Tuesday, September 30, 2008

And another thing :)

We all saw the bulge in the jacket of bush during the debate fueling the fire that he was getting assistance from others.
I am fully expecting Palin to have similar help.
And I think that she will be able to do so without anyone knowing. The number one telltale sign that someone is being prompted is the pregnant pause between the question and the answer. Palin, with her journalism degree and work on television, has had experience dealing with someone yakking in her ear while she presents information.
I would think that the one surefire way of detecting whether aid is being offered is her answers. We have all been subjected to the shakin', fixin' type language she uses. If someone is feeding her, she will not have time to shift their language into her own. If she says fixing...she's getting help.
Also, she has shown everyone that even with a sit down, softball throwing anchor, she talks in circles, repeats campaign points and has a decidedly moose in the headlights look when unsure which way to go. If she is being offered assistance, she will be straightforward, NOT repeat campaign slogans or resemble a moose.
No one, NO ONE, can recover that quickly. She might improve. She might have steeled up her resolve after days of being cajoled by all sides as to her preparedness but NO ONE can absorb the kind of information that she will need to absorb to look proficient in response to any and all of the questions put before her Thursday night. If she crams, she will get that blasted "day of test blank out" that so many of the procrastinating college students understand and have experienced. You simply cannot learn that much information in this short period of time and have command of it. Biden has years of not only expertise but INTEREST in the subjects that will be presented. Biden would do well to talk to the voters, steer clear of any altercation with Palin who will be working the angle of trying to get him to look arrogant, elitist, dismissive, patronizing, condescending. How do you do that when you are so clearly more informed, more knowledgeable, more involved with the information? It's going to be a thin line that he must walk.
Hopefully he'll be able to keep himself in check.
The way I see it..........

Out amongst the voters, Palin is asked, by a voter not a journalist, a question about Pakistan to which she implies that she would invade Pakistan if that's where the terrorists are.
McCain and Palin turn up later with Couric and say that it's typical gotcha journalism.
?
??
I can't even get my head around this one.

I'm done with this.
I am so annoyed, so ridiculously pissed off by this whole thing, I don't even know where to start. Granted, Palin was the best conceivable pick for Democrats. If McCain had chosen anyone else, including another woman - a qualified woman like Snowe, Hutchinson, Rice (shudder) - democrats would be struggling right now.
I believe that.
But instead, we get this wave of sympathy for this woman who is clearly out of her league.
It makes me think of a high school basketball player that is a really good HIGH SCHOOL player that someone says hey! Head up to the NBA...no training, no steps, just jump on in...in fact...jump on in during the playoffs.
It is mind boggling how ridiculous this all is.
If anyone dare says that she's unqualified, they are sexist.
If they question her actions - as a political figure - they are the mean ole media.
I feel like I am watching some warped story about the demise of feminism. To have this caricature up there spitting out catch phrases and then whining about being mocked and "gotcha journalism", I just feel like screaming! It's like watching the president of the PTA meet with world leaders. What the fudge monkey do they talk about? She hasn't the vaguest idea what is going on, she's not stupid but, like me, she is involved locally and unlike me, she doesn't seem all that interested in anything outside our boundaries. Saying that she has some kind of foreign policy experience is like saying I do...since Texas borders Mexico and all. I have had some trade experience as well....going to the border towns and buying trinkets.
I had no idea I was so qualified.
What is so frustrating is that we have this protectionist, poor little Sarah Palin sweep now because it is so cringe worthy watching her try to answer questions.
She is clearly out of her realm.
But who's fault is that?
She accepted the invitation "without blinking".
Except for that "kids" vote thing.
She, hopefully, has seen past presidential/vice presidential runs. She was aware that there are times when you actually have to TALK to people, ANSWER questions, UNDERSTAND what the job entails. It isn't all waving, pointing, clapping, hand shaking and blasting from the podium. You actually have to have a working knowledge of several complicated issues.
So, she knew.
She also knew and actually had the balls to reference Hilary's run for the presidency. Did she see how scrutinized HC was? Did it not occur to her that this is a woman that has years of national and international political experience? Did it not occur to her that this was a well qualified woman that was ready to take a leadership role?
To me, the beauty queen crap is indicative with what is wrong with this whole picture. We all cringe uncomfortably when we see those little girls dolled up and strutting around like adults. We also get a collective chuckle out of the question & answer session when a girl stands there blinking wildly while answering with the most vague yet positive bs available.
That won't work here.
Neither will the "ah, shucks! Don't ya know?" persona.
I am tempted to temper here and say that I'm sure she's a nice person...but I won't.
I don't think she is. I think the barracuda nickname was given to her for a reason and it wasn't a compliment. I think she goes for what she wants without thought about others. I think she uses her looks to get where she wants to be.
I know too many woman like this to not be able to recognize it.
If McCain showed up at my door and said, met you yesterday, liked you, wanna be my VP?
I would be flattered.
I would be flabbergasted.
But I would pass.
I could always say, hey grandkids, know what? See this picture of this old guy and me? He asked me to be his VP!
Can you believe it?
But I would never subject myself, my family, the ladies that are counting on me to represent myself AND THEM honorably and proudly, to something so clearly beyond my current capabilities.
I felt sorry for her for a moment.
I don't anymore.
She doesn't take responsibility for a bad decision.
She blames everyone else.
I've had enough of that.

Monday, September 29, 2008

Post Debate Observations

You know, the content was to be expected, and it really held no surprises, I presume, for anyone. What did stand out in an interrogation lamp sort of way for me was a) how presidential Obama comes across and b) how snarky McCain appeared.
There's buzz that McCain said horseshit twice while Obama was talking about Spain. Whether he did or not really isn't the point. The fact that it is feasible is the point. I watched it a couple of times on youtube and frankly, I have no idea. But he could have said.
Which goes to this whole snarky thing.
As an elder, I would think your best bet is to come across as wise, knowledgeable, empathetic to the newbie but ready to redirect at a moment's notice. McCain came across not as said "maverick" but as a prone to outburst in temper, huffing puffing teenage boy. Believe me. I know.
He would not make eye contact with Obama. Perhaps he felt it wasn't necessary, I felt he missed a great opportunity to appear to be listening, to appear to be engaged, to appear to have some kind of tact and diplomacy.
I got none of that.
It just looked as though he was waiting to pounce on an opportunity to drop some of those well rehearsed convention/campaign slogans that everyone has heard repeatedly (thanks but no thanks, take names make them famous, blah blah blah). He even managed to make a Palin reference which, again, to me seemed like he is completely out of touch with everything that is going on. Had he not seen the disastrous Couric interview? Shouldn't he just let that sleeping dog lie?
I think about it and I shudder. Can you imagine McCain working with other nations that have ideological differences to us? I want someone in there, representing us in a way that is polite and respectful, yet strong and commanding. I don't get that from McCain. I don't even get a hint of it.
I watched the 20/20 special on him and Obama on ABC before the debates. What that man went through! Can you imagine it? 5 years? FIVE YEARS! The pain he must have endured must have been soul destroying. When he talks about that, about his life, his mistakes and successes - there is the ghost of John McCain past. Funny, humble, knowledgeable. I know, he probably had his "game face" on but I don't think it was the right choice.
I do have to say something about he moderator. Normally, I like him. He's good.
But dear God, what the heck??
Stop. Now look at him when you are talking to him.
Tell him, not me.
It was how I used to mediate my boys after an argument when they were in elementary school. It was so infantile, yet it was completely overshadowed by McCain's refusal to make eye contact with Obama. That just bugged me.

So, the debate was a draw to me. I watched it on CSPAN (ode to my bro, Paul!) so I didn't have the added bonus of commentary or graphs or other opinion swaying gadgetry.

I am looking forward to the VP debates. I want to see if the surgery worked to get Joe's foot out of his mouth, Gaffe Masta Flash!, and if he is able to pull off a win without 1) excessive verbosity, 2) appearing condescending and 3) coming across as a bully. I happen to like Biden, for all his stupid misstatements and errors. He is so very human. Palin, on the other hand, has a hurdle the height of a toothpick to get over. The bar is that low for her now. After her terrible interview with Gibson and then, fresh from VP class 101, has an even worse interview with Couric, no one is expecting her to do very well at all. I think she's going to try to play up the golly gee-ness of her persona, to work that "I'm just like you" adage to draw people in. She might pull it off. If she can bs for 90 minutes, she will have my admiration. Seriously. That's hard to do. She won't have my vote, but I will admire her effort.

Friday, September 26, 2008

Have you seen the interviews? Gut-wrenching. I actually looked over at my husband, who had recorded it for me and had already seen it, who was nodding knowingly and saying "it gets worse." Couric was firm but not badgering. It was painful.
Anyway!

This from a very conservative woman. Now we can see if anyone actually WILL put country first.


Palin Problem
She’s out of her league.
By Kathleen Parker
If at one time women were considered heretical for swimming upstream against feminist orthodoxy, they now face condemnation for swimming downstream — away from Sarah Palin.To express reservations about her qualifications to be vice president — and possibly president — is to risk being labeled anti-woman.Or, as I am guilty of charging her early critics, supporting only a certain kind of woman. Some of the passionately feminist critics of Palin who attacked her personally deserved some of the backlash they received. But circumstances have changed since Palin was introduced as just a hockey mom with lipstick — what a difference a financial crisis makes — and a more complicated picture has emerged.As we’ve seen and heard more from John McCain’s running mate, it is increasingly clear that Palin is a problem. Quick study or not, she doesn’t know enough about economics and foreign policy to make Americans comfortable with a President Palin should conditions warrant her promotion. Yes, she recently met and turned several heads of state as the United Nations General Assembly convened in New York. She was gracious, charming and disarming. Men swooned. Pakistan’s president wanted to hug her. (Perhaps Osama bin Laden is dying to meet her?)And, yes, she has common sense, something we value. And she’s had executive experience as a mayor and a governor, though of relatively small constituencies (about 6,000 and 680,000, respectively). Finally, Palin’s narrative is fun, inspiring and all-American in that frontier way we seem to admire. When Palin first emerged as John McCain’s running mate, I confess I was delighted. She was the antithesis and nemesis of the hirsute, Birkenstock-wearing sisterhood — a refreshing feminist of a different order who personified the modern successful working mother.Palin didn’t make a mess cracking the glass ceiling. She simply glided through it. It was fun while it lasted.Palin’s recent interviews with Charles Gibson, Sean Hannity, and now Katie Couric have all revealed an attractive, earnest, confident candidate. Who Is Clearly Out Of Her League.No one hates saying that more than I do. Like so many women, I’ve been pulling for Palin, wishing her the best, hoping she will perform brilliantly. I’ve also noticed that I watch her interviews with the held breath of an anxious parent, my finger poised over the mute button in case it gets too painful. Unfortunately, it often does. My cringe reflex is exhausted. Palin filibusters. She repeats words, filling space with deadwood. Cut the verbiage and there’s not much content there. Here’s but one example of many from her interview with Hannity: “Well, there is a danger in allowing some obsessive partisanship to get into the issue that we’re talking about today. And that’s something that John McCain, too, his track record, proving that he can work both sides of the aisle, he can surpass the partisanship that must be surpassed to deal with an issue like this.”When Couric pointed to polls showing that the financial crisis had boosted Obama’s numbers, Palin blustered wordily: “I’m not looking at poll numbers. What I think Americans at the end of the day are going to be able to go back and look at track records and see who’s more apt to be talking about solutions and wishing for and hoping for solutions for some opportunity to change, and who’s actually done it?”If BS were currency, Palin could bail out Wall Street herself.If Palin were a man, we’d all be guffawing, just as we do every time Joe Biden tickles the back of his throat with his toes. But because she’s a woman — and the first ever on a Republican presidential ticket — we are reluctant to say what is painfully true. What to do?McCain can’t repudiate his choice for running mate. He not only risks the wrath of the GOP’s unforgiving base, but he invites others to second-guess his executive decision-making ability. Barack Obama faces the same problem with Biden. Only Palin can save McCain, her party, and the country she loves. She can bow out for personal reasons, perhaps because she wants to spend more time with her newborn. No one would criticize a mother who puts her family first.Do it for your country.
Kathleen Parker is a nationally syndicated columnist.
So what was the prediction?
That McCain, by "suspending" his campaign and returning to Washington to bring about a resolution to the economic crisis (an area that he has stated he hasn't a full understanding), the negotiations would be "politicized" and deteriorate into bi-partisan bickering.
And, by golly, what happened?
The republicans got us into this mess and now they suddenly are refusing to help solve it.
Personally, I don't want the bailout.
But at the same time, this isn't only about saying no to the bigwigs that the republicans helped to create, it is about our economy and doing nothing isn't an option.
Legislation had been amended to include an oversight committee that would monitor the distribution of funds, a slow release of funds, the removal of the wording in section 8 as well as other provisions.
To be honest, I think this is the republican attempt at an October surprise...at the end of September. By making the democrats clean up the mess and appear to be working with the most unpopular president in the history of America, they keep their hands clean and McCain gets to look like he is the man of the people.
Mr. Deregulation himself.
The whole thing is pathetic.

Thursday, September 25, 2008

Timing is Everything

So, from what I gather, the timeline for the Great Suspension went something like this.

9/23
Obama's staff brings to his attention that McCain has very similar ideas in regards to the bailout and the decision is made to give the guy a ring to see about making a joint announcement in regards to their stance on the resolution of this crisis.

9/24 8:30 am
Obama makes a call and leaves a message re:joint announcement regarding Wall Street Bailout issue.

2:30 pm
McCain calls back and says, hey, yeah, let's make an announcement about our very similar stances and to show bipartisanship, lack o'politicizing on such an important issue. And hey! What do you think about postponing the debate? Obama, hmmmm, well, let's just make the announcement, show that we are united, make ourselves available and go from there. McCain - cool. Obama - cool, see ya.

3:30 pm
McCain makes an announcement to the press that he has refused to talk to all week that he is suspending his campaign, postponing the debate as he is all about Country First! and he invites Obama to come on along and get this solved.


Can I just say...what a freakin' weasel?
Yes I think I can.
For one, there are senators that have been working 24/7 on this problem, reaching across the aisle and negotiating. It appears that they are (shockingly) pretty much on the same page. How grandiose and not just a little ridiculous that McCain feels that nothing can be solved without him there. 90% of the time, during the congressional sessions, the reps/senators staff cover the proceedings and report multiple times a day. Obama's peeps have been on this constantly, keeping him apprised of everything that is going on. He has made himself available any time, anywhere. He is in constant communication with the leadership. He does not need to sweep in to "solve" all the problems, waving his wand of diplomacy and brilliance.

Of course this is a publicity, political stunt by McCain. He is desperately transparent. He is plummeting in the polls - especially in light of the economic crisis and his history of not only deregulation but also his lack of comprehension in that particular arena.
9 points.
He has dropped behind Obama by 9 points. Obama finally broke the 50% mark.
To play it off as some kind of leadership move or Country First! effort, is lame.

Wednesday, September 24, 2008

This is long but it is spectacularly telling about the S&L crisis and the current crisis.....

McCain – Crisis Enabler
From The Nation
By Mark Sumner
September 21, 2008

James Bond's wealthy nemesis may have had an obsession with gold, but he judged, quite correctly, that if people keep putting your plans awry, that was likely their intent.

In 1982, the same year John McCain entered the Senate, a bill was put forward that would substantially deregulate the savings and loan industry. The Garn-St. Germain Depository Institutions Act was an initiative of the Reagan administration, and was largely authored by lobbyists for the S&L industry--including John McCain's warm-up speaker at the Republican National Convention, Fred Thompson. The official description of the bill was "An act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans." Considering where things stand in 2008, that's enough to make you wince. It should.

Seven years later, the S&L industry was collapsing. What was the cause? Garn-St. Germain had handed the S&Ls a greatly expanded range of capabilities, allowing them to go head to head with full service banks, but it hadn't handed them the bank's regulations. Left to operate in an anarchistic gray area, S&Ls had chased profits, indulged in amazing extravagances and cranked out enough cheap mortgages to fuel a real estate boom. They had also experimented with lots of complex, creative--and risky--investments, even though they didn't have the economic models to really determine the worth of the things they were buying. The result was a mountain of bad debts and worthless "assets." Does any of that sound eerily (or nauseatingly) familiar?

It wasn't a foregone conclusion. In 1985, three years after the deregulation of the S&Ls, the chairman of the Federal Home Loan Bank Board saw that the situation was already looking bad, with potential to get much worse. To try to head off disaster, he instituted a rule to limit the amount and types of investments S&Ls could carry on their books. However, many savings and loans--among them Lincoln Savings & Loan Association of Irvine, California, which was headed by a fellow named Charles Keating--promptly ignored these rules.

Now enters a familiar cast of characters. First to pop up was the universally beloved Fed-chief-to-be Alan Greenspan. Greenspan argued against the loan board's new rules, and persuaded Reagan to appoint one of Keating's pals to the board to blunt the requirements. A quintet of senators, among them John McCain, began having meetings with both the management at Lincoln and the regulators at the loan board. With their help, Lincoln was able to stay in business an additional two years, at the end of which they failed--taking the life savings of 21,000, mostly elderly, investors with them.

How involved was John McCain? McCain and Keating had known each other since 1981 and had become fast friends. Of all the "Keating Five," it was McCain who really moved into the life of the Lincoln S&L chief. The two men vacationed together multiple times, with the whole McCain clan (babysitter included) heading out for Keating's private Caribbean property on Keating's private jet. McCain didn't think to actually report these trips, or pay for them, until the investigators were breathing down his neck. And McCain took payment in more than just vacations. Keating and other members of Lincoln's parent company padded McCain's pockets with $112,000 in campaign contributions.

In John McCain's biography, he called his meetings with Keating and regulators "the worst mistake of my life," though from the text you'd think this was a spur-of-the-moment decision, not something that McCain did repeatedly over a space of years. Still, you might think that a "worst mistake" would stay fresh in his memory.

It certainly didn't fade quickly for the country. Following the S&L crisis, the Resolution Trust Company was formed to swallow up the debt of Lincoln and 746 other S&Ls gone wild, and taxpayers were left holding a $125 billion bag. The resulting budget deficit forced cutbacks in other programs. The artificial real estate boom collapsed, and housing starts fell to their lowest levels in decades. Finally, the whole nation settled in for a period nasty enough that three years later someone could still campaign around the idea "It's the economy, stupid."

Even so, by 1999 Phil Gramm--who had entered the Senate only a couple of years after McCain and become friends with the Keating Five maverick--put forward the Gramm-Leach-Bliley Act. This act passed out of the Senate on a party-line vote with 100 percent Republican support, including that of John McCain. (To be fair, the bill eventually passed again with a wide margin following revisions in the House.)

This act repealed part of the Glass-Steagall Act. This may sound like a bunch of Congressperson soup, but the gist of it is that Glass-Steagall was put in place in 1933 to control the rampant speculation that had helped cause the collapse of banking at the outset of the Depression, and to prevent such consolidation of the banks that the nation had all its eggs in one fiscal basket.

Gramm-Leach-Bliley reversed those rules, allowing not only more bank mergers but for banks to become directly involved in the stock market, bonds and insurance. Remember the bit about how S&Ls failed because they didn't have the regulations that protected banks? After Gramm-Leach-Bliley, banks didn't have that protection either.

Gramm wasn't done. The next year he was back with the Commodity Futures Modernization Act, which was slipped into a "must pass" spending bill on the last day of the 106th Congress. This act greatly expanded the scope of futures trading, created new vehicles for speculation and sheltered several investments from regulation.

As with both Gramm-Leach-Bliley and Garn-St. Germain, large parts of this bill were written by industry lobbyists. This included the "Enron loophole" that exempted energy trading from regulation, and was written by (big surprise) Enron lobbyists working with Gramm. Not coincidentally, Senator Gramm, the second-largest recipient of campaign contributions from Enron, was also key to legislating the deregulation of California's energy commodity trading.

Thanks to this fortunate trifecta of Gramm-crafted legislation, Enron was able to create "EnronOnline" and trade electricity in California with absolutely no oversight or transparency. They quickly worked out how to game the system. Previously, there had been only one Stage 3 rolling blackout in the history of California. Within months, the system had been manipulated by traders to generate thirty-eight such blackouts and wholesale electrical prices had gone up more than 3000 percent. Despite production capacity equal to four times the demand during winter, energy traders even engineered a blackout in mid-January.

During the confusion of these deliberate "shortages" and "price spikes," the California administration of Gray Davis--blind to speculator manipulations because of the walls erected by Gramm's legislation--was forced to sign energy contracts at enormous rates. There was little choice, because most of California's public utilities were on the brink of bankruptcy from the rising wholesale prices.

In a single year, the legislation allowed speculators to bring the state to its knees. Enron alone looted California of $11 billion. The manipulations of the energy market were also a major factor in Davis getting the hook, helped usher the governator into power, and they still have repercussions in California's budget battles today. By the end of that year, the depth of Enron's deception could no longer be hidden, and the whole company came crashing down in the largest bankruptcy in history--at the time. This brought more billions lost in mutual funds and pension funds across the country, and played a major role in the economic downturn of 2001.

But that was only the second act.

The combination of Gramm-Leach-Bliley and the Commodity Futures Modernization Act was a toxic cocktail whose total damage was greater than the sum of its parts. The first promoted bank buyouts and mergers that reached such an insane pitch that the average consumer could keep up only by tracking the changing names on their checks and credit cards. Mercantile buys Ameribanc and Mark Twain. Firstar buys Federated and First Colonial. US Bancorp buys Mercantile and Firstar.

And, because it allowed brokerages and insurance companies to mingle with banks, the act cemented a trend that was already (and illegally) underway, in which all those terms had become rather quaint. Is Wachovia a savings bank, an investment bank, a brokerage or an insurance provider? The answer is "yes." In allowing financial institutions to grow to Godzilla-sized proportions, Gramm-Leach-Bliley helped ensure that we would have properties that were "too big to fail." Rather than choosing to enforce rules that kept these institutions apart, the deregulators chose to create monster bankeragasurance businesses whose downfall (and existence) was enough to threaten the whole system.

But if Gramm-Leach-Bliley removed the limits on size and scope, these new institutions still needed fuel. With many financial transactions operating on razor-thin margins, and increasing automation sapping the profits from trading of all sorts, they needed a new way to generate the funds required to swallow their brethren in the merged fiscal corporation pond. For that, the Commodity Futures Modernization Act was a godsend.

Among those instruments which the CFMA sheltered from regulatory scrutiny was something called the "credit default swap." A kind of insurance one bank could exchange with another, credit default swaps supposedly made it safe for banks to take on ever riskier forms of debt. The act didn't invent these swaps, though they were relatively new. But the act meant that they would be not only unregulated but almost perfectly opaque, thus placing the swaps in a hyper-rich growth situation. No one had any idea what these things were actually worth; they were traded "over the counter" without being administered by any exchange, and even the SEC could monitor their existence only indirectly.

So who would love a new kind of financial instrument that was difficult to understand, invisible to regulators, and impossible for even the whizziest of Wall Street whiz kids to value? Guess.

More recently, instruments that are more complex and less transparent--such as credit default swaps, collateralized debt obligations, and credit-linked notes--have been developed and their use has grown very rapidly in recent years. The result? Improved credit-risk management together with more and better risk-management tools appear to have significantly reduced loan concentrations in telecommunications and, indeed, other areas and the associated stress on banks and other financial institutions. --Alan Greenspan, 2002

Get that? Greenspan loved credit default swaps. He opined again and again that such instruments would be the salvation of the industry by spreading around risks. To the mighty Greenspan, both their complexity and their lack of transparency were good things, since swaps would only be handled by the big boys who knew how to play with fire.

When questioned about his support of Gramm's legislation, John McCain called his friend (and by then, campaign co-chair) Gramm "one of the smartest people in the world on the economy" and pointed out that Greenspan also favored the acts Gramm and his coalition of lobbyists had authored. If both Gramm and Greenspan were on his side, McCain couldn't possibly be in the wrong.

Except, of course, that he could.

From the beginning, there were plenty of people in the financial community whose opinion of these unregulated credit swaps was not as rosy as that of Gramm, Greenspan and McCain. Chief among those speaking in opposition was SEC Chairman Arthur Levitt. Levitt argued that what the industry needed was more transparency, especially when it came to complex instruments like default swaps, and he testified to this before Gramm's Senate Banking Committee,.

In my judgment, the risk of this regulatory approach is simply unacceptable for America's investors. --Arthur Levitt, 1999

Gramm paid no attention.

Credit default swaps did allow the banks to share risks. So much so, that banks raced each other in an effort to find more risks. They made it possible for the down payment on homes to become 3 percent, 1 percent, 0 percent. Skip the credit check, avoid the employment requirements, damn the torpedoes, full speed ahead! We've got a credit default swap, we can do anything!

The encouragement and "safety" that credit default swaps provided made the subprime mortgage market possible. Just as with the deregulation of S&Ls in the 1980s, the market provided a flood of easy credit. The result was a real estate boom, soaring home prices and a plague of Flip that House! shows on cable.

As the banks piled up crappy mortgages, they heaped on ever more of the credit default swaps--and they still had no idea how to value the things. Worse, they began to trade the swaps themselves as if they were an investment, treating them like something worth holding instead of a big bundle of cartoon bombs whose fuses were already lit. Since very few loans were falling into default at the time, owning a default swap seemed like a way to collect fees without ever paying. Banks wanted more, and more, and more.

A secondary market for trading swaps exploded into existence, and swaps were traded with absolutely no consideration for the nature or quality of the underlying investment. Worse still, no one regulated who could buy a swap, so it was (and is) perfectly possible for a company to acquire swaps that theoretically cover billions of dollars in loans, even if that company doesn't have a red cent on hand to cover those swaps should the loans default.

How big did this market become? Here's business correspondent Bob Moon and host Kai Ryssdal on American Public Media's Marketplace from back in the spring.

BOB MOON: OK, I'm about to unload some numbers on you here, so I'll speak slowly so you can follow this.
 The value of the entire US Treasuries market: $4.5 trillion.
 The value of the entire mortgage market: $7 trillion.
 The size of the US stock market: $22 trillion.
 OK, you ready?
 The size of the credit default swap market last year: $45 trillion.

KAI RYSSDAL: That's a lot of money, Bob.

As in three times the whole US gross domestic product, Bob. And the truth is that Moon probably underestimated. The unregulated and poorly reported credit default swaps may have actually passed $70 trillion last year, which means that they were about $5 trillion more than the GDP of the entire world.

So, are you starting to get an idea of just how big a genie Phil Gramm and his pals unleashed?

With some regularity over the last eight years, fiscal whistleblowers have tried to raise their hands and register a protest. Um, sirs? Is it altogether a good idea to run up debts exceeding all the assets it's even possible to hold? But so long as no one actually had to pay off on the swaps, the party went on. Even usually conservative (in the fiscal sense) companies like AIG started to worry that they were being left behind and leapt headlong into the swap pool.

Shortly after Greenspan's departure in 2006, the Federal Reserve took the unusual step of issuing a joint statement along with the SEC to warn about the risks associated with credit default swaps. But by that point, the damage was already severe. If swaps lost their value, most of those who had played the game would find themselves in companies whose worth was valued in pocket change. The only solution was to cover the problem with still more swaps and keep moving.

Then a funny thing happened. After years in which banks had handed out loans willy-nilly, guarded by the indestructible swap, people and companies started to really default on those loans. Credit slowed, home prices fell, and the whole snake started to eat itself, tail first. Suddenly, credit default swaps were not sources of limitless cash. It turns out that an insurance policy--even a secret, unregulated policy--is occasionally expected to pay. Speculators started to look at all the paper they were holding and for the first time realized it could all be worthless. Worse, it could (and did) represent a massive debt. Only no one had the funds to cover it all.

When Bear Stearns fell apart last March, it was only suspected that a big part of the effort in saving the giant investment bank was keeping their holdings in credit default swaps from unraveling and spreading to other institutions. Naturally, part of solving this problem involved creating a new credit default swap to cover Bear Stearns's potential debt. But the all-purpose swap was starting to lose its power. Shortly after Bear Stearns went belly up, AIG reported the largest quarterly loss in the company's history, taking a $11 billion hit on revaluing its holdings of swaps. The party was definitely coming to a close.

When AIG finally collapsed this week, there was no doubt about the primary cause of its failure. The previously well-grounded company had "gotten itself involved with something called credit default swaps." Point of irony alert: Arthur Levitt now serves on the AIG board--or at least he did until the government had to take over most of AIG to salvage the company from the very idiocy Levitt had warned of in 1999.

This week, the Bush administration announced the beginnings of a plan to salvage what remains of the financial markets. At first glance, it appears that the plan will consist mainly of creating a kind of "garbage pit," a company--some new version of the Resolution Trust that was created during the S&L crisis--into which those people who have dabbled in bad debts can toss their problems. The cost to the taxpayers is expected to be in the area of $1 trillion.

The expansion of unregulated savings and loans in the 1980s brought on the collapse of that industry, a crippling of the economy, and left taxpayers holding the bag. Maybe that was only happenstance. Those pushing for the Garn-St. Germain Depository Institutions Act may not have known what they were doing.

The deregulation of the California electricity market, along with the protections provided to Enron through Phil Gramm's lobbyist-written legislation brought blackouts and failure, and left taxpayers holding the bag. But the people who engineered that event--people like Gramm and Greenspan--had already seen what happened with the S&Ls and they should have known better. Still, perhaps that was only coincidence.

The subprime mortgage crisis that has not only come so close to utterly destroying the markets but has also ruined the value of many people's homes and left millions with mortgages they couldn't pay was also the outcome of the deregulation created by these men. The very predictable outcome. When taxpayers are left holding the bag for $1 trillion this time around, it's hard to believe it's any sort of accident.

This is enemy action. This is a bullet deliberately fired into the economy by men willing to exercise their ideology regardless of the cost to taxpayers. John McCain may not have had his finger directly on the trigger, but he was there. He assisted. He not only cheered them on but claimed until last month that he was also "primarily a deregulator." These were his personal friends and philosophical comrades.

It may come as a surprise to the champions of deregulation, but nobody likes regulation. The restrictions that were placed on banks, S&Ls and other institutions in the 1930s weren't put there because someone thought it would be fun. They were put in place because they addressed problems that had just been clearly and painfully revealed. They were put in place because they were necessary.

It's bad enough if John McCain didn't know that. It's far worse if he did.
Sidewalk Shell Game….Hits the Big Time

Goldman to Raise Capital, With $5 Billion From Buffett
The billionaire Warren E. Buffett will invest $5 billion in the investment bank Goldman Sachs, as part of the bank's efforts to raise $7.5 billion in fresh capital, a Goldman spokesman, Lucas Van Praag, said Tuesday. In return, Berkshire Hathaway, the conglomerate run by Mr. Buffett, will receive perpetual preferred shares in Goldman, Mr. Praag said. The preferred stock will pay a 10 percent dividend.

So here's how a real bailout works: Goldman Sachs needs money, Warren Buffet gives them money. In return, Warren Buffet gets stock that pays a ten percent dividend.

Now, for comparison, here's the shell game version. Keep your eye on the pea.

(1) Goldman Sachs gives Hank Paulson seven hundred million dollars (that's seven zero zero comma zero zero zero comma zero zero zero) in salary and bonuses.

(2) Goldman Sachs lends Hank Paulson to the Treasury (now that he can afford to be a public servant).

(3) As the Secretary of the Treasury, Paulson insists that we give Goldman Sachs a lot of money, in exchange for a lot of crap. (If not, we all die.)

(4) Except it's not Hank Paulson's money, it's ours.

(5) If the crap turns out to be crap, we're stuck with it. (And by the way: if it's not crap, why are they so desperate to unload it?)

(6) In four months, Paulson returns to Goldman Sachs.

(7) Paulson receives salary and bonuses from the money we just gave to Paulson to give to Goldman Sachs to give to Paulson.

(8) It's our money. Or was. But we don't get preferred shares. We don't get a ten percent dividend. We don't even get a free copy of The Warren Buffet Way: Second Edition (Paperback). We get crap.

In essence: when Goldman Sachs needs money, and the guy lending the money is rich, they give him something for it. When Goldman Sachs needs money, and the guy lending the money is us, they don't.

Why should they, unless they have to? And the way it stands now, they don't have to.

It's been said that when the dust clears from WWIII, the only things left standing will be Keith Richards, cockroaches, and the investment bank of Goldman Sachs. Having lived long enough to see the Stones, my old New York kitchen, and the events of the past week, I wish I could disagree.

P.S. - Warren Buffet today tells CNBC he wholeheartedly supports the bailout plan. So: our money goes (for free) to prop up a company he just invested $5,000,000,000 in. Why in God's good earth wouldn't he support it?
Freddie Mac Paid McCain Campaign Manager's Firm Through last Month
Nicholas Graham
September 23, 2008

Two reports, one from the New York Times, and the other from Newsweek, contradict John McCain's statement this week that his campaign manager Rick Davis had no involvement with mortgage giant Freddie Mac for the last several years. The Times reports:

One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month to a firm owned by Senator John McCain's campaign manager from the end of 2005 through last month, according to two people with direct knowledge of the arrangement. The disclosure contradicts a statement Sunday night by Mr. McCain that the campaign manager, Rick Davis, had no involvement with the company for the last several years. Mr. Davis's firm received the payments from the company, Freddie Mac, until it was taken over by the government this month along with Fannie Mae, the other big mortgage lender whose deteriorating finances helped precipitate the cascading problems on Wall Street, the people said...

...On Sunday, in an interview with CNBC and The New York Times, Mr. McCain responded to a question about Mr. Davis's role in the advocacy group through 2005 by saying that his campaign manager "has had nothing to do with it since, and I'll be glad to have his record examined by anybody who wants to look at it."

Newsweek confirms the story:

Freddie Mac had previously paid an advocacy group run by Davis, called the Homeownership Alliance, $30,000 a month until the end 2005, when that group was dissolved. That relationship was the subject of a New York Times story Monday, which drew angry denunciations from the McCain campaign. McCain and his aides have vehemently objected to suggestions that Davis has ties to Freddie Mac-an especially sensitive issue given that the Republican presidential candidate has blamed "the lobbyists, politicians and bureaucrats" for the mortgage crisis that recently prompted the Bush administration to take over both Freddie Mac and its companion, Fannie Mae, and put it under federal conservatorship.

But neither the Times story -- nor the McCain campaign -- revealed that Davis's firm, the Washington, D.C. based lobbying firm Davis Manafort, continued to receive $15,000 a month from Freddie Mac until last month-long after the Homeownership Alliance had been terminated. The two sources, who requested anonymity discussing sensitive information, told Newsweek that Davis himself approached Freddie Mac in 2006 and asked for a new consulting arrangement that would allow his firm to continue to be paid. The arrangement was approved by Hollis McLoughlin, Freddie Mac's vice president for external relations, because "he [Davis] was John McCain's campaign manager and it was felt you couldn't say no," said one of the sources. [McLoughlin did not return phone calls].
In a sharply-worded statement released to the Huffington Post, David Donnelly, director of the watchdog group Campaign Money Watch, said: "John McCain's campaign manager and Freddie Mac essentially had a secret half a million dollar lay-a-way plan. For almost three years, they made secret, monthly payments of $15,000 to Rick Davis for apparently no other work than for him to provide special access to a future McCain White House in exchange. If McCain knew about this, his presidential campaign should be over. If he didn't know about it, he ought to fire Rick Davis immediately."

McCain's campaign has been attacking Obama over his own (rather tenuous) ties to the two former lending giants. GOP officials argued that despite whatever connections Davis or others had to the mortgage giants, McCain was a leading advocate for reforming them. However, the Times' reporting punches some holes in that claim:

In an interview Tuesday with conservative talk-radio host Neal Boortz, Mr. McCain said, "I remember warning at that time that Fannie and Freddie were out of control and that they needed to be reined in. And, frankly, I warned that this kind of thing could lead to serious problems. Now, in full disclosure, I didn't foresee something this huge, but certainly I saw the fundamentals there for serious problems when you have a quasi government agency acting the way they did."

When Mr. Boortz noted approvingly that Mr. McCain had co-sponsored a Senate bill to mandate new regulations, Mr. McCain said, "I remember it very well."

But a Freddie Mac official said Mr. McCain "never took on the role that some other Republicans did" to try to limit the companies. He named instead Senators Chuck Hagel of Nebraska, John Sununu of New Hampshire and Elizabeth Dole of North Carolina, all of whom were on the banking committee during recent years. "I remember working against a number of amendments and they were always introduced by Hagel and Sununu. John McCain was never anywhere to be found."

A check of the records for the legislation that Mr. Boortz mentioned shows that Senator Hagel was the original sponsor on Jan. 26, 2005, and Senators Sununu and Dole were co-sponsors then. Mr. McCain did not sign on as a co-sponsor for more than a year, on May 25, 2006.
God, I hate to say!
I really do.
But it is so evident, so stark, that pretending it isn't there is foolish and not just a little silly.
Race is a huge issue in this election.
Phew!
Firmly off my chest now.
I know for a fact that there are people out there that listened to Obama and McCain, that watched the conventions, that are deeply political, that understand both platforms who will not vote for McCain because they realize that as one of the architects of the current financial crisis, John McCain is not only too old to be president but his running mate is far too inexperienced to be so close to the presidency. (Let's be honest for two seconds. Palin is being protected from the mean ole media and has given ONE non-partisan interview in the THREE WEEKS since she was chosen as VP. She will not take questions from anyone. Can you fathom this happening with Biden. All jokes aside? Let's say that Obama brought out some woman that no one knew, she spoke at the convention, travelled with him giving the same same speech in different forms - repeating the same half truths as if completely oblivious to the fact that they have been exposed. This woman is then essentially sequestered with our media not having any access. Do you honestly think this would fly? They have played this as protection from the jackals that attacked her out of the gate.
But that's to be expected.
There was no vetting.
This is the presidency for crying out loud!
It is essential that we see how she fares in the pressure cooker with the media on her heels, having to respond to multiple situations all at once. It is how we can evaluate her performance should she win. My God! Every president ages 15 years in office! It's a terribly stressful, demanding job. And she can't take questions from the media? AND she is already trying to put a stop to a bi-partisan investigation?? Do we really need more of this??!!!)
Anyway, there are people out there who are politically savvy, that are in tune with what's going on and have a working historical knowledge.
Yet they will not vote.
They will not vote for a black man.
There is a fear amongst whites in our country that has existed for hundreds of years. It is why black men are targeted. They are (generally speaking, now) seen as a threat. A threat physically. A threat to "our womenfolk". Honestly. Look at how blacks were treated and the punishments they received from the white masses. Not only were they tortured - which is an intimate cruelty - but most if not all, had some sort of "sexual" based injury. What a pathetic word for what many endured! Injury! If having your penis cut off and shoved into your mouth or having poles shoved up your ass is an "injury" then I guess it's appropriate.
Anyway. There is a real fear. That's why we incarcerate so many young black men. Our white society fears them. For whatever reason, and I say this because there are so many deeply seated causes for this irrational fear, we white people have this undercurrent of suspicion when it comes to black men.
It is why, when Obama was getting pummeled a bit and everyone was saying "get mad!" "fight back!", we saw none of that.
Because anger would lose it for him.
He knows it.
His closest advisers know it.
An angry black man will NEVER win the presidency.
He maintains his decorum.
He keeps a level head.
He stays...even.
He has to.
Otherwise the fear-mongering will ensue.
But back to my point.
Our racism permeates every aspect of our culture.
With the off hand stereotyping.
The flippant comment.
I hope one day that it will not define us.
I'm hoping that those people that find it next to impossible to vote for a black man for all their "false" reasons will seriously evaluate the true reasons.
I am still hopeful.

Tuesday, September 23, 2008

Economy
Why Congress Objects To The Bailout Plan
by Maria Godoy
NPR.org, September 23, 2008 · The outrage was palpable Tuesday as the Senate Banking Committee grilled Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke on the details of their $700 billion plan to bail out Wall Street with taxpayer funds. But lawmakers are hardly the only ones questioning whether the plan will work. Here, a look at some of the objections being raised on and off Capitol Hill.
It's A Huge Amount of Power to Invest In The Treasury: The Bush administration's plan would grant the Treasury secretary nearly absolute control of the $700 billion authorized by the bailout measure. The language in the measure sent to Congress would make the Treasury secretary's decisions "non-reviewable" – including by "any court of law or any administrative agency."
Jon Macey, a professor and deputy dean of Yale Law School, says the bill contains the largest transfer of power from Congress to the administration that he has ever seen. Macey says Congress is handing over more power than it did in granting the executive branch leeway in the Patriot Act, more than when authorizing combat through the War Powers clause. He says the move amounts to a sidelining of Congress.
Senate Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut, on Tuesday called the language "so troubling" and said it "cannot last" as part of the legislation.
It Represents A Fundamental Shift In The Way The U.S. Economy Works: The Bush administration's plan to bail out the nation's financial institutions represents an unprecedented intervention in free markets. If the Wall Street bailout is adopted, Republican Sen. Jim Bunning of Kentucky said last week, "The free market for all intents and purposes is dead in America."
A fundamental principle of free-market capitalism is that investors take on big risks to reap big rewards — but they also assume any losses that occur. The government's plan would radically alter that model, leaving profits private while making losses public.
It's Not The Only Viable Option For Fixing This Mess: In a nutshell, the Bush administration's plan would authorize up to $700 billion to let Treasury buy up bad mortgages from financial institutions. With these toxic assets off firms' books, lenders would once again be willing to lend and the money would start flowing freely through the markets, the theory goes. Objections to the plan have come from both sides of the aisle — and from academics and economists who say it amounts to a huge handout to Wall Street without necessarily fixing the problem.
Many economists have proposed alternatives and alterations to the administration's proposal, some of which have been taken up by lawmakers. Details of the plan are still being negotiated, but here are some of the key points of contention.
Equity stakes: Rather than simply buying up bad loans and letting taxpayers assume all the risk, why not take shares in the financial firms in exchange, so that taxpayers could also participate in any potential profits? Banking Committee Chairman Dodd has proposed "contingency shares" that would only be issued if losses are realized on the assets bought up from a firm. In Tuesday's hearing, Paulson rejected the idea of equity shares, saying it would make the bailout program "ineffective" — though he didn't offer details on why that would be the case.
Valuing assets: There are already buyers for these toxic assets out there — they just aren't willing to buy them at prices that financial institutions find palatable. (In some cases, selling at those prices would send firms into insolvency.) Many critics argue that the fundamental problem is that the financial markets lack capital, so the only way the government's plan will work is if the Treasury overpays for the assets; otherwise, why not just let investors buy them up?
So, how to price these assets? Technically, assets are only worth what a buyer is willingly to pay for them. If no one wants to buy mortgage-backed securities, then right now they are worthless — but that doesn't mean they will always be. Paulson has suggested that one way to set prices would be through what's known as a reverse auction, the goal of which is to drive prices down, rather than up.
But some economists note that reverse auctions work best when the assets being auctioned off are essentially identical. That's not the case with mortgage-backed securities: Some of them may have plenty of healthy, payment-producing mortgages in them, while others may be full of defaulted loans. If the government simply buys the securities with the lowest price, it may end up with $700 billion worth of the worst loans, critics say.
Executive pay limits: Some lawmakers want any company that participates in the bailout to agree to slash the pay of its executives. After all, they say, those who created the mortgage mess shouldn't be allowed to profit from the bailout. But Paulson has resisted this idea. He argues that pay cuts would discourage firms from using the program and would force thousands of firms to review their executive compensation before participating, a time-consuming process.
Lawmakers Are Being Urged To Act While Staring At The Barrel Of A Gun: Congress is being asked to enact a fundamental restructuring of the U.S. economy — in one week. That's not a lot of time for lawmakers to weigh their options and the repercussions of their actions. In private meetings on the Hill, Paulson and Bernanke have warned lawmakers about the dire consequences of not acting — but these economic Doomsday scenarios have not been spelled out to the public.
Democratic Sen. Jon Tester of Montana told Paulson as much on Tuesday: "I fully feel the urgency. But the truth is, we have to be given the time to do this right, or you'll be up here in a year or two asking for another $100 billion or more."
It's difficult, you know, when you associate so much with music. I listen to Pandora Radio at work as it allows me to select the music I prefer and from that it offers a sampling of "like" genre music. I have several stations - some for when no one else will be in the office and I can move around a bit, others for when I need to block out extraneous noise, etc. Anyway, I was sitting here, minding my own business trying to get the Municipal Utility District Data to present properly when Macy Gray "I Try" came on. Much like the ballad "I'll Always Love You" (sadly, the version by Dolly not Whitney) always brings back memory of my dad, "I try" always brings me to Paul, my brother. The words "try to say goodbye and I choke, try to walk away and I stumble" is so gut wrenching as not only was the song indicative of an innate sadness but it also was telling physically. ALS affects the ability to talk, to walk, to move. He was beginning to slur and his footing wasn't the best.
Sigh.
I miss my bro.
Not all the time, most of the time I have him on my shoulder listening to my constant inquiries and requests for aid. It's a strong, close, positive relationship, where he's always with me. But when I hear a song, see a movie or CSPAN (inside joke), or see a family member do something that was "so Paul", that pang of pain at the physical deprivation hits. It's not debilitating or crushing, just a sharp jab reminding me that he is no longer physically here.
It's like Coldplay's "Miss You"...I always think of my boys. They are still at home but one is a senior so we are on the cusp. As it plays, I get the video in my head of his first steps, falling asleep in his high chair, climbing like a little monkey to the top of any structure, his devastation and full run to me when rejected by his peers when just a little tiny guy, too much to recount but a beautiful and heart gripping reel of surreal, wonderful memories.
I have been so blessed to have those two boys in my life.
So many people don't ever realize their dreams.
I did.
I am a mother to two boys.
Simple but true.
I have others but that was the one I had since I was little.
And I got it.
I look at them now and swoon. Literally. Swoon at the journey. What an amazing trek we have had! And continue to have. So many obstacles, so many hindrances, so many ups and downs, hard times, good times. I can't believe that I managed to do it. I am proud that I planned how I would raise my kids and I did it. Sure there were adjustments - like the chocolate cake for breakfast - but for the most part I remembered what I wanted to do as a mom and I did it. I learned a lot from the examples of others, which I think is crucial in our on the job training parenting society.

There is much music that acts as my magic carpet to the past. Regardless of what happens, I have been blessed.

Monday, September 22, 2008

Please tell me this sets of the alarm bells with you as it does for me....

Section 8 (ironically) of the bailout legislation reads:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
Pitchfork, anyone?

Is it just me or have we been down this road before? Weren't the alarm bells rung for all the world to hear about the impending and imminent danger that Iraq presented? WMDs? Have to do this "NOW!" mentality?
Damn the torpedoes! Full speed ahead!
Uh. Not so fast, cap'n.
You see. We don't really trust you. You and yours, that is.
You want to push through a bailout of close to a trillion dollars....in order to protect the taxpayers?
Say..wah?
What was that bushism...fool me once...?
We won't get fooled again.
No to the bailout.
Not without concessions.
Not without regulations.
Not without additional help for the INDIVIDUAL CITIZENS OF THIS COUNTRY. You remember them, the ones in which you have inserted your hand into said wallet. The ones that you still, to this day, wag a finger at saying bad bad citizen for taking on more than you could afford.
Well, you see, it's funny how all that worked at the time, now completely out of context.
We were told that we were part of an ownership society. And here were financial experts telling the citizens that you can afford this, we can make this work for your situation, and having learned next to nothing about finances in school (yay, public school system!) and believed that these professionals were more knowledgeable. So, we, they bought into it. They signed the endless stream of papers at signing, and they became part of the ownership society.
Little did they know that they were part of a nationwide scam.
Enabled by the deregulators and the "free market" drones.
And now those same free market droids are first in line with their hand out, reaching into the taxpayers pockets, feeling them up for every last nickel.
The republicans want to zip this through, "clean", with no attachments, giving the secretary of the treasury complete and total control over the funds.
Uh. No.
Been there, done that.
We are on the verge of taking over. It is time to show what democrats are capable of. What we are all about. They can claim that they are fiscally conservative, But we know better. History has the evidence.
It is time to show them that they must be help accountable.