The Wall Street Journal‘s latest headline is “Fannie Mae Loss Balloons; Says Needs Treasury For Survival”. Obviously. But not so obviously, who does Treasury need for survival? Choose one from the multiple choice selection below.
- The taxpayer;
- The printing press;
- None of the above.
The story, sourced from the Dow Jones New Wire said:
Fannie Mae (FNM) posted a sharply wider second-quarter loss on $18.8 billion of credit-related impacts as delinquencies continued to surge and the company admitted it is reliant on the government’s help to stay in business.
The mortgage financier, placed under conservatorship in September to prevent its potential implosion, requested another $10.7 billion of aid as part of the $200 billion package extended to Fannie. It has received $34.2 billion so far.
“Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury,” said Fannie in its quarterly report, filed late Thursday with the Securities and Exchange Commission. “As a result, we are dependent on the continued support of Treasury in order to continue operating our business.”
I think the correct answer is number 3. None of the above. Treasury needs to redefine the problem of Fannie Mae, not simply ask for more tax dollars or print more money. Maybe Fannie Mae is part of the problem and writing it a bigger check doesn’t really help. That would put a wholly different construction on the headline.
embedded by Embedded VideoYouTube Direkt
Tip Jar or Subscribe for $5
Does this mean the folks at Fannie Mae and Freddie Mac who got bonuses will have to give them back? Don’t I wish. F
Hi Richard,
Obviously, financial institutions which have left of center support live by a different set of rules than those that live in a more capitalist world.
But in the end, Fannie Mae is just another bank. The difference is, it probably won’t be closed – but continue to serve as a channel for government money into the general housing market.
Now, all that is left are the mortgages held by Fannie Mae, and the bond holders who expect to be paid back. That’s a lot like the holders of savings accounts at a typical bank, in that the holders expect low returns with a government guarantee.
The government guarantee was never explicit. It was never spelled out which portion of the capital structure was guaranteed and which wasn’t.
When Fannie Mae went bankrupt last September, the government (Paulson) had to decide. Common stock holders get wiped out, bond holders get saved. But what happens to the preferred stock holders? Paulson decided to have them be wiped out as well.
Lehman Brothers was holding Fannie Mae preferred stock as Teir 1 capital. With that loss, they were bankrupt as well. That in turn brought on panic and mass selling. That in turn elected Obama. Would you like to be the one making such decisions?
James
Check out O’Reilly with the giant manliness going on.
Fannie Mae looks to me like a kind of energy transfer machine that impoverishes some and empowers others. It did something in the recent past. And from the looks of it, it is still doing something. The big question to me is what is that something? Once that is known, the amounts that keep those events in train are a secondary consideration. From my relatively uninformed standpoint that “something” it is achieving is another bubble that squeezing itself through the system.
Wretchard,
That energy transfer machine was really a wealth transfer machine. It is still going on. There is a boom in the lower end housing market with FHA government guaranteed mortgages that only require 3 1/2% down. We’re still subsidizing and guaranteeing millions of mortgages that will go belly up. An internal memo at Wells Fargo seems to think that next year the FHA home loan will be the only game in town. Conventional mortgages will be scarce and jumbo- forgetaboutit! Hard money only.
Interest rates must rise. Market Ticker is reporting that almost half of last week’s huge $220 billion Treasury offering was bought by the Fed. That’s some real money printing. Hello dollar devaluation.
Shadow Housing Inventory: The Deception of the Foreclosure Numbers and the real REO Picture.
How 40,000 Homes are Hidden From Public View by Banks
—
Comment by Tallia:
Well it seems like people are finally getting it. Yes it is true there is a huge backlog – it is also true that they will NEVER release it en masse.
I serve as outside counsel for one such bank. When MTM was in place, I told them to cut their losses, sell as quickly as possible, get back to solvency ASAP.
As soon as we realized the defaults arent stopping anytime soon, we went to Capitol Hill and FASB, asked them to suspend MTM but still be in covenant with GAAP.
That changed everything for us. By our reckoning if we get 80% default @ 60% loss rate, our total loss will be 14B. Thats doomsday scenario & would wipe them out at once. Thus their plan now is to spread that loss out over 24 years if necessary. Moreover, thanks to relaxing MTM, they can do it, all the while ekeing out the smallest of gains.
wretchard
I’m a bit of a history nut and i’ve read far too many books.the last year of the third reich is something i could never understand-the scheming and struggle to achieve power while the whole thing was collapsing around them.everybody was trying to succeed Hitler when there obviously wasn’t any Nazi going to succeed him(not with the Red Army and Allied armies closing in).i believed that there was something peculiar to those people at that time that blinded them to reality.Now i’m thinking that maybe they weren’t so peculiar after all.
i believed that there was something peculiar to those people at that time that blinded them to reality.Now i’m thinking that maybe they weren’t so peculiar after all.
The interesting thing about current events is that they were wholly predictable. A being from Mars could have foreseen that the stimulus wouldn’t work, that the bailouts would end badly and that the whole train that was set in motion was headed for a smash. But events are still coming as a surprise because the things that reason projected were unimaginable. They went against past experience. Things worked yesterday and so they must still work tomorrow. Expectations are based on an emotional grounding, not necessarily on a factual one. We often expect things long after they are no longer forthcoming, or even possible.
It’s natural that politicians should still aspire to be “Speaker” and “Committee Chairman” even when things are tumbling around their ears. Only at the very, very last will a kind of belated concern grip them. This lagged realization is dangerous because it makes people misjudge many things.
I think events will speed up for two reasons; first because the catastrophes that the Obama administration has seeded will soon show up as real economic pain, a foreign crisis or in political high-handedness; and second, the lagged realization will distort the response. They’ll be pouring gasoline on the fire because they simply can’t accept that the deck is burning.
Yet, given the size and stability of the ship, even speeded up things will simmer on a while longer. So it will go. But when the first big shudder is felt, the real danger is that after long underreaction there will be a pent-up overreaction. Right now we’re seeing Tea Party people being shut out of Town Halls. This is the denial phase, like the first half hour after the Titanic struck the ice. It’s what comes afterwards that is potentially worrisome.
Reg,
Rommel agreed to succeed Hitler in an assasination plot which failed.
He purpose was to surrender to Us before the Red Army arrived.
Abusive mortgage servicers profit from government help
WASHINGTON — Billions of dollars the government is spending to help financially pressed homeowners avert foreclosure are passing through — and enriching — companies accused of preying on the people they’re supposed to help, an Associated Press investigation has found.
The companies, known as mortgage servicers, are middlemen who collect monthly payments from homeowners and funnel the money to the banks or investors who hold the loans.
The biggest players in the servicing industry —Bank of America, Wells Fargo, JPMorgan Chase and Citigroup— all face litigation, some of which has led to settlements with homeowners. All will receive federal money to modify loans.
The Levee’s Gonna Break
Bob Dylan
If it keep on raining, the levee’s gonna break
If it keep on raining, the levee’s gonna break
Everybody saying this is a day only the Lord could make
Well, I worked on the levee, mama, both night and day
I worked on the levee, mama, both night and day
I got to the river and I threw my clothes away
I paid my time and now I’m good as new,
I paid my time and now I’m as good as new.
They can’t take me back unless I want them to
If it keep on raining, the levee’s gonna break
If it keep on raining, the levee’s gonna break
Some of these people gonna strip you of all they can take…
If it keep on raining, the levee’s gonna break
If it keep on raining, the levee’s gonna break
Some of these people don’t know which road to take…
Some people on the road carrying everything that they own
Some people on the road carrying everything they own
Some people got barely enough skin to cover their bones…
I woke up this morning, butter and eggs in my bed
I woke up this morning, butter and eggs in my bed
I ain’t got enough room to even raise my head.
Come back, baby, say we never more will part
Come back, baby, say we never more will part
Don’t be a stranger with no brain or heart
If it keep on raining, the levee’s gonna break.
Fannie Mae is a criminal enterprise.
The “Stimulus” package is a criminal enterprise.
Cash for Clunkers is a criminal enterprise.
The Treasury Department is a criminal enterprise.
Health Care Reform is a criminal enterprise.
Pork barrel spending is a criminal enterprise.
Cap and Trade is a criminal enterprise.
Global Warming is a criminal enterprise.
TARP is a criminal enterprise.
Congress is a criminal enterprise.
The White House is a criminal enterprise.
Bob Dylan again:
In you, my friend, I find no blame
Wanna look in my eyes, please do
No one can ever claim
That I took up arms against you
All across the peaceful sacred fields
They will lay you low
They’ll break your horns and slash you with steel
I say it so it must be so
Now I’m down on my luck and I’m black and blue
Gonna give you another chance
I’m all alone and I’m expecting you
To lead me off in a cheerful dance
Got a brand new suit and a brand new wife
I can live on rice and beans
Some people never worked a day in their life
Don’t know what work even means
Meet me at the bottom, don’t lag behind
Bring me my boots and shoes
You can hang back or fight your best on the front line
Sing a little bit of these workingman’s blues
If it’s time for Lexington and Concord Redux, I’m prepared to fire my musket. I’m prepared to be Crispus Attucks if that’s what it takes. I want my country back.
If it keep on raining, the levee’s gonna break.
Revolution 2.0.
Somebody kindly report me to the snitch line, as I’m getting fishy.
It is beyond any doubt or challenge: whoever is posting as Peterike above (Post #12) is clearly posing, and has to be an agent provocateur. The hack to Pajamas Media (it definitely involved more than Richard’s area) was an attempt to disrupt amounting to a deliberate denial of service. Even though it didn’t succeed in completely choking the site…
On the other hand, if you really are Peterike, I suggest you develop a code or write in Pig Latin to avoid detection.
If, as Wretchard says, a being from Mars could have foreseen all these things, then why has Obama pushed them so hard? (BTW, that Martian can also foresee the catastrophe Obama’s health plan will produce.)
Is it because the Obama team is thoroughly convinced that their plans WILL work? Or is it because they don’t really care whether they work, because their true agenda is something different? Or is it that they calculate that by making things worse, they will hasten some other outcome that is the most important to them? Or are they merely grandiose, inexperienced, or incompetent? Or are they covertly trying to ruin things on purpose?
This is a great mystery to me. I’ve given it much thought and would have preferred my original conclusion that they are merely grandiose, inexperienced, and incompetent, as well as imprisoned by an ideology that sounds great but never worked. Those who live in a world of sentiment and who count intentions as more important than results fall into this category.
However, as time has passed, as one destructive initiative after another is proposed and we are pressed to enact it before anyone has a chance to think about it, and as flag.gov emerges, I no longer believe in my earlier hypothesis.
It now seems to me that either there is an agenda different from helping the economy recover is being sought, or there is a wish (unconscious perhaps, or perhaps not) for the United States to fail. And that is a horrible thing to contemplate. Even saying it makes me wonder whether I am succumbing to paranoia.
Yet if there is a more logical hypothesis I would love to hear it.
“Right now we’re seeing Tea Party people being shut out of Town Halls. This is the denial phase, like the first half hour after the Titanic struck the ice. It’s what comes afterwards that is potentially worrisome.”
I am bothered by the loose ends around this man Obama. I keep going back in my mind to an old cohort of Bill Ayers, one of Obama’s friends, who testified that The Weathermen, led by Ayers, actually had a plan for herding all the dissenting folks into “re-education camps” lcated in the southwest. Those that could not be turned around would simply be eliminated. See, there might actually be a plan for all us bothersome types!
At Lehman brothers everyone lost except their borrowers (Fannue Mae). At Bear Stearns the small investors lost. At GM and Chrysler the shareholders and senior debt holders lost and the union one. At Goldman Sachs the senior management won. At Fannie Mae the senior management won. Is there any pattern to this? Only one that a good RICO prosecutor could follow. Every dime that has been transfered to anyone in senior management (yes I mean Jamie Gorelick and Howell Raines and Barney Franks’ special friend) by Fannie Mae and Freddie Mac over the last 15 years should be clawed back.
I’ve let Peterike know about the comment and will take action if necessary.
Richard
I have been wondering for awhile when the other shoe was going to drop. Then I realized that bad things happen in threes.
Unfortunately the commercial real estate market is likely to tank in that next 2 years when the prospects of refinancing at favorable rates falls apart.This will destroy a significant portion of the holdings of banks, insurance companies, and retirement funds.
The Fannie/Freddie firewall appears to be crumbling from the battering of reality. There is no chance that those loses can be made whole without devaluation and deception.The underlying assets of the securitized bonds have lost value. Forget about subprime loans, remember those derivatives products that were sold based on the core assets holding their value. That is when the money for the future inflation was already printed. It was called wealth creation back then. Now its nothig but a number value with no supporting assets. Tell this to the Chicoms. Except for the sad case of the CFO’s suicide it has been a struggle to keep the Fannie/ Freddie story off the front pages. Now it is oozing back like sewage into the water system.
The third leg of catastrophe is the runaway spending not on the economy but on the fanciful dreams of the political class that just bought their house at the height of the political market from the somewhat embarrassed republicans. None the less they want to redo the kitchen, bath and basement because they are determined to have the house of their dreams.
Welcome to the nightmare on Pennsylvania avenue. They could end this by simply waking up but then again no one from Hollywood wants to wake up in the middle of a gripping nightmare.
@1 F: “Does this mean the folks at Fannie Mae and Freddie Mac who got bonuses will have to give them back?”
I wish Raines, Waters, and B. Frank would give back their ill gotten gains backs.
@ 4 Wretchard: “Fannie Mae looks to me like a kind of energy transfer machine that impoverishes some and empowers others.”
[better description]
@5 Unsk: “That energy transfer machine was really a wealth transfer machine. It is still going on.”
I agree.
@6 Doug: “…it seems like people are finally getting it. Yes it is true there is a huge [Repo] backlog…” (and this relates to your #10)
Yes, clever accounting can keep Repos hidden for years – and it helps to have loan brokers and RE brokers willing to sweep them under the rug.
@8 Wretchard: “The interesting thing about current events is that they were wholly predictable… I think events will speed up for two reasons; first because the catastrophes that the Obama administration has seeded will soon show up as real economic pain, a foreign crisis or in political high-handedness; and second, the lagged realization will distort the response. They’ll be pouring gasoline on the fire because they simply can’t accept that the deck is burning.”
Actually, that is exactly what is happening by “spending our way out of a recession” and causing manufacturing to move off-shore. I will not go into inflation and interest rates.
America will become somewhat of a huge Walmart.
Sure, there will be a few one-off hi-tech manufacturing lines and certain military lines but like the steel industry most manufacturing will move off-shore.
There service industry will expand to a certain point then it will contract (Some parts of home building are actually “Service Jobs”).
Manufacturing is a critical part of the economy. Without it people compete for clerk jobs and other lower level service jobs in industry and the government.
The answer is less government intervention and useless regulation (such as the OSHA and the Community reinvestment act). The government’s tinkering exacerbates the natural waves of economic expansion and contraction. The government breeds cumbersome lawsuits and other undesirable items. Less, government is better.
Here is some humor based on Barney Frank and his cronies at Fannie and Freddie:
http://tinyurl.com/dy5wyx
In case the short URL does not work here is the real one.
http://www.thenoseonyourface.com/conservative-satire/retro-nose-cuckoos-nest-ii-the-housing-denial/
ledger,
It worked fine. Rarely have I seen something done so well. It was a Gettysburg Address of satire.
And it was all true.
The “editor” seemed to clock out early.
(First part fixed)
@1 F: “Does this mean the folks at Fannie Mae and Freddie Mac who got bonuses will have to give them back?”
I wish Raines, Waters, and B. Frank would give back their ill gotten gains.
“Right now we’re seeing Tea Party people being shut out of Town Halls. This is the denial phase, like the first half hour after the Titanic struck the ice.”
Woodstock – 40 years later
Just because they’ve got white hair now, we really need to remind ourselves that the Tea Party protestors who are currently disrupting the best-laid plans of mice, men and messiahs ARE the very same people as who over-threw a government, stopped a war, and impeached a President 40 years ago, when they were in their 20’s.
Obama is messing with the Baby Boomers. And the Boomers have *always* gotten their own way.
Always.
I think the Boomers are just as annoyed now with Mr. Obama as they were then with Mr. Nixon, and, actually, for a lot of the same reasons (can you say “enemies list”?).
I will be surprised if Obama makes it through his complete term of office. I will further be surprised if the unions – especially the Detroit car-based ones – continue to thrive.
This is gonna be fun.
Unsk @5
The Fed buying all that debt last week doesn’t sound true. The Fed explains its purchases here:
http://www.federalreserve.gov/releases/h41/Current/
Its been buying a pretty steady $9 Billion/Week for quite a while. Many of its positions in other markets have been contracting at the same time. You can see the affect on the monetary base here:
http://www.federalreserve.gov/releases/h3/hist/h3hist4.txt
(Scroll to the bottom – 5th column over from the date. Its $1.66 Trillion right now).
I’m probably considered crazy in this forum, but I think the Fed’s actions have been reasonably good the last few months.
James
Lotm, good. I am glad you liked it.
I am using an older XP machine which has some regedits. It acts up when using the Fire Fox tiny url plug in. I went the the actual Tiny url site to make sure – and it gave a different url.
ledger,
Nose on your Face – hilarious, but true. And we are all Jack, locked up in the fun house with the Dems.
That clip of O’Reilly and Franks is not the most illuminating. The best one was removed from Youtube and detailed the unflagging efforts of certain Congress critters to blunt the Bush administration’s attempts to bring Fannie & Freddie under control.
6. Doug; Far more than 40,000 homes hidden from view. Millions of ‘em all across the country. The second wave is upon us, just starting, and will go on for years, finally ebbing in 2011. By then the commercial real estate bubble will be bursting.
Meanwhile, here in Los Angeles and across the country I’m sure, millions of ‘Stimulus’ money has been allocated to provide silent second mortgages to home buyers on easy terms. Funny thing is, nobody seems to know about them, only two such loans have been made in LA, but the money is there.
8. wretchard: The Obama administration is sowing the wind, and will likely reap multiple whirlwinds at the same time. I grow ever more frightened as this train wreck unfolds.
14. Batman; To harp on my favorite theme (why should Whiskey be the only one? (Pace, Whiskey)), it’s all about power. Better to rule in Hell than serve in Heaven, better a small economy skimmed by a few than a large economy skimmed by many. Wherever Socialism has become the dominant political system that is what we see happening. I believe that what we are witnessing in the nationalization of private industries is intended to pay off supporting constituencies. There are many, I’m sure, who sincerely believe that Socialism is the true wave of the future, but always the practice of it boils down to two active principles: coercive control and pillage in the name of the many for the benefit of the few.
Batman @ 14
Sadly my opinion is that the objective is simply to create a 50% dependency on the government in whatever form works. “Works” meaning only that the voter is more worried about a candidate who says taking away one’s particular dependency drug (or limiting it in any way) is the only way to fix the real problem than the candidate that promises to keep giving them the fix even if they’re smart enough to know that it is too good to last.
“Works” has nothing whatsoever to do with results other than that stated above.
By now it is clear that there is only one party that will keep making those promises even while the ship is going down. This ensures continued control of the ship. These captains seem to believe that only the passengers will drown when the ship actually goes down. Somewhere there must be a waiting helicopter to take those few worthy souls off at the last minute.
It’s probably a little too early to know if it will work.
19. ledger; “Yes, clever accounting can keep Repos hidden for years – and it helps to have loan brokers and RE brokers willing to sweep them under the rug.”
Nope, it’s the banks themselves. Loan brokers and RE brokers don’t get paid unless somebody buys something. If it’s hidden it’s not being bought by anybody and brokers don’t get paid. My estimate is that between 75-85% of foreclosed property is in the shadow inventory and is NOT on the market. As a Realtor I cannot fathom what they are thinking. It reminds me of nothing so much as naughty children who’ve broken something and are trying to keep the pieces hidden so Mom doesn’t find out and punish them.
@26 J Charles, I am glad you like it. There is a grain of truth to the satire.
On a serious note, @24 the first Fed table is not clear. The numbers are averaged and there a lead-lag relationship that exists in the Fed’s tables.
***
[First Fed table]
(In millions)
…………………..Week ended Aug 5, ’09…….Change from Jul 29, ’09
Fed agency debt securities (2) 106,837 + 2,771
Mortgage-backed securities (4) 542,888 – 1,619
foot notes:
2. Face value of the securities.
4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the remaining principal balance of the underlying mortgages.
***
One must remember face value of the debt may differ from the actual cost/value the Fed paid. Further, I am sure there is some shifting between the two categories (Fed agency debt securities and Mortgage-backed securities).
I think you will have to wait for a better trend to appear before saying the Fed is not supporting Fannie and Freddie.
Aircraft accidents are events that more often than not occur suddenly – sometimes without warning – such that the flight crew on the aircraft may never actually know the source of the problem. More often than not, around 70% of the accidents are attributable to pilot error and depending upon the rapidity of the accident, the occupants may or not be aware of the exact time when the aircraft ventured past the point of no return – when in retrospect it was always “there”. For those aircraft where the primary error contributing to the accident results from some judgment error, it may be clear to the pilot what he did, or failed to do, just before his “Aw shit” epiphany. Some accidents caused by structural failure, may have the pilot struggling against some unknown problem and without the knowledge of what actually failed, may cause the pilot to apply the exact opposite correction, leading to an aircraft attitude from which he cannot escape.
Additionally, there may be small but contributing “existing circumstances” that in and of themselves cannot cause disaster, and may not themselves rise to perception as dangerous conditions. Notwithstanding, dangerous conditions arising as singular voices, sung intermittently, may never pose a substantial threat; but over time they can worsen a predicament and together form a chorus that morphs with changing conditions into a cacophony of destruction. While we normally equate dramatic and tragic accidents with speed and violent impacts, there are some occasions where many causes can contribute to a much quicker and more horrendous accident than could ever have been expected. The story of the Edmund Fitzgerald sinking on Lake Superior in 1975 appears to have had just such a tragic and swift end:
http://cimss.ssec.wisc.edu/wxwise/fitz.html
“Factors contributing to the sinking:
Raising the wintertime load line.
When a ship is filled with cargo, there is a level at which the ship rests in the water. This level is referred to as the load line. The height load line is set as a function of season and determines the weight of the cargo the ship can transport. Between the time of her launch and its sinking, the SS Edmund Fitzgerald load line was raised 3 feet 3 1/4 inches, making her sit lower in the water. This increased the frequency and quantity of water that could flood the deck during a rough storm.
Leaking Hatchways
The ore was loaded through hatchways located top side. On October 31 routine damage was noted during an inspection and were [sic] scheduled for repair after the 1975 shipping season. The hatch covers were not sealed properly and were therefore not water tight, thus allowing water to enter the cargo areas. Once water entered it could migrate throughout the hold. There was no way to determine if flooding was occurring in the cargo bay until the ore was saturated, much like a sponge. Throughout the storm the ship was probably taking on water in the cargo hold though the hatches. Increased water loading, and the lower load line, made the ship sit lower in the water, allowing more water to board the ship. Eventually the “bow pitched down and dove into a wall of water (storm tossed high seas) and the vessel was unable to recover. Within a matter of seconds, the cargo rushed forward, the bow plowed into the bottom of the lake, and the midship’s structure disintegrated, allowing the submerged stern section, now emptied of cargo, to roll over and override the other structure, finally coming to rest upside-down atop the disintegrated middle portion of the ship” (Marine Accident Report SS Edmund Fitzgerald Sinking in Lake Superior).”
Reading that account of the probable demise of the Edmund Fitzgerald, a couple of thoughts jump out. The Skipper of the ship was incredibly seasoned (over 40 years of experience) with many voyages over the Gitche Gummee (Lake Superior), in all kinds of weather. Perhaps he actually knew what was happening, but gambled on hope to reach safe harbor before the end came. The Edmund Fitzgerald was, after all, a Titanic like – can’t sink – ore carrier. But perhaps also, the non-water tight hatches were simply forgotten in the calamity of the storm and the lowering in the water simply went unnoticed due the ferocity of the storm. But two things should have been checked knowing the state of the ship’s condition – the flooded cargo hold and the raising of the load line. Perhaps both were checked, but perhaps also the embarrassment of that initial oversight of so seasoned a Captain, may have prevented him from admitting the reality of the error to himself (and the Coast Guard) until it was too late:
Continuing…“This sequence of events would lead to a rapid sinking, with no time to make a distress call or attempt life-saving operations. The conditions of the recovered lifeboats support this in that they appear to have been torn from their storage racks.”
Upon reading that account, now failing to remember what led me to it, I was struck with an epiphany that revolves around the current financial difficulties and the apparent over-reach of the Obama administration in the speed at which he is changing the government – without proper oversight and, well…without permission. And to that point but perhaps even worse, is similar to what might have happened to the Edmund Fitzgerald. What is it that may be known by Geithner and Bernanke that they simply cannot admit, or refuse to do so? Worse, that for which they are intentionally planning, without a clue as to the true eventual outcome.
Reading the tea leaves and having an Ouija Board moment perhaps derived all too soon, I was startled by the question that came to me: How fast might the Edmund Fitzgerald of America…sink? How close may we be to a precipice that we are unwilling to acknowledge, with momentum too great to arrest?
And whom if anyone might have a deliberate hand in this outcome?
With this escalation of the recent roughing up of one of the attendees at the Tampa Town Hall meeting, I will pose that same question about the state of discourse between the elected and their benefactors. As an example, now comes this headline from the Politico concerning the White House’s response to this emerging reality:
“WH to Dems: Punch back twice as hard”
“If you get hit, we will punch back twice as hard,” Messina said, according to an official who attended the meeting.
I have a personal response to such provocation and it is not to “put flowers in the muzzles of their rifles.”
James @ 24,
The Fed used the primary dealers to buy the bonds. It is explained here:
http://www.chrismartenson.com/blog/fed-buys-last-weeks-treasury-auction/23880
Reading the tea leaves and having an Ouija Board moment perhaps derived all too soon, I was startled by the question that came to me: How fast might the Edmund Fitzgerald of America…sink? How close may we be to a precipice that we are unwilling to acknowledge, with momentum too great to arrest?
This is the key unknowable. And since at least I don’t know how to estimate it, the only approach that makes sense to me is to do two things: set up markers that will confirm or rule out effects whose existence we suspect and prepare for contingencies. In this context it means looking out for certain statistical indicators and perhaps even talking to people we know who are watching for certain signs. It also means organizing and making connections so that if a crisis hits, then a damage control team can go into action.
At the end of the day people can’t flee the places they live. Unlike the Edmund Fitzgerald, there is no shore to reach. The boat is the world. So this problem gets solved one way or the other.
Batman @ 14:
Just what I have supposed for months. What is the underlying agenda? It is not paranoia. (Remember just because you may be paranoid does not mean you do not have enemies!) The utter defeat of the US followed by……what? Full on dictatorship? That explains the siding with Chavez et. al. in reference to Honduras.
The ship is sinking and we are already past the point where we can save it from drastic actions.
Robohobo and Batman:
If what you suggest is true, an explosion at the Town Hall meetings, goaded by the Union “Brown Shirts” that are now apparently showing up all over the country, should be wisely avoided. Yelling at my TV set is a very safe gesture as my dogs “head for the hills”. So is my calming them down moments later. But such yelling at a Town Hall meeting and drowning out those who came to speak makes for great TV, but may simply be poor tactics. The Dems tactic is apparently to eschew those chanting as they approach the hall, and the muscle is there to close the door in their faces.
As per the links on the Drudgereport, we may be seeing a shift highlighted with the Dems “Hitting back twice as hard” and if covered by a fawning Obama media and even a union police presence, it begs more for maneuver tactics vice raucaus confrontation.
In other words, if you’re going to get knocked down by 3 or 4 heavy thugs, as some have reported, try to do it where there are lots of cameras. Many of the folks I see at these groups are about my age – some older, some younger, but none of them are in the same shape as a 35 year old stevedore who just got out of Arnold’s World gym.
Tactics are in order. The world ain’t fair.
Even saying that, we do not yet know how far they will go and it may be Obama’s intention to start hurting people just so they get “the message.”
Martin Luther King got knocked down a lot…but he won.
I think a key problem with the Left’s “When your goal is utterly lost sight of then redouble your efforts” approach is that they have never comprehended the “Design Margin” concept.
There is always more, more from … somewhere. You can pile on more and more regulations, more requirements, more special favors for your special people, more pork, more third party interlopers, more Congressional reviews, more welfare, more Politically Necessary Items … and the system will just shudder and keep right on going. If you hit an iceberg, then aim for more iceburgs. If a flock of geese knocks out the engines on your airliner then aim for more geese and that will keep you in the air.
At the root of this is not just the ignorance of people who have never had to actually produce anything that works, but also the arrogance of people who don’t think that matters. These are the people who subscribe to the “Era” theory of history – things happen because it is “time for them” in the same way that hemlines rise and fall and hair lengths change fashionably.
This is a view much favored by the Legal Industry. A judge makes a decision, a law is passed, a lawsuit won and things just happen. No one has to worry about where the millions of dollars are for the lady that spilled coffee in her lap comes from. The money is “out there” somewhere – it always has been and always will be.
Clearly, this is an item that’s directly on point for reporting to Big Brother–I mean to flag at whitehouse.gov. The fishy information, the disinformation, is this rumor that Fannie Mae is spreading that they need the Treasury to survive.
That the rumor–that Fannie Mae needs the Treasury–is prima facie false, as anyone with a third grade education in allowances and logic can see. This false rumor of Fannie Mae’s needs to be exploded, and who better to do so than our very own Big Brother?
Eric Hines
RWE @ 36:
“At the root of this is not just the ignorance of people who have never had to actually produce anything that works, but also the arrogance of people who don’t think that matters.”
Outstanding.
The story on the Fed monetizing the auction:
The action was in the 7-year paper — half the auction was picked up by the sixteen primary dealers which was, five days later, purchased by the Fed.
The previous auction was poor — plainly something had to be done about the longer paper.
BTW, the vast bulk of these auctions goes towards rolling over debt.
We haven’t really seen the tidal wave of fresh issuance, yet.
Perhaps we consumers–and institutions that we can convince–should stop buying the government’s debt. It’s rapidly becoming worthless. The disappearance of domestic buyers might make the point plain even to the Social Democrat Patricians in Congress.
Eric Hines
Looking at today’s headlines, one thing occurred to me:
The left is very sure about their continued hold onto power (forever).
Hence, they don’t care too much about the removal of masks, because in the end, dissents will be dealt with.
Indeed, the Social Democrats are sounding an awful lot like King George in re the Minutemen and the other Patriots. The New Left aristocracy have no need to listen to vox populi because they know better. And they’ve never been interested in hearing an opinion that’s different than their own–because they Know Better.
Eric Hines
the securitization mkt is the target of all the ‘hiding’ –unless it can be jacked up –some demand derived –the 1.8 trillion in commercial real-estate debt that needs to be rolled over in waves not just now but in 3, 5, and 7 years is just undoable. james is right the Fed has been light on ‘quantitative easing’ in the last few months –it had better be, with the mortgage rates so sticky downward. The 900 bbl in ‘off-balance sheet’ losses in the banks is the the turd in the punchbowl depressing demand for the needed securitization. This securitization is all about belief in the USA, Inc enterprise continuing to sail on ‘as-is, more or less’ into the future –and here the O admin is doing everything wrong it can possibly do and stay just inside ‘deniability’.
for example, many have long smelled the Russian mob/kremlin being involved with this admin (ever since “oil manipulation 2008″ evidence began surfacing) thru the person of avowed Dollar enemy and big-time Dollar short George Soros. So what do we get yesterday –as the tea party phenom threatens to boil over — but these two items, 1) a major russian oligarch recieves a $100m deal from the Stim program, and (2)the KGB’s hacker army shuts down twitter, and harms several other major net ops, under the thin cover of a misfired attack on some blogger in Georgia/Caucasus. They hit every social network site except …NewsCorp’s (Fox)!
RCM @ 35:
Answers to bolded text:
We must co-opt the Brownshirts for ourselves, the Patriots. As in “Serenity” – Mal Reynolds, “I aim to misbehave.” He went to Mr. Universe and got the message out.
I agree with the 2nd premise. Shouting and chanting will only draw the assassin’s sight picture, as it were. Calm, polite but forceful and pointed questions are the way to go. Come in quietly, sit down and ask to be called upon. ‘Loyal Citizens’ can be heard, if you whisper, it makes them listen harder to interpret what you have asked.
o/t, for the Kremlin file:
http://neveryetmelted.com/2009/08/05/russian-state-security-service-working-with-hezbollah/
WRT the incestuous swapping going back and forth in the “securitization markets,” it sounds to this poor uneducated sod like Check-Kiting on a Cosmic Scale
The authors and spokespersons for the current mandarin class seem like they learned their crafts in some Dickensian crowd of pockpickets, cutpurses, and other folk who decided early on they preferred acquiring wealth after someone else had done the hard work.
One lesson that came from running a bidness for a few years: there really are bastards who will work harder to screw you out of a nickel than they will to earn an honest dollar.
Much thanks to Doug, Blert and Buddy on recent financial insights. It is obvious to me that the shell games are beyond most folks and news systems. Any and all clues, marked as maybes when applicable are treasured.
I liked, the last (free) contraryinvestor: “a generational shift”, even without staking a destination claim. Over time always from debtor nations to creditors, the wealth, different methods, ends the same.
Ledger is right about USA discount sale. This is what I’ve talked about. Oh to be without principles and in the system, the cash to be made. Middle men; “step right up, what do I hear for the fair county of Fairfax”.
Finally, USA admin is purposely creating chaos when needed to continue to open new areas for restructuing, ie., wrecking. Too many middle men in DC, a wrecking crew with heavy security and unaccountable thugs obfuscating as needed. All mere tools to blow more holes, add to it foreign policy…
“The decay of trade and industry was not a cause of Rome’s fall. There was a decline in agriculture and land was withdrawn from cultivation, in some cases on a very large scale, sometimes as a direct result of barbarian invasions. However, the chief cause of the agricultural decline was high taxation on the marginal land, driving it out of cultivation. Taxation was spurred by the huge military budget and was thus ‘indirectly’ the result of the barbarian invasion.” Arthur Ferrill – The Fall of the Roman Empire: The Military Explanation
(above copied from here)
This admin’s deep target, i do believe, is the US military. It fits with the universe from which it emerged, and it justifies all the financial, cultural, generational, racial, and geographical divisivness & destruction –which actions serendipitously happen to accrue power to its very agents –the destroying gangsters. I could see their overarching general point if America was Rome –but America is not an exploiter –I really think one must measure by quality of life –farming with a John Deere is a better life than farming without one. As far as the ‘bad America’ bit –the worst thingh we senf forth is porno pop culture –exclusively a thingling of the Left and the organized crime mob which operates inside its political protection.
I was just watching Glen Beck interview an English politician and I learned an astonishing fact: the UK’s National Health Service is the third largest employer in the world with 1.2 million employees, most of whom are administrators. The number one employer is the Red Army and the second is the Indian National Railroad. The UK, based on my rather hasty research, has approximately 5% the population we have here in the US.
If the US nationalized health care system were to become as bloated as the one across the pond, we’d have over 23.5 million workers. Of course, they would all be Federal employees, and members of the SEIU and other similar unions. Now that is a substantial voting block beholden to the party of the hard left. With other nationalizations sure to follow, I feel sure that that a captive and beholden constituency can be created to guarantee the Democrats a permanent majority.
Tamquam,
The UK has a population ~61 million plus. The US has a population ~307 million. That makes the UK pop roughly 20% of the American. So you can adjust the rest of your math accordingly. Assume for the sake of argument that about six million jobs, most of which already exist, are under discussion.
What the nationalization plan would do is remove these workers, who are represented often by SEIU at state supported institutions, from scrutiny by private agents such as insurance companies and HMOs.
Now don’t you feel better?
52. Lifeofthemind:
Thanks for fixing my math, not enough fingers and toes at that hour. Feel much better, thanks again.