I figured with the nonstop bad news everywhere, y'all could use a good laugh. The New York Daily News hired a Sarah Palin impersonator to go around New York City. Some of the comments from unsuspecting cityfolk:
“You're hot! But I hope you lose.”
“She seems smart. She likes hockey.”
“Obama '08!”
“If her parents see her with anyone who even looks like Palin, they'll strangle me.”
Interestingly enough, the comparison of the impersonator and the real deal show, well, a more worldy candidate in the impersonator. Probaby smarter, too.
There’s a line that threads its way through the recent spate of articles on our newest economic emergency … The Great Bailout of 2008 (yeah, the claimed credit crunch that will freeze the world under glaciers made of economic inactivity), and it goes something like this: “The lack of liquidity is making it impossible for banks to engage in intra-bank loans thus not enabling these same banks have the where-with-all to make loans to businesses and consumers (ya’ know … those bipeds that used to be considered people).”
You’ll see the above stated in various forms, but it’s almost always there.
Simple question: if banks are depending upon intra-bank loans to lend money to businesses and consumers (ya’ know … those bipeds that used to be considered people), who is supplying the input that banks are using as a basis for making these intra-bank loans? For that matter … is there any backing for these intra-bank loans?
Well yes, there is a backer for these intra-bank loans, and that backer is the same group who’re being asked to fund The Great Bailout of 2008. That, good people, is you and I and our family, neighbors, co-workers, acquaintences and others.
Trace these intra-bank loans back and you find all roads lead to the Federal Reserve Bank. This is the place where macro-liquidity (ie. system wide availability of cash) emanates from. This is why (when the time comes to fight wage inflation and protect stock market and financial instrument inflation) the Fed plays with base interest rates.
Raise the Fed rate and intra-bank loans get more expensive thus driving up the price of loans to businesses and consumers (ya’ know … those bipeds that used to be considered people). Lower the Fed rate and the opposite occurs. Higher rates will remove some of the capital liquidity (availability of cash) because fewer businesses/people will be applying for loans thus reducing the amount of cash running around … lower interest rates go the other direction.
IMPORTANT POINT: The Fed is backed by the full faith and credit of the United States, and thus any monies created by their loans has the same protection as that $10 bill, treasury note or other government issued financial instrument (including bailouts via credit financed purchases of bad debt related instruments).
What I’m describing above is nothing more nor less than a check kiting scheme. I write you a check that bounces, and when you complain I write another bad check to cover the one that bounced.
Under normal circumstances (ie. not involving the uber rich and powerful) once that second one bounced, I would be held legally and financially liable … you wouldn’t take any more checks from me, and life would go on.
With today’s intra-bank lending situation, however, people/businesses have been allowed to keep writing known bad checks to cover the last bad check. Out of liquidity? No problem … the Fed is keeping rates real nice and low just for you … and by the way … you can use those bad debt instruments that are making you run out of liquidity as collateral to borrow the cash you need for liquidity.
Not only can the banks continue kiting checks, but they can use the kited checks given them for intra-bank loans as collateral to cover their own kited checks.
And the buck does stop … not at the Fed, but at the taxpayer … because in the end we are on the hook because we’ve covered everything with the full faith and credit of the United States of America.
As usual flying under the radar Brian Dubie kicked off his campaign at what one newspaper is calling a quickly organized and quiet event. Dubie declared himself ready to “fill up his Saturn with gas ” and travel the state. A common criticism of Dubie is that he actually does very little in his post as Lt.Gov.and has few solid achievements to cite.
His website does make note among other things of his declaration of a symbolic heating emergency last summer or was it a symbolic declaration of a real heating emergency?
To help voters learn more about the candidate’s records and ideas, Costello(Dubie’s Democratic challenger ) proposed weekly conversations among the four lieutenant governor candidates at locations across the state, starting Oct. 2 at Castleton State College.
“His Thursdays are booked,” said Susie Hudson, Dubie’s campaign manager. She complained that Costello set the schedule without consulting the Dubie campaign.
A check this morning shows his official State website calendar of events listing only April and March 2007. The campaign website lists no campaign events …..just keep a sharp eye out for a saturn full of gas coming to your town (unannounced) .
With the winds of change starting to threaten Jim Douglas’s job (where he doesn’t have to actually do anything), he’s upping the slime ante to a level not seen in Vermont politics up to this point. To get a sense of what he’s scared of, take a look:
Rothenberg Report: Race was re-rated from “Currently Safe” for Douglas down to to “Clear Advantage Incumbent Party.”
Stateline.org: Re-evaluated from “Safe Republican” to “Worth Watching.”
Vermont Gov. Jim Douglas’ politically moderate profile and modest personal manner have enabled him to win three two-year terms as a Republican, overcoming the strong partisan trend that has given the Democrats the upper hand in his home state’s politics. And his Democratic opponent, state lawmaker Gaye Symington has to worry about losing a chunk of the liberal vote to independent candidate Anthony Pollina, who has long been associated with Vermont’s left-leaning Progressive Party and who has received the backing of several unions in the state.
But at least some uncertainty about the outcome has been produced by Symington’s prominence as the state House Speaker, along with a Democratic voter turnout boost likely to be spurred by Barack Obama’s effort to run the party’s presidential winning streak in Vermont to five elections dating to 1992. CQ Politics, which had rated the race as Safe Republican, has changed its rating to Leans Republican.
“She tried to pass off four years of bogus tax returns before the press caught her.”
The charge that Symington was passing bogus documents has clearly been demonstrated to be false, and not simply by this site, but by the very press Douglas is invoking. From Remsen:
The Burlington Free Press did not report that she filed separately, but did state — mistakenly — that the forms Symington provided were the actual tax returns she filed… The campaign also included a note on an accompanying e-mail to the media indicating that the documents were “pro-forma tax forms prepared by her accountant.”
Douglas and Casey know this, but put out this trash anyway. A naked lie – one that they couldn’t sell the press on at the time, but we’re in the era where McCain-style casual, routine lying is a bona fide communications strategy. After years where he’s derided his opponents as “flip floppers”, “Mr. Property Tax,” calling them Commies by tying them to Sandinistas and accusing them of “squealing like a stuck pig,” Douglas is showing he’s willing to join his presidential candidate in taking sleaze to this next level.
As a Vermonter, I am both ashamed and disgusted. Let’s get some letters to the editor calling Douglas out for exactly what he’s chosen to become.
Congresswoman Marcy Kaptur took only 5 minutes to describe the administration’s shell game, propose a solution that protects the American people and call for an independent counsel to investigate the architects of this colossal economic failure:
Oddly, she seems disinclined to give the architects of failure a building permit for more failure.
I like her proposal. A lot.
These people created the “$10 trillion global over-the-counter credit derivatives market.” $10,000,000,000,000,000 is a lot of money. It’s a whole lot more than $700,000,000,000. Here, I’ll line them up so you can see the difference:
700,000,000,000
10,000,000,000,000
Notice those extra zeroes? Not really impressive when you see it that way. Hmmm…
How about this:
If you had a 4″ stack of $1 bills, you’d have a million dollars. Imagine what you could buy with a million dollars!
Now, if you had a billion dollars, that stack would be 47.35 miles high. Your arm would get really tired.
If you stood all those $1 bills on their sides and packed them together, you could drive from Burlington to Montpelier and half way back without driving over the same bill twice.
Imagine how many bridges we could replace with all those $1 bills!
Now for the bailout: if you had 700 billion dollars in $1 bills, you could do two round-trips from Burlington, VT to Washington, DC on them, and still have enough left to make a few side trips to Allentown, PA (in case you wanted to see some abandoned steel mills), or a one-way trip to Boston, MA!
That’s just for the proposed bailout’s first installment or $700 billion dollars (remember, it’s a floating window. They can keep spending, but there can only be $700 billion outstanding at one time – so they sell something, pay back a part of the $700 billion, then turn around and buy something else to bring the total back up to $700 billion – it’s like a magical refilling debit card).
Now back to that $10 trillion dollars in voodoo they call “over-the-counter derivatives.” That’s the bailout times 14.29. You could drive around the earth 19 times on those $1 bills, plus a couple dozen side trips to Montpelier.
Most of those “derivatives” are really just bets that the value of mortgages would continue to go up.
But the bets weren’t placed against actual individual mortgages. Instead they were placed on collateralized mortgages. To collateralize mortgages, you take all the mortgages held by your bank, and toss them into a giant mortgage Cuisinart.
It doesn’t matter if the mortgage is good, bad, whatever – in it goes. The output is then divided up into “bad,” “not so bad,” and “looks good to me” batches, then those batches are sold off to the highest bidder.
The derivatives folks didn’t really want to buy the things, they only wanted to place a bet on the future value. Someone else owns the actual mortgage sludge, these guys simply own the right to make a profit if a buyer pays more for the sludge than the guy who bought it before them.
The sludge is passed around from investment bank to investment bank over and over: it’s a little merry-go-round o’ sludge. And the derivatives market places bets, takes profits, and everyone’s happy.
Until the day that someone says, “Gee, I don’t think this batch of sludge is worth that much. If you want me to take it off your hands, I’m only going to pay this much.”
Now all those bettors, who were betting on the value to go up owe their bookies. But see, the bets had very long odds. So now they owe their bookies a LOT. Like kajillions of dollars.
Sadly, between the derivatives, actual mortgages, CDOs, insurance swaps, and all the other weird unregulated debt vehicles the financial industry has created over the last decade or so, the amount owed is greater than the entire value of all the treasuries on the planet.
Oops.
It might not be so bad, if the bettors were just a bunch of numb-skulls betting their own money.
But they weren’t. They were investment banks. And they bet our money. Our pension plans, our 401ks, our municipal investment accounts, our IRAs, our CDs. Just about anything that had dollar signs attached was used as the downpayment, with the expectation of large returns.
Now the returns have dried up. And the stuff that’s been promised as collateral … well it doesn’t actually belong to the bettors. And the amount owed doesn’t actually exist on the planet – even if you put every penny from every treasury on the line.
This means someone’s taking a hit.
A really big hit.
And the bettors want it to be us.
And they’ve come up with all these reasons why it’s our fault. After all, we took out the mortgages on the houses whose values kept rising, enticing them to make the bets with the money they were holding in trust for us.
So they want us to refill their pockets with a portion of the money that is owed, so they can quickly pay off their bookie and only get knee-capped instead of being fitted for cement overshoes.
And they want to do it behind closed doors, so we can’t see that even after they pay off their bookies with enough $1 bills that you could drive back and forth from Burlington to DC twice (with side trips to Allentown) without touching the same bill twice, they will still owe enough tightly-packed $1 bills standing on their sides to travel around the world roughly 18.8 times (you’d only end up 4,980 miles from home on that final trip – which is only 700 miles longer from a trip to Wasilla, Alaska!).
Buckle Up, and Enjoy the Drive!
[UPDATE: I dug up the source for the original math – they’d made a boo-boo. So I went to a school web site and downloaded this PDF File and did my own math.
I also clarified that the derivatives are only one piece of the big pile of crud that exceeds the total money actually extant on the planet. Sadly, we’re still in very, very deep doo-doo. Certainly deeper than we’re going to get out of with a silly little $700,000,000,000 bailout, even if it’s a moving window.]
I guess we won’t be hearing much of anything about why Douglas deserves to be reelected, but at least we’ll get plenty of personal attacks on Symington:
So I was hovering around Huffington Post until I noticed their top story today. Check this out.
Jason Linkins writes:
“A critical – and radical – component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that’s so flat-out astounding that it ought to set one’s hair on fire.”
It definitely set my hair on fire. Are you all ready? Here’s what the bailout text says:
“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.”
So the mother of all bailouts CANNOT be challenged by the courts. Does that make any sense? Is this even legal? Some answers would be great.
Kudos to Huffington Post for finding this. Has anyone else been covering this aspect of the bailout? It looks like The American Prospect’s Robert Kuttner has delved into the issue… but not many.
Folks, this Section 8 of the bailout consolidates A LOT of power in the executive branch. I’m confident Leahy, Sanders, and Welch will vote against it but there’s got to be something we can do as bloggers to make sure this doesn’t pass. To read the Huffington Post article in full click here.
The Vermont Public Service Board will hold a statewide public hearing tonight on the fate of Vermont Yankee’s relicensure. You can participate in the hearing at VIT (Vermont Interactive Television) videoconferencing, beginning at 7 pm at the following locations:
Bennington, Brattleboro, Castleton, Johnson, Lyndonville, Middlebury, Newport, Randolph Center, Rutland, Springfield, St. Albans, Waterbury, White River Junction, Williston, and Montpelier.
Click here to find a location near you. The hearing runs from 7 pm to 11 pm.
If you’re at one of these locations tonight, feel free to leave us some updates. Be great to hear how it goes. Thanks!
Rasmussen will probably be in the field with a Vermont Governor’s poll this week. The high profile polling outfit has been steadily polling on big ticket races around the country, and actually wrapped a Vermont Gov poll early last week. Problem was, it didn’t include Independent candidate Anthony Pollina, and when they heard the news that he’d received 7% in the Research 2000 poll commissioned by WCAX, they decided to reboot.
So I begged the guy for the gist of what their numbers were – promised that I wouldn’t reveal it was Rasmussen numbers – but no dice (of course that means I’m free to tell you it was Rasmussen now). All he would tell me was one thing that he repeated three times:
It was “close.” Clearly, he didn’t realize how impactful just that simple assessment would be, given the political history.
So we should hear more soon – all clearly post endorsements. What I’m also expecting to see soon is Douglas do what Douglas does – get really really nasty with the ads. By this time in the last few cycles we had seen, or were just starting to see, stammering Clavelle, the “Sandinista” red baiting schtick, “Mr. Property Tax” – and I think even the Racine “flip flop” ads. Sure, there’s the radio ad where Douglas brazenly distorts Symington’s record, but that’s hardly in the same league.
In fact, if we don’t see them soon, it’ll be time to ask why not. Are the numbers closing? Is Douglas afraid to push up his already high negatives?
I assume we’ll see them shortly. He goes negative when he doesn’t need to – and spends a lot of campaign money to do it. He obviously digs it.
