why he ordered the cancellation of a book-signing by Phil Lawler at the National Shrine of the Immaculate Conception, Msgr. Walter Rossi, the rector the basilica, told the Washington Times that Phil's book, The Faithful Departed, covered a subject on which the Roman Pontiff wants no further discussion. During his April visit to the US, the rector said, the Pope said as much.

"Benedict over and over again said it's time to move on," the monsignor said of the sex-abuse scandal.


If the Pope said this "over and over again," it's funny that the message does not appear in the transcripts of his public remarks. It's funny that nobody else heard him say it

The US Bishops, of course, would LOVE to have the whole thing disappear, and they ordered Mgr. Rossi to come up with some line of foofoodust--which he did, obediently--to legitimize their command.

Here in Milwaukee, we have at least $26 million reasons to remember. In LosAngeles and Boston, the numbers are even higher.

And you think, Monsignor, that you have credibility? That you represent some sort of moral authority?

Fuggeddaboutit, Monsignor.

The Clarity of Jos. Ratzinger

Found in an essay written by Fr. J. Schall, who quotes Tracey Rowland:

For Ratzinger, the whole point of Gaudium et Spes, correctly interpreted, is that a 'daring new' Christocentric theological anthropology is the medicine that the world needs, and that it is the responsibility of the Church to administer of it. He is critical of interpretations which would transform Christianity into what he provocatively calls a 'poorly managed haberdashery that is always trying to lure more customers'"

That is clear, no?

"Teen Mass", anyone?

The Reality of This Election

For those of you who think that I am a McCain partisan---you are wrong. I agree with Douthat.

So Barack Obama, who once claimed to embody sweeping, once-in-a-generation change, has ended up running a cautious, negative, and deeply generic Democratic campaign, while John McCain, who's supposedly all about honor and service and aching nobility, has offered a mix of snark, stunts, and manufactured controversies week in and week out.

The rest of his essay amplifies on that graf.

You have TweedleDum and TweedleDee, both massive egos, differentiated only in one regard: McCain actually has substance (most of it wrong-headed.)

THE Fannie/Freddie Problem

There is only ONE problem with Fannie/Freddie.

His name is Barney Frank (D-Boys).

Rope. Tree.

On "Financial Deregulation"

Most references to "financial deregulation" are about the effective repeal of the Glass-Steagall Act, which finally occurred in 1999.

What you don't hear:

[it] passed the House by a vote of 362-57 and the Senate by 90-8,

Gee. You mean there were only 57 Dimowits in the House, and 8 in the Senate that year?

Something else of interest:

Since the 1933 regulatory wall has collapsed as definitively as the Berlin Wall, all the giant financial conglomerates now face oversight and regulation by the Federal Reserve, the Securities and Exchange Commission, the Comptroller of the Currency and the Federal Deposit Insurance Corp

Yah. That's under-regulation, hey.

HT: RedState

Why Is McCain in DC? OR: "Who Needs Obama?"

As usual, to get the realities, you have to peruse the correct blogs.

“We got a good sense last night, even more so this morning,” one top aide said. “Got in a position where Democrats were warily circling McCain — not going to commit to a deal unless McCain does. It was just a time for leadership. So he just stepped up.”

(Quoted in No Runny)

Contrast to this mindless rant (excerpt) from Folkbum:

The John McCain campaign has become just one hail mary after another. It's hard to take seriously

I had earlier mentioned that McCain was playing with Obamamama's mind by going to DC for the negotiations--and he is. Pushing off the debate will throw The O-and-Savior off his game.

At the same time, it is clear from the WaPo quote that both Democrat and Republican Senators view McCain's contribution as essential.

And it's also clear that nobody, but nobody, views Obamamama's contribution as essential--or even necessary. Harry Reid certainly doesn't.

That ought to tell you something.

Gummint Health Care Stories, #56,946

Here's a nationalized-medicine patient who will NOT cost a lot to treat.

Health officials are still investigating how a man found dead at the Health Sciences Centre ER waiting area escaped the attention of medical staff for 34 hours.

"Staff weren't aware he was waiting for care," said Dr. Brock Wright, chief operating officer for the Winnipeg Regional Health Authority, at a news conference this morning. "They didn't know he was in the queue waiting to be seen."

Dead patient.

Brain-dead staff.

HT: Moonbattery

Dave Obey: "Shepherd" or "Midnight Operator"?

Despite the JSOnline's headline implying that Dave Obey is some sort of good boy for his "work," a better description would be "conniving backroom pol."

Here's the JS headline:

Obey shepherds spending bill to House passage

Reality? Far different.

"Congress is being forced to approve a package that was created in a backroom by a handful of Democrat leaders and staff," Rep. Jerry Lewis of California, the top Republican on the Appropriations Committee, said in a statement. "This legislation has never seen the light of day, and has had no oversight or scrutiny by the vast majority of representatives, senators, the media or the American public."

'Profanity Dave' didn't want anyone looking too carefully at his handiwork--which says volumes about his preferred modus operandi.

Long Delay in GAB Case

Apparently this is one really, really, really, really busy little judge.

Judge Maryann Sumi also agreed to allow the state Dem and GOP parties to intervene in the suit as well as three public employee unions.

But she will not hold another hearing in the case until Oct. 23, just two weeks before the November election

People who speculate that 'the long delay in hearing the case is politically motivated and can only help James Doyle's party' are, of course, wrong.

Political considerations NEVER enter into Dane County officials' decisions.

Let Me Call You Sweetheart, Jamie Gorelick


Countrywide Financial Corp., the biggest U.S. mortgage lender, made large, previously undisclosed home loans to two additional executives of Fannie Mae, the government-chartered firm at the center of the U.S. credit crisis.

One of Countrywide's previously undisclosed customers at Fannie was Jamie Gorelick

Another Countrywide client was recently ousted Fannie Mae Chief Executive Daniel Mudd,

The Gorelick note was "special"!

Ms. Gorelick received a rate of 5% for the first 10 years on a $960,149 refinancing. The transaction was handled by another employee who sat next to him, Mr. Feinberg said. The average market rate for loans of the type obtained by Ms. Gorelick and Mr. Raines fluctuated around 6% at that time, according to data from HSH Associates Inc

Ms. Gorelick cannot recall that her treatment was "special."

Wednesday, September 24, 2008

Best Summary EVER of The Bailout

HT Ace.

This is readable, understandable, and not lengthy.

Besides, it knocks all the twinkle-toe arguments from the 'Pure Capitalist' Morons (and the 'Dirty Little Democrat/Commie' Morons) on their cans.

If you read it, you'll know more about the situation than Herb Kohl does.

More/More Credit Lockup?

OK, so the country's largest Chevy dealer goes down.

A few thousand employees out of work, and GM has a helluvalotta inventory that they didn't expect to have. It's meaningful, but not the end of the world as we know it, right?

That's not all.

In early August Caterpillar brought a 5 year bond to market, the 4.90 of August 2013. That bond priced 175 basis points cheap to the benchmark 5 year Treasury note. With the turmoil in the credit markets the last several weeks, the issue has widened on spread and this morning it was quoted 225/ 210.

The talk on the new issue is T + 325 basis points. That is fully 100 basis points cheap to the outstanding issue and 150 basis points above where the same maturity was priced six weeks ago.

CAT, for crying out loud.

But that's not all:

.American Honda (the finance arm of the car company) just issued 5 and 10 year bonds similar to Catapiller. They are rated AA, and the offering went off at 400 over [Meaning that AmerHonda paid 4 cents more in interest for each dollar of debt.] Which also means that Honda consumers will be paying 4 cents more/dollar of debt.

Credit lockup still look good to the Pure of Principle?

Both from McArdle's sources, mis-spellings and all...

Credit Lockup Troubles? UPDATED

Maybe it's the credit lockup, and maybe it's not.

The USA's largest Chevrolet Dealer (Bill Heard), which sold 25% of all Chevys sold in the USA last year, just went belly-up.

That would be 14 dealerships, largely in the Mid-South.

Auto dealers live on credit. It finances their inventories, and finances their customers.

UPDATE: Apparently Bill Heard had a number of problems; it's possible that the company's disregard of the law had more to do with the closure than any financial problems.

OODA Loop, Phase III


McPain pulls out of the Foreign Policy debate to attend to the nation's business.

Obama, stunned, says "Nope."

A Different View of the US Economy

Ettore Gotti Tedeschi, an Italian economist and professor of financial ethics at the Catholic University of the Sacred Heart in Milan, Italy, wrote an article for L'Osservatore Romano, the Vatican's daily paper.

He addressed the current crisis in the US economy, and his take is interesting.

The current financial crisis pummeling the United States and beyond is a sign that the so-called "new economy" and its risky investments have failed, the Vatican newspaper said.

The booming growth of financial markets did not correspond to real growth or concrete development for society because it created an artificially robust gross national product, said a Sept. 24 article in L'Osservatore Romano.

The only real growth registered in this crisis has been "the commissions, profits of the banks and bonuses for the managers," it said.

The U.S. financial meltdown has been blamed on "the greed of managers and lack of regulations. But curiously, no one ever refers to the indirect responsibility of the government's economic policy" which, he wrote, tried to cover the lack of any real economic development with a booming Wall Street.

He said the U.S. government's proposed bailout may stave off any worst-case scenario for its troubled financial markets, but it will not repair the root causes of the crisis.

"Despite various attempts, the Western world does not know how to map out a model of development that is capable of guaranteeing stable wealth," the article said.

The West has "not succeeded with its new economy project, it did not succeed with accelerating growth in Asia by transferring low-cost production (there), and it did not succeed after inventing a boom in the GNP through risky financial models that were poorly conceived and badly regulated," it said.

"In order to maintain this sham GNP, the banks financed things that were not guaranteed" and that should not have been financed, like the subprime loans, it said.

Financial institutions created an "economic growth out of debt and, therefore, (created something) very risky," it added. The article said the lesson to be learned is that nations cannot build a healthy economy or experience real development if it is not based on "balanced demographic growth."

So happens that the Vatican's Pontifical Gregorian University and Barclays Bank had sponsored an international conference on economics the same day that article ran.

Giulio Gallazzi, founder and president of the financial and business consulting firm Socially Responsible Italia, was one of the conference speakers

He said when an economy is based predominantly on the health of its financial markets and not on growth in the industrial, manufacturing and service sectors, the bubble of wealth that is generated is more difficult to distribute to the rest of society.

The seemingly paradoxical term "jobless growth," he said, indicates this problem in which a nation's GNP increases without an increase in employment, which means much of the new wealth does not trickle down to the working classes.

Nations need to reconsider now-debunked economic theories from the last century and create new rules that favor long-term growth and investments that involve "measured and manageable risk," he said.

Businesses and stockholders should also engage in "value sharing" in which they choose investment opportunities not solely for their chances at reaping a profit "but as an opportunity to contribute to the common good" and sustainable development.

He and other speakers emphasized the importance of having banking institutions and foundations concentrate on helping the local communities in which they are based.

Besides offering microcredit and small-business loans, local projects should also include scientific, humanistic and cultural initiatives that foster a person's "full development," the speakers said.

What a concept! Economics as if MAN matters!

What DO the Bishops Say About....

....voting for an abortion absolutist such as Obamamamamama?

Actually, the bishops said candidates who promote fundamental moral evils such as abortion are cooperating in a grave evil, and Catholics may never vote for them to advance those evils.

A Catholic voter’s decision to support a candidate despite that gravely immoral position “would be permissible only for truly grave moral reasons, not to advance narrow interests or partisan preferences or to ignore a fundamental moral evil.”

This standard of “grave moral reasons” is a very high standard to meet. The bishops added that “a candidate’s position on a single issue that involves an intrinsic evil, such as support for legal abortion or the promotion of racism, may legitimately lead a voter to disqualify a candidate from receiving support.”

--Letter to the NYSlimes authored by Bps. Wm. Murphy and N. DiMarzio, 9/24/08

Recently a nice young fellow who teaches at a Catholic school in the Twin Cities advised a family member of mine that '...some Catholics consider voting for Obamamamamama to be the morally correct thing to do.'

Fortunately for him, that family member was not possessed of a baseball bat. Not only was his tone utterly condescending, he is (obviously) morally under-informed.

And he graduated from a Catholic high school and college...

HT: American Papist.

Could a Daley Family Member....Lie???

Heaven forfend!

Tom Roeser:

In a TV ad, John McCain listed Bill Daley as a lobbyist which has drawn a shout of anger and resentment from Daley since he has never been registered as a lobbyist. The shout he gave off was that of a wounded animal, unjustly shot at, in a forest.

Dear me, as one who went to Washington weekly as a lobbyist for Quaker Oats for 27 years and would frequently see Bill Daley on the early morning UAL or American Airlines 7:30 a.m. Red Eye, I am utterly aghast that all the while, big firms were sending Bill Daley to D. C. because of his expertise on the technical end of Big Business…and not because his name was Daley, that he was the mayor’s son and mayor’s brother but because he was so expert in business economics. All the time I thought it was because he was an expert at plying his trade with Democratic power brokers who would recall his surname with fondness

...All the times I saw him chomping steaks with Democratic power lords at Morton’s of Chicago on the edge of Georgetown and tippling drinks at Hill fund-raisers he was sharing his great knowledge of the economy and his scientific expertise with the telecommunications industry without any political connection…and was not seeking favor with the power people which is what a lobbyist is supposed to do. How I misjudged Daley all these years! Indeed, John McCain should be ashamed of himself for saying that Daley was lobbyist.

Ergo: Daley was NOT a lobbyist or applied pressure or gratification to lawmakers in return for favors because Daley never registered as a lobbyist!

...It is indeed gratifying to see his anger at being singled out as having been hired as a lobbyist when he didn’t fill out the lobbying forms and hence could not be a lobbyist. That proves McCain is a liar, right? Well that’s what the Chicago press thinks…and you know the Chicago press fully trusts that a Daley assigned to Washington is not a lobbyist and isn’t muscling for his clients because, after all, he didn’t file a lobbyist’s registration fee.

You kinda have to have your "droll" glasses on to read that post.

Seeing as Bill Daley's from Chicago, it is frankly impossible that he would NOT fill out the forms and pay the fees if he were .....ahhhhhh.....lobbying. Especially since he's a member of the esteemed (and notoriously HONEST) Daley family.

Hell, there are probably 10,000 registered voters in Chicago who will testify to the Daley Honesty. Maybe 30,000. Maybe 50,000.

Is the Election Over?

Maybe I missed something, but I thought that the Presidential will be held in November.

Democrats have begun striking coins with Barack Obama’s profile — and already proclaiming him President

A company in Birmingham's Jewellery Quarter is making commemorative coins for American presidential hopeful Barack Obama

...The coins show Senator Obama’s face, along with a picture of the White House and the legend “President of the United States of America”.

Geez. That could save a helluvalotta time and money, no?

HT: Ed Morrissey

PJBuchanan on The Bailout

He's right.

No, it is not fair. Yet, Treasury’s Hank Paulson may be right. To save the sheep who might have been wiped out in a general financial panic, we may have to save the pigs

Buchanan is a historian, and reminds us of a few inconvenient facts.

-the Big Apple had to be rescued by Gerald Ford.

-Marion Barry’s Washington, D.C., was next in line at the cashier’s window

-In the Reagan era, it was Chrysler. Later that decade, Citibank, Chase-Manhattan and Bank of America were staring into the abyss, as Latin American regimes

-Then came the Mexican and Asian financial crises and the U.S.-IMF bailouts of the 1990s

And guess what? "Flyover Country" inhabitants paid the most--but not necessarily in taxes.

Who ultimately paid for the Mexican bailout? Florida tomato growers wiped out by Mexican producers, the price of whose tomatoes was chopped two-thirds by the devaluation. U.S. autoworkers who saw Ford and Delphi plants shuttered as new Ford and Delphi plants opened in Mexico. U.S. textile workers whose mills closed and jobs vanished.

Middle-class American families have paid and paid—in lost jobs, lower wages, a falling median income—to save the big banks from the consequences of their follies. And those bank bailouts are behind the trade deficits that set five records in the Bush era, reached 6 percent of GDP, forced huge U.S. borrowings from abroad and ravaged the dollar

If there's any good news, PJB speculates that at least McPain and Obamamamama's high-spending promises may be voided by the pile-on of Gummint debt this bailout will occasion.

I think PJB is an optimist.

Even More, Yet, Again, on The Bailout

Eminently sensible stuff here, cited by PowerLine.

David John, argues in favor of (1) strict oversight over all the new RTC's activities, (2) allowing the new RTC to exercise rights over purchased securities, as opposed to being a passive holder of them, (3) allowing it to hold the assets without "sunset," so as to maximize the ability of taxpayers to receive full value for them, and (4) a limit on total taxpayer exposure. It is my understanding that the Treasury Department's proposal contains all of these features [this from a Heritage Foundation paper].

There are some sensible additions to the package which John endorses:

...the Treasury draft lacks the two features that John considers important. First, the new RTC should be allowed to refer cases to the Justice Department for civil suits to recover bonuses or termination compensation received by executives where appropriate. Second, the new RTC "should purchase securities only at a deep discount, where the market for the security is having difficulty clearing" in order to "exact a cost on the asset holder and ensure that only dysfunctional markets are eligible."


..."the new RTC should focus on restoring the markets, not on providing funding for other programs or serving as a platform for other goals."

By now, anyone who has read more than Democrat Party talking points on the issue should understand that the market-gridlock on these securities was caused by several elements:

1) Democrat legislation and regulation forcing or enabling Fannie/Freddie (and banks) to make bad loans.

2) Democrat and Republican passage of SarbOx, which contained the infamous "mark-to-market" clause, meaning that banks who were forced to make crappy loans were also forced to write down the value of those loans.

3) Al Greenspan's horrific "easy money" policies--which supported ridiculously high purchase-price valuations of housing by stuffing cash into the markets at unrealistically-low rates.

4) Greed, corruption, and abominable behavior by a number of financial execs, including those NOT on Wall Street (see, e.g., Countrywide Loans and WaMu.)

5) Greed, corruption, and abominable behavior by a number of Congressmen who took monstrous campaign contributions from Fannie, Freddie, Wall Street, and the banks (not to mention the Realtors)--see, e.g., Dodd and Obama.

6) Greed and/or stupidity on the part of home-buyers who THOUGHT that the value of their homes would rise forever--and quickly--beyond the value of the mortgage they incurred to purchase it. This particularly applies to 'flippers' and 'climbers.'

Some, such as Gingrich and Malkin, seem to think that crippling the banking system is better than a $700Bn bailout. Obviously, reality doesn't cloud their judgment.

Others, notably Congressional Democrats, seem to think that more lousy lending (and even MORE targets for bailout dollars) is a better solution than what's proposed by Paulson, modified with the above suggestions. These are people who suffer from mental diseases, possibly brought on by physical diseases. (Remember King Herod?)

Cleaning up Fannie and Freddie and repealing CRA/HUD regs should be the first items on the Congress' agenda for next session.

They won't be, of course, because of #5 above.

But repeating The Depression to teach Democrats a lesson is not in the national interest.

NYSlimes v. Truth

Seems that the NYTimes/Slimes (they're interchangable names) can't handle the truth.

Or at least they won't print it. The slimetime says Rick Davis is a lobbyist.

McCain's response:

As has been previously reported, Mr. Davis separated from his consulting firm, Davis Manafort, in 2006. As has been previously reported, Mr. Davis has seen no income from Davis Manafort since 2006. Zero. Mr. Davis has received no salary or compensation since 2006. Mr. Davis has received no profit or partner distributions from that firm on any basis -- weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annual or annual -- since 2006. Again, zero. Neither has Mr. Davis received any equity in the firm based on profits derived since his financial separation from Davis Manafort in 2006.

Further, and missing from the Times' reporting, Mr. Davis has never -- never -- been a lobbyist for either Fannie Mae or Freddie Mac. Mr. Davis has not served as a registered lobbyist since 2005.

No salary, no other compensation, no equity, no distributions....geez, that usually means NO EMPLOYMENT CONNECTION.

HT: PowerLIne

Big Spenders: Wisconsin Gummints

Wisconsin Taxpayers Alliance:

From 1983 to 2007, state aid and tax credits for kindergarten through grade 12 schools rose 320%, state expenditures were up 222%, inflation rose 115% and UW funding increased 99%, according to the report released Tuesday by the Wisconsin Taxpayers Alliance

WTA seems to be complaining that UW funding is shorted.

Thank God for small favors. And that IS a small favor, given the above.

Going Bankrupt? Offer MORE Benefits!!

What else could MPS do to engender confidence in its financial smarts?

An effort that began more than a year ago to give domestic partners of Milwaukee Public Schools employees the same standing for fringe benefits as employees’ wives or husbands took a major step forward Tuesday night when the School Board’s finance committee voted 3-2 to support the idea

That's the ticket!!

Tuesday, September 23, 2008

Good News From the UK

This is something that rings true:

The music in most Roman Catholic parishes is so bad that it's turning practising Catholics into lapsed ones.

Of course, horribly sung Chant also caused the Lutheran Revolution, IMHO.


According to James MacMillan, arguably Britain's finest composer, "our liturgy has been hijacked, in some places, by opportunists who used the vacuum created by the Council to push home a radical agenda of de-sacralisation". But he also reckons that there is a growing movement against "enforced banalities".

And here's the action plan:

Today I spoke to a leading Catholic cathedral musician, who said he was fed up with SSG composers "pushing their own rubbish at dioceses in their endless workshops". His suggestion: commission simple, chant-based settings of the liturgy from composers and publish them free of charge on the internet.

Imagine the fury of certain well-off composer-publishers if settings of the Mass and antiphons that were better than their own tripe – and more in line with Pope Benedict's teachings – could be downloaded for nothing. Or perhaps this music could be given away free with copies of a leading Catholic newspaper. Now there's a thought...

Simple, eh? Break the back of OCP by publishing actual music free.

Insight on Obamamamama

This essay is spot-on, and reflects accurately my thoughts. Malor calls it precisely.

Christopher Hitchens asks: "Why is Obama so vapid, hesitant, and gutless?"

Uh, is that a trick question?

Obama acts like an aimless twit because that's what he is. There is no "deeper Barack." Sure, he does fine on the topics he's rehearsed a hundred times (race, healthcare, race, anti-Bush, race, Iraq, oh and race), but give him something new to to think about and he defaults: "Present."

...He seems vapid and hesitant because he's never really sure if the answer he's giving is the right one. He's worried that his minders are going to have to turn him around so he can explain away any "inartful" statements.

You see where this leads, although the author did not say so explicitly: it will not be Obama who is making policy, nor "running" the country. It will be his advisers, and THAT cast of characters is not too savory. In fact, none are more than partisan hacks with their own power-trip agenda.

This separates Bush and McCain from Obama. Clearly, GWB and McCain are not Conservatives; just as clearly, they are both very independent and quite stubborn. It may be that Bush and McCain's final policy will coincide with that of one or more of their advisers--but that's more likely to be coincidence than design.

Obama, however, is not a leader. He is a creature of the Machine--he is exactly what Axelrod and Plouffe built and programmed.

And that Machine is not interested in "the National Interest." It is self-interest, pure and simple.

Look no further than Fannie/Freddie to see the Machine in action.

Even MORE, Yet, on the Bailout

Think this is beanbag?

Democrats in the Senate and House believe that if they can string out negotiations on the federal financial markets bailout through Tuesday, "we can get everything we want and more, including solidifying the Obama campaign," says a Senate Banking Committee staffer working for the majority.

"Let's see what the White House has to say when the market is cratering again." . . ."This is a Bush and McCain problem, not an Obama problem no matter how much they try to pin it on him and us," says a House Democrat leadership aide.

What was that jazz about 'the public interest'?

Ahhhhh, nevermind.

HT: McCain

Even MORE on the Bailout

RedState's Cianfrocca has an overview worth reading.

Does Mr. Paulson intend to systematically purchase MBS at higher prices than current market values would suggest?

This would save Wall Street’s bacon. A great many firms would be relieved of the burden of their past errors and mismanagement, and would get a fighting chance to stay in business and attract new capital.

Is that fair and right? No, it’s not. It would also put the taxpayers in a position to absorb Wall Street’s losses, through higher taxes, higher inflation, or both. (Politically, of course, this is dynamite.)

Got that? Purchasing at par (100% of face-value) is not fair and endangers taxpayers to some (yet-to-be-determined) degree.

What if he means to value his MBS purchases fairly, or to undervalue them? That will force the pain to be borne by the firms that made the bad decisions and took too much risk.

Is that fair and right? Yes, it is. But it will also force many of these firms out of business. And that would have severe follow-on effects in world markets, as a cascade of liquidations cause asset values to collapse across the world.

More than one analyst has suggested that we could see a 25% drop in the US stock market, or worse.

That's the alternative. Purchase them at some "fair" price (say, e.g., a discount of 20% from par) and there's a significant liquidity crisis. What he does NOT say is that this will have a serious impact on day-to-day credit markets.

His conclusion:

We need to perform the purchases of MBS either at a fair valuation or at an undervaluation. Because, as with the Resolution Trust Corporation, that will give the authorities time to control the process and work everything out carefully, perhaps over the next two years.

The time element is extremely important. The actual values of the CDOs ("loan lumps") will not be known for at least a couple of years, maybe 5 to 10 years. Treasury can always assign penalties (or rewards) later.

What about The Objectors, like BillyBoyKristol, Limbaugh, Newt, Barney, Dodd, et al?

Instead, the perception is growing in financial markets that the deal will die in Congress. The culprits: Republicans who are dead-set against a bailout on principle, and Democrats who are seeing a chance to jump-start their plans for the government to take over the economy and run it in a corrupt way

Like it or not, his assessments of the politicians is dead-on. Who loses big-time if the deal does NOT go through?

If there’s no deal, there’s no upside for Republicans

I agree with him there. If the Republicans liked FDR's regime, they will LOVE Obama's.

Members of Congress in both parties: Get your heads out of your lower intestinal tracts and do the people’s business for a change

I know. It will be hard to get out of your habits...

ACORN: Still Consistently Fraudulent

New Mexico, Wisconsin, Michigan, and now North Carolina.

The move by RNC Chief Counsel Sean Cairncross and Communications Director Danny Diaz followed a Herald-Sun report that Durham County Board of Elections Director Mike Ashe wants state officials to check about 80 voter registration forms for possible fraud.

Gee. Makes you wonder about Illinois, no?

Nah. Couldn't happen there.

HT: Moonbattery

Newt: Still a Geek

Gingrich is the kind of guy who everybody has known.

You put him in a closet while he works on his idea, and slide a pizza under the door now and then. But you never, EVER put him in front of customers.

In other words, he's really, really smart, but disconnected from reality.

Here's his "solution" to the liquidity crisis:

...suspend the mark-to-market rule

A very good idea. If it can be done administratively, do it!

...repeal Sarbanes-Oxley

Sure, Newt. How about tomorrow? Well--OK--how about September 30th?

...match our competitors in China and Singapore by going to a zero capital gains tax

Another great idea. Another non-starter.

...immediately pass an “all of the above” energy plan designed to bring home $500 billion of the $700 billion a year we are sending overseas.

Sure. Why not bundle that with #s 2 and 3 above. September 30th still OK with you?

All of these are fine and dandy. NONE of them will happen with Queen Nancy and Harry the Twit running Congress.

Thanks, Newt. Go get your pizza.

Realistic people will get the job done while you design the Perfect Society.

HT: Gop3

Monday, September 22, 2008

How Bad WAS It Last Week?

If you think Paulson just decided to ask for $700Bn because he had nothing better to do that day, get this from McArdle:

...What happened last week is that one money market firm advertised its entire portfolio, including a large chunk of Lehman paper worth slightly less than 2% of the total fund assets. Spooked investors, who did not want to lose out if the fund "broke the buck" started withdrawing as fast as their little fingers could punch the buttons on their phones.

...Thus was touched off a general run on money market funds that held money for institutions

...Suddenly, said one source, no one could sell two-week Wachovia paper at 30% yield-to-maturity-

...The fund runs started to hit money markets that had no obvious problems (Putnam, BKNY/Mellon, American Beacon) causing them to shut down or redeem the shares in kind. Investors began worrying State Street's massive short-term investment fund complex was holding Lehman, which whipsawed its stock price 50% in one day

The red highlight is bonkers wild significant to anyone who's been around finance for more than a week or so.

McArdle then says what I posted earlier, with a much better slant:

No doubt some of my readers are rubbing their hands and saying "Exactly what should happen to people who carry credit card balances!" And I'm sure that among you there are people who pay cash on the barrel for everything, having never taken out any loan for a house, an automobile, an education, a personal financial crisis. These people never even use an American Express Card, which is, of course, a short-term loan. They also do not work for companies that borrow money to buy capital equipment or finance expansion, and their firms do not experience any mismatch between their payables and their receivables. Those people should stop reading now, because I'm pretty sure the Amish aren't supposed to use the internet

McArdle was kind enough not to add "jackass!!" after that paragraph, so I did on her behalf.

There's a lot more at the link. She's savvy, and 'splains it for you.

Let's stop the silly talk and get this deal done. Let's do it the way ABadger wants:

1) Non-political;
2) Clear mission and mandate along with adequate funding;
3) Professional management paid at market rates….this would include bonuses if earned;
4) All profits returned to the funding source….i.e. the government to the general revenues funds;
5) Exhaustive transparency

And if Congress can't do it right, then let's commence the Revolution!!

Belling's Right, LImbaugh's Wrong (More or Less)

On The Bailout...Belling is right: do the deal and shut up, so long as Congress doesn't screw around with this. Limbaugh's bellowing about "free markets" is seriously erroneous.

Some stuff you need to know before you evaluate The Bailout:

1) 'Impairments' and write-downs on good loans.

Yes, indeed, the credit markets could literally lock up and disappear if something is not done. That means that you might not get PAID, folks, if your employer is dependent on short-term or seasonal credit facilities.

(Work for a building contractor? This means YOU. Work for a company that makes stuff like toys, lawn-mowers, or snowblowers, that is a seasonal good? This means YOU. Work for a school system that gets 2 tax-infusions/year? A municipality that gets only 2 tax-infusion payments/year? How about an automobile manufacturer or dealer? This means YOU.)

Why a "credit lockup'?

Because FDIC and Fed Reserve bank examiners are demanding that Banks write off loans that actually are GOOD loans--but they look 'hinky' to the examiner. This is not widely reported, but trust me, it's happening. Banks don't get a vote; they must comply. This is impairing their capital ratios, meaning that they cannot make OTHER loans--like to your employer (see above.)

'Hinky' doesn't mean that the borrower is not paying; it means that perhaps the collateral doesn't seem to have the value that the Bank says it does. Easy example: if your house is worth $400K but in a FIRE-SALE it's only worth $250K and your mortgage is written for $300K, your collateral is "impaired." You're still making payments! You keep up the house, and pay the insurance and taxes! But the examiner says it's 'hinky' because of "mark-to-market" rules which use FIRE-SALE as a factor.

The same applies to businesses. The machinery which is collateral for the loan is worth $1.5 million, unless it's a FIRE-SALE, in which case it might only be worth $500,000. So it's 'impaired' and the Bank must write down $1 million or so.

Most important, this applies to the "loan lumps" (CDO's) that the Bank purchased from Fannie, Freddie, or Lehman, or Bear. This is large-money stuff, folks. If those CDO's are 'impaired,' that takes out a large amount of lendable capital.

Do that often enough and the Bank cannot make any other loans.

Lockup ensues, and a crash will happen.

2) 'Impairments' and write-downs on bad loans

Yes, there are bad mortgage loans. Let's define that a bit, shall we? For our purposes, "bad" mortgages are those on which no payments have been made for more than 90 days. They're going into foreclosure.

That's only about 5% of the loans out there, which is NOT a lot (although it's higher than the historical average.) They must be written off--but the value of the houses and land is not ZERO; it may be anywhere between 20% - 90% (or more) of the mortgage amount. In other words, it's not a "total loss." In fact, it may even sell for MORE than the mortgage amount, meaning that there's a profit here (sorta--there are expenses, too....)

3) Short-term and Long-term thinking

Short-term, the Banks need relief. They cannot operate with impaired capital, and the value(s) of the "lumps of mortgages" they hold (purchased from Lehmann, or Bear, or Fannie/Freddie) is not determinable. If they get rid of the "lumps," they will have 'fixed' their capital ratios and will be able to lend.

Long-term, the "lumps" of mortgages will pay off, with a few exceptions. 90%++ are being paid now, regularly, no problem. 5%++ are not. The 5%++ problems will be a problem for Gummint (or the taxpayers, if you think that way) and that's the risk.

4) Risks

The biggest risk is NOT the loan packages. It is Congress. This is where all the REAL worries should be concentrated. If the plan is not Simple, Focused, and Transparent, it will be a problem.

All the Treasury should do is pick up the loans, collect what they can in an orderly fashion (that will be most of the loans, no problem) and dispose of the bad stuff in an orderly fashion. NOTHING ELSE SHOULD BE IN THE LEGISLATION. NOTHING. ELSE.


Some people seem to think that "private enterprise" can muscle its way out of this, if only the Gummint would go away and leave them alone. Balderdash. They have no understanding of the banking system. None. Zero. Zip. First off, $700 Bn is a helluvalotta money. You're not getting that from your Mom, or even from Rush Limbaugh--or from Bill Gates, or Warren Buffett. Ain't there. Can't happen.

Secondly, the Banks will ALWAYS be regulated--for better or for worse.

Talk to an honest banker and they will tell you: the Banks got into this because a number of them were (and are) run by greedy little bastards who saw Big Returns (and Big Bonuses) in those CDO's. But that's a minority of bankers, and as usual, the 10% cause 80% of the problems.

Third: Congress and Presidents caused a lot of these problems with stupid laws. What's new? Congress may be better or worse than greedy bastards--which poison do you want? You're going to have one or the other (until the next Revolution, hint, hint...)

Sure, things will go wrong with the Big Bailout. Congress will interfere at some point, sooner or later. But if they keep their mitts off it for three or four years, there's a good chance that it will work out for the best.

Either that, or fuggeddabout that paycheck--right around Christmas.