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Drive-by Economy Blogging — Why Now?
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Drive-by Economy Blogging

Update: From Jack the Grumpy Forester in comments – WaMu bites the dust. You may as well have a laugh.

Actual CNN headline: “Glenn Beck: Crisis an absolute disaster”.

Do you think he came up with that on his own, or did Roget help? Is this guy someone’s brother-in-law?

From MSNBC: U.S. gets a triple dose of bad economic news

WASHINGTON – Weekly jobless claims surged to the highest level in seven years, durable goods orders took a bigger-than-expected tumble and new home sales plunged to the slowest pace in 17 years, according to government data released Thursday.

And they still refuse to say we’re in a recession.

Apparently part of “price discovery” is to determine the “hold-to-maturity” value of the toxic paper the Septic Bank is supposed to buy. Given that no one wants to buy it, much less hold it to maturity, isn’t that impossible?


1 Jack K., the Grumpy Forester { 09.25.08 at 10:57 pm }

…in Beck’s case, it’s probably all about the writers. He probably doesn’t even know many of the words…

Washington Mutual apparently died tonight, disappeared by a combination of government takeover and JP Morgan buyout. The speed with which the whole house of cards is collapsing makes all of our hand-wringing back in the 1980’s savings and loan crisis look like fretting over the umpire’s call at a local Little League game. Make that a quadruple shot of bad news, barkeep, and I’d like another double…

2 Bryan { 09.25.08 at 11:44 pm }

They had a run and there was nothing that was going to save them after it started.

3 hipparchia { 09.26.08 at 1:46 am }

i’m not ever again going to be able to think of that song in quite the same way….

4 Badtux { 09.26.08 at 2:27 am }

Well, Wamu collapsing is a symptom, not a cause. But since we as a nation seem to be utterly determined to party like it’s 1929, I’m just going to grumble Mencken’s famous dictum about democracy being the notion that “the common people know what they want, and deserve to get it good and hard” and shuffle back to my iceberg. And to make it even worse, the price of tuna is going up. A penguin can’t even stock up on tasty fishies anymore for his bunker…

5 Kryten42 { 09.26.08 at 8:08 am }


Is McCain Planning to Vote Against the Bailout?

Okay, the more I think about it, here’s the most likely McCain play. He’ll swoop in, read through the compromise proposal that’s been reached and declare that it’s unacceptable in its present form. He’ll then demand that something either be added or removed (or both) and use his leverage (his threat to vote no) to get the bill changed. Then he’ll vote for the amended bill and take full credit for having made this crucially important change (whatever it is). His surrogates will claim that the whole episode shows McCain’s heroic leadership, the way he takes charge of a situation.

Was McCain’s Stunt an Attempt at Palin Damage Control?

I’m serious. The more I look at what happened today, the more I think it was all an elaborate attempt to stem the fallout from the truly disastrous interview Sarah Palin taped this morning with Katie Couric. In that interview, Palin did two things that hurt the McCain campaign and, but for McCain’s late afternoon shenanigans, would have garnered much more attention. First, buying into the premise of one of Couric’s questions, she all but stated that if no bailout legislation is passed, we’ll be headed into the next Great Depression. Even if true, that’s not a very smart thing for a politician to say and, importantly, it all but foreclosed any possibility of McCain voting against the bailout.
Then she was asked a crucially important question about McCain’s record on banking regulation, something she should have been prepped for:

COURIC: But he’s been in Congress for 26 years. He’s been chairman of the powerful Commerce Committee. And he has almost always sided with less regulation, not more.

PALIN: He’s also known as the maverick, though. Taking shots from his own party, and certainly taking shots from the other party. Trying to get people to understand what he’s been talking about — the need to reform government.

COURIC: I’m just going to ask you one more time, not to belabor the point. Specific examples in his 26 years of pushing for more regulation?

PALIN: I’ll try to find you some, and I’ll bring them to you.

That is not a good soundbite. Not only does it confirm that Palin is in way over her head, but every time the clip is played, viewers get to hear Couric point out that McCain has a 26 year record of not favoring regulations.

While there’s certainly a lot going on right now, I’m pretty confident that if McCain hadn’t engaged in his late afternoon theatrics, those two Palin clips would have been in heavy circulation tonight and tomorrow, especially in light of the mini-press corps revolt that everyone was talking about yesterday.

I think the McCain campaign knew the Couric interview would be a disaster as soon as it was done taping and spent much of the day frantically trying to think of a way to push it out of the headlines. The clincher for me is the fact that McCain cancelled his Letterman appearance at the last second and instead sat down for an impromptu interview with, of all people, Katie Couric. The hope was to bump the Palin interview even on the CBS Evening News, which otherwise would have hyped and teased the Palin interview all afternoon and used it to lead the broadcast. Instead, CBS devoted most of its coverage to McCain and played segments of the Palin interview almost as an afterthought. Mission accomplished.

Sorry… I’m just PMSL! 😀 I looove American politics… really! There’s nothing funny on TV until the 6 O’clock news lately. LOL

We may well be heading over that cliff… but hell, at least I can go laughing! LOL

6 Kryten42 { 09.26.08 at 8:26 am }

I like this too BTW… 😉

Keiser: US Dollar ‘Backed by Bananas’

Press TV interviewed Paris-based financial analyst Max Keiser on the US financial meltdown on September 20. What follows are his free-wheeling comments on the US government bailout of Wall Street and the potential consequences for America:

• • •

“We have a treasury secretary in America – Hank Paulson. I’m afraid he’s gone insane. He’s become like the Colonel Kurtz of Treasury Secretaries. He’s gone native. He’s co-opted trillions of dollars of American taxpayers’ money and he’s playing hedge fund like a rogue trader. We have got a rogue trader in the Treasury Secretary’s office. He’s being aided and abetted by Ben Bernanke who’s been discredited as the entire Federal Reserve Bank has been utterly discredited. We’re looking at a possible inflationary depression in America and the worse is yet to come, much worse is yet to come.”

“To pay for all this insanity from Hank Paulson, they have two options. They can either raise taxes or they can inflate the money supply. They can destroy these things US dollars [waves a dollar bill at the camera]. Dollars 30 years ago used to be backed by this stuff – gold [waves a gold coin at the camera]. Now thanks to Hank Paulson and Ben Bernanke US dollars are backed by these – bananas [waves a banana at the camera]. They’re absolutely worthless. Anyone buying US dollars today is going to lose money.”

“For the average American, this is what they will experience. The price of food and oil are going to skyrocket due to hyperinflation. The only way they can possibly pay for all these bailouts is to inflate the money supply. This means hyperinflation in America like you had in Germany in the 1920s. This is what the average American will experience: destitution, poverty, social unrest due to flagrant bank mismanagement – and it could have been avoided. But unfortunately the banks in the USA are run by greedy, insane private marketeers and this is the result.”

And for me, this is the money quote!

“It’s not really a doomsday scenario for the rest of the world. Take Iran for example, you’ve got a lot of oil and gas. Those prices are going to go up. China has huge savings. The Indian people have huge gold reserves. For the rest of the world this is actually a fantastic thing. Only the US and Britain are going to experience this horrible disconnection with the rest of the world economy. So it’s a doomsday for them but there’s a certain symmetry here. They spent 20 or 30 years with this neoliberal model hoisting trillions of dollars of debt onto themselves and now it’s gone belly up.”

This is why I am laughing really! 😀 I love irony, and it doesn’t get much better than Bush destroying the USA while Iran, the Nation he wants to destroy, becoming one of the Kings of the hill! Of course… it was Iran’s oil and gas Bush wanted to take, or destroy. Maybe if he’s desperate enough, he may just order a nuke strike as his parting shot. You know… one of his “If I can’t have it, than dammit, nobody will!” tantrums.

Get ready to kiss your asses everyone. 😉

7 Badtux { 09.26.08 at 11:04 am }

Yep. Folks in the U.S. and Britain knew what they wanted. Now they’re gonna get it, good’n’hard.

8 Bryan { 09.26.08 at 2:07 pm }

This is a more intense version of what happened in the early 1990’s, housing bubble and all, and not a damn thing was learned. This is what tax cuts and deregulation have consistently led to, but some people just don’t get it.

If there is still a county in 20 years and it has managed to limp back to solvency I fully expect there will be a group of idiots in Congress who again propose that we cut taxes on the wealthy and deregulate business to promote growth. No matter how often, or how badly, it fails this idiocy keeps returning.

9 Kryten42 { 09.26.08 at 8:04 pm }

I don’t understand that either. One good thing that will probably come out of all this, is that the stinking rats in Washington will most likely leave the sinking ship. Cheney has already set up shop in Dubai, and I’m sure he has room for *friends*, as much as anyone like him has any real friends. 🙂 Maybe it’s best to look at it as short-term pain for long term gain. 😉 And once they are out of the USA, the World court and War Crimes Commission can get at them. 🙂

Here’s the most recent report in Reuters:
Wachovia hunts for a merger partner

It seems that the Bushdog idiot, Andy Kessler (WSJ) thinks the bailout will make ordinary people rich! LOL

Andy Kessler reckons that if the government buys up bad loans at 35 cents on the dollar and eventually receives 50 cents for them, it could make well over $1 trillion on this bailout. I’m not sure how that works: a 43% return on $700 billion is a profit of only $300 billion.

In any case, it seems clear that even under Kessler’s optimistic scenarios, if the government buys bonds at about 60-65 cents on the dollar — which is very much within the realm of possibility, listening to how Ben Bernanke described the bailout — then the taxpayer is liable to be on the hook for a very large sum indeed.

All of which only goes to reinforce the central irony of the bailout negotiations. While the politicians argue about things like executive pay and insurance funds, there’s only one thing which really matters: the price the government pays for bad assets.

Paulson and Bernanke are leaving that key number deliberately vague, while the House Republicans’ plan seems to envisage ultimately paying a full 100 cents on the dollar, through a new insurance fund, with some unknown part of that payment coming from the banking industry itself. Either way, the cost of the plan is very much up in the air. But for reasons I don’t pretend to understand, the real sticking point of the negotiations is the “how”, and not the “how much”. Weird.

Bailout Talks Lose Sight of the Cost Question

For anyone wondering what it all means, there is a good explanation here that may help.
The Simple Explanation of Bailouts, Inflation, and Deflation

And, this has to be a gem! Poulson on bended knee begging Pelosi to pass his bill! That’s funny on so many levels! LMAO

It’s the defining moment of Thursday’s breakdown in negotiations:

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

What Was Paulson Begging For?

PS: Be sure to read the rest of that one… It shows an interesting dynamic in Politics. 😉

10 Bryan { 09.26.08 at 9:26 pm }

The Hedgemony has no influence over the House Republican caucus since all of their enforcers, like Tom DeLay, had to “spend more time with their” families or lawyers or parole officers. This is what happens when you bring “true believers” into government – they think the lies are facts. They actually think the “trickle down theory” will work.

I’m still waiting to hear why we went from the “fundamentals of the economy are strong” to “economic Pearl Harbor” in four days. There is a big piece missing and no one is rushing to tell people what.

Right now we have panic in the system. Washington Mutual was shaky, but it collapsed because of the disaster talk which led to a $16 billion+ run since September 15. I was reading in the BBC about B&B, a commercial bank, that is probably going to be the next to fail even though it has been reporting good news lately. People don’t believe it, and banks have stopped lending to each other. The damn system is awash in cash, but no one wants to do anything with it. Everyone is afraid and they have gone totally risk adverse. The whole point of capitalism is “risking capital” to get a return on your investment. They damn sure spent a few years taking absurd risks to maximize profits, and now they are finding out that not all bets pay off.

This wasn’t banking. This didn’t belong in The City or Wall Street. This is normally seen in a casino in Las Vegas or Monaco.