Wednesday, November 12, 2008

Congress 1, Paulson 2

Nonono, just kidding. Hah, I fooled you, you sumumabitches. This is what Paulson must be snickering to himself after successfully executing an all-time bait-and-switch job.

"...purchasing illiquid mortgage-related this not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role, relative to other potential uses of TARP resources, in helping to strengthen our financial system and support lending."

Paulson turns around and, fuck what he told Congress, he's got something better to do with the money. After he made sure his homies were satisfied, the rest of the money will go to:
  • "...use the TARP to encourage private investors to come back to this troubled market, by providing them access to federal financing while protecting the taxpayers' investment..."

  • "...carefully evaluating programs which would further leverage the impact of a TARP investment by attracting private capital, potentially through matching investments...we will also consider capital needs of non-bank financial institutions not eligible for the current capital program..."

That sounds suspiciously like he's got more homies with their hands extended. Oh, and this shit will now cost (moves pinkie towards mouth) $3.5T...and they've already spent it. From Yahoo's TechTicker:

"...the tally so far is nearly $3.5 trillion, and that's before a likely handout for the auto industry.
Yes, $3.45 trillion has already been spent, as details:

  • $2T Emergency Fed Loans (the ones the Fed won't discuss)
  • $700B TARP
  • $300B Hope Now (the government's year-old attempt at mortgage workouts)
  • $200B Fannie/Freddie
  • $140B Tax Breaks for Banks (WaPo has the details)
  • $110B: AIG (with it's new deal this week, the big insurer got $40B of TARP money, plus $110B in other relief)

"Approximately 40 percent of U.S. consumer credit is provided through securitization of credit card receivables, auto loans and student loans and similar products. This market, which is vital for lending and growth, has for all practical purposes ground to a halt. Addressing these two priorities will have powerful impacts on the overall financial system, the strength of our financial institutions and the availability of consumer credit."

Let's not bullshit each other here. Of course, consumption drives the economy. It has fueled over 25 years of virtually continuous economic growth. If we stop spending, it would do far more harm than a few bad mortgages are doing. If the default rate on credit cards were to reach, say, (pulls number out of nearest trash bin) 15%, the credit markets will seize up like fuckinfuggedaboudet.

Aside - The median real wage has held steady for 40 years, meaning Average Joe's grandson is no better off than Average Joe. The growth has come at the top of the ladder, as the boss-to-shlub salary ratio has gone from 50:1 to 500:1. At the same time, public debt has increased from <$100B to >$10T (see debt clock). Taken simply, it's like the government has taken $10T and given it to the bosses.

The wrinkle is that consumption comes at the expense of saving and we passed the point where we spend more than we make a LONG time ago. At some point, the debt burden becomes too much to bear. Anyone with any economic sense knows that a day of reckoning is coming. If that people tighten up on their spending as necessary to tame consumer debt, it would scuttle US economy.

Tangent alert!!!

It doesn't even need to get that point. Corporations, especially publicly traded ones, have rosy assumptions of sustained growth factored into their planning (not to mention their stock price). When the outlook becomes less than rosy, like the Mafia after someone gets clipped for something that can get back to the boss, people get clipped left and right. Companies were cutting to the bone last time around, when the New Economy dream cloud was eviscerated, then evaporated in the smoke-screen of 9/11. This time around is already lot worse than last time around, as companies are positioning for the second round of job cuts.

As far as were concerned, it's like these corporations, having gotten people to flip into new cars every three years instead of five, and buying a new flatscreen every two years, by living outside their means, started factoring that these same indebted people will now flip into up-model cars every two years and by a bigger and better LCD every year. Apply a similar analogy to other industries. When putting off the saturation point becomes too much of a challenge, their strategy resorts to denying (to themselves) its existence.

For the banks>>brokerage houses>>investment bankers responsible for this clusterfuck, securitized debt is their LCD, and it's all dependent upon people speding beyond their means. Defaults are a temporary issue; not having debt to securitize is the long-term problem.

Remember Milken with the junk bonds? This is 5000 Milkens. This is a whole economy of Milkens.

Paulson and his homies know this and, as the powers that be have always done, are just trying to put off legitimate pain, both for themselves and, by coincidence, for us. I think I've told y'all this before; the foundation of all mental illness is the unwillingness to experience pain or legitimate suffering or discomfort. They've been putting off experiencing such pain for so long, call it Percocet for the economy, and most of us are so beholden to our debt, that we couldn't bear the pain.

End of tangent alert.

To get out of this pickle, they're going to have to find a way to put more money on the table for the American consumer. Unfortunately, since the system has been bleeding us dry for years, other than by stimulus packages, the modern day equivalent of caesar throwing loaves of bread into the crowd, they've probably got no clue how to get it done. I'd suggest, but they'd never do it. I'll rather save it for another time.

Friday, November 7, 2008

Eventful times

All this shit's been happening. I've been (vainly) trying to find those Baked Tostitos scoops, Halloween, playoff game (crushed those chumps on the first leg) and, uhhh, oh yeah...the nation elected (such as we can; we don't actually vote for President) a bi-racial cat to the Presidency...thass wassup.

Aside - I didn't vote for Obama. Bokolis always votes for himself. Life under Bokolis would be a good ol' time, until someone fucked up. Then, muthafuckas'll be getting executed like a muthafucka.

America has been so quick to suck its own dick for electing a black guy. If racial hang-ups weren't still an issue, nobody would give a fuck. But, like everything else, it's exaggerated and overblown. Obama was raised- in his version of an Army brat upbringing- mostly by white people. He's Ivy League educated and has been around the world like Akinyele and Lisa Stansfield's tour bus. If you turn up the sound and look away- the opposite of what you would do if Joe Buck were speaking- Obama is every other politician. The standard here is Derek Jeter, who is viewed outside of any race. Switch pigmentations on them and nobody would point out Obama's race...and Jeter would be far less clutch and Yankees fans may even acknowledge (to themselves) that he's a shitty fielder.

You know when we'll be past all the bullshit; when we have a stretch where 3 out of 4 Presidents that are something other than white males- they don't even have to be particularly good presidents- and there is no sentiment for a need to get a white guy back in there.

Baby steps, right? If you must focus on looks and/or pigmentation, it's not like Wesley Snipes, or some "real bruhh," (Chuck D?) is president. That's where I want to see y'all. Obama looks like Urkel, talks like The Rock. I can't bullshit; I'm waiting for Obama to pull off a mask and there's Bernie Mac, still alive, yelling, "Here I am, muthafuckas! Here I am!" I could picture Mac, in his twang, going, "...white people walking around, looking at each other (his eyes would be wide-open, looking around, p-noid like some shit was about to jump off), like, 'What the fuck did we just do?' "

Anyway, it only took eight years of the worst president in the history of our country and an ancient lizard, who projected more of the same, for an opponent, with politics' answer to Paris Hilton for a running mate. Putting aside his dogfight with Hillary because either one was going to break a ceiling, if Obama didn't have a good draw, then no one has.

Full credit to him, though. Let's see what ya got, homeboy. I mean, President-elect presumptive Obama. After the past 8 years, if Obama exits to the critique of, same ol' bullshit, it will mean that he will have held his own.

Kids (20-somethings) were out there celebrating like we overthrew the Bush dictatorship. While I think they are blithely naive if they believe real change is coming, I can't say that it was that much of an exaggeration. I thought for sure that the current cabal, when its time was nearing the end, was going to find some way to stay on...pull like a code red on the DHS scale, suspend the Constitution or some shit. There's still time, I guess. But I have to believe that Bush has a countdown clock on his desk and that he can't wait to get back to Crawford and re-hit the bottle. Laura Bush will have to be weaned off Zoloft. No worries, as long as she doesn't drive, we'll be all right.

We have lovely parting gifts for Gov. Palin, as well...a tee shirt, made in some hostile nation, like Africa, that says, "I ran for Vice President and all I got was a stupid wardrobe, which I'm going to return, 'cause I'm no diva." We also have a pair of Love Pink sweat pants, with "DRILL BABY DRILL" stitched into the rear. Farewell, enjoy your fade into bolivian. Give a fist-pound to Quayle. See if he has gotten potatoe worked out.