Bush’s Speech Fails with Most Important Audience

Via John Cole, it appears our bankers were none too impressed with Bush’s speech last night.

Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

I guess this is where we start talking about paying for milk with wheelbarrows full of cash, fresh off the very busy printing press.

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  1. JohnForde says:

    God I hope so. My dad always used to say that inflation doesn’t help anyone. But the truth is it helps debtors. Right now most of us are debtors and our country is a debtor. The downside is- after the debasement, greenbacks will cease to be the international currency of choice.

    • nomolos says:

      My social security cheque would look a lot better. Make paying off the mortgage less burdensome as well. Bring on the inflation!!

      • DeadLast says:

        From the colapse of the Soviet Empire, fixed pesnions didn’t inflate Old people got screwed. Inflation will only be good, relative to a fixed debt payment, if your income increases nominally.

        You had better learn to duck and cover…cuz the sh*t is hitting the fan.

    • behindthefall says:

      Ummm, please let me know how that works, because a modest and fixed income is being stretched to the very limit by the ca. 100% inflation of the last two years of many prices.

      • JohnForde says:

        It works in favor of debtors and against asset holders. A fixed income is an asset. Think of it as an anuity.

        I hope yours has a COLA

    • scribe says:

      I’ve been saying – since the first tax cuts in 2001-2002 – that at the end of the day the only way to get out of the mess which would be caused, would be to inflate the currency.

      So, when friends ask my opinion on whether they should buy the house, I told them and tell them they should – because the best place to be in an inflationary episode is as a debtor. You’ll owe $100 every year, but next year that $100 will only be worth the equivalent of $80 or $50 in this year.

      • yellowsnapdragon says:

        If wages are stagnant, how does inflation help? I lived through a 40 percent devaluation of the Turkish Lira in the 90’s, and all I saw was suffering and struggling.

  2. plunger says:

    Rove, channeling Orwell, coined the name for the problem you are now being asked to pay for – forever…

    Ownership Society

    Ownership society is a slogan for a model of society promoted by United States President George W. Bush. It takes as lead values personal responsibility, economic liberty, and the owning of property.

    …if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country.

    – President George W. Bush, June 17, 2004

    We’re creating… an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property.

    – President George W. Bush, October 2004.

    http://en.wikipedia.org/wiki/Ownership_society

    Naomi Klein. 2008. Disowning the ownership society.

    It was Margaret Thatcher who pioneered a solution. The effort centered on Britain’s public housing, or council estates, which were filled with die-hard Labour Party supporters. In a bold move, Thatcher offered strong incentives to residents to buy their council estate flats at reduced rates (much as Bush did decades later by promoting subprime mortgages). Those who could afford it became homeowners while those who couldn’t faced rents almost twice as high as before, leading to an explosion of homelessness.

    As a political strategy, it worked: the renters continued to oppose Thatcher, but polls showed that more than half of the newly minted owners did indeed switch their party affiliation to the Tories. The key was a psychological shift: they now thought like owners, and owners tend to vote Tory. The ownership society as a political project was born.

    The mass eviction from the ownership society has profound political implications. According to a September Pew Research poll, 48 percent of Americans say they live in a society carved into haves and have-nots–nearly twice the number of 1988.

    http://www.thenation.com/doc/20080218/klein

    What Ownership Society?
    Robert B. Reich
    September 02, 2004

    http://www.tompaine.com/articl…..ociety.php

  3. 4jkb4ia says:

    Via commenter in same thread, the Chinese government is denying it, but some Chinese banks are refusing to lend on their own. Link was to reuters.com.

    • prostratedragon says:

      Unless the Chinese govt. knows something privately, which they might, or is looking for a fairly controllable way to send a little nudge, which they also might, I’m not sure the move wouldn’t normally be considered something of a shot to their own foot. Those wheelbarrows are after all an outside option that favors the U.S. over its creditors. (Talk about grim strategies though.)

      The lending in question is generally very short term, overnight up to a few days, takes place among private banks or in the case of China non-central ones, and is the kind of thing that the Fed’s usual monetary operations are meant to support and actually have been supporting fairly well. The purpose of this lending in a general sense is to balance the banks’ need for funds on hand, which might in part be a regulatory need as with federal reserve requirements and is certainly a prudential one, with the ability to complete routine transactions in progress.

      You could say that the current phase of the banking crisis began last year when many banks did tighten up on their interbank lending as the first big wave of early mortgage defaults hit. That’s what led to the Fed’s special lending facilities. Whether or not it’s because of some directive from the Chinese government, or co-ordination among other Asian bankers, the 30-day market is looking rather tight lately; Krugman and CR on their blogs follow these conditions regularly in threads on the TED spread or credit spreads.

      I’ll be looking out for somebody like Brad Setser on this, but till then here’s a little something on the Asian bank involvement in U.S. Treasuries, a problem with which would be a (the?) big meltdown.

  4. DefendOurConstitution says:

    Isn’t this what happens every time Bush opens his mouth? I’m amazed the stock market didn’t crash!

  5. pdaly says:

    Food for thought. The Chinese are weary of credit/debt.

    I was listening to an NPR broadcast a week or two ago about credit card companies in China. Citibank was having difficulty getting people to use their credit cards. Everyone in China pays for big purchases in cash. They don’t trust credit. Part of the problem (for the Chinese at least) is that there is no protection against credit card fraud. The card holder owns the debt–even if his/her card is stolen.

  6. DeadLast says:

    Maybe China is willing to flood the U.S. with cheap opium to help take away our paid during the sino take-over economic downturn. I know the Chinese appreciated the U.S. & British assistence in “self medication” in the past.

  7. Leen says:

    I guess China owns us.

    Every time I watch Bush I know I am watching a dry drunk (no insult to folks working their 12 step programs) This child never accept responsibility for anything..O.

    The Secretary of the Treasury Paulson (inside hit man) has let American Taxpayers know the nations family jewels are nailed to the floor of the U.S. Treasury. He has handed the taxpayers and our Reps a knife and a pack of matches. And then he says “choose”

    What timing!

  8. FrankProbst says:

    Um, if they’re not willing to lend to our banks to feed Big Shitpile, why would they be willing to lend to our government to feed Big Shitpile? Has anyone bothered to ask where this $700 billion (at least) is going to come from?

  9. plunger says:

    The ONLY actual solution the the housing/credit crisis is to BUY THE HOMES outright that are subject to foreclosure. Cap the purchase price at $500,000. Under no circumstance would the government pay greater than 80% of the amount the home most recently sold for. Tie the purchase price to a previous point in time (perhaps January 2004) values, and in so doing, set a floor on the entire real estate market while pulling inventory out of the system. Let the present tenants continue to live in the home as renters, with the prospect of earning back their ownership rights over time tied to keeping the property in good shape. Alternatively, rent these houses to those who can afford to rent them at some fair rate.

    The pending homeless crisis comes with a societal cost that is not being considered, or solved, by the present bailout plan.

    Unless a floor is put under the real estate market, no plan will solve the problem.

    Don’t buy the paper marked to market. Buy the houses, and set the market value.

    • behindthefall says:

      Huh. We were writing at the same time. See #19.

      Yes to your idea. That’s what has seemed logical to me, but then, I don’t have a command of the push-pull in the economic system.

    • readerOfTeaLeaves says:

      plunger, thank you so very much for this comment, but particularly this:

      The pending homeless crisis comes with a societal cost that is not being considered, or solved, by the present bailout plan.

      This is the part that’s really hitting home with me.
      The psychology of shame, of ‘failure’ (in their own eyes), of guilt, of fear… all those are making people more vulnerable than they need to be right now. And it’s bad for the young, dependent children who need reassurance.

      What we are seeing now will surely ripple across generations, and we really need to be clear in our minds about HOW we deal with this complexity.

      I have a lot of admiration for the way that Barak Obama is speaking in a measured, calm, quiet voice — trying to suck up some of the over-active hysteria from the BushCheneyMcCain panic attacks.

      No wonder the Chinese called in their cards.

      …Paging Manmohan Singh…

  10. 4jkb4ia says:

    The Chinese government denying this is significant because if they were to admit having directed it, they would be trying to extort things from us as EW mentioned a few days ago.

  11. 4jkb4ia says:

    At least some of the $700 billion is going to come from more Treasury bills. But that does mean additional inflation and they may not be as safe as they once were.

  12. JThomason says:

    Maybe we are a point of some ego-deflation for the financial people (banks and brokers) and if they get taxpayer help they may gain some awareness that their privilege is dependent on the good will of citizens. Maybe…huh? Maybe ask those credit card people the next time they call asking for money “hey didn’t Congress get you right?” (T’is snark).

  13. perris says:

    marcy, this is off topic, I hope you don’t mind

    I just found out the divorce proceedngs involving the palin’s business partners, the motion was to remove that transcript from the public record, the motion was denied

    why hasn’t this been gone through?

    I would have thought someone enterprising would have that transcript by now to report if there was or was not some things said that might be considered bad for the presidential campaign

  14. behindthefall says:

    I keep reading lines like “failure of largely mortgage-backed securities”. Can anyone explain why it would not be effective to turn the “bad mortgages” into “good mortgages”? (The bailout seems to be giving unimaginable amounts of money to people in order to buy their “bad mortgages”, and I cannot see that that helps anyone except the people who get the money: doesn’t help the people trying to stay intheir homes, doesn’t help the government, doesn’t help the taxpayer who has to come up with money to replace the funds that just went to the insanely wealthy, doesn’t help those who really need the help of governmental programs, doesn’t help the underlying economy.)

    Why wouldn’t it work to pay off the mortgages for people? (Don’t think “fair or not fair” for a second. I’m just trying to understand what would happen if funds were put into the other end of the pipe.) If a significant fraction of the “bad mortgages” suddenly went away, wouldn’t the bundles that hold these mortgages be made profitable again?

    It also seems to me that there would be less inefficiency in pushing money into that end of the pipe and real benefits to families and thus to the economy.

    I do not understand how pouring $700B into various financial houses is any better than pouring water into a bucket with no bottom if the underlying trouble — people defaulting on their mortgages — remains untouched.

    Anybody around who can enlighten me?

    • AlbertFall says:

      I’m with you. I have been inquiring of the blogosphere why an approach that hits the reset button on residential mortgages wouldn’t work to de-toxify the Wall Street assets–we can pool brainpower and get something going here.

      • behindthefall says:

        (Snark acknowledged, BTW.) It’s governmental intrusion one way or another. The question is whether to help the many or the few, though. Socialism for The People or The Oligarchs.

    • readerOfTeaLeaves says:

      Why wouldn’t it work to pay off the mortgages for people?

      Here’s my stab at an answer; read with many grains of salt…

      I’ll use a simple $100,000 as a base because the math is simple but it illustrates my point that very powerful interests are heavily invested in having us NOT pay off anything.

      The more they can continue to charge for money, for the lending of money, for the uses of money, the more they make: month in, month out; year in, year out.

      So if you paid off that $100,000 the bank would not have a debtor. It could invest that money, but it wouldn’t have money coming to its coffers each month.

      Note the way that small changes make for big differences over time:

      $100,000 at 8%
      For 10 years = $1,213.28 for 120 months = the bank makes $145,593 with principle + interest for the service** of loaning you the money.

      For 15 years = $955.68 for 180 months = the bank makes $172,022.40 for principle + interest for the ’service’*^* of loaning you money.

      For 30 years = $$733.77 for 360 months = the bank makes $264,157.20 for principle + interest for the ’service’ of loaning you money.

      In this simple example, the bank does NOT want $100,000 when it has signed a ‘contract’ (mortgage) with you and put $264,157.20 on its ‘asset’ books.

      This is just one super-simple example, and I’m not sure that this was the question you had actually posed, but hope this makes sense on your end.

      So is Congress handing over the $264,157 to the banks because it’s a ‘collateralized asset’ on their books, when the actual VALUE is $100,000 — maybe, if the market will bear that price on any given day?!!

      Because I have not yet been able to see WTF Congress is underwriting here. But for starters, it sure as hell looks to me like we’re all being asked to fund the ‘assets’ – most of which is complete and total bullshit.

      Jesus, I hope that I’m wrong.
      I swear to God… I think Obama’s a wonderful, gifted man but I’m almost pissed enough to vote for Bob Barr simply from sheer disgust and contempt for the Dems pulling this shit and caving to the feckless PanicMeisters who fund this globalized usury.

      **It’s not as if they have to invent a new production facility, or invent a new technology (they’ve adapted online commerce, but they sure as hell didn’t invent much of it). But my biases are showing…

      *^* ’service’ as in ‘you sign the papers in one afternoon, say in May 2000, and we continue to get your payments for the next 15 years… it’s not exactly like these folks are working as hard as my dentist, or my lawyer, both of whom are required by state law to maintain current certification and keep up on the latest… but my biases are showing…

      • behindthefall says:

        I guess my attitude is that someone is going to lose money, no matter what is or is not done, and that I am far more interested in seeing that the fundamental cause of the trouble is addressed as far as is possible. I am less interested in assuring that all of the lost fees and interest are restored to people who are speculators and ought to have known what they were buying. They haven’t produced a damn thing; all their cleverness has been expended in figuring out slyer ways to push the funds around.

        • readerOfTeaLeaves says:

          They haven’t produced a damn thing; all their cleverness has been expended in figuring out slyer ways to push the funds around.

          You’re distilled it more succinctly than I managed to do!
          Great synopsis.
          Thx!

          Although, they did produce biz cards, lovely brochures, a lot of bullshit, some Internet ads, and a lot of paper ‘assets’. Mostly bullshit. Mostly ego.

      • james says:

        Exactly!!

        Debtors who are collecting interest are only interested in collecting that money. Once the principal is paid off their books no longer show that illusory “asset” represented by the future value of the principal plus interest. That’s why whenever there is a debt restructuring plan involving some third world country other than our own, the banks are perfectly happy to restructure the loan for a longer period of time as long as the debtor nation continues to make interest payments.

        And for those who think inflation helps those on a fixed income, you’re wrong. Prices increase with inflation and the value of money is deflated. Using the current CPI multiplier that the govt uses to figure out social security payments, the amount of money SS recipients receive is much less than they would be receiving if the true rate of consumer inflation was posted instead of the one worked out by Greenspan back in the 80s when this whole stagecoach robbery began.

    • readerOfTeaLeaves says:

      EW has a link in her ‘favorites’ to Calculated Risk, which is a sensationally good resource. I’m just to ‘hot under the collar’ to be able to go over there today. But it’s a great resource for your questions.

      • behindthefall says:

        I’ll go look. My experience, though, (biology, not finance) is that there are a hundred or more very smart people who are blind as bats for that one clear-sighted genius or near-genius who can think an original thought. I have a feeling that Ian Welsh is such a person; I don’t see others on the landscape. (Bernanke? Not. Paulson? Wouldn’t trust him to go to the store for groceries.)

        • readerOfTeaLeaves says:

          I have the same general sense that you do — about the lack of genuine talent (although, I’d say closer to 1:100,000). And I’d include Krugman, and Paul Hawkins, Muhammad Yunis, Manmohan Singh, and George Soros in my list of ‘economists that I’ll read because I think they see things clearly’.

          Bernake may have the best intentions in the world and be a smart guy.
          Personally, I don’t view anyone as a good economist who doesn’t have broader life experiences to draw from — Bernake and the Wall Streeters life experiences are too narrow, too privileged, and too focused for them to strike me as genuinely creative, innovative thinkers.

          And Hawkins draws on plant biology as his economic template; economies as interlapping ecosystems. Because he’s biologically based, his models recognize the interconnectedness of things.

          Wall Street derivative models, as near as I can tell, come from two areas:
          1. Heat defusion (an area of engineering)
          2. Formal logic
          Those have value, but it’s limited. They can’t deal with the complexity that actually occurs with large scale social interactions, with limited or corroded information, with other factors that play in.

          Agree that ’smarts’ are in short supply.
          But there are also different types of ’smarts’. My auto mechanic is a genius, but don’t ask him to play a musical instrument or paint a landscape…

          • behindthefall says:

            Funny you say that about life experiences for economists. I listened to CNN, and I found myself saying afterwards, “These financiers ought to get out more.” Bernanke saying that the whole exercise is needed in order to get a single number for “the market” to contemplate … just incredible; a near-total disconnect from life.

            • readerOfTeaLeaves says:

              There’s a book that is on my ‘to read’ stack: “How Starbucks Saved My Life”.
              Evidently, about a man who had tons of money, lost it, and ended up working at Starbucks being supervised by a young minority woman.

              People have not had to examine their beliefs, nor the consequences of their actions, for a long time. If there could be a golden lining to this mess, I’d hope for some really profound personal changes and more meaningful lives.

              Some of those Wall Streeters need to volunteer with Habitat for Humanity.
              It might help them open their eyes a bit and see the world more richly and fully.
              But then, my biases are showing…

            • readerOfTeaLeaves says:

              just incredible; a near-total disconnect from

              life.

              Precisely what I saw from home builders, mortgage bankers, realtors for a solid two decades.
              It really wears you down.

              At one point, it hit me that none of them had probably ever looked into a microscope, and they actually believed that ‘money’ can ‘grow’. Bullshit. It compounds according to mathematical formulas, but that’s no different from a mechanical beast.

              They are totally disconnected even from their own biology, nor did they pay enough attention to their own children’s development (except as baseball and soccer players!) to think clearly about the ways that communities have to accommodate the full range of human development, the way that ancient cities did — and that modern European cities do a good job of.

              They are completely, utterly disconnected with the biological resources required to sustain even a family of five that doesn’t own a car. They’re blindly foolish, and that’s why they are inadvertantly dangerous.

              The higher-end, more ‘upscale’ architects and construction firms that are involved in ’sustainable development’ are way ahead of the curve; they’re great people because they do pay attention to biology and human psychology.

              • R.H. Green says:

                Tim Leary’s dictum: turn on, tune in, drop out comes to mind. The “Turn on” part got most of the attention, but the tune in part was the most important. It was a “Naked Lunch” look at what exactly one’s life(and lifestyle) consists of. Then presumably one could opt to chuck a lot of what is irrelevant, and drop out. The reply from the homefront: “Oh no; don’t take off yer shoes. Spend. Buy. You can’t not want what’s on the shelves; it’s unpatriotic.”

  15. KenMuldrew says:

    Maybe this is all part of Cheney’s grand plan to take down China. By causing their central bank to fail, he causes the nation to fail. There are a few side effects (like the failure of the US, Japan, Russia, Europe, …), but when did Cheney ever shy away from introducing chaos into a stable situation?

  16. Mary says:

    Add in the Forbes report that a treasury spokewoman told them that the 700 billion has no relationship to any “data point” and they only picked it bc they wanted a “really large number” and then include the Director of the Congressional Budget Office piping up to explain who the bailout could expose lots more insolvency as the Fed starts actually setting a price for assets that are being carried on the books at much larger prices, and then Paulson lying through his teeth to Congress on oversight – it makes it all a really bad episode of the Keystone Kops.

    OT – again proving that JAG has chops that you don’t find anywhere in the Dept of Justice, a JAG prosecutor at GITMO is resigning because – get this – gov won’t hand over exculpatory material to a now-man, kid when shipped to GITMO, detainee who is facing a life sentence.

    Contending that the government had suppressed evidence that could help a young man facing life in prison, a prosecutor has quit the war crimes tribunals here, several military defense lawyers said Wednesday.

    Lt. Col. Darrel Vandeveld quit the case — and the Office of Military Commissions — after growing increasingly concerned about the lack of due process afforded to Mohammed Jawad and his legal team, according to Michael J. Berrigan, deputy chief defense counsel for the commissions.

  17. readerOfTeaLeaves says:

    Random guess: Bush flipped them out, and they were worried.
    Then they watched the Palin/Couric interview, at which point they called in their cards.

    Meanwhile, why are Reid and Dodd letting the WH call **any** shots?!!

    —————————–
    Why I’m spending my a.m. fuming at EW’s instead of Getting Work Done:
    Last night, I had a nice visit with the daughter of a friend. She and her husband have three little kids, and they’ve moved back to stay with grandma and grandpa. This really nice young couple (evangelicals, if that matters to anyone) have worked for everything they’ve ever had. Their mortgage was ‘readjusted’ three months ago — it went up by $1,500 in a single jump, and with three kids under the age of five, there was no way they could manage.

    They’re now among the ‘foreclosed’, and I’m sure that on some impersonal balance sheet, they look like irresponsible jerks. These are exactly the kind of people this nation should be helping — fine parents, hard working people, and not walking around in designer clothing (!) or driving nice cars.

    So I gather that the Wall Street bailout costs of this one, young family will be legally obligated by our wonderful, brilliant Congress and BushCheney total around $11,500 (i.e., $2,300 x 5) for the three kids and two parents. And FWIW, neither parent even went to college, although one made two years of a community college for a technical certificate. Both came from large families and focused on making money because of family financial pressures.

    Meanwhile, they’ve just moved in with one set of grandparents (who are very glad to have the space to keep them all safe), The young husband feels like a jackass, and the young mom has worked since she was about 14 years old — in fact, before she had her kids, the mom always worked two jobs to ‘get ahead’ and also to help out her siblings.

    And to cap it off, one side of this young family is Hispanic, so I guess they’re the kind of people that are viewed by policy makers in DC as ‘in over their heads’ and ‘irresponsible’. Yet these are the very people who show up on your doorstep with a meal if someone in your household has had surgery; they share what they have with full hearts, and they work hard for not all that much money.

    I can only assume that ‘irresponsible’ is now code for: ‘not well enough connected to sell derivatives on Wall Street for millions and let the rest of my fellow humans rot in the hell of credit card slavery.’

    You’ll never meet finer, harder working people than my young friends, which makes me absolutely ill. And their kids are darling, well-behaved, and a sweet tempered. At least the kids are cared for, but primarily because they have large, extended family and church network.

    Which may be why I’m spending my morning delaying work, and FUMING here at EW’s instead.
    Jeebuz.

    Sorry for such a long, personal post — but this whole thing has become very personal, and deeply disgusting. It makes me angry enough to think of me and my own kids bailing out flagrant egoism and stupidity, but I really ’see red’ when I think of this young family losing their home, and then being expected to pay off Wall Street.

    Things are deeply, profoundly out of balance.
    I may spend my lunch break with Mohammad Yunis’s book and contemplate whether there’s any way to set up a Grammen-like outfit in my region that could help people with the kind of work ethic and decency as this young couple, who I am so proud to call my friends.

    Sorry for getting too personal here…
    But then, this is why ‘politics is personal’, I suppose.

    • acquarius74 says:

      Reader, don’t apologize for “getting too personal”. We need to broadcast the details of every foreclosure tragedy we know about. Maybe THAT will open the eyes of the stupid, blind-to-reality crew that has us all captive. We need those stories flooding the net, newspapers, wherever we can, written as expertly as you have done.

      One blogger tells of driving around Austin, TX and in one day he saw 3 families being hauled out of their homes by sheriff’s deputies. He saw foreclosed signs like weeds in many yards. Each one of those families has a story like yours.

      Back in the 1980s my mortgage holder went belly up in the S&L mess. My mortgage was taken over first by Resolution Trust Corp., then sold to 8 different banks before I got it paid off in 2002. Why not handle the foreclosures now in the same way?

      I say use those billions to pay rock bottom for the mortgages, then let the families live there with rent in proportion to their income. Seems better than building a forest of housing projects to house those evicted.

      I say caring for these families, and the multitude yet to be foreclosed, is far more important than feeding the greedy Wall Street Monster more and more and more . . .

      • readerOfTeaLeaves says:

        Agree that ‘Wall Street’ has fucked up so profusely they’re not to be trusted.
        But this really needs to drive a stake into the vampire of heartless, amoral greed.

        The world is so complex that people don’t have to confront the harm they do to the planet, or to one another. Mindful people try to make those connections and act responsibly, but it certainly appears that Wall Street’s culture — enabled by the ideology of the Right wing — is lethally unhumane.

        People are social creatures. Social creatures need a moral framework, and a sense of justice.
        We’re moving beyond the nation state, but need wise leadership to avoid becoming global serfs to the Neofeudalists.**

        ** A term brilliantly coined by EW, and you can use her search feature to track it down if you’re not familiar with her explanation.

    • R.H. Green says:

      Thanks for the personal illustration. Last night I listend to the speechreader to hear him claim that the cause of the crisis is bad decisions made by people who took out loans that the could not pay back. I kept waiting to hear how the blame is spread around by other bad decisionmakers, but heard none. It seems that your friends are the cause of all our mess. I’m angry too. Chimpy went on to wail about how the investor class that bought all those worthless promises are now left holding the bag, and therefore the nations credit rating is shot, all because of your friends’ living beyond their means.

      It would be interesting if you can learn more about the type of loan, and interest rate structure it had. It seems that the poor, and especially minorities, are shoveled into the adjustable rate mortgages, with the full understanding by the lender that the borrower will default when the rate resets, a setup if there ever was one.

      • readerOfTeaLeaves says:

        Adjustable rate mortgage (surprise!).
        They had one child, and their goal in life was a house in a subdivision.

        And trust me, they’re not paragons of brilliance, nor are they saints.
        But who among us is?
        And they shouldn’t have to be.

        They weren’t spending money on extravagant travel, but I think that they figured they’re be able to refinance later on good terms. They gambled in that sense; but how is the nation better off with young families moving in with the grandparents while those houses sit empty? They could have continued to argue and cut deals with bankers, but they decided to ‘cut their losses’ and the unpredictability was too scary. I think in that respect they were more realistic than Wall Street.

        They were willing to cut their losses, and now the focus in my own mind is to help them see what good parents they are and how much they have to offer in this world. Because they’ll do ‘a day’s work for a day’s pay.’ But finding jobs that support a family isn’t simple.

        Thanks for your kind words.
        I think we all need to see how these bigger decisions play out in individual lives.

        How many Wall Street financiers are having to move in with their parents?
        I resent the idea that they’re hanging on to multiple homes and swank lifestyles.
        This is also increasing the social polarization in the US; not a good formula for social stability or mutual respect. The news is focusing far too much, IMHO, on ‘formulas’ and CEO pay — we need a larger conversation about how this damages social relationships and trust.

        MSNBC has had a few clips showing 20-somethings saying, “I don’t trust what the government says, and I don’t believe what I hear.” In that sense, we are ‘all Russians now’. Distrustful, cynical, and increasingly irritable.

        • readerOfTeaLeaves says:

          Should have made more sense.

          They started with an adjustable mortgage when they had one child.
          They had a second child, and refinanced.
          Then two years later another child… and when he was several months old, they were unable to refinance when their mortgage jumped $1,500 per month.

          So they paid the mortgage for over four years, and refinanced at least once, which meant the bank/mortgage company got all the loan fees a second time.

          What a racket.
          Amoral and socially destructive.

  18. perris says:

    I am wondering if al qaeda and Iran has something to do with this economic meltdown

    and I am wondering why cheney hasn’t pointed this link to out us yet

    I also suspect this was a time bomb economic meltdown masterminded by sadam himself before he was offed

    no…really

  19. JThomason says:

    Am I all wet thinking the derivative default is probably several multiples greater than the actual underlying mortgage value (considering both equity and liability). This is why Wall Street loses in the plan consists merely of establishing a market bottom for the underlying security.

    • readerOfTeaLeaves says:

      That’s sure as hell the best explanation that I can come up with; however, my field is definitely not finance, and I don’t spend hours on it.

      I do know that my accountant friends and acquaintances are disgusted beyond belief. They thought Enron was incredible; this has them almost speechless.

  20. Neil says:

    Fratto admitted the Bush admin has been working on the bailout for months. Not a word was spoken to Congress or the American people until the weekend before the first presidential debate, some 40 days before the election.

    In yet another dire emergency, American citizens are being told we must consent, pay up or risk everything. Iraq WMD, etc.

    Has it crossed your mind Bush is playing politics with our future?

    Bush will be known in history as the bully, the brinksmen, the manipulator and the coercer.

    Why should we trust this guy now?

    We should get an equity interest so we have upside for our risk. The bill should fix social security by removing the cap so benefits can be increased not lowered during our retirements.

    • yellowsnapdragon says:

      Bush will be known in history as the bully, the brinksmen, the manipulator and the coercer.

      I hate to be a nihilist, but is the history of the United States of America as we have known it ending? Seems so.

    • readerOfTeaLeaves says:

      Has it crossed your mind Bush is playing politics with our future?

      Bush will be known in history as the bully, the brinksmen, the manipulator and the coercer.

      Precisely.

    • readerOfTeaLeaves says:

      That’s the way I figure it.
      And I don’t doubt for an instant that they’ve already ’spent’ some of that imaginary lucre.

      We need new obscenities.
      My old ones aren’t nearly powerful enough.

      And Jesus, Mary, and Joesph we need a super-investigation mortgage division of the FBI (!). Although, as near as I can tell from my real estate friends, there were NO safeguards, and mortgage brokers were hiring anyone who could walk and talk and show up sober reasonably on time. So how does an FBI investigator distinguish between criminal intent, stupidity, and simply someone who didn’t understand their job properly…?

  21. acquarius74 says:

    I was going to vote early but have changed my mind. I wish Obama would not go to that WH meeting with Bush and McCain. If Obama comes out of there with his eyes glazed over from the injection of the mind control juice, then Bob Barr gets my vote.

    • readerOfTeaLeaves says:

      Wow. I wasn’t planning to vote early.
      And up to my disturbing experience last night, I was thrilled to vote for Obama.
      I dislike realizing how much emotions — rather than logic — really do play in to political decision making.

      I watched some home builders bully government in the 80s and 90s and early 2000. I do not have an ounce of sympathy; they had a great, wild ride and they basically ransacked the economy, denied that anyone needs anything other than money and fancy kitchens to live well, and were so caught up in their GroupThink that they acted like thugs looting the local governments and using their enormous wealth to sabotage efforts at Smart Growth policies.

      But the realtors and mortgage bankers were along for the ride, and howdy, did they make out like bandits! Unbelievable amounts of money within five or seven years. So the momentum to keep building houses, destroying farmland in the process and doing unspeakable damage to natural resources and the ag economy, was unbelievable. And 98% based on ego and greed, and fully underwritten by government policies.

      And by the very lobbyists running the McCain campaign.
      This election needs to drive a stake through the heart of this fraudulent, irresponsible, biologically unsustainable stupidity.

      A little humility and a sense of the greater good and their role in the universe might do some of those assholes a world of good. And for the Dems not to recognize that is potentially catastrophic.

  22. earlofhuntingdon says:

    This financial debacle is so broad and deep, it is such a Grimpen Mire, with no safe path across, that no lender will lend to these Good Ol’ Boys: no bank, no foreign potentate. But rather than come cap in hand and beg a handout from the poor box to save their million dollar bonuses, Wall Street decided to put on Cheney’s Stetson, and like Cleavon Little in Blazing Saddles, put a gun to its own throat and say to Congress, “Give me the money or your sheriff gets it!”. Rather than guffaw or offer an witty retort like Jon Stewart, Congress, knowing it holds all the cards, is just laying them down.

    Last night, the Deciderer decided the passive voice, devoid of agency or causation, was best when describing Wall Street’s excesses. Its bloated compensation for selling aluminum siding in the form of financial paper; the Boschian staircase it’s built on the sand of aggressively sold mortgages, extended with reckless disregard for the borrower’s ability to pay; mortgages (like credit cards), designed to go into default so as to generate exorbitant fees and the need to refinance them, quickening the vicious circle. The Deciderer was not so passive in blaming the poor choices of individual mortgage holders for becoming addicted to Wall Street’s financial crack. It’s their fault.

    Mr. Bush claimed awareness of how dicey mortgages are, and, hence, how the mass of debt obligations dependent on them are now uncreditworthy. But the only assets he deemed worthy of Gubmint’s attention, of unprecedented government largesse, are those debt obligations and the balance sheets of the companies that created them out of some witches brew of greed, frogs’ toes and newts’ eyes. Mr. Bush is really an incurable romantic; he’s laying down the public’s only cloak so that Queen Wall Street can walk across the puddle unscathed, unmuddied.

    It’s clear, however, that any true fix must address the hundreds of thousands or millions of rapacious mortgages: for the creditworthy, rewriting them devoid of their most egregious terms, including cross-default clauses, prepayment penalties, etc. For the uncreditworthy, of necessity, an individualized decision, it requires undoing them and moving householders back to the rental market.

    Strengthening and accurately repricing the underlying mortgages is the mortar essential to keeping the brick wall of debt obligations from tumbling down under its own weight. Bush’s proposal is to buy the debt and let “the market” do the rest. That’s the surest way possible to saddle the public with the offal Wall Street’s butchers can’t sell to anyone else.

  23. alank says:

    the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

    This stealth caveat refers to the fact that it will be business as usual through other channels.

    The U.S., e.g., blocks dollar payments to Syria banks, but that doesn’t prevent said payments from getting there by other routes.

    However, the all-currencies order is a rather strong, sweeping statement of disapproval from China authorities.