Dear Jackson Free Press & FOLO

If you want to bash Sarah Palin, this is how you do it.

Sound Familiar?

"I have never worked harder in my life but I cannot give the tax cuts I promised during the campaign."

DWF: Warning

Someone Explain This To Me

Question for Jim Hood

When are you going to prosecute the Seale Case?

Better yet, when is The Jackson Free Press going to demand you prosecute James Seale? One would think as much time and effort as it spent trying to bring him to justice, the JFP would be outraged by your failure to do anything regarding the murders of Henry Dee and Charles Moore. I hope its not because Mr. Hood prosecuted Melton and is the only statewide elected official who is a Democrat.

PUMA: Ghost Army in Mississippi?

From the PUMA (Hillary-promoting) website:
"You thought we’ve forgotten, ey? Not at all. During the Mississippi Democratic Primaries, Barack Obama won 265,502 votes in Mississippi, an amount equal to 61.2% of the total votes cast. Hillary came in a very distant second with 36.7% of the vote, the other candidates split the difference.
Well, when something seems too good to be true, it usually is, and reports coming out of the state provide us with the following ultra-amazing information...."
http://www.puma08.com/2008/10/28/how-a-ghost-army-delivered-mississippi-to-barack-obama-in-the-primaries/

TED Spread Has Improved Some but Shipping Still Slowing

TED Spread has improved somewhat in the last two weeks. Bloomberg: "Yields indicate banks are more willing to lend than they were two weeks ago. The difference between what they and the Treasury pay to borrow money for three months, the so-called TED spread, narrowed to 2.68 percentage points from a high of 4.64 percent Oct. 10."

Translation: Credit markets have thawed a little in the last two weeks. TED Spread Ticker on Bloomberg.

Unfortunately, international shipping is still slowing down to the the widespread disappearance of letters of credit:

"Suppliers of oil, coal, grains and consumer products from Chicago to Mumbai are losing sales as the credit crisis spreads beyond financial institutions, and banks refuse financing or increase the fees for buyers. Coupled with declining demand, the credit squeeze is threatening international trade, one of the lone bright spots in the global economy.
``It's like standing on a beach watching a tsunami, knowing that it's coming,'' said Scott Stevenson, manager of the International Finance Corp.'s Global Trade Finance Program. IFC is the World Bank's private lending arm.
Emerging markets such as Brazil, Vietnam and South Africa are particularly vulnerable because buyers have more trouble proving their financial strength. The slowdown is also damaging the U.S., the world's largest economy, where exports accounted for almost two-thirds of the 2.1 percent growth in gross domestic product in the 12 months through June, according to the U.S. Trade Representative's office. .." Shipping Continues To Fall

Note: TED Spread is difference between interest rates on 3 month T bills and LIBOR. Closer LIBOR rate is to T-Bill rate, the more fluid the credit markets are. A corresponding rise in the TED Spread means interbank lending, and thus the credit markets, are tightening.

Earlier posts on international trade & shipping crisis:
Update on Shipping Slowdown
http://kingfish1935.blogspot.com/search?q=letters+of+credithttp://kingfish1935.blogspot.com/2008/10/update-on-trade-slowdown.html
http://kingfish1935.blogspot.com/2008/10/bloomberg-letters-of-credit-frozen.html
http://kingfish1935.blogspot.com/2008/10/more-news-about-grain-piling-up-in.html
http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html

Greatness.

Time for a Break

We Are Now Propping Up Mexico and Brazil

We really ARE the banker for the world. Bloomberg reported today, "The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time. ...." Fed Gives billions to Brazil, Mexico, S. Korea & Singapore

Leading finance blogger "Mish" Shedlock calls this move by the fed "complete silliness".
The Silliness Continues

Trustmark Releases Earnings Statements

From what I've read so far, they are in much better shape than most banks in Mississippi.
https://investor.shareholder.com/trustmark/releasedetail.cfm?ReleaseID=343533

Other Mississippi Banks 3rd Quarter Earnings Statements:

Cadence Financial Corp:
http://www.snl.com/irweblinkx/file.aspx?IID=1018635&FID=6893752

BancorpSouth:
http://www.snl.com/irweblinkx/file.aspx?IID=100163&FID=6852086

Citizens Bank of Philadelphia:
http://www.thecitizensbankphila.com/site/about.html

Mish: No Surprise Banks Aren't Using Bailout Money To Lend

Leading finance blogger "Mish" Shedlock writes there is no "conspiracy" by the banks to hoard cash instead of lending money as alleged by the New York Times:

'Stop the nonsense. There is no conspiracy between Paulson and the Banks. Paulson and Bernanke want banks to lend, but the ridiculous policies of the Fed and the Treasury make it difficult for banks to do so, especially in the current economic backdrop....
Indeed, each of Bernanke's vast array of lending facilities is causing an unwanted side effect somewhere else.Perhaps banks would have been willing to lend to GE, but not at the same rate as the Fed's Commercial Paper Funding Facility. And by competing against the banks it wants to lend, the Fed is guaranteeing it will be the lender of only resort.That is just one reason not to lend. Here are more: (see link for list).....
Indeed, there are 6 different facilities by which the Fed can lend to damn near anyone it wants, while accepting whatever collateral it wants......
The economic constraints and poor policy decisions by the Fed and Treasury make mergers a better alternative than lending money or sitting in cash......"http://globaleconomicanalysis.blogspot.com/2008/10/ny-times-lending-conspiracy-madness.html

International Shipping Update: Still Slowing

Financial Times chirps up about the crisis in international shipping:
"While the BDI has been dropping for months, the real collapse took place from the week after the Lehman bankruptcy. From a level of 4949 then, the BDI had, by last week, come down to 1149, for a decline over about a month of 76 per cent. This doesn't represent some piece of high-concept securitised paper meeting its maker in front of a judge; this is the real world of physical assets being employed to do actual work.....
It all goes back to that Lehman bankruptcy. Among the more serious casualties of that colossal failure of leadership was the letter of credit business. There is nothing more vanilla than the l/c for an international shipment. One bank tells another bank that it will accept the credit risk of an individual importer or exporter. They document that, with forms that have been around forever, clerks and computers shuffle the paper around. A fee is charged and goods are released for shipping, inspection, and delivery. The most boring business in the world. Until it stops.
After Lehman those clerks, and their computers, stopped trusting the clerks and computers at other banks. Treasury secretary Hank Paulson's ignorant and clumsy attempt to avoid moral hazard and systemic risk resulted in uncounted quantities of goods piling up on loading docks, and customers living off inventories and consuming less.
No, I don't think the Lehman leadership, or the shareholders who went along with them, deserved to be saved. It was not, however, necessary to sacrifice the worldwide flow of goods and credit to make them an example.
The government and banking leaders might think that those clerks and computers will have been reassured by the business cable channels telling them that things will be fine. Well, it hasn't happened yet.
Some critical institutions were caught in the middle of this. Wachovia, as I mentioned last week, did a lot of letters of credit for the Latin American trade. Royal Bank of Scotland has huge exposure to shipping. The line people working on trade finance need to be told that it is okay for them to take these risks, that they won't be laid off if they make one good-faith mistake...
http://www.ft.com/cms/s/0/03ff3bb4-a48e-11dd-8104-000077b07658.html

Still think that Bailout Bill should have been passed? Markets plunged how many points since it was signed into law? The government nationalized the banks. The housing market slows even more. Yet that is not even the worst part. International trade freezing up is what causes depressions. THIS is what has everyone in finance and government spooked.

Earlier posts on international trade crisis:
http://kingfish1935.blogspot.com/search?q=letters+of+credit
http://kingfish1935.blogspot.com/2008/10/update-on-trade-slowdown.html
http://kingfish1935.blogspot.com/2008/10/bloomberg-letters-of-credit-frozen.html
http://kingfish1935.blogspot.com/2008/10/more-news-about-grain-piling-up-in.html
http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html

Market Ticker: We Haven't Hit Bottom Yet

"In short there is absolutely nothing in the past history of the market to support a "bottom" call here. Remember that CNBC's mouth-breathers along with virtually every commentator called a bottom in March and then again in July. How has that worked out?
Is it possible we have bottomed here? Sure. Anything is possible. I could win the lotto this coming weekend, if I buy a ticket.
But hope is not an investment strategy and there is a difference between trading a bear market rally (and, if we have in fact finished (III) down, we're due for one that might last a couple of months) and investing for the long term.
If this bear is not over, then the 13/34 EMA and 20/50 SMA (on a weekly chart) will not cross back over. If you are a conservative investor you should have gone to cash in December of 2007 at the latest.
If you did not and are now paying attention to the bottom callers you are engaged in "investment by prayer", which is a horrible strategy and has been the ruin of many people in the market.
If you did go to cash back in 2007 based on a long-term timing signal and are now engaged in going back into the market "long", one has to ask - why would you be doing that when those same long-term timing signals are in fact still diverging - that is, showing deteriorating rather than improving conditions?
Finally, analyze your investment thesis based on what you think the economy is going to do. If you can come up with a cogent belief that the economy - the consumer portion of the economy - will in fact turn around by June of 2009, then you have an argument for trying to scale into investment positions for the long haul at this time.
Personally, I don't see it. ..............."
http://market-ticker.denninger.net/

Listen to KIM Waaaaade Thursday, November 6.

Karl Denninger, The Market Ticker guy, will be his guest. If the show is anything like his last appearance, should be really good.

More Terrorism From Obama Supporters

More attacks by Obama supporters continue this week as they engage in domestic terrorism against Republicans. The picture to the left is the well-known effigy of Governor Palin one hater displayed in front of his California home. Naturally the police said this was not a hate crime (although the liberals had a few other things to say about such nooses when one in Jena was hung with NOTHING attached to it).

While this could be called hate speech, violence occurred yesterday as Obama supporters attacked and maced elderly Republican campaign workers in Galax, Virigina. Obamabots Mace Elderly Republican Campaign Workers Unfortunately this is merely the latest in a series of violent acts committed by supporters of Barack Obama. Earlier this month, JJ posted a story about a male Obama thug-wannabe beating a McCain supporter in the face with a stick. Female McCain Supporter Beaten.

I guess this is called "getting in their faces".

What Exactly IS the Socratic Method?

There is no problem or issue Frank Melton or the Jackson City Council can't make worse, as history has shown. What should have been a simple renewal of the wastewater contract has turned into a circus. JPD. The Fire Department. Grants. Farish Street. A-1 Pallets. Now the wastewater contract renewal. It was supposed to be completed by the end of September, only to be delayed as Melton wanted to rebid the contract a few days before it expired.

Since the contract was due Friday, a reasonable person would have assumed the city would have a contract drafted and ready to present to the City Council for approval. However, this is Frank Melton we are discussing and true to form, the contract is not ready. Does anyone want to guess who is going to receive the $7 million per year contract? You guessed it, Socrates Garrett, last seen snatching the cleanup contracts for the storm cleanup last spring. The Clarion-Ledger reports Mr. Garrett is once again the beneficiary of some Melton shenanigans to the tune of several million dollars. As I wasn't aware Mr. Garrett possessed any expertise in wastewater treatment, I am slightly curious as to why the company that's held the contract for over 20 years is bringing him on as a partner.

However, I am sure this is all above board.

Clarion-Ledger story: http://www.clarionledger.com/article/20081027/NEWS/81027045

Market Ticker: Cut It Out Now!

"Let's start with AIG: $122 billion may not be enough.
Why? Because the CDS they wrote keep going down in value and forcing margin calls for more collateral (money).....
Now let's talk banks. You know, those things that are supposed to hold reserves against deposits when they make loans? Well guess what - there are no reserves. The non-borrowed reserves have been negative for months - since the turn of the year, in fact, and now total over $300 billion dollars.
What does this mean? Simple - the banks lost (blew, speculated with and got caught on the wrong side of, issued or purchased crap securities with, paid bonuses with, paid the light bill with, etc) the reserves they are supposed to hold against deposits. This would usually result in them being declared insolvent and the FDIC would seize them, but that would be inconvenient. So instead they went to The Fed which loaned them reserves so it appears they have some. It appears they have subsequently lost some of that money as well, because the "non-borrowed" reserve number continues to increase in the negative direction (that is, it's a negative number - a very large negative number.)..."
http://market-ticker.denninger.net/archives/P3.html

Keep Reading.

An Obamabot Unleashed

This is a picture of Helen Jones-Kelly, director of the Ohio Department of Job and Family Services.

The Columbus Dispatch reported she "confirmed today that she OK'd the check on Samuel Joseph Wurzelbacher following the Oct. 15 presidential debate." "Obama Government Spy Harasses Joe the Plumber

In what can only be termed an outstanding coincidence, apparently a total of four computer checks were on the Plumber by people with access to Ohio government computers.

I've had it. Its time to take the damn gloves off. These same people who scream bloody murder about the Bush administration intercepting phone calls from Al Qaida terrorists in Pakistan to Americans without a warrant (never mind they can check your mail and body at the border without a warrant) think its perfectly ok for this government bitch, and I do mean bitch, to harass someone who dared to ask Obama a question. It should also be pointed out she gave the maximum donation allowed by law to Obama.

Whats good for the goose is good for the gander. Any other info that is verified or from trustworthy newssources sent in to me will be posted on this website as long as its legal and not libelous and nature. Its about time to let this Obamabot know what it feels like to be on the receiving end. Perhaps she'll realize at some point what civil rights really mean.

Helen Jones-Kelley's bio: http://jfs.ohio.gov/ocomm_root/director.stm

She believed in a right to privacy when the state supreme court unanimously ruled against her on a public records request: http://www.sconet.state.oh.us/Communications_Office/summaries/2008/0417/062239.asp

Preach Brother Preach!!!

So You Obamabots Want to Bring Back the Clinton Economy?

Well, here is what Arthur Laffer has to say about Clinton's policies:
"The stock market is forward looking, reflecting the current value of future expected after-tax profits. An improving economy carries with it the prospects of enhanced profitability as well as higher employment, higher wages, more productivity and more output. Just look at the era beginning with President Reagan's tax cuts, Paul Volcker's sound money, and all the other pro-growth, supply-side policies.
Bill Clinton and Alan Greenspan added their efforts to strengthen what had begun under President Reagan. President Clinton signed into law welfare reform, so people actually have to look for a job before being eligible for welfare. He ended the "retirement test" for Social Security benefits (a huge tax cut for elderly workers), pushed the North American Free Trade Agreement through Congress against his union supporters and many of his own party members, signed the largest capital gains tax cut ever (which exempted owner-occupied homes from capital gains taxes), and finally reduced government spending as a share of GDP by an amazing three percentage points (more than the next four best presidents combined). The stock market loved Mr. Clinton as it had loved Reagan, and for good reasons.
The stock market is obviously no fan of second-term George W. Bush, Nancy Pelosi, Harry Reid, Ben Bernanke, Barack Obama or John McCain, and again for good reasons..."
http://online.wsj.com/article/SB122506830024970697.html

Anyone think Obama might pursue these policies?

Better yet, anyone think the Obamabots under the age of 30 will believe Mr. Laffer?

The Master

Who is Teresa Ghilarducci?

Although unknown to most Americans, Teresa Ghilarducci is the intellectual godmother for the Democrats' plans to radically change how Americans save for retirement. Ms. Ghilarducci, an economist at The New School for Social Research, called for the abolition of the tax breaks given to employers for 401k plans and instead proposed the mandatory enrollment of American employees in Government Retirement Accounts (GRA's) that are funded by a 5% mandatory payroll deduction in her book, When I'm 64: The Plot Against Pensions and the Plan to Save Them, published last year.

Ms. Ghilarducci outlined her proposals in a briefing paper nearly a year ago:
"The plan calls for all workers not enrolled in an equivalent or better defined-benefit pension to enroll in a GRA, a plan that borrows the best features of defined-benefit and defined-contribution plans, including guaranteed retirement benefits that last a lifetime, low administrative costs, and steady contributions. With GRAs, workers will accumulate savings in investment funds that earn a rate of return guaranteed by the federal government. These funds will be converted to life annuities upon retirement. Along with Social Security benefits, these will replace approximately 70% of pre-retirement earnings for the typical retiree.

Guaranteed Retirement Accounts eliminate the regulatory and tax law favoritism that not only gives 401(k)-type plans wide discretion and little scrutiny, but does so at the expense of the defined-benefit system.....

Guaranteed Retirement Accounts are like universal 401(k) plans except that the government, as befits a large and enduring institution, will invest and manage the pooled savings.

Contributions equal to 5% of earnings are deducted along with payroll taxes and credited to individual accounts administered by the Social Security Administration. The cost of contributions is split equally between employer and employee. Mandatory contributions are deducted only on earnings up to the Social Security earnings cap....

The pooled funds are conservatively invested in financial markets. However, participants earn a fixed 3% rate of return adjusted for inflation, guaranteed by the federal government.....
Participants who die before retiring can bequeath half their account balances to heirs; those who die after retiring can bequeath half their final account balance minus benefits received... "
Briefing Paper on Proposed New Government Retirement System

The rest of her plan is more of the same as the esteemed professor calls tax breaks for 401k plans a wasteful expense, claiming they cost the government $80 billion a year in tax revenue. She considers $80 billion in a $2 TRILLION budget "extravagant" while ignoring the fact these plans ARE taxed upon withdrawal of funds.

One benefit of 401k plans she seeks to change is ownership of the retirement funds. Currently 401k funds are the property of the employee (after becoming fully vested). If he dies, his heirs receive ALL of his money saved for retirement, minus any taxes. Under Ms. Ghilarducci's plan, surviving family members only get HALF of what remains in the account with the rest going back to the government. Consider this example: an American works for 40 years, builds up a nest egg in his GRA of $100,000 and suddenly dies from a heart attack. His wife will only receive $50,000 as the government will seize the money he earned and contributed to his retirement under this plan while the detached ivory-tower thinking of Ghilarducci and government-first philosophy of the Democrats consider such thievery to be "fair".

Unfortunately, Ms. Ghilarducci ignores the the effect her plan will have on financial markets when such a massive amount of 401k funds are transferred to the federal government. The current crisis in our markets will seem mild as they collapse from such a withdrawal of capital. Instead of addressing this very serious concern, she blithely says any injury caused to the worker can be prevented with a tax credit and says the government "conservatively invest" the money contributed to GRA's. One can only imagine the mischief this will create as it gives government further control over the markets and private businesses.

Democrats will seize upon this opportunity to impose conditions on funds receiving government investments as it does for corporations doing business with the federal government: Labor conditions. Environmental regulations. In what countries and types of business does a fund invest its money? Preferred investments and projects by favored political pals (Teamsters pension fund ring a bell?) will be a tempting target. Diversity guidelines. The list goes on as GRA's will inject the government into the economy in ways unimaginable only a few years ago.

Such a scenario is not far-fetched as House Democrats are currently discussing enacting legislation doing exactly what this liberal economist proposes: forcing the involuntary transfer of 401k retirement funds into government coffers. Investment news reported they recently held a hearing to examine "proposals to overhaul the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute" Earlier Post on Democrats Seizing 401k Plans

Mr. Miller had his own comments for the 401k tax breaks: "“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings..." Another Kingfish Post on Dem's Seizing 401k Plans.

The playbook is familiar: Democrats will use the worn out mantra about stopping tax breaks for the rich, protecting the little man on the street, etc., then fast-track legislation effectively abolishing private retirement accounts, moving most private retirement funds into the government cookie jar. The victims will receive no right to their money but instead an IOU from the government for an annuity as the government does the same for Social Security and FDIC. Meanwhile, liberals will celebrate, proclaiming they succeeded in protecting the middle class when in reality they reached their goal of enslaving everyone.

This is their idea of change.

Note: Listened to Mark Levin tonight who oddly enough, interviewed Dr. Ghilarducci. She said she wanted to "nationalize" 401k plans. No spin, no out of context, she said that was exactly what she wanted to do.

Related Post:
Are Your 401k Plans Safe From the Democrats?

Additional reading:
Ghilarducci NY Times Essay
Money Magazine Article
Washington Post Article on Ending 401k Plans

Additional note: Believe it or not, Limbaugh actually nailed the essential elements of her plan on the radio today. As I've read her policy paper, I can confirm that everything Limbaugh wrote about her plan is true. Nice to see he caught up with The Kingfish Limbaugh Analysis

Obama on Redistribution of Wealth

Warren Court was not radical enough with economic changes.

"The Supreme Court never ventured into the issue of the redistribution of wealth."

A Word From Our Sponsor

The Legacy of Joe Biden

In 1974, Biden voted to cut off all aid to South Vietnam, causing the government to collapse and guaranteeing a communist takeover of S. Vietnam. These are pictures of the Senator's legacy. The same Senator who opposed Desert Storm. Coincidence? I think not. For a more personal note on Senator Biden's legacy, read this blog written by someone who lived in the refugee camps: http://songkhlavietnameserefugeecamp.blogspot.com/

Market Ticker: Fed Has Lost Control

Denninger writes with acid yet again, cutting through the BS, telling Americans some things the media and politicians are not willing to say:
"today we learned that The Fed has lost control of the Effective Fed Funds Rate - their own overnight lending rate. They were forced to change their interest rate on reserves in order to try to get it back under control - and there is no reason to believe their efforts will be effective.....
Treasury will have to issue three trillion dollars of new debt over the next 12 months in an attempt to make this work. But Treasury has been using very short-term debt - mostly four week and 13 week "bills", to fund the existing debt, because they are cheaper. As such the total amount of these auctions could easily reach five trillion dollars over the next 12 months.
Already, Treasury is issuing more than $100 billion dollars in this debt a week, on average, including new issues and rollovers. This is about double the total amount of debt that foreigners (or US interests) hold in total, and we have barely begun to actually issue the debt necessary to make the "TARP" operate.
We are, in effect, borrowing to pay interest. If you have ever tried to do this personally, you know that doing so almost always leads to bankruptcy......
I believe Treasury has been attempting to "kick the can down the road" as is the usual pattern in Washington DC.
Unfortunately the can has filled up with cement and there is now a very high probability that instead of the can being able to be kicked down the road until next year after the elections the second-level dislocation - the "big one" - is going to happen within days. ..."
http://market-ticker.org/archives/623-The-Stark-Choice-Now-Facing-America.html
Someone made a snarky comment last week about my posting Denninger's columns on a regular basis. I am doing so for several reasons. I think he has a very valid point of view which needs to be considered. The media has consistently gotten this whole story wrong and the debate over the Bailout proved most politicians either don't care about this problem or if they do, it's too complex for most of them to understand. I think the two institutions, the media and our political leadership, have consistently failed the American people. If you read Mr. Denninger's predictions for 2008 nearly a year ago, he completely nailed everything that's happened in the markets and economy this year. He was also one of the few people who read the Bailout Bill. As I read it, I was able to confirm his analysis and everything he said would happen after it was passed took place. When it comes to the issue of the transparency of balance sheets, he is one of the few voices bringing it up as Bernanke and Paulson try to fight a forest fire with a garden hose. Keep reading his posts, you'll learn more from him than from the hacks or money honeys.

No Letter of Credit? No Shipping.

The media continues to wake up to the developing crisis in international trade. Yahoo News (Singapore) reports:
"There is growing evidence the global credit crisis is stifling seaborne trade as banks become more reluctant to honour crucial letters of credit between buyers and sellers who ship goods and resources, analysts say.
"With reports of sellers' banks deciding they don't trust the financial institutions named in buyers' letters of credit, have come alarming anecdotes of cargo ships being stuck in home ports," Matt Robinson, an economist at Moody's Economy.com, said.
"With ships not moving, stocks have been piling up and exporters have grown desperate for income from idle inventory," Sydney-based Robinson said in a report published on Wednesday.....
Robinson said if the crisis worsened ordinary consumers could be hit as more importers feel the pinch.
"This could lead to price distortions as demand, despite being subdued by slowing economic conditions, outstrips supply as shipments are delayed," he said.
"Consumers also face potential supply shortages as shipments of foodstuffs and grain lay stranded overseas," Robinson said." http://sg.news.yahoo.com/rtrs/20081023/tbs-shipping-credit-trade-7318940.html

Earlier posts on this subject:
Update on Trade Slowdown
Bloomberg: Letters of Credit Frozen
Time to Wake Up
More News About Grain Piling Up in Ports
International Trade Shutting Down?

Regions Goes A'Begging

Regions Bank apparently has its hand out for some federal bailout money after announcing this week its earnings plunged 79% in the third quarter. The Birmingham Business Journal reported:
"The Birmingham bank posted net income of $79 million for the quarter ended Sept. 30, versus $394 million during the same period last year. In the second quarter, Regions reported $206 million in earnings.....
Regions, Alabama’s largest financial institution, announced plans to participate in the government’s capital purchase program, which is part of the $700 billion rescue package signed into law earlier this month. The Treasury Department will spend $125 billion to help provide capital to thousands of banks in exchange for preferred stock.
If Regions qualifies, it will gain between $1.2 billion and $3.5 billion worth of capital, which would provide “a significant strengthening of our overall capital base,” according to the press release.
The bank’s Tier 1 capital ratio – the primary measure of a financial institution’s capital level – was at about 7.47 percent in the third quarter or $1.7 billion above the minimum allowed by bank regulators......." http://www.bizjournals.com/birmingham/stories/2008/10/20/daily10.html?ana=from_rss

BBJ also reported Regions suffered from large losses due to "non-performing" loans:
"In the latest quarter, Regions sold off or moved about $430 million of non-performing loans and foreclosed properties off its balence sheet, which totaled $186 million in losses.
Total net loan charge-offs jumped to $416 million, compared to $209 million in the second quarter..."

On a more critical note, it should be pointed out The Clarion-Ledger did not publish this information this week even though Regions (which contains the former Deposit Guaranty National Bank) is one of the largest banks in Mississippi. The newspaper's business section continues to display its sloppy nature as its entire coverage on Regions' problems consisted of this single paragraph:
"Regions had a poorer performanse and reduced its dividend from 38 cents to .10 cents per share to strengthen its capital position. Regions posted a net income of $206.4 milion in the second quarter, with 30 cents per diluted share, including the final $100.1 million in expenses from the institution's merger with AmSouth."

No mention of a request for federal help, the size of the losses, or what the net income in the third quarter was, which was the point of the whole story. Even worse, the story was written by a Hattiesburg American reporter. So much for business journalism in Jackson as The Clarion-Ledger, Mississippi Business Journal, and other local publications completely missed a story that was definitely newsworthy as well as easily available on the web as no fewer than three different business publications reported it early this week.

Regions Earnings Statement:
http://www.regions.com/about_regions/IR_newsreleases.html

Our New Word Today is "TED", as in "TED Spread"

Good morning boys and girls. Before we take our naps today, we are going to learn about "The TED Spread". Do you know what the TED Spread is? The TED Spread is "the difference between the interest rates on interbank loans and short-term U.S. government debt ("T-bills")."

Do you understand what this means? You compare the interest rates between the three-month T-Bill rate and the three-month LIBOR rate. A small TED Spread is good, a large TED Spread is bad. We don't like big TED Spreads. They are mean and hide under the bed waiting to eat little children. Big TEDs give nightmares to rich people everywhere. We try to make them go away.

The Gospel of TED Spreads according to St. Wiki states "The TED spread is an indicator of perceived credit risk in the general economy. This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. When the TED spread increases, that is a sign that lenders believe the risk of default on interbank loans (also known as counterparty risk) is increasing. Interbank lenders therefore demand a higher rate of interest, or accept lower returns on safe investments such as T-bills. When the risk of bank defaults is considered to be decreasing, the TED spread decreases.." http://en.wikipedia.org/wiki/TED_Spread

There is even a pretty color chart to help you understand the TED Spread. You can see it on this little website in Halloween colors: http://www.bloomberg.com/apps/cbuilder?.ticker1=.TEDSP%3AIND

Now line up for the bathroom, then unroll your nap pads, get your blankie and lie down. This will be a long nap.

I report. You decide.

Market Ticker: Fiscal Cat 5 Warning

Can't say he didn't warn us.

Just wait until you see what will come next.
"If you're playing "Buffett", following his claim (note: there is no penalty for lying on national television about what you're doing in your personal account) that he's buying here, there is a little ugly fact you need to be aware of.
That fact is treasury issuance.
See, to fund all this crap that Congress, Paulson and Bernanke have in the pipe (you know, the TARP, the newly-minted SIV that Ben announced this morning to buy commercial paper, etc) the treasury issue requirements will be north of three trillion dollars in this fiscal year.
Oh, and that's before Obama wins (and he will) and promises another $1 trillion worth of new spending without a nickel's worth of ability to fund it.......
what's nasty here is that right now we're seeing a flight INTO longer-term bonds (the 10 in particular), which means the market is anticipating another stock panic, and with good reason....
Bernanke is doing what Paulson tried and failed at in the "free" (coerced by arm-twisting by Paulson) market through executive fiat, and he is printing money to fund it. Exactly how much money he is printing (as opposed to lending) depends on the precise amount of overpayment that is being induced through these so-called "loans", but that it is happening is not open to question.
Why has this become necessary?
Ben and Hank produced a dislocation in this section of the marketplace by favoring other debt instruments with federal guarantees, thereby forcing money out of these instruments.
This in turn created major problems for money market funds who buy this paper as a routine matter of course in that when they needed to redeem deposits they suddenly found no buyers for the securities, as those people had fled to other instruments that Ben had guaranteed payment on!
As each new facility is rolled out by Ben and Hank a new area of debt becomes backstopped by the government in some fashion, thereby forcing money out of other instruments and causing those instruments to become distressed!
We are rapidly reaching the point where only The Fed and Treasury are providing any lending at all!........"
The Market Ticker: Fiscal Category 5 Warning

This Is How Screwed Up NOPD Really Is

"The veteran New Orleans police officer booked this week in the rape of a 13-year-old girl has a history of rape complaints against him, the department announced Wednesday..."
http://www.nola.com/news/index.ssf/2008/10/cop_booked_in_rape_of_13yearol.html

Red State Update

Obama: Defend Yourself and YOU are the Criminal

Supporting evidence for video:

"A 55-year-old Wilmette man was charged Thursday with weapons violations after he shot and wounded a burglar in his home more than a week ago.
Hale DeMar, of 35 Linden Ave. in the north suburb, was charged with a misdemeanor for violating a state law that required firearm owners to have a valid Firearm Owner’s Identification card, Wilmette police Officer Roger Ockrim said in a news release. DeMar was also cited for violating a village code that prohibits possession of handguns in Wilmette, the release said. Violation of the ordinance is a petty offense carrying a maximum fine of $750 upon conviction." (WNBC Chicageaux)

A law was passed in the Illinois Legislature to prevent cities such as Wilmette from prosecuting homeowners who tried to defend their families from thugs breaking into their homes. The law, SB2165, "Amends the Criminal Code of 1961. Provides that it is an affirmative defense to a violation of a municipal ordinance that prohibits, regulates, or restricts the private ownership of firearms if the individual who is charged with the violation used the firearm in an act of self-defense or defense of another. Effective immediately." Bill to Let Homeowners Defend Themselves

The bill passed 41-16. Obama voted against the bill. Obama's Vote Against the Right to Self Defense The bill was vetoed and Obama naturally did not even vote that day. Obama Skips a Vote, Again

Considering he told Georgia to show self-restraint when Russia attacked, perhaps one shouldn't be too surprised Obama expects families to stand by idly while they are raped, robbed, and murdered.

Apparently Democrats Aren't the Only Ones Thinking of Stealing 401k's

The Wall Street Journal reports Argentina is attempting to seize private pension funds. Don't think this is going unnoticed here at home by a few Democrats:
"The government proposed to nationalize the private pensions, which would provide it with much of the cash it needs to meet debt payments and avoid a second default this decade....
Argentine President Cristina Kirchner said the move to take over the private pension system was aimed at protecting investors from losses resulting from global market turmoil (sound familiar?) Funds in the system, which is parallel to a government pension system, are administered by financial firms. The private system has about $30 billion in assets and generates about $5 billion in new contributions each year.
While no one knows for sure what the government would do with the private system, economists said nationalization would let the government raid new pension contributions to cover short-term debts due in coming years.
Argentina's financing needs are growing quickly as the global financial squeeze pushes down prices of its commodity exports, such as soybeans. Coupled with unchecked government spending...."
http://online.wsj.com/article/SB122460155879054331.html

Earlier Posts on Democrats Targeting 401k Plans:
More on Democrats Going After 401k Plans
Are Your 401k's Safe From Democrats

Note: By the way, I asked a Republican Operative on the national level why they weren't attacking the Democrats for trying to seize 401k money. He said there wasn't enough time. Um, it's more relevant to Americans than Ayers is, it deals with the economy, and it is an issue affecting the pocketbooks and retirement plans for most Americans directly and immediately. Trust me, this will be an issue they get. But not enough time. Now, back to Bill Ayers and how he blew up Lincoln log cabins as a child.

Sitting Up With the Dead

Classic.

Market Ticker: Have We Reached "The Bottom"?

"From a fundamental analysis perspective the underlying problem with the market here is the same as it was a year ago - valuations are too damn high. I have no faith that the operating earnings estimates for the S&P 500 are going to be delivered on a forward basis, and without that, I've got nothing to invest based on, since its always the earnings stupid that drives prices.
From a technical perspective the picture is even worse. We have a confirmed double-top, a DOW theory primary trend bear market reconfirmation, and a spike bottom. From a technical perspective this implies that the entire bull market move to the first peak is going to be retraced, which puts the S&P 500 down into the 500 area, erasing twenty years worth of gains....
Could it really be different this time? Sure. It can happen. We hear that constantly - "this time its different." Well, perhaps some day it will be.
But history says that staking your fortune on such a belief is a poor gamble. In every case through history primary bear markets - ones that have confirmed on Dow Theory - the buying opportunity hasn't been on the initial decline, in that every time that low has broken and led to new lows.
It is only when a low is made and retested a few months later that one can reasonably take long positions. A retest that comes a week or a month later is too much, too fast.
How do you know when you've got a valid retest? ......"
http://market-ticker.denninger.net/archives/P2.html

Explanation of Dow Theory:
http://en.wikipedia.org/wiki/Dow_theory

Update on Trade Slowdown

The Bailout still hasn't thawed the credit markets as international shipping continues to slow down because letters of credit from banks are not being honored by sellers. Livemint.com reported:
"Dry bulk shipping has been on a roll and what we are seeing is completely unprecedented,” said Anjali Kumar, spokesperson for Great Eastern Shipping Co. Ltd, the country’s biggest private shipping firm. “Fortunately, the tanker sector is doing well and is helping us cope with the situation.”
The Baltic Dry Index, a benchmark for shipping bulk commodities, on 17 October tumbled nearly 7% from 1,615 points to 1,506, its lowest since November 2002. The index has plunged 53.2% since the end of September, and 86% since 20 May, when it had hit a high of 11,893 points....
“Traders who hire ships on spot basis are facing difficulties to secure letters of credit from banks,” said an executive at Chowgule Steamships Ltd, who did not want to be named. Letters of credit assure a shipper of payment for a cargo after it is loaded on a ship, but before the buyer receives it.
The squeeze on trade credit is also restricting commodities shipments. Around 90% of the world’s $14 trillion (Rs683 trillion) trade is handled via trade credit, the SCI official said.
“You don’t know the credit worthiness of the guy hiring the ship... The best and the biggest of names are defaulting,” said an executive at Apeejay Shipping Ltd, who too did not want to be named......" http://www.livemint.com/2008/10/21005334/Shipowners-see-business-slowin.html

Meanwhile, The Economist picks up the story as it gains more steam in the mainstream media:
"Since the early summer the prices of various kinds of steel have fallen by 20-70%, iron ore is down by a third and the key rate for bulk shipping of commodities such as iron ore, coal and grain is down by more than four-fifths. There is even talk of grain cargoes piling up in ports in the Americas. Their buyers’ letters of credit have not been honoured, because of a lack of confidence in the banks that underwrite them. At least one Australian producer has had the same problem with iron-ore shipments. And shipowners are struggling to finance new vessels they have ordered....." The Economist

Steel Guru reported the same as well:
"The Baltic Dry Index stood at 1506 as the week ended a massive fall from the 11,893 points at which it stood as recently as May 2008. The problem is not just the market's view on forward demand for commodities, although that is a large part of it. Rather, it's the global credit crunch. Reports from London indicate that ship owners are having trouble getting banks to sign off on letters of credit for the cargoes..." Steelguru.com

It is clear the global credit crunch is affecting international trade as there are more reports every day on shipping falling off due to sellers not honoring trade credit and letters of credit. This is the real economy. While the money honey gets mad about the Dow, this might be where the real story is as it affects the everyday lives of Americans much more quickly and directly than does a thousand point drop in the Dow.

Earlier posts:
http://kingfish1935.blogspot.com/2008/10/bloomberg-letters-of-credit-frozen.html
http://kingfish1935.blogspot.com/2008/10/time-to-wake-up.html
http://kingfish1935.blogspot.com/2008/10/more-news-about-grain-piling-up-in.html
http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html

Zogby Poll with 1 Day to Go in Ohio: Obama Leads Clinton

"A new poll shows Barack Obama has taken a narrow lead over Hillary Clinton in Ohio for the first time in the campaign for the state that could decide which Democratic Senator will win their party's nomination for president. However, other polls still show Clinton in the lead, with the gap shrinking.
With a day to go before the primary election, a Zogby International poll for Reuters/C-SPAN/Houston Chronicle that was taken between Feb. 29 and March 2 shows Obama with 47 percent compared with Clinton's 45 percent. The previous poll from a few days earlier showed Clinton with a narrow 47 percent to 46 percent lead. The same poll showed the race in Texas, which also has its primary Tuesday along with Ohio, Rhode Island and Vermont, narrowing. Obama had a four percentage-point lead several days ago, but that has shrunk slight to a three percentage-point lead at 47 percent to 44 percent."
http://www.bizjournals.com/dayton/stories/2008/03/03/daily3.html

Some Reality for FOLO

(Picture of victim's eye after Democrat took her McCain sign and beat her in the face with it.)

After forgetting to take her meds yesterday, Lotus hyperventilated over so-called Republican terrorism. So-called because she can't actually list an incident of violence against a Democrat or Obama supporter in this election. (I don't consider tearing up yard signs acts of violence or terrorism.). The one violent incident she does mention didn't even happen in this election cycle. Dear Lotus, since you are so concerned with election violence, hopefully you will publish this story and criticize the assailant:

"Here is a real district attorney’s complaint documenting an unprovoked assault by an enraged Democrat against a McCain volunteer in midtown Manhattan: “Defendant grabbed the sign [informant] was holding, broke the wood stick that was attached to it, and then struck informant in informant’s face thereby causing informant to sustain redness, swelling, and bruising to informant’s face and further causing informant to sustain substantial pain.”....
The overly formal document doesn’t mention this important detail: the victim was a small, quiet, middle-aged woman wearing glasses, and the attacker was a loud, angry man who went into orbit at the mere sight of McCain campaign signs....."

The complaint as well as interview with the victim can be found at Democrat Beats up McCain Supporter.

Deepika

Democrats' Plans for Controlling the Media

Conservatives and Republicans fear the Democrats will impose the Fairness Doctrine on talk radio if Obama wins in November. While they rightly worry about the Fairness Doctrine, they fail to pay attention to other plans the Democrats have for controlling the media.

Under the guise of improving diversity and attention to local affairs, Obama explicity states his goals in a 2007 press release after an FCC hearing in Chicago . Here are a sampling of reports:

"Obama Urges FCC to Reduce Length of TV Station Licenses
By Ira Teinowitz of TV Week September 21, 2007
Democratic presidential hopeful Barack Obama is throwing out more hints that the Federal Communications Commission would have a somewhat different focus if he wins the election.
At Thursday night's FCC media ownership hearing in Chicago, an aide read a statement in which the Illinois senator complimented the FCC for holding the hearing but questioned some of the FCC's past focus on easing ownership rules.
Sen. Obama said the FCC should reduce the length of TV station licenses and get more input, more often, on how well stations are serving community needs.
"I believe that broadcaster license-renewal requests--the periodic review required to ensure that broadcasters are complying with their public-interest obligations to local communities for using the public spectrum--should require greater FCC scrutiny and public input and occur more frequently."......
"Instead of greater consolidation, I fully endorse the call for new rules promoting greater coverage of local issues and greater responsiveness of broadcasters to the communities they operate in.".....
http://my.barackobama.com/page/community/post/reneaguilera/CWDT

The Broadcast Law Blog:"According to press reports, the statement expressed the candidate's positions favoring shorter license renewal terms for broadcasters so that they would be subject to more public scrutiny, as well as criticizing the FCC for allowing broadcast consolidation....."Broadcast Law Blog

Broadcast Engineering.com: "Obama called for “greater clarity” of broadcasters’ public-interest obligations. The Illinois senator said he supported new rules “promoting greater coverage of local issues and greater responsiveness of broadcasters to the communities they operate in.”
He also urged greater FCC scrutiny of broadcast station license renewals and more public input into the process..." Broadcastengineering.com

Congress passed the Telecommunications Act of 1996, easing restrictions on how many media outlets a corporation (or individual) could own in a particular market. There has been much debate over this law as most radio stations are now owned by only a few companies. Critics argue that such consolidation has stifled diversity in programming and ignored the needs of local communities. An earlier post, The Changing Face of Radio, discussed how consolidation has ruined the radio industry. However, the Democrats go past the goal of increasing competition and have made it clear they want to make it easier for the government to harass and control the media.

The Democrats advocate shortening the length of a broadcast license from its current term of eight years to one that is only two or three years, thus forcing the station to constantly worry about getting its license renewed by the government. The Democrats also have a few ideas of how to improve the so-called community focus of a station. The two Democrats on the FCC Board made the following recommendations, as reported in Broadcast & Cable:

The localism items proposed -- it established no final rules -- that broadcasters be required to better demonstrate their local programming service to the community at renewal time, including forming community advisory boards to help them determine programming of local import.

Specifically, the localism item looks at nine areas: 1) communications between the community and the station; 2. the nature and amount of local programming; 3. the nature and amount, specifically, of political programming; 4. underserved audiences, i.e. are the communities whose needs have not been addressed?; 5. disaster warnings and whether, say, there is someone physically at the station to relay them; 6. the relationship of network and affiliate, and whether that can an impediment to local decision-making (preemption of programming, content issues); 7. payola and sponsorship identification (radio pay-for-play rather than TV product integration); 8. the adequacy of license renewal procedures; and 9. additional spectrum allocations that might increase the diversity of voices.It is a laundry list that has broadcasters fearing the kind of regulatory heavy hand cable has long complained of from this commission.
Democrats Michael Copps and Jonathan Adelstein generally supported the localism initiatives but said they wished they had been final rules rather than proposals. They worried that the final rules might be watered down and were concerned about the commission's willingness to enforce them.
"We need to put meat in the sandwich we deliver," Adelstein said. "Why not a final order," Copps added, "rather than just good ideas?" He said he was skeptical but would work with the chairman to "try to move these things along.” http://www.broadcastingcable.com/index.asp?layout=article&articleid=CA6513849

Citizen Review Boards. The Democrats want to establish citizen review boards for tv and radio stations. One can only imagine the mischief this would create. What would be the criteria for appointing people to the board? Would a station criticize a government body, local or federal, if the allies of that government were on the board? Would there be a board for each station or just one for that community? What powers would such a review board have? Would local or federal governments appoint the members? How much weight would be given to its recommendations for the renewal of a license? If the license is renewed every three years, a station would be forced to become a trollop, trying to please the government in order to stay in business.

It is also telling that Democrats want to interfere in the relationship between the network and its affiliates, by advocating the government take control of a station's content away from its owners. The Democrats complain about stations ignoring "underserved audiences." How exactly does one determine what constitutes an "underserved audience"? Ratings? Sociological studies? Focus group polling? Such a vague goal is merely an excuse to give the government more control over content as some government official will determine what audience is "underserved" (after cooking the statistics to support the ruling) and issue a decree to the offending station to whom it will market its programming (CRA in Broadcasting anyone?).

The press has its freedoms because the Founding Fathers knew government needs a watchdog. The public has a right to information provided by a media free from any form of government influence if the government is truly to be for the people and by the people. What Obama and the Democrats desire is to shield themselves from media scrutiny under the masquerade of serving the community, a tactic used by most despots and tyrants. The public is harmed when the media is controlled by a few large corporations or the government, even in the age of the internet. While there may be some legitimate complaints about how media consolidation harms local communities, such concerns can be addressed by simply re-imposing some of the limits on ownership of media outlets in a market.

However, the Democrats desire to create their own version of Huey Long's Louisiana, seeking to create Community Review Boards, make the stations constantly plead for license renewals, give outside groups more power to veto said renewals, and dictate what the content should be, all under the guise of "protecting" the "underserved" and "the community". If a Republican government came up with these ideas, one can only imagine the shrieking and gnashing of teeth among the media that would occur. However, the media does not mind selling its soul as long as it serves The Cause. Huey P. Long took over the media in Louisiana while promising to "Share the Wealth". The Democrats intend to do the same while the media doesn't just sell them the rope but ties the noose for them as well.

Is Obama the Next Hoover?

The Cato Institute's Alan Reynolds recently wrote the Great Depression was caused not by Hoover's inaction, but rather by his actions as he took a stock market crash and turned it into a catastrophe. Mr. Reynolds opined:
"Far from "doing nothing," Herbert Hoover initiated a violent implosion of world trade and prices by signing the infamous Smoot-Hawley tariff on June 17, 1930 (Hiked tarriffs to 60%) The Commercial and Financial Chronicle then observed "a renewed violent collapse of the stock market." Benjamin Anderson, the chief economist for Citibank at the time, called the draconian tariffs Hoover's "crowning financial folly" and explained why:
"In a world staggering under a load of international debt, which could be carried only if countries under pressure could produce goods and export them to their creditors, we, the great creditor nation of the world, with tariffs already too high, raised our tariffs again ... Protectionism ran wild over the world. Markets were cut off. Trade lines were narrowed. Unemployment in the export industries all over the world grew with great rapidity, and the prices of export commodities ... dropped with ominous rapidity."....
In short, Hoover's rush to "do something" soon proved extremely dangerous to the U.S. and world economy. Hoover's trade policy seems like an extreme version of what Barack Obama proposes to do if elected. The same is true of Obama's Hooveresque vision of raising corporate taxes by 25% (in the guise of closing loopholes and tax havens), and of trying to raise income, payroll and investment tax rates for those who already bear most of the federal tax burden....
At the end of 1931, President Herbert Hoover asked for a temporary tax increase, saying it was "indispensable to the restoration of confidence." Congress went along in June 1932, raising the top income tax rate from 25% to 63% and quadrupling the lowest tax rate from 1.1% to 4%. That didn't help confidence or the Treasury. Revenue from the individual income tax dropped from $834 million in 1931 to $427 million in 1932 and $353 million in 1933.
It was Hoover, not FDR, who pushed for the biggest increase in marginal tax rates before or since. And it was Hoover, not FDR, who created the Reconstruction Finance Corporation to make lavish loans to banks and businesses--just as the Bush administration is doing today. .."
http://www.cato.org/pub_display.php?pub_id=9671

Last week in the debate, he said he would make trade agreements dependent on labor and environment conditions. This will merely cause countries to avoid signing trade agreements with us as they will rightly perceive we are telling them how to run their country. He wants to raise taxes in an economy that is probably going into a recession. He claims only the rich will suffer, ignoring the fact the superrich that everyone loves to bash usually have their money protected in low-tax trusts and foundations. Think Obama will attack those loopholes? The ones used by Soros, the Kennedy's, and his other super-rich Democrat friends? His target is the working and investing rich, the ones who are productive with their money and make the economy run (by the way, is there anyone you personally know making over $100,000 a year who DOESN'T work hard?). However, like Hoover, Obama wants to hike taxes during a time of economic crisis, which will merely make things worse. He also resists any calls for across the board spending cuts, in a two TRILLION dollar budget. Since he is advocating making Hoover's mistakes, one must ask if Obama is another Hoover.

Tonight's Humor is Brought to You By.....

A blogger at The Jackson Free Press. This post by the Millsaps graduate is for your amusement. Enjoy:

"There has been quite a debate over issues of tax cuts, class warfare, and shared prosperity ('spreading the wealth around'). I want to present a little tutorial on income and taxes for my friends who bemoan the idea of taxation - or, rather, higher taxation.
First, higher income always comes on the backs of the poor. After all, we buy food for cheap because we pay farm workers so low. We buy clothes cheaper because folks are willing to work for close to minimum wage without health care.
So, we could lower taxes, but would you be willing to pay much more for goods and services so the folks who "need" government service (e.g. health care, food stamps) can afford those previously provided for services?
Second, if I make higher income, someone else generally has to make a lower income - there is only enough money to go around. The economy has a fixed amount of "good" high paying jobs. The economy needs people to be willing to take low income and physically demanding jobs. Would you be willing to pay more to people who do those jobs so your taxes can be low?
Third, income tax rates are at a historical low. Take a look at the marginal historical tax rates. Go ahead, google it. Tax rates have been unbelievably high (even close to the 90 percentile in income!!).
Fourth, we are only as prosperous as our neighbor. When we lower taxes, we lower social programs. Take a look at the 1980s which led to the social upheavals of the 1990s (remember the high crime rates, teenage pregnancies, and so forth?) When we lower social programs, we cause social problems. When we have social problems, we have major expenses for YOU the taxpayer. You have to hire more police, more teachers, pay for more health care and so forth. The gist of my point is this - you are going to have to pay for "it" some how. We can lower taxes in the short term, but you'll pay for it in the long term.
The problem, then, is not taxes. The problem is government working well and working for us. So, quit bemoaning taxes and bemoan bad government programs!
posted by John Sawyer on 10/17/08 at 07:44 AM"
http://www.jacksonfreepress.com/index.php/site/comments/a_friendly_tutorial_on_taxes/

A Rat Killin' Story

It's the Transparency, Stupid

Dylan Ratigan of CNBC points out the same Secretary Paulson who is trying to clean up the mess in our markets, lobbied the government while at Goldman Sachs in 2000 to change the leverage limits placed on financial institutions:

"Dylan introduces a pair of quotes from Hank Paulson when he was the CEO of Goldman Sachs back in 2000. They follow:
“We and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. " - Goldman Sachs, CEO Hank Paulson, Feb. 29, 2000...." http://www.cnbc.com/id/27217313/

Transforming a dollar of capital into forty dollars of capital is "efficient"? Keep in mind it's the leveraging that allowed the housing meltdown to crash the markets and economy. The same CNBC story reported some remarks by Morgan Stanley CEO John Mack on how reckless Wall Street firms were in leveraging their assets:

"One year ago, Morgan Stanley ran leverage at some 30-times, Mack said. This means for every dollar of capital the firm had, it carried some $30 in debt. Morgan currently sits at "slightly below 20-times leverage," he said. With the $9 billion investment from Mitsubshi UFJ Financial Group and future federal aide, Mack expects leverage to fall into the teens.
Mack indicated he now questions whether it was wise to maintain such a high leverage ratio, and he noted that other financial institutions abroad had leverage ratios of as much as 40 or more..."

The current Secretary pushed for the rule changes causing this disaster. The Bush administration changed the rule in 2004. When the whole thing blew up, the Secretary demanded we bail out his buddies on Wall Street without ANY judicial review (thank goodness THAT was changed). He became Secretary after he cashed out of Goldman Sachs to the tune of $500 million. He resisted any limits on executive compensation and has refused to prosecute anyone involved. The esteemed Secretary ignores any discussion of making balance sheets more transparent, as firms are still allowed to keep these toxic deals off of the books. Meanwhile, no one has been indicted or forced to give back their ill-gotten gains. Money is thrown at the problem while common sense is thrown out the window.

Southern Crossroads Radio

Heard this program tonight on WFMN, 97.3 FM, Southern Crossroads Radio. Pretty good blues show. It would be nice to see something like this survive in the era of Clear Channel cookie-cutter programming. The website for the show is Southern Crossroads Radio.

MSU/JSU: Why? Why Not USM?

While the local media applauds the decision by Jackson State and Mississippi State to play each other in football, JJ refuses to participate in this farce. Make no mistake, such a deal is good for Jackson State and I applaud them for landing such a quality opponent, as it means a great deal of money and attention for them. However, Mississippi State deserves criticism for making such an arrangement.

There is no reason for Ole Miss and MSU to avoid playing Southern Miss, if they are going to start playing Jackson State (USM deserves the same criticism for playing Delta State while avoiding JSU as well). LSU plays Tulane every year and picks up another Louisiana school at least every other year. Tennessee has played Memphis on more than a few occasions. Miami plays Florida. Clemson and South Carolina have a traditional rivalry. Considering this and the fact the schools begged us to spend money to expand Memorial Stadium for them, Ole Miss and MSU should take turns playing USM each year in Jackson.

Such a game should be scheduled during the state fair. One of the hallmarks of the Texas State Fair is the annual Oklahoma-Texas game held during the fair in Dallas. Imagine the turnout if such a game was held during the fair in Jackson. Since Jackson does not have many events with statewide appeal, this would be an opportunity for it to capitalize on one of the few it does. Shuttle buses could ferry visitors back and forth from the game to the fair. For once a family would have a choice between tailgating (where there is gasp, drinking) and a family-friendly Mississippi State Fair.

In times of tight budgets, it is insane for the Bulldogs and Rebels to pay hundreds of thousands of dollars in rent-a-win fees when a game with the Golden Eagles will draw a great deal more interest and money, than would a match-up with the Citadel or University of Louisiana at Monroe or Lafayette or Bunkie or whatever they call themselves each week. Mississippi State can play Jackson State on the gridiron..... after it plays Southern Miss.

Note: Earlier version of this post contained an egregious error on my part. I thought the NCAA rule was that wins against AA schools didn't count towards bowl eligibility. Since then I discovered, through the help of a commenter, that one win every two years can be used. Thanks.

Market Ticker: Fraudacity Rampant?

Mr. Denninger keeps asking questions regarding the financial crisis completely missed by the media. He is not some conspiracy theorist or a genius. He simply reads what is published and asks questions, something our money honeys seem unable to do as they blather about the rise and fall of the Dow Empire. He coins a new word in this post, fraudacity, as he discusses the phoniness of the Bacardi Bailout:
"John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios - not be lent out. In other words, they intend to hoard it.
CNBC's Fast Money finally started talking about the outright fraud and lies last night. Dylan Ratigan was absolutely on fire about the fact that Paulson was in fact one of the executives lobbying hard for removal of leverage limits in 2004, just two years before he took the position at Treasury (and cashed out $500 million in Goldman Sachs stock tax free.)
I and a few others have been peppering the media with this, and finally, someone woke up to the fact that the very same people who made this mess now want we the taxpayers to pay for cleaning it up - after they ran off with all your money!.....
Nor does it stop there....."

Fraudacity Story

Bernanke Defends the Liquidity Maginot Line with the Same Results

Anna Schwartz tells The Wall Street Journal that Bernanke is using the wrong tools to solve this problem. The hapless Fed Chairman defends his Maginot Line of Liquidity while the CDO Panzers outflank him through the forest of overleveraged balance sheets. Who is Ms. Schwartz? She is 92 years old and lived through the Great Depression. She co-authored with Milton Friedman "A Monetary History of the United States" in 1963, the leading treatise on how monetary policy "turned the stock market crash into the Great Depression". Since 1941, she has worked at National Bureau of Economic Research in New York. Her thoughts on the current crisis should be taken very seriously. Regular Readers of this blog will find her remarks sound very familiar.

"Ms. Schwartz thinks that our central bankers and our Treasury Department are getting it wrong again.
To understand why, one first has to understand the nature of the current "credit market disturbance," as Ms. Schwartz delicately calls it. We now hear almost every day that banks will not lend to each other, or will do so only at punitive interest rates. Credit spreads -- the difference between what it costs the government to borrow and what private-sector borrowers must pay -- are at historic highs.
This is not due to a lack of money available to lend, Ms. Schwartz says, but to a lack of faith in the ability of borrowers to repay their debts. "The Fed," she argues, "has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."
So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue.".....
Today, the banks have a problem on the asset side of their ledgers -- "all these exotic securities that the market does not know how to value."
"Why are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot sell them, you don't know what they're worth, your balance sheet is not credible and the whole market freezes up. We don't know whom to lend to because we don't know who is sound. So if you could get rid of them, that would be an improvement." The only way to "get rid of them" is to sell them, which is why Ms. Schwartz thought that Treasury Secretary Hank Paulson's original proposal to buy these assets from the banks was "a step in the right direction."
The problem with that idea was, and is, how to price "toxic" assets that nobody wants. And lurking beneath that problem is another, stickier problem: If they are priced at current market levels, selling them would be a recipe for instant insolvency at many institutions......
Today's crisis isn't a replay of the problem in the 1930s, but our central bankers have responded by using the tools they should have used then. They are fighting the last war. The result, she argues, has been failure. "I don't see that they've achieved what they should have been trying to achieve. So my verdict on this present Fed leadership is that they have not really done their job." http://online.wsj.com/article/SB122428279231046053.html

This is what Karl Denninger has been preaching on The Market Ticker and what he said on Kim Wade's show Monday. Most of the financial reporters don't have a clue or are using the wrong paradigm to analyze this problem. Its not liquidity, its not interest rates, its not the bailout and recapitalization. Its the transparency that is key. The freezing up of international shipping is merely a symptom although its a very serious one. The Fed and Treasury ostriches refuse to acknowledge they might have made a mistake in ignoring this issue. As Ms. Schwartz and others have stated, the problem is these CDO's were private deals and too often were kept off the balance sheets yet can very easily sink a company. Until these are acknowledged and valued properly (and how do you void mark to market if they were grossly overvalued in the first place?), banks will not lend to each other and the credit markets will stay frozen.

Another one bites the dust

Damn. The FOURTH attorney in my law school class from Mississippi College is about to be disbarred. . Kyle Sadler, Ed Benson, Kristi Smith-Miller all disbarred; now Dwayne Deer is headed that way as he was charged with fraud. Then Laura Kuns of Diaz case fame was in my class as well. What the hell were Richard Bennet, Jeff Jackson, and Mary Libby Payne teaching us?

Another Crooked Lawyer

Fox is in Charge of the Financial Hen House

Probably the single largest factor that caused the market meltdown was the 2004 SEC rule change that removed leverage limits. The New York Times reported:
"On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.
They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments. ......
Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly. ...... "(Kingfish note: The limit had been 12:1 before the SEC action) http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=1&_r=1

Want to guess who spearheaded the effort by the investment banks to get the SEC to change the rules? "The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary. "

Anyone questioning the leadership of the Treasury Department as it bailed out Bear Stearns, AIG, Fannie Mae, Freddie Mac, the nine largest banks while each time promising that particular step would solve the crisis as the SAME leadership caused this debacle to happen in the first place in the private sector. Skeptical? Ask Secretary Paulson when he is going to force the banks and other financial institutions to put these CDO's and other off-balance sheet assets or losses on their balance sheets so we can finally have an accurate picture of our financial health? Why does he insist on throwing money at the problem while avoiding the issue of transparency? Sixty Minutes recently reported the credit default swap market could be as large as $60 TRILLION dollars but no one knows for sure because they are not regulated or registered, yet we are assured by the Secretary and Federal Reserve Chairman that spending $700 billion on the banks will fix the problem.

Tic..tic..tic.. that is the sound of invisible off-sheet swaps and balance sheets waiting to explode.

Bloomberg: Letters of Credit Frozen, "Nothing Is Moving"

FINALLY some of the American media is beginning to wake up to the shutting down of international shipping. Kingfish has been warning you about this little-known disaster in the making while the media has been asleep at the wheel. Bloomberg reports:

"Oct. 15 (Bloomberg) -- Commodity shipping rates plunged to the lowest in more than five years as a lack of trade finance left cargoes stranded and the global economic slowdown limited raw material demand.
Traders are finding it harder to get letters of credit that guarantee payments for goods, shipping executives said. Together with a slowdown in trade, that has contributed to this year's 82 percent drop in shipping costs for grain, coal and other commodities. Rates are so low that Zodiac Maritime Agencies Ltd., the line managed by Israel's billionaire Ofer family, announced today it may idle 20 of its largest ships.
``Letters of credit and the credit lines for trade currently are frozen,'' Khalid Hashim, managing director of Precious Shipping Pcl, Thailand's second-largest shipping company, said in Singapore yesterday. ``Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay.''
The Baltic Dry Index fell 11 percent today to 1,615, the lowest since February 2003. Rates for larger ships of the type Zodiac intends to idle fell 17 percent today, taking this year's plunge to 85 percent, according to the London-based Baltic Exchange.
Banks are leery of financing commodities and shipping transactions. Rio Tinto Group, the world's second-largest aluminum producer, may delay the planned sale of $10 billion of assets and Sterlite Industries (India) Ltd. shelved its $2.6 billion purchase of Asarco LLC. Ship owners can't find cash to finance the construction of new ships...."
http://www.bloomberg.com/apps/news?pid=20601087&sid=alFFUQ8a.WZM&refer=home

Naked Capitalism posted some more information on the slide of the BDI. There are also some good comments at the end of the story. http://www.nakedcapitalism.com/2008/10/baltic-dry-index-falls-nearly-20-in-two.html?showComment=1224057420000

If I had to make a completely uneducated guess, I think this is an example of what completely spooked Bernanke and Paulson into injecting $250 billion into the banks instead of first buying the bad paper. They see the wholesale rejection of letters of credit and trade credit by shippers, causing a depression and other crisis's if allowed to worsen. If the trade credit implodes, then we are facing a real economic disaster.

Earlier posts on this subject:

Time to Wake Up
More News about Grain Piling Up in Port
International Trade Shutting Down?

Business Dopery at The Clarion-Ledger

Once again The Clarion-Ledger publishes its ignorance on items of an economic nature. A brickbat goes to Kevin Richardson, the so-called business editor, who accused Treasury Secretary Paulson in his column Sunday for supposedly not using the tools given to him in the Bacardi Bailout to fix the crisis in our economy:
"But a week after the bill was enacted, none of the funds has been released and most of us have stopped checking the value of our investment accounts tied to the stock market for fear of a heart attack or nervous breakdown.
Why the delay?
For the record, I supported the bailout legislation because of the potential for calamity if nothing were done. (You did? You mean you actually read some of the bill? If you did, where was this analysis because you never published it in this newspaper. How come you don't have a blog by the way? Even the copy editor has one.)
But I am concerned by the inaction of the administration's economic advisers to disburse the money. And as the world waits, stocks continue to plummet.
The Dow has dropped eight consecutive days, losing 22 percent of its value, the worst performance since the Depression. There is no way to know where markets would be today if the legislation was not approved...." http://www.clarionledger.com/article/20081012/COL0102/810120350/1303/biz









Is this guy serious? After reading his drivel, one must question if Mr. Richardson even read any part of the bill or knows what the terms are. Mr. Richardson thinks the Secretary should be buying mortgages and other assets one week after the bill became law. Is the "Business Editor" really this ignorant? The Secretary could not do anything until the bill was passed. Mr. Richardson needs to watch "I'm Just a Bill" on Schoolhouse Rock as it takes more than seven days to set up the tools needed to buy mortgages, auction them off, hire the necessary employees such as fund and property managers, write guidelines, establish procedures, etc. However, Mr. Paulson did take action to inject $250 billion in American banks earlier in the week. Too bad that was not fast enough for Mr. Richardson, who like most so-called journalists, writes about what other people do while not actually doing anything himself.

However, Mr. Richardson continues on his ignorant way, focusing solely on the Dow. Its the freezing of the credit markets, not the Dow that is killing the economy. Mr. Richardson does not mention the credit markets anywhere in his column even though its the most important problem in this crisis. We can get by with a falling stock or bond market, however, our economy will CRASH with a frozen credit market. He also fails to mention the fact that these credit default swaps are crippling balance sheets. The causes of this problem: the overleveraging of credit default swaps, off-balance sheet accounting, implosion of the housing market, interest rates kept too low for too long, etc didn't took years to develop and won't be mitigated in seven days. Unfortunately for the readers, Mr. Richardson mentions none of these factors.

The economic dopery carries over to another story in the newspaper concerning the local housing market. Reporter Laroye Brown used the Martins' effort to sell their home on Mossline Drive in Jackson to demonstrate how much the Jackson real estate market has softened. Unfortunately for Mr. Brown, the story showed his ignorance as well for he missed several basic facts in his story. He wrote: "Wayne Martin and his wife, Patricia, have had their home on Mossline Drive in Jackson up for sale for two months but have had no luck in attracting a buyer." http://www.clarionledger.com/article/20081012/BIZ/810120348/1005/biz


TWO months. Our esteemed business reporter considers a home sitting on the market for two months to be evidence it is tougher to sell a home in Jackson. Most homes take 3 or more months to sell, a fact Mr. Brown should know. The picture of the Martin residence showed some very obvious problems with the saleability of the home that were completely missed by the reporter. Did anyone notice the "For Sale by Owner" sign? The Martins are not even using a realtor, depriving themselves of the benefit of the MLS. The Martins thus limited the exposure of their home to potential buyers. The home also DOES NOT HAVE A GARAGE!!! Think that might have SOMETHING to do with the reason why the house has not sold for a grand total of TWO MONTHS? No listing, no garage, 60 days on the market, yeah, its a real tough market right now. Mr. Brown, do yourself a favor. The next time you publish a story, why don't you actually read what you write as well as actually looking at your photographs. 'Nuff said.









Maybe The Jackson Free Press is on the right track in just running news feeds on its so-called business blog as the quality of business reporters available in Mississippi might just be that bad. As the job market in the financial/investment services industries is shaky right now, surely the newspaper can fire these so-called business journalists and hire a stockbroker who can write as just about anything would be an improvement.

Irony

Oh, the irony is too rich. The High Priestess of The Jackson Free Press defends Obama's tax hikes:
"Harry, don't buy the red-baiting hype. If you pay taxes, you already participate in some degree of "spreading the wealth." And every time you drive on a highway, you are enjoying the benefits of other people's weath. Or, the many other ways we are all benefitted by the government every day. This country wouldn't be what it is (in its best moments) were it not for "spreading wealth."And let us not forget the Republicans' corporate welfare schemes. posted by ladd on 10/16/08 at 02:08 PM "
http://www.jacksonfreepress.com/index.php/site/comments/another_vetting_problem_joe_the_plumber_not_registered_to_vote_101608/
If you don't know what I am talking about, go to this post, Jackson Free Press Tax Liens , about the Federal tax liens for over $55,000 representing 18 months worth of unpaid taxes filed on the Jackson Free Press (They have been paid.) at one time.

More on the Democrats Going After 401k Plans

Think your 401k plans took a large enough beating? Don't worry, the Democrats plan on abusing them from more as they seek to convert them to GOVERNMENT retirement accounts. They also claim that the tax break for the retirement accounts it a tax subsidy, ignoring the fact that the accounts are taxed upon closure or withdrawal. That is not good enough for these thieves as they consider your money to be theirs anyway. McCain should be nailing these bastards on this outrage.

"Powerful House Democrats are eyeing proposals to overhaul the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute....." http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971

Need I say more?

Related Posts:
http://kingfish1935.blogspot.com/2008/10/who-is-teresa-ghilarducci.html
http://kingfish1935.blogspot.com/2008/10/are-your-401ks-safe-from-democrats.html

Some Sanity at The Wall Street Journal

Some writers are showing more sense than the money honeys. David Reilly, a columnist for The Wall Street Journal, echoes The Market Ticker in calling for more transparency on balance sheets, warning the current crisis will only get worse:

"The intensifying debate over mark-to-market accounting is missing the point.
The question shouldn't be whether regulators should relax or suspend the practice. It should be whether regulators should encourage banks to expand their use of it.
The reason: Credit markets are already marking bank balance sheets to their own view of market values, or walking away in the absence of such information.
That isn't going to change if the U.S. or Europe alters the accounting rules. If anything, it might give these investors yet another reason not to invest. What markets really need is more information about who is sitting on what losses. (Sound familiar? Do you hear this Maria or the goatee?)
However, many banks and some governments want to row in the opposite direction. (They want the party to return without the hangover.) The American Bankers Association on Monday released a letter calling on the Securities and Exchange Commission to essentially gut mark-to-market accounting. Internationally, accounting rule makers Monday eased some mark-to-market rules. But it isn't clear whether this will be enough to appease the European Union, which may still move to water down the practice further.
The argument against mark-to-market accounting is that it forces banks to use overly pessimistic market prices to value holdings. That triggers losses that deplete capital.
Debt investors don't buy that. They believe that the values banks put on their loans, which mostly aren't marked, still don't adequately reflect losses that will result from the housing crisis. Investors have also cast a jaundiced eye on possibly understated losses on the securities that banks do mark to market prices.
In other words, investors still think some bank balance sheets are cuckoo. Accounting rules should be used to remedy that situation, not make it worse...."

This might be why the credit markets are not loosening up despite all the money we are dumping into the system. First we save Bear Stearns. Then we write a check to Fannie only to see the government quickly take it over. We pass a $700 billion bailout bill, only to see it balloon to over $800 billion, then watch the government quickly take over part of the banks without buying up the toxic assets as we were told they would do when the bill was debated. As Japan did in the 90's, the Fed cut rates to virtually zero, ignoring one simple fact: low interest rates are useless if investors, as well as the public, are too spooked to borrow money. Unfortunately, few people are telling you the truth because they are either trying to make the facts fit their agendas or simply don't understand how this stuff works. Don't watch the Dow or bond markets as much as the credit markets, as they are a more accurate barometer of what is coming down the turnpike. These are turbulent times indeed.

Nice shot.

Time to Wake Up

(Exponential Average in Red)

Credit Crisis About to Become Real

No Teleprompter?

Graduate of Missouri, the top journalism school in the country, working all day on a story and using cheat sheets on camera? I like the dramatic gestures, too. Nice touch. Notice the captions attached to the wrong people as well. ;-)
Notecards anyone?

Sound Familiar?

A little rougher around the edges, doesn't wear a suit as well, but the message is the same.

More News About Grain Piling Up in Ports

Another story about credit crunch affecting shipping. International trade is slowing down. Think this is some arcane subject that doesn't affect the average American? Think of all the goods that come from overseas. Oil. Metals. Food. Textiles. What is going to happen if this continues for more than another month? This is the stuff that really causes an economy to contract. Unfortunately, these stories are reported in the Canadian media while ignored by the money honeys. When are they going to start doing their jobs?

Foreign Policy's blog writes:
"Still think the global credit crunch is all about the TED spread and collateralized debt obligations? Think harder. Export-bound grain has started piling up in Canada as sellers have begun refusing to trust the credit lines and financial institutions linked to their foreign buyers.
The problem is that Canada's export cargoes don't get loaded until buyers can prove their ability to pay -- proof that has been increasingly hard to come by in the wake of bank defaults and shrinking credit markets worldwide. Unable to get credit lines, many buyers have left the grain market, generating big losses for Canadian shippers. Add to this the greater costs that shippers now shoulder because of delayed payments, and the picture starts looking pretty bleak.
And Canada isn't the only country suffering from the crunch. U.S. and South American shippers are taking even harder hits. Los Angeles and Long Beach -- home to two of the biggest ports in the United States -- have already seen a 9 percent drop in imports this year. Global shipping rates are down 74 percent from last May.
With 90 percent of the world's trade in goods going by ship, credit access is key to trade's survival. It's also key to investment in product development, which surely will fall as manufacturers face greater declines in profits. ..." http://blog.foreignpolicy.com/node/10010

The Financial Post on October 10 reported:
"The fall in commodity prices is being exacerbated as international buyers delay or even back out of purchases in the hope that the market will go still lower.......
While the retreat of buyers from the market is a key contributor to the price free fall, industry insiders say some purchasers are backing out of deals at the last minute, leaving piles of unsold grain, coal and other raw materials backed up at ports in the United States and Canada....
Speaking in an interview earlier this week, Mr. Temple said the phenomenon is happening mostly at U. S. and South American ports but is starting to appear in Canada.
While declining global demand is a factor in commodity prices, the biggest driver is the credit crisis. Thanks to the near-evaporation of credit, even willing buyers have been unable to step up to the plate.
Banks have ceased to trust one another and letters of credit backed by once-revered global banks no longer carry weight.
According to Mr. Jensen, some companies have managed to get around the problem by using alternative financing but in some areas trade has dried up completely.
A spokesman for Export Development Canada declined to comment....."
http://www.financialpost.com/story.html?id=871673

Still don't believe The Kingfish? Reportonbusiness.com confirms such stories:
"At Port Metro Vancouver, the country's largest port, the early impact of the credit crisis is being seen. With traditional lines of credit drying up, some bulk cargo such as grain is stuck because buyers' proof of payment isn't considered adequate...."
http://www.theglobeandmail.com/servlet/story/LAC.20081010.RBANKSBC10/TPStory/Business

A quick check of the Baltic Dry Index (See chart above), a leading indicator of shipping prices and volume, shows the Index has plunged since early September (52% decrease. The Baltic Exchange describes the Index as "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain."). The Index confirms in part the reports on the grain piling up in ports as international trade slows down due to the credit crunch. Keep in mind the freezing up of international trade (due to the Smoot-Hawley Act jacking up tariffs to 60%) was one of the leading causes of The Great Depression. Same problem, hopefully a different result. People need to start demanding more answers from our leaders as well as the media.

Market Ticker: Europe "Rams" Changes Down Bernanke's Throat

Karl Denninger, the publisher of The Market Ticker, appeared on Kim Waaaaade's radio show yesterday (The Kingfish was allowed to appear on the show as well.). It was a very good show. Mr. Denninger gave a good synopsis of how we got into this financial crisis and what the ramifications could be. A couple of people told me later it was the first time they thought someone had been candid as the financial press is clueless for the most part. The switchboard lit up after 15 minutes as listeners had time to digest what Mr. Denninger was discussing. We could have easily made the show last another hour as the phones did not stop ringing. We will probably have him on again in the near future given the current volatility in the markets. Yesterday, he opined on what he thinks is a new problem in the markets:

"Last night Trichet and other policymakers in Europe basically forced Bernanke's hand, initiating 100% guarantees of interbank lending.
This forced Bernanke to follow suit early this morning, lest the US markets and US credit system implode into a smoking hole instantly.
This was not a position Bernanke was willing to take on his own, or he would have. But when the rest of the world has done it, you literally have no choice, unless you intend to be turned into an instantaneous credit island - an event that the United States would literally not survive.
So the die was cast and Paulson and Bernanke's refusal to endorse this step in the G7 meeting Friday was literally rammed down their throat.
Now, however, we have a new problem.
You see, if there are defaults, they now flow straight through to sovereign balance sheets. The IMF is now stating that there are three nations that are insolvent now, and there will be more. You can bet on it.......
The reaction in the credit markets was less than inspiring. The TED Spread and LIBOR came in, but not what should have happened. Both should have been flattened - they weren't.
This leaves us with an obvious - and uncomfortable question - what if this doesn't unlock the short-term credit markets? What if lending still doesn't happen, because banks still don't believe their counterparty is good - sovereign backing or not?
....." http://market-ticker.denninger.net/

Another politician for Obama

Dispatch from Afghanistan

Michael Yon, who provided the best coverage from Iraq for several years, sends a dispatch from Afghanistan. Unlike a certain CNN foreign correspondent who reports from hotel balconies several countries away from the actual story she is covering (while wearing a safari-style jaket for authenticity), Yon, a writer and former Special Forces troop, goes to the front lines where the danger is to bring you the true story. Here is his latest dispatch:

"Since leaving the British embed, I’ve gone unilateral. I flew back and forth between Kandahar and Lashkar Gah, drove around and talked with people down south, then flew up to Kabul. In Kabul, I met Tim Lynch and Shem Klimiuk (a retired USMC and ex-Aussie paratrooper, respectively), and we drove in an unarmored truck east to Jalalabad. The canyon-filled drive would be dangerous even if there was no war, but there is a war – a rapidly growing one — and Tim pointed out burnt spots on the road where ambushes had occurred. I was unarmed, and counting on the military experience of my two guides as well as their combined seven years experience in Afghanistan. In the weeks that I would spend with Tim and Shem, we drove more than a thousand miles up and down Afghan roads without the slightest drama, except that Tim scares me with his driving. If you are rich and want the adventure of a lifetime, contact Tim Lynch. You might die. But if you live, you’ll come back with a new perspective on Afghanistan.

On our first trip, we drove from Kabul to Jalalabad. The road passes through a village called Sarobi. Sarobi has become known as the place where ten French soldiers were killed on 18 August, 2008, although they were not actually killed in Sarobi, but near Sper Kundy. The French soldiers were on a reconnaissance patrol in the Uzbin Valley, about 40 kilometers east of Kabul. At approximately 15:00 local time, they were spread out over a steep slope and started taking fire from the ridges above. The gunfire was fierce and accurate. After 90 minutes, the French vehicles ran out of ammunition, and they abandoned a counterattack. They fought for four hours without reinforcements, which were slow to come because the French troops lost radio contact and could not call in air support or reinforcements. According to a secret after action report that I have read and was quoted extensively and accurately in the Canadian Globe and Mail newspaper, the loss of radio contact was probably due to the fact that they only had one working radio. Soldiers from the Afghan National Army (ANA) had accompanied the French patrol, but they were apparently worse than ineffective, “lounging on the battlefield” until they finally dispersed, leaving their weapons and equipment, according to the report.
Reinforcements eventually arrived, but the fighting continued into the next morning. The French dead were not recovered until mid-day. By then, some had been stripped of their weapons, equipment and uniforms......

The Sarobi ambush was the worst single day toll for the French military in a quarter century. Most of the troops were from the Eighth Paratrooper Regiment, which had been nearly wiped out in the siege of Dien Bien Phu, Vietnam in 1954.....

This is exactly what the Taliban want, to split off our allies and create a sense of desperation among those willing to stay. The Canadians are also getting hit hard. And the Brits as well. By picking off our allies, and undermining the domestic support crucial to supporting the war effort, our enemies in Afghanistan and Pakistan are trying to isolate the U.S. so that they can eventually force us to leave.
Is this war winnable? I don’t know, but my gut instinct is that Afghanistan/Pakistan will devolve into something worse than Iraq ever was.
Afghanistan is considered “The Good War” only by people who don’t realize (or refuse to acknowledge) how difficult the situation is. The road to hell is paved with good intentions. And that seems to be the road we’re on in Afghanistan...."

http://www.michaelyon-online.com/

Dear Adam Lynch,

If you are going to call out someone, you might want to get his name right. Factchecking. Its. Not. That. Hard.

"Conservatives have a new scapegoat to take the blame for the economic meltdown over the last few weeks. Syndicated columnist and supply-side advocate Lawrence Kudrow summed it up during a Sept. 18 morning news talk show.
“It’s time for the Congress, Republicans and Democrats to stop encouraging, exhorting and forcing banks to make low-income loans with no documentation. Stop (the regulation) that literally pushed these lenders to make low-income loans,” Kudrow announced on Joe Scarborough’s MSNBC morning news analysis show, “Morning Joe.”
http://www.jacksonfreepress.com/index.php/site/comments/a_new_blame_in_town_100808/

By the way, the rest of that story was very poorly researched and written as it's pretty obvious you were out of your depth. Don't feel too bad, I consider Hannity and other CRA critics clueless as well, if it makes you feel any better.

Bless His Heart

Hannity is trying so hard.

Here Is What The Kingfish Thinks of the Republicans and Democrats on the Bailout Bill

An Open Letter to John McCain

American voters face a choice of two opposites come election day. McCain: the grizzled warhorse; honorable, knowledgeable, and reliable. A known quantity even if a bit dull. Obama: the boy wonder; fresh, vibrant, charming, and intelligent. A Reaganesque vitality yet hiding numerous radical ideas and associations. Americans face a financial crisis, hearing the word "depression" bandied about more and more by the money honeys on cable tv while they grow weary of fighting in two countries. The Republicans are the modern day Louis XVIII's even after the 2006 rout: they have learned nothing and forgotten everything while young Cassius Clay floats and stings. As Republicans are pummeled in the mainstream media, reviled by left-wing websites, and kicked around by a large segment of the so-called intellectual class, they grow frustrated, yielding to the temptation to fight back with flame-throwers, forgetting how easily they can burn themselves with such tactics.

The Hannities think it should be easy to beat Obama. Americans only need to hear THE TRUTH about Cassius. He has radical friends such as Ayers, a real bomb-throwing terrorist. All the Republicans have to do is pull a Bill Clinton, link Ayers to Obama as Clinton successfully tied McVeigh to Conservatives and Americans will see him in a different light. Once they finish pointing out the Ayers Connection, then bring up Reverend Wright, the black David Duke. Throw in some news about voting fraud and leftist community organizers and there is no way that Americans will vote for such a candidate or so goes the thinking.

Unfortunately, Republicans have been here before with similar results. Once there was a war hero who was President yet considered to be out of touch, old, and yes, boring. Another Cassius Clay faced him in the ring, filled with brilliance, plans, facts and figures on every possible subject, and a willingness to mix it up with his opponent. The earlier Cassius was pretty and yes, he was a baaaad man. He ran rings around Mr. Bush as he made the older fighter look clueless and slow. He wore the same mantle of change, waving it as a red cape in front of the voters. Bush sounded like McCain in the debates, making weak arguments, feebly accusing Clinton of wanting to raise their taxes while the scoundrel charmed the viewers with his plans to help them while Bush promised more of the same. Change was in the air as he hypnotized voters with the common sense words "Its the Economy, Stupid". The Republicans, in power, fossilized and feeble as they are now, thought it would be very easy to tar and feather him as an anti-American radical. He dodged the draft. Smoked weed. Had numerous affairs. His wife and friends were considered to be left-wing radicals who sought to destroy traditional America. The Republicans simply refused to believe the American people would be fooled by such a smooth-talking salesman, ignoring how many times such has occurred in democracies throughout history. They just needed to tell Americans THE TRUTH and all would be right in the voting booth.

The Republicans went down in defeat so badly, they nearly lost the power to filibuster in the Senate. Clinton drove them crazy for the next eight years as they could never figure out a way to tag the ivory Cassius Clay who hit like Foreman but bobbed and weaved like Frazier. The similarities between the 2008 and 1992 campaigns are striking. Even more striking is the Republicans are using the same losing playbook from 1992, having learned nothing.

While praising Reagan, Republicans forgot one of his basic lessons: people like to vote for a candidate instead of voting against someone. Carter pulled the hate card too, saying Reagan was lying and that he would have Americans hating each other. Reagan laughed at him, sending him on his way while Carter still has not figured out how he lost. Obama is a likable person. People are not going to believe he is a radical regardless of what some ad says about his friends and supposed connections to them. If Republicans want to run strong attack ads against Obama, they need smart bombs, not flame-throwers. They should run ads reminding Americans of the following items:
1. He told the Iraqi government to double-cross Bush on American troop withdrawals. Americans expect honesty and fair play from their leaders when it comes to their children fighting on the battlefield. Obama seeking to deny some troops a return home so he can get political points is something that should be publicized.
2. He said our soldiers were bombing civilians in Afghanistan. Republicans could have much fun with this one. Attack him for impugning their character. Remind the public how the anti-war hippies called the American troops baby-killers in the 60's. Run tapes of Murtha slandering our soldiers then show their vindication, proving Mr. Murtha to be a liar. There are several ways to play this one, all using the words of Obama and the Democrats. Better yet, play two clips: one of Obama saying how much he supports the troops, the other of his offensive comments. Let Obama speak for himself here, no spin is necessary.
3. When the Senate voted on a resolution condemning the Moveon.org ad against General Petreaus, Obama didn't participate. Hit him on it. Its a legitimate target. Ask how he can be Commander-in-chief when he won't even support the troops and their leaders on a simple vote such as this one. It occurred in his official capacity as a Senator so its definitely fair game.
4. Bring up his votes in the Illinois Senate against homeowners having the right to defend themselves with firearms. The average person will relate to this one and will not want an activist judge taking this right away from him.

Notice something? No personal attacks were made on Obama nor his family or friends. His votes and comments are questioned. Such criticisms are more relevant as they relate to his record as a politician as well as his professional judgement. Voters will pay more attention to these type of ads than personal mud-slinging.

Another issue that could be a silver bullet for the Republicans is the prospect of Democrats grabbing Americans' 401k accounts. The Democrats are already discussing in Congressional hearings taking away the tax exemptions for 401k plans (ignoring the fact they are taxed upon withdrawal or closure) and moving 401k funds into GOVERNMENT accounts. Considering how worried Americans are about their 401k plans, McCain should ask them if they trust the Democrats to seizing their money, putting it into a government account, and giving them an i.o.u. in return. I can think of few issues that would honestly scare Americans such as this one. This is one issue they get, trust me.

A final suggestion for attacking Obama is to broadcast clips of Clinton making the same promises about giving the middle class a tax cut and then showing the video of his telling Americans that he would not be able to give them one. Point out they didn't get a tax cut until the Republicans took over Congress (wouldn't' hurt to mention the economy took off as well). Reminding the voters they have seen this same promise by a similar candidate before will be a powerful reminder if these two clips are used.

However, such tactics do not hide the fact that people want to vote for a candidate. McCain needs to get his head out of his ass and figure that one out before its too late. The major issue is the economy. Neither campaign planned on it becoming the issue it is, proving the maxim a good battle plan lasts until the first shell falls. So far Cassius Clay has adapted to this crisis more nimbly than McCain has. What McCain can use in this crisis to his advantage is the fact Americans are mad as hell as they feel betrayed by their leaders in Washington and Wall Street. They remember Enron and Worldcom, wondering "Did we learn ANYTHING?" They turn to the money honeys on CNBC for answers and find they are just as clueless. One candidate presents the 2008 edition of "I feel your pain" while the other candidate makes it clear economics is an afterthought to him.

McCain is behind on points but doesn't need a fifteenth round knockout to win. He needs to start fighting Obama but pick his spots, not simply try to land haymakers. Reagan was sharp in his criticisms of Democrats but it was SMART criticism. He gave people reasons to vote for him and stated exactly what he was going to do in detail, similar in fashion to Obama and Clinton.

McCain should emulate Willie Stark in All the Kings Men and give a speech saying "I know you are angry. I know you are scared. I have a bunch of studies and proposals that will fix these problems. They are backed up by a bunch of fancy charts and statistics but that is not what you need to hear from me right now. What you need is to know I'm just as mad as you are. We have been betrayed by people on Wall Street who saw us as suckers, who didn't give a thought about anything but getting rich off of everyone else, regardless of the consequences. You need someone who is going to say hell no to those asking us for help from the comfort of a spa. We need to bring these people to justice. While Americans are working hard and trying to do right by their families, they wonder why grow angrier at those who said "trust us" while they fleeced them.

If elected President, I'm going to fight for you regardless of whether that means I'm fighting Democrats, Republicans, or even old friends. I'm not flashy and truth be told, I'm not so good with fancy words. I don't know how to give ten different presentations for the same problem. I just know how to talk straight to you and tell you what the problem is and what I think we need to do.

Part of this disaster was government's fault and the areas that the government screwed up, we are going to fix. While we are fixing it, we are going to bring justice to the American people, whose hard work has been betrayed by those who should have known you don't give something for nothing and expect to escape to a spa when the going gets tough. I'm going to appoint Rudi Guiliani to Attorney General. Rudi took on Wall Street back in the 80's, throwing in jail the junk bond shysters and inside traders who betrayed our trust. No one in this country doubts he is scared of taking on pinstriped hucksters. He will work in conjunction with the man I'm going to appoint to be Secretary of Treasury, Mitt Romney or Steve Forbes, a respected leader and businessman, to clean up Wall Street and fix our markets while bringing justice and faith in our leaders back to the American people. I'm announcing these two members of my team now because this crisis requires fast action and decision.

The American people need answers RIGHT NOW from my team, not 4 months from now in hearings covered only by CSPAN at two in the morning on Saturday night. These potential nominees will be out there among you, taking your questions, listening to you, and giving you the answers you need as best they can. My team will be straight with you. What we have to say will not always be pretty, but it will be the truth, something you have not been getting from your leaders for quite some time. I'm going to go after any politicians who got sweetheart deals from lenders, regardless of party. Any friend of Angelo will NOT be a friend of John McCain. I'm going to create an exchange for these credit default swaps that nearly bankrupted our system and require the firms using them to fully report the terms of said swaps. The days of hiding such swaps from balance sheets and regulators while leveraging them 200:1 so they can claim their 8 figure salaries are over if I'm elected. If elected, I'm going to restore sanity to the markets. I'll prosecute those who need it while bashing those who make this country work, unlike my opponent, who sees success as a bullseye.

Americans are a strong people and will get through this crisis. We will rise up and beat this problem as we always have in the past through straight talk, thoughtful discussions, listening to you, my fellow Americans, and making tough decisions. When America sets its mind to solving a problem, there is nothing that can stand in our way"

You get the idea. The truth is Mr. McCain, you are an SOB, a funny and honorable SOB but still an SOB (As a former Airborne troop, I have no problem making that statement ;-) ). The trick is to tap into the anger and make them realize you will be their SOB, something Bush the Elder did NOT do. If Republicans don't wake up and learn a few lessons from 1992, history will repeat itself in November. You are not a great public speaker and Obama is killing you in talking about the economy. You've made good government (which includes wasteful government spending and earmarks) and foreign policy your main interests for years in Congress. There is nothing wrong with such a focus, its just that right now, we face an economic crisis and unfortunately, its clear that you've not spend much time over the years thinking about it. People are going to scream "Reagan would do this or that". Blah blah blah. Reagan had a DEGREE in Economics. So did Dick Armey, Phil Gramm, and other Republican politicans who successfully promoted Republican economic policy. You don't have such a background and it shows.

Announcing Guiliani and Romney/Forbes as two nominees for their respective positions sends to the American people a message you take this subject so seriously, that you are willing to do something no candidate has done before as you think they deserve such answers right now. You are weak on this subject so send them out on the stump and to the media. They are all leaders and have been through primaries before so they are familiar with presidential politics. You need a game-changer right now that is smart, thought-out, and not reckless.

Take these steps and people will take a second look at Obama while seeing you in a new light. This race can still be won and doesn't need gimmicks or cheap shots. Some candor, expertise, and backbone are what is needed right now and the candidate that provides all three of those things to the American people before election day will win.

Market Ticker: Economic Seizure Possible?

Kingfish note: Karl Denninger, The Market Ticker guy, will be on the KIM Waaaaaaade Show tomorrow on 1180-AM, WJNT. If you have any questions you want to ask him, feel free to call the show or email them to me. Should be a very good discussion as his predictions this year have so far proven to be correct.

The Market Ticker warns of "potential economic seizure ahead" (It was written Thursday):
"The selloff this afternoon is the "real deal." It was not caused by the stock market getting "mad", it was caused by the short-term credit market along with the Treasury market suddenly dislocating at a few minutes before the bond pit closed at 2:00 PM.
Worse is also the fact that institutional lending has essentially disappeared - both between banks and now it is choking off commercial short-term credit across the board.
It doesn't get any more serious than this. To repeat: short-term commercial credit is threatening to completely disappear from the American scene.
We have "pumped liquidity" and even bailed out firms with taxpayer money, and yet the markets have not unfrozen.
They remain frozen because the root cause of the problem is that banks and other financial firms have been lying for more than a year, each quarter claiming to have "kitchen sinked" their losses only to report more the next quarter, and in some cases have gone on national TV to proclaim they're "well-capitalized" only days or weeks before they collapse!
The first question anyone asks when someone wishes to borrow money is whether or not they will get paid back. If the lender does not believe they will be able to be paid back then that loan will not be made, no matter how much money someone has available to them.
It really is that simple folks and yet this fundamental principle has been willfully and intentionally ignored for more than a year...." http://market-ticker.denninger.net/

"Gee, how does this affect me?" you ask. Denninger warns:
"Please understand - the TRUCKER who has a full load of food headed for your grocer REQUIRES commercial credit in order to fill his truck with diesel.
The local GAS STATION owner REQUIRES commercial credit to fill his underground storage tank.
The local CAR DEALER REQUIRES commercial credit to have cars - and parts - in his dealership. No credit, no car - and no car repairs.
The manufacturer over in China REQUIRES commercial credit (letters of credit from the buyer's bank) to be able to ship those goods to America, where you can buy them. If the bank over there won't take the LOC from the bank over here, suddenly you have no tires, DVDs and other similar products to buy....." (See post from Friday on the freezing up of shipping due to the lack of letters of credit, http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html)

Clarion-Ledger Economics

The Clarion-Ledger is now charging 75 cents for a daily issue and $1.75 for a Sunday edition, yet they give it away for free on the website (with photo galleries, blogs, comment sections, and videos).

Anyone see a problem?

Your Sunday Morning Sermon

Is this still funny?

You're All Hicks

Enjoy

A much younger Pavarotti

JFP and Folo: Defending Wife-beaters and Child-abusers while calling Republicans "Domestic Terrorists"

Surprise. Over at FOLO and The Jackson Free Press they smear Governor Palin for firing the head of the state police even though the report says the firing wasn't over that incident.

All I will say is go head Lotus and Ladd, defend a wife beater who wouldn't fire a child abusing cop caught drinking in a patrol car. Merely shows when it comes to your pet cause of domestic violence, you truly do have situational ethics. Considering how there is a conspiracy of silence concerning domestic violence among cops (especially at JPD), I don't blame the Governor at all for coming in and cleaning house. However, the left-wing prostitutes of so-called journalism will gladly ignore domestic violence if it furthers The Cause. Of course, Ladd did name Robbie Bell as "Most Intriguing Person of 2007" so perhaps there should be no shock at her always-shifting moral compass.
http://www.jacksonfreepress.com/index.php/site/comments/breaking_troopergate_report_finds_palin_abused_power_101008/
http://www.folo.us/2008/10/10/the-branchflower-report/

Keep in mind by the way, when the FBI gets through busting the Alaska Legislature (and it was Democrats AND Republicans that were nailed), Palin stated she is going to prosecute them. Think there might be a reason the legislature was so quick to investigate her?

If you want some more humor by looking into the deranged mind of a liberal, read this post by Lotus as she is now frightened by Republicans losing the election, thinking they will turn into terrorists. Please don't tell me she is sane. I don't think the Democrats are going to start blowing up buildings if Obama loses and no sane Democrats thinks the reverse is true. This is just plain stupidity on the part of someone who should know better. http://www.folo.us/2008/10/11/the-haties-that-mccain-palin-have-made-sure-well-face/

Then there is the obnoxious little twit Glittergirl, who shows her hackery in this post on FOLO:
"GlitterGirl // Oct 11, 2008 at 11:37 am
afotl: Are you saying that because we’ve said some “bad” things about Bushco, McCain & Palin that we’re being hypocrites to object to these hate filled, fear-mongering tactics?
What’s been said here in objection to the that trifecta is as close to what’s happening on the McCain-Palin campaign as the Hatfields and McCoys."

Excuse me GlitterGirl, but the terms Bush Derangement Syndrome started for a reason. I remember Conan O'Brien placing the words "Snipers Wanted" in front of a picture of Bush. I also remember your friends at Democratic Underground REJOICING over Pat Tillman's death saying they were glad he was killed as it was the death of another soldier defending empire and corporate America. However, you conveniently ignore your own side's kooks, something that should come as no surprise to anyone who reads your propaganda.

Update: How did I miss this one in the first paragraph:
"You know what McCain and Palin have been up to this week, don’t you. Until some intervenor(s) slapped John McCain upside the head hard enough to make his ears ring, he, Palin, their ad-makers, and their henchman Fox News have been inciting domestic terrorism."

Does this even deserve a comment?

Update: Some domestic terrorism practiced against McCain supporters:
http://www.katu.com/news/30847164.html

Market Ticker: Media Clueless

Keep reading:
First, our rates. The EFF (Effective Fed Funds) rate has been trading at 1.5% now for a couple of weeks. Two percent schmoo percent; a target rate only in name is no target at all. In reality the 50 bips cut, even though it resulted in an instantaneous 40 handle rocket shot in the /ES futures Wednesday morning, was entirely a CONfidence game (with the emphasis on "Con"!)...
Wednesday morning Britain and the EU zone all announced major bank rescue operations. Same deal - "throw money at it, paper it over."
Nowhere a mention of forcing balance sheet transparency and truth.
Except in one place - here in the US! Plans to standardize CDS contracts and force them onto an exchange are actually under way. This is a major positive move and fulfills one of the three prongs of my view of how to solve this problem, once implemented. We'll see how much pushback we get, and whether OTC derivatives are actually banned (as they should be), or whether the big trading houses and banks insist on being able to play "pick pocket" along side the "regulated" world......
Speaking of which, Thursday is D-Day - D standing for either "derivative" or, if things go sideways on people, "detonation."
See, this is the day that Lehman's CDS contracts are supposed to be resolved. Since Lehman's bonds are trading at ~20-30% recovery (horrible, on balance) the writers may have to fork up 60 to 70 cents on the dollar.
The $64,000 question is how many of those contracts net out. The real liability is what's left once everything is "balanced" (a long and short held by the same guy net to zero, assuming that both contracts are "money good", leaving the holder with no liability - and no asset)
This has the potential to be a big "nothingburger", a minor tremor, or a 250' high tsunami that washes over Lower Manhattan (and the City) tomorrow. There's no good way to know in advance which outcome will manifest, since nobody (at present) knows what the true netted-out open interest is. This is one of the problems with not having a public exchange; lack of knowledge.
The bright light of reality will shine tomorrow........" (This was written Wednsday. What happened the next day?-Kingfish) http://market-ticker.denninger.net/

Levee at Sundown

Picture I took last week on the levee by High Street before sunset.

International Trade Shutting Down?

Naked Capitalism blog reports international shipping is slowing down due to the credit crisis:
"Confirmation comes from the Financial Post, "Grain piles up in ports" (hat tip reader Vox Sanus):
The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.
Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said."There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy.....
Access to credit is key to the survival of maritime trade and insiders now say the supply is being severely restricted. More than 90% of the world's trade by volume goes by ship..."
http://www.nakedcapitalism.com/2008/10/international-trade-seizing-up-due-to.html

Are your 401k's safe from the Democrats?

Update: See post on October 27, 2008: Who is Teresa Ghilarducci?

Original Post:
One common question asked of Obama's proposed policies is how will he pay for increased government spending since his plans also call for tax cuts. Perhaps Congressional Democrats unwittingly provided us with a clue. Investment News reported the following remarks in a recent hearing:
A wide range of sweeping changes to the 401(k) system were proposed Tuesday at a hearing on how the market crisis has devastated retirement savings plans.
"Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401(k) retirement savings plans.
This was suggested by the chairman of the House Committee on Education and Labor.
“With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market,” Rep. George Miller, D-Calif., said.
“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings.
With savings rates going down, “what do we have to start to think about in Congress of whether or not we want to continue and invest that $80 billion for a policy that is not generating what we … say it should?” Mr. Miller said.
Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.
When workers collected Social Security, the guaranteed retirement account would pay an inflation-adjusted annuity under her plan.
“The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,” which goes to the highest-income earners, Ms. Ghilarducci said.
That simply results in transferring money from taxed savings accounts to untaxed accounts, she said....." http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081007/REG/810079894

The Democrats are planning on grabbing your 401k plans and using them for their schemes just as Augustus paid for the Roman Empire's expansion by seizing Cleopatra's gold. What they will do is move your 401k funds into so-called government bonds or accounts. The money will not be put into Algore's "Lockbox" but instead placed into the general fund just as the government does with FDIC premiums and Social Security contributions, giving IOU's in return.

The arrogance and ignorance of these social engineers is obvious. They can not stand for Americans to control their own retirement plans. If someone worked hard, sacrificed, and saved for retirement, they see him as rich because he didn't want to settle for $800 a month while living under their control. While whining about how 401k plans receive unfair tax breaks, they very conveniently ignore the fact that 401k plans ARE taxed when funds are withdrawn or the account is closed. Such taxation is not good enough for these thieves as they see anything one earns as a target since they are smarter than the rest of us.

What is ironic is they are complaining about market instability yet their proposal is to withdraw a colossal amount of money from the market when it is falling. This will cause the market to crash even further and rob 401k holders of ANY recovery in the market that will return to them all or part of their lost value. It also ignores that every 50-year return on the stock market, INCLUDING the Great Depression, has a rate of return that is near double digits. However, economic ignorance seems to be in ample supply among our leaders on both sides of the aisle.

McCain should nail these bastards with a hard-hitting ad about this issue. Americans may not care about Ayers or Wright. They DO care about the government taking away their retirement accounts while it claims to be helping them.

Related posts:
http://kingfish1935.blogspot.com/2008/10/more-on-democrats-going-after-401k.html
http://kingfish1935.blogspot.com/2008/10/apparently-democrats-arent-only-ones.html

And RedState finally caught up:
http://www.redstate.com/diaries/redstate/2008/oct/23/401ks-under-threat/

Here is an essay written by the Democrats' intellectual godfather for seizing 401k plans:
http://www.nytimes.com/2008/09/27/opinion/27ghilarducci.html?_r=4&oref=slogin&oref=slogin&oref=slogin&oref=slogin

McCain Plan just Bacardi Bailout with Another Name

I mentioned while live-blogging the debate that McCain's plan to buy mortgages was really the plan passed by Congress last week. The Paulson plan allows the Secretary to buy toxic assets at 100% of what the institution paid for them. The Secretary is also empowered to reduce the homeowner's interest rate and principal. What McCain is proposing is already law. Fox News and other publications said the same thing yesterday (Once again, proof The Kingfish knows what he is talking about on these matters). Housingwire.com reported yesterday:
"Critics argue, however, that the plan is strikingly reminiscent of Treasury Department secretary Henry Paulson’s bailout plan, which was passed by the Senate and signed into law Friday. Specifically, the plan echoes Section 110 of the law...."
http://www.housingwire.com/2008/10/08/mccains-bailout-a-bag-of-old-tricks/

Milky Way Road Trip

In search of planets and the summer Milky Way, astronomer Tunç Tezel took an evening road trip. Last Saturday, after driving the winding road up Uludag, a mountain near Bursa, Turkey, he was rewarded by this beautiful skyview to the south. Near the center, bright planet Jupiter outshines the city lights below and the stars of the constellation Sagittarius. Above the mountain peaks, an arcing cloud bank seems to lead to the Milky Way's own cloudy apparition plunging into the distant horizon. In Turkish, Uludag means Great Mountain. Uludag was known in ancient times as the Mysian Olympus.

For your amusement

Lot of truth in this video.

Dear Local Liberal/Progressive Radio Talk Show Hosts....

Don't get too smug if Obama wins and brings back the Fairness Doctrine. Yours truly will be filing complaints with the FCC against every one of you if I'm not given equal time on each one of your networks in comparable time slots, meaning no banishing The Kingfish to 2:00 AM.

Market Ticker: Congress Needs to Wake Up

The Market Ticker crucifies Bernacke's recent attempts to solve the crisis. The interest rate cuts will not work. Japan tried the same policy in the 1990's with little effect. Right now the markets and Americans are completely spooked. Lowering interest rates is a useless strategy if everyone is too scared to borrow money. Rarely does lowering interest rates increase the demand side of the equation although raising them too much can hurt demand. One must wonder if the Fed Chairman is capable of dealing with this earthquake. The Market Ticker writes:
"Academia, including most particularly Bernanke, posits that one must "increase liquidity" into a seizure in the markets such as we have now, lest we have a Depression.
The failure of this so-called economic "theory" is that it fails to recognize the root cause of the problem ......
The commercial paper market for non-financial, non-asset-backed entities has not frozen. Nor will it. Those firms have not abused the market and thus have nothing to fear.
It is in fact those firms that have abused this market that have problems, just as occurred with municipalities with "auction-rate" securities.
Borrowing short-term (to lower the coupon required) for long-term requirements is fundamentally unsound. When you do so you place the very life of the entity that does so at risk......
The credit markets, along with consumers and banks, are literally choking on all the liquidity being shoved down their throats. It has done exactly nothing to address the problem and won't because:
Banks and other financial institutions have been repeatedly proven liars in terms of their financial strength and balance sheets. Pick a financial institution and you will find that almost without exception they have claimed "exposure" to bad debt that is a tiny fraction of what is later shown to be accurate. Nobody can fairly evaluate a firm's financial strength so long as this continues; ergo, nobody can have a reasonable degree of trust to lend to such an institution. In addition even settled black-letter law in some regards has been shown to be wantonly (and perhaps feloniously) ignored; Lehman, as an example, is alleged to have transferred segregated customer funds and securities to a Cayman Islands subsidiary shortly before it went under, effectively locking up funds and securities that are supposed to be safe from a bankruptcy proceeding.......
It is not possible to reflate the credit bubble. We must deal with the reality that the bad debt in the economy - no matter who holds it - must be defaulted.
There is no "liquidity trap" into which to fall; we are already in the hole as there is no more capacity to borrow; we have exceeded the maximum safe amount of lending that can be accommodated in the economy. When one is in a hole, the first rule is to stop digging.
Remember, we were told repeatedly that Bernanke's Fed and Treasury's actions would prevent a recession. We were told that the TAF would free up bank lending. We were told that the TSLF and PDCF would prevent more blowups in investment banks after Bear Stearns yet Lehman blew up and the two remaining IBs (after the essentially-forced merger of Merrill) were forced to reorganize as commercial banks to prevent their own implosion....."
http://market-ticker.denninger.net/archives/601-CONgress-Wake-Up-NOW.html

Town Drunk!!!

"Melton contended that as mayor of Jackson he could do what he wanted," Blumberg said. He also said the mayor had been drinking Scotch whisky and water from a 16-ounce water bottle earlier that day. He said the mayor "routinely" drank the combination before going out on law enforcement-style sweeps." http://www.clarionledger.com/article/20081008/NEWS/810080362&referrer=FRONTPAGECAROUSEL

Guess we can be thankful it wasn't Mad Dog or Ripple.

READ!!!

I have posted a few articles from The Market Ticker, Karl Denninger's website, this year as I find his analysis to be penetrating, candid, and more expert than most of what I read in the media. Here are his end of 2007 review and predictions for 2008 column from earlier this year. Warning: it's a verrry long read but well worth it. If you are trying to understand what is going on right now, this column is a good place to start. Most of his predictions have been fulfilled so far this year. Mr. Denninger wrote:
"There are many who argue that The Bear Market, however, not only did not arrive but that we will rocket to new highs, and have a solid market in 2008.
It is my view that they are sorely mistaken, and soon are to be not only dead wrong but dead broke..........

Here’s my view on what you can expect in 2008:
The US will enter a recession, if it has not already done so. It will be consumer spending driven, with its genesis found in the Housing market. The slowdown will become evident once the “real” holiday sales data is posted, and accelerate into the first quarter.
Unemployment will increase significantly, rising to north of 5% by the middle of next year. This will of course cascade back into consumer default rates (mortgages, credit cards, auto loans, etc) and cause yet more layoffs. The “virtuous cycle” will turn vicious.
Housing will not turn in 2008. The total damage to prices will exceed a cumulative 15% from 2005-2008, and it will not be over. At least one, and probably several, national home builders will be cut to the single digits on their stock price or go bankrupt and be reorganized. Residential Real Estate will NOT be a buy in 2008; you’re still at least one and probably two years too early. The story in the housing space in ’08 will be the defaults on “prime” mortgages – which in reality were nothing of the kind (e.g. “Option ARMs”), and on the piggyback seconds and HELOCs behind them.........
The “big story” in the financial markets for 2008, and the likely trigger for major turmoil, will be the implosion of the CDS marketplace and how Buffett profited from it. This will stabilize the municipal bond marketplace which has been positively hammered.
Equity prices will be choppy in the first couple of months and will experience a peak to trough swing of at least 20% during the year in total. I expect the S&P 500 to at least touch 1220 in 2008 and my current downside target is 1070. Note that should we get a “parabolic” sort of move in the first quarter, which is possible, the potential for an even louder “boom” (collapse) goes up dramatically; in that case I would not be surprised to see a three-digit handle on the S&P 500 sometime during the 2008-2010 time period.....
The Dollar will bounce all over before starting to take off when it becomes apparently that the rest of the world is going to get it worse than we will.
The “market callers” who are (almost to a man!) calling for big moves northward in 2008 will be coming to the public “hat in hand” as we get into the latter part of the year. ..........."
http://market-ticker.denninger.net/archives/134-The-Year-In-Review-And-a-Look-Ahead-for-2008.html

Sit down, pour yourself a drink, and read his column in its entirety, even if it takes thirty minutes. If you've read nothing else on this website, read this article. Denninger has consistently nailed what is going on in our economy and financial markets all year. I will continue to post his columns here as we need more straight talk from experts like him. If you listened to him for awhile, your portfolio is in better shape than if you followed the advice of the goateed-motor mouth ritalin junkie on CNBC. One further point he makes which most people don't know: When the fed injects liquidity into the system it is a loan. At some point it has to be withdrawn. We are going to be dealing with this mess for a long time to come. What we need are straight talk and tough questions, not hot air and posturing. Start by educating yourself.

Histrionics and a Voice of Reason

Over at FOLO, Lotus wonders aloud if we are heading for a depression, showing her economic ignorance: 6.1% unemployment, low interest rates, 2.8% GDP GROWTH, falling oil prices, etc. yet the dreaded "D" word is mentioned in a serious manner as she cites a CNN poll showing 60% of Americans think we are heading for a depression. http://www.folo.us/2008/10/07/60-of-americans-expect-a-depression/

Fortunately, more sound minds are providing good reasons WHY we are not heading for the Big D, one of them being a Nobel Prize-winning economist in the Wall Street Journal yesterday:
"First of all, the magnitude of this financial disturbance should be placed in perspective. Although it is the most severe financial crisis since the Great Depression of the 1930s, it is a far smaller crisis, especially in terms of the effects on output and employment. The United States had about 25% unemployment during most of the decade from 1931 until 1941, and sharp falls in GDP. Other countries experienced economic difficulties of a similar magnitude. So far, American GDP has not yet fallen, and unemployment has reached only a little over 6%. Both figures are likely to get quite a bit worse, but they will nowhere approach those of the 1930s......"
http://online.wsj.com/article/SB122333679431409639.html?mod=todays_us_opinion

DWF on LSU: Sorry 'Fish

http://collegefootball.rivals.com/content.asp?CID=860306

Nice guy, that Ricky. After all the crap last fall, can't pass this up.

Kingfish note: RJF didn't play last fall and Charles Alexander was out hurt. Tebow facing a real D-line this week. He better turn his receivers loose on LSU's corners because that is where the weak spot is.

BOOM! CNN reports on Obama-Ayers Ties.

They finally do some real reporting and Obama's story will have to change again.

Now imagine if it was McCain and David Duke or Edgar Killen, think McCain would get a pass? I don't care what Obama says about it being in his past, I don't think somehow I would be friends with a confessed Timothy McVeigh, which is exactly what Ayers is. Interesting how the Obama campaign says it was set up by Alice Palmer, who says she had nothing to do with it.

Live Blogging the Debate.

Debate about to start. I expect a little bit tougher exchanges and sharper reponses than last time as is usually the case. McCain needs to point out that Clinton made the same promises in 92 and was forced by the Democrat Congress to abandon them. He also needs to run against the Congressional Democrats more than he does Obama. People like Obama. He is more personable and has a better delivery. Attack the Barney Franks and Chris Dodd's who got sweetheart loans from Countrywide and put us in this housing mess. If Obama starts hitting him on hiring Davis, he needs to point out that Davis was a hired gun who is no different than any other lawyer who represents his client and point out that Pfitzker and Johnson are two people who WERE the lenders who drove us into the ditch and attack Obama's judgement for hiring them. Obama should stay calm, play it safe, jab, and link McCain as much as possible to Bush and Wall Street, tapping into the country's anger.

Here we go. First question about getting us out of this financial mess. Obama response predictable. Nice. Attacking AIG. Good move. Rescue package for middle class. How do you pay for it? Road projects? Bridge projects? Clinton's old "rebuild the infrastructure campaign promise. HOW do we pay for it? How? McCain, look at Obama. McCain responds with energy independence, lowering taxes, the debt. Discussing home values and doing something about them. How? Advocates buying up the bad mortgages. Um, didn't we pass that bill last week? Did he learn nothing from 1990's Japan? Dumb question by Brokaw about who he would hire to run Treasury. No serious candidate is going to announce who he will appoint to a cabinet position. Classy move by McCain to note Buffet and his tie-in to McCain. Obama had a better answer on this question.

Bailout question. Oooohhhh... McCain hitting Democrats on their protecting Fannie and Freddie. Obama personalizing the Bacardi Bailout bill, tying in the frozen credit markets to the average guy on the street. Obama stressing he warned about subprime mess. Hits McCain for hiring Davis. Wonder if McCain will make the appropriate response and tie in Dodd and Frank to this. Should not have attacked Obama specifically on that one but the Democrats instead. McCain needs to hit him on hiring Pfitzker and Johnson. Slight edge to Obama on this question.

So far, the difference between the two is Obama is offering more specific details on what he plans to do, making sound more of an authority on the economy. He is giving McCain openings but McCain is missing them. He is attacking McCain for not cutting taxes on corporations. McCain should mention it is corporations who do the hiring and give the middle class their jobs and retirement plans, not the government and that Obama will cause unemployment to rise as they are burdened by more taxes required by increased government spending. McCain needs to wake up. Obama is uh'ing and oh'ing a good bit.

Damn. Didn't McCain study the Clinton/Bush debates? Obama is making many of the same arguments that Clinton made then. Didn't the Republicans learn anything? OK, McCain, Obama rejected an across the board spending freeze. Wow. Worked for Reagan. Wait a second McCain, Bush raised taxes during a recession in the early 90's. Nice job. He is hitting Obama for raising taxes on small businesses. Little secret about personal income tax rates: Small businesses file on personal tax returns and they do most of the hiring in any economy. They also have a higher tax rate than do corporations. Brokaw nutting up and saying nope when Obama wants special treatment to respond to McCain.

Nice trap here by Brokaw. Social security reform. Nice barb by Obama. "Straight Talk Express lost a wheel on that one". Obama claiming his taxes will go up on those making over $250,000 a year. McCain once again needs to point out that those are the small businesses who do most of the hiring. McCain has an opening here as Obama attacks him for wanting to cut corporate income taxes. McCain needs to give him a lesson in Econ 101. Romney would be toasting Obama on this subject right now. Both avoid mentioning privatizing Social Security or how they would reform it. Vagueness seems to be the response for both candidates.

Dammit, Direct TV just went out and its clear outside. Thank you CSPAN online.

So far McCain is missing openings and looking weaker than Obama.

Brokaw asks about the economy affecting our foreign policy. Obama hits McCain hard on Iraq, saying he was all for a misguided war and how much money it is costing us. McCain is giving him a pass. McCain should have stated that he told the Bush administration they didn't have a large enough military force for the invasion and advised against fighting the war on the cheap. Truth is Bush administration came around to McCain's position after badly bungling the war. McCain keeps giving him a pass on this.

Damn. Lady just asked if we should pursue Al Qaida into Pakistan. Obama setting up a softball here, saying we lost focus on Afghanistan because of Iraq. McCain should mention we fought Japan and Germany at the same time yet we can't focus on those two countries at the same time? Eliminate the drug trade funding terrorism? Um, Senator Obama, it was the Taliban that wiped out the drug trade. Nice. McCain is sound more of an authority than Obama on this question. Points out how saying we will invade Pakistan galvanizes the Pakistan population against us and shows a better knowledge of counter-insurgency doctrine. Obama wants the rules changed for him so asks for the rules to change for him. McCain should not let these remarks about bombing Iran and North Korea as well as going to Bagdhad unchallenged. Well, they go unchallenged. Nice line about why we should not telegraph our punches to the enemy.

Brokaw asks how to reform Afghanistan strategy. Obama is predictable, smoothly states how he would draw down troop level in Iraq and put pressure on Karzain. Um, is he aware of the assassination attempts on his life? Can you imagine any greater pressure to stabilize the country than THAT? Slight edge to McCain on these two questions.

Russia. Moral support? Senator Obama, we gave moral support to Eastern Europe for 50 years. It took a president calling the Soviets an evil empire and standing up to them to bring them down. Obama advocating a thoughtful approach to dealing with Russia.

Dumb question by Brokaw: Is Russia under Vladamir Putin an evil empire? Irresponsible question as they are both going to say no since they will have to deal with Putin one on one.

Question about Israel. McCain says he won't wait for UN approval to defend Israel and brings up Iran. Both say they will defend Israel and Iran should not get nukes.

What don't you know and how will you learn it? Interesting. Obama speaks about opportunity and value of family sacrifice. Young people don't have the money for college? Um, Pell Grants, student loans, the military. They have plenty of options if they work for them. McCain discusses the challenges we face.

One thing I noticed: Not one word by either candidate about freedom and liberty. Sad. Very sad.
My verdict: Both candidates looked like they sleepwalked for the most part. Obama was predictable and good in his delivery. Someone like Romney would have capitalized on the openings Obama left for McCain. McCain needed a solid win tonight. Unfortunately, the solid win went to Obama.

So you want this.....

to handle this?

Congress: Thanks for nothing.

Note: Read the first comment. Very thought-provoking.

The market went down over 1000 points after the bill was passed before it finally began to recover. Funny how the people crying to the media about how the DJIA's nearly 800 point decline on Monday last week are virtually silent over this slide. The Market Ticker once again nails it concerning the Bacardi Bailout and Congress:
"That's a 10 percent crash in two days, courtesy of YOU, Congress.
Well this isn't a crash (yet) but its a hell of a sell-off, and you can thank Congress - directly - for it, because they are responsible. ........
Please do so - call your Congresscritters (both House and Senate) and thank them LOUDLY for the over $1.5 trillion in market wealth that they have destroyed, some of which undoubtedly is yours along with the $700 billion bailout that is going to go to the Chinese.
Make sure you keep thanking them for the 30% loss in your portfolio since last October. That, by the way is what one would expect as the full loss during a Bear Market and our government hasn't even admitted we're in a recession yet!............
Let me once again outline how we solve this problem:
Force disclosure of everything on everyone's balance sheet and their marking models. No exceptions. This can be done now, administratively, and must be done right here and now. Today.
Force all credit default swaps (CDS) and other OTC derivatives onto a public exchange. (This, surprisingly, is actually being discussed - but a forced implementation has not yet been announced.)
Force leverage down to no higher than 12:1; if this forces asset sales, so be it. Give participants six months to do it, 1/6th of the excess taken off per month until complete.
Once that is done we must then recapitalize the banking system, and the easiest way to do that is through forced "cramdown" debt-to-equity swaps.
The simple fact of the matter is that I have been yelling at Congress on this issue for over a year and we are now at a place where the market is threatening to blow up wholesale, with the real economy going off the cliff as consumer spending capacity simply evaporates.
All this nonsense about "short selling" being responsible for this mess is an abject lie. The proof is in the tape - you can't short, so why are the banks and other financial stocks collapsing?........"
http://market-ticker.denninger.net/archives/600-Thanks-For-the-Crash-CONGRESS!.html

Still wondering how this all happened?

Still confused as to how this mess all started? This video from 60 Minutes does a pretty good job. One thing to point out, some of the swaps were bets against each other so the $60 trillion figure is not accurate. While the mortgage paper was bad, it was the swaps that really exacerbated the crisis (see the OSU study posted yesterday). The discussion on the swaps is rather interesting.


Watch CBS Videos Online

The Obsession continues

Damn. make it 19 out of 25. What is that? 76%?

Make it 18 out of 24 Jackblog posts:
Ladd's Obsession

Who is running for President again?

The Ohio State University: Foreclosures on Primary Homes Less Than Expected

"Homeowners who are struggling with mortgages for their own residences are a relatively small part of the overall mortgage crisis, according to results of a new nationwide study of consumer balance sheets.The study estimates that losses on first mortgages for owner-occupied homes may range as high as $180 billion.
While that's a large amount, it is not catastrophic, said Randall Olsen, co-author of the study, professor of economics, and director of the Center for Human Resource Research at Ohio State University.
Instead, the results suggest that the biggest losses in the mortgage crisis are not for owner-occupied homes, but for commercial real estate loans, and loans for houses bought as investments or built on speculation, Olsen said."As a group, people who have mortgages on homes they live in have been more conservative and careful about their money than some of the big financial institutions," Olsen said.....
"That's a lot of money, but it is not disastrous in itself," Olsen said. "This suggests much of the problem we're seeing concerning risky investments doesn't involve owner-occupied homes"....." http://osu.edu/news/newsitem2151

Guessing Game

McCain is pulling out of Michigan? Due to weakening poll numbers, the McCain campaign is withdrawing from Michigan, a decision criticized by Governor Palin.

In 1980, President Reagan blew off Iowa, skipping the debates. George Bush won the caucuses, giving him a stunning upset of the GOP favorite that year.

Anyone want to guess what the common denominator in these two situations is?

Answer: Charlie Black. So bad a campaign manager he nearly screwed Reagan up. The Ray Rhodes of campaign operatives (Rhodes was the only coach Brett Favre couldn't make look good)

More on the Obama Youth

Any of this sound familiar? Only thing missing is a kid saying "Thanks to Obama, the sky is bluer, the air is fresher"? Very creepy and scary. See the last video in this post. First two minues of this next clip is all you need to see:




Here is just a little reminder of what else the Obama crowd has been up to in their little softened 21st Century approach to creating their own little Hitler Youth:

Wall Street Journal's Marketwatch:

I told you the Barcardi Bailout was a joke:
"Experts are uneasy that the plan already has the makings of a public-relations disaster, arguing it isn't the panacea for U.S. economic woes that some members of Congress and the media have suggested.
Simply put, it won't keep the nation's economy from slipping into a recession.
Indeed, Many economists say a severe downturn has already begun -- and some say it could last for more than a year.
All this is clearly isn't going to go down well, either on Capitol Hill or on Main Street.
In order to get the measure passed, supporters had to pull out all the stops and give the program super-human strength. This $700 billion program, experts say, should be regarded as a "first step" down a long road to address the root causes of the recent financial turmoil.
It's clearly a frightening day when a $700 billion package can be regarded as merely the first step. ...." http://www.marketwatch.com/news/story/now-thats-here-paulson-plan/story.aspx?guid=%7B5A73C777%2DB063%2D4C58%2D9369%2DF9B3C7B24444%7D

A Nobel Prize-winning economist, Fox News, Denninger, and yours truly warned regular readers of this website that the 700 billion dollar figure was only a "first step" and not a final limit on what the Secretary could spend purchasing "toxic assets". We are going to rue the day we passed this so-called bailout.

I wonder what people would say

if I claimed Edgar Killen for a friend and say all the stuff in Neshoba County happened before I was born?

Food Fight!

Number 54 and Counting.

Yet another homicide occured in Jackson this weekend, as yet another victim was gunned down, pushing the city's homicide rate up to 54 murders for the year. The Clarion-Ledger reported:
"Police say they don't know why Rebecca "Blayne" Bolton-Mack, 29, of Ridgeland was in the area of Northside Drive and Lampton Avenue, where she was found in her car just after 11 p.m. Friday. Officers were called to the intersection by residents who reported hearing gunshots.
The Hinds County coroner could not be reached Saturday. Credell Calhoun, a family friend, said Bolton-Mack was shot in the arm but the bullet ricocheted and struck an artery. Her death marks the city's 54th homicide of the year.
Two years ago, Bolton-Mack became the daughter-in-law of Ally Mack, director of Jackson State University's Division of International Studies and a political science professor. She and her husband, Robert Mack Jr., have two children, Daniel and Ally...."
http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20081005/NEWS/810050369/1001/news

Oddly enough, this website reported on shootings involving the family before, except it was Ms. Bolton-Mack's brother-in-law, the Jackson State University shooter, Mack (am trying to dig up his first name as the link no longer works, sorry), a convicted drug felon, who shot another student at JSU and got off due to his family connections such as Mr. Calhoun who worked mighty hard to ask the judge to give him leniancy, which he did. Faye Peterson, then Hinds County District Attorney, tanked the investigation as she did not call the victim or arresting officer before the grand jury nor charged him with possession of a gun on school property. Earlier post:
http://kingfish1935.blogspot.com/2007/05/when-it-comes-to-criminal-justice.html

Having said that, pray for the families involved as they try to get through this tragedy. After praying, start demanding our leaders do something about Jackson crime as things continue to get worse.

Best of Posts From September.

Market Ticker: Bailout a Big Screw Job
Here is a Real Congressman
Bailout Bill Analyzed
More Evidence of Democrats' Responsbility for Fanne Mae Disaster
Liveblogging the Debate
Fox News Catches Up With Kingfish
The Bailout Broken Down
Truth Coming Out on Troopergate
Latest Headline at JFP. Needs No Comment
WLBT Covers Kingfish's Fight With City Hall
GREAT Breakdown of Paulaon Bailout Bill
Jackson Disregards Ethics Commission's Opinion

NY Times 1999: CLinton Admin Pressured Fannie Mae on Subprime Lending
Great Response by Liberal Alaska Legislator Defending Palin
More Evidence of Democrats/Fannie Mae Incest
NY Timesm 2002: Bush Admin Tried to Reform Fannie Mae
2005: McCain Tried to Reform Fannie Mae
Greenwood Commonwealther Publishes Story on Kingfish
I Report, You Decide
Clarion-Ledger Pens Editorial on Ethics Commission's Ruling
The Truth About FDIC
Thanks for Trashing Laurel Park
Kingfish Requests Ethics Commission Opinion"
Remembering Heather Spencer
Drive-by Guilt by Association
Thinking of Blaming Bush for Fannie Mae? Try Again
Good Read on Fannie/Freddie Bailout
Kingfish Has a New Young Male Live-in Companion
Yet Another Lie by Ladd About Governor Palin
Was Palin Too Mean To Obama? Judge For Yourself
Go Ahead, F With Bristol
Donna Ladd: Local Smear Factor
Donna Ladd: Liar

Why are you Republicans Surprised by the McCain Campaign?

Charlie Black is running it into the ground in the same haphazard fashion as he did the Dole campaign in 1996.

New Ad.

S*** just got real.

Former Missionary Votes for Rum

You got it. Republican Congressman Chip Pickering voted for the Bacardi Bailout today. Cochran, Wicker, Thompson, Taylor, and Childers all voted against it.

Clarion-Ledger: Spellcheck anyone?

In case you think I am picking on the Jackson Free Press, here is something funny from The Clarion-Ledger:
"SafeCity is supported entirely by private fundrs. Recently, the organization has focused its efforts on support for the Metro One law enforcement helicopter and many other initiatives."
Spellcheck needed

Then there are all the passives used in the story.

JFP: Dewey Defeats Truman

Here is a headline at The Jackson Free Press today:
"JUST IN: House Passes Bailout Plan 263-171; Stocks Rally"
posted by ladd on 10/03/08 at 12:32 PM"
Too funny

If she had looked at the stock chart provided on her own business blog by Google, she would've seen that the DJIA began falling shortly after voting on the bill started (The DJIA was at 10,795) until the market closed at 10,325 points, a TOTAL decline of OVER 400 POINTS:Stocks fall 157 points today

Does she even know what she is reading?

Update: Too funny. She changed her headline over the weekend:
"JUST IN: House Passes Bailout Plan 263-171; Stocks Rally, Then Fall"
and added this note:
"Update: Notice on our new stock ticker that soon after the news broke about the House passing the bailout plan, the stock market started dropping, with the Dow ending down 157 points."
;-)

The Obsession of It All

Update: Now its 19 out of 25. Sickening.

UPdate: Here's two new ones, making it 18 out of 24 Jackblog posts:
Press Can't Interview Palin Supporters
Palin Makes Racially Tinged Attacks

Madame DeLadd over at The Jackson Free Press writes without realizing how much about herself she reveals:
"I'm kinda feeling like maybe the Palin obsession will slow down now. I think we got the best possible from her tonight, and it was substanceless and obnoxious..... posted by ladd on 10/03/08 at 12:47 AM" The Logical Labyrinth that is Ladd's Mind or....... Ladd's Lunacy

The one with the Palin obsession is Donna Ladd as a quick read of her beloved Jackblog proves to any objective reader. Here are the last 21 Jackblog posts by Donna Ladd (The ones about Governor Palin are highlighted in yellow):
What's Wrong With This Story?
Oops, Another Fake McCain/Palin Ad Slips Through
The Ultimate Bridge to Nowhere
Does Sarah Palin Know What Hamas Is?
Presidential Obama v. Angry White Man
Parker: Palin Should Step Down
My Favorite Palin Moment
CNN's Campbell Brown: Sexist McCain Campaign Must Free Sarah Palin
McCain Tries to Bar Media from Palin, CNN Rebels
McCain Campaign Head Paid 2 Million to Stop Mortgage Regulations
Obama: We Must also Help Main Street
Palin's $50,0000 Office Makeover...into Bordello Red
Wall Street Journal: Of Palin's Earmarks and McCain's Lies
Obama Supporters Launch Watch Oprah, Counter Campaign Deals with Oprah's rejection of having Palin as a guest on her show.
Factcheck.org Exposes McCain's Distortions
Reformer Palin Billed state for 312 Nights Spent at Home
Grand White Party
Why is Sarah Palin Sneering So Much?
Is Palin a Reformer?
Wait! Isn't It Sexist to Criticize Female Reporters? Deals with media treatment of Palin
My choice for most digusting post:
Bristol Palin, unmarried and 17, is pregnant
McCain Chooses Alaska "Hockey Mom" as Running Mate

Does anyone see a pattern?

Madame DeLadd made Governor Palin the focus of 16 out of her last 21 Jackblog entries. She trashed her family, falsely claimed she was a member of a Secessionist party, and tried to link her to neo-Confederates and David Duke (Her editor did the same). Lets not forget the headline calling her "White Trash". There was no insult or tactic too low for Ms. Ladd in her diatribes against the Governor. If she is going to accuse the media of obsessing over Governor Palin, perhaps she should look in the mirror as it is quite clear she is obsessed with her.

Mark to Market: Debate Gimmick?

The Market Ticker argues that the debate over the "mark to market rule" a "red herring":
"Never listen to what people say, unless they are backing their mouth with their wallet. Those who claim that MTM accounting is somehow making banks "insolvent" when they should only be "illiquid" need to have their heads examined.
More than $3 trillion sitting in cash, in hedge funds, and none of these guys agree with the mouth-breathers in the media - and in the banks - who claim that this is all a "mark to market" problem? None of them are out there buying this crap.
But $700 billion - one fifth - of the amount sitting in these hedge funds, all funded by the taxpayer (with borrowed money no less!) is going to make it all better?.....
Is there a disaster in here (commercial paper markets. Clink on link to see chart)? Yes. In financial commercial paper, and asset-backed commercial paper.
These are the firms that are and have been lying about their balance sheet strength and exposure.
Non-asset backed non-financial commercial paper is trading just fine; it shows no sign of trouble at all. In fact, the coupon being paid - that is, the cost - of non-financial commercial paper is the lowest it has been in five years and is down from just last year by about thirty percent.
Lack of credit? Where? For firms (and people) who have crappy credit histories and shaky balance sheets? Of course. It should be that way - don't you think whether or not you'll get paid back should be the determining factor on whether or not you get a loan? If a lender doesn't trust your financials (as a person or company) don't you think its prudent for them to say "no"?
Finally, if there is such a disaster in our markets and banks, why is it that Wells Fargo came in and swallowed Wachovia lock, stock and barrel, removing a liability that the FDIC had already agreed to backstop when Wachovia was "taken under" by Citibank?
Disaster?
More like manufactured fear by Paulson and Bush so their cronies, including and especially foreign cronies, can come in and rip you off wholesale."
http://market-ticker.denninger.net/

O'Reilly calls Frank a "Coward"

O'Reilly should have read to Frank his 94 remarks saying there was no financial crisis at Fannie Mae.

The Bacardi Bailout

P. 262 of Bailout Bill: Rum gets a tax break!!! I think this bill should be called the Bacardi
Bailout. It fits on several levels. My fellow trolls, please make sure this makes the rounds on the internet.

The Bacardi Bailout.

Da Kingfish Made WAPT Tonight.

Yes, that was Louis XIV sitting on the couch. Viewers got a two for one special tonight. Haven't seen the video as I HATE seeing myself on camera. Apparently I was the only person in town to read the Bailout Bill. I must've been crazy for doing so. ;-)

You can't make this up.

ANOTHER Bailout Devil

COO of Mortgage Bankers Association, a huge backer of the Bailout, is being sued for fraud and embezzlement.

San Francisco Chronicle Story

The Bailout's Devils

http://senateconservatives.files.wordpress.com/2008/10/ayo08c32_xml.pdf

Reading the bill right now, all 450 pages of it and making notes as I read so forgive me for not writing more formally in my comments. How many scams are in this little piece of legislation?

Page 8. Section 101(c):
"(c) NECESSARY ACTIONS.—The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without
limitation, the following:
(3) Designating financial institutions as financial agents of the Federal Government, and such institutions shall perform all such reasonable duties related to this Act as financial agents of the Federal Government as may be required...."

Secretary can designate any financial institution his financial agent. Doesn't say anything about being distressed or limited to sellers of toxic paper. It says "without limitation".

Page 10. Section 102: Insurance program. This section authorizes the Secretary to implement an insurance program for the toxic assets. However, it says he "may" take such actions related to this program. "May" means HE DOES NOT HAVE TO TAKE SUCH ACTION. Its NOT a mandate but simply a grant of power to use at his discretion as he sees fit. Republicans were snookered or were snookering the American public.

Page 33. Section 112: "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..."

Do I really need to explain this one?

Page 59. Section 119 (Judicial Review):" (A) INJUNCTION.—No injunction or other
form of equitable relief shall be issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, other than to remedy a violation of the Constitution..."

"(3) LIMITATION ON ACTIONS BY PARTICIPATING COMPANIES.—No action or claims may be brought against the Secretary by any person that divests its assets with respect to its participation in a program under this Act, except as provided in paragraph (1), other than as expressly provided in a written contract with the Secretary....."

Take the money, the institution forfeits its rights, even if it gets shafted.

"(4) STAYS.—Any injunction or other form of equitable relief issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, shall be automatically stayed. The stay shall be lifted unless the Secretary seeks a stay from a higher court within 3 calendar days after the date on which the relief is issued..."

No Comment.

Huh? There is this little title on page 113: "DIVISION B—ENERGY IMPROVEMENT AND EXTENSION ACT OF 2008" What the hell is this? First 40 pages are a collection of tax credits for fuel cells, wind power, steel industry fuel, solar, hydropower, and other renewable energy. Nothing for nuclear, coal, oil, shale, etc. The next section deals with coal and carbon provisions as well as carbon emissions. Page 159: "EXPANSION AND MODIFICATION OF COAL GASIFICATION INVESTMENT CREDIT". You can figure that one out for yourself. Page 161: "TEMPORARY INCREASE IN COAL EXCISE TAX; FUNDING OF BLACK LUNG DISABILITY TRUST FUND."

Page 180. SEC. 117. CARBON AUDIT OF THE TAX CODE. Get ready for this one:
"(a) STUDY.—The Secretary of the Treasury shall enter into an agreement with the National Academy of Sciences to undertake a comprehensive review of the Internal Revenue Code of 1986 to identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects..."

Had enough? We are only at page 180 out of 451 pages. Think it gets better? Hang on because here we go.

Ah, there is a TITLE II!!! "TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS. SEC. 201. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS DEPRECIATION FOR BIOMASS ETHANOL PLANT PROPERTY. ...." Do I really want to read this section? I think the title alone will suffice as to its intentions. "SEC. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL." Yeesh. They don't know when to stop. Shazam. I was right, they REALLY don't know when to stop. "SEC. 205. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES." I'm only at page 200, please tell me this will end soon. You'd be amazed at how detailed these tax credit provisions are getting. Where is the provisions for cutting the corporate tax rate or capital gains tax rate? This bill WAS supposed to help the economy and the markets, wasn't it?

Damn. Wouldn't want to forget about INSULATION, would we? "SEC. 206. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING REDUCTION UNITS AND ADVANCED INSULATION..." Keep reading. Finally some sanity: "SEC. 210. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES." Guess what this means? Makes it cheaper for oil companies to engage in oil exploration. Drill baby drill. JUST passed page 200. Getting scarier.

No. Say it isn't so. Even bike riders get a mention in this bill: Page. 205. "SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS..." We've gone from trying to stay out of a depression to helping bikers. Nice. However, back to sanity:"TITLE III—ENERGY CONSERVATION AND EFFICIENCY PROVISIONS" I think you get the idea. Ok, NO MORE ENERGY mentions. OK. I lied. Did you know you can get a tax credit for your WASHER AND DRYER in this bill? See page 218: "SEC. 305. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT FOR APPLIANCES PRODUCED AFTER 2007." This bill gives you tax credits for your washer and dryer. It even includes your DISHWASHER. This bill was supposed to save the world, remember? Just read this section, you have to in order to believe it.

The tax extenders are on page 262. Just read the list. You won't believe some of them. Wooden arrows anyone?

Uh-oh. Page 311: "MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT". Just saw the mental health provisions as they relate to insurance. Health insurance premiums will sharply increase OR insurance companies will increase the copays and deductibles as the bill mandates they have to give mental health treatment the same coverage as they do surgical and medical procedures. Insurance companies will thus be forced to raise premiums, which probably won't be enough to cover the higher costs of coverage for them. Consequently, they will probably limit coverage, forcing you to pay more for procedures and other medical treatment. Another possibility would be for insurance companies to completely drop ALL mental health treatment. The bill states:
‘‘(A) IN GENERAL.—In the case of a group health plan (or health insurance coverage of offered in connection with such a plan) that provides both medical and surgical benefits and mental health or substance use disorder benefits, such plan or coverage shall ensure that— ‘‘(i) the financial requirements applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan (or coverage)......"
‘‘(ii) the treatment limitations applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan (or coverage) and there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits......"
(B)(i) FINANCIAL REQUIREMENT.—The term ‘financial requirement’ includes deductibles, copayments, coinsurance, and out-of-pocket expenses..."

You just got screwed on your health insurance.

This is a VERY bad bill. Congress knows what to do and how to fix this problem. We don't need a bill loaded with wooden arrows, bogus energy tax credits, and provisions that will make health insurance cost more for Americans. It is clear that all the Congressional trolls care about is attacking each other and getting their little pork projects passed, not actually helping the country. This bill grew from 3 pages to 110 to 450. If there has ever been a more disgusting display of what is wrong in Washington, I do not know what it is. If you think Obama and McCain are your friends for while they are claiming they will change Washington, the Change guy and the Maverick said nothing about how this bill has mushroomed into its current form. The main reason we are in this fix is because none of our so-called leaders have taken their jobs seriously and until they do, we can expect more of the same.

Nobel Laureate Economist: It's a BAD Bill.

Economist gives some straight talk on the bailout and the financial crisis, something we DESPERATELY need. I think some of his comments will be familiar to regular JJ readers, especially at 6:00. Scary. See earlier post on this part of the bill:
200 economists agree with Kingfish

Here is the Kids for Obama Video.

Sickening. Simply sickening. Here is the website for the group that produced it:
The Multicultural Hitler Youth Some lyrics:

We’re gonna spread happiness
We’re gonna spread freedom
Obama’s gonna change it
Obama’s gonna lead ‘em

We’re gonna change it
And rearrange it
We’re gonna change the world.

Maybe it will bother you after you watch this:

Told you! Now Fox News Saying 100% Valuation Rule May Hurt Taxpayers.

Earlier this week I warned you about a little provision in the bailout bill allowing the Secretary of the Treasury to pay an institution 100% of the purchase price it paid for an asset regardless of what the actual value of the asset might be!!! In case you think lil' ole Kingfish doesn't know what he is talking about, here comes Fox Business News to verify my post:

"A little understood but very important accounting rule being blamed for the $523 bn in losses and writedowns at financial companies around the globe is now being retooled by market and accounting regulators, in a last-ditch attempt to stop the steam pipes bursting and to get banks lending again.
However, the move matters greatly to taxpayers, because analysts now say that banks who own severely damaged mortgage-backed bonds may be able to use the changed rule to get higher prices for these securities if they auction them off to the government as now planned in the $700 bn rescue bill......"

"Loophole Dangerous to Taxpayers in the Rescue Bill
And check out this sentence I’ve highlighted in italics in section 101 of the new bill, entitled “purchases of troubled assets”–it could also mean even higher costs to taxpayers:
(e) PREVENTING UNJUST ENRICHMENT. In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset. This subsection does not apply to troubled assets acquired in a merger or acquisition, or a purchase of assets from a financial institution in Conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code.
This section “probably indicates that JPMorgan Chase can sell the troubled assets of WaMu to the US government and make windfall profits,” notes market analyst Richard Suttmeier. “Same for Citigroup with regard to Wachovia’s troubled assets. Other future deals as well. That is a direct bailout of Wall Street on the back of taxpayers........"
http://emac.blogs.foxbusiness.com/2008/10/01/a-new-rule-change-that-could-hurt-taxpayers/

What did my earlier post say?

"(Kingfish note: Bill says (Secretary shall take steps) "preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset." In my opinion the bill is poorly worded in this section and shows an intent to keep firms from profiteering off of the sale of assets. However, Denninger is correct in that the Secretary could buy the assets for their original purchase price, not current market value. One can see the opportunities for financial mischief here. Remember, under the proposed judicial review provisions, any injunctive relief is AUTOMATICALLY STAYED until the Secretary can appeal.

The taxpayers will undoubtedly get ripped off because of this provision. The government will purchase mortgages that are based on overvalued appraisals. Lenders such as Countrywide OWNED the appraisal companies used for their mortgages, creating an egregious conflict of interest as it led to the widespread problem of these lender-employed appraisers creating fraudulent or bogus appraisals. Even worse, Fannie Mae had a program for several years that WAIVED appraisals altogether. Unfortunately, that is not the end of it as there is the second mortgage market that has completely collapsed. Second mortgages usually did not depend on appraisals at all or if they did, the lender relied on a "drive-by appraisal". Citi originated stated income second mortgages. GMAC underwrote 125% second mortgages, i.e. an unsecured loan based on an overvalued property. The Secretary could thus be forced to buy most of the second mortgages that are toxic while the lender actually gets full value for the bad debt. Nice deal if you can get it. This section is bad news for Americans. Period. Banks will take advantage of this clause to dump bad or fraudulent mortgages on the government, leaving it to figure out how to modify the mortgage or help the homeowner.)'
http://kingfish1935.blogspot.com/2008/09/bailout-bill-analyzed.html

Don't believe so-called experts on t.v. telling you this bailout is good. The government will be purchasing assets which are grossly overvalued. How will the government make money, as we are told it will, selling properties for which it paid a grossly inflated purchase price having no relation to its actual value? This is nothing but another taxpayer ripoff.

Repost: Democrats Beating Up Regulator, Running Interference for Fannie Mae

Yes, I know all about the 1999 NY Times Story about Clinton & Fannie Mae

I posted the story last week on September 21: http://kingfish1935.blogspot.com/2008/09/new-york-times-1999-clinton.html

What is funny is I've gotten a bunch of emails telling ME about the story. My traffic counter shows me that I've gotten ALOT of hits because of google searches looking for it. So yes, I know all about this article.

The Market Ticker on the new Screw Job, oops, the New Bailout Bill

Read it and weep:
"The bill The Senate intends to try to ramrod down your throat is neither about Main Street or really even about Wall Street.
You are going to get VERY angry. Sit down before you read further.
""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS. They know it, they demanded it, and the bill has been carefully written to make sure that can happen." - Brad Sherman , D-California"
That's right folks. You are going to have $700 billion - about 25% of the total federal budget - put on your personal credit card (via taxes forever) in order to bail out foreign investors.
Oh, and the best part of it is that the underlying assets involved do not even have to be in the United States!
Here is the definition of a "troubled asset", right from the bill:
"(9) TROUBLED ASSETS.—The term ‘‘troubled assets’’ means— (A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."
Notice that conspicuously missing from the definition is the requirement that the asset's underlying thing (that is, the property that was mortgaged, etc) lies within the United States. Also note that Treasury must tell Congress if they add "new types" of debt, but that Congress has no right of review or censure.
That is, it is perfectly legitimate under the bill for a foreign bank to sell or swap any "crap sandwich" it may hold (irrespective of how or where it originated, so long as a mortgage is the basis for it somewhere) with a bank domiciled in the United States, and said bank may then "PUT" it into the TARP.
Note also that Representative Sherman said on Kudlow last night that when this was raised with Secretary Paulson he was told that if Congress tried to restrict the ability of the Secretary to purchase assets "laundered" in this fashion from foreigners, that the bill would be vetoed...." http://market-ticker.denninger.net/

Watch the video if you have time. One thing I noticed was the phrase "ANY OTHER ASSET". Understand what that means? Secretary is given the permission to buy up any bad debt NOT related to mortgages from lenders that want to get rid of their bad paper. Let that thought percolate in your head awhile.

Note: Watch yesterday's video if you get a chance. Interesting stuff.