Making banks into GSE’s

TBTF will be the law of the land for the chosen few:

Too small to be bailed-out? Prepare to be absorbed.

Fall of the Republic

Old but still relevant.

 

Why do we even need banks if 95 percent of the mortgage market is directly subsidized by the government?

A good question, asked and expounded upon by Dr. Housing Bubble:

“95 percent of the mortgage market is now backed by the government. As we know, a large part of this growth also occurred with highly risky FHA insured loans that are now imploding at record levels. Last month in Southern California 36 percent of mortgages were FHA insured loans. Now applying the Stockholm syndrome, it would appear that many instead of being angry and calling out the banking fraud for what it is, are starting to believe in what the abductors are pushing. They say things like, ‘ see, the banks are now holding off on the shadow inventory to help the market. Prices are now going up! ‘ As if the banks are concerned about the average American with some banks charging 79.9 percent on credit cards before dealing with the tougher legislation coming in 2010. As you can see from the above chart, the mortgage market is the government which raises the question, why do we even need banks if 95 percent of the mortgage market is directly subsidized by the government?.“

His very graphic graphic (not for the squeamish):

“In fact, there have been a few articles talking about the ‘ brain drain’ because of compensation limitations on Wall Street! You have got to be out of your damn mind! People mistake ‘ intelligence ‘ in kleptocracy, cronyism, and financial engineering with actual smarts. They are smart at screwing over our economy so this brain drain argument is absolute insanity. It would be one thing if they were creating life saving drugs or consumer goods but instead, they are an albatross on the rest of the economy sucking taxpayer dollars into their balance sheets. Yes, let us feel sorry for our financial kidnappers. How can they live on a few million dollars (note: read DeanBaker’s rant) a year after all the good they have done? Let us allow them to have the same system that gave them the key to drive our economy off the financial edge.”

That last paragraph was directed at the so-called “brain-drain” by Hank Greenberg’s new firm from the pool of ready able and willing AIG co-conspiratorshorts, which as you know like GMAC is having trouble paying back the taxpayer bailout that saved their nasty-asses (the perpetual bailout that is never gonna take, they’ll keep coming back for more and more throwing good money after bad, until we realize the only solution is to take ‘em out back and shoot the poor old mangy critters).

Ever get the feeling that you’re being gamed?

“Oh no! Our top commanders are leaving the ship. As it turns out, they were on their laptops all day ignoring the financial iceberg ahead. When it came time to jump ship however, they were the only people with lifesavers.”

…

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“Children need encouragement. If a kid gets an answer right, tell him it was a lucky guess. That way he develops a good, lucky feeling. ” -Jack Handy

More declines in the market ahead?

Part 1

Part 2

Bush 44

Pardon my neglect. I often make reference to Bush 44, but I have not explained what I mean. My bad.

Bush 44

The party’s over…

From Marketwatch, an article by Paul B. Farrell

Death of ‘Soul of Capitalism:’ Bogle, Faber, Moore
20 reasons America has lost its soul and collapse is inevitable

1. Wall Street has lost its moral compass. They created the mess, now, like vultures, they’re capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation. The collapse is now inevitable
2. Failure to plan for the excesses caused by unchecked greed was a plan to fail
3. The business and ethical standards of corporate America, of investment America, and of mutual fund America have been gravely compromised.
4. Greed was legalized
5. The ‘life cycle’ of capitalism is on the decline.
6. Wall Street wealth now calls the shots in Congress and the White House
7. America’s top 1% own more than 90% of America’s wealth
8. The average worker’s income has declined in three decades while CEO compensation exploded over ten times
9. The Fed is now the ‘fourth branch of government’ operating autonomously, secretly printing money at will
10. Since Goldman and Morgan became bank holding companies, all banks are back gambling with taxpayer bailout money plus retail customer deposits
11. Bill Gross warns of a “new normal” with slow growth, low earnings and stock prices
12. While the White House’s chief economist retorts with hype of a recovery unimpeded by the “new normal”
13. Wall Street’s high-frequency junkies make billions trading zombie stocks like AIG, FNMA, FMAC that have no fundamental value beyond a Treasury guarantee
14. 401(k)s have lost 26.7% of their value in the past decade
15. Oil and energy costs will skyrocket
16. Foreign nations and sovereign funds have started dumping dollars, signaling the end of the dollar as the world’s reserve currency
17. In two years federal debt exploded from $11.2 to $23.7 trillion
18. New financial reforms will do little to prevent the next meltdown
19. The “forever war” between Western and Islamic fundamentalists will widen
20. As will environmental threats and unfunded entitlements

‘We’ll have a dictatorship soon in the US’

The grand old man of letters Gore Vidal claims America is ‘rotting away’ — and don’t expect Barack Obama to save it [ London Times ]

Last year he famously switched allegiance from Hillary Clinton to Barack Obama during the Democratic nomination process for president. Now, he reveals, he regrets his change of heart. How’s Obama doing? “Dreadfully. I was hopeful. He was the most intelligent person we’ve had in that position for a long time. But he’s inexperienced. He has a total inability to understand military matters. He’s acting as if Afghanistan is the magic talisman: solve that and you solve terrorism.”

#Regrets, I’ve had a few#

The elephant in the room

Could not have said it better myself, part deux

Obama: should he be referred to as Bush Lite, or Bush III?

Tactical Error: Health Care vs Finance Regulatory Reform

I believe the brain trust behind the Obama White House has made a huge tactical error.

As Rahm Emmanuel likes to say, one should “never waste a crisis” — and the White House has done just that.

There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry and other causes of the collapse. Instead, the White House tacked in a different direction, pursuing health care reform.

This was an enormous miscalculation.

I’m not sure who to blame, but the leading suspects (in order) are Larry Summers, Rahm Emmanuel, Tim Geithner, and (perhaps) David Axelrod. Instead of a populist clean up of The Street (ala Eliot Spitzer circa 2,000), Obama advisors allowed a smoldering resentment to take hold and build amongst the electorate. The massive taxpayer wealth transfer to inept, corrupt, incompetent bankers has created huge resentment amongst the populace — regardless of political affiliation.

There was widespread popular support for a full reform of finance. What the White House should have pursued was: 1) Reinstatement of Glass Steagall; 2) Repeal the Commodity Futures Modernization Act; 3) Overturning SEC Bear Stearn exemption allowing 5 biggest firms to leverage up far beyond 12 to one; 4) Regulating the non bank sub-prime lenders; 5) Continuing high risk trades to be compensated regardless of profitibility; 6) Mandating (and enforcing) lending standards, etc. [emphasis added]

…

Never waste a crisis, indeed . . .

[ more at The Big Picture ]

This adminsitration is loaded down with do-nothings like Rodham and Holder, know-nothings like Shitener and Summers, know-it-alls like Emmanuel and the press secretary (whose name must never be spoken, lest he see it in print and stoke that ego even more) who has no real power, but whose attitude represents the supreme arrogance of lottery winners.

…

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We get the government we deserve.

Shell game insight

Treasury paying banks not to lend:

“The Fed is payng banks higher interest rates now… to keep their funds parked at the Fed instead of loaning that money to the American people.”

Oh well, it’s not like we need more debt in the hands of the people. Would you give a loaded gun to an infant?

[H/T]