Friday September 26 Housing and Economic stories

TOP STORIES:

Click Here To Play They Want Mama To Make It All Better - (www.youtube.com) Rep. Marcy Kaptur D-Ohio 9th District Toledo making one of the better arguments against the bailout. Part of the transcript is listed here: Taxpayers did not get their fair share of the upside, but they are getting all of the downside and a huge IOU. While Wall Street is made whole, the folks on Main Street are getting the bill. What has mama given us here? Are Mr. Bernanke and Mr. Paulson giving them any bet on the upside? They're not even helping them on the downside. I feel sorry for our country, I feel sorry for this Congress, that we can't do a better job of standing up for the people today. Where's the Federal Reserve, Where's the Treasury? Why do they only help the rich people? What about the rest of the people who have to work for a living? Wake Up America. Wake Up America. Contact your member of Congress.

Unusual Action in Goldman Trading - (www.cnbc.com) I wouldn’t be surprised if the trading was initiated by Goldman Sachs itself, as we know the government and the Fed would never prosecute Goldman. In an interesting twist, an unusual surge in Goldman Sachs' share price in the last 10 minutes of trading on Tuesday raised eyebrows on Wall Street, as it came two hours before news of Warren Buffett's big investment in the bank. Goldman Sachs shares rose more than $5 heading into the close of trading even as the rest of the market tumbled, leaving traders suspicious that inside information was used to make a profit.

Ron Paul: Bailout is Sinister - (www.campaignforliberty.com) Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike. The events of the past week are no exception. The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! “This is welfare for the rich,” he said. “This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters.” The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

Upheaval on Wall St. Stirs Anger in the U.N. - (www.nytimes.com) With a pillar of American power — its financial leadership — so badly shaken, there was a certain satisfaction among some of the attendees that the Bush administration, which had long lectured other nations about the benefits of unfettered markets, was now rejecting its own medicine by proposing a major bailout of financial firms. President Bush, making his eighth and last address to the United Nations, with which he has had a troubled relationship, sought to reassure world leaders that his administration was taking “bold steps” to stanch the economic crisis in the United States, which, he said, “would have a devastating effect on other economies around the world.” Amid a long ode to the importance of continuing the fight against terrorism, he devoted one paragraph to the rescue plan. “We’ve promoted stability in the markets by preventing the disorderly failure of major companies,” Mr. Bush said. He noted that many were watching how the United States responded because economies were “more closely connected than ever before.” But for some leaders, the Bush bailout plan seemed hypocritical given the tough course Washington has often advised struggling nations to take. President Nicolas Sarkozy of France described the crisis as the worst financial mess since the Depression of the 1930s and the financial system as “insane.” He called for a summit meeting in November to determine how to address the problems and to develop greater international regulations of financial markets. Many leaders echoed that latter demand. Mr. Sarkozy also said that at a news conference he had talked with Wall Street bankers, but that they claimed not to know who was responsible for the mess. When banks and hedge funds hand out fat bonuses, they are all willing to gloat about their success, Mr. Sarkozy said, “but when there are deficits we don’t know who is responsible.”

Agents Raid Office in L.I.R.R. (Long Island Railroad) Disability Inquiry - (www.nytimes.com) Please don’t tell me that we can’t reduce costs (by billions of dollars) before raising taxes. I am sure we can find thousands of these types of cost saving measures to focus on before raising taxes. Here is another example of ¼ of a billion in waste to pay lazy railroad retired workers. The inquiry into the legitimacy of thousands of disability payments to retired railroad workers intensified. The raid came two days after The New York Times reported that nearly all career employees of the railroad — from 93 percent to 97 percent of retirees every year since 2000 — retire early and soon after begin getting disability payments from the federal agency. The retirement board almost never turns down a claim, and since 2000 has paid more than a quarter of a billion dollars in disability checks to former Long Island Rail Road workers, The Times found. Responding to the findings, Gov. David A. Paterson immediately directed the state attorney general to begin a wide-ranging inquiry into disability claims at the railroad. On Tuesday, he called on Congress to aid in that investigation.

CEOs 'Unpatriotic' If They Refuse Pay Cut: Rep. Frank - (www.cnbc.com) And to take it one step further, the biggest moron in Congress, Barney Frank should not be eligible for a pension as he was asleep at the wheel while all this was occurring.

Fed Acted Like a Liquidity Drug Dealer: Economist - (www.cnbc.com) – Good video interview with Dr. Marc Faber. The Federal Reserve, which has encouraged excessive borrowing, is to blame for the credit crunch that has gripped world markets for more than a year, Marc Faber, the author of the Gloom Boom & Doom Report, told CNBC on Tuesday. "About 15 percent of U.S. households have negative equity. Who supplied the leverage into the system? It's called the Federal Reserve Board," Faber said. "If I'm the drug dealer I'm not responsible that everybody takes drugs, but I facilitate it, especially if I give it out free of charge, I can enlarge the market share, and that's what the Fed has done." Liquidity will dry up even more, volatility will stay high and financial assets are going to suffer as the crisis continues to unfold. The bailout plan is unlikely to work and the global economy will take the hit, he predicted. "People rely on the people in Congress, at the Fed, at the Treasury, people that brought us into this trouble, to take us out of trouble. I don't think they will succeed," Faber said. "We can have recovery rallies but a new high on the S&P is practically out of the question for a very long time. In real terms, equities are still very high and economically, I think the world will go into a slump." We have to see very clearly that the cause of the problem was excess leverage. The biggest hedge funds were Fannie Mae and Freddie Mac; they had the leverage of one over 150 and under the eyes of Congress, under the eyes of the SEC and everybody… and nobody did anything about it. Then, people go and bitch about the short sellers," he added

Bernanke Tells Taxpayers To Pay Above-Market Prices for Bad Debt - (www.bloomberg.com) Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis. ``Accounting rules require banks to value many assets at something close to a very low fire-sale price rather than the hold-to-maturity price,'' Bernanke said in testimony to the Senate Banking Committee today. ``If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.''

Cramer: 5 Lies About the Paulson Plan - (www.cnbc.com) – Cramer wrong as usual, and also as usual, trying to push through Wall Street bailouts.

More stories related to the crooked Henry Paulson and his tough love for the American Taxpayer:
· Paulson's folly : I'm not buying it - (blog.macleans.ca) We’ve had market crashes before. We’ve had bad recessions before. They’re not nice, but we survive them. Part of what has helped us survive is the distinction between private enterprise and public finance. Public finance should be used to address the damage from market crashes. If you had a trillion dollars to spend, you could do an enormous amount to help people hurt by a market crash. With a trillion dollars, you could create a public program to halt home forecloures, for example. You could go on a massive public infrastructure spending program to employ all the tradespeople hurt by the housing collapse (and address a huge and simmering long–term threat to the economy at the same time). That’s just two examples. They have managed to terrify people, in order to convince them that this is the only way they could prevent a return to the Great Depression. I think they’re saddling our generation, and our kids generation with a greatly diminished future, for the sake of temporarily bolstering the status quo, and bailing out a handful of incredibly irresponsible institutions that ought to be allowed to fail.
· Buy MY shitpile, Henry! - (www.buymyshitpile.com)
· Complain about Paulson's theft to your Representatives - (clerk.house.gov)
· Paulson Will Not Bully Congress into $700 Billion Bailout - (rocktrueblood.blogspot.com)

FBI investigates Fannie, Lehman, AIG - (but not Fed or White House!) - (www.marketwatch.com)

"Personal responsibility" for the poor, but not for the rich - (www.opednews.com) In fact, the blog “Economics of Contempt” compiled a list of pundits/experts who were catastrophically wrong on the housing bubble. They include: Alan Reynolds of the Cato Institute; Kevin Hassett of the American Enterprise Institute; Jim Cramer of CNBC’s “Mad Money;” Nocolas P. Restinas, director of the Harvard Joint Center for Housing Studies, and 20 more. So the American home-buying public was told again and again by this administration, its economic minions, TV pundits and very popular right wing talking heads that they should go out and buy all the house they could because Happy Days Were Here Again and there was no bubble and everything would be just fine. When the bottom falls out, these same conservatives blame the homebuyers for failing to earn their advanced degrees in economics and understand what a great many with such degrees failed to—that this was not just a bubble, but a dung-filled bubble, a la Dennis the Menace as filmed by John Waters, and it was going to burst in our faces. Sullivan said that he believed in “personal responsibility.” But like most conservatives, he only believes in it for proles. According to the U.S. Census Bureau, the Northeast has the highest percentage of college graduates—just shy of 31%. An overwhelming majority of Americans have high school educations. Yet, per Sullivan, Bernanke and their conservative class, they’re supposed to know that the current administration and its two Fed Chairmen were full of economic crap. They were supposed to know to ignore that Ivy League professor on their TV.

If truth came out, most foreclosures would generate no sympathy - (www.chicagobusiness.com) Mr. Zell attributed the housing crisis to the “unequivocal blind faith in the value of a house and the belief that it would go up forever” and the role of financial intermediaries who had “no skin in the game,” like investment banks that packaged loans into securities and sold them. “Everything was intended to be bought by a bunch of dumb German state-owned banks,” Mr. Linneman said. “And thank God there were a lot of them,” quipped Mr. Zell. Mr. Zell also blamed government programs aimed at increasing homeownership, perhaps not surprising considering his role as chairman of Equity Residential, the nation’s biggest publicly held apartment owner. Historically, about 62% to 65% of U.S. households have owned their home, but the rate peaked at 69.2% in 2004. “The reality is we keep seeing over and over again that only 62% of the people can afford it,” Mr. Zell said. He suggested that most homeowners facing foreclosure today are victims of their own bad judgment, not unscrupulous lenders. “The majority of the foreclosures today — if the truth came out — would generate no sympathy at all,” he said.


OTHER STORIES:

Hey Congress, You Already Passed Homeowner Bailout - (www.cnbc.com)
Bailout Backers Will Lose in November - (www.newsmax.com)
Housing still too high! Millions spend half of income on housing - (www.businessweek.com)
Fraud expert: Orange County median should be $300,000 - (www.ocregister.com)
When the gamblers bail out the casino - (www.atimes.com) Paulson's dreadful scheme will become law, because Americans love their bankers. The bankers enable their collective gambling habit. Think of America as a town with one casino, in which the only economic activity is gambling. Most people lose, but the casino keeps lending them more money to play. Eventually, of course, the casino must go bankrupt. At this point, the townspeople people vote to tax themselves in order to bail out the casino. Collectively, the gamblers cannot help but lose; individually they nonetheless hope to win their way out of the hole. Americans are so deep in the hole that they might as well keep putting borrowed quarters into the one-armed bandit. They have hardly saved anything for the past 10 years. Instead, they counted on capital gains to replace the retirement savings they never put aside, first in tech stocks, then in houses. That hasn't worked out. The S&P 500 Index of American equities today is worth what it was in 1997, after adjusting for inflation (and a pensioner who sells stock purchased in 1997 will pay a 20% capital gains tax on an illusory inflationary gain of 40%). Home prices doubled between 1997 and 2007 before falling by more than 20%, with no floor in sight.

Mortgage Strike To Protest Paulson $700 Billion Theft - (patrick.net)
Vote No Bailout - (www.votenobailout.org)
No Wall Street Bailout - (nowallstreetbailout.com)
Get Pitchforks and Torches: Protest at Wall St. Thu at 4 pm - (www.indypendent.org)
Senator Sanders' Petition Against Paulson - (Mish)
Paulson's 0% Balance Transfer! - (optionarmageddon.ml-implode.com)
Tougher Bankruptcy Laws Bite the Lenders -- Ha! - (www.businessweek.com)
Analyst says Paulson intervention is big mistake - (abc.net.au)
Contact your Congressperson in the House of Representatives - (forms.house.gov)
Senator Contact Info - (www.senate.gov)
Write Paulson at home: 2750 32nd St NW, Washington, DC 20008 - (switchboard.intelius.com)
Let's Play "WALLSTREET BAILOUT" The Rules Are... - (www.youtube.com)

U.S. Government: The World's Largest Homeowner - (www.ml-implode.com) - "f the Treasury buys $700 billion in toxic mortgages from banks, the government would be setting itself up to be the world's lar...
FBI probing Fannie, Freddie, Lehman, AIG - (www.ml-implode.com) - The FBI did not provide specifics but said the inquiries were part of a broader probe, CNN said. The bureau is trying to deter...
Sovereign Funds May Invest $725 Billion in Property - (www.ml-implode.com) - "Sovereign wealth funds may increase investment in commercial real estate to a net $725 billion by 2015 as they diversify their ...
Liars, and the Lying Lies They Are Telling You - (www.ml-implode.com) - " Like a lot of folks who are completely flabbergasted by the Government’s repeated efforts to whitewash and gloss-over the all...
Paulson plan throws oil on fire - (www.ml-implode.com)
Chase Prime Wholesale added to Ailing/Watch list. - (www.ml-implode.com)
Online critics take aim at $700 billion bailout - (news.cnet.com)
Is it worth $700 billion? - (lansner.freedomblogging.com)
Treasuries Lose Allure for Asia, Europe Investors - (www.bloomberg.com)
Japan offers solution to financial crisis - (news.bbc.co.uk)

Senate Majority Leader Reid: "No Blank Check" for Wall Street - (Mish at globaleconomicanalysis.blogspot.com)
Treasury Auction Scam and How To Stop It - (www.ml-implode.com)
'The World Shouldn't Have to Bear the Burden for America's Lapses' - (www.ml-implode.com)
Mortgage Defaults Already at $50bb Per Month…$700bb Won’t Go Too Far! - (www.ml-implode.com)
MLI Exclusive: Is the California Association of Mortgage Brokers insolvent? - (www.ml-implode.com)
Fate of Bailout May Rest With Republican Sen. Shelby - (www.cnbc.com)
Congress cool after bail-out plea - (news.bbc.co.uk)
Americans Oppose Bailouts, Favor Obama to Handle Market Crisis - (www.bloomberg.com)
Echoes of Iraq in Bush's handling of mortgage 'surge' - (www.marketwatch.com)
Stopping a Financial Crisis, the Swedish Way - (dealbook.blogs.nytimes.com)
Truckload of stinking dead carp pushed on taxpayers - (jameshowardkunstler.typepad.com)

House buyers get cold feet in credit crisis wake - (money.cnn.com)
World's richest man to invest $5 billion in Goldman Sachs - (www.goldmansachs.com)
Fate May Rest With Shelby - (www.ml-implode.com)
$5 Trillion Needed to Stop Bank Crisis, Says Japanese Expert Listen to this article - (www.ml-implode.com)
The Bailout Plan - what does it mean? - especially for gold and T Bonds - (www.ml-implode.com)
Roll Your Own Bailout, It's Easy! - (www.huffingtonpost.com)
REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP - (patrick.net)

Thursday September 25 Housing and Economic stories

TOP STORIES:

Is the California Association of Mortgage Brokers insolvent? - (www.ml-implode.com) With membership dropping into the low 1,400 range, the once strong California Association of Mortgage Brokers (CAMB) teeters on the brink of insolvency. The 2006-2007 Annual Report shows 4,751 members, now down to 30% of its former power and glory. A couple of years ago (June 2006) CAMB had over 1.5 million dollars in cash and reserves, which has been virtually wiped out -- it's gone. Where it went is a BIG question, with bickering Board members looking for answers, and an audit. We don't think there is even enough funds left for an audit. A report sent to us titled "CAMB weekly cash management system" shows current available cash is just over $3,000.00 (The budget spreadsheet shows $3,074.00 as of August 22, 2008). Most companies run a Profit and Loss Statement at the end of each month -- CAMB runs their figures weekly. Check it out here. As a non-profit corporation (501-c6) there is no requirement for public disclosure, and we're pretty sure there is no way to ever find out where the money went. In California, Non-Profits are governed by the AG's office, but with the current budget cuts, there is not enough manpower to even 'think' about looking into what might be the obvious. Although CAMB's many Board members carry (non-profit remember) Credit Cards, it appears the Membership at large is not allowed to see the individual expenditures and rationale for the dollars. Granted the Board gets no pay (all volunteer), it's the Credit Cards that could tell the real story. After all... the money is gone -- somewhere. We spoke with CAMB President Fred Arnold, and he acknowledged money was tight, but felt there were sufficient funds to make it through until at least January or February. Mr. Arnold suggested operating dollars would come from incoming dues, but we found out 90% of the current members run on an April-to-April payment basis, and they are paid up! So it looks like very few (some of the 140 as they come due) left will be footing the bills. The day-to-day administration of CAMB's activities are handled by the "Association Resource Center" in Folsom, CA. We believe their contract for services was just renewed this month. We have not seen the actual 'signed' Management Agreement, but the one presented for signatures says $17,682.00 per month. Here's a copy. Fred Arnold, current President of CAMB said in a conference call that "anyone that talks to the Implode-O-Meter will be fired on the spot." Not surprising considering someone inadvertently released the weekly budget. Should we have kept it private? We think the internal expenditures and financial brinkmanship should at the very least be exposed to the membership. And yes... Fred has used the word "insolvent" in front of numerous people.


Wells Fargo 30 Year Jumbo Mortgage Rate Now Up to 9.2% - (www.wellsfargo.com)
Jumbo Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 9.000% 9.176%
15-Year Fixed 8.250% 8.512%
10-Year ARM 8.625% 7.913%
5-Year ARM 7.625% 6.659%

Greenspan Hurt America More Than Osama - (www.latimes.com) But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street. The finance minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn."Greenspan was considered a master," Tremonti declared. "Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis." In an interview Thursday in the Italian newspaper Corriere della Sera, Tremonti drew a comparison to corruption-ridden Albania in 1997, when a nationwide pyramid scheme cost hundreds of thousands of people their savings and ignited anarchic civil conflict. "The system is collapsing, exactly like the Albanian pyramids collapsed," Tremonti said. "The idea is gaining ground that the way out of the crisis is mainly with large public investments. . . The return of rules is accompanied by a return of the public sector."

IT IS TIME TO FORCE HENRY “HANK” PAULSON FROM OFFICE (through any legal means). This man should be tried and potentially put into prison. Here are some reasons why:

· Paulson is Stealing ALL THE CASH IN AMERICA - (patrick.net) $700,000,000,000 divided by United States Population: 301,139,947 (July 2007 est.) EQUALS $2324.50 collected for every man woman and child. How much is it for the average family? Average family (mother, father, 2.5 kids) = $10,460 stolen from the average family, and then handed to banks. It's reverse bank robbery! But what is the "bailout's" percentage of total cash in circulation? According to Wikipedia, 700 billion is 100% of ALL THE CASH IN CIRCULATION used throughout the United States. (in 2007)
· Oil Prices Surge By Largest Jump Ever, Thanks Hank! - (news.yahoo.com) Oil prices briefly spiked more than $25 a barrel Monday, shattering the record for the biggest one-day gain as unease about the government's $700 billion bailout plan pummeled the dollar and spurred investors to buy safe-haven assets. An expiring crude contract added fuel to the frenzied rally. Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37. The contract expired at the end of the day, adding to the volatility as traders rushed to cover positions; the October price began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board. Still, the rally, which shattered crude's previous one-day price jump of $10.75, set June 6, showed the intensity of emotion in the market.
· Weep For The Unites States of America- (Mish at globaleconomicanalysis.blogspot.com) Unconstitutional Provisions. Pay particular attention to section 8. 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. Essentially the law will state that whatever the Treasury does it is above the law. Such a provision is undoubtedly unconstitutional. Weep For The Free Market. It's time to Weep For The Free Market (or rather what little free market the US had left). Weep For The Unites States of America. At taxpayer expense, Bernanke and Paulson are willing to bail out their banking buddies at enormous expense to the average taxpayer of this country. Bernanke and Paulson both should be fired. Instead Congressional sheep will baa yes to this bailout and Bush will baa yes when he signs it. It is a sickeningly sad that day for America that Congress will go along with this proposal that makes the US Taxpayer A Giant Dumpster For Illiquid Assets.
· Single largest rip-off scheme in the history of America - (dadtalk.typepad.com) I may not be a Constitutional scholar, but consider what this means. If Treasury Secretary Hank Paulson – or his successor – wish to favor cash on buddies, there is no legal mechanism to stop him or her. Do we really want to give a cabinet secretary the ability to write a $700 billion check without any review or oversight? How will Americans, who have continually and successfully argued for less government intervention in corporate America, react to such a bailout?
· Bank of America Says "Paulson Plan Benefits Mostly Goldman, Morgan" - (Mish at globaleconomicanalysis.blogspot.com) Surprise, surprise, surprise. Guess who the Paulson plan benefits? Bank of America's top credit strategy analyst says Paulson Debt Plan May Benefit Mostly Goldman, Morgan. Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp. "Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment," Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks. Many banks may not participate in the Troubled Asset Relief Program because they haven't had to write down as much assets under accounting rules, meaning decisions to sell into the program would cause them to lose capital, Rosenberg wrote. Investment banks operate "under a mark-to-market accounting model while commercial banks hold assets at cost until realizing a loss (or until they reasonably expect one)," he wrote.
· Welcome to the U.S.S.A. - Thanks Hank! - (jonnyob.blogspot.com) Hank used to run Goldman Sachs. Worth approximately $700 Million, he recently cashed out and took a cozy job looking out for the good old boys as Secretary of the Treasury - a job handed to him by our infinitely wise President, George Bush. Hank was one of the guys who engineered the biggest housing bubble of all time. See back in the day when you wanted to buy a crash pad you would go to a bank. The manager would be real concerned about your ability to pay them back so they did a lot of careful homework about you. They were on the hook for your debt for 30 or so years until you serviced the loan completely, and so they had a keen interest in your ability to repay. One day, some bright financial engineers figured out a way to buy your loan from the bank and package it with a bunch of other loans, sell them off to foreign investors and pocket a tidy fee for their troubles. Suddenly your bank didn't care whether or not you could pay them back, since the sucker foreign investors were on the hook for your debt, and not them. Then the party began in earnest and mortgage lending was cranked into high gear. Out of nowhere came high-school dropouts making six figure incomes peddling loans to anyone with a pulse.
· Lies From Paulson Keep Stacking Up: What You Can Do About It - (Mish at globaleconomicanalysis.blogspot.com) Somehow Paulson has gone from "Our banking system is a safe and a sound one" (See You Know The Banking System Is Unsound When....) to Paulson telling Congress “That we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.” Inquiring minds may wish to consider a recap of things that have happened since Paulson made his "Our banking system is a safe and a sound one" speech.
· Paulson announced "Financial Institutions Must Be Allowed To Fail", arguably one of the most amazing financial lies in history.
· Fannie Mae and Freddie Mac were placed in Conservatorship putting taxpayers at risk to the tune of $200 Billion or more. Equity and preferred shareholders were wipe out while the treasury (taxpayer), guaranteed the agency bonds.
· Lehman went bankrupt after a long weekend poker party. See Fed Sponsored Poker Party Morphs Into "Old Maid" for more details.
· AIG was nationalized. The treasury took an 80% stake in AIG in return for $85 billion. Taxpayers are at risk of that $85 billion.
· Merrill Lynch (MER) merged with Bank of America (BAC) as noted in Another Shotgun Marriage: Bank of America and Merrill Lynch.
· 3 Month Treasury Yields Effectively Hit Zero in a systemic distrust of banks and money market funds.
· The Fed Intervenes In Money Markets with non-recourse funding of asset backed commercial paper.
· The US Taxpayer Becomes A Giant Dumpster For Illiquid Assets.
· In the biggest financial witch hunt in history the SEC banned short selling of financials. See Peak Insanity: SEC Plans to Temporarily Ban Short-Selling and Paulson's Shorting Ban Needs Revisions Already.
· Of course Congressional Leaders Are Stunned That Bernanke Finally Admits The Truth.
· Bush Administration Seeks "Dictatorial Power"
The implications are twofold. 1) Paulson and Bernanke are liars 2) Paulson and Bernanke are incompetent

ALMOST ARMAGEDDON - MARKETS WERE 500 TRADES FROM A MELTDOWN - (www.nypost.com) The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post. Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor. According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning. The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds "breaking the buck," or dropping below $1 net asset value. The Fed's dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.


OTHER STORIES:

Fed Report Reveals Another 'Wealth Contraction' - (www.seekingalpha.com)
Letter To Senator Feinstein - (patrick.net)
The $700 Billion Bailout: One More Weapon of Mass Deception - (www.alternet.org)
Morgan Stanley's CEO Seeks Protection From You, At Your Expense - (www.bloomberg.com)

The financial meltdown explained - (www.onlinejournal.com)
Seeing the Forest: Why The Bailout Plan CAN'T Work - (seeingtheforest.com)
How We Became the United States of France Under Bush - (www.time.com)
Why am I responsible for the fact that you were not? - (www.washingtonpost.com)
Paulson's Plan As An Image - (patrick.net)

Senator Tim Johnson of South Dakota Wimps Out - (Mish at globaleconomicanalysis.blogspot.com)
Paulson Debt Plan To Benefit Mostly Goldman, Morgan - (www.bloomberg.com)
What the latest bailout plan means: You're Screwed - (www.chrismartenson.com)
Petition against bailout - (Pitchforks and torches would be better) - (www.financialpetition.org)
Housing crisis has spread to well-to-do - (www.indystar.com)
Senator Email Blast List Simplified: Flood Them With Emails With One Click - (Mish at globaleconomicanalysis.blogspot.com)
Phone And Fax Numbers For All US Senators; More On What To Do - (Mish at globaleconomicanalysis.blogspot.com)
Open Letter To Congress On The $700 Billion Paulson Bailout Plan - (Mish at globaleconomicanalysis.blogspot.com)
Bush Administration Seeks "Dictatorial Power" - (Mish at globaleconomicanalysis.blogspot.com)

Stronger Oversight Gets Nod in Talks - (online.wsj.com)
Currency's Dive Points to Further Pain - (www.washingtonpost.com)
Bailout Plan Talks Advance in Congress - (www.nytimes.com)
Retail trade group forecasts weak holiday sales growth - (www.latimes.com)
Paulson Plan May Push National Debt to Post-World War II Levels - (www.bloomberg.com)
More to Fear in World of Retirees - (www.nytimes.com)
Workers to pay 9% more for health-care in 2009 - (www.chicagotribune.com)
More Americans strain to meet housing costs - (www.usatoday.com)
Federal Reserve makes it easier for private equity firms to take minority stakes in banks - (www.chicagotribune.com)
Lennar Reports Quarterly Loss as Foreclosures Rise - (www.bloomberg.com)
This Season, Tense Times for Retailers - (www.nytimes.com)
McDonald's says Bank of America won't boost franchisee loans - (www.latimes.com)
Harley-Davidson thrown by bumps in the road - (www.latimes.com)
Weak sales drive CarMax net down 78% - (www.chicagotribune.com)
Fitch downgrades GM's credit rating - (www.chicagotribune.com)
'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles - (biz.yahoo.com/ibd)
With its fiscal health at 4th and long, GM punts Super Bowl ads - (www.chicagotribune.com)
Morgan Stanley, Goldman Search for Deposits; Banks Are `Lunch' - (www.bloomberg.com)
A Bailout Above the Law - (www.nytimes.com)
The era of leverage is over - (www.ft.com)
U.S. futures in tight range before Bernanke, Paulson - (www.marketwatch.com)
Dollar Snaps Four-Day Drop Versus Euro Before Testimony on Plan - (www.bloomberg.com)
Russia, China Lead Emerging Market Declines, End Record Rally - (www.bloomberg.com)
Oil Falls as Stock Losses Signal Concern Over U.S. Bailout Plan - (www.bloomberg.com)
Scramble to handle structured credit - (www.ft.com)
Democrats, Treasury Dept. Agree on Outline of Rescue Package - (www.washingtonpost.com)
U.S. bailout of financial system runs into resistance - (www.iht.com)
Fannie Mae, Freddie Mac Takeovers Cost U.S. Banks Billions - (online.wsj.com)
Faith in Ratings - (online.wsj.com)
Eveillard Says Gold May Surge as Investors Seek `Insurance' - (www.bloomberg.com)
New York Tries Taming Credit-Default Swaps - (online.wsj.com)
Money market funds suffer huge outflows - (www.ft.com)
Authorities struggle to determine what is toxic - (www.ft.com)
Hedge Funds Also Caught in Tempest - (www.washingtonpost.com)
Funds look to circumvent shorting ban - (www.ft.com)
Push for central credit derivatives counterparty - (www.ft.com)
Freddie and Fannie bank losses grow - (www.ft.com)
Crisis to spur big Asia hedge fund shake-out - (www.reuters.com)
U.K. Mortgage Approvals Sink to Decade-Low, BBA Says - (www.bloomberg.com)
European Services, Manufacturing Contract Further - (www.bloomberg.com)
Foreign Nations Pledge Support, but Not Financing - (www.nytimes.com)

Wednesday September 24 Housing and Economic stories

TOP STORIES:

How Congress Intends To Waste $1.8 Trillion - (Mish at globaleconomicanalysis.blogspot.com) A quick check of the totals shows that is $1.809 trillion dollars that Congress is hell bent on wasting. Stay tuned in. Very shortly I will have a complete email and fax list for every senator in the country, including a list used by various software programs that will allow blasting every senator at once with a fax. The list o 1.8T is presented in this story.

China Blames Wall Street Meltdown On Fed Overissuance of Currency - (www.prisonplanet.com) China’s state media today reports on the real reason behind the Wall Street meltdown and a subject that the mainstream US media dare not mention - the Federal Reserve’s overissuance of currency - which the Chinese say is part of a wider agenda to justify increased control over the global economy. The Bush administration today announced a plan to use hundreds of billions of dollars of taxpayer money to buy up bad mortgages and other debts. The process of injecting more fiat money into an already over-inflated system had the desired effect - the Dow Jones shot up 450 points - but the dollar, following a brief jump, began to plummet. According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets

ALMOST ARMAGEDDON - MARKETS WERE 500 TRADES FROM A MELTDOWN - (www.nypost.com) The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post. Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor. According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning. The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds "breaking the buck," or dropping below $1 net asset value. The Fed's dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.

Phone And Fax Numbers For All US Senators; More On What To Do - (Mish at globaleconomicanalysis.blogspot.com) These guys are morons and will pass anything with little debate. We really ought to rally together and take away all their pensions and force them to live off of Social Security like the majority of people, as they are completely ruining the country. From Mish: I am emailing the plan I outlined in Open Letter To Congress On The $700 Billion Paulson Bailout Plan to every senator. Please phone, fax, or email your Senators asking that Congress consider my alternative plan or the Hussman plan. Anything is better than the plan Paulson put together. Please phone and FAX your Senators. Ask 10 people to do the same. Send them this link

Who will bail out American families? - (www.chicagotribune.com) - Lost in the headlines are the families who signed their names to subprime mortgages, not knowing or caring that the pieces of paper they signed would become one of the cards in the house of cards that now threatens the U.S. economy. No less visible are the people who have lost jobs as the economy reverses, the students who can't pay for college without taking on ruinous loans and the millions of families who turned to credit cards and payday loans as they have been caught in the squeeze between declining wages and skyrocketing costs. They are casualties of a financial system that saw them not as customers, but as prey. The secretary of the Treasury and the chairman of the Federal Reserve have told us that now is not the time to assign blame and that we must concentrate on preserving the bedrock institutions of our economy. But the real bedrock of that economy is the American family, countless thousands now in or facing foreclosure, families falling further behind on credit cards or paying 400 percent interest to payday lenders just to keep groceries on the table. The logic is impeccable: The big need protection, and the small pay for it. Whether the Federal Reserve and the Treasury acted prudently, time and the American voter will tell. But there are simple, tangible steps that government can take now.

Amid market turmoil, some patients skip plastic surgery - (www.ocregister.com) …Plastic surgeon Dr. Michael Persky of Encino said several patients have cancelled appointments for surgery or backed out of long-scheduled consultation. He said: The news of the week with the Dow plunging, Lehman going under, Merrill being bought by B of A, AIG being saved, and the rumors of Washington Mutual going under next have definitely affected my practice this week. We have had three surgical cancellations, as well as consultation no shows. Consultations whom in the past would have booked their procedure are now “thinking about it”, or “will get back to us after they discuss things with their husband.”

Fannie, Freddie Subprime Spree May Add $100 Billion to Bailout - (www.bloomberg.com) Freddie Mac Chief Executive Officer Richard Syron stood before investors at New York's Palace Hotel in May last year lauding his company's ``cautious'' avoidance of the subprime-mortgage crisis. What Syron, who was ousted last week, didn't say was that Freddie Mac had been gorging on subprime and Alt-A debt. While it and the larger Fannie Mae bought the safest classes of the mortgage-loan pools, Freddie's purchases totaled $158 billion, or 13 percent, of all the securities created in 2006 and 2007, according to data from its regulator and Inside MBS & ABS, a Bethesda, Maryland-based newsletter used by Federal Reserve researchers. Fannie, which was also seized by the U.S. on Sept. 7, bought an additional 5 percent. The purchases by Freddie and Fannie helped fuel the boom in lending that led to frozen credit markets, more than $514 billion in bank losses and the collapse of two of the country's biggest securities firms. The subprime overhang may determine whether the $200 billion U.S. Treasury Secretary Henry Paulson earmarked for the companies will all be used to rev up mortgage lending. He may have to spend about $300 billion, William Poole, the former Federal Reserve Bank of St. Louis president, said in a Bloomberg Television interview this month.

U.K. Housing Market `on Its Knees,' Rightmove Says - (www.bloomberg.com) The housing market is on its knees and will remain so until financial institutions address the disastrous state of the mortgage funding markets,'' said Miles Shipside, commercial director at Rightmove. ``While this market provides a good opportunity to trade up, it requires a degree of bravery.''
The average asking price for a home fell 1 percent from August to 227,438 pounds ($414,000), Britain's most-used property Web site said today. From a year earlier, prices fell 3.3 percent.
The property market may face further weakness in coming months, provoking a ``painful'' adjustment for many families, Bank of England Chief Economist Spencer Dale said last week. HBOS Plc agreed to a takeover by Lloyds TSB Group Plc after plunging home values and the financial market crisis destroyed the value of the company and added to the threat of a recession.

Short Sellers Keep the Market Honest - (James Chanos at online.wsj.com) We are currently witnessing one of the periodic financial convulsions that inevitably follow eras of easy credit and lax regulation. As someone once said: "Politicians and people who lose money always need someone to blame." So who is to blame now? According to the guardians of our economy, it's the short sellers, those investors who believe certain stocks are overvalued for fundamental reasons. In the latest of a series of constantly changing rules announced overnight without public comment or participation, the Securities and Exchange Commission has imposed a ban on short selling 799 financial companies through Oct. 2. But the regulator has yet to put forward any supporting data, or a clear justification, for this and prior emergency actions against short selling this summer. Meanwhile, the causes of the collapse in the financial sector go ignored. Never mind that months ago short sellers were warning about the problems we now see undermining American capitalism. In the spring of 2007, I joined another fund manager in outlining to finance ministers and central bankers (at a G-7 finance ministers meeting) the looming crisis in credit structures and overleveraged banks and brokerage firms. Our audience listened politely, but, as events now show, failed to take any meaningful action



OTHER STORIES:

Bailout Plan Threat to Dollar ? - (www.ml-implode.com) - "The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market...
Bailout Does Not Address The Problem: Too Many Houses - (www.ml-implode.com) - "Paulson has proposed that the U.S. pay for the largest bandaid in history, and the New York Times asks, "Will the bailout work?...
"Uh, Tom, I don't look at it that way" T - (www.ml-implode.com) - Treasury Secretary Henry Paulson on Meet the Press yesterday and Chris Dodd (D-Conn.) and John Boehner (R-Ohio) on This Week wit...
Misdirected credit runs unabated - (www.ml-implode.com) - ``It now appears they didn't appreciate the ramifications for Lehman going under - how this would quickly ignite a run on the co...
Now you see it. Now, you don't - (www.ml-implode.com) - "But there’s another possibility - one which many seem to be resorting to in these “extreme circumstances” - namely bending the ...
U.S. Treasury Widens Scope of Plan to Buy Bad Debt - (www.ml-implode.com)
WaMu, Under U.S. Pressure, Scrambles for Deal or Capital - (www.ml-implode.com)

U.S. Stocks Fall, Led by Regional Banks; Regions, M&I Tumble - (www.bloomberg.com)
Oil and gold lead commodities higher - (www.ft.com)
Oil futures rise on hopes for bailout plan - (www.marketwatch.com)
Leveraged loan values drop to record low - (www.ft.com)

Goldman, Morgan Stanley Bring Down Curtain on an Era - (www.bloomberg.com)
Dollar May Get `Crushed' as Traders Weigh Up Bailout - (www.bloomberg.com)
In Newest Crisis, Hedge Funds Face Chaos - (www.nytimes.com)
U.S. Treasury Widens Scope of Bad-Debt Plan Beyond Mortgages - (www.bloomberg.com)
Paulson Presses Congress to Act On $700 Billion Bailout Plan - (online.wsj.com)
Bailout Question Looms: What's the Real Price? - (www.cfo.com)
Emerging markets face $111bn maturing debt - (www.ft.com)
Commercial space toll worse than S&L crisis - (online.wsj.com)
Big Financiers Start Lobbying for Wider Aid - (www.nytimes.com)
High-risk, big-bucks era wanes on Wall Street - (www.latimes.com)
Few Funds Hit Performance Mark - (online.wsj.com)
High-risk, big-bucks era wanes on Wall Street - (www.latimes.com)
Commercial space toll worse than S&L crisis - (www.ft.com)
High-Performing Hedge Fund Manager Closes Shop - (www.nytimes.com)
Australia Suspends All Short Sales - (online.wsj.com)
Foreign Banks Hope Bailout Will Be Global - (www.nytimes.com)
Hedge funds to sue U.K. regulator over short-selling ban: report - (www.financialweek.com)

Concern as Russian car demand slows - (www.ft.com)
Taiwan limits short-selling - (www.ft.com)
Moscow widens emergency funding - (www.ft.com)
Consumers Cut Health Spending - (online.wsj.com)
The Fed, now with more junk - (www.financialweek.com)
Gas pains hit far-flung suburbs - (www.chicagotribune.com)
Mitsubishi UFJ to Invest Up to $8.4 Billion in Morgan Stanley - (www.bloomberg.com)
Fed OKs Goldman, Morgan as bank holding companies - (www.reuters.com)
Radical Shift for Goldman and Morgan - (www.nytimes.com)

Stores Plan for Weak Holiday Sales - (online.wsj.com)
GM's Credit Move May Fuel Worries - (online.wsj.com)
G.E., a Giant of Lending, Is Dragged Down Along With Banks - (www.nytimes.com)
Ugly Side of Leverage Hurts Morgan, Goldman - (online.wsj.com)
Consumer-electronics stocks may get holiday price cut - (www.chicagotribune.com)
Online advertising hit by spending cuts - (www.ft.com)
Now Uncle Sam Is Hedge-Fund Guy, AAA Needs Review: Mark Gilbert - (www.bloomberg.com)
A long shadow - (www.ft.com)
Leading economist Kenneth Rogoff says bank rescue opens door for other US industries - (business.timesonline.co.uk)