Kristol: I'd perfer to go with McCain's record in the senate than Obama's record on the campaign.
Stewart: But he has...McCain has repudiated almost that entire record...during the campaign. "I am for-"
Kristol: Oh Nonsense. Oh Nonsense. You're reading the New York Times too much. Y'know he's the same guy.
Stewart: Bill...Hold on a second...
Kristol: Though, It's a very fine paper-
Stewart: You WORK for the New York Times!!!
This week, a number of veteran GOP operatives who orchestrate door-to-door efforts to get voters to the polls were told they should not expect to receive plane tickets, rental cars or hotel rooms from the campaign.Political campaigns are stocked with volunteers - it's the only way they function - but not paying your operatives for travel can only hurt their effectiveness.
"The desire for parity on television comes at the expense of investment in paid boots on the ground," said one top Republican strategist who has been privy to McCain's plans. "The folks who will oversee the volunteer operation have been told to get out into the field on their own nickel."
But the other story, the story on which we've had a running eight-week exclusive in 36 separate On the Road pieces and counting, is that John McCain's ground campaign is just not happening. It hasn't been happening, without Sarah Palin there might be four or five volunteers across the entire nation left, and now, per Mosk's piece at WaPo, it looks like it will be happening even less.Read the full post.
A Question for A.I.G.: Where Did the Cash Go?
A.I.G. has declined to provide a detailed account of how it has used the Fed’s money. The company said it could not provide more information ahead of its quarterly report, expected next week, the first under new management. The Fed releases a weekly figure, most recently showing that $90 billion of the $123 billion available has been drawn down.
A.I.G. has outlined only broad categories: some is being used to shore up its securities-lending program, some to make good on its guaranteed investment contracts, some to pay for day-to-day operations and — of perhaps greatest interest to watchdogs — tens of billions of dollars to post collateral with other financial institutions, as required by A.I.G.’s many derivatives contracts.
No information has been supplied yet about who these counterparties are, how much collateral they have received or what additional tripwires may require even more collateral if the housing market continues to slide.
1) Whose the most liberal senator?How do I know this?
That'd be Sen. Feingold
2) The most conservative?
McCain? Hardly - Hatch? No.
It's Sen. Coburn of Oklahoma, but the really interesting bit is that the most right wing guy in Congress is Ron Paul - by a very wide margin.
The real point is, at this late hour, should we really be relying on guesses, anonymous sources, or a company spokesman’s word to know where Wall Street banks’ interest lie in the disposition of public funds to fill holes created by private companies?A-freaking-men. We own you.
Taxpayers, remember, now own AIG, and they own it precisely because of well-founded fears for the counterparties to the insurance contracts it clearly could not pay. There is no other reason. The U.S. Government accidentally got into the property/casualty business (and every other insurance line) only because of AIG’s unnamed counterparties who were exposed to some unknown degree of risk of losing some undisclosed amount of money that they willingly took on for their employees’ own excessive remuneration.
And taxpayers can’t even find out who these institutions are? They’re still squinting over news stories and parsing quotes from anonymous sources, none of whom has any real knowledge themselves? How’s that again?
[snip]
What we have here, Audit readers, is a classic transparency problem, without doubt. Whatever Goldman’s hedges were and whatever collateral it holds—down to the last security—should be disclosed for taxpayer inspection. Those are public records now.
[The fact that newspapers have to guess about this information shows] how deeply the Wall Street culture needs to change.
On the other hand, it also shows a way forward to restoring public confidence in the government, its bailout and the bailed out institutions:
Put it all online.
* Intel Atom 1.6 Ghz CPUExactly.
* 802.11 b/g wireless
* 1 GB ram
* 120 GB hard drive
* 8.9" 1024x600 display
* Windows XP Home
* webcam, mic, 3 usb ports, ethernet, vga out.
[snip]
As I sat down to configure this machine, I belatedly realized that for most of what I do with a computer, this cute little netbook is perfectly adequate. Sure, the keyboard is a bit cramped, it's no performance powerhouse, and the screen size, at 1024 x 600, is definitely the minimum necessary for it to be practical. It took some adaptation, but it wasn't frustrating or disappointing to use. It delivered (almost) the same web experience I'd get on my desktop or laptop, with no serious compromises. It just.. worked.
Republicans were praised for quickly wrapping up their contest by virtue of having adopted a first-past-the-post winner-take-all allocation for most of its primaries, whereas the Democrats adopted a proportional representation system. Thus John McCain won all of Missouri's delegates by winning, I believe, around 34% of the vote (with Mike Huckabee coming in second with around 31%). Those dumb Democrats, it was suggested, were simply creating a divided party well into June (and beyond?), while John McCain had all those months to preside over a unified party and then take advantage of Democratic ineptitude.Interesting, to say the least.
Except, of course, it didn't work out that way.
[snip]
It will be interesting to see what lessons the Republican Party learns from a process that gave them John McCain and Sarah Palin.
What do you say to the people who are concerned that Barack Obama will want to turn the America into a socialist country much like Sweden?I mean, here's a better question: what do you say to a person who asks such a stupid question?
A federal jury of eight women and four men from the District of Columbia found that the 84-year-old Mr. Stevens, who has represented Alaska in the Senate for more than 40 years, knowingly failed to list on Senate disclosure forms the receipt of several gifts and tens of thousands of dollars worth of remodeling work on his home in Girdwood, Alaska.In the post Sen. Craig world, it will be interesting to see what kind of rhetorical gymnastics will be performed to justify Sen. Steven's continued presence in the senate.
[snip]
Mr. Stevens is certain to appeal the conviction, and his supporters are also likely to explore the possibility of obtaining a pardon from a fellow Republican, President George W. Bush, before Mr. Bush leaves office in January.
The maximum sentence on each of the felony charges is five years in prison, but federal sentencing guidelines could call for much less than that. Mr. Stevens will turn 85 on Nov. 18. Judge Emmet Sullivan did not set a date for sentencing, but said it would be after February.
A senator can be expelled only by a two-thirds vote of the entire Senate, so a conviction does not automatically cost a lawmaker his seat. Since 1789, only 15 senators have been expelled, mostly for supporting the Confederacy during the Civil War, according to the Senate Web site.
Hee, hee, hee...We're all software developers here, so let me put this in terms programmers understand: Dungeons & Dragons character statistics. You know, the classics.RPG character stats: STR DEX CON INT WIS CHAIf you're a programmer, and you want to get better at your job every year, you might think that the most important character stat to build is coding. Let's call this INT. So at the end of many years of toil, you'll end up something like this:str 6dex 9con 12int 51wis 13chr 4OK, you're a genius programmer who can code circles around everyone else. But you may never ship any of your code for reasons that you don't control. That's an illusion. You can control when, how, and where your code ships. You probably spent too much time building your code and not enough time as an advocate of your code. Did you explain to people what your code does, why it's cool and important? Did you offer reasons why your code is going to make their lives better, at least in some small way? Did you make it easy for people to find and use your code?
Consider this Federal Reserve Board data, compiled by McClatchy. It shows that:And so on...
- More than 84% of the subprime mortgages in 2006 were issued by private lending institutions.
- Private firms made nearly 83% of the subprime loans to low- and moderate-income borrowers that year.
- Only one of the top 25 subprime lenders in 2006 was directly subject to the CRA [Community Reinvestment Act];
- Only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.
- Mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.
Waxman put Greenspan on the spot, asking if he made any mistakes during his tenure as Federal Reserve chairman that may have contibuted to the mortgage crisis.
Greenspan said he made a mistake in presuming that lenders themselves were more capable than regulators of protecting their finances. He said he was "shocked" when that system "broke down."
"I still do not understand exactly how it happened," said Greenspan.
Here’s all you really need to know to see who lost and who benefited most at the Five Families of Wall Street, otherwise known as Goldman, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. From the start of their 2004 fiscal years through yesterday, the big standalone investment banks lost about $83 billion of stock-market value. During the same period, they reported about $239 billion of employee-compensation expense. So, for every dollar of shareholder value destroyed, the employees got paid almost three.If education used same inverse relationship of value provided to compesation paid out - we'd have lousy schools with millionaires in their classrooms.
Let's see, medical coupon from the state... lots of bills"No secrets from the postal worker. Makes you wonder what kind of access law enforcement can have to your unopened mail.
[snip]
Andrea notices her unemployed mom with an affinity for black leather is getting another overdraft notice.
[snip]
"Collection notices on parking tickets, to overdue utility bills, to towing lots that have cars that people aren't coming to pick up."
Certified letters? a major negative indicator. Credit problems almost always lead to certifieds, and certifieds are almost always bad news mail.
Another measure? color. Normally utility bills, they're usually white. When you're a month late, the envelopes turn yellow. Way, way late - they all go red. Angela's been noticing a lot of red lately.
In this ultra-low rate environment, where prices are appreciating, and most mortgages were being securitized, all that mattered to the mortgage originator was that a BORROWER NOT DEFAULT FOR 90 DAYS (some contracts were 6 Months). The contracts between the firms that originated mortgages and the Wall Street firms that securitized them had explicit warranties. The mortgage seller guaranteed to the mortgage bundle buyer (underwriter) that payments were current, the mortgage holders were valid, and that the loan would not default for 90 or 180 daysNow, the fact that mortgage brokers didn't care about the long term future of a loan is old news. The notion that risky loans getting written by money hungry brokers is pretty well established - but (at least for me) the creation of a three month "no take back" rule would explain an awful lot of doomed loans getting written.
So long as the mortgage did not default in that period of time, it could not be "put back" to the originator. A salesman or mortgage business would only lose their fee if the borrower defaults within that 3 or 6 month contractually specified period. Indeed, a default gave the buyer the right to return the mortgage and charge back the lender the full purchase price.
What do rational, profit-maximizers do? They put people in houses that would not default in 90 days -- and the easiest way to do that were the 2/28 ARM mortgages. Cheap teaser rates for 24 months, then the big reset. Once the reset occurred 24 months later, it was long off the books of the mortgage originators -- by then, it was Wall Street's problem.
¶5 In December 2006 Attorney Hughes entered a plea agreement whereby he agreed to plead guilty to conspiracy to commit offense or to defraud the United States, in violation of 18 U.S.C. § 371. On April 18, 2007, Attorney Hughes entered his guilty plea and was found guilty. He was sentenced to a prison term of one year and one day.The guy wasn't planning to pay anything back, so it's not really a "charge this house" situation - but still.
¶6 The plea agreement said that between November 2002 and November 2003, Attorney Hughes' creditors wrote off as bad debt or referred to collection agencies approximately 28 of Attorney Hughes' credit card loans, resulting in over $270,000 in principal debt plus additional unpaid fees and interest. The federal sentencing transcript indicates that Attorney Hughes conspired with his girlfriend to use the proceeds of the credit card loans, without repayment, to purchase a house in Gulf Shores, Alabama. According to the plea agreement, Attorney Hughes agreed to pay restitution as ordered by the federal court for at least the principal amounts owed to the credit card issuers and their assignees for the credit card debts he incurred in the course of the conspiracy to which he pled guilty. The court ordered $146,100 in restitution.
with this:NYT, October 14, 2008
The chairman of Wells Fargo, Richard M. Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout, according to people briefed on the meeting.
NY Post, October 20, 2008(H/t to The Big Picture)
Wells Fargo, despite booking a near $1 billion increase in non-performing loans in the third quarter compared to the previous three-month period, cut its loan-loss reserve by $500 million.
The slick accounting moves, while perfectly legal, gave a false impression of just how strong Wells Fargo's balance sheet actually was, the analysts said in separate interviews and reports last week.
"Wells Fargo are pretenders," said a trader at one top hedge fund, who spoke on condition of anonymity because he is afraid of trouble from the Securities and Exchange Commission, in light of the regulatory body's recent threat to prosecute short sellers.
[snip]
The Field Check Group, which measures real-time residential defaults in California - where Wells Fargo has over 30 percent of its $74 billion first-lien mortgage portfolio - reports the default rate on loans originated by Wells Fargo's in 2008 is running 237 percent above last year.
That is just under the increases seen by Indymac Bank (239 percent) and over Countrywide (226 percent). IndyMac was seized by regulators, and Countrywide was forced into a takeover by Bank of America.
[snip]
On Friday, Moody's, the ratings agency which has Wells Fargo on review for a possible downgrade, said it was looking at the quality of the bank's loan portfolio and its future capital structure.
Moody's noted that Wells Fargo's loan-loss reserves are at 101% of annualized quarterly credit losses, which is below some of its peers.
The cut in the loan-loss reserve in the face of an increase in non-performing loans is not the first thing Wells Fargo has done this year to raise eyebrows on Wall Street.
Earlier this year, Wells Fargo increased to 180 days from 120 days the amount of time they take to book second-lien loans, that is, home-equity loans, as not paying. The move helped keep down the default rate in the second quarter.
A Depressing Look BackRead the rest.
The Washington Post has some enlightening historical reporting today on a series of Clinton Administration battles that left the market for derivatives unregulated, contributing mightily to the current crisis.
The story follows a New York Times piece we liked last week on Alan Greenspan’s central role in allowing the financial system to head off the cliff. Brooksley E. Born, Clinton’s head of the Commodity Futures Trading Commission issued stark warnings on the threat of unregulated derivatives and tried to get something done. If she had succeeded it would certainly have moderated this crisis. But Greenspan and then-Treasury Secretary Robert Rubin and Arthur Levitt of the SEC (and the Treasury’s Larry Summers) battled her tooth and nail.
Securitization has been around since the 1970s. In such a transaction, a group of loans—for example, mortgage, credit card, or corporate loans—is bundled together and sliced up into pieces called tranches. The lowest portion, called the equity, is exposed to the first losses. The next slice up is exposed to the following losses, and so on, until you get to the top. The slices are usually rated by the rating agencies. (Often, the media and even some on Wall Street colloquially refer to tranches of securitizations as derivatives; they aren’t. Tranches are securities backed by a pool of cash-producing assets.)
The Demchak group’s breakthrough was to inject a little magic into standard securitizations. Instead of putting a particular loan into the sliced-up instrument—say, a 30-year loan to I.B.M.—it put a piece of J.P. Morgan’s exposure to I.B.M. into it. For this, the team used credit-default swaps, a burgeoning form of credit derivative. In a C.D.S. transaction, the buyer is protected against a default. These contracts had been floating around in small, experimental form for several years, having been created by Bankers Trust, a scrappy cowboy investment bank.
Bill Demchak’s team was the first to take them wholesale, using credit-default swaps in a huge deal. They mashed up J.P. Morgan’s exposure to more than 300 giant corporations, created an off-balance-sheet vehicle, then sold slices of that to investors. The vehicle then protected J.P. Morgan from defaults. In effect, Morgan was paying insurance premiums to investors who now were on the hook if one of Morgan’s clients went belly-up. “The innovation of not being tied to specific loans or bonds is what made the credit-derivatives market what it is today,” says Romita Shetty, who was part of Demchak’s team at J.P. Morgan.
[snip]
J.P. Morgan would go on to launch a credit-derivatives assembly line, becoming the Henry Ford of the new financial market. Throughout the 1990s, the bank was a major player in persuading lawmakers to allow the derivatives markets to remain unregulated—a move regulators are now reevaluating. [J.P. Morgan's first CDS, called] Bistro helped [their] traders in London kick-start the expansion of the “single-name” C.D.S. market, where individual contracts that cover just one company or entity trade hands. This market became liquid and deep by the early 2000s. “We had 100 people,” Demchak recalls. “We helped create the regulatory framework, the legal and accounting framework, and we did billions. We industrialized the product.”
Bistro “was the most sublime piece of financial engineering that was ever developed. It was breathtaking in terms of beauty and elegance,” says Satyajit Das, a risk consultant and the author of Traders, Guns, and Money, a financial history. But “in many ways,” Das adds, “J.P. Morgan created Frankenstein’s monster.”
J.P. Morgan: We're going to pay you money every year, in exchange for you assuming our liability if we default on this billion dollar loan.Obviously, it was more complicated than that, but you have a kind of financial judo move taking place - but basicially J.P. Morgan is selling its future payments on a CDS to investors. The investors would be liable for Morgan's loan but-
Investor: Where do I sign?
Byron York: I think that Fannie Mae and Freddie Mac were also major factors. And I believe that many of the problems in the mortgage area can be attributed to the confluence of Democratic and Republican priorities: the Democrats' desire to give mortgages to people, particularly minorities, who could not afford them, and the Republicans' desire to achieve an "ownership society," in part by giving mortgages to people who could not afford them. Again, I believe that if you are suggesting that the financial crisis is a Republican creation, or even more specifically a McCain creation, I think you're on pretty shaky ground.Yeah, Taibbi's going to Defcon 5 a little fast, but York is sucking the same thumb that Wall Street is:
Matt Taibbi: Oh, come on. Tell me you're not ashamed to put this gigantic international financial Krakatoa at the feet of a bunch of poor black people who missed their mortgage payments. The CDS market, this market for credit default swaps that was created in 2000 by Phil Gramm's Commodities Future Modernization Act, this is now a $62 trillion market, up from $900 billion in 2000. That's like five times the size of the holdings in the NYSE. And it's all speculation by Wall Street traders. ...The effort of people like you to pin this whole thing on minorities, when in fact this whole thing has been caused by greedy traders dealing in unregulated markets, is despicable.
[snip]
York: When you refer to "Phil Gramm's Commodities Future Modernization Act," are you referring to S.3283, co-sponsored by Gramm, along with Senators Tom Harkin and Tim Johnson?
Taibbi: In point of fact I'm talking about the 262-page amendment Gramm tacked on to that bill that deregulated the trade of credit default swaps.
Tick tick tick. Hilarious sitting here while you frantically search the Internet to learn about the cause of the financial crisis — in the middle of a live chat interview.
The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.Late edit: CJR's Ryan Chittum's all over this one. He rounds up a bunch of good articles and this nice little observation from Martin Wolf of the Financial Times:
[snip]
But by 6:30, all nine chief executives had signed — setting in motion the largest government intervention in the American banking system since the Depression and retreating from the rescue plan Mr. Paulson had fought so hard to get through Congress only two weeks earlier.
What happened during those three and a half hours is a story of high drama and brief conflict, followed by acquiescence by the bankers, who felt they had little choice but to go along with the Treasury plan to inject $250 billion of capital into thousands of banks — starting with theirs.
[snip]
In addition to the capital infusions, which will be made this week, the government said it would temporarily guarantee $1.5 trillion in new senior debt issued by banks, as well as insure $500 billion in deposits in noninterest-bearing accounts, mainly used by businesses.
All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest show of government firepower is an abrupt about-face for Mr. Paulson, who just days earlier was discouraging the idea of capital injections for banks.
Informed observers suggest an additional $1,500bn in capital might be needed for such reasons. So double this and assume it all comes from the state: it would still “only” be 10 per cent of US and European GDP. If the real interest rate were 2 per cent, this would be a permanent increase in public spending of 0.2 per cent of GDP.Great.
Moreover, this would not be extra demand for resources. It would be a recognition of past errors: a part of what people thought was private lending turned out to be public spending. Stuff indeed happens!
...four sociologists at the University of Arizona, led by Lane Kenworthy, relesed a...study [that] followed the voting behavior of the forty-five per cent of white Americans who identify themselves as working class. Mining electoral data from the General Social Survey, they found that the decline in white working-class support for Democrats occurred in one period—from the mid-seventies until the early nineties, with a brief lull in the early eighties—and has remained well below fifty per cent ever since. But they concluded that social issues like abortion, guns, religion, and even (outside the South) race had little to do with the shift. Instead, according to their data, it was based on a judgment that—during years in which industrial jobs went overseas, unions practically vanished, and working-class incomes stagnated—the Democratic Party was no longer much help to them. “Beginning in the mid-to-late 1970s, there was increasing reason for working-class whites to question whether the Democrats were still better than the Republicans at promoting their material well-being,” the study’s authors write. Working-class whites, their fortunes falling, began to embrace the anti-government, low-tax rhetoric of the conservative movement. During Clinton’s Presidency, the downward economic spiral of these Americans was arrested, but by then their identification with the Democrats had eroded. Having earlier moved to the right for economic reasons, the Arizona study concluded, the working class stayed there because of the rising prominence of social issues—Thomas Frank’s [author of What's the matter with Kansas?] argument. But the Democrats fundamentally lost the white working class because these voters no longer believed the Party’s central tenet—that government could restore a sense of economic security.Ohio's trending blue these days - but I'd Packer is pointing out a host of reasons to not be complacent. Among them:
“Poorer, less well-educated white people refuse surveys more often than affluent, better-educated whites,” Kohut wrote. “Polls generally adjust their samples for this tendency. But here’s the problem: these whites who do not respond to surveys tend to have more unfavorable views of blacks than respondents who do the interviews.” This statistical glitch is different from the Bradley Effect...
If Wall Street were truly serious about convincing Main Street that we're all in this together, its top executives would have stepped before the cameras yesterday and promised not to cut lines of credits to long-standing business customers who have never missed a payment.Of course, we've yet to see any such steps like this from the recipients of our collective largesse.
They would have committed themselves not to foreclose on any homeowner who is willing and able to refinance into a new, government-guaranteed, fixed-rate mortgage set at 85 percent of the current value of the property.
They would have offered to suspend dividend payments until capital levels had been restored to pre-crisis levels.
They would have given us their solemn promise not to advise clients to hold on to their own investments while quietly dumping whatever they can from their own portfolios and shorting every security in sight.
[snip]
And the maharajas of finance could have set a wonderful example if they had all gotten together and agreed to work for a dollar a year until the crisis has passed.
The Bush administration will invest about $125 billion in nine of the biggest U.S. banks, including Citigroup Inc. and Goldman Sachs Group Inc., in the government's latest attempt to shore up confidence in the financial system.Well, next time some titan of commerce starts talking smack about this or that social program - we can all point to this moment and politely ask them to shut the hell up.
The proposed cash injections in exchange for preferred shares are part of a $700 billion rescue approved by Congress and follow similar moves by European leaders to unfreeze global credit markets by helping beleaguered banks. The other companies are Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Merrill Lynch & Co., Morgan Stanley, State Street Corp. and Bank of New York Mellon Corp., said people briefed on the plan.
On November 1, Energy Star will officially launch its revised specification for TVs, version 3.0, which promises to significantly reduce power consumption. After that date, TVs must meet the new spec to carry the Energy Star logo.Yeah, I mean - I guess I'm glad that the standard is being improved. It's just hard to feel good about an energy standard that had two iterations of measuring an appliance's power consumption when it was turned off.
It may come as a surprise that prior to the new spec, TVs were only tested in standby mode (plugged in but turned off) to comply with Energy Star. The TVs were never turned on for the test, and the only thing that qualified them for the logo, since 2005, was the ability to draw less than a watt when turned off.
What is the nature of the crisis? The details can be insanely complex, but the basics are fairly simple. The bursting of the housing bubble has led to large losses for anyone who bought assets backed by mortgage payments; these losses have left many financial institutions with too much debt and too little capital to provide the credit the economy needs; troubled financial institutions have tried to meet their debts and increase their capital by selling assets, but this has driven asset prices down, reducing their capital even further.That's just a marvelously tight summary of what's been going on the past few weeks.
What can be done to stem the crisis? Aid to homeowners, though desirable, can’t prevent large losses on bad loans, and in any case will take effect too slowly to help in the current panic. The natural thing to do, then — and the solution adopted in many previous financial crises — is to deal with the problem of inadequate financial capital by having governments provide financial institutions with more capital in return for a share of ownership.
This sort of temporary part-nationalization, which is often referred to as an "equity injection," is the crisis solution advocated by many economists — and sources told The Times that it was also the solution privately favored by Ben Bernanke, the Federal Reserve chairman.
But when Henry Paulson, the U.S. Treasury secretary, announced his plan for a $700 billion financial bailout, he rejected this obvious path, saying, "That’s what you do when you have failure." Instead, he called for government purchases of toxic mortgage-backed securities, based on the theory that ... actually, it never was clear what his theory was.
Meanwhile, the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.
...two former Army Reserve Arab linguists for the National Security Agency have said that they routinely eavesdropped on -- "and recorded and transcribed" -- the private telephone calls of American citizens who had absolutely nothing to do with terrorism.
[snip]
The two NSA whistleblowers, Adrienne Kinne and David Murfee Faulk, were interviewed by ABC News' Brian Ross. Kinne said that "US military officers, American journalists and American aid workers were routinely intercepted and 'collected on' as they called their offices or homes in the United States." He also said his co-workers "were ordered to transcribe these calls." Faulk told Ross: "when one of my co-workers went to a supervisor and said: 'but sir, there are personal calls,' the supervisor said: 'my orders were to transcribe everything'."
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.I'm glad they're looking at other options. But two cheap shots occur to me:
The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.
The proposal resembles one announced on Wednesday in Britain.
When McCain sprung his surprise idea at the start of the debate in Nashville, his campaign posted details online of his American Homeownership Resurgence Plan, which would direct the government to buy up bad home mortgages, allowing strapped people to keep their property.Oh fer chrissakes... can't his campaign do anything right? This was an opportunity to run against type. Save the borrowers - stick it to the bankers. Now he's gifted the Obama campaign a free rebuttal any time he brings this up.
The document posted and e-mailed by the McCain campaign on Tuesday night says at the end of its first full paragraph: “Lenders in these cases must recognize the loss that they’ve already suffered.”
So the government would buy the mortgages at a discounted rate, reflecting the declining value of the mortgage paper.
But when McCain reissued the document on Wednesday, that sentence was missing, to the dismay of many conservatives.
That would mean the U.S. would pay face value for the troubled documents, which was the main reason Sen. Barack Obama (D-Ill.) gave for opposing the plan.
For more than six years, the United States has detained seventeen Chinese citizens of Uighur heritage at the Guantanamo Bay Naval base. Following the ground-breaking decision of the U.S. Court of Appeals for the District of Columbia Circuit in Parhat, which I discussed here, the U.S. government finally conceded that the Uighurs are not enemy combatants, and that therefore Congress has not authorized their indefinite detention. The Uighur detainees had nothing to do with the attacks of 9/11. There is no evidence that they ever participated in, or planned, or even supported, any hostile action against the United States or its allies. They are not part of al Qaeda or the Taliban, or any other nation or organization that "planned, authorized, committed, or aided" the 9/11 attacks. They have never engaged in any hostilities against the United States or the Northern Alliance (an Afghani coalition partner of the United States).Given the track record of the curent administration - you wonder what kind of novel legal premise the administration will find for refusing to comply with this order.
And yet the United States insists that it can continue their detention at GTMO indefinitely, because it cannot send them back to China (where they likely would be tortured) and has been unable to find another nation willing to take them in.
Today Judge Ricardo Urbina ordered that the government must permit the 17 Uighur detainees to be released into the United States -- with conditions that the court will specify next week -- and that the transfer out of military detention must occur by this coming Friday morning.
...this suggestion that if this court mandates [the release of the Uighurs] and the Court of Appeals approves it and these individuals are brought into the United States by virtue of the Court's directives, that they may be descended upon by I.C.E. officials, arrested and taken into custody, that's not how the three branches of government work together. That is not how things work.
That would be inappropriate to even suggest that at this point one branch of government makes a firm decision on the legitimacy of someone's presence in the country and another branch goes out and scurries to get these individuals now present by virtue of the Court's directives arrested. I assume that won't happen. I certainly wouldn't take it kindly.
...the hearing would be on conditions. A representative of Homeland Security should be present. I do not expect that these Uighurs will be molested or bothered by any member of the United States Government. I'm a federal judge, I've issued an order, and what it says it says and what it implies, it implies, and that's comity among the branches. Nothing will happen to these people until Thursday when this hearing convenes.As in, I don't trust you guys any further than I can throw you - and my arms are tired.
A representative of Homeland Security will be present and that individual at that time, through counsel, if necessary, can state its position and lay out its view on what the necessities of the situation are, legal or -- legally or otherwise, but nothing is to bother these people until I see them on Thursday. No one is to bother these people until I see them on Thursday, and they are all to be present here in this courtroom.
In its emergency motion, the Justice Department said it wanted a ruling on the emergency stay by the end of Wednesday so it would have time to rush a further appeal to the U.S. Supreme Court on Thursday if necessary.Lame duck or no - this crew hasn't lost a step.
60 Minutes had a good segment Sunday on what they are, how they got out of hand, and why they’re the damage multiplier in the financial crisis. The piece gets at something I’ve been wondering about CDS:and this cheerful bit of news:
“The problem was that if it were insurance, or called what it really is, the person who sold the policy would have to have capital reserves to be able to pay in the case the insurance was called upon or triggered. But because it was a swap, and not insurance, there was no requirement that adequate capital reserves be put to the side.”
The Washington Post has a good story on page one today, warning of something that sounds very much like depression to me and saying that $700 billion may not be near enough...
[snip]
The Journal says up next to choke the economy is credit cards. Consumers are increasingly late on payments and the paper says credit lines are about to be tightened.
That's the big problem I've had. You want to tear the foundation of our current system down - you might want to have something to replace it with. McCain's saying "trust me, the roof will stay up."Mr. McCain, on the other hand, wants to blow up the current system, by eliminating the tax break for employer-provided insurance. And he doesn’t offer a workable alternative.
What now? The first effort must be to find a plan that Congress can pass. It is quite possible to find one that protects the taxpayers’ interest better, by insisting on full reimbursement, after assisted companies return to health. Buying preference shares, as Warren Buffett did in Goldman Sachs, would be a good way to do this.-and Bloomberg's Jonathan Weil just wails on the Paulson plan:
Instead of asking Congress to let Treasury recapitalize needy banks, he proposed buying some of their troubled assets at above-market prices. This would have let other banks create phony capital by writing up the values of similar assets on their own balance sheets, using Treasury's prices as their guide.
In short, Paulson's plan was one part robbery (with the banks doing the robbing) and one part accounting sleight of hand. No wonder House members rejected it.
If Paulson or congressional leaders devise a Plan B, they should look to the example of Fortis, Belgium's biggest financial-services company. This week, the governments of Belgium, the Netherlands and Luxembourg invested 11.2 billion euros ($16.3 billion) in Fortis. In exchange, they got ownership of almost half its banking business.It's looking like the fix is in. The Senate will pass this mess, and then House members will get leaned on until they fold. It's the same old crap - There's this plan or nothing! You must support the plan!
