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September 19, 2008


Cecil Turner

Isn't congressional "supervision" (whilst using FMae/FMac as an ATM) what got us into this mess in the first place? Yeah, thought so. Their similar fecklessness on energy policy is largely to blame for that fiasco, as well.

bio mom

Congress needs to reform itself. Never will happen though since they police themselves. Crazy.


What should we call this entity?

What will we call the next entity for Consumer Credit, Home equity lines, Commercial Credit, Commercial Development, Auto Loans/Leases, etc...

Cecil Turner

How about "ACK!"? (Perhaps with "THBBBT" as an alternate?)

Charlie (Colorado)

It's the Pottery Barn Rule: you broke it, you bought it.


BTW, Obama is using this as an excuse to not release his own "detailed plan for economic recovery."


You are a fool and a coward. You prefer Republicans leading whatever socialism is done because Democrats would do worse. What a joke. Grow some sac.


BTW TM apparently the general public pretty much agrees with you, I found this at Powerline but it from RAS from last evening:

Remarkably, a much wider plurality--49 percent versus 36 percent--worry that the federal government will do too much, rather than too little, in response to the current crisis.

Government did screw this up ( Congress and the GSEs,) and its so big now that the fixes are: (1)lots of fear and dislocations in the market short term or (2) some kind of mechanism to get a sense of the size of the problem and get an orderly market functioning again for these tainted assets. That is the benefit of the RTC, nothing was selling at any price and once the RTC began to look like they meant to sell at any price, the vultures came out as only a free market can provide. And once some sales started and some vultures were telling their buddies at the Country Club about the killing they were making others came along and increased the buying pool and bid up the prices obtained. It will work, the real problem is the Democrats( with the exception the NY delegation worried about Manhattan cleared of any financials ) dont want it to work for about six more weeks.

Can the Congressional Democrats stand another against interest hit given the cigar blowing up in their faces on energy and drilling policy? That is the theatre playing out right now.

Harry Reid = "no one knows what to do."

Nancy P = let me get back to you on that, after the break.


"I would prefer to see Republicans lead the nationalization of the US economy since there is at least a chance they will do so reluctantly."

Well, I guess you are anticipating that your readers weren't reading in the year 1993.

(McCain/Keating) McCain's reluctance was daunting.................

BTW, Obama is using this as an excuse to not release his own "detailed plan for economic recovery."

Being a Democrat means never having to prove you're a leader. Second-guessing -- it's not just a tactic, it's a way of life.

Rick Ballard

"the actual size will be $600 billion"

Maybe $700. The actual face value of the Level Three assets is supposed to be around $500 but having a little extra never hurts.


" "the actual size will be $600 billion"

Maybe $700. The actual face value of the Level Three assets is supposed to be around $500 but having a little extra never hurts."

Hey! A hundred billion here and a hundred billion there, and you're starting to talk about real money!



The DOW is up 400 as of this minute..........

You might be right. It could sail up to the watermark of 9/11/2001.

Barney Frank

Sorry for the length of this but I thought of this admittedly imperfect and slightly gross metaphor while trying to explain this mess to my wife.

An economy digesting an asset bubble is like a guy digesting a giant holiday meal.
And an asset bubble that is intricately and pervasively leveraged is like digesting a bowling ball.

Imagine Dr. Greenspan invites your family over for a gigantic, low interest rate Thanksgiving feast in 2000. Unfortuantely your poor Uncle Sam, egged on by those weirdo cousins nobody can stand, Barney Frank, Chris Dodd etal, eats way too much and lays down on the couch with heartburn. Dr Alan gives him some Tums and after a good deal of pain and a few trips to the john, Sam's back on his feet.

Doc Greenspan encouraged by his cure and despite Sam's pain cooks up an even bigger feast a few years later, but this time he absent mindedly adds gobs and gobs of cheese (leverage) to the bean casserole. Uncle Sam is up to his elbows again and is soon right back on the couch, but this time even Doc Alan knows all that cheese has really got old Sam constipated. He's basically sound otherwise, as Nurse McCain correctly points out to dirisive laughter from Barney and Chris and their young squire Master Barry, but nothing is moving.

Now Dr Greenspan, after watching Uncle Nippon go through the same thing a few years back knows chalky Tums (low interst rates) are just going to cork old Sam up even more so he gives him about 15 neatly spaced but very small doses of weak laxative. All this does is compact the mass poor Sam is trying to digest even more, so Doc Greenspan decides it's late and he's kind of old and tired, so he's going to retire and take a nap, leaving the problem to young Dr. Ben, who promptly starts delivering Tums (artificially low interest rates which caused the problem in the first place and which absent a blockage stimulate the system), back to Uncle Sam and of course he becomes even more bound up. Doc Ben calls in Dr Paulson for a consult and they decide that the pain Uncle Sam is feeling needs to be alleviated with some aspirin when it's severe (AIG, Fannie and Freddie) or just left to work its way out naturally when its not quite so bad (Lehman). Neither course actually moves the compaction of course and Sam is not only feeling worse his family (you and me) is getting pretty nervous.
At this point there are only two solutions;

1. The family tells the Dr's and the nutty cousins who created the problem to take a hike, then put a knee on Uncle Sam's chest and force about a pint of castor oil (bankruptcies and the market) down him or;
2. They let Docs Ben and Hank take him down to the hospital.

The first one has the disadvantage of a great deal of pain for Sam as he passes the mass and the unpleasantness of the medicine and of course there is a very large smelly mess someone has to clean up, but the patient is up and functioning through a natural process and most importantly retains a very vivid memory of what being a glutton at Alan and Barney's trough cost him in pain and embarrasment.

The second way avoids the mess for the family to clean up but they have to pay the good Docs for the treatment. They hope that Doctors Paulson and Bernanke will be able to package up the mass and sell it as some type of medical curiosity so as to get some of their money back but that is an open question. In the meantime Sam is recuperating but the Docs put him on a strictly regulated regimen to prevent him from eating too much in the future which of course will keep him dependent and under their and Barney's and Chris's care. Not only will he be weakened by their nannying, more importantly, due to the anaesthesia Sam won't have any recollection of the pain he was in nor will he suffer the pain and embarrassment of making a big mess and having his family have to directtly clean it up for him and so will have learned absolutely no lesson what to do the next time his 'friends' offer him a great big indigestable free lunch.

Of course sometimes everyone lets Sam eat so much and gives him so many tums and aspirin that surgery is the only way to avoid a near death experience and long painful convalescence for poor old Uncle Sam.
That's when everyone say they'll never let anything like this happen again.
And even though Sam knows they're full of it and will do the same thing again as soon as they get the chance, he is feeling a might peckish.


capitano, again O follows the no fail Kerry campaign playbook--remember Kerry "had a plan" on Iraq that was so super secret he couldn't reveal it publicly either.

Annoying Old Guy
What should we call this entity?

Consolidated Consumer Credit Panel - CCCP.


(2) some kind of mechanism to get a sense of the size of the problem and get an orderly market functioning again for these tainted assets.

The problem is, especially with the derivatives, nobody has title to anything. Those things should have been illegal from the get go. Not sure they actually have any value.

WASHINGTON — NASA will hold a media teleconference Tuesday, Sept. 23, at 12:30 p.m. EDT, to discuss data from the joint NASA and European Space Agency Ulysses mission that reveals the sun’s solar wind is at a 50-year low. The sun’s current state could result in changing conditions in the solar system.
I wonder if they will blame this on Bush or Rove.

Reportedly, Obama is now openly advocating socialism--arguing today that if the feds can help these financial institutions they can help ordinary Americans..That'll work..

Annoying Old Guy


Silly! It's the chilling effect of Palin's cold and heartless ideology. She took The One's glamour, and now she's stealing Chimpy's Mantle of Blame.

P.S. Gosh, it is hard to write obvious sarcasm. I blame Palin for that, too.


"I would prefer to see Republicans lead the nationalization of the US economy since there is at least a chance they will do so reluctantly."

Well, I guess you are anticipating that your readers weren't reading in the year 1993.

(McCain/Keating) McCain's reluctance was daunting................."

Are you suggesting the corruption of the Banking system and the Federal bailout of the S&L's was due to Republicans? Four of the Keating 5 were Democrats.


"I wonder if they will blame this on Bush or Rove."

I don't see it needing to be a one or the other proposition. It's a twofer. Same as it ever was.

Charlie (Colorado)

You might be right.

I was already right, you ass. I said close above 11K by the end of the week, and it closed at 11020. Yesterday. It's up another 400 now.

Charlie (Colorado)

...the sun’s solar wind is at a 50-year low. The sun’s current state could result in changing conditions in the solar system.

Global warming.

Charlie (Colorado)

So, Barney, what you're saying is "this too shall pass"?


I'm just wondering if Paulson & Bernanke found out "something" and explained to the congress critter leaders what that "something" was in order for them (leaders) to be so docile and bi-partisan?

Rick Ballard

As to a name, I like Ben's Third Level of Hell Bank & Pawn but it might be a bit cumbersome. Third Nationalized would work.

For those with a slight sadistic bent - think of the loan portfolio managers trying to outguess the Fed today and over the weekend. The moment the Fed makes the first deal, the Zero Value Third Level Portfolio has a value. What if the Fed makes their deal an "all in on day one or nothing" proposition? Twenty cents on the dollar, take it or leave it. The day after the Fed offer, the supposedly valueless portfolio could be worth thirty cents. If you take the Fed offer and give up 50%, you'd better have your resume in good shape.


Neo - 2 possibilities:

1. Darth Cheney has a Death Ray that he unleashed (Death of Global Warming, that is).

2. McCain/Palin and the "winds of political change" that they are bringing to the "landscape".


SemCleo - that is the most positive post you have made in quite a while! Good to see that.

I believe that ChaCo was describing North of 11K, not to 9/11/01 values. Could it be that this burst of "positiveness" indicates that you have some LONG positions that might pay-off now? If so, congrats!


Dow right now is above its Monday mark at opening bell. And it seems to want to run abit.

Barney Frank

Interesting and IMO correct article from former head of the FDIC in the WSJ on what should have been done.

Charlie (Colorado)

Dow right now is above its Monday mark at opening bell. And it seems to want to run abit.

I liked what I just heard the options floor guy say: "We're back to Monday's levels, nothing happened this week."

Barney Frank

So, Barney, what you're saying is "this too shall pass"?

Yes Charlie. Like a multi pronged, walnut sized kidney stone.


One thing I've noticed at McCain campaign rallies, the crowd shouts USA, USA. At Obama's rallies, they shout Yes We Can! Yes We Can! Just a little thing I've noticed.


At Obama's rallies, they shout Yes We Can! Yes We Can!
Sue - just as well - if they switched, half their crowd might start alternating with "Death to the".


To quote Jonah Goldberg: We are all Fascists now.

Charlie (Colorado)

Read Bill Whittle's piece at NRO today.



I thought I was going to get a Bill Seidman article so I was gritting my teeth. Isaacs was a pleasant surprise and he is very astute.

Unfortunately he is blaming the scorekeeper. I can tell you first hand, that historical cost basis as opposed to fair value leads to lots of problems too. It was the reason why we did not notice earlier that the S & Ls were in such horrible shape, they were not required to write down losers.

The true problem is embedded in the article. There is so market, if these things were brought to market there would be no buyers. That is just a fact.

How do you create an environment that restarts a locked up market. We have a template and that is the RTC.

Going back to pretending assets have a historical value is, frankly, insanity.


I agree with Tom, the Republicans will manage this better than the Dems. There is some silver lining in all this...

One plus is, the Fed's acquisitions were bought at fire-sale prices, there's a lot of value in each enterprise to both build on - or squeeze out. These sales were "panic" ones - and the buyer usually gains in these.

Another, the "R's" could make this a useful football in the 2010 House and Senate races. In a few years, the R's can run on selling-off, or privatizing, the Fed's reconditioned assets to reduce the national debt, or some such. The Dem's can be counted on to reflexively oppose the sale of their new, potential fiefdom.

It seems, given some time, the Senate and House Republicans can generate and capitalize on this rhetorical proxy for the Nationalization/Privatization debate at very low cost to themselves if a President McCain can first level some of the upstream obstacles to reform.


Read Bill Whittle's piece at NRO today.

Great stuff, Charlie. Thank you for the link.

Barney Frank

The true problem is embedded in the article. There is so market, if these things were brought to market there would be no buyers. That is just a fact.


I'm not sure he was denying that and it seemed to me there was a whiff of nostalgia to it as well, as in 'why didn't we do this sooner when it could have helped more'. But I think his main point is that had accounting practices not been so rigid and had the shorts had a sensible leash on them the need for an RTC solution would have been greatly reduced or even eliminated as it was the former joined to the latter which has led to many of the failures and to the inability of otherwise solvent firms to ride out this storm.

Jim Rhoads aka Vnjagvet

Whittle is the best. And that essay is one of his best. It deserves framing. And to be reread and reread.

Thanks for linking it, Chaco.


Loved Whittle, Chaco. Thanks.


Dow back above its Monday mark...

Could it be that this is only a financial "burp," and we almost got talked into - or talked ourselves into - buying the entire, failing industry? Luckily the Fed's allowed themselves to pick and choose from the gleanings.

(I for one am puzzled as to why a 4-5% drop in the Dow is so exceptional all of a sudden. From all the superlatives expended by BBC 4's news team today on the topic - you'd think the Queen Mum had been abducted by Basque Separatists while on holiday in the Azores.)


We have temporarily fixed the short seller problem.

Your choices in accounting are leave it on the books at historical cost or write it up or down based on market values. Maybe I am not very imaginative but I cant think of a third way. Now if you dont like the second, that means you want to go back to the first. And lots of us who were front row participants in the S & L debacle, fought a very long battle to make folks realize that historical cost masked a problem, allowed it to fester for many quarters and made the inevitable day of reckoning so much more costly.

While I do understand that no market exists, that does not mean historical cost and closing our eyes would not again turn a problem into a big damn problem. I dont like 500 billion ( although I do think the losses will be a small fraction of that ) but I really dont like a trillion or two. How about you?

Sara (Pal2Pal)

Is anyone else having problems get YouTube videos to load? I don't mean to play. I've got 3 Hot Air posts open each with new McCain ads and big holes where the YouTube video should be.

Rick Ballard

"I for one am puzzled as to why a 4-5% drop in the Dow is so exceptional all of a sudden."

Because the hedge hogs and jackals were were turning MS and GS into throw rugs. Take those two out and you're looking at the China Syndrome. I'm sort of curious as to where the trail on the naked short selling coupled with the fiddle on the credit default swaps may lead.

Barney and GMax both make excellent points but Pofarmer's allusion to the wholly intangible nature of derivatives needs to fit into the mix. These MSBs are like the three pound Swiss Army knives. The complexity has reduced the utility to the point where putting them in a drawer (the tweezers don't work and the toothpick is missing anyway) and settling for a single blade pocket knife seems like an excellent idea.

I know how to foreclose on a mortgage and get a portion of what I'm owed back in the bank account. I don't think anyone knows what to do with an undivided 1/64th interest in tranche XXX-c2 (which, BTW, paid up two thirds of the past due interest last month but has missed this month's payment).


To the extent I understand the situation I agree with GMax.

As an engineer and musician I am somewhat familiar with intellectual property. Copyright, patents, etc. More or less intangible stuff that has value because there are government rules that make something like ownership possible.

At the other end of the spectrum are things like gold and land. Real stuff that has value with or without government rules.

It sometimes seems that discourse on the role of government is based on the second kind of stuff. IMO that is like trying to apply Newtonian physics to electrons and quarks. As Einstien said: Things should be made as simple as possible -- but NO simpler.

A lot of this problem appears to be stuff that has one value under this set of government rules and different value under a that set of rules. Seems to me getting the rules set proper involves more than just writing them down. Changes may require some value transfer, and that just does not bother me as long as I can trust the process.


I probably should have mentioned that applying Newtonian physics to electrons and quarks does not work.


Rick is dead on about the rocket science nature of the MBS ( mortgage backed securities ) business. The whole idea on Wall Street was: can we carve up a mortgage and end up with pieces that when added up yield more than the whole mortgage is on a stand alone basis.

At first they strip on timing, and IOs and POs were sold with slightly more risk to to IOs and slightly less risk to the POs and found buyers who would pay 105 for a mortgage worth 100 or 101.

Its when they brought in the CRAY computer models, sliced and diced and added credit enhancements etc etc etc ( believe me if I have not lost you yet, its geometrically more complicated on some of these to the point where PhDs in mathematics struggle to understand on first read through a prospectus ).

I dont have an answer for sure, but banning esoteric instrument would be quite fine with me. Let Wall Street sell M & A services instead.



Interesting analogy. My Wall Street friends have been warning me of these circumstances for @ 2 years. One called it a "perfect storm". An overextended dollar, the loan bubble, irrseponsible Congressional policies all contribute to the mess.

Yes, the government could have just let it all melt down this week, and it would have taken the good with the bad. Once these things start, it's a self fulfilling prophecy. Further debacle has the potential of taking the entire banking system down, perhaps worse than 1929-33. By the way Bernanke has spent his career studying the Depression. So that was the risk as they understood it.

Now as SteveAZ and others point out. It is most likely that most of those securitized mortgages will retain a significant portion of their value. Right now, no one can assign one, so the financial institutions were faced with having to write them down drastically, thus forcing the crisis. However, if the Feds buy this stuff up at deep discounts, they can make a very significant profit if timed properly. Timing is everything.

In the mid-90's, the conntroller of Orange County, CA got himself into a similar pickle. He had made some complex financial plays in repo's and notes, betting on interest rates. The prime went up and basically the County had to fire sale the notes because of margin issues. 6 months later, the notes paid off. The people who bought the notes made a fortune.

If I were President/King, I'd hire Michael Milken to run the thing and maximize the return. If he failed, back to the clink. If he succeeds, full pardon, lots cash, and he's a hero.


Neo, thanks for the heads up. We are cooling, folks; for how long even kim doesn't know.


Gmax, do you remember First City Bank?


If so, tell me today's First City, please.


Actually there is no financial institution in worse shape today in my own humble on the outside looking in view, than Citicorp.

WaMu is a thrift that is not in great shape but its relatively tiny compared to Citi.

If you want some good bets, the Regional banks like MI and BTT are most likely going to pay good dividends and get back to normal valuations for depositary institutions the quickest. You might get yields better than the highest CD, and potential to double your investment in about 2 years.


'The transaxle of their credibility'. That's a good one.


Double? Where's the 20-1 play?


The Whittle piece is wonderful; thanks, Charlie.

However, Barney's Thanksgiving tale is about the best analysis of the whole credit mess I have seen thus far. Bravo.


That was AIG pre bailout, the pigs got slaughtered, which is what happens when you get greedy.

Low risk of loss, high dividend in the meantime and maybe double your capital. Average on the DOW is what 8%? Heck the dividend on some the regional bank might get you that!

M. Simon


I gave my Congress contact an earful the other day that was condensed Whittle.

I said the people are ready to fight - what is wrong with the leaders?

Maybe some one was listening. McCain has sure amped it up in the last couple of days.


Are the assets there for AIG to take itself back?


We could call the entire operation Love Canal where they tossed the toxic waste. Much as we don't like socialized finance, Bernanke and Paulson realized that we were in the throes of a full-fledged bear raid on the financials, with nasty and rumors about banks holding billions of LEH commercial paper. Hearing that the reason why politicians were pointing the finger at Cox over the last week is that he was resisting prohibiting short sales. Now that he's caved a whole bunch of hedge funds -- including Soros?? -- have closed down their financial operations including the longs.

Paulson et al must have something on the FNM/FRE mess that's herding the dems into complicity. Although they still may try to add language to get MBS holders to try to avoid foreclosure by renegotiating terms. Worst dem proposal I heard about was selling this mess to Ginny Mae.




Have ya'll been to dealbreaker.com.?Snarky stuff but he seems to have a lot of people give him tips


McCain’s hiding Sarah Palin away from answering any questions from the media so that the American people will be able to make an informed choice, is the reason why we cannot trust him in this financial crisis. It is not our fault that McCain made a unwise choice in his V.P. pick but the American people should not have to pay the price for his misjudgment. The Townhall Meeting she participated in was Staged, Republicans only crowd! There is something deceptive in that action of hiding her away, it is not honest and it is not truthful and it is a lack of integrity! Furthermore, McCain lacks credibility when he spits in the face of the legal system and does not allow Palin and her husband to honor subpoenas, again engaging in a above-the-law mentallity. We have had enough of that base behaviour.

America we cannot afford, nor can we trust, nor can we have any confidence that McCain and the Country Club Boys First Club will fix our failed and crumbling economic system, when at heart their allegiance is to the Country Club Boys first and not to the American people. Their fixing will be a partial measure of change and a band aid — looked to assuage a worried public but will do nothing to bring the radical change and upheaval needed to get America truly back to being fiscally sound and thriving again! It will be short turn and to their advantage.

McCain can Run, McCain can Pretend, McCain can Deceive but McCain cannot Hide from his past — the S&L Scandal and the Keating 5! To trust these Country Club Boys again to make fair and sound changes on behalf of the people, would be to do so at your own risk and detriment! When you see and hear McCain speak think, Wizard of Oz! America we must pull back the curtain and expose the deceit and deceptions of the country-club boys and get off the Yellow Brick Road! It is somehow sinister to hear McCain now pretend to get a Heart — Courage — and Brain while he deceptively talks about regulation and transparency when he has been against it his whole political career. McCain cannot change the Old Guard because he is part of the Old Guard, but the new kid on the block, Barack Obama can.

Republican Good Old Boy Government Says:

“We don’t have ENOUGH MONEY to fix Social Security
We don’t have ENOUGH MONEY to fix Medicare
We don’t have ENOUGH MONEY to provide health care to ALL Americans
We don’t have ENOUGH MONEY to help out Americans losing their homes
We don’t have ENOUGH MONEY to help all our veterans returning from war
We DO HAVE ENOUGH MONEY to bail out Fannie Mae and Freddie Mac
We DO HAVE ENOUGH MONEY to bail out Bears Stearns
We DO HAVE ENOUGH MONEY to pay for an unnecessary TRILLION DOLLAR war
When the LITTLE GUY needs help, they scornfully say, “GET A JOB!”
But when one of their BIG GUY CRONIES from the COUNTRY CLUB FIRST need a bailout, what do they say?



What an irrelevancy, Angellight. The McCain campaign's tactical handling of a hot Veep candidate sheds no light whatsoever on that brain trust's ability to navigate the shark infested waters of Wall Street. That you think it does is evidence of your dimness.

Besides, McCain's just Bush III and Bush looks like he's got a couple of sharpies in Bernanke and Paulsen with whom to whack the stupid, yes, stupid and corrupt Democrats.


OK angellight is going behind the cloak of invisibility in 3 , 2, 1 . Bye nice knowing you...


"The DOW is up 400 as of this minute..........

You might be right. It could sail up to the watermark of 9/11/2001."

George Soros he isn't.

"This ain't algebra, where a negative plus a negative equals a positive."


Whenever I see one of these long posts, I always look first to see who wrote it. I'll read it only if it written by one of the regulars (excepting a couple who have proven to write garbage).

Maybe we could convince Tom to give people with a small number of posts (less than 10? 20?) to have typepad add the Carl Herman header of "SOB."

So I didn't even bother with Angelfire.

Sara (Pal2Pal)

Here is the latest update on Tasergate from Flopping Aces. Full of links and explanations of what is what to date:

Trooper’gate latest expected news - Todd Palin refuses to testify

Rick Ballard


We won't know if AIG can pull out until the Fed bids for the Level Three junk. The LIBOR + 8.5% certainly has their attention focused upon getting it all over as quickly as possible and there are some super pieces that can be peddled rather handily.

I think they'll make it - after Ben neck locks Congress into voting for whatever he wants.

The last hour of trading today has been a riot with profit takers and jackals covering short positions having just a ton of fun in the sandbox. We could see a hundred point swing either way in the next ten minutes.


George Soros he isn't.
Do we know that for sure?

The internet ain't epistemology, where you can take things for granted.


The LIBOR + 8.5%
Holy cow, I had been misreading the news stories as 85 basis points. 850 is the kind of "bailout" you usually get only from guys who use the phrase "bag a'doughnuts" as a last name. Or -

Here's a new meme for defenders of the AIG action, which I think I am all of a sudden -

AIG is borrowing money from the government under worse terms than most subprime mortgages.

JM Hanes

So Angelight:

To which Action Memo mailing list do do we owe the honor? So many miles to go before you sleep!

Posted By: jangel | September 19, 2008 at 02:53 PM at Politico

Posted by: Angellight | September 19, 2008 at 03:30 PM at JOM

Rick Ballard

"is the kind of "bailout" you usually get only from guys who use the phrase "bag a'doughnuts" as a last name."

Listen up, buddy, Benny don't like that kinda talk. You godda problem wit dis, Tony'll come over to splain things.



Well, maybe, JMH. The presence of 'angel' in both means its probably the same person.


It's the sort of spiral the IRS can put on you.


AIG is getting a junk bond rate, but they are lucky because most non-investment grade companies can't borrow now.

What a week. Phew it's over.

Captain Hate

The presence of 'angel' in both means its probably the same person.

Yes, original thinking isn't one of the characteristics of trolls as exemplified by the pathetic examples that have shown up on this thread. Not to mention proficiency in basic math concepts.

Charlie (Colorado)

McCain’s hiding Sarah Palin away from answering any questions from the media so that the American people will be able to make an informed choice....

Hmmm. Other than Charlie Gibson, Katie Couric, and Sean Hannity.

So Angelight:

To which Action Memo mailing list do do we owe the honor? So many miles to go before you sleep!

An old one, it would appear. They were trolling that one a couple weeks ago.


Heh, two angels prance on the heat of this pain, but two negatives make a positive. Distinguishing sums from products is above my pay grade.

Sara (Pal2Pal)

Angellight must not own a TV if he/she thinks Palin is being hidden away. She is everywhere. Campaign speeches, answering questions from voters at Townhalls, the condescending Gibson interview, 2 nights of interviews on Fox, with much more indepth questions than Gibson could dredge up from his elitist mindset, candid interviews at her home and a week long series by Greta Van Sustern done in Alaska interviewing everyone and anyone she could find plus a great interview with Todd Palin.

The feminnazi women are starting to embarrass themselves and make it crystal clear why the majority of women look at them as freaks.

Those of us who were on the front lines of women's issues and equality knew it 30 years ago. We saw NOW disintegrate into nothing but angry women and lesbians. They've done more to hold women back than any man or any law ever did. We knew that they wanted women to give up more than they gained by lowering themselves to be equal with men.

These women hide behind their fancy degrees and their uptown addresses and fashion to camouflage the fact that they really are bound together by only one thing, their absolute hatred of anything male or any woman who has anything to do with a real man. Of course, they surround themselves with the wooses and wimps of the world, the sexually confused and other elitists who have their own massive insecurities which they try to camouflage with the same trappings. They hang on to their pretend power and when someone they thought was one of them, Lynn Forester de Rothchild, says whoa, I'm not like you at all, they are shocked, like Campbell Brown was. They think class is all about money. Class is class and you can be born in the ghetto or even a trailer park and have genuine class or you can be the daughter of teachers, married to a working class dude, and have class.

These freaks calling themselves the "voice of women" should take a lesson. Sarah Palin and millions like her don't lower themselves to be equal with men, they meet men head on and beat them at their own game, and do it with grace and style. She likes to use the term "ruffle feathers," and she has and does, but you know that when the day is done, she'll be the first to smooth those ruffled feathers and give the men back their manhood rather than taking it home to her feminazi sisters as the first course in their in their hate-feasts.

Rick Ballard

65 cents - per Bill Gross, who should know and wants to manage the action.

At 65 cents AIG will be just fine.

perfect storm

Obama's secret plan for the economy;

>Keep two brothers on CIA payroll.
>Tax GDP like Britain, wait for terror and double the tax.
>Give away 100s of billions in foreign aid and 'loans' and laugh at American's mortgages 'cause they're too stupid to figure out this isn't all of it.
>Sell more so no body can tell it's him.


AIG is not borrowing at Libor +8.5%.


You forgot to add in the 80% equity kicker.

The government depants AIG.

Tony Soprano would be embarrassed asking for this kind of action.

Good for me ( and you ) if its a contribution to the till that I dont have to pay for, for a change.


Well said, Sara!

Rick Ballard


The exercise of the 80% warrants is a contingency - the anvil Benny drops on your head after he breaks your knee with the 8.5% hammer if don't you make your vig every week.

The very small carrot is that if AIG moves like lightning they won't be on the walker very long and the warrants won't be exercised. Upon reflection, Gross may be being a bit optimistic at 65 cents. I'll believe it 100% when Benny nods.


Rick, help me out here. The gov't took AIG to the cleaners, they're working under extraordinarily harsh conditions (and dropped 80% of their equity, thanks GMax) - but Gross thinks they're going to sail out of this?

Has the market just overreacted in the size of the beatdown laid on AIG?


Oops, should have previewed. +8.5%, or lose 80% equity.


PIMCO does not have any MBS action to speak off that I am aware. I think he just pulled a number out the air. He wants 85 to 115 basis points to manage the stuff and package it up for sale. If the price is higher initially it may take longer for a sale and thus he gets more mgt fees!

When Merrill Lynch sold a slug of these to Westwood ( a hedge fund in Texas ) it as at $.22 if memory does not fail me. And I do remember some analyst thinking the calculations to get to 22 cents were a little strained too. Take that as a better indicator of where this might trade, of course better stuff gets better pricing.

M. Simon

Any one see Carol Herman around the www these days?


First I heard of the warrants being cancellable. How many seconds did Ben give them before scooping up all the marbles in the match?

M. Simon

Ladies and gents IMO we are in the midst of a full blown coup attempt.


"George Soros he isn't.
Do we know that for sure?"

Yes,JOM doesn't pay enough.

Rick Ballard

"Has the market just overreacted in the size of the beatdown laid on AIG?"

I think (well, sometimes I do - sorta) that AIG, MS and GS were all being hit with naked shorts and credit default pricing manipulation. It appears (to me, anyway) that the AIG seizure set up the squeeze on the shorts and that cooperation for the squeeze was achieved on a global basis. There are reports that AIG management could have sold off enough to stave off the Feds and refused to do so.

It's almost enough to make a person wonder about the Dems hue and cry concerning FISA warrants for international data collection. The look of sobriety on Pelosi's shrewish mask last night makes me wonder what the binder she received contained.

In short, I don't believe the Feds want AIG for any longer than it takes to get the head offices cleaned out. There are sufficient assets readily available to satisfy lending requirements if Gross is anywhere near being correct at 65 cents.


The warrant language in the AIG SEC disclosure: "The summary of terms also provides for a 79.9% equity interest in AIG. The corporate approvals and formalities necessary to create this equity interest will depend upon its form." seems bullet proof but I don't think it is. If AIG can get straight in 2 weeks, could (or should) the Feds get 80%? I think there's some slack there.


AIG may have a wink and nod that if you move lightning quick we will consider renegotiating the warrant arrangement, since we dont want to be usurious. I could well see that. I doubt its in any document though. Lets see how good they are at the triple jump.

M. Simon

McCain Palin Rally Michigan.

Now for the bad news:

It's no wonder, then, that John McCain and Sarah Palin held their first joint town hall meeting in this solidly Republican city on Wednesday, or that McCain played his newly discovered populist tune during a visit earlier in the day at a General Motors plant. "We are not going to leave the workers here in Michigan hung out to dry," McCain said, "while we give billions in taxpayer dollars to Wall Street."


"indicates that you have some LONG positions that might pay-off now? If so, congrats!"

Transferred ALL my stocks and commercial paper
when Fannie Mae and Freddie debacle began to erupt. Now I'm in Treasury bills and have been riding the slow see-saw upwardly.

BTW, folks. If you think it's been rocky up until now, watch yerselves.

The only propping ;up the dollar is the Chinese. If they should switch to Yen,(and they'd be crazy with all the US paper they hold) you can use yer dollars for lighting the fire.

Buy some Junk silver. It will still be valid tender. Better still, buy lots of coffee, sugar and salt and rent a storage unit.


'ngellight must not own a TV if he/she thinks Palin is being hidden away. She is everywhere.'

Angel is referring to her Press accessibility.

A short leash is necessary with a pit bull who has a nasty bite to go with it's surplus of barking.


Gilgamesh just went into the cloak of invisibility. Poof! No more troll. This is better than having *** to sell on a troop ship!

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