The Expansion of Eye on Washington

This blogspot has been expanded. Over the past few months, additional blogspots have been added to the "parent" blog. The additional blogspots can be found highlighted in red, along the right side of this blog page. There are 4 additional blogs all created and written by Carl and me (Jerry).

At the top of the list is A New American Paradigm. Next is Consumer Thrift Reform Movement. Third is Handmade Manufacturing. And fourth is The Nitwit Awards.

In A New American Paradigm, we will write about our views on how we might all approach finding our way into the future. I see the future of America to be very different than the one that has been shedding its "chrysalis" which has existed for the last 80 years or so. "The times they are a changin" and it may not be a pretty sight for many.

The blogspot, Consumer Thrift Reform Movement will discuss what consumerism might look like in the New American Paradigm we are entering.

The blogspot Handmade Manufacturing will focus on the Real Economy and those who are building it with their hands. There will be pieces on businesses that make things. Let me know if you want to be featured.

The Nitwit Awards is just a place to point out the outrageousness of those who say the "darnest things"!

In addition, please check out our wide ranging collection of assorted videos found on the Web, which you can access above. Just click on "Eye on Washington Video". You can also watch us our weekly--done live--talk show!! Click on the screen that says Ustream in the upper right corner.

Thanks for coming around. Jerry and Carl.

The Great American Swindle Is Obama's Big Mistake!

There were 116,011,000 households in the United States, in 2006. Of this figure, 2% exceeded $250,000. 12.3% fell below the poverty line. 20% were living at the bottom of the income ladder with $19,178. Median income was $50,233. No doubt, these figures have worsened. The top 6.37% earned 1/3 of all income. Median income per household member was $26,036, in 2006.

The top 2 quintiles of income earners earned over $91,000, which was 77%, in 2006. The 2 mid-quintiles earned between $36,000 to $57,000. The lowest quintile earners earned $19,000 or lower. A quintile equals 20% of a given amount.

The Chinese middle class population has 100 million to 247 million people. There exports dropped 25.7% in February YoY, for the fourth straight month as the world demand began to shrink. The Chinese imported less, as well. They bought 24.1% less stuff. Professor Michael Pettis reported on his blog, an article printed in the Financial Times quoting the Commerce Minister Chen Deming that “China will reduce export taxes to zero and give more financial support to exporters as it tries to increase its share of global trade in the current crisis.” It went on to say that China would “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” Chen Deming went on to say, “We should increase our share of the global market…We must transform ourselves from a big export nation to a strong export nation.” So, how come President Obama is not saying the same thing? Oh, I forgot, he is saying that about zombie banks.

Professor Pettis wrote the following, “It’s probably not a good idea to announce a drive to increase China’s share of the global market, especially since for the last several months, while the world has suffered a collapse in demand, China’s share of exports has risen dramatically, but this may have been said primarily for domestic consumption.” Mr. Chen realizes that China is facing tough times ahead with their foreign trade business. This will mean that China may likely find their trade surplus falling quickly to a reported amount of $4.8B. We haven’t seen a trade surplus for a very long time. Professor Pettis stated that there are many who feel that the days of massive monthly trade surpluses are over.

President Obama and you Knights of the Roundtable, if massive trade surpluses are likely to come to an end, then which countries will continue to fund our budget deficits? Professor Pettis sends out a warning. “There is a real need for an adjustment consumption in the U.S, and I don’t think it makes sense for the U.S. to attempt to replace excess household consumption with excess government consumption. One way or the other the U.S, along with China and most other countries that have contributed to one side or the other of the global imbalances, is going to have to accept a demand contraction….Trade friction is an issue that will not easily go away.” He concludes his intelligent and insightful writing with this, “…China would be able to keep its growth at about 8 percent this year, a growth rate long believed to be minimum to create enough jobs and maintain social stability….China’s economy accounted for only five percent of the world’s total.” China alone cannot revive the world.”

U.S. manufacturing has declined over the last 12 consecutive months. And, these top ten red state hypocrites received the most per dollar spent in federal spending:

New Mexico=$2.03, Mississippi=$2.02; Alaska=$1.84; Louisiana=$1.78, West Virginia=$1.76, North Dakota=$1.68, Alabama=$1.53; South Dakota=$1.53, Kentucky=$1.51, Virginia=$1.51. So much for rejecting socialism!

President Obama and Team, what amount of growth does the U.S. need to create enough jobs and maintain social stability? It seems you are more concerned in stabilizing the balance sheets of the uber-richest people, and banksta thieves. Is the People’s Republic of China on to something we are missing in the home of the brave and land of the free?

One in five homeowners are underwater, which means that the value of the home is more than what the home actually is. This means that the home is not as valuable as the mortgage and the house is not worth what the owner is paying for the mortgage. This is when the owner might actually consider walking away from what might be considered a lost cause. Such homeowners are typically those who are able to pay on their overpriced mortgage, but instead, might think of packing up and walking away from it. If an unfortunate life situation occurs that would cause economic pressures to bear down on their expenses creating undue financial stresses, the owner might just give the keys over to the bank.

If your house is worth more than your mortgage, you can often refinance, but it won’t work the other way around. When the mortgage is worth more than the current value and the payments, the payments are not paying the house off. This is called negative equity. Often the homeowner is paying on a mortgage in excess of the value of the house and is not paying anything on the house and not getting closer to any ownership of the house.

When the mortgage is bigger than the house value no bank will refinance. It locks the owners into their own home without ever getting a chance to sell at a break-even or profit price.

1 in 10 homeowners are in default or in foreclosure. 10,000 Americans enter foreclosure everyday. 2.3 million homeowners were in foreclosure in 2008.

42,000 companies closed in 2008, up 45% from 2007. It is predicted that 62,000 companies will close in 2009. So what happens? Workers lose their jobs. Then they realize they can no longer keep paying on their mortgages, credit cards, cars, or whatever else, and walk away from those specific debt burdens, since the government is not helping them, but only the mega-banks with $11T in commitments. For example, Citi, which is only worth $5.4B has been given $75B in taxpayer bailouts. AIG, which has a total market value of only $1B, has been given $180B in taxpayer bailout funds. Yet the taxpayer is left hanging to blow in the wind!

The FDIC placed 20 banks into receivership in 2009.

When one looks at unemployment, underemployment, those no longer looking for work, no longer in the data bases, and working a part-time job instead of a full-time job, or a part-time job that pays less than the last one they lost, the figure is 15-19% un/underemployed. This number rises to over 22 million people. During the Great Depression, at its peak we had 20-25% unemployment.

50 million jobs have been lost worldwide just in 2009. We are shedding jobs at a rate of 23,000 jobs everyday! 4.4 million jobs have been lost since the crisis began last year, and 6.8 million underemployed. The recession began in 2007, and already has stolen over 4.4 million jobs away from the real economy and sent 12.5 million in search of work. The economy contracted at 6.2% in the final three months of 2008, and the worst we have seen in the last 25 years. The economy will see further contraction throughout this year, possibly at the same rate.

In the world of banking, and found in the article by Bill Dedman, 3-17-09, MSNBC.com, U.S. Banks Suffer 149% Rise In Bad Loans, “Out of 8,198 banks for which we have two years of data, 5,784—or 71%--had a higher troubled asset ratio at the end of 2008 than a year earlier”. “The picture was worse for the largest 100 banks: 90 showed declining strength. Only seven improved, and one maintained the same ratio.” Data taken by the American University group that had created the website, Bank Tracker.

On March 23, 2009, the DOW climbed back up to its January 2009 level—7775, which was the lowest it had ever been prior to that same all-time 5-year low back in October-November 2008. Prior to that it was 2002-03, then prior to that was 1997-98, which was the all-time high up to that point in time.

U.S. bank’s toxic assets, the ugly stuff that needed to be removed from the bank balance sheets before the economy can recover, amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50-60 cents on the dollar. Translation: as much as another $2T taxpayer bailout, was written by Mike Whitney, Counterpunch.org, “Time for Geithner and Bernanke to Go”. Mr. Whitney also quoted from the Financial Times, “The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their collateral debt obligations, although market value was only 47 cents on the dollar.” He went on to report that around March 3, 2009, “Within days after Obama announced plans to slightly reduce tax rates on deductions for the wealthiest 1.2% of taxpayers (from $35 to $28 for every $100 of deductions), Geithner quickly suggested that the Obama administration would be willing to drop or reduce the tax hike.” So much for helping the struggling working American.

$314 billion has been handed out to foreign central banks, while $600 billion was transferred to those same banks in December 2008. Bernanke and Geithner are printing up $2T for the latest scam called TALF, or Term Asset-Backed Loan Facility, in order to create more loans from auto, student, credit card loans, and business and corporate loans.

Since Reagan, US growth has only been 3% or less per year! Once the Commodity Futures Trading Corporation was put into play, in 2000, $62T in derivative trading grew by 2008.

It is said, with all the government obligations and debts, it is $60T in debt. Zbignew Brzezinski, former national security advisor under President Carter, told Joe Scarborough (Economic Crisis=USA Riots, 3-10-09, Ampedstatus.com) that there is the possibility of class warfare in the United States. “I was worrying about it because we’re going to have millions and millions of unemployed people in dire straits. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America…”

One in 50 children are homeless! California, the 10th largest population in the United States had nearly 300,000 two years before the last stock market high in 2007. Sacramento leadership is now talking about government controlled and legal tent cities where the homeless can be taken and held. It is estimated that there are 1.5 million homeless children across the country. California ranked 40 out of 50 states with Texas being number 50, The State That Breeds Presidents. They don’t call it Lone Star for nothin’!!!!!! Is this the type of nation we want to pass on to future generations?

Yet we continue to spend $500B in the Middle East wars, and more billions in maintaining military domination with our 1000 worldwide bases in 200 countries. This military budget is more than the world’s entire military budgets put together! Yet, we have watched 23,000 jobs disappear everyday, and homelessness gather momentum. Is this the kind of nation YOU want? Is the type of country YOU want to pass on to others? Are YOU proud of this?

U.S. air cargo declined 21.3% in January 2009. In the March 6, 2009 online version of The Journal of Commerce, it was written that cargo traffic for U.S. airlines fell at the steepest rate since 9-01, in January. Carriers saw their worst month for cargo in nearly seven years. Domestic business tumbled 16.6% in January 2009 compared to a year ago. “The 838.3 million cargo ton miles the airlines reported was the lightest monthly domestic traffic measure since September 2001, and before that since February 1995.”

The Journal of Commerce-online continued to indicate that KLM air cargo business fell 18% from a year ago. British Air’s air cargo fell 20.7%. Asia/Pacific shipments dropped 17.7%. U.S. air traffic dropped 13.9% in February 2009.

Asian air cargo slumped 23.6% in January, and passenger numbers fell 7.8% as was reported in the Association of Asia Pacific Airlines, said on 3-6-09.

Container port traffic for February, found on bomlat.blogspot.com, stated that the traffic was down for another month. The February Chinese trade surplus was only $4.84B, which was 25% lower than the same period in 2008, and even lower than January, 2009 surplus. “The containerized exports in February were down 27.6% in Los Angeles, and 37% in Long Beach. The decline in imports was even greater, 35.3% in L.A. and 43.3% in Long Beach.” “The First Container Terminal in St. Petersburg, Russia’s biggest box terminal, reported traffic in February plunged 27.3 percent from a year ago as imports collapsed.” “Dutch foreign trade was hit hard in the global economic crisis with exports tumbling 21 percent in January from a year earlier, the biggest drop since the records were kept in 1990, the Dutch central statistics bureau (CBS) said on Friday. The value of goods exports fell to 24.4 billion euros (31.5 billion U.S. dollars), the CBS said. The volume of exports fell 14percent, according to figures corrected for working days. Imports also plummeted 22 percent to 21.6 billion euros, while the volume of imports decreased 14 percent.”

From what I have read the Truck Mileage Index of the U.S., in January 2009, has declined by more than 10%, as well as the truck inventory by 50%, which means that the investment in trucks has dropped.

73,000 retail enterprises have closed in 2009. 237,000 are projected to fail.

These numbers indicate that there is a worldwide consumer slowdown, so why are stock market numbers going up? It is all a head-fake!!!

Professor Joseph Stiglitz, Nobel Laureate in Economics, wrote in the Nation magazine, in his piece titled “A Bank Bailout That Works”, said that the banks are $2-3 trillion or more undercapitalized!

The IMF stated in a BBC report “there is now $2.2 trillion of toxic bank debt worldwide, and $500 billion more than it was estimated a few months ago.”

When workers lose their jobs, they cannot repay their debts, or afford to borrow, and when underemployed, their debts may exceed their income and/or assets. Also, the debt interest rates or borrowing costs on the debts could be too high making the payment process non-payable.

The vicious downward spiral begins. When workers lose jobs, businesses downsize and might have trouble paying their own debts. When workers lose jobs, they stop being consumers, then more businesses close and Pink Slip workers. Strip malls lose tenants, and close up. Developers seek bankruptcy protection. The economy slips further into its black hole toward depression. It ends up that all the money thrown at the mega-monopoly financial institutions, which are already insolvent, cannot issue credit. Credit becomes a moot point because there are fewer borrowers, yet these banks are filled with taxpayer dollars jacking up their “liquided-up” balance sheets. Yet these insolvent institutions continue to look the other way at their toxic debt-assets burning up all that we taxpayers have given them. Yet Citi claimed a profit, while not factoring in all their toxic debt into the supposed profit, as well as the fact that the taxpayer owns 80% of their stock. It is all a bad joke played on Americans!!! And, the administration is not calling them out.

Matt Taibbi, wrote in Rollingstone.com, in “The Big Takeover”, “In the final three months of last year, the company [AIG] lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street…” (This article will explain the financial Ponzi scheme.)

The “Big Mistake” ends up glaring in the face of President Obama and the angry Americans that the bailout went to the wrong places, and the wrong people. Instead of rescuing mortgages, retirement funds, and jobs stabilizing the economy and easing troubled minds, we got a failed top down bailout plan. Does this look to you a little bit like Reagan’s failed trickle down economics theory, which delivered us into this economic tsunami?

thanks for reading, jerry

Postscript: This article can also be read at Economicrot, as well, thanks to Randy posting there!

Bill Moyers speaks with William Black, economist and former regulator about the banking fraud beginning back to Reagan. Mr. Black speaks about the current fraud, the cover-up, and that Geithner and Summers are deep within the fraud and cover-up. Watch it.

Is The Resurrection of Barack Roosevelt Obama Coming?

Has Timmy Geithner been listening to the title song’s chorus on the great new Van Morrison recording, Astral Weeks-Live at Hollywood Bowl? The chorus is, “I believe I have transcended.” Has the Man-From-Uncle-Goldman Sachs been transcended from the financial crime syndicate’s Trojan Horse into a higher plane where he now wears a big flowing red, white and blue cape as he does battle to rescue the US economy from eminent danger? Oohh Baby, I’m getting chills already!

University of Missouri and economics Professor Michael Hudson, Ph.D, wrote in How The Scam Works, brings up this example that if a “bank now offers $3 million to buy back mortgages [from another bank that believes they are sitting on a $10 million package of collateralized debt obligations that had been put together out of junk mortgages that] what the hell, the more they bid [up], the more they [can] get from the government. So why not bid $5 million. [If] the government-that is, the hapless FDIC-puts up 85% of the $5 million to buy this-namely, $4,250,000 [package, then] the bank only needs to put up 15%-namely, $750,000.”

“Here is the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.”

“The more [money] the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85%. So the strategy is to overpay, overpay, and overpay. Paying 15% is a small price to pay for getting the government to put in 85% to take the most toxic waste off your books.” What an incredible scam upon the taxpayer!!!

Mr. Karl Denninger of market-ticker.denninger.net wrote in his 3-19-09 piece called Bernanke Inserts Gun in Mouth, he said that “ The error in the hyperinflationist scenario is that without being able to couple price increases back into wages they are unsustainable-price increases instead of collapse demand [collapse of demand and falling prices]. If gasoline goes to $20/gallon you will buy less of it-a lot less-not because you want to, but because you simply don’t have the money. This in turn destroys the gasoline retailer and oil company’s operating cash flow, which in turn causes them to lay off more people. In a debt-laden economy the debt percentage (of GDP) continues to rise even as spending drops and a mad dash to try and redeem what debt can be repaid soaks up all available money.”

“The nightmare scenario that is staring us in the face, right here, right now isn’t hyperinflation. It is in fact a collapse of monetary systems driving demand for dollars through the roof in a crescendo of attempted redemption into collapsed (“no-bid”) asset prices-a demand that Ben [Bernanke] will not be able to meet, as the collateral backing those dollars will have been exchanged for toilet paper. Whether Bernanke holds all this trash on his balance sheet or manages to scam Treasury into exchanging it for T-bills, the result is the same-there is no collateral behind the Bucky [dollar] and as employment collapses no production to replace it will [be there] either.” This might be really hard to get your head around such an economic picture!

Columbia Business School’s Professor Joseph Stiglitz, Ph.D. and 2001 Nobel Prize winner in economics, wrote (Fiscal Plan Fails Both Markets and Taxpayers, 3-24-09, Project Syndicate) “Trickle-down economics almost never works. Throwing money at the banks hasn’t helped homeowners: foreclosures continue to increase. Letting AIG fail might have hurt some systemically important institutions, but dealing with that would have been better than to gamble upwards of $150 billion and hope that some of it might stick where it is important.”

I have said this all along--this is nothing but a trickle-down scam. Professor Stiglitz went on to say that the lack of transparency was the problem and will not offer a solution. By bribing hedge funds and private investors to buy up the bank’s bad mortgage assets will not result in the establishment of a true “market price” for these toxic bombs. Bank losses are already a fact, and now the taxpayers are being told this will be a win-win for just the banks and the government; but how is this a win for the taxpayers who will get stuck subsidizing an over-valued price? The taxpayer will see a loss: privatize the gains; socialize the losses.

University of Texas, LBJ School Professor of economics James K. Galbraith, Ph.D. wrote (This Crisis Is Way Bigger Than Dead Banks and Wall Street Bailouts, 3-25-09, Alternet.org) "In late 2007, the ratings agency Fitch conducted this exercise on a small sample of loan files, and found indications of misrepresentation or fraud present in practically every one. The reasonable inference would be that many more of the loans will default. Geithner's plan to guarantee these so-called assets, therefore, is almost sure to overstate their value; it is only a way of delaying the ultimate public recognition of loss. while keeping the perpetrators afloat. When a bank's insolvency is ignored, the incentives for normal prudent banking collapse. [Management] may take big new risks, in volatile markets like commodities, in the hope of salvation before the regulators close in. Or it may loot the institution--nomenklatura privatization, as the Russians would say--through unjustified bonuses, dividends, and options. It will never fully disclose the extent of insolvency on its own. [Management will likely engage in a] combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place? The odd thing about Geithner's program is its failure to act as though the financial crisis is a true crisis--an integrated, long term economic threat--rather than merely a couple of related but temporary problems, one in banking and the other in jobs." One cannot help but believe that President Obama and Timmy Geithner are not afraid of the less powerful manufacturing CEOs, since they will force them to resign in exchange of government economic support, but are very afraid of the big time thieves deep within the financial industry's syndicate allowing them to keep their seats intact on the deck of the sinking ship.

Professor Paul Krugman, Ph.D. and 2008 Nobel Prize winner in economics said in an interview with Amy Goodman (Have Geithner’s Zombie Ideas Won?, Democracy Now!) that Geithner is “basically saying that, you know, there’s nothing really fundamentally wrong with our banking system; there’s just this stuff that’s ultimately backed by home mortgages, and if only we could get people to see that these things are really pretty decent assets, then the banks will be in fine shape. And that’s [troubling to me during this economic time]. You know, there’s an argument that says maybe they were somewhat underpriced, but to make that the centerpiece of your [Geithner’s] financial rescue plan is just—well…, it leaves me with a feeling of despair.”

So, what is wrong with President Obama? Why does he ignore Nobel Laureates and their opinions? Is he asking to be destroyed? Is he asking for the GOP to cannibalize him if this recovery plan calling for the financial crime syndicate to buy up over-valued toxic debt that they may use against the American people if they decided to throw back their catches?

You know the deal? The buyers of what are now being called “legacy assets” have a money back guarantee. They come up with 15% and if they only want to pay 25 cents on the dollar, Geithner’s taxpayers will subsidize the remainder of the seller’s offer price, which will likely be between 40-60 cents on the dollar.

If Obama falters and stumbles, or, at worst, falls flat-out he will be trampled by the GOP and many who changed their party affiliations to vote for him will retreat back to the Republicans. This will destroy the Democratic Party, which is already devouring their own. The trust will be significantly damaged and the circle (of Hope) will be broken!

Obama is risking his entire reputation on a weak and historically failed policy of trickle-down economics. One cannot help but believe that we are on the verge of actually losing our democracy. A Mussolini-like Republican is waiting in the wings. One has to believe that President Obama is being controlled by the very powerful forces within the financial banking crime syndicate to reuse Dr. Frankenstein’s horror machine to make sure the Ponzi monster lives on to trickle-down the fatal gruel in the form of Monster Mash.

J.P. Morgan manipulated the financial markets just before the stock market crash and the bank runs that led up to the Depression. He was responsible for the hundreds of bank failures, therefore it is not conspiratorial to believe that this bank syndicate dragon had been kept alive all this time and not slain generations ago.

I have a prediction that was seen in Madame Joy’s crystal ball. After she put herself under a hypnotic trace, the crystal ball lit up brightly spinning the gold and silver and cobalt blue colors which told this story. The banking industry is in a dilemma right now. They have backed their spankin’ cheeks too close to the hot and raging fireplace because they are now either going to have to put up or shut up. If they put up, then they will have to buy up the toxic “legacy assets” at the inflated and over-valued prices amounting to two to three times their actual market values. They may never be able to unload them unless they back out and dump them back on the taxpayer. This action may enrage the taxpayers for being dooped by the scam and call for nationalization, or force the banks to handle their own toxic debt bombs. The citizens will rally behind President Obama when he says that he bent over backwards to make a deal with the bankstas.

Now, if they shut up and don’t bite, then President Obama will look like the Emperor With No Clothes and the GOP will hammer him as they unleash the vulgar and despicable racist dogs on him. If the banking cartel decides to “shut up” then Obama will realize that the biggest crime syndicate set him up to look ineffectual and unable to bring the banks to the banquet table and gather up platefuls of toxic mortgage debt bonds after weeks of public reassurances and pitches; and, we’ll all see that a scam had taken place. We will see that the set up was to move the Trojan Horses: Geithner, Bernanke and Summers right up to his free throw line. This is all becoming transparently clear to more and more people.

This is a face-off. President Obama will see that maybe even his closest confidantes, Raum Emanuel is in on the coup. With the cowards- Pelosi, and Reed pissing in their woolens, they’ll switch sides for enough campaign cash if it will fill the gunnysacks under their desks.

Hillary knows that she will go down, too, unless she joins with Barack. She knows her career will be over, as well, if she abandons him, since she has few fans in the Republican camp.

The set up is that if the banking cartel shuts up, then the Mussolini exhumation will begin ushering in what Carl Rove dreamed of—the 100 years of Neo-Fascism-oligarchy-style.

But Obama will not take this lying down!! He will transform himself into Luke Skywalker to take control, and it must be done in a New York Minute. He will nationalize the failed banks—all of them. They will be consolidated overnight, stripped of their assets, and the zombie executives thrown out on the streets only to be shut out of the dark hovels that would protect them from the daylight and citizen vigilante groups look for revenge-European style. He will then take all the cash that had not been stolen and siphoned off by the crime syndicate kleptocrats and put into an Obama Industrial Marshall Plan—New Deal Initiative—relying on the Democratic governors throughout the country to give him cover as they throw him lifelines ASAP. This will be Roosevelt Obama resurrected!

The unemployed will be hired to work the program. Obama will command the FBI to bust open the banking crime syndicate and prosecute the thieves and robber barons.

This will astonish our world allies, and begin to revitalize our trade alliances. Rush Limbaugh and the other Neo-Con Freaks may actually have to go into hiding doing only Internet shows from undisclosed secret locations.

WOW! Madame Joy is something else, isn’t she? I think it is now time for me to wake up, and shake it off. Although, it is always good to dream.

thanks for reading, jerry

TALF, and the Obama-Geithner Public-Partnership Plan

Has President Obama jumped the cravace safely reaching the other side, or will he lose his momentum and fall, whereby he, personally, will need a rescue package? What has now been put into action is the Obama/Geithner Private-Public Partnership Plan, whereby private investors seeking to buy into the banking industry’s toxic mortgage backed securities pools will get their chance to help move the stuff off the bank’s balance sheets freeing them up to make more loans without the toxic boogieman lurking deep within their balance sheets. What a comforting thought, except banks have been lending in spite of this liability. There is no problem with liquidity. What we have is a solvency problem. Also, there is a confidence issue. No one really trusts what has been going on for quite a while. I guess, this is a plan to make the banks solvent again in just a matter of weeks. The taxpayers will become Mr. Clean and wipe all the dirt right out of their balance sheets.

We the public, along with the FDIC, will take on, at least, 85% of the risk of the sales of these toxic debt instruments, while the private sector takes on around 7% of the risk. But if the private sector sees that the toxic debt instruments are really worth less than they bought them for, and not the grade quality they believed they were, then they can ask for a refund. At that point, the public eats the deal. Sweet, aye?

TimmyG finally blew some very bad notes from that rusty horn he has been carrying around with him; or, has he? The way this all will come down is that these toxic securities will be auctioned off to the highest bidder. TimmyG is hoping to get around 40-50-60 cents on the dollar. The prospective buyers, such as hedge funds, JPMorgan Chase, PIMCO, and the others are hoping to get a really good deal, whereby, sometime in the future, they would be able to sell the stuff at a profit.

My question is if 40-50-60 cents are what TimmyG thinks these securities are worth, then why haven’t these banks sold them for that price already? Many experts believe that they are worth far less than even 40 cents on the dollar. Some have stated they are only worth around 25 cents on the dollar. That is quite a discrepancy, in my opinion. So, since 2007, when this all blew up, no one has actually unraveled these debt-engineered assets (now that is an oxymoron) to find out what they are really worth?

As I recall TimmyG, Ben Bernanke, and Larry Summers were there when the Bush Bailout began. They had their secret meetings, including their former employer-Goldman Sachs, discussing who will get what when the bailout money got dropped out of Bernanke’s helicopter. They all knew then what was causing the bank failures, but they did not choose to unravel the toxic mortgage backed securities when it all was unfolding. They were all in bed together trying to prevent an economic nuclear meltdown. But it did. It happened. We are now living it. It continues everyday, although Wall Street does not think so. If you are still in, I sure hope you know when to sell because a technical upswing in the market may not be real. And now, we are to believe that this plan will all make it better. Or is it actually the kiss of death on a very deep wound.

TimmyG is stress testing these toxic securities. I guess he should know their worth, but the reality is that stress testing will not unravel these securities totally exposing their actual values. It is all a game of Estimation. It is not like the weather forecaster on the evening news saying it will rain tomorrow so don’t forget your umbrella and jacket, only to find out the next day that there is not a single cloud in the sky from morning ‘til night. Not a really big problem that will totally f**k up your life for years to come. Or, how about generations to come.

President Obama has walked up to the casino table, and placed his bet that credit will get flowing again with this plan. He is betting that all boats will rise once the banking crime syndicate is completely saturated with trillions of taxpayer dollars in spite of their criminality in this entire mess.

Nobel Prize winner in economics Professor Krugman says he is very skeptical that this plan will work. But we all know that TimmyG is smarter than this Nobel Prize winner; and Professor Stiglitz, also is a Nobel Prize winner and skeptical with the plan. And, don’t Professor Noriel Roubini, who questions the way this administration is moving toward unraveling the “trash”. They are trying to increase asset values, bring about inflation, and move the economy using monetary policy instead of a ground-up worker driven New Deal type initiative. Professor Krugman has stated that he does not believe that these toxic securities are worth what TimmyG claims they are worth, but if they are, he will say he was wrong.

President Roosevelt, upon entering the White house, and before the war began, hired 60% of all the unemployed to build roads, bridges, create the Tennessee Valley Authority, bring “rural electrification” to rural America, build government buildings, and the Cathedral of Learning in Pittsburgh, hire government workers, teachers, and artists lowering unemployment from 25% to 10%. Americans, during that Depression, invested in treasurys, and it took 25 years before the banking industry gained what it has lost. The banks were not all that significant in the recovery plan, at that time. But they sure are now!!!

President Obama, I, too, hope you are right. I hope your scheme will work out just fine!! I hope that the $1 trillion dollar “cash for trash” plan turns out to rescue the economy from its slide into the abyss. Only an evil person would hope it would fail, no doubt for the sake of media ratings.

What is interesting is that no one really knows what these toxic mortgage (residential and commercial) backed securities are worth because when the mortgages were originally gathered up into the “sell-off” basket over at the Shadow Bank, which specialized in crafting “creative”, non-regulated, non-transparent, non-identifiable over-the-counter pools of mortgage back securities, which were all mixed together like the Daily Lottery ball machine, one could no longer tell which mortgage out of the bunch was the healthy one from of all the diseased ones. Once they were all mixed up and poured into molds, slices were taken, called tranches, and sold off to suckers all over the world. Then AIG sold counter bets, or should I say insurance.

It was like a slab of Mystery Meat. Somewhere in that slab of strange food, was a portion of actual real quality triple A graded meat. But you actually could not see it, nor even assume it was in there. So now, the Mystery Meat, which eventually ended up on your plate sitting before you, had a long and winding road of travel before it was able to get close to your fork. The same goes for these mortgage backed securities.

Yet, TimmyG has a way to unravel and stress test these slabs of Mystery Meat. Good luck, Timmy. I hope you are reallllllllllllllllllllly smart because you will need a scalpel, blank microscope slides and very technical tools to separate the good from the bad from the ugly.

President Obama has placed his bet to win. If it works, and he hits with real winnings, then he will become King Neptune who guided the horribly wounded ship through rough waters and into safety. But, if not, and the plan falls flat, and his toxic MBS rescue plan to facilitate more lending fails, he will have given the vile vitriolic GOP assault team all the ammo they will need to devastate his presidency.

We will know within the next several weeks.

thanks for reading, jerry

Postscript: 

The blogspot called Economicrot has kindly posted this article. 

Will President Obama Call Eliot Ness Immediately!

Is Barack just too young to figure out this economic disaster and what to do about AIG? He must not be familiar with the television show The Untouchables, about a real character named Eliot Ness, played by Robert Stack. Eliot Ness was born in 1903 and lived until 1957. He was a Chicago lawman who went after gangsters. He declared war on the mob.

I watched that show religiously between 1959-1963. President Obama was too young to learn the one lesson that the show taught everyone, which was to get those bad guy gangstas!

Also, I watched The Lone Ranger, too. He was a masked man who rode the western landscape capturing 19th century villains with his faithful companion, Tonto. The Lone Ranger was a Texas Ranger, and not the same ones who enriched George W. Bush. One of his many missions was to rid the west of bank thieving crooks. The series was aired long before Obama was born. It ran between 1952-1954.

President Obama grew up not watching the moral valued television shows of my youth. If he had, he would take heavy action against the thieves and robbers of our current mega-banking industry.

No doubt, what he would do is call Eliot Ness, The Lone Ranger, and, of course, the infamous Jim Bowie, a 19th century legend, American pioneer and valiant soldier. With these three iconic American heroes, they would all become deputized, of course, gather their weapons and pile into tricked out modern surveillance vans. During the early morning hours, they would surround the headquarters of AIG during one of their secret executive ritual sacrificial meetings. One where they engage in strange branding exercises. Rumor had it they were going to rebrand their name to IGA. Ah, ha!

The deputized four would surround the building, over-power the guards, and raid the stockade, so to speak. They would blindfold the high ranking officials and send them off to secret detention camps to be tortured and held in cages in some undisclosed location without the opportunity to speak to a lawyer. We will make an example out of them.

Hey, we did it in Iraq, so why can’t we do it to AIG? We take over the boardroom, all their computer hard-drives, raid the snack machines and occupy the building. We declare Nationalization. We’ll call in all the bond and stockholders immediately under the threat of rendition. Then, we hire all the unemployed barbers, and beauticians and force all the bond and stockholders to line up for haircuts. None get away without a haircut! So, what is he waiting for?

There is a populist uprising occurring in the streets. It is boiling and percolating by the hour, yet he keeps telling us that he has confidence in Brownie Geithner—Heckuva Job, Timmy!

Could it be that Barack Obama is just too green around the edges? And, I don’t mean “Green”, just green, as in Kermit.

The author of the regressiveantidote.net, David Michael Green (there is that word again-green), a professor of political science and a terrific writer of political commentary, was a tried and true Obama supporter. But now, he believes “Barack Obama is dumber than an bag of hammers.” In his latest piece, he pounds on Barack Obama. Mr. Green said, “…I never thought I’d witness such inane stupidity (or, worse-is it venality?) from the man.” He went on to say, 

“…and thus, it is no exaggeration to say this vibrant and well-liked president, who carries the hopes and aspirations of a nation on his shoulders with a robust foundation of good will to match, is potentially giving away everything in order to make sure that a band of corporate pirates [at AIG] keep their stolen taxpayer money. And, doing that, ladies and gentlemen, is as dumb as…Well, you know.”

Well said!

It looks like President Obama and AIG CEO Edward Libby, are filming a new television reality series called Bankstadog Millionaire, or Who Wants To Be A Banksta Thief Millionaire?

Has Obama been handcrafted by a little known woodcarver and toy maker named Geppetto, who has now become president, and for some odd reason decided to hire on the woodshop’s pest, Timiny Cricket as his economic sorcerer? Timiny tells him that if he does not obey the bankers, then he, Barack, will grow up to be a donkey. This frightens Barack. But unfortunately, Barack did not realize that that was only a joke, since he was already a donkey and not an elephant!

Why does President Obama want to give the GOP—the Grotesquely Oligarchist Psychopathetics—currently staged by one Rush Limbaugh and his band of Jingle Jangle Jindals, a chance to exhume Dr. Frankenstein from the grave in order to create a new monster, which would, no doubt, take the nation closer to a fascist kleptocracy, which recently came to an abrupt end on 1-20-09?

His Knights at the Roundtable appear to be Trojan Horses for the financial banking crime syndicate. Why? What are we not being told?

Will someone, PLEASE, call Eliot Ness right away!

Thanks for reading,  jerry

POSTSCRIPT:

U.S paralleling Japan's Deflationary Period. A good read to think about. The Fed has something to worry about.