[denmason]

I have just 2 requests.

- Spend 10 minutes watching the below video.
- If you are swayed, even a little, pass it on to your elected representatives and your personal / professional network.

YouTube - Go Viral: STOP THE BAILOUT OR.... DEPRESSION?

Think folks.
Think long and hard.
This is what the threat to blow $700 billion has done to America. We now have a higher risk of default on our national debt than a company that sells hamburgers has on their private debt.
Rick Santelli nailed it this morning. This is a man who is a trader on the floor of the exchange that provides primary liquidity to some of our most important capital markets in Chicago.
He said, and I quote, that "confidence has been shattered because the rules of the game keep changing."
That is exactly correct.
Banks and other institutions have been hiding the truth, they have claimed "protection" against events that is in fact not present (the other guy doesn't have any money to pay) and leverage in the system remains excessive. Then, when the correct bets made (being short those institutions) are paying off, Chris Cox comes in and literally destroys them on purpose.
As a result The Fed is literally holding up every bank in the nation but this is not because of a "loss of confidence"; it is because everyone involved is lying, including The Fed and Treasury.
Art Cashin, who has been on the floor of the stock exchange for a very long time, said that The Fed would cut today except that it would take pressure off our officials.
In other words Ben Bernanke is blackmailing Congress by spreading gasoline all over the floor of the US Financial System and then holding a lit match and chortling that if Congress doesn't do as he demands he will drop it.
I agree. The Effective Fed Funds rate has been trading 50 basis points or more below the 2% target for five straight days now, and for the last two days, it has traded 75 basis points under. The IRX is demanding an immediate rate cut. The Slosh has been intentionally drained by over $125 billion in the last week and lowering the water in the swamp exposed one dead body - Washington Mutual - which was immediately raided on a no-notice basis by JP Morgan. Not even WaMu's CEO knew about the raid until it was done.
Congressional response to this sort of blackmail should be a bill to repeal The Federal Reserve Act and/or to remove Ben Bernanke from office.
The Fed claims to be an "independent central bank." They are nothing of the kind; they are now acting as an arsonist. The Fed and Treasury have claimed this is a "liquidity crisis"; it is not. It is an insolvency crisis that The Fed, Treasury and the other regulatory organs of our government have intentionally allowed to occur.
There is massive stress in the credit markets because of this intentional mismanagement.
We can and must fix it but spending taxpayer money will not do so.
The Democrats claim they have the votes to pass the original bill. Then pass it Democrats. Bush will sign it.
The Democrats will NOT pass it without The Republicans because they are afraid that the plan won't work (and in this they are correct) and refuse to put their heads on the chopping block if they spend $700 billion or more and the economy collapses anyway. They demand that Republicans march into the furnace with them.
Republicans are wise to say NO.
The solution is simple, it is elegant, and it will work.

1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Do it now.
2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy.
3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.

Once 1-3 are put in place then send in the OTS and OCC examiners and look at every financial institution in the United States. All who are insolvent and unable to raise private capital immediately are forced through receivership where the debt is converted to equity and existing equity is wiped out. With the CDS monster caged the systemic risk is removed, the bondholders provide the cushion for recapitalization (as it should be) and the restructured firm emerges with no debt while the former bondholders are now the owners (of the equity) in the resulting firm.
With a clean balance sheet the restructured firms remain in business and open the next morning able to raise and attract capital.
For the few firms that have an insufficient debtholder capital cushion to successfully complete this process, they are liquidated instead. There will be few of these and in fact each of those firms is a regulatory failure, as we should have never permitted a firm to become so far "underwater" that the bondholder's capital is insufficient to capitalize a restructuring.
Finally, drop the silly shorting restrictions. Liquidity in the market right now stinks and this is a big part of why. Start prosecuting aggressively the rumors and other manipulation that leads to stocks both rising and falling.
This plan will work, it will instantaneously stabilize the credit markets as balance sheets will be transparent, the CDS monster will be permanently de-fanged, leverage will be returned to reasonable levels and the forcibly restructured firms will have no debt on their balance sheets and be able to immediately access the capital markets.
Best of all, it will require exactly zero taxpayer dollars.
Get on the phone and fax machines now - this is a solution that addresses ALL of the outstanding issues and most importantly WILL WORK.

Once again, here is a link to find your Congressman's phone numbers, fax numbers and email address. Get with it and let them know how you feel about this bailout BS. Contacting the Congress

[Nord Jim]

I guess I'd have to ask who is this guy and why should I listen to him instead of to Warren Buffet?

There is actually very little on Karl Denninger on the web, beyond some posts that identify him as a blogger with a background in tech. He's evidently not a financial professional.

Interesting, though, that he couples the end of the world as we know it to problems with preferred stock. In other words, he says he's worried that we won't protect preferred stock (such as the stock one would find in the severance packages of the grifters who got us into this situation) by laying the losses off onto common stock (such as that which would be owned by you or me). Who's being protected here? (Just a question.)

Interesting point of view, but not a slam dunk in my book.

j

[Seraphim]

Originally Posted by Nord Jim

I guess I'd have to ask who is this guy and why should I listen to him instead of to Warren Buffet?

There is actually very little on Karl Denninger on the web, beyond some posts that identify him as a blogger with a background in tech. He's evidently not a financial professional.

Interesting, though, that he couples the end of the world as we know it to problems with preferred stock. In other words, he says he's worried that we won't protect preferred stock (such as the stock one would find in the severance packages of the grifters who got us into this situation) by laying the losses off onto common stock (such as that which would be owned by you or me). Who's being protected here? (Just a question.)

Interesting point of view, but not a slam dunk in my book.

j

Is Warren Buffet investing $5 Billion of his own money, or is that the money of his investors?



BTW I wrote my congressman and senator last week....

[gssixgun]

I must be missing something here????? It is my understanding that 98% of the Americans polled have said NO to a bailout with our money, but despite that, our "Representatives" in Washington are going ahead with it anyway..... Do I have that wrong?????

That my friends is "taxation without representation" somewhere I have heard that phase before.....

[maplemaker]

Originally Posted by gssixgun

I must be missing something here????? It is my understanding that 98% of the Americans polled have said NO to a bailout with our money, but despite that, our "Representatives" in Washington are going ahead with it anyway..... Do I have that wrong?????

That my friends is "taxation without representation" somewhere I have heard that phase before.....

No, sadly you don't have it wrong. This is again a case of the people we send back to do our bidding thinking they know more about our own lives than we do. Funny, if I'm your employer and you don't do what I say I get to fire you, but people are so easily swayed by the "us vs. them (the rich/white/male/liberal/feminist/etc.)" argument that politicians drag out for another round every election cycle that nothing really changes. IF this is REALLY a bolster to help the economy and boost international confidence in the American markets, there's a simple solution that wouldn't cost taxpayers a dime: Repeal the capital gains and inheritance taxes. But no. Orrin Hatch knows much more about what's best for me than I do. Thank the Lord above I have him to guide and direct me, otherwise I might not have sense enough to come in out of the rain, or I might start buying up all sorts of consumer credit debt all will-they-nil-they with a "What, me worry?" grin on my face. Good thing he's there to stop me, being so enlightened. You too, Matheson. Turds.

[ScottS]

Originally Posted by maplemaker

IF this is REALLY a bolster to help the economy and boost international confidence in the American markets, there's a simple solution that wouldn't cost taxpayers a dime: Repeal the capital gains and inheritance taxes.

Actually, this is a plan to free up credit for businesses that's increasingly freezing up. I don't understand at all how decreasing a capital gains and inheritance tax fixes this at all.

[maplemaker]

It will increase investing, which in turn will bring the market back up, which will open more capital flow which will give business more solvency. Everything I'm hearing is about how if we don't do it, international investor confidence will be lost, the stock market will crash, the moon will turn to blood and a plague of locusts will cover the earth. OK, so, boost the confidence. Don't socialize insurance and mortgage firms. Just for the poops and laughs files, the money they're talking about paying would be enough to pay every single American roughly 2 million dollars each. Tell you what, congress, give me that money. I'll spend it much more wisely than you or AIG can...

[voerman]

Originally Posted by maplemaker

Just for the poops and laughs files, the money they're talking about paying would be enough to pay every single American roughly 2 million dollars each. Tell you what, congress, give me that money. I'll spend it much more wisely than you or AIG can...

I am not sure what money you are talking about, but the $700 billion bailout amounts to about $2,300 per person in the USA, not $2 million. $700,000,000,000 / 302,000,000 - that is the bailout divided by the population (approximate).

That is not to say it is good or bad, just that it is a few orders of magnitude smaller than you stated.

Lou

[Smiles]

Originally Posted by Seraphim

Is Warren Buffet investing $5 Billion of his own money, or is that the money of his investors?...

Both. Berkshire-Hathaway is investing the $5 billion, and Buffet owns something like 38% of Bershire-Hathaway.

[denmason]

The current $700 billion Paulson bailout plan has brought to the forefront a new class of what must be called American Oligarchs and oligarch wannabes. Some may have originally earned their wealth by supplying consumers with desired goods, but at some point they crossed over to the dark side to use government as a vehicle to take from the poor and the middle class to give to themselves. Others, never produced an honest product and have been career long parasites on the working classes.
An oligarchy is generally considered any form of government where a small elite segment of society, be they from royalty, wealth, family or military, rule. The most current day popular meaning associates an oligarch with an extremely wealthy person who acquires his wealth, or increases it significantly, by incorporating the use of government influence. Oligarchs are not the only ones who become rich, but their success and secretive influence over governments put them into a separate class.
Paulson's "bailout" plan has little to do with bailing out banks in trouble. In fact, if his plan is approved by Congress, it is likely the number of banks that will be in trouble will hardly decrease. Billions more in real bailout money will be needed to bail these banks out. This $700 billion may end up in many places, but it doesn't appear it is going to bail out many troubled banks. This could be news to many Americans, since it also appeared to be news to Fed Chairman Ben Bernanke, who is something of Paulson's lapdog. Bernanke tends to follow Paulson's lead and doesn't generally get out of order, but he even barked as he was figuring out what Paulson was up to.
The Paulson plan breaks the government hold over the nation. It takes considerable power away from Congress and puts it in the hands of the Treasury. No one even notices the absence of the President— we just assume Treasury’s got this one. I’m not saying any of this is a good thing, I’m merely observing that far from centralizing the power, it breaks government into sharply competing... fiefdoms.
Hard times are coming folks.

Take a look at what Dr. Paul had to say.

YouTube - Ron Paul risk was shifted to the people from the corportions

Also, if you've got a spare 3.5 hours, here's a little video you might find interesting.

The Money Masters - How International Bankers Gained Control of America

[denmason]

Guess what these people are laughing at..... the joke is on US.





Pelosi looks like she is having an orgasm from screwing the American taxpayers!

[maplemaker]

[hoglahoo]

oh, MAN

I don't know whether to or

[JMS]

The house rejected the bail out plan!!

[JMS]

FOXNews.com - House Defeats Wall Street Bailout Bill - Politics | Republican Party | Democratic Party | Political Spectrum

[Seraphim]

Bush said the legislation addresses the root cause of the problem — "assets related to home mortgages that have lost value during the housing decline."

And the president noted that under provisions of the pending bill, "the federal government will be authorized to purchase these assets" and said that will help financial institutions to resume lending to individuals and businesses.

Let's see: The banks are in trouble because they took on bad loans.

Now Bush wants us, the taxpayers (we fund the federal government), to buy those very same assets that is causing these major financial institutions to fail?

And where would that leave us? That would be money out the door and down the toilet.


I'm not buying that sales pitch. Not with my money.

Get the failing divisions of AIG up on the auction block immediately, let some other fat cats put their money in there. Put the individual bad mortgages up on EBay and let people bid on them.

Listing: $500,000 mortgage on McMansion in Southern NJ.

Current loan owner makes $45k a year and also drives a Hummer, couldn't keep up with payments when gas spiked +$4/gallon.

Starting bid $0.99

[English]

Everybody has an angle and the more you listen, the more you will get confused.

Your banks have loaned money to American citizens so that they can buy houses.

Unfortunately the borrowers can not pay the interest payments, because the economy has taken a downturn.

As a result, people are suffering and banks are suffering.

The situation is so bad that some banks have gone bankrupt and confidence in money is at a low ebb.

Your Government says that the situation can be recovered if each and every American pays into a kitty $2500.

You have all been riding the fat for a few years now. I think that if the only price you have to pay is $2500 per head, then that is a bargain. Buy it and buy it now, but expect to pay more later.

You may feel its unfair, but hey, life is unfair.

[Seraphim]

Originally Posted by English

Everybody has an angle and the more you listen, the more you will get confused.

Your banks have loaned money to American citizens so that they can buy houses.

Unfortunately the borrowers can not pay the interest payments, because the economy has taken a downturn.

As a result, people are suffering and banks are suffering.

The situation is so bad that some banks have gone bankrupt and confidence in money is at a low ebb.

Your Government says that the situation can be recovered if each and every American pays into a kitty $2500.

You have all been riding the fat for a few years now. I think that if the only price you have to pay is $2500 per head, then that is a bargain. Buy it and buy it now, but expect to pay more later.

You may feel its unfair, but hey, life is unfair.

$2500 per head includes men, women and children. Per taxpayer is more like $10,000 a head.

I want a better return on my investment than that.

I personally haven't been riding the fat