Rolling US Economy Into The Shitbin Thread

So warren buffet is putting 6bn into goldman. Champagne, cocaine and bonuses all round.

Xpost

Well there's a surprise, as if it hasn't already.

I shall start queuing up for my goldman saving account because clearly my money is safer there than in fort knox.

Okay so just to play more schizo:

Investment Mgt fundie (another kind of fundie!) writes "The Treasury proposal will not be a bailout of Wall Street but a rescue of Main Street"

How Main Street Will Profit (lol)

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092302322_pf.html

" Critics call this a bailout of Wall Street; in fact, it is anything but. I estimate the average price of distressed mortgages that pass from "troubled financial institutions" to the Treasury at auction will be 65 cents on the dollar, representing a loss of one-third of the original purchase price to the seller, and a prospective yield of 10 to 15 percent to the Treasury. Financed at 3 to 4 percent via the sale of Treasury bonds, the Treasury will therefore be in a position to earn a positive carry or yield spread of at least 7 to 8 percent. Calls for appropriate oversight of this auction process are more than justified. There are disinterested firms, some not even based on Wall Street, with the expertise to evaluate these complicated pools of mortgages and other assets to assure taxpayers that their money is being wisely invested. My estimate of double-digit returns assumes lengthy ownership of the assets and is in turn dependent on the level of home foreclosures, but this program is, in fact, directed to prevent just that.

In effect, the Treasury will have the fate of the American taxpayer in its hands. The Resolution Trust Corp., created in the late 1980s to deal with the savings and loan crisis, dealt with previously purchased real estate, which was flushed into government hands with a "best efforts" future liquidation. Today, the purchase of junk mortgages, securitized credit card receivables and even student loans will be bought at prices significantly below "par" or cost, and prospectively at levels allowing for capital gains. This is a Wall Street-friendly package only to the extent that it frees up funds for future loans and economic growth. Politicians afraid of parallels to legislation that enabled the Iraq war are raising concerns about a rush to judgment, but the need for speed is clear. In this case, there really are weapons of mass destruction -- financial derivatives -- that threaten to destroy our system from within. Move quickly, Washington, with appropriate safeguards.

while over here you have this (if you can indulge the source):

Banks race to profit from US bailout
http://www.wsws.org/articles/2008/sep2008/fren-s23.shtml

By Barry Grey
23 September 2008

The announcement of a virtually open-ended government bailout of Wall Street has set off a frenzied competition among the biggest banks and financial firms to grab the lion’s share of the super profits to be reaped from the program.

Banks, brokerage houses, insurance firms, mortgage lenders, private equity companies and asset managers are furiously lobbying the Bush administration and Congress to make sure that the legislation authorizing the bailout gives them the biggest possible share in the spoils. Behind the public speech-making and posturing by administration officials, presidential candidates and congressmen, a sordid campaign of influence-peddling and vote-buying is under way, which will determine the details of the bailout law that is expected to be passed either this week or next.

Tens of billions of dollars in corporate profits and billions more in personal windfalls for senior executives and big investors are at stake. The plan drawn up by Treasury Secretary Henry Paulson not only allows the biggest financial firms to rid themselves of virtually worthless assets that are driving down their stock and slashing their profits, it provides vast opportunities for the winners in the money race to realize huge gains from the management of the program and the ultimate resale of the assets by the government.

The entire program is so rife with “conflicts of interest” that the term does not begin to capture the level of corruption and criminality it entails.

so of course i just re-read this to feel good that some ppl don't have any moral hazards

http://www.wsws.org/articles/2008/sep2008/fren-s23.shtml

Trader Makes a Quick $1.25 Million on Rescue, Then Slams It

SEPTEMBER 24, 2008
Trader Makes a Quick $1.25 Million on Rescue, Then Slams It
By MICHAEL M. PHILLIPS

William O. Perkins III says he turned a $1.25 million profit trading Goldman Sachs Group Inc. stock last week.

You would think that would count as a pretty good paycheck for the Houston energy trader. Instead, the experience left him so angry about the demise of capitalism that he says he has decided to spend his profits on advertisements attacking President George W. Bush's planned $700 billion Wall Street bailout.

The president has run into a wall of skepticism over his plan. Troubled voters are calling their congressmen. Academic economists are churning out sound bites. Democratic lawmakers are demanding that the plan include perks for the working classes, while Republicans are saying the plan interferes with the invisible hand of the free market.

But the 39-year-old Mr. Perkins is putting cash behind his anger. He commissioned an African-American arts collective to draw a cartoon depicting Mr. Bush, Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke trampling on the graves of private enterprise and capitalism. Then he paid $139,104 to run the drawing as a full-page ad in the Tuesday editions of the New York Times. And he promises to spend a million more on ads before he is done.

http://s.wsj.net/public/resources/images/P1-AN026_ANGRY__G_20080923155642.jpg

not bad for "African-American arts"

Interesting:

Experts offer alternatives to bailout approach

Leading economists argue that other solutions could address financial crisis

http://www.msnbc.msn.com/id/26861562

To hear Henry M. Paulson Jr. and Ben S. Bernanke tell it, there is only one plan to save the economy -- use $700 billion in taxpayer money to take the worst of Wall Street's assets off its books.

But leading economists and financial thinkers argue that there are a host of alternatives that would reduce taxpayers' liabilities and perhaps more effectively address the urgent crisis in financial markets. Although these experts concede that the clock is ticking, they say different approaches have been dismissed too quickly.

While the government's plan is built around buying troubled assets, other options offer sharply different visions.

One approach seeks to reduce taxpayers' liability by offering collateral-backed loans to troubled banks, leaving them to work out their own solutions. Another idea is to have the government set up a profit-driven investment fund with the aim of infusing the financial system with cash without taking on bad debt. Still others suggest radically different tactics of directly helping homeowners by reducing mortgage principal or bolstering banks by suspending capital gains taxes.

especially this part:

Mortgage breaks

Liberal thinkers say the government could intervene in the financial system by addressing the ailing mortgages at the heart of the crisis. Under this approach, the government could reduce the amount of principal that struggling homeowners owe.

"It's about foreclosures, stupid," said John Taylor, chief executive of the liberal National Community Reinvestment Coalition.

One idea is for the government to take control of some mortgage-backed securities -- most likely by buying them from financial firms -- and then work to restructure the underlying loans into something homeowners could afford. The value of the securities, both those bought by the government and those in private hands, could improve as foreclosures and late payments drop. If so, financial firms holding mortgage-backed securities could see a recovery in their balance sheets.

To make it fair for homeowners who keep up with their payments, borrowers who receive federal help would be required to give the government some of their gains if they eventually sell their homes for a profit.

but I don't know about repealing the capital gains tax by itself - what would that do? If these are enacted in conjunction with each other it's more fathomable

I wonder who's going to be returning the favor...

Fed plows $30 billion in money markets overseas
Wednesday September 24, 1:42 am ET
By Jeannine Aversa, AP Economics Writer

http://biz.yahoo.com/ap/080924/fed_credit_crisis.html

Federal Reserve plows $30 billion into money markets overseas to ease credit stresses

WASHINGTON (AP) -- The Federal Reserve, in coordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis.

The Fed's action -- taken at 1 a.m. EDT -- sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.

"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a brief statement.

"Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises," the Fed added.

The new swap arrangements will provide up to $10 billion each to the central banks of Australia and Sweden and $5 billion apiece to the central banks of Denmark and Norway.

Last week, the Fed and other foreign central banks pumped as much as $180 billion into money markets overseas. The European Central Bank, the Bank of Japan, the Bank of England, the Swiss National Bank and the Bank of Canada participated in that maneuver.

The global credit crisis poses a danger not only to the U.S. economy but also the world economy.

Finance officials from the world's major economic powers pledged this week to do all they can to provide relief.

The Group of Seven countries said they welcomed the extraordinary steps by the United States to stem the crisis, including a plan for the Treasury Department to buy $700 billion in bad mortgages and other toxic assets held by banks and other financial institutions. Those dodgy debts are at the heart of the crisis. Besides the United States, the Group of Seven is made up of Japan, Germany, France, Britain, Italy and Canada.

So who's all buying Goldman shares today?

I don't understand that last story. What does swapping several billion in cash with another country do?

im curious to what degree this argument is viable:

http://frum.nationalreview.com/post/?q=MjE0YTA5NWRhM2M0Njc1ZjQ3YjkyZjU0OTVkZTNiZjg=

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

to what degree is this complicity? What should have been done to protect affordable housing, if this was a real threat to the national/global economy?

There's a good article by David Leonhardt in the NY Times about why executive compensation is a side-show, and lawmakers should be focused on exacting the best return for taxpayers:

One of the fashionable ideas of the week, supported by both Democratic leaders in Congress and John McCain, is to limit the pay of top executives at any Wall Street firm that sells assets to the government. In effect, this is an attempt to tell Wall Street how to split up a government subsidy among its various employees and shareholders.

Personally, I couldn’t care less how much of the subsidy goes to Wall Street’s chief executives and how much goes to Wall Street’s shareholders. I care about the size of the subsidy that we taxpayers are paying. And in a frenzied week, any time spent on talking about C.E.O. pay is time not spent on designing the toughest possible bailout package.

Issue Is Payback, Not Bailout
http://www.nytimes.com/2008/09/24/business/24leonhardt.html?_r=1&hp&oref=slogin

I think that the terms of the Buffett deal with Goldman should serve as a template for what taxpayers should insist on in return for any bailout.

jobs with justice action plan for citizens:

http://www.unionvoice.org/campaign/step_up/idui7664y75dnmnw?

Oh for dumb:

President Bush was considering whether to address the nation about the financial meltdown, which has wiped out all Wall Street's investment banks and resulted in government rescues of Fannie Mae, Freddie Mac and insurer AIG.

"This is a huge moment America," said White House Press Secretary Dana Perino, who did not specify when Bush might address the nation. "And if we don't take decisive and bold action, we could be facing financial calamity."

HUGE MOMENTS.

Also this:

"Although the retrenchment in household spending has been widespread, purchases of motor vehicles have dropped off particularly sharply," Bernanke said.

Wow, I'm crushed.

I think that the terms of the Buffett deal with Goldman should serve as a template for what taxpayers should insist on in return for any bailout.

^^^ otm

After Enron, WorldCom, AIG, Lehmen Brothers, and Bear Sterns, every thinking person should be seized by uncontrollable hilarity the next time they hear anyone claim "government ought to be like a business."

I think that the terms of the Buffett deal with Goldman should serve as a template for what taxpayers should insist on in return for any bailout.

Word. It's 10% return deal on his investment, isn't it? i don't mean to play rote conspiracist (though if you want their line, here: ) but it still makes me uncomfortable that Paulson was a GS guy

Max Kaiser is a terrible actor but apparently also an anchor on Al-Jazeera. I first saw that vid linked from a Ron Paul oriented discussion - who to make matters worse, has just endorsed the Constitution Party's fundie. Great, Ron, couldn't leave the Southern Evangelism at home, could you?

Whatever cuts into McCain's vote though is good for me

http://www.villagevoice.com/2004-08-31/news/passionate-conservatism/2

lmao @ GOP 2004 convention including bragging about minority home ownership:

Similarly fantastic, and repeated by nearly every speaker: that homeownership, and especially minority homeownership, is at an "all-time high." The number of homeowners has grown every year on record. Every year is an "all-time high." The relevant number is the rate of growth.

Word. It's 10% return deal on his investment, isn't it?

More actually. He gets 10% per year on the preferred until Goldman redeems at a premium of 10% to Buffett's purchase price. In addition he gets warrants struck below the current stock price valued conservatively at about $2.8 billion. So the effective yield is closer to 20%.

Details here:
http://bigpicture.typepad.com/comments/2008/09/a-very-expensiv.html

MANAGE YOUR GODDAM AMYGDALAE PEOPLE
http://www.businesspundit.com/amygdalae-management-key-to-avoiding-another-great-depression/

lets lock this thread now that mccain is fixing the economy

some rare good news on the economic front BAD NEWS ~~ ATTN: ALL PHIL COLLINS FANS

Ohh so shocking:

Goldman's shares get suspicious boost pre-Buffett
http://news.yahoo.com/s/nm/20080924/bs_nm/us_goldmansachs_sharesbiz;_ylt=AoiQ1ij6Rwv7vcFYddTHkDJv24cA

NEW YORK (Reuters) - An unusual surge in Goldman Sachs' share price in the last 10 minutes of trading on Tuesday raised eyebrows on Wall Street, as it came two hours before news of Warren Buffett's big investment in the bank.

Goldman Sachs (GS.N) shares rose more than $5 heading into the close of trading even as the rest of the market tumbled, leaving traders suspicious that inside information was used to make a profit.

lol not when everyones watching guys

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Did the Treasury spokesman play for Spinal Tap?

amirite

Wow. I mean wow.

So who wants to set up the rules to the Bush speech drinking game?

When he opens his mouth, finish your drink.

I'm guessing there's a former treasury spokeswoman posting resumes on monster.com right about now.

When he opens his mouth, finish your drink.

An IV tap sounds more practical.

Every time the word "derivative" is not used I will take a drink. Country before liver.

You go with the data point you don't have not the one you wish you had.

http://media.washingtonpost.com/wp-srv/photo/homepage/hp9-24-08vv.jpg

Anyway, threats of a 'long and painful recession' then. Uh.

Mistakes were made.

ROFL - http://wonkette.com/403005/403005#comments

Michael Douglas asked about Wall Street crisis
Wed Sep 24, 3:23 PM ET
UNITED NATIONS - Michael Douglas had to field questions Wednesday about the financial turmoil shaking world markets from reporters recalling his role in the 1987 film "Wall Street."

The actor sought to focus on the subject of Wednesday's news conference — urging the United States and eight other holdout nations to ratify a nuclear test ban treaty.

Douglas won an Academy Award for portraying the rapacious banker Gordon Gekko, who popularized the phrase "greed is good" in the movie.

After world leaders here condemned the "boundless greed" of world markets, Douglas was asked to compare nuclear Armageddon with the "financial Armageddon on Wall Street."

But the likening to Gekko did not end there, with a reporter asking: "Are you saying Gordon that greed is not good?"

"I'm not saying that," Douglas replied. "And my name is not Gordon. He's a character I played 20 years ago."

Bright side of coming Depression: Mets and Yankees take a bath on their new stadia.

(a boy can dream)

god michael douglas no sense of humor wtf hate that guy

Congressional negotiators reach agreement in principle on bailout terms

thanks to john mccain

i knew he could do it

New agreement actually looks sane-ish on the face of it. Don't know enough to be sure of anything other than that Barney Frank is on point and hilarious:

House Financial Services chairman Barney Frank (D-Mass.) said the agreement should calm the markets, and noted, "Some of us have been invited to the White House to try and break a deadlock, and I'm glad that well be able to go and tell them that there isn't that much of a deadlock to break." He paused and added, "But I'm always glad to get to go to the White House."

I would totally vote for Barney Frank right now. Frank/Dodd 16!

barney frank has always ruled

2003, the ruler speaketh:

"These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Probably more true than not in 2003.

Barney also a big non-fighter for transsexual civil rights, the gay press says.

Puts him in a broad company along with 99.7% of politicians. Not a big transsexual vote out there to court.

Right, and who are the big fighters for transsexual civil rights in the House of Representatives again?