The "bad bank" idea is currently in the ascendant, so let's tackle it in this post. A bad bank, as opposed to all the nice, upstanding banks you take home to mum, would become the final resting place for much of America's toxic sludge like: MBSs, CDOs and other complicated thingymajigs and whatchamacallits. These non-producing investments are ostensibly jamming up the credit superhighway that speeds easy money into the pockets of responsible American consumers who would never in a million years allow themselves to get strung out on credit card or mortgage debt. On the contrary . . . if there's anything the American people need right now, it's an enormous infusion of easy money.
The government has decided to tackle this complex problem in the same straightforward and successful manner in which all such economic matters have been handled since this crisis broke in September--with clumsy, sleight of hand tricks and shell games spearheaded by Washington's finance queen - Barney Frank. The normal course of action would have been to confound and mislead the public about the severity of the problem through verbose doublespeak. However, obfuscation was quickly eliminated as an option after our prone to blurting lame duck president dropped the "this sucker could go down" bomb on national television. And while Hank Paulson was a bit more discrete in warning the Senate of America's imminent descent into anarchy without the almost instantaneous passage of his unscrutinized 7 page TARP measure, it still had the overall unintended effect of dragging the problem out into the light of day, precisely where cockroaches politicians fear to tread. Conveniently, creating a sense of urgency through exaggeration was precisely what D.C. needed to ram this boondoggle through Congress.
Moving on now. By placing these assets in the conservatorship of the the US government who, by the way, failed specactularly in preventing just such an economic calamity in the first place, we are assured that they will be expertly assessed so that you, the enthusiastic taxpayer, will be given the distinct pleasure of paying 50-90% too much for a security that has no fucking chance in hell of finding a new home. We can't be using accounting methods that work against banks, like mark to market - oh no! Perish the thought of actually valuing an asset at its current market price. Why not speculate that in 3-5 years, an MBS MIGHT be worth two to three times as much. On the flip side, it might be worth fuck all and was bought at a premium. Yeah, that sounds like a plan! Experts claim that this would render most banks insolvent instead of flush with cash as they currently stand. The fact remains: we will overpay for the assets, they will never recover the value they once held and you will be on the hook for them.
I think we all knew it would come to this eventually. I've explained in previous posts how the only feasible manner by which struggling assholes who bought more home than they could afford buyers could remain in their homes was through this kind of legislation. Home values are really the key to understanding the problem and how cram downs purport to stem the tide of foreclosures.
Americans have come to regard their homes less as abodes--places where one puts down roots, raises a family and grows old--and more like stores of wealth to be tapped whenever they desired a new snowmobile or Caribbean vacation they otherwise couldn't afford. Now that this seemingly unending source of wealth is, well, ending, homeowners are realizing just how underwater they truly are. Underwater in this case means that a good number of Americans (most in fact) owe more on their mortgages than the house is worth. This turn of events has brought an entire industry to a standstill. Profligate spenders that they are, millions of homeowners borrowed against the value of their homes with HELOCS or simple home equity loans. Now that JPM, BofA, Wells and most other major banks have cut off home equity loans entirely, spending on plasmas and new cars has practically grinded to a halt. Enter the cram down:
Under the legislation, borrowers could have the principal balance on their home loan reduced by a bankruptcy judge - a move known as a "cram-down."
After stalling in Congress last year, the legislation has gained traction in recent weeks due to the change in power in Washington and the growing perception that mortgage servicers have not done enough to help strapped borrowers.
Without a "cram down" of the principle borrowed amount, most homeowners will continue to fall behind--either intentionally or unintentionally. Some will simply stop paying because they know their home is worth much less than the amount borrowed, and hence, offers no real upside. Others will be foreclosed upon because the payments are simply too high regardless of a desire to keep up on them. In both instances, the buyer probably bought into a home that was 40-50% overpriced to begin with, and as if that wasn't enough, probably lied about their income which enabled them to purchase that 5000 square foot home on a janitor's salary.
Once the principle loan amount is crammed down, buyers will presumably be able to swing the new, lower payments. Of course this begs all sorts of questions, like what about the millions of people who have been canned in the last couple of months? What if the cram down still doesn't bring the payment down to a manageable level? Will people begin defaulting anew? Sure looks that way. And how the fuck does some mangy judge determine a fair price for a home that has no market? Comps? Yeah, that should be good for some laughs. Maybe we can assign David Lereah and Lawrence Yun that task. And most importantly: who is going to make up the difference between the amount the judge sees fit to reduce and the actual loan amount? Well, you are, of course.
This is the part where you, the taxpayer, gets something crammed . . . straight up your ass that is. You didn't think the US government was going to allow the banks to take a loss on these toxic loans, did you? I mean, they've got MBSs tranched out to all corners of the globe and to investors who are far more important than you. At some point, these increasingly impatient investors in slimy strategic investment vehicles want their money back or they'll simply stop lending to us. They know that you're mostly complacent vegetables who will willingly give your money to the same banks that have fucked you over with $2 ATM fees and closing costs.
And the best is yet to come. Your scumbag neighbors--the ones that have 6 kids and 5 cars parked on the lawn--they'll be paying 20-30% less for the same home and it will all come at your expense. Enjoy America-You Deserve This!!
At what point will you worthless pieces of shit seize your country from the clutches of the corpo-fascists and restore a modicum of dignity to its sullied reputation? JPM, BofA, Citi, State Street and all the rest are bleeding out from self-inflicted wounds, and yet Washington has no misgivings whatsoever about recapitalizing them with your tax dollars just so they can turn around and jack up your interest rate to 36% and saddle you with exorbitant late fees. Hell, they'll probably even refuse to lend you your own money for an an auto or student loan.
I wonder . . . what will be the straw that finally breaks the camel's back? Is anyone awake out there? Americans don't yet appear to be chafing under the harness of a corrupt government corporatacracy that has imperiled their future along with that of their children and grandchildren. Is it self-deceit, complacency or just plain ignorance? Either way, the average American's tolerance for having immeasurable humiliation heaped upon him is truly something to behold
Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet -- only this time, it's the taxpayers who are getting screwed.
Even though the bank's stock is as cheap as a gallon of gas and it's burning through a $45 billion taxpayer-funded rescue, the Citigroup's execs pushed through the purchase of a new Dassault Falcon 7X, according to a source familiar with the deal.
The French-made luxury jet seats up to 12 in a plush interior with leather seats, sofas and a customizable entertainment center, according to Dassault's sales literature. It can cruise 5,950 miles before refueling and has a top speed of 559 mph.
There are just nine of these top-of-the-line models in the United States, with Dassault's European factory churning out three to four 7Xs a month.
Citigroup decided to get its new wings two years ago, when the financial-services giant was flush with cash, but it still intends to take possession of the jet this year despite its current woes, the source said.
Today's announcement that Citigroup will be purchasing a luxury 12-seater Dassault 7X jet for a reported $50 million sure has Americans hot under the collar, but will they actually revolt or just bluster a bit and let it slide? I think we both know the answer to that. I want you assholes to remember this moment while opening that letter from Citi wherein you are informed that your credit limit has been slashed in half (not entirely a bad thing) and your interest rate has been increased by 50%. At that very moment, some corporate thug will be flying overhead--off to the Caymans to bang his secretary at a 5 star resort on your dime. Oh well, go back to your Gossip Girl. One day soon, when you're Social Security and Medicare entitlements have been whittled down to nothing, you'll understand the price of inaction.
You don't have to dig very deep to find abominations like this nowadays. This is the kind of story that jumps right out at you and confirms the worst preconceived notions that many around the world harbor about our money-obsessed culture. The US has been reduced to nothing more than a cold, steely meat grinder that chews people up and spits them out with no compunction whatsoever; and WWII veterans are no exception. It makes me wonder if the corporate ethos will ever hold the value of human life above that of profit.
BAY CITY, Mich. -- Officials in central Michigan say a 93-year-old man who owned more than $1,000 in unpaid electric bills froze to death inside his home -- where the municipal power company had restricted his use of electricity.
I'm no dippy, flag waving Toby Keith-type yokel, but I still believe that a man who likely risked having his head blown off by Nazis in the Black Forest deserves a little more respect than this. I faced a life and death situation for one brief moment in my life and it wasn't something I wish to relive anytime soon. Now, can you imagine what it must be like getting up each and every day knowing that it may be your last? That requires a level of courage that most of us are completely lacking.
But then again, who the fuck are we to judge the good folks at Bay City Electric Light and Power? If one or two seniors happen to slip through the cracks and freeze to death . . . aaahhhhh - no biggie! It's not like he did anything exceptional in his lifetime. And hey, to hell with that old coot. Most 93-year-olds who aren't residing in "assisted living villages" are lucid enough to pay their bills on time and in full. If he wasn't crapping his pants, he was fit to pay his bills. Besides, Social Security, on top of the Nazi gold this guy obviously looted while serving, afforded him a life most of us can only dream of. I mean, look at that house. Don't tell me this guy wasn't the original moneybags.
To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West — know that your people will judge you on what you can build, not what you destroy.
-Translation: To our petro-overlords . . . we covet the black gold buried deep under your parched lands, and as such, we will continue to feign respect and tolerance for your backward, troglodytic ways. We now understand that you will not submissively forfeit your natural resources no matter the amount of munitions we expend. As a new, inexperienced president, some may be tempted to test my mettle. I assure you that I am more reasonable and pragmatic than my predecessor, but if you so much as jaywalk in lower Manhattan, I will not hesistate to reveal my inner warmonger and unleash the world's most potent killing machine on your largely innocent people. And remember, your usefulness will be judged on the basis of how much oil you supply to America priced in US dollars.
To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds. And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders; nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it.
-Translation: To the people who have for so long been trampled under the boot of American imperialism, we wish to offer this small, insincere token of our -ahem- gratitude for allowing us to pillage your natural resources and exploit your financial systems to satisfy our neoliberal agendas. The US, working closely with its globalist partners like the IMF, WTO and World Bank, will insist that you privatize your schools so that your children become as feebleminded and docile as their American counterparts. Through economic arm twisting, we will compel you to open your arable lands to the likes of Monsanto, ADM and Cargill so that you may become dependent on their genetically modified terminator seeds. And lastly, you will be asked to privatize your water distribution systems as was attempted in Bolivia, Argentina, India, South Africa and Morocco.
And to rich, first-world countries that have exploited your neighbors' natural resources for financial gain for centuries, we must realize that our jack-booted tactics may have caused these peasants dignified human beings to expel our multinational companies and commit the ultimate injustice of -GASP- nationalizing their resources. This simply cannot be allowed to happen.
We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.
-Translation: Despite a rampant culture of gross incompetence among our leaders, financial criminality on a scale heretofore unheard of and persistent military failures in field afar, the US somehow remains the most prosperous, powerful nation on Earth. That is to say, we have excelled in spite of ourselves!
Our workers are just as fat, lazy, uneducated and self-interested as they were when this crisis began. Perhaps we are more concerned for the future of our overpriced homes and plasm TVs now that jobs are being shed by the millions, but overall, they are the same buffoons they've always been. Our "innovative minds" are still producing clunky cars, cut-rate electronics and mortgage backed securities (but we make one hell of a Caramel Macchiato) and those goods and services, despite causing many of our economic woes are, still in demand. Our capacity to produce cheeseburgers and complicated financial whatchamacallits remains intact. But our time of foolish pigheadedness, of allowing special interests - cough, cough mmmmIsrael - to openly dominate this country's domestic and foreign policies must be better concealed and shielded from public scrutiny.
Starting today, we must spend trillions of borrowed dollars rebuilding this farce of a country. We must attempt to convince the rest of the world that the United States is a country worth investing in, and not a financial black hole where money is lost forever.
The "creepy factor" in this video is really off the charts! Bestowing mythic status on anyone is dangerous, but bestowing it upon an untested junior senator is something else altogether. I don't expect Obama to degenerate into some genocidal maniac with ultra-authoritarian tendencies, but the unquestioning loyalty he commands is frightening in that America's celebtards would willingly do his bidding should he use economic weakness as a pretense for taking us to the extreme left.
I was reduced to watching the inauguration on my computer at work, and even between streaming video buffer pauses, I could make out Rev. Joseph Lowery's rather peculiar if not somewhat insulting line from the benediction. For those of you who missed it, here's the (partial) transcript:
Help us then, now, Lord, to work for that day when nation shall not lift up sword against nation, when tanks will be beaten into tractors, when every man and every woman shall sit under his or her own vine and fig tree, and none shall be afraid; when justice will roll down like waters and righteousness as a mighty stream.
Lord, in the memory of all the saints who from their labors rest, and in the joy of a new beginning, we ask you to help us work for that day when black will not be asked to get back, when brown can stick around -- (laughter) -- when yellow will be mellow -- (laughter) -- when the red man can get ahead, man -- (laughter) -- and when white will embrace what is right.
Let all those who do justice and love mercy say amen.
AUDIENCE: Amen!
REV. LOWERY: Say amen --
AUDIENCE: Amen!
REV. LOWERY: -- and amen.
AUDIENCE: Amen! (Cheers, applause.)
END.
Now I understand that the old coot is half out of his fucking gourd, but I'm not sure that referring to people as "yella" & "red" is in keeping with the tone of racial unity (did anyone run that past the Prez beforehand?) Nor do I think that asking "white to embrace what is right" was wholly intelligent considering that white voters put him in office. Had they opted to embrace, i.e., vote for, the dark side (one can only assume that's McPalin), we would be on a collision course with certain disaster, as opposed to the promising path we set upon immediately after Obama was sworn in.
Just out of curiosity, when was the last time someone overheard a driver, pilot, etc. ask a black man or woman to "get to the back"? I always heard that growing up in rural Southwestern Colorado, but we was mainly ignant crackers. Since we've opened the floodgates, I thought I'd run a few slogans by you and see how you think they'd be received:
And when . . .
Black will get on track
Black will stop using that smack
Black will stop the attack
Black will stop selling that crack
I'm guessing those would have gone over quite well at a McCain inaugural. Half of DC would still be smoldering and white bystanders would still be piling into emergency rooms for heroic measures. With all due respect, fuck you Reverend Lowery. I don't much give a good fuck that you're old, senile or simply drawing upon some adage that was bandied about during the civil rights movement. A black man was sworn in as president primarily because white Americans came out in huge numbers to support him. Now, go have a stroke and get the fuck off the planet!
I'm not sure how or why this asshole is still relevant, but the MSM simply refuses to let him drift quietly from the celebrity scene. His acting is on par with the that of Jessica Alba and his comedy routines grow more mundane by the hour. Yeah, the up/down hummina hummina cadence and whiny delivery were mildly amusing once upon a time, but what have you done for us lately? I hope you'll dig deep and come up with something better than this:
While I'm normally the biggest fan imaginable of raw sarcasm and good ol' fashion hostility, his schtick seems to be in a constant state of tired rehash. His world view is hopelessly obscured with questions of race and the myriad ways in which it renders his privileged life infinitesimally more difficult. Rock also proves that bigotry isn't the sole provenance of Caucasians with every thinly veiled "Yes Massa" joke" he spouts for the self-deprecating politically correct "crackers" who lap that shit up. Rock is a master at couching his hatred for "the white man" in humor, but that doesn't change the fact that he's a prick in his own right, and no number of Rock apologists will change that. People feel obligated to laugh at his clumsy race relations diatribes as if they were being elbowed in the ribs by the producers and threatened with banishment to the unenlightened comedic netherworld.
His latest remarks about Barack Obama confirm what many of us have suspected: making fun of Barack Obama will be strictly off limits, and not for a lack of good material, but rather because he's black. Welcome to post-racial America, right? I'm sure if we dug deep enough in the Chris Rock archives, we could find him cracking on Mother Theresa, the Pope and Stephen Hawking. But busting on Obama? Perish the thought!
Chris Rock: He's just one of those guys, you know, like Will Smith. There's no Will Smith jokes. There's no Brad Pitt jokes. You know, what are you going to say? "Ooh, you used to have sex with Jennifer Anniston. Now you have sex with Angelina Jolie. You're such a loser." What do you say? "Ooh, your movies are big. You make $20 million." There's nothing to say about Brad Pitt.
CNN: Why is Obama like that?
Rock: It's like "Ooh, you're young and virile and you've got a beautiful wife and kids. You're the first African-American president." You know, what do you say?
I'm gonna sleep on this one, Chris, and get back to you tomorrow . . .
As the scope and magnitude of this financial mugging become apparent in the coming months, many of you might be tempted to engage in desperate acts of violence, namely looting and rioting. Some of you may even decide to experiment with something a little more risque, like sedition and/or anarchy. Far be it for me to judge. On the contrary, I would encourage you to ride the waves of anger and resentment wherever they may take you. But before you conceal your face with that bandana or pour your first Molotov cocktail, please remember that social unrest is better when carried out in a well-planned and deliberate manner.
That's why I've compiled this Q & A list of things you can do to make insurrection more enjoyable and prosperous for you and your fellow mobsters:
Q: Where do I start?
A: This is probably the most common question we receive. Just follow these three simple rules and your uprising will be better for it.
1. For the love of god, do NOT burn down your own hood/ghetto/district. Your neighbor may be an asshole, but he isn't the one with his boot on your neck. Besides, he's a broke ass motherfucker just like you. Better to head across town and burn down entire gated communities. Of course you'll have ten times the number of police to contend with as their unspoken obligation is to protect the wealthy at all costs, but that's the price you'll pay for being thrust into the national spotlight. Besides, order will eventually be restored and you'll need a staging place for your next treasonous acts. Hard to conspire in a burned out tenement . . .
2. Don't go to the trouble of looting plasma TVs and computers. Your depredations should focus on handguns and jewelry. You'll need small, highly portable objects that will fetch a handsome price on the black market. Besides, you can use that Glock 9 to get most anything you want if the market becomes too saturated. *TIP: don't forget the bullets!!
3. While you're fucking around smashing windows and turning over cars, the real objectives targets are cowering in the basement or trying to reach the roof for helicopter extraction. Don't take your eye off the ball. Years of inbreeding and a lack of manual labor have cursed wealthy aristocrats with lithe necks that snap easily in a noose drop. Failure to terminate the elite will only result in servitude down the road.
Q: Rioting is about justice and being heard, right?
A: Wrong! Rioting is about exacting revenge on those who have more than you and refuse to share it. Go to law school and accept a low-paying position with the ACLU if you're an idealist. Rioting is about a disproportionate reaction to one or two isolated events that normally culminates in pain and suffering for all but those who are responsible for the act. But don't let that deter you. Rioting is about low-minded hooliganism that aspires to little more than inflicting pain on anyone resembling "the man"!
Q: The police are the enemy and must be dealt with severely
A: While law enforcement officials generally represent the established order, they are in all actuality, just immature sociopaths who get off on discharging their weapons, and possibly killing the occasional perp simply to know what it feels like. Many of them are frustrated war veterans who never saw much action and know that their best chance to kill people within a legal framework is with a badge. And make no mistake, they are drooling at the prospect of putting a bullet between your eyes.
Remember, don't take your eye off the ball. Sure, drop kicking some Barney Fife type would be good for a yuk or two, but bankers, lawyers & politicians--these are the people you want to hunt down like the dogs they are. Tangling with the cops will only get you a good beat down and a pepper spray surprise. These troglodytes live for this kind of knuckle dragging fun. Please, don't be this guy:
At least America's seniors have sizable nest eggs in the form of savings, pensions and 401Ks. Surely those will tide them over until the economy picks up steam. Whoops! Those were mostly zapped back in October and November-- remember those 600-700 point losses on sheer panic selling? Somewhere a short seller is teeing off at Pebble Beach and driving a Maserati because your foolish pride and ignorance compelled you to hold Fannie and AIG when Wall Street outsiders were telling you to unload.
But you weren't about to let some know-it-all wiseacre like Peter Schiff or
Nouriel Roubini tell you that the market was headed for a crash. Nope, Cramer told you to stay the course and that's exactly what you did. He told you that there was nothing to fear because America's financial system was the class of the free world. Hank Paulson told you that its flexibility and transperancy were the envy of investors the world over. Unfortunately, he forgot to tell you that it was precisely that flexibility--the flexibility to not be transparent if so desired-- that will ultimately bring about our demise.
But at least their homes are still increasing in value at 30% annually. DOH!! Looks like those shoddily built cookie cutter piece of shit aren't the ATMs they used to be. But how could a few bad mortgages possibly contaminate the entire global financial network, you sheepishly asked. It's just a blip because the smart guys over at CNBC told you this would amount to nothing more than a slight, V-shaped recession. You'd be back on your feet in no time, right? Hate to break it to ya, gramps, but your artificially inflated home price is never coming back and no one will let you borrow obscene amounts of money against it ever again.
401Ks & pensions are mere shadows of what they were a few short months ago, and home prices are still tumbling, so what wealth remains? Material possessions are losing value faster than you can say "Depends Undergarments", so forget the pawn shop angle. Some may eventually be reduced to hawking grandmother's diamond broach, but that's small change when taking into account the magnitude of debt. And even if some happen to be among the few "debtless" Americans, how will they adapt to such a vastly reduced standard of living? My guess would be not all that well, especially in light of American ego frailty and an utter lack of humility.
WIth nothing left to lose, it is my contention that senior citizens will sooner check out than face that humiliating trip to the welfare office, or worse, make the gut-wrenching call to their kids asking if they can occupy the guest bedroom for, well, the rest of their lives. I think this trend will pick up momentum as the crisis reaches a fevered pitch around July '09. Not only will we see an uptick in suicides, but we'll begin to grow accustomed to stories of rampage shootings and other crimes of desperation. It's only a matter of time before some story surfaces where a bank executive accepted bailout money, blew it on lavish trips, fancy clothes and prostitutes while much of working class America was struggling to put food on the table. That kind of story will be what lights the fuse. More on that in my next post . . .
