Posts from — September 2008

Susan Taylor Martin, St. Petersburg Times, provides some background: A financial crisis built one bad loan at a time

Jackson, who said he handled marketing for the builder, bought 14 units between April and August of 2006 and financed them through several different lenders. He was vague on how much he actually paid for the condos although transfer taxes on the deeds reflect purchase prices of $320,000 apiece for eight of the units and $329,000 for the other six.

Jackson paid the higher amount for Units 404 and 418, according to the transfer taxes. BNC Mortgage loaned him $256,000 on each condo at 8.75 percent — a so-called “subprime” rate typically given to borrowers with less than sterling credit.

Eight units at $320K, plus six at $329K equals more that $4.5 million dollars to a guy who lives in a trailer park and rides a bicycle because of DUI convictions. He needs $9,940 to cover the taxes and condo fees every month. What would possess any rational lender to extend him credit?

The New York Times offers “News Analysis”: A $700 Billion Rescue Plan for Wall St., but Will It Work?

“It goes a long way; it ameliorates it very substantially,” said Alan S. Blinder, an economist at Princeton and a former vice chairman of the board of governors at the Federal Reserve, who has said for months that the government must step in forcefully to buy mortgage-linked investments.
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If the plan works, it will attack the central cause of American economic distress: the continued plunge in housing prices. If banks resumed lending more liberally, mortgages would become more readily available. That would give more people the wherewithal to buy homes, lifting housing prices or at least preventing them from falling further. This would prevent more mortgage-linked investments from going bad, further easing the strain on banks. As a result, the current downward spiral would end and start heading up.

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Paul Krugman says No deal and tells you why.

Echidne refers to it as Crony Capitalism Strikes Back and follows up with More On The Blank Check.

Duncan gets a little shrill:

Any member of Congress who looks at the plan to give Hank unchecked power to transfer $700 billion from the Treasury to his friends’ companies and has any reaction other than “You’ve got to be fucking kidding me” does not deserve to hold office.

Well, they are liberal economists, and they seem to object to providing the “financial professionals” who created this mess with most of a trillion taxpayer dollars to do whatever they want with.  I realize that the Shrubbery thinks its normal, because that’s what happened every time one of his businesses failed, but sometimes you have to pay your own bills.

Update: Brad Delong was first with the title, No Deal!, and extra shrill [note exclamation point].

In addition to things going on in Real Life® I’ve been looking for information on the Super Atomic, Better Than Sliced Bread, Going To Solve All Our Problems Plan. Pretty slim pickings when it comes to details.

Atrios is wondering why the “line in the sand” about no new bailouts resulted in 0 To $1 Trillion In 4 days Flat. What is it that changed? What facts emerged that convinced Bernacki and Paulson that they needed spend upwards of $ 1,000,000,000,000?  Duncan is also concerned that they haven’t figured out that this is not a liquidity problem, but is more involved than that.

Nouriel Roubini, a person who has been saying this was going to happen since 2004 and a specialist in collapsing economies, says that we need to bring back the very effective program created under FDR, the Home Owners’ Loan Corporation. He says if they don’t deal directly with the mortgages, anything they do will have only short-term effects.

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McClatchy has a look at the “plan”: Will latest bailout plan work? No one actually knows

WASHINGTON — The Bush administration swung for the fences Friday with an unprecedented bailout of the financial sector that will cost taxpayers “hundreds of billions of dollars.” It jolted markets back to life for the day, but questions remained about whether the bold effort would actually work.

Truth is, no one knows. America and its financial markets haven’t been down this road before.
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Congressional leaders from both parties agreed to work through the weekend to craft legislation that would authorize the Bush administration’s plan to buy up all of the mortgage-backed securities at the root of the problem and get them off the books of banks and other lenders.

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MSNBC has “the happy news” on how the Secretary of the Treasury and Chairman of the Federal Reserve System are scaring Congress into approving a deal that would absorb all of the liabilities of the mortgage mess they helped to create and saving the financial sector from the risks that control capitalism.

The BBC has an interesting article, Viewpoints: Where now for capitalism?, that provides the thoughts on what is going on from a diverse group of individuals, including a majority of people Americans have never heard of, and thus, very different perspectives.

Using the Titanic metaphor that seems popular at the moment, it sounds to me like they are shutting the water-tight doors to protect the crew and first class passengers by making this a problem for “the lower classes”, i.e. the foolish group that works for a living, pays its taxes, and received none of the benefits this mess created as it took aim at the iceberg.

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What has a mechanical grasshopper, a coffin, and costs more than $1.8 million?

On CBS it is: New Clock Tells Time, But Evokes Mortality

The “Corpus clock” is the brainchild of inventor John Taylor, who used his own money to build it, in part to pay homage to the genius of John Harrison, the Englishman who in 1725 invented the “grasshopper” escapement – a mechanical device that helps regulate a clock’s movement.

Making a visual pun on the grasshopper image, Taylor has designed a fantasy version of a grasshopper at the top of the clock face, and uses this beast – with its long needle teeth and barbed tail – as an integral part of the clockworks.

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It wasn’t just pet food or powdered formula, as the BBC reports: Mass recall of China milk produce

Shop shelves in China and elsewhere are being cleared of popular dairy products after tests found contamination in regular milk as well as baby formula.

Inspectors found that 10% of liquid milk from three of China’s dairies was tainted with melamine.

Singapore banned the import and sale of all Chinese milk products after some were removed from stores in Hong Kong.

The scandal first came to light in milk powder that killed four infants and sickened more than 6,000 others.

Suppliers are suspected of diluting milk to cut costs, then adding melamine to make it appear higher in protein.

Melamine is an industrial chemical normally used in plastics, and is banned from food stuffs.
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It’ll be double rations of grog all around in the galley as ye throw the pasta and pesto down your gullet for the final day of Pasta Week, on Talk Like a Pirate Day.
Arr…
Belay that! ‘T’would be better done by swilling lambrusco directly from the flask!
Arr…

Faster Than Falling Food

Nom Nom Nom Nom!

[Editor: If you look behind this grey kitten’s right ear you will see a splash of cat food. She managed to intercept it as it fell from the spoon towards the dish.

Friday Ark

It turns out that the law in Texas is the same as the law in Florida – The land between the average low tide mark and average high tide mark is public land, and no one can build on it or block it. The storm surge moved those marks inland.

The story is at MSNBC: Some Ike victims may not be allowed to rebuild

The reason: a 1959 law known as the Texas Open Beaches Act. Under the law, the strip of beach between the average high-tide line and the average low-tide line is considered public property, and it is illegal to build anything there.
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LadyMin offers Mezze Penne with Pesto from her Garden.

Kryten presents an entire meal for you and your friends.

Appetizer
Gamberetti alla Salvia
(Shrimps in Sage)

Entree
Carciofi e Pisellini alla Romana
(Roman Artichokes with Peas)

Pasta
Spaghetti Aglio, Olio e Peperoncino
(Spaghetti in Garlic and Oil with Peperoncini)

Dessert
Dolce di Ricotta
(Roman Cheese and Cream Tart)

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The Day of His Noodly Appendage

The holiest of holidays for Pastafarians, is of course the birthday of His Most Holy Prophet, Marco Polo (b. Sept 15, 1254), who brought the word of his Noodly Appendage back from the East. As Talk Like A Pirate Day falls on September 19th, this five-day period constitutes Holy Pasta Week, during which spaghetti is consumed liberally. With a nice Chianti, of course.

[Hurricane Ike distracted me from the celebration]

After noticing one of the gazillion ads at a news site about finding out your “credit score” [I suspect a con to gather more personal information, as well as sell you some program to “improve” it] I considered writing a post about needing to find out your bank’s “credit score” before you put any more money in it.

As the fates would have it Susie Madrak provided a source for that information: Safe & Sound® ratings.

When you see the ratings for your bank or credit union you want low numbers [1 or 2] and lots of stars [4 or 5].