Jackson Jambalaya

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?

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.

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.

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 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.

(Exponential Average in Red)

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?

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

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.

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/

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.

Hannity is trying so hard.

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.

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)

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?

A much younger Pavarotti

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

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/

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

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

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

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/

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.

Lot of truth in this video.

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.

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

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.

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

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.

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.

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.

to handle this?

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 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

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

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

"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

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)

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: