Gov. Eliot Spitzer’s eerie prediction on our current economic crisis, written Feb, 08!

“When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.”

http://www.washingtonpost.com/…..02783.html

(My take on this crisis, is that Lenders suckered average folks into mortgages which they could afford at first. Because there were no Regulations or Oversight, these Lenders would raise the monthly mortgages to an amount they could no longer afford! The houses were then foreclosed on and then re-sold again to some other unsuspecting victim, until the whole deck of cards has collapsed. What is compelling, is that before the total collapse, CEO’s pay themselves millions, sometimes billions as compensation pay for the said collapse!)

For instance, “In 2007, Wall Street’s five biggest firms– Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley – paid a record $39 billion in bonuses to themselves.” From ABC’s Political Punch

Could one of the Main reasons why these companies fail and go under, be due to the enormously high salaries paid to CEO’s (millions of dollars a year salaries) which actually, and in the end, bankrupt these companies!

The pay of most, if not all, of Wall Street CEO’s was based on profits. It was in their interest to gin up huge profit numbers even if the profits were only on paper. They colluded to spin up a mixed bag of mortgages into trillions of dollars of derivatives, CDO’s, credit default swaps, etc., because they made themselves a shitload of money doing so. America could take the hit of mortgage defaults but not the rickety tower of paper built on them because deregulated banks were allowed in on the ‘bonanza’ and the real money that was being loaned to real people and real businesses was suddenly put at risk by the collapse of Wall Street’s castles in the air.
Clearly, Clinton, minorities, the media and whiners are to blame for this debacle.

Damn, what will I wrap my fish in now? Guess I’ll use the New York Post, but last time I did that, it made the fish smell really bad.

With the overdue demise of the Sun, AIPAC loses a mouthpiece. Excuse me while I grave dance.

Lipsky: “Our losses, which are substantial, have been covered so far by a group of investors whom we would call heroic.” Feh, others would perhaps call them suckers, but let’s not bicker about wording. Suffice it to say that even the most hardcore conservative investor won’t continue to throw good money after bad. And if they can’t get the taxpayers to pick up the tab, then the party is over. And that leaves a lame rag like the Sun so outta luck.

Isn’t it striking how Lipsky & Co. would argue vehemently that this is exactly how the market is supposed to work and that’s why we should have no pity on people who can’t afford health care or a home, but suddenly here’s this lame sob story pitch for mercy and more pocket money to continue publishing “The Annals of a Neo-Con’s Wet Dream”?

Fistfights broke out as the NY Sun’s editorial staff struggled to get through the door of the Washington Times.

I’m praying for a soft landing for Alicia Colon. She’s my most favorite pathetic but psychotically insane wingnut.

You want her to land on her head?

A forest of a thousand Scotch Pines sighed in relief….

Pammycakes Shrugged must be beside herself now that this latest portent of the unrushing waves of savage liberals has been loosed upon the great city.

And the Sun sets in the East.

That’s Just What I Said

Can someone tell me why, if the credit markets are frozen and people won’t lend anyone money, they don’t just raise interest rates? Wouldn’t that make lending money a more appealing prospect?

When they say the credit markets are frozen and no one is lending, don’t they really mean that no one is lending CHEAPLY? This easy credit system that’s built up on cheap lending is relatively new. I remember when rates were 9 or 10 per cent.

Good point George. From what I can gather as a markets and econ geekette, the problem here is counterparty risk; banks don’t want to lend to other banks because they can’t be sure if the bank is good for the collateral they are offering in order to back their loan. The rates for this kind of lending have increased significantly, but banks would rather sit on what they have than take a huge risk of lending to the next Wachovia to when the loanee could go tits up the next day and not return the principle, much less the vig. Net result is no money is moving between banks, and the wheels have come off the loan machine for everyone from a large bank to a small business trying to make payroll or a farmer trying to get his annual harvest loan.

The Federal Reserve only sets the discount rate that Federal Reserve banks charge banks to take out overnight loans (these loans are used to balance the books on a daily basis). They do this by how much money then inject into (or remove from) the money supply; they don’t just say “that’s it, only 2% is legal today”. Last night they shoveled HUGE amounts of money into the system to try to stay at their target interest rate.

I remember when rates were 10% too. Houses were significantly cheaper because no one could pay a 10% mortgage unless the princple was smaller, and the economy was moribund. Welcome back to the 90’s (if we’re lucky) or perhaps the 70’s (or, Dog forbid, the 30’s), only with different music. If everyone’s home price drops back to what it was in 1990, then maybe 10% rates will be back; or maybe the latter will end up causing the former. Either way, this is going to be a really rough patch of road we have to travel and with a raging hangover on top of it all.

I find this amusing. There are 38 days to go in this election. On the FDL and EW and Campaign Silo tabs there has been breathless blogging on every perceived twitch and burp by the candidates.

Yet the bloggers on those tabs are loath to touch one very obvious issue that is a major issue although it’s not going to prevent Obama from winning the general, but it is almost as amusing as watching the mean spirited bitch Sarah Paylin and her Church Lady persona melt down and cause major stress for the bastards Schmdit and Davis.

That issue is the overt, palpable, conspicuous in your face effort of the Clintons to fuck up Obama’s campaign any way they can. I predicted it all along; I noticed it as the Hillrumonster kept rearing her nasty passive agressive Borderline personality head after Obama had clinched the nomination with the bullshit they pitched at the DNC and prior; and it is now official.

The Clintons are doing everything they can think of to help McCain win and no one on the FDL, Campaign Silo, or EW tab will touch it. I find this particular behavior as comatose and non responsive as Jim Lehrer was in Debate I. I wonder what the dynamic is that makes such otherwise prescient and talented bloggers loath to recognize the Clintons’ effort to defeat Obama.

The New York Sun, the six-year-old newspaper with a conservative mind-set, announced on Monday that it would close after publishing Tuesday’s issue.

Boo Hoo! I pray more will follow.

Are you kidding me?

If interest rates nudge up even slightly, more people will be forced to foreclose on housing that is priced beyond affordability. Add to this the enormous debt of the nation (in excess of $9 trillion prior to the financial collapse) and the fact that many people have lost their jobs and…well I don’t think I have to spell out why raising interest rates (yet again) would cut it.

The lighter side of Meltdowner John’s history of deregulation.

In a world gone insolvent, an unstoppable force travels from our past to destroy our future. He is . . . The Deregulator.

http://snipurl.com/3xln8

Then kick back and enjoy America’s least favorite reality game show: Drop the Regulations!

http://snipurl.com/3xlop

I guess Amity and her hubby are finding out that their neocon buddies aren’t interested in helping with the money they made off the war which they were happy to pimp.

But doesn’t that only apply to ARMs and the other ponzi-like loans that were put into circulation during the hey days of deregulated, predatory lending? I mean, my mortgage is locked in, so no matter what the market does, I know my rate and my monthly cost. I can only assume that the real problem w/ raising rates at this time is the disincentive it would be for potential new buyer’s to close a deal — and of course the increased cost to businesses that are already struggling w/ rising costs of oil + inflationary pressure.

I still want to know exactly who takes the loss if Bailout Plan 2.0 has us (the gov) sticking to buying out actual mortgages while ignoring the whole derivatives market (legalized gambling) that seems to constitute most of the god-awful shitpile that Paulson wants us to buy from his oh, so fucked up friends. But if it’s all largely fictional anyway, where exactly would the buck stop if we simply said “hey, you chose to mess with these ridiculous bundles of other people’s debt, you hold the bag”?

ARMs would be toast for sure, but rising rates hit everything: credit cards (the new “People’s bank”), student loans, business loans, etc; we are a economic system that depends on debt and stringing out payments (see the health insurer of your choice for specific tips from the pros).

I agree that the bailout should just buy mortgages, and not get involved in a game of ‘we say these CDO’s & CDS’s are worth the sky and more’ with slimy weasels who will do anything they can to get the Feds to overpay for this crap. If the derivatives they played with are now so dangerous to their financial health, well isn’t that the Invisible Hand doing what it is supposed to do? Just like it did with this useless neocon “news”paper?

After his finessing of the financial crisis, Bush’s approval rating fell to a new personal low of 27%. Guess that would be the 22% of Americans comprising his wingnut base, plus the 5% comprised of corporate executives and other investors in the financial sector who bailed in the past 5 years with nine figure golden parachutes.

I don’t care what anybody says. We went from the biggest creditor nation to the biggest debtor nation in eight years. This was all on a republican watch. You can spin it to Moses to Bush as the second coming of Christ if you choose but, it changes not the fact the GOP is responsible. And mostly everybody else are bystanders to this with the exception of their Wall Street cohorts and partners in crime. Enough said.