Bailout Nation: Freddie, Fannie, and more

[Mark F. Barnes]

I just don't feel easy about this new 1+ trillion that the FED is going to buy up all this short term bad paper. I know if these two goofballs tonight spend the majority of the time arguing who's the bigger crook, I may start cleaning my FN-FAL myself. Sure McCain, you jumped on board a bill as it was dying a slow death, due to a filibuster by the Senate. Did you cross party lines, I guess you can call it that, did you you accomplish a damn thing? Not that I can tell. And Obama, you haven't done a damn thing sense you've been in office except make a speech and verbally oppose the war. Did you accomplish a damn thing, no that I can tell either. It's time to for some real straight talk out of somebody. I want to hear some solid answers to this free fall we are in. I've lost half a million dollars in three days, because of all the bureaucratic BS. Barney Franks better pray I never get a clean look at him through a 9 X 24 Gold Ring. And either one says they are going to lower anybodies taxes, middle class corporate or other wise, they are a lying son of a delicate flower. Taxes are going to have to be ponied up to pull out of this mess. And screw helping anybody else's economy until we get ours under control. All the damn hybrid cars, windmills and nuclear plants, in the world are not going to fix this mess, we have got to get some capital moving around. Screw the Automakers, they best deal with their situation or pack up their tent. Park that damn space shuttle for a few rounds. Send a fleet of super tankers over up the Euphrates and tell Iraq to "Fill'er up!" consider it a down payment on services rendered. I don't care if Obama made Ayers a PB&J with his favorite call girl blew him. I don't care if McCain made a stupid move and got into bed with the Keating five. They've both been in bed with the idiots that have us in the economic toilet right now, and everybody knows it. Let's get it together and talk about a real fix, that's reasonable and is going to work.

Enough of this non-sense is enough.

[RedScare]

I've been thinking about the taxes, too. I realize the candidates need to be careful about raising taxes, but we have got to pay for this mess eventually, somehow. I guess another thread about the best way to raise taxes effectively may be in order.

[Mark F. Barnes]

Yes that is a certain, it is going to take taxes. They need to slap some heavy tariffs on imported goods,somewhere in the neighborhood of 5-6%. I know the Chinese will try to balk at it, but where the hell are they going to sell their crap at anyway. We all are going to have to pony up a couple of grand to make a dent. Instead of cutting capital gains tax, lets leave it be for now to help ease some of the pain. The Bush hand out checks need to be held for a year, possibly two. Then if they want to resume after we get some recovering done, go for it. I never saw any of it anyway. Since we own a chunk of some of these bailouts, we need to seize and liquidate some of the extras. Warren Buffet can shut his pie-hole unless he wants to assume some of this debt, we don't need his so called expert opinion, since I am sure he pays very little tax anyway, cheap bastard, what we need is liquidity not BS.

[memebag]

I just don't feel easy about this new 1+ trillion that the FED is going to buy up all this short term bad paper.

Yeah, it sounds kind of ridiculous on the face of it. Wall Street screwed itself by pretending that unsecured loans weren't risky. Now the Federal Reserve is going to fix it all by making a lot of unsecured loans...

Wait, that's not just ridiculous on the face of it, that's ridiculous all the way down to the ass of it.

[houstonmacbro]

I think we haven't seen the half of this meltdown.

[RedScare]

Yes that is a certain, it is going to take taxes.

Just saw Kudlow claim that the new president needs to cut taxes. In this topsy-turvy world, where up is down and down is up, good to see one of the less tax free marketers sticking to his guns....even though he looks like a moron doing it. He's probably still saying Bush did a good job, too.

[houstonmacbro]

Just saw Kudlow claim that the new president needs to cut taxes. In this topsy-turvy world, where up is down and down is up, good to see one of the less tax free marketers sticking to his guns....even though he looks like a moron doing it. He's probably still saying Bush did a good job, too.

What would happen if we just dissolved the debt. Just said "Hey, it doesn't exist."

What would happen?

[Mark F. Barnes]

The dollar would resemble the Peso of the 1980's

Another words your next set of tennis shoes will cost you about $25,000.00

And we are not talking Nike's we are talking Athletic Works.

[Mark F. Barnes]

Kneejerk market is going to be shakey for a while.

[Subdude]

I've been thinking about the taxes, too. I realize the candidates need to be careful about raising taxes, but we have got to pay for this mess eventually, somehow. I guess another thread about the best way to raise taxes effectively may be in order.

Taxes won't be raised, nor will tariffs. It will be paid for the tried and true way - by selling debt, mainly to investors in other countries. If anything demand for Treasuries is at a record high right now.

[crunchtastic]

Taxes won't be raised, nor will tariffs.

Never say never.

These are truly unusual times. When money dries up, taxation is the last gasp before appropriation.

[TheNiche]

These are truly unusual times. When money dries up, taxation is the last gasp before appropriation.

seinorage

[RedScare]

UK is partially nationalizing its major banks with a $90 Billion investment.

The Nikkei plummetted 9.4%, its biggest crash since 1987.

Iceland is on the verge of bankruptcy.

Dow Futures are down 304, suggesting another tanking in store for today.

Looks like just another fun day on Wall Street.

Oh, and it's seiniorage, though it has gained acceptance as 'seinorage' as well.

[BryanS]

Maybe its finally time we go for hyper-inflation. If we hyper-inflate, then all the debt becomes insignificant. We may have no choice. Those with existing life savings will be destroyed... but what can you do...

Bernake, Paulson... YOU IDIOTS. You liars!!! How in the hell could you NOT see this coming?!

[musicman]

The Nikkei plummetted 9.4%, its biggest crash since 1987.

looks like toyota and honda both went down at least 10%.

[musicman]

now they are dropping interest rates worldwide......and may drop it even more later today.

[memebag]

Maybe its finally time we go for hyper-inflation. If we hyper-inflate, then all the debt becomes insignificant. We may have no choice. Those with existing life savings will be destroyed... but what can you do...

Yeah, I'm hoping for hyper-inflation. Then everyone who spent their "life savings" on Indian food and video games looks like a genius.

Suck on that, ants! Grasshoppers r00l!

[OkieEric]

now they are dropping interest rates worldwide......and may drop it even more later today.

wow...that didn't work. I love when I see the headlines on yahoo saying futures have "spiked", then I check them and they're already down yet again. Should be another fun one

[TheNiche]

Maybe its finally time we go for hyper-inflation. If we hyper-inflate, then all the debt becomes insignificant. We may have no choice. Those with existing life savings will be destroyed... but what can you do...

Specifically, what we need is a multinational concord to take place. The leaders of all major economic powers must agree to increase their money supply by some particular and uniform percentage, for some particular and finite duration (these measures designed to prevent currency devaluations relative to other currencies), and at such a rate as is reasonable as to provide liquidity to banks and to stave off global deflation without triggering a hyper-inflation game or expectations thereof.

This goes against everything I have ever been taught in a classroom. But it seems appropriate as a last-ditch effort.

It's like in Ghostbusters, where they cross the streams.

[lockmat]

Found a cool website:

The Adam Smith Institute

http://www.adamsmith.org/

[lockmat]

Looks like the Brits got their own bailout goin as well...

http://news.bbc.co.uk/2/hi/business/7658277.stm

[sevfiv]

I had been hesitant to look the past couple days because of the inevitable, but the share price of a mutual fund I have dropped about 30% since last look (flashback to circa 1993 average price). Here's to a long recovery.

[N Judah]

I want to see this (finally) happen:

http://www.wallstreetandtech.com/printable...icleID=14704060

[TJones]

Suck on that, ants! Grasshoppers r00l!

This is really not a topic to be laughing at, but THAT is freakin' funny, I don't care who you are. Thanks meme.

BTW, Spain has followed UK's example and pumped $40 billion into their economy.

[Subdude]

Yeah, I'm hoping for hyper-inflation. Then everyone who spent their "life savings" on Indian food and video games looks like a genius.

I'm sorry, but worrying about inflation is like soo second quarter. Doncha know, all the cool kids are worrying about deflation now.

Seriously, commodity prices are plummeting, consumer demand is collapsing, real interest rates are probably negative, the dollar is strengthening. By the cuts today the central banks have admitted that that inflation is not the main concern at the moment.

Never say never.

These are truly unusual times. When money dries up, taxation is the last gasp before appropriation.

The odds of a tax hike in the near future are vanishingly small. First, no one is ever going to want to raise taxes in an election year during a recession. Second, the world is clamoring for more US debt. Yields on Treasuries are lower than they have been in decades. Just today the Treasury issued more debt to meet demand. If we have the option to borrow cheaply from the rest of the world to fund our bailouts etc, then who is going to suggest raising taxes?

Of course, I would qualify all of this by pointing out that things change and change quickly, and when the panic and recession finally do end it may be worth giving some thought to reducing the level of external debt.

And when the time does come, we should also give some thought to whether the new banking system that is being created on an ad hoc basis is really the best outcome. By concentrating so much in just a few surviving mega-banks that handle both investment and retail banking we could be setting ourselves up for a fall next time around. The surviving banks will be riskier, more likely to infect the economy as a whole when they have problems, and both too big to fail and too big to save. If you want an example on an teeny little scale, witness Iceland.

[sevfiv]

House Speaker Nancy Pelosi said Wednesday that a $150 billion economic stimulus plan is needed now because of the faltering economy and she may call the House into session after the election to pass it.

Pelosi told reporters that the stock market meltdown, which has caused an estimated $2 trillion loss from pension funds, was a factor in her recommendation for a second stimulus bill. The first relief plan sent out $600-$1,200 tax rebate checks to most individuals and couples this year.

The House did pass a $61 billion economic aid proposal last month before lawmakers left Capitol Hill ahead of the Nov. 4 election. But a similar plan failed to pass the Senate. President Bush had promised a veto anyway.

If Democratic nominee Barack Obama wins the White House and if Capitol Hill Democrats make gains in the elections as well, it might be easier to pass a stimulus measure over dispirited Republicans, especially if the economy remains in big trouble.

The Senate is expected to be back at work after Election Day to complete a public lands bill and perhaps deal with other matters, such as a measure to extend unemployment benefits. The House also could return to consider a stimulus plan and additional issues in a lame-duck session before the newly elected Congress takes over in January.

http://ap.google.com/article/ALeqM5hydO1To...oIiK8AD93MGUB06

[Mark F. Barnes]

Another tough day but the bleeding has slowed some. The FED cut interest rates to 1.5% but still people are uneasy.

They are giving AIG another 37 billion dollars, that I have issues with. $440,000.00 on a Spa Junket and I have to pony up another 37 billion, this is getting deep.

[editor]

By concentrating so much in just a few surviving mega-banks that handle both investment and retail banking we could be setting ourselves up for a fall next time around. The surviving banks will be riskier, more likely to infect the economy as a whole when they have problems, and both too big to fail and too big to save.

I think the marketplace will sort all that out. Yes, we'll have a few megabanks in the short term, but eventually the well-managed mid-size banks and some upstarts will fill in the gaps formerly held by the other names.

There are still thousands of local banks across the country in various states of health. When this all shakes out probably some of them will eat each other and form medium-sized banks that will eventually begin to challenge the megabanks. Not to mention credit unions. Even though they can only grow so far, they still provide a viable alternative for many people.

It's all cyclical. So far it's Citi and Chase that have managed to grab a couple of chairs before the music stopped. But a new game will start eventually, and a whole new round of players will be in.

They are giving AIG another 37 billion dollars, that I have issues with. $440,000.00 on a Spa Junket and I have to pony up another 37 billion, this is getting deep.

No kidding. With the people at the helm of AIG showing their true colors, I wouldn't cry if AIG was nationalized and the pieces sold off to the highest bidders.

[westguy]

Hmm, interest rates are already ridiculously low, and there's only one direction they can go if the fed wants to increase the money supply. When it reaches zero, will they have to tell everyone there's nothing else they can do?

[Mark F. Barnes]

The more I look at the fine print. and follow the trail of paper on this entire fallout in our current economy, the more I realize how much I unconsciously had my head in the sand at times. While everyone is point the finger of guilt at Fannie and Freddie, there is a lot more to this story the more I read. I am beginning to believe the fetus of today's financial meltdown lies in part, in the Community Reinvestment Act of 1977. This fine piece of work was a law passed in 1977 and signed in to law by a Naive President Jimmy Carter. The sole purpose of the CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods, and help try and get them into a better residential situation. However it gave an opening for abusers to take advantage of deregulation. That in turn has provided an opening to radical groups like ACORN to abuse the law by forcing banks to make hundreds of millions of dollars in "sub-prime" loans to often uncreditworthy poor and minority customers. A lot of this has been attributed to very high profile and connected Community Organizers like Madeline Talbott, they nice plush private offices, they make scenes inside bank lobbies, staged in-your-face protests in the bank or on the working floors and from articles I've read, even often mobs confronting executives at their homes and influenced financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers. I can't really say they forced anybody into doing anything, force is a strong word, however any bank that wants to expand or merge with another has to show it has complied with CRA and approval can be held up by complaints filed by groups like ACORN. This is an ugly business. In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from all these banks and lenders.

Now this is where Fannie and Freddie come in later. All these banks are already overexposed by these shaky loans were pushed still further in the wrong direction when "government sponsored" Fannie Mae and Freddie Mac began buying up their bad loans and offering them for sale on world markets. They claim that now that these bad loans were packaged in these black boxes of deceit, but the more I look at it, the more I think Fannie and Freddie knew exactly what they were doing, because the had the politicians in their pockets. Fannie and Freddie acted in response to administration pressure to boost homeownership rates among minorities and the poor. However good the real motive was, the result of this systematic disregard for normal credit standards and the financial disaster we see today is upon us.

Let me back track a little. Now this grand ACORN sub-prime loan shakedown racket was not the brain child of Madeline Talbott, but she was one of the main shysters involved. She was also, IMHO is in on the ground floor of this catastrophic down-turn in Fannie Mae's mortgage policies. She's been the director of Chicago ACORN for many many years, Talbott is a specialist in "direct action", which is an organizers' term for militant tactics of intimidation and disruption. Perhaps her most famous stunt was leading a group of ACORN protesters breaking into a meeting of the Chicago City Council to push for a "living wage" law, shouting like a frigging banshee as she was arrested for inciting a mob and disorderly conduct. The papers reported that six people were arrested as 200 Acorn protesters tried to storm the Chicago City Council session. Here's a tid bit to ponder on, guess who her legal council was during this legal issue and arrest. Barack Obama, he was the legal council for ACORN Chicago for eight years. But I guess her real legacy may be her drive to push banks into making all the shaky and risky mortgage loans. Now I know you are all thinking ole Mark has lost his mind, how can this CO from Chicago, be held responsible for all this mess, well I am not saying she was solely responsible for it, but her and ACORN cut a wide swath, and as you melt it down the layers or should I say players start to appear. There is no one person that can be blamed for this financial meltdown we are currently experiencing. The list of guilty parties is long and distinguished. But there were a lot of people that also tried to cover all this up, and should be held just as accountable. There is no party lines when comes to those involved in this, because they are on both sides of the fence. However there was a line involved in this deal and it was the line of right and wrong, and that line was crossed. Not only was it crossed it was obliterated. And greedy people took advantage of loopholes in the system to line their pockets and inevitably fleece ours. They took full advantage of strategically placed politicians that they bought off, knowing full well they had markers to pull in when they needed them. And they have done so, and we are stuck with the tab. I know I have had to contribute my share, as I've watched stocks go to hell.

Fair or not, the GOP and McCain are bearing the blame for the economy, which right now is more terrifying than horrible for most people. That is, fear about the future is far deeper and more widespread than actual economic suffering. Not knowing or being unsure is really torture on some people. And they sit back and worry, and wonder, not knowing which way to turn. And the people we would normally turn to for guidance and advice, just look at us and shrug. It's touchy business folks, and it's going to get worse before it gets better.