Tuesday, September 30, 2008

This is not about keeping people in their homes.

I hear the call from so many to prop up housing and "keep homeowners in their homes." I see the goal however, as a dangerous one. The consequence of trying to do that would be to continue to artificially inflate home prices, preventing new buyers from entering the market. It would prevent housing from reaching a price that is commensurate with median incomes. This is dangerous for the housing market and will leave it stagnant. Propping up home prices is harming prudent people who chose to wait until home prices came back down to a level that is more historically consistent with incomes.

This would likely also harm many of those who are "kept" in their homes, as they may have been better off financially speaking defaulting from their debt and getting out from underneath a massive burden.

Mortgages are not the problem in this financial crisis. The problem is leverage. The institutions in question have over leveraged themselves so that the amount of credit they have outstanding far outstrips their asset base. They cannot afford to support even the smallest of losses.

It is unfortunate that we are faced with this now, but being that the core production of our economy cannot now sustain the levels of credit we have created, a credit contraction must take place.

Doing anything keep the credit party going will only serve to harm us further. We're maxed out congressman, it's time to stop preventing a debt default with more debt.

These companies have to deleverage, and our economy has to adjust. That's the fundamental truth to this.

Congress can work to reinforce time tested regulations. Enforce reasonable capital and leverage requirements. Enforce transparency and accounting principles. Prosecute false and misleading information used to manipulate stock price. Eliminate insider trading (it's happening now and it's troubling). None of this is new, but it's not being done. The opposite is occurring, and it's the opposite that brought about this financial crisis. The measures being taken thus far continue and encourage that troubling behavior.

Extraordinary measures that must be taken will include regulating the derivatives markets, and creating a program that facilitates expedited chapter 11 bankruptcy protection for insolvent financial institutions. Lastly Congress must act to fund the FDIC. The insurance program does not have the money to handle the bailouts that are coming, and congress must demonstrate it's commitment to shoring up the program. These things are new, but they must be done in order to wind things down in a more moderate fashion.

We're in trouble. No matter what is done our economy must undergo a major shift. The Bush/Paulson/Dodd plan makes it much worse. But these measures I've mentioned will help bring up investor confidence, and bring in billions of dollars that is sitting on the sidelines (including my own), and aid in a speedier recovery.

Monday, September 29, 2008

Mortgage Failures are a Symptom, not the Disease.

In numerous places now, most notably the president's speech on behalf of his bank bailout, mortgage failures are being used as the scapegoat for a declining economy.

This is, the way I see it, at very incorrect and dangerous assumption. Mortgage failures are an indicator that something is not well in the system. The resulting impacts of the failures point to the heart of the issue.

Institutions that have been funding the debt have levered themselves to the point that they could not even withstand modest losses. And further more, not unlike some addicts, some of the financial institutions on Wall Street could not sustain any longer if they could not produce more and more mortgages.

Wall Street's financial institutions have over leveraged themselves. This country has over leveraged itself. Investment needs to be made into non-financial productive work.

These mortgage failures are indicators, margin calls. And instead of settling our debts, we're creating a $700 billion dollar bailout that threatens to continue the problem.

UPDATE: Finally here's an article on just this subject from the Financial Times via Naket Captialsim.

Thursday, September 25, 2008

Letter to My Congressman. NO Bailouts

Congressman Inslee,

I'm writing you today on an issue that I feel is a part of a defining moment in this country's history.

There are massive shifts occurring in credit markets right now and those shifts are going to have a significant impact on our ways of life.

The Administration via Secretary Paulson has submitted a ridiculous bailout legislation plan that it appears many in congress are taking seriously. Senator Dodd has even crafted legislation that, while significantly cleaning up Paulson's proposal, still follows in lock step.

I've heard members of congress in hearings talking about how it's up to the administration to explain why this bailout is necessary, as if the throngs of angry constituents don't understand.

I want you to know, Congressman, that I do understand. I understand and I am angry. I am angry as I was when we launched the Iraq war, when we passed the patriot act, and when I saw that FEMA had almost no plan or competence to handle the aftermath of Hurricane Katrina.

I understand that our economy is in deep trouble. That a massive deleveraging event is taking place. I understand that this means we will be facing a lot of hardship in the years to come.

But I also can see that there is nothing that can, or should be done about his deleveraging, other than to take measures to make it orderly and to work to support our fellow citizens when the time comes.

Paulson's plan is flawed in so many despicable and obvious ways. But in one core way it is flawed that should stand out.

The plan is guilty of trying to keep "the debt party" going, when there is no reasonable cause to assume that it should.

The debt bubble has eroded much of our economy. While we enjoyed the temporary benefits of massive leverage much of our industry was displaced through movements to other labor markets. We've been lax in exploring new technologies in energy production, and energy efficiency. But it is that very sort of productivity that we find ourselves desperately in need of now.

We are in trouble, and there is a way to deal with the trouble that helps us begin growing new and better institutions that can help us rise out of this decline. But the bailout proposal is not only thievery and economic terrorism on the Administration's part, it is also a denial on the part of others who would like to keep us in the dysfunctional state we've been in.

Congressman, I don't think I'm the only constituent who understands.

Please filibuster any bailout proposal.

Thank you,

Caleb Mardini

contact your senator now.

contact your representative now.

Wednesday, September 24, 2008

Dodd Amends Paulson's Plan...Still Headed For a Bailout.

Dodd has proposed an alternative, or should I say amended Paulson plan.  I've only breezed through it.  It looks better but it's still a bailout.

That Hurts prudent investors.
Hurts existing homeowners by keeping them in a negative equity situation.
Hurts home owners waiting for a more affordable market to jump in.
Hurts investors, and institutions who avoided entering into this mess.

And most importantly, staves off a de-leveraging event, which must occur in order for our economy to start growing again.

Tuesday, September 23, 2008

Economists Launch Protest

To the Speaker of the House of Representatives and the President pro tempore of the Senate:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses.  Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If  taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects.  If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, Americas dynamic and innovative private capital markets have brought the nation unparalleled prosperity.  Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come. 


The letter was signed by over 100 (and growing!) of the leading economists I know — including folks who have very different views about just what got us here.

Via [Freakonomics Blog]


U.S. House 1999

"[W]what we are creating now is a group of institutions which are too big to fail. Not only are they going to be big banks, but they are going to be big everything, because they are going to be in securities and insurance, in issuance of stocks and bonds and underwriting, and they are also going to be in banks. And under this legislation, the whole of the regulatory structure is so obfuscated and so confused that liability in one area is going to fall over into liability in the next. Taxpayers are going to be called upon to cure the failures we are creating tonight, and it is going to cost a lot of money, and it is coming. Just be prepared for those events."

Representative John Dingell (D -Michigan) Regarding the repeal of the Glass-Steagall Act of 1999

Via [The Crypt]

And another hopeful sign today from the House and Representative Marcy Kaptur (D-Ohio)

Sunday, September 21, 2008

Not a Dime! Stop the Bailout

There is currently a horrifying proposal being fast tracked through congress by the President and Treasury Secretary Henry Paulson. Many members of congress have openly admitted they don't understand the situation and they aren't sure what to do.

I've called my senators offices and I was asked to organize people in a calling campaign. They want to hear what we have to say.

What's happening right now in our financial markets is a major event, regardless of what the government does, I feel it's going to have a major impact on us all. However I believe the proposal being fast tracked threatens to make things much, much worse.

I ask that you read the proposal yourself. It is very short. You can also read the analysis I've posted here.

The chances of preventing this are very limited . But after reading the proposal, please call and email your senator, NOT JUST ONCE, BUT A COUPLE OF TIMES A DAY, for all of this week.

Ask them to block or filibuster any bailout legislation.
Ask them to vote no.
Tell them you don't want to pay for a bailout.

Here's a link to the text of the plan.
Click here for contact information for the Senate.

  • The Foxes are in the henhouse.
    Prior to becoming the treasury secretary in 2006 Henry Paulson ran Goldman Sachs bringing the company to the position it is in now. Goldman Sachs stands to benefit a great deal from this bailout.
    Furthermore there is a tremendous conflict of interest as Paulson seeks to hire those who helped create this mess to help decide how to use the public's money.
    From the proposal:
    (2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
    (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
  • The budget is unlimited.

    Sec. 6. Maximum Amount of Authorized Purchases. The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.

    700 billion is greater than the Pentagon’s budget for 2009 which was record breaking. And that’s just the amount of purchases that can be held on the balance sheet at any moment.
  • It doesn’t represent the tax payers. This deal is, in many respects, open ended with no safeguards for taxpayers. While the bill gives lip service to the idea of protecting tax payers it specifically avoids accountability and transparency.

    Sec. 3. Considerations. In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–
    (1) providing stability or preventing disruption to the financial markets or banking system; and
    (2) protecting the taxpayer.

  • Completely dubious. While granting extreme powers, there is no review. (this one is really incredible)
    Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
  • There are no stipulations for punitive actions. Instead for institutions able to move their bad debt to taxpayers, or able to buy debt at discounted rates this will be quite rewarding.
  • The arbitrary nature of the bailout creates greater uncertainty in the markets. Furthermore some market watchers speculate that this could result in a greater devaluation of U.S. credit as there is fear we’ll nearly bankrupt ourselves trying to take on the debts of these failed institutions. The measure calls for raising the national debt for example.
    Sec. 10. Increase in Statutory Limit on the Public Debt. Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
  • We already have an excellent solution in place Chapter 11 Bankruptcy.
    In Chapter 11, companies with a solid underlying business generally swap debt for equity: the old equity holders are wiped out and the old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure. Alternatively, the debt holders can agree to cut down the face value of debt, in exchange for some warrants.
    Luigi Zingales and Robert C. Mc Cormack the authors of the above quote maintain the process would have to be faster than chapter 11 normally takes. But passing a law, especially one of the magnitude normally requires much more investigation and vetting. If we can entertain passing a law of this magnitude this quickly, isn’t there a possibility that an expedited Chapter 11 program could be created.
  • The Mother of All Bailouts. A measure of this level is unprecedented. You may have heard that this isn’t dissimilar to the Resolution Trust Corporation founded in 1989 to help us out of the S&L Crisis. But
    In 1989, there was no choice. The federal government insured the thrifts, so when they failed, the feds were left holding their loans; the RTC's job was simply to get rid of them. But in buying bad loans before banks fail, the Bush administration would be signing up for a financial war of choice. It would spend billions of dollars on the theory that preemption will avert the mass destruction of banks. There are cheaper ways to stabilize the system. (Sebastion Mallaby of the Washington Post)
    And they want to bailout whatever they decide. This will likely include bailouts for foreign businesses as well.
    The U.S. Treasury submitted revised guidance to Congress on its plan a ... Officials now propose buying what they term troubled assets, without specifying the type. (Bloomberg)
  • It goes counter to the spirit of the American free system that maintains those that reap the rewards should bear the losses.

    The basic premise of a free economy is one governed by laws and not men, where property rights are respected, where individuals are free to make contracts with each other, and where honesty and transparency exist in the marketplace.(Mish)

Please contact your senator now and ask them to prevent, block, filibuster, and vote no for any bailout.

I’d also encourage you to drop me an email or a comment if you make the call.

Thank you.

Update: 10/2/2008

Dodd's revised version of the bill made what appear on the face to be significant changes. But upon further examination, the latest proposal doesn't deviate from Paulson's plan. The oversight is there but it's token oversight. The secretary of the treasury, for example would be the head of their own oversight committee. While we've heard sound-bites about greater assurances, very little has been done to alleviate the problems with the bill.

Anyone saying the problems have been fixed are mistaken. Read it for yourself. (First 113 pages or so.)

A tiny ray of hope.

Dems say they won’t get fooled again

Specter urges leaders not to 'rush to judgment' on bailout

Fed Amputates Invisible Hand

An excellent headline from Minyanville:
Fed Amputates Invisible Hand.

Thursday, September 18, 2008

Let's Backup Quality Firms, not Garbage.

"Look to where you want to go."
"Reward good behavior, not bad."

Those are two axioms I've come to understand that really work in the real world. Applying them to the current financial situation offers some perspective on "what we need to do."

Talk about Moral Hazard
What are we doing now?

By throwing money at the losers the worst of bad behaviors is rewarded. The biggest, most interconnected faulty institutions are getting government assistance.While those that are more prudent and pragmatic are being ignored.

Look at Lehman versus Bear Stearns. Barry Ritzholtz says it best:

• Lehman Brothers was like the little kid pulling the tail of a dog. You know the kid is going to get hurt eventually, and so no one is surprised when the dog turns around and bites the kid. But the kid only hurts himself, so no one really cares that much.

• Bear Stearns is the little pyro -- the kid who was always playing with matches. He could harm not only himself, but burns his own house down, and indeed, he could have burnt down the entire neighborhood. The Fed stepped in not to protect him, but the rest of the block.

Because Lehman was a slightly better market player they and their investors didn't get the benefits of being bailed out, while the Bear, who's executives should potentially be prosecuted does.

Perhaps I'm being naive but wouldn't it be better to break things down, maybe back up smaller better institutions with some sort of government review of investment institutions? (yeah I know this should have been happening all along) It could be followed up with a 6 year guarantee or backing of some sort.

It's not the idea solution or the one that I want. But if you have to intervene in the markets this is better than throwing money at losers right?

But Cox Should be Fired

McCain, today called for the firing of SEC chairman Christopher Cox. Immediately he was attacked by Chuck Schumer (D-NY) and Harry Reid (D-NV).

From Senator Schumer:
“Instead of firing Cox, McCain should explain how his policies differ from President Bush on this issue,"
Senators Reid and Schumer are right in saying that it's the Bush administration ultimately at fault for SEC issues, but that doesn't mean the SEC chairman doesn't need to go.

McCain and Schumer are wrong about the short selling issues, and McCain is wrong about the reasons for firing Cox. Short selling is not hurting our economy.

From Time:
Last year the SEC let the longstanding uptick rule expire, which stipulated that traders could short a stock only after it had moved up. Cox called the rule useless, because an uptick can be just a penny in the decimalized market. His view is supported by academics such as MIT's Paul Asquith, who has done extensive research on short sales. Asquith reviewed two years of data during which short trades were tracked by the SEC, and found that 30% of all trades are short sales. All the short sellers are going to do is make the market react faster, he says. "The question is, Can the short seller take a firm down? The answer is no. Not by themselves. If there is nothing fundamentally wrong, all you need is a couple of smart people on the other side to show that they're wrong," says Asquith.
Short selling is a scapegoat. And the Dems are attacking McCain for making Cox a scapegoat. But Cox has played a role, but not doing his job.

It is curious however how McCain decries "naked short selling" when like Cox and Bush, he's been anti-regulation for some time.

From The Boston Globe:
throughout his two-decade Senate career, McCain has cast himself as an outspoken critic of government intervention in the markets, saying that he is "fundamentally a deregulator."

"After all the years of tearing down the regulations that govern financial institutions, it rings hollow to claim that he will build them back up," said Elizabeth Warren, professor of bankruptcy law at Harvard Law School. "This economy is the direct consequence of the deregulation that John McCain fought for day after day, year after year, since the mid-1980s."
Christopher Cox is to this financial crisis and the SEC as Brownie was to Katrina and FEMA.

Leadership isn't going to come from the administration on this and you're not going to see any from the SEC either. There's been little real leadership on anything thus far.

What are some measures the SEC should have taken?
  • Enforce quality accounting standards that would have led to greater transparency and market confidence.
    • Instead the SEC has completely avoided this issue allowing companies to keep tens of billions of bad investments off balance sheets. Which has allowed for...
  • Prosecute the lies and misrepresentations made by corporate executives to their shareholders.
    • Because the books are unclear poor accounting standards, comments from CEO's and other corporate executives have been used to influence the investment community. Unfortunately there have been enough lies, rumors, and deliberate misrepresentations (which are illegal and should have been investigated and prosecuted by the SEC) that investors have been hurt and have lost faith the quality of information that is on the market.
  • Enforce existing rules.
Firms are collapsing because rules have been relaxed by the SEC.

From the Big Picture:
the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.
And I would maintain capital is pulling out because accountability standards have been eliminated and there's no way to know what you're buying short of being an insider.

The SEC is the police for the market, Cox is the guy in charge. The SEC is non existent.
Cox(ie) has got to go.

[The Crypt]

The Headline Says it All


Wednesday, September 17, 2008

Pelosi Barks at Bush and Bailouts

"Is it a free market if you privatize the gain and nationalize the risk?"
“This is crony capitalism manifesting itself in the meltdown of our financial institutions,” Pelosi said, lamenting the fact that taxpayer dollars would now have to be used to fund the bailouts."
VIA The Crypt

I have to admit I'm a bit jaded. This seems like a great way to help Obama and the Democrats case.

I'd like to see some sort of mea culpa of various Dems, mostly Chris Dodd, as they pushed through and authorized at $300 Billion Bank Bailout bill.

What I also worry about is Congressional Stock positions. From Capital Eye:
According to the nonpartisan Center for Responsive Politics, nine lawmakers have between $785,900 and $1.8 million of their own money invested in Merrill Lynch...Fifty-four lawmakers ... held stock in the company in 2007, worth between $1.9 million and $5 Million.

Eight lawmakers owned stock in Lehman Brothers at the end of 2007, valued at between $102,170 and $184,160.
And Again...
Of all of the companies facing major transitions over the last week, lawmakers owned the most stock in AIG. Twenty-seven lawmakers owned stock in AIG last year, worth between $6.4 million and $20 million.
Then there's campaign contributions with AIG, Bank of America, Lehman, and Merill Lynch contributing over $40 million to both sides of the aisle.

I'm going to leave out Fannie Mae and Freddie Mac for now.

Letter to Congress: Stop The Bailouts

Dear Congress Member

I've been very close to the markets for some time now. I'm very aware of the things that are going down now. I am also aware of many of the potential consequences as some of these institutions like AIG, Bear Stearns and others fail.

I submit to you however that these institutions must fail. By propping up housing prices, and the markets, prudent investors like myself, and better, functional institutions, are being robbed of actual cash by the less cautious, and more reckless market players.

Keeping these failing institutions is hurting market transparency, creating greater moral hazard in the marketplace, preventing new functional institutions from reinvigorating the markets.

I am one that believes very much in market policing, and I believe just as with FEMA and Hurricane Katrina, the bush administration has stripped the markets of much of the effective enforcement that could have mitigated some of the disaster we're facing now. But now, the current government intervention amounts much more toward Corporate Welfare, and a corporate run government. These actions do not represent the best interests of the markets or the people.

These actions seek to prop up institutions that have proven they are failures.

Please prevent tax money from going to these institutions. There are much better ways to let this economy adjust.

Thank you for your time and consideration.

Dilbert Creator Polls Economists.

Dilbert Creator Scott Adams paid for a survey company to conduct a survey of 500 Economist Members of the American Economic Association to see who they thought would be better for the Economy McCain or Obama.

When asked which candidate for President would be best for the economy in the long run, not surprisingly, 88% of Democratic economists think Obama would be best, while 80% of Republican economists pick McCain. Independent economists, who in this sample are largely from the academic world, lean toward Obama by 46% compared to 39% for McCain. Overall, 59% of the economists say Obama would be best for the economy long term, with 31% picking McCain, and 8% saying there would be no difference.
Interesting survey if you ask me. Check it out. And be sure to check out his thoughts on the results here.

Great move Mr. Adams.
[The Scott Adams Blog Via Freakonomics]

Tuesday, September 16, 2008

Paulson Gives Dodd the Finger

The Crypt

When Paulson announced he was planning on taking advantage of the new powers congress and the president allotted him in a recent Housing (bank bailout) bill and take into government control Fannie Mae and Freddie Mac, Senator Dodd, who introduced the bill was shocked, or at least he acted like he was.

He scheduled hearings on the bailout scheduled for today. The hearings were postponed today by Dodd. "At the Treasury Secretary’s request, I have postponed tomorrow’s hearing."

Of course Mr. Paulson must be busy dealing with everything that's going on the the markets with WAMU, AIG, Fannie, Freddie, and well every other major financial institution to look after right? No.
"It is regrettable that the Secretary has said he is too engaged in the current crisis to come before the Congress, yet is available to give speeches on the same day he was scheduled to testify," (a banking committee aide)

Apparently Paulson decided it was better to debrief the Brooking Institution today.

Monday, September 15, 2008

Where's Chairman Cox and the SEC?

Listening to the story of the SEC and Chairman Cox in this weeks “This American Life” brought up striking reminders of Michael Brown, FEMA and the disaster of disaster management that accompanied Hurricane Katrina in 2005. Michael Brown and Christopher Cox are evidence of and extreme neoliberal ideology that pervades the Bush administration.

The current financials crisis that is melting down Wall Street is worse now because regulators like Chairman Cox’s SEC and the FDIC haven’t been doing their jobs. Instead his lack of action is reminiscent of the the neoliberal idea that government should have little or no input in markets, an extreme position that believes that regulation leads to inefficient markets and bloated government.

How concerned is Christopher Cox with doing his job?
One Friday in March, with investment bank Bear Stearns Co. teetering toward collapse, the chieftains of U.S. financial regulation dialed into a 5 a.m. conference call to craft a bailout plan. When they were done, the Treasury secretary informed the president. The head of the Federal Reserve Bank of New York called Bear Stearns.

Christopher Cox, chairman of the Securities and Exchange Commission, didn't call anyone. Though the SEC was Bear Stearns's regulator, he didn't take part in the meeting.

In an interview, Mr. Cox said the time of the call changed overnight and no one told him. SEC staff members were on the early call and Mr. Cox says he was involved in calls later that day and throughout the weekend with his peers.

Big crises put Washington's regulators to the test. At pivotal times during the current financial turmoil, Mr. Cox has appeared peripheral. The next night, as Fed and Treasury bosses negotiated a bailout, Mr. Cox was at a birthday party. He was missing from a Sunday conference call announcing the sale of Bear Stearns and the Fed's plan to lend funds to investment banks. The following weekend, he left town for a family vacation.
In Cox’s own words “markets should be efficient, competitive, transparent, and free of fraud.” Citing potential problems with government own investments Cox says: “If government-owned investments lack transparency, they could contribute to market volatility stemming from uncertainty about the allocation of their assets.” Isn’t this also true with private investments? Since the start of the break down a year ago rumors, and blatant manipulations have been floated around wall street with impunity. Illegal statements made by corporate executives in an attempt to stave of disaster and help insiders have been made time and time again with no SEC enforcement actions to be heard of. In Enronesque fasion companies throught the markets have illegally misreported their financial situation in order to manipulate their stock price.

Where’s the transparency Mr. Cox? In a large part the lack of transparency is what’s destroying our markets. With full disclosure and a better understanding of each companies financial situation capital would have a place to go. But as it is, uncertainty is eating away at the entire market.

The ironic result of all this is that we’ve now come full circle, and are as far away from the neoliberal ideal as possible. With government take-overs of companies that are supposedly “too big to let fail” we are setting ourselves up for an even greater disaster when the money runs out or the debt reaches too high. We are now headed toward more of a Corporatic welfare state or the ultimate in corporate socialism where the government is inherently tied to propping up and maintaining the welfare of corporate interests at the cost to the people.

Where's the Real Polling?

I must admit I'm not much a fan of polls, I do believe they have an influence in shaping the debate.

The questions asked often end up laying out what's on the table for discussion rather than interpreting what's being discussed.

As a result some large and significant issues don't get addressed.

Looking at the issues going on in the markets these days it really is amazing that we don't see them being raised in the polls on discussed in the interchange.

What kind of issues might voters be concerned about?

Corporate crime and influence
Government accountability
The lack of party distinction
The rapidly growing national debt
The secretisizing of government
Denial of due process and habeus corpus
Expansion of government to spy on Americans.

These all very much could be issues if people were able to voice their reall concerns.

Posted by ShoZu

Saturday, September 13, 2008

AIG Stuck on Mortgages

Amidst the news of WAMU, Lehman, and rumors of Merrill failing, the insurer AIG is seeking to raise $20,000,000,000 to cover it's own shortfalls. UK Times Via Nakedcapitalism.

The company has been taking major losses in large part because of its mortgage and security insurance businesses. The losses are likely to continue to grow.

Here's what's odd. Business News Americas this week reports that AIG is hoping to inure 140,000 Mexican mortgages by 2013. The Mexican housing market, while not in the same position as the U.S. is currently showing signs of weakening. One can only hope the company learns from past experiences, so far that doesn't look likely.

Of course it doesn't look likely the company will be around by 2013.