The S&P500 is Up About 9 Percent in One Week. Totally Irrational.

I can remember when that was a great year.

Taxpayer-Insured Commercial Banks Continue To Write CDS in $Trillions

Protest that you numbskulls.

These banks' political contributions are going to your man in The White House.

Gretchen Morgenson has the story here for The New York Times.

Why is This Man Making Bad Bets With Our Money?

Kyle Smith wants to know, here.

Why Don't You Occupy 1600 Pennsylvania Avenue?

Herman finds his voice (or we found his):


"Wall Street didn’t write these failed economic policies -- the White House did."

“Why don’t you move the demonstrations to the White House?”

“Wall Street didn’t write those failed policies, Wall Street didn’t spend a trillion dollars."

“Wall Street isn’t asking to spend another $450 billion.  It didn’t work with a trillion. It’s not gonna’ work with $450 billion. You can demonstrate all you want on Wall Street. The problem is 1600 Pennsylvania Avenue!”

Herman! Herman! He's our man! If he can't tell 'em, nobody can!

More here.

Herman Cain: “We’ve got some altering and abolishing to do!”

Cain also quoted the Declaration of Independence, stating that “it is the right of the people to alter and to abolish” the government.  “We’ve got some altering and abolishing to do!” he said.

Story here.

For Rep. Nancy Pelosi, Occupy Wall Street Anger Counts, ObamaCare Anger? Not So Much.

As quoted in the LA Times here:

House Democratic Leader Nancy Pelosi of San Francisco on ABC’s “This Week,” essentially called [Rep.] Cantor a hypocrite for criticizing the Wall Street protesters while embracing the “tea party” movement.

“I didn’t hear him say anything when the tea party was out demonstrating, actually spitting on members of Congress right here in the Capitol, and he and his colleagues were putting signs in the windows encouraging them,’ Pelosi said.

Pelosi said she supported the movement’s “message.”

“I support the message to the establishment, whether it's Wall Street or the political establishment and the rest, that change has to happen,” she said “We cannot continue in a way that does not — that is not relevant to their lives. People are angry.”

"The Hindenburg of anti-bank gasbags"

Yves Smith of Naked Capitalism, according to banklawyersblog.com, here.

Very entertaining.

The World: One Giant Organized Crime Which Keeps Two Sets of Books

I nominate "The Cost of Financial Ignorance" by Hernando de Soto in The Washington Post for most important editorial in the wake of TARP.

A few excerpts:

"Advanced nations seem to have forgotten . . . how important documenting assets and transactions is to the creation of credit. Consider that most private credit is made up not of bills and coins, anchored in bank reserves, but in papers that establish rights over the assets, equity and liabilities that guarantee loans. Over the past 15 years, however, as they package, bundle and resell securities, Americans and Europeans have gradually undermined the reliability of the records that guarantee or make credit trustworthy — the deeds, titles, liens and other documentation that establish who owns what and how much, and who holds the risks. ...

"When property is poorly documented, markets don’t get the information needed to connect assets to finance, and governments don’t obtain the data required to detect which connections have gone awry and how to fix them. This became obvious in 2008 . . ..

"The U.S. Treasury secretary created the Troubled Assets Relief Program to prevent a run on banks by purchasing the derivatives that financed the subprime mortgages. But officials realized within days that they couldn’t locate the assets or find criteria for pricing, buying and then removing them from the market. ...

"TARP authorities couldn’t locate knowledge about toxic assets fast enough because so many non-standardized types of records were scattered around the world. U.S. property and mortgage transactions records became obscured when companies were permitted to raise large amounts of financing by “bundling” mortgage loans into marketable liquid securities and recording these “derivatives” not with the traditional public registries but with the Mortgage Electronic Registration Systems, a private company whose registry reportedly holds about half the mortgages in the United States.

"These derivatives had a notional value of $600 trillion to $700 trillion — 10 times the amount of global annual production. They are still outside any property memory system."

'Our Citizens Ascribe Our Distresses To Every Thing But Their True Cause, The Banking System'

With its fictitious capital, otherwise known as credit without collateral, which enriches only those who issue it:

"The enormous abuses of the banking system are not only prostrating our commerce, but producing revolution of property, which without more wisdom than we possess, will be much greater than were produced by the revolutionary paper. That too had the merit of purchasing our liberties, while the present trash has only furnished aliment to usurers and swindlers. The banks themselves were doing business on capitals, three fourths of which were fictitious: and, to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labours of the plough, chose rather to call himself a merchant to set up a house of 5000. D. a year expence, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fraudulent bankruptcy was an ultimate resource of retirement and competence. This fictitious capital probably of 100. millions of Dollars, is now to be lost, and to fall on some body; it must take on those who have property to meet it, and probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt. We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pennyless and ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end. But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knolege of Political economy than we possess. I believe it might be done, but I despair of it’s being done. The eyes of our citizens are not yet sufficiently open to the true cause of our distresses. They ascribe them to every thing but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present all is confusion, uncertainty and panic."

-- Thomas Jefferson, to Richard Rush, June 22, 1819 

(source)

Unemployed? Was Your Hope Justified?

What, Me Worry?

TARP Was Designed to Accommodate the Fat Cats

If my memory serves me right, the whole idea was dreamt up in the first place by people at Bank of America and actively pushed in Congress long before the collapse of autumn 2008, according to a story in the New York Times from early 2008. I'd better go find that.

Anyway, TARP was for the fat cats, if not of and by them, too. And so says banklawyersblog.com, here:

[I]t's galling that special action was taken at the highest levels to accommodate the fat cats, while providing any TARP for the little guys was at first an afterthought, and that now that many of the small banks took that capital, no one in Congress or the federal banking agencies is falling all over themselves to relax any rules (e.g., amortization of CRE losses) to help them [exit] before the dividend rates rise.

My new best friend.

S&P 500 Close at 1155, 26 Percent Off the October 2007 High

For technical analysts, such a datum signifies that we are in a long term bear market since at least 2007 because the decline persists below 20 percent.

Today the Shiller p/e ratio is 19.79, shown here:

314 percent higher than the all-time low in 1920;

25 percent higher than the median;

20.5 percent higher than the mean;

and 55 percent lower than the all-time high in 1999 -- when a child was born somewhere, to mark that occasion, I am sure. Think of that: To be born at the height of irrational exuberance. I know such a person, but I didn't know the fact at the time.

A crash in the p/e ratio from here to the historical nadir would mean a collapse of nearly 76 percent.

Unthinkable? No. It is not necessary for such a crash to occur from a great height in the p/e ratio.

The collapse to the nadir in 1920 was from a p/e ratio lower than 25, as was nearly the case also in the early 1980s.

Price, and condition, that's all that matters, says the realtor. So should we all say. 

Steve Jobs on Family

Seen here:

“Steve made choices,” Dr. Ornish said. “I once asked him if he was glad that he had kids, and he said, ‘It’s 10,000 times better than anything I’ve ever done.’ ”

Rush Limbaugh Says The Banks Were Victims, The Bailouts A Success!

And the Tea Party got all hot and bothered over what, exactly?

Santelli's rant against the $75 billion mortgage bailout program called HAMP on CNBC? Noboby heard it!

The interventions bailing out private corporations like GM, Chrysler, and AIG, etc? Why, totally meaningless! Didn't happen!

This gag never appeared anywhere:

Nearly 400 failed banks haven't failed.

The FDIC hasn't had to pay $80 billion because of it.

1000 more with $400 billion in assets aren't really in danger.

Taxpayers aren't on the hook for $160 billion and rising for Fannie Mae and Freddie Mac. 

$10 trillion in taxpayer funds weren't really lent to every Tom, Dick and Hairy Bastard in the world at rock-bottom rates by the Federal Reserve!

The New York Times is simply mistaken that TARP will end up costing the taxpayers $37 billion. The CBO estimate of $25 billion is also quite simply wrong.

Partial transcript here:

RUSH: Will in Amanda, Ohio. You're up first. Great to have you on the EIB Network. Hello.

CALLER: Hey thanks, Rush. Hey, don't you think the one common denominator between the Tea Party and the protesters on Wall Street is a lack of justice? And what I mean by that is the lack of criminal prosecution from anybody from Fannie Mae and Freddie Mac, Wall Street, the banking industry, or even our own government officials.

RUSH: Um, okay --

CALLER: Not one prosecution, Rush.

RUSH: You want prosecution? Oh, "not one." I'm trying to understand. What's the correlation to the Tea Party?

CALLER: Well, the Tea Party gathered great strength after the bailouts that they tried to stop, and I think without the prosecution of anybody for crimes that have brought this country to its knees --

RUSH: Okay, name for me a crime and who you think should be prosecuted. I'm not disagreeing, I just want to know. Obama was asked this question today.

CALLER: Rush.

RUSH: Somebody asked him today, "How come there haven't been any prosecutions?" Who? And for what?

CALLER: I have to untie the other half of your brain for this one. Think about Fannie Mae and Freddie Mac.

RUSH: Okay, when I think Fannie Mae and Freddie Mac I think Barney Frank and Chris Dodd.

CALLER: Absolutely.

RUSH: Okay.

CALLER: But look at the collusion that's taken place between Wall Street and the banking industry and selling the mortgages -- or giving mortgages to anybody -- 'cause we know we can sell 'em off over here and we don't care if they're qualified or not.

RUSH: All right.

CALLER: Do you think there was a lack of fiduciary responsibility from a lot of people?

RUSH: No! I think there was fear of government.

CALLER: The what?

RUSH: I think there was fear of government. You talk about all these mortgage-related projects. Why did they exist?

CALLER: That doesn't justify crime.

RUSH: I'm not saying it does. No, no, no, no. Wait a minute. (sigh) I'm not trying to justify crime, but when you have the... I don't know. ...

Now, it's risky saying this because I sound like I'm coming to the defense of bankers. ...

They were forced to accept the bailout. The banks have paid back their bailouts with interest. The government has made a profit from the bailouts.

Capitalism's Idea of More Efficient Regulation Than the Government Kind

"Failure."

-- Rick Santelli, on The Laura Ingraham Show this morning

Senate Democrat Millionaire Tax Would Pay Less Than 10 Percent of Jobs Bill Cost

In the first year. The Democrat trick is to levy the tax over ten years to pay for a spending bill this year, and to rely on data which is suspect.

So one would have to infer from an AP story here, but you have to do the math:

About 392,000 households would get hit by the Senate Democrats' proposed 5.6 percent tax on income above $1 million, according to an analysis by the Tax Policy Center, a Washington think tank. In 2013, the first year the tax would take effect, those households would see their taxes increase by an average of $110,500, according to the analysis.

The latter figure extracted from that many households comes to just $43 billion, $404 billion short after the money has already been spent.

Socialsecurity.gov reports here, however, that fewer than 80,000 individuals had net compensation in excess of $1 million in 2009, collecting in the aggregate $184 billion. Taxing each and every dollar of that amount, not just the adjusted gross income over $1 million as the Democrats propose to do, would net just $10.3 billion.

The Tax Foundation here has a much more conservative estimate of the numbers than The Tax Policy Center. It says that for 2009 there were just 230,323 tax returns reporting adjusted gross incomes in excess of $1 million, and just 8,148 reporting $10 million or more. (Adjusted gross income captures more than just wage compensation). It calculates that the 5.6 percent millionaires' surcharge all by itself would take an extra almost $45,000 in new taxes from the median filer in this group. That also comes to $10.3 billion in new revenues annually if that median filer is typical of millionaires.

Even over ten years for a one year jobs program Obama needs to get re-elected next year, either the rest of us will be paying the $344 billion the scheme is short, or it just gets added to the deficit, crowding out other spending.

The fact of the matter is, taxing the AGI of everyone in the top half of the country with an extra 5.6 percent surcharge still would not pay for Obama's one time $447 billion jobs spending bill.

That doesn't make any sense!

Senator Reid Goes Nuclear, So Does Senator McConnell

“We are fundamentally turning the Senate into the House."

-- Senator Mitch McConnell, R-KY, quoted here.

Sorry, Mitch, but the 17th Amendment already did that in 1913.

US Homeownership Rate Falls at a Great Depression-Like Rate

So says a story here, but written to obscure that fact:

[T]he U.S. may never return to its mid-decade housing boom peak in which nearly 70 percent of occupied households were owned by their residents. ...

Nationwide, the homeownership rate fell to 65.1 percent - or 76 million occupied housing units that were owned by their residents - from 66.2 percent in 2000. That drop-off of 1.1 percentage points is the largest since 1940, when homeownership plummeted 4.2 percentage points during the Great Depression to a low of 43.6 percent.

Since 1940, the number of Americans owning homes had steadily increased in each decennial census due to a mostly booming economy, favorable tax laws and easier financing. The one exception had been 1980-1990, when ownership remained unchanged at 64.2 percent.


So the recent drop to 65.1 from nearly 70 is 4.9 points (not even mentioned!), or 7 percent, compared with a Great Depression drop to 43.6 from 47.8 (again, not mentioned!), or 8.8 percent.

Instead, the article spins the story with the statistical irrelevancy of the homeownership rate in the year 2000, evidently because the 2000s was the bubble decade, which doesn't count, unless George Bush did it, if it's bad thing.

Another deliberate diversion by AP Obama. 

Sarah Palin Quit a Governorship, and Bails Out of a Race for President

Americans don't like quitters. Just like they don't like bailouts, unless they get one. All the Wall Street occupiers would go home tomorrow if you just gave them what they want: cancellation of their student loans. Political protest? I call it extortion.

I'm guessing the polling in the aftermath of Palin's Sept. 3 "crony capitalism" speech didn't look very good, either, otherwise Sarah would be getting ready to run right now, not announcing that she's quitting before she's begun.

I don't think anyone really believed her on Sept. 3, seeing how she defended the bailouts after McCain's defeat. She got the religion against bailouts long after the fact, then didn't press it home consistently as the number one issue and got sidetracked by all kinds of other stuff, only to find at this late juncture that the issue has, unhappily, lost its intelligibility among the electorate.

Government intervention in the financial sector has been too bewilderingly thorough-going and complex even for the experts to explain, even when they've been against it. Which is why people end up accepting facile explanations, which boobs like Rush Limbaugh excel at explaining and which elites are happy for people to believe as the surest way forward to business as usual.

One day after declining to run, here, Rush Limbaugh is telling his listeners that the bank bailouts were a big success, that TARP has been repaid, and that the banks are on the side of free-market capitalism, so don't be deceived and fall for occupywallst.org.

Too bad we haven't really had any free market capitalism since FDR, just big shots who stand to gain the most because they are the first in line for the money, which other big shots need at preferred rates to do business.

Try to remember that every time Rush takes an obscene profit center time out.

The rest is just entertainment.