Naked Capitalism

MyDD and others are commenting on a story from naked capitalism.

It's probably wise to show some restraint on this - but it appears that a US Treasury Dept. conference call involving Sec. Paulson and industry financial analysts has been leaked.

Yves Smith is reporting that the phone number was posted on Calculated Risk and members of the public were able to listen in.

Now, it's easy for folks who (like myself) know little about the financial markets to view every word uttered as evidence of a Machiavellian plan to screw the taxpayer - but if what they are saying is accurate, Sec. Paulson was laughing down his sleeve at the Dems trying to pass his bailout plan.

Smith's first point is perhaps his best:

...the report I got from one person who was on the call was the the questions came from financial services industry members. In other words, this was most assuredly not intended to be a call open to the public at large. If anyone from the media or other member of the great unwashed was listening in, it was by accident.

This is simply scandalous. To have a group of interested parties get a privileged briefing by government officials on a matter of keen public interest flies in the face of what a democracy is supposed to be about. The proper method would either be a published FAQ on the Treasury website or a briefing with the media included.

The notes suggest that Treasury was spelling out the bailout plan in the wee hours to industry insiders.

They also suggest that Treasury viewed the division of the bailout funds the same way I did - as meaningless posturing. (I was hopeful that some good might come of it - but I clearly fell for the same Bush stratagem: my plan is the only plan. The Dems occupied themselves with rearranging deck chairs - and I was looking at the patterns they made.)

Treasury viewed the executive salary limitations as equally meaningless.

That they would have these opinions isn't really news - that they would use them to assure the financial industry in a late night conference call is pretty tacky.

But here's my question - With all the talk of stopping Golden Parachutes - it would appear that Congressional leadership either missed (or chose to ignore) the fact that the entire bailout bill IS a golden parachute.

• Wall street buys up all the mortgage-backed securities they can get.
• When they run out - they demand more and tell mortgage brokers to lower their underwriting standards. i.e. "Make more crap so we can buy it."
• When they've bought up all good mortgages and all the crap mortgages they can - they turn them into CDOs and start selling them to anyone they can.
• Then the bad mortgages fail, the writedowns start, people stop buying MBS and CDOs, and banks start dying.

And a cry goes up from Wall Street "Help!! Somebody buy our crap!"

And Sec. Paulson and Congress rush to the rescue.

The plan stinks. And if it died because of the House Republicans - we owe them a great deal. My Democratic Rep. voted for the bill and I'd love to hear their rationale for the vote.

What would that sound like, exactly?

"At this time - with the economy in crisis, it is essential for the government to buy 700 billion dollars of crap."

Boehner is so obviously full of it

Here's a House Republican answering direct questions with direct answers:



I totally agree with this man.

Pelosi's speech was stupid - and Boehner's pointing fingers in hopes that people won't notice he couldn't deliver votes on a bill he pushed for.

Calling your bluster

Exhibit A on how to counter a poorly conceived soundbite:

Rep. Barney Frank confronts the notion that the bailout bill might have passed - were it not for the speech of Speaker Pelosi:



Memo to the Dems - THIS is how you go after the partisan BS talking points.

Also, it would help if the Dems weren't such mindless tools when it comes to legislating in crisis - but, one thing at a time.

Emergency Pasta

The other day I did something I haven't done in about two months.

I cooked dinner in the kitchen:

The kitchen... she is done!!    Ahhhhhhhh...

Wasn't even much of a meal - but weeks of deprivation made it taste a lot better. E and the boy were the first ones to use the kitchen for real. They made pumpkin muffins, something the boy has been jonesing for for awhile.

They were pretty solid, too. Our new oven is a double oven - so you can just heat up this small oven to bake things. Seems to heat up faster. Slick.

For the first dinner, I went with what's at hand. I call this recipie Emergency Pasta, because the ingredients last damn near forever - so you can always have it ready to go in case, well - in case you need dinner in a hurry.

It's also a rolling recipie - meaning very little needs to be prepared en masse. Most stuff goes in in a series. So you put something in the pan and while it's cooking - you prep the next ingredient.

Emergency Pasta - Puttanesca

2 tablespoons of olive oil (I just pour until I coat the bottom of the pan)

2 oz anchovies, chopped (You can skip chopping these, they will just take a bit longer to dissolve in the oil)

2-3 garlic cloves, chopped

28 oz can of imported tomatoes. (There may be a good domestic brand, but I'm not willing to spend the money to find it. Buy Italian)

Splash of dry red wine

6 black olives, pitted and sliced

6 Kalamata olives, pitted and sliced

1 lb pasta (spaghetti, spaghetti rigatti, or linguine)

1-2 tablespoons of capers

1 teaspoon dried oregano

1 cup grated Parmesan Reggiano cheese

1. Pour the olive oil into a saucepan on medium heat
2. Dump the anchovy oil into the pan and then chop up the anchovies and put them in as well.
3. After the anchovies have dissolved into the oil, add the garlic and be ready to add the tomatoes after 30 seconds.
4. Add the tomatoes, wine and let the pan simmer for at least 20 minutes (until the sauce reduces and thickens)
5. Salt and pepper the tomatoes (go easy on the salt, you put in some anchovies - remember?)
6. Chop the olives, measure out the capers and oregano and put them in a cup
7. Start the pasta water
8. Salt the water
9. About the time the pasta water's rolling, the sauce should be reducing nicely.
10. Boil the pasta, add the olives, capers and oregano to the saucepan
11. Grate the cheese
12. When the noodles are done, turn the sauce off.
13. Drain the pasta
14. Combine the pasta & sauce, mix well
15. Dump the Parmesan over the top 
16. Eat

No bells, no whistles - just a nice easy meal.

Ahhhhhh.

Late edit: I added garlic to the recipe. One of those things you throw in without thinking, but should probably write down.

In other news, the DOJ can't get it done

Remember the US Attorney scandal?

Emptywheel does

What are the odds?

Barron's online has a nice list of regulatory gaffes and non-calls that got us here.

This one kind of jumped off the page:

2004: The SEC waived its leverage rules. Previously, broker/dealer net-capital rules limited firms to a maximum debt-to-net-capital ratio of 12 to 1. This 2004 exemption allowed them to exceed this leverage rule. Only five firms -- Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley -- were granted this exemption; they promptly levered up 20, 30 and even 40 to 1. 

Seems I've heard those names in the news before.

That'd be:

• Goldman Sachs (stopped being an investment bank on Sept 20, 2008)
• Merrill Lynch (bought out Sept 15)
  
• Lehman Brothers (bankrupt Sept 15)
  
• Bear Stearns (bought out/bailed out March 25)
  
• Morgan Stanley (stopped being an investment bank on Sept 20, 2008)
  

If the Fed hadn't propped up AIG, Goldman would have died shortly after AIG did.

Interesting grouping there, no?

(H/t digby)

AIG, OMG

Thorn POD sent me this article about the AIG implosion.

Behind Insurer’s Crisis, Blind Eye to a Web of Risk 

The general flavor of the article can be summed up by the quote that kicks it off:

“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.”
— Joseph J. Cassano, a former A.I.G. executive, August 2007

The same old story - a group of self assured, smart people getting blindsided by things they never bothered to worry about.

Unfortunately, their failings became our problem.

Late Edit: Had the wrong attribution. POD send this article. Sorry 'bout that.

The bailout as a hellbound snowball

Okay - so looking at the bailout deal (or the summary) it's looking like some good thought was put into it. The summary skirts a rather big item (IMO):

Section 112. Coordination With Foreign Authorities and Central Banks.
Requires the Secretary to coordinate with foreign authorities and central banks to establish programs similar to TARP.

When you go to the actual bill, you don't get much more detail:

SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS. The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.

That's the entire section of the bill dealing with Treasury's powers to buy "troubled assets" from foreign firms.

Meaning, the Secretary of the Treasury can prop up companies that are overseas. What he can do here, he can do anywhere.

That's comforting.

Much will be made of the scaled back numbers. "It's not $700 billion right off the bat."

No, it's $250 billion right off the bat. But if the President certifies that the Treasury needs it, another $100 billion is released immediately. If the President issues a written report that more money is needed - congress has 15 days to vote to disapprove his request or another $350 billion is released.

I'd like to believe congress could put the brakes on this president, but since they've utterly capitulated on every other issue of note - I'm not so sure this limitation is much to crow about.

$250 billion now, $100 billion on request, and $350 billion in 15 days.
Mind you, I'm not critiquing the size of the amount, only the value of a "compromise" that adds up to exactly the amount the administration asked for.

Even I can do that math.

For a dose of perspective, here's WaPo. They' do math, too - only better:

The goal is not to vacuum all the industry's troubled assets into a federal holding tank. Rather, the government wants to determine credible prices for the assets held by banks, through the mechanism of buying some of those assets. If the plan succeeds, the prices paid by the government will become a new market standard, bridging the current gap between the higher prices sought by banks and the lower prices offered by investors.

"We need confidence, and this is about confidence," Paulson said.

In a practical sense, the government is trying to revive the markets because buying up all the troubled assets would require far more than $700 billion.

Twenty of the nation's largest financial institutions owned a combined total of $2.3 trillion in mortgages as of June 30. They owned another $1.2 trillion of mortgage-backed securities. And they reported selling another $1.2 trillion in mortgage-related investments on which they retained hundreds of billions of dollars in potential liability, according to filings the firms made with regulatory agencies. The numbers do not include investments derived from mortgages in more complicated ways, such as collateralized debt obligations. 

Cross your fingers, folks - this is close to a trillion dollars acting as a diversion.

Let's hope this works. Or it's good money after bad.

The last goddamn inch

I've always believed that a huge part of customer service is managing customer expectation.

Take the following scenario:

The customer is eagerly awaiting delivery of a product, and the vendor knows the delivery date will be one of two days on the week of September 8th.

The vendor could tell their customer any number of things, but lets try just these two:

1) "Those items will arrive on September 10th or 11th. We will call you on the 8th to let you know."

2) "Those items will arrive the week of September 8th."

Which of these statements is more likely to tick off the customer?

I'll give you a hint - # 2 is what our vendor told us about our cabinet delivery.

Now, a statement like that - you know it's not going to be delivered on the 8th - but you've been waiting for this delivery for weeks. You're eager. That part of your brain that desperately wants your kitchen to be done is saying "The week of the 8th, could mean the 8th!"

The realist calls the vendor on the 6th and asks to know what's up. The realist is told "We won't have a firm date until the 8th." Logic kicks in and says well, if we won't know until the 8th - odds are it won't show up on the 8th.

Optimist pipes up again "Maybe the 9th!"

The 8th shows up and all of my numerous factions are pinging the vendor to find out when the hell our cabinets will show up.

"Well..." says the vendor, "the trucks run on Wednesday and Thursday" so the soonest it will be here is the 10th."

-----

Okay, stop right there. This is how you annoy a person like me. String me out with bare minimum information and then admit to me that you knew more than you'd let on.

Week of the 8th + Trucks run on Wednesday and Thursday = the 10th at the earliest.

So why not say that? Yes, it's a matter of 72 hours - but when your kitchen is missing in action, and your general contractor is headed to Florida on the 13th, every hour matters. Why make me wonder?

Fail.

(We did actually get our cabinets on the 10th - our general contractor installed them on the 11th and 12th and life went on. But I'm still ticked at the vendor for stringing me along.)

-----

A kitchen remodel goes in fits and starts. Our contractor (I'll just call him The Man) is a typhoon of action. Day one, he obliterated our old kitchen and we had new walls and plumbing in a week and a half. If we'd have had cabinets by then - he'd have been done in two weeks. The Man makes stuff happen.

Except that kitchens have parts that have to be ordered, or subbed out. The floor took a week and a half to set up, cabinets take four to five weeks to make.

At some point, The Man just has to wait until stuff shows up. We had weeks of a big empty room and little activity.

Then the appliances showed up - then the cabinets and suddenly, The Man is off on a tear again. Cabinets and appliances are in place in 48 hours.

Enter the next delay - the countertops.

Countertops need to be made to order, so once the cabinets are in - the Fabricators can show up, measure everything and then inform you of when they will be done. It'll be another week and a half.

Which sucks.

You have a kitchen that is practically done, but no countertops means no surfaces - and no surface means no sink - and not having a kitchen sink is perhaps the most annoying thing about a kitchen remodel.

I want my garbage disposal!!!

So you spend the next ten days walking through a room that is a kitchen in all but function. In your head, the kitchen remodel ends with one of those "reveals" from basic cable:

Wow! It's so great! Let's cook a meal and do dishes, hon!

Reality is - your microwave is the only working appliance - and there's no place to put anything.

For ten days.

Then the Fabricators show up and you're told that the day after they're done - the plumber will show up and connect everying.

Counters + working appliances = Done! At least in my head.

But it's like jumping forward by halves - you never really get to the destination. First, the Fabricators notify you late in the day that - Oops! - they've forgotten to fabricate part of your counter. It'll be another five days. The missing part is not something that will affect the plumber, so it's easy to shrug off. Function is the big deal and so long as the plumber can work, we're 24 hours from being able to cook and clean again.

Plumber day, yesterday. Heading out the door, I'm thinking there's any number of items that will go wrong, so I leave my cell number on the countertop right next to opening for the sink. i.e. call me if you need something.

Returning home from work - I'm eagerly looking forward to firing up the stove and doing some dishes.

Except - the plumber has put in the sink (with the disposal on the wrong side) and has done nothing else. He's read my note, because he's added his own note below it:

Had to leave, will be back in the morning to run gas line to stove. I called the electrician he will be here in the morning to wire the dishwasher, thanks.
     -Plumber

Okay - FAIL.

Not only did he not do all the items on the list - he didn't call to let us know. Customers who are given more time to believe things are fine are more irritated when they find out they're not.

True, it's all going to be sorted out tomorrow morning - but cripes! This close to the end, every delay is slow death.

--

It's tomorrow (today) I'm telecommuting, looking forward to talking with the plumber and electrician. I have a few questions and I need to talk with him about switching the disposal and running a gas line for our dryer.

I leave him a detailed note - in case he shows up while I'm dropping off the kids.

I get back to the house and he's not there. By 10am - I'm getting that familiar feeling of things going south.

I call the electrician - he's surprised I'm calling him. He clearly has no expectation of showing up today. "All I want," I say, "is somebody to hook up the dishwasher. I don't want another weekend of hand washing plates."

Electrician sounds like a person that's been caught stealing your newspaper. "Gosh, I don't know. I don't know if I can get anybody there today. I mean, we're going to have to get it inspected next week anyway..."

I'm like who cares about the inspection? I want a working dishwasher! Four days doesn't matter to you, but it sure does to me!

"Well, I'll call you back around 1 or 2, and let you know if I can get somebody there today. How's that sound?"


Truth? It sounds sh!tty. I get to wait in suspense all day for the possibility that you might help me?

I bite it back. "Well, if that's all you can do - I'll wait for your call."

Click.

Next up is the plumber. I call and leave a message. An hour later (11am) he calls me back. He's on his way, and he's okay with switching the disposal.

Good. But I'm still ticked off. I was told I'd have a plumber and electrician this morning. I'm going to get a plumber around noon - and probably won't get an electrician at all.

Plumber shows up and I lay it out for him. "I just want to use my kitchen. Hook up my stove, and I'm happy. My sink works, you can do the tune ups next week. I want to cook."

He gives me a can-do smile and says, "I'll get your stove set up right now."

Solid.

I go back to work, and his pounding and hammering is a satisfying soundtrack for the next two hours. The hammering stops and about the time I look up, the plumber leans into my room and asks, "Say, do you have a connecting hose for the stove?"

All right, then. Now I know how the stove hookup will go south.

I bought a new stove that arrived without a power cord (it's dual fuel) and a gas hookup line. The plumber has run the gas right up to the stove, but the last foot of the gas connection is something he doesn't have (and didn't think to bring).

He's one foot out the door at that point, has to pick up his kid and he leaves me a roll of teflon tape and says "it's really simple." He recommends testing for gas leaks using a match - and then leaves.

Great. No hookup unless I do it. I know nothing about hooking up a gas line - but I'll be damned if I go through another weekend without a stove. I look at the gas pipe, then head for the hardware store.

On the way to the hardware store, I remember that it's after 2, and there's no word from the electrician. I call him and get his voicemail. Figures.

At the hardware store, I find there are two sizes of hoses for gas connections, small and big. The valve was big - so I buy the big one. On the way home, I call the electrician again - and get through.

"Uh, yeah - I don't think we're going to be able to make it today. How's Monday look?"

EPIC FAIL. Fine.

Click.


Back at the house, I tear open the bag, pour out the connectors and start checking the connections. The hose is too big.


Back to the hardware store. I get the small hose, and I find the old guy. I ask him about how I can hook up my dishwasher. He give me a cord and some wirenuts and turns me loose.

Back at the house again. I get the small hose down to the connectors - I'm missing an adapter.

Fine.

Back to the hardware store. I get the adapter, grab the old guy again. Is there anything else I should have to connect a gas range? He gives me some teflon tape - the yellow kind for gas connections, not the white stuff the plumber left me - and I check out. The cashier smiles at me "Is this the third time today?"

I give him the kind of look that says: I need space today.

There's now no time to actually connect anything - I have to pick up the kids. No way we cook our own dinner now. Arrgh!

So, pick up the kids and E, back to the house. Stepping out of the car, I find - in my driveway - the exact adapter I need for the hose. It's not the one I just bought, it must have been in the bag and - IRONICALLY - fell out as I went into the house.

Fine.

I get the yellow teflon going - hook up the connectors, screw stuff together and start testing the connections with soapy water. No movement - no leaks. Hooray.

I peel the tape of the top of the stove - the burners and bits aren't on, but I want to see if the stove lights up.

It doesn't. Plenty of sparks, no flame. In the back of my head - I'm thinking, did the plumber turn the gas back on? Eventually, it occurs to me that there's an easy way to see if the gas is flowing. I turn the burner know past the lite and just pump out some gas. I hear it, I smell it - the gas is there, it's just not lighting.

Burner covers. I put the burner covers on, and it lights up on the first shot. Who knew?

We have a stove.

Now, the dishwasher.


The dishwasher is bolted under the counter, and there's a stripped piece of romex running out from under the front. Old guy told me to splice a plug onto those ends and put on wirenuts.

It'll be ugly, but I'll be washing dishes until the electrician decides to grace me with his presence.

I splice and plug - switch the breaker and.... nothing. The plug tester shows no lights at all - but the outlet is sending electricity because the disposal is working.

????

If the plug works and no lights are on- that means there's an open hot connection.WTH?

And then it hits me: the romex isn't coming from the dishwasher, it's going to the dishwasher. All I have to do is connect the three ends to the volt box on the front of the dishwasher and I'm good.

Three hookups later, I power up the dishwasher.
We're still missing part of our countertop - but the big three stove/dishwasher/sink are all online.

We're not done - but here and now - I'm calling it done.

Despite the best efforts of our subcontractors - we can cook.

Huzzah!

Gonzalez: Oh! Now I remember!

(Via TPM and the Atlantic)

In March 2004, White House Counsel Alberto Gonzales made a now-famous late-night visit to the hospital room of Attorney General John Ashcroft, seeking to get Ashcroft to sign a certification stating that the Bush administration’s warrantless wiretapping program was legal. According to people familiar with statements recently made by Gonzales to federal investigators, Gonzales is now saying that George Bush personally directed him to make that hospital visit.

Nice timing, Gonzo. Pity your conscience couldn't have acted up back when Congress was asking you, eh?

Blink

McCain will debate tonight.

(H/t TPM)

This was such a strange thing to do - and the reaction was so negative, you wonder what kind of thinking went into this.

In some alternate universe - McCain might have had a vital role to play. If his party was in the majority, if he was on the Senate banking committee, if he was seen as a leader on - or had any credibility with - economic issues.

In that other reality - you could have created a situation where Sen. Obama would appear at a debate by himself and look foolish for not tending to the crisis at hand.

But in order for that to work, Sen. McCain has to be seen solving the crisis - and that just did not happen. All the discussions were led by other people. The house republicans revolted, and McCain did not or could not rein them in.

So McCain goes to Washington and does not save the day. No deal is in sight, and he's looking at a deadline for debating Sen. Obama. What the hell was he thinking? You stay in Washington, you are clearly a fifth wheel who doesn't want to debate.

McCain will slouch back to Mississippi like he's been repremanded for running off - and Obama looks like the responsible one.

Was this another hipshot, or did the McCain campaign actually think this was a good move?

So much for WaMu

(Via the NYT)

Government Seizes WaMu and Sells Some Assets

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution. 

JPMorgan is fast becoming the Government's cleaner (the Jean Reno one, not the lame, A&E one).
First they gobble up Bear Stearns with help from the Fed, now they're feasting on WaMu's corpse.

While I'm certainly not going to play the violin for WaMu - I have to wonder about something.

Is JPMorgan too big to fail now - or are do they need to wolf down a few more banks first? And once they're too big to fail - what happens when they do?

Take all your overgrown infants away

Banks imploding, a furious electorate, the President making a national appeal for action....

and we get this:

The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.

[snip]

When Congressional leaders and Senators John McCain and Barack Obama, the two major party presidential candidates, trooped to the White House on Thursday afternoon, most signs pointed toward a bipartisan agreement on a grand compromise that could be accepted by all sides and signed into law by the weekend. It was to have pumped billions of dollars into the financial system and transformed the way Wall Street was regulated.

“We’re in a serious economic crisis,” Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, “My hope is we can reach an agreement very shortly.”

But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.

Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.

The talks broke up in angry recriminations, according to accounts provided by a participant and others who were briefed on the session, and were followed by dueling news conferences and interviews rife with partisan finger-pointing.

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

(via the NYT)

Ye Gods. Who are these nincompoops?

Heisenberg - as applied to market bailouts

Ryan Chittum found another gem on Bloomberg: Jonathan Weil's article, Why Mark-to-Paulson Accounting Won't Save Banks.

Weil's saying that haggling over the details of Paulson's bailout is beside the point:

There's one glaring weakness in Treasury Secretary Hank Paulson's plan to save the U.S. financial system: We know what the plan is. Any other problems with it are mere details.

[snip]

The plan goes like this: Treasury will pay financial institutions above-market prices for garbage assets nobody else wants. Then, through the magic of mark-to-Paulson accounting, everybody else that owns similar stuff will use those same prices, or marks, to value the trash on their own balance sheets.

Shazam! Banks and insurance companies write up the asset values on their books. They post big profits. Their capital goes up. Everyone gets fooled. And nobody knows the difference.

Except, we do. And that's why the plan probably won't work.

[snip]

Under Paulson's plan, Treasury would hold so-called reverse auctions for financial institutions' troubled assets. Whoever submits the lowest bid gets to sell its junky assets to Treasury for cash.

While that might look like a competitive, free-market mechanism, it's not. Once the first bid in the first auction is submitted, it may not go much lower, and it probably will be much higher than the true market value.

That's because the real incentive for the banks isn't to sell their rubbish to Treasury and get cash. It's to watch the Treasury pay grossly inflated prices to others. That way, they can use those transactions for accounting purposes to mark their books to the Treasury's farcical market prices.

Weil goes on to point out that the point of all this was to get the idea of a bailout in the zeitgeist - so Wall Street can start breathing again - so it's not all a bunch of stupid - but it does raise the question that Congress might be rushing to re-arrange chairs on a certain iceberg bound vessel.

Ugh.

The one unpardonable sin in America

...is to be bad on television. (At least, according to Dennis Miller).

By that measure - Gov. Sarah Palin is rocketing towards damnation:


(H/t to Glen Greenwald and CBS)

It would be unfair to say this means that Palin is a bubblehead. Plenty of smart people look foolish on television.

But off the cuff brilliance is clearly not her strong suit. If the past two interviews are the measure of her PR value to the McCain campaign - I'd imagine there are some long faces at McCain headquarters.

Too big to fail

I've been waiting for CJR's Ryan Chittum to weigh in on the latest mess - and he's re-emerged with a list of questions for the press.

My favorite of the bunch:

4. Why have politicians and regulators let institutions get “too big to fail, and why not put such firms on a diet?

The press should ask why companies whose collapse would threaten economic apocalypse aren’t being slimmed down and split up until they’re not so scary. Instead, we have Bank of America, the nation’s biggest commercial bank, swallowing Merrill Lynch, the second biggest investment bank with nary a peep from the press about whether this is a good idea. B of A was already too big to fail. Now it’s something worse.

Why isn’t anyone writing about slimming these companies down? Bigger is not better here.

Exactly. The government has had to step in to save institutions that have grown to sizes where their every sniff and cough is a matter of (inter)national concern. I would think the government has an interest in ensuring a certain amount of redundancy exists on Wall Street.

We want to get to a point where we say "Oh, your investment bank just imploded? - too bad for you - but another one will spring up to take over your office space tomorrow."

Bank of America getting huger may make Merrill feel better, but I don't see why you and I should feel relieved.

Read the whole list.

Welsh on the bailout

The Big Picture has a marvelous quote by Jim Welsh.

Huddle?

Okay, I'm just going to rattle off a few items and ask a question.

McCain's suspending his campaign to go to Washington to deal with the economic crisis.
(This is a crisis where the key issues are being discussed in committees he's not on. McCain is not a chairman of any committee. While he wields more influence than a rank and file Senator, his essential role in addressing this crisis will be to cast a vote.)

Much has been made of Gov. Palin being shielded from all questions in her recent press appearances.

And then there's this.

Now, my question is.Where is McCain going to spend the next few days? and Where is Gov. Palin going to spend the next few days?

If there's some high level campaign huddle going on... Enquiring minds want to know.

The road to the White House goes through Letterman

Owch.



(H/t HuffPo)

The Geisel file

(H/t to E and mental_floss)

Stacy Conradt digs up 10 odd facts about the works of Dr. Seuss.

My favorite bits:

1. The Lorax. In case you haven’t read The Lorax, it’s widely recognized as Dr. Seuss’ take on environmentalism and how humans are destroying nature. The logging industry was so upset about the book that some groups within the industry sponsored The Truax, a similar book but from the logging point of view. Another interesting fact: the book used to contain the line, “I hear things are just as bad up in Lake Erie,” but 14 years after the book was published, the Ohio Sea Grant Program wrote to Seuss and told him how much the conditions had improved and implored him to take the line out. Dr. Seuss agreed and said that it wouldn’t be in future editions.

and

3. If I Ran the Zoo, published in 1950, is the first recorded instance of the word “nerd”.

So, that's who started it...

Read more.