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September 17, 2008



Careful NEO the left will start calling you a liar...


Okay, I may be closer.


to what?


My pleasure, Clarice. Thought it was the perfect topping to the anti-troll software talk.


Wow +401 on the Dow and S&P 500 and Nasdaq even higher % gains. That will cut the trolls giggling while gravedancing down to size.

JM Hanes


LOL! It's amazing how much people who know what they're doing can leave out, when trying to explain it to someone who thinks they are speaking a foreign language!

My husband and I spent the first several years of our marriage in a remote, mountain-ringed valley in the southwestern outback of Virginia. He travelled a lot on business which meant I was on my own quite a bit. There was a state prison in the next valley over, and early on, while my husband was away, a couple of major bad guys escaped. After a series of freaky little things happened that night, I called him to ask where he kept his pistol(s). He had strong box with two guns (picture a shoot out in a spaghetti western) and bullets in assorted sizes, which I located and then called him back so he could explain what I needed to do.

He had married me straight out of Manhattan, and I had only just begun to acquire my huntin' & fishin' skilz at the time, so the conversation which ensued was pretty hilarious. Finally he said, "Look, don't put any bullets in the gun, just hide them in a safe place. The guy you're pointing it at has no way of knowing whether it's loaded or not. If you cock it and accidentaly pull the trigger, just cock it again like that was the only empty chamber."


"Mac boy" wins another round

The doublespeak coming from Microsoft and its ad agency, Crispin Porter & Bogusky, in the wake of its "icebreaker" ad campaign featuring Bill Gates and Jerry Seinfeld, is amazing. Yesterday, Valleywag learned that Microsoft PR was revving up a spin campaign to go along with the ad campaign.
... on second thought ...
Remember those awful Microsoft ads with Jerry Seinfeld and Bill Gates? Well, now you can forget them. Microsoft flacks are desperately dialing reporters to spin them about "phase two" of the ad campaign — a phase, due to be announced tomorrow, which will drop the aging comic altogether.


LOL! It's amazing how much people who know what they're doing can leave out, when trying to explain it to someone who thinks they are speaking a foreign language!

That is exactly what it is like. And when I try that stuff I immediately panic.

The other problem I have is I cannot read instructions. If you tell me what to do, like here, in conversation I can usually break it down, but give me a sheet of instructions and my eyes glaze over.

As for your gun analogy - the reason I never got a gun is that I am absolutely sure I would shoot someone.


to what?

At this point who knows, but I think to blocking the troll.


JMH, I really love that story, ROFLMAO..


JMHanes, and your pistola...

For the fun of it, invest a weekend at an L.L. Bean beginning flyfishing class. Invest another weekend in a rifle/pistol shooting class.

We are never so far from Mother Nature that we shouldn't be able to go back to our roots in an emergency. And if we don't ever need to use the lessons, if gives you confidence... and a nice warm memory to look back on.


Yay, Jane!

You can join JMH's classes for fun, too.


IT gives you confidence...

JM Hanes


That was long, long ago. I've been fly fishing and bird shooting ever since. In fact, there's a river in the NC mountains which is awfully close to the thing I miss about my marriage most. :-) False casting on the lawn is also great if you find yourself seriously keyed up and overwrought.


I'm not worried about learning how to shoot, I'm worried about getting so mad I'd shoot someone. Back then, I owned a 2 family house that I lived in. I had a tenant - highly recommended, who turned out to be a crack dealer. He refused to leave when the lease was up and was destroying the victorian I had rehabbed.

The worse part was I lived upstairs and had to pass his apt to get home. I filed suit to get him out, and was scared every day that he was gonna do something. Someone suggested I get a gun. I knew I was so angry, and scared, that if I did, I would shoot him.

JM Hanes

Probably best, Jane. If you're going to handle a gun, it's better to shoot it often enough so that you're not terrified of handling it, and can do so with compentence, and, oddly enough, with safety in mind.


Jane & JMH. Shoulda known! JOMers have good sense.


Ah! Let's have a moment of silence for (from) Semanticleo.


He mistook continuous misrepresentation and putdown for dialog.


JM Hanes


I'm still open to any other suggestions someone with as much good sense as you've got might make!


Fox reporting more than Sarah's email was hacked--her family members and staff emails were hacked, too.


JM Hanes

Where fundamentals are concerned, Fox News reported that someone named J.D. Foster (at Heritage) offered this timely reminder:

While Wall Street & the Financial Sector are important, they are not the entire economy. The real economy isn't Wall Street, it's real people producing and selling real goods and services. Wall Street is important, but it just finances those activities.


JMH, I'm the one that's amazed. I've learned more over the last few days than I thought possible about tranches and selling naked shorts.

People around here know their sh*t. And more importantly, they know when they don't know it, and ask.


I like short shorts better than naked shorts--dependin' on whom is wearing 'em.


Sobbering ?

The Bush administration is urgently preparing a massive intervention to revive the U.S. financial system, including a plan to sweep away the unpaid loans that are choking banks and blocking the flow of money to borrowers.

Congressional leaders gave bipartisan support to the administration's efforts after a meeting last night with Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke.

Paulson and Bernanke presented a "chilling" picture of the state of the financial system, according to a participant in the meeting who spoke on condition of anonymity. Lawmakers were told that the consequences would be grave if they failed to pass legislation by the end of next week. Sen. Harry Reid (D-Nev.) and Rep. Nancy Pelosi (D-Calif.) committed to meeting that deadline.

Seems like somebody has an idea of what to do.

JM Hanes

Yeah. The grownups called the kids into the room and read them the riot act.

Jim Rhoads aka Vnjagvet

There goes that recess. And they will have to vote, too.

J Verner

Latest on young popcorn. Mike Kernell denied last night that the authorities had been in touch with his son. But according to the Memphis Flyer, local FBI confirms that it has been in touch with the FBI Anchorage office.

Seems like they're getting their ducks in a row before they knock on that door.



"Morning Guys,

McCain needs some of that fighter pilot action on this mortgage crisis and fast. I hope they regrouped yesterday. If not, they better and fast/"

World markets are recovering nicely and the US stock market futures are up in a big way. McCain has recovered somewhat on Intrade and Obama's recent "economy bounce" might already be fading. I think the slide in the tracking polls should start leveling off. Let's see.


This might be one of the few situations where openly doing something about a problem is better than talking it up or down.

Yanking the economy back from the brink looks a lot like grownups taking charge. Being part of the fix adds credibility when it's time for some 'splaining, Lucy.


WaPo has an editorial this morning saying Obama's ad lies when it says McCain was always only for deregulation and notes that he was for tighter controls on Fannie Mae AND the claim that McCain is surrounded by those responsible considering who is close to Obama.


It's a loser. You guys are arguing about minutia, when McCain has had several days to speak out against Bush bailouts and keep the REpublican principles. Heck, most of you all do not keep those principles. You might as well be Democrats. You damage both the country and the Republican brand by rolling over so easy.

Let the banks fail. Chapter 11 works just fine. It keeps creditors at bay. And it is much fairer to let counterparties and speculators and investors take losses than to raid my all cash portfolio to pay for other people's losses.

It amazes me that I have to argue FOR the free market with supposed Republicans.


Most people in the country feel similar to me as well. There is a lot of popular discomfort with the bailouts.

Cecil Turner

It amazes me that I have to argue FOR the free market with supposed Republicans.

I know the Dems made out pretty well with the crash of '29, but do you really think a depression is necessary in order to win an election?

There is a lot of popular discomfort with the bailouts.

Tell it to your (Dem) congressman. Then ask him or her how this happened. Then try to justify having one of them "investigate" this . . . or electing one president.


You're pathetic:

Money doesn't grow on trees. Money from the government comes from taxes or inflation. It's incredible that I have to explain this to a supposed Republican. People who made bad investments are being made whole by people who did not.

Grow a nutsac. Stiffen your spine. Stop whining about the depression, you think is going to happen and stand strong for the free market.


The financial sector can (and should) take a huge shellacking. And a bunch of people (in blue New York) would lose jobs. But we have too many people in the financial sector anyhow. Don't worry, there would still be someone left to charge you commissions if you want to buy stocks.


I think you missed a point, TCO; this wasn't a free market. It was encumbered such that criminals could take advantage of it.

Go straighten out Jolliffe. There's criminals over there, too.

Cecil Turner

People who made bad investments are being made whole by people who did not.

People who made a bad law are now bailing out those they forced to make bad loans. (They also milked the loan guarantors for millions in campaign contributions whilst resisting regulatory reform. They also all have a (D) after their names, and reside in Congress.)

Grow a nutsac. Stiffen your spine.

Again, tell it to your Dem congressman. They control the purse strings, so as long as they don't go along with it, a bailout is impossible. But you're pretty sure that ain't gonna happen, aren't you? And that we can blame this all on the Administration, and not the party whose brilliant oversight (e.g., "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis") enabled this nonsense in the first place.

Stop whining about the depression, you think is going to happen and stand strong for the free market.

If you're seriously suggesting GSEs remotely resemble a free market, then you don't understand how they work.


Whoa, Cecil, maybe you should go straighten out Tamino, and Mann, and Hansen, and Gore. There's plenty more over there, too.


Bush has the ability to NOT bail out people. He is doing the WRONG thing economically and morally. And it will KILL the Republican brand.

Have fun losing the election Democrats-lite.

Cecil Turner

Bush has the ability to NOT bail out people.

Yeah, sure, why even bother with that whole Constitution thing, when we can just blame "the party in power" and define that as the President? A prettier example of working backward from the desired conclusion would be hard to imagine.

What the President should have had is the ability to regulate GSEs. The fact that he did not is almost entirely due to a group of recalcitrant legislators who blocked meaningful reform:

Meanwhile, Dodd — who along with Democratic Sens. John Kerry, Barack Obama and Hillary Clinton were the top four recipients of Fannie and Freddie campaign contributions from 1988 to 2008 — actively opposed such measures and further weakened existing regulation.
And why they did it is obvious. Elizabeth Dole said it well:
“And I absolutely demand to hear from the ousted CEOs of Fannie Mae and Freddie Mac who spent millions of dollars lobbying against the reforms I proposed to help prevent this crisis long before it started.”
Dem congressmen started this mess, and are the responsible institution for the bailout. Blaming the President is a load of crap that just won't flush.


As usual, a little historical perspective is in order.


The bubble pops. Lenders freeze. Depositors lose faith. Panic spreads. And the government steps in because nobody else will.

Today it is Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke putting together the rescue package for a financial system rocked by falling home prices and a wave of defaults on subprime mortgages.

But a short walk through U.S. history demonstrates the point made by Alex J. Pollock of the American Enterprise Institute: "If you would like an empirical law of government behavior, it is that in a panic or threatened financial collapse, governments intervene -- every government, every party, every country, every time."

The Panic of 1792
The nation's first president was in his first term when the U.S. ran into its first financial panic.

In 1791, the federal government assumed obligations that such states as Massachusetts and South Carolina owed from the Revolutionary War, part of a larger deal that included moving the national capital from New York to Philadelphia to Washington. Taking on the states' obligations added about $18 million to a total U.S. domestic debt of $65 million -- debt securities that proved attractive to financial speculators.

Primary among them was William Duer, a well-connected New York businessman who schemed to start a New York bank to drive down the price of Bank of New York stock and win control of BONY on the cheap. He and his colleagues also intended to corner the market on government 6% bonds, so-called Sixes.

Treasury Secretary Alexander Hamilton, the founder of BONY, watched the developments with alarm. "I have learnt with infinite pain the circumstance of a new Bank having started up in your City," Mr. Hamilton wrote to a New York associate, according to research by economic historians Richard Sylla, Robert E. Wright and David J. Cowen. "Its effects cannot but be in every view pernicious," because of the damage they caused to "the whole system of public Credit, by disgusting all sober Citizens and giving a wild air to everything."

The price for Sixes in New York jumped markedly from early December to mid-January. By March, the bubble had burst, with the price of the bonds dropping 25% over two weeks.

Working without a historical blueprint, Hamilton engineered an innovative response. The Treasury borrowed money from the banks and used it to buy government bonds, lifting the market price. He also told banks to accept bonds as collateral for loans to securities brokers, with the government guaranteeing the collateral.

"What Hamilton did in 1792 is just like what Paulson and Bernanke are doing now," said Mr. Sylla, who teaches at the Stern School of Business at New York University.

The financial system stabilized in April, and not a single bank failed until 1809. Mr. Hamilton's improvisation did the trick, or at least so concludes Mr. Wright, also at NYU. He named his son Alexander Hamilton Was Wright.

The Panic of 1907
The century that followed was punctuated by financial instability. There was the panic of 1819, during which states passed laws delaying foreclosures on real estate and personal property.

In 1841, another bout of financial volatility sent land values plummeting. States that had been depending on land taxes suddenly found themselves short of cash; nine of them defaulted on their debts. There was talk of a federal bailout, but Congress balked. Some states raised taxes and paid up; others swapped canals or other assets with their creditors.

"There were banking panics all of the time," said Princeton University economist Alan Blinder, former vice chairman of the Federal Reserve Board. "The banking panic of 1907 was particularly pernicious."

One immediate cause of the panic involved a failed attempt to corner the market on stock in a particular copper company. That led to a run on banks and trusts that had made loans for the plot, starting with the Knickerbocker Trust Co. Public confidence in other financial institutions soon evaporated.

The Treasury injected millions of dollars into the banking system. But it was really J. Pierpont Morgan, the banking magnate and undisputed king of New York financial markets, who saved the day. He had been in Virginia for a church conference when the panic hit, and he took an overnight train back to New York City. He dispatched his lieutenants to figure out which banks were in the worst trouble, then he called the bankers to his home. Working through the night, he browbeat the others into forming a joint pool of capital that they would use to pay depositors at banks that faced runs.

Once depositors saw that they were going to get their money, the panic eased. "Where's J.P. Morgan when we need him?" joked Mr. Blinder.

Six years later, Congress established the Federal Reserve system, creating a lender of last resort for the country's financial system.

The Great Depression
By 1933, four years after the infamous stock-market crash, about 1,000 American homeowners a day were losing their houses to the bank. President Franklin Delano Roosevelt and Congress created the Home Owners' Loan Corp., an ambitious government agency designed to prevent foreclosures on an enormous scale.

The agency bought defaulted mortgages from banks, then refinanced them at lower rates for fixed, 15-year terms. Over the three years it accepted applications, the agency was swamped with 1.9 million requests; about half of the applicants had monthly incomes of between $50 and $150.

Ultimately, the agency issued mortgages, averaging $3,039 apiece, to some one million homeowners. About one in 10 Americans with nonfarm, owner-occupied dwellings secured aid from the agency, according to a 1951 paper by C. Lowell Harriss of Columbia University.

The current mortgage crisis involves securities backed by subprime home loans. But during the 1930s, there was no secondary market for securitized mortgages. So the agency had to hold the mortgages for the full terms. It finally closed up shop in 1951, with about 80% of borrowers having paid their loans off on time or early.

The agency earned the government a small profit. "You save 80% of the people from being tossed out of their homes, and it didn't end up costing the government a dollar," said Lee Davison, a historian at the Federal Deposit Insurance Corp., another Great Depression creation.

Savings and Loan Crisis
It used to be that savings-and-loan associations were staid institutions that stuck to home loans and lured savings-account depositors with blankets and toasters. But during the 1980s, the industry expanded wildly into commercial real-estate lending, spurred by deregulation and poor regulation, according to Mr. Blinder.

The business model worked as long as the S&Ls made more money on their loans than they had to pay for deposits. But the model broke down when interest rates rose, and the institutions found themselves paying more for deposits than they earned from fixed-rate loans in their portfolios.

"In addition," said Mr. Blinder, "they went into a lot of what could only be called stupid real-estate investments."

From 1986 through 1995, about half of the 3,234 S&Ls in the U.S. closed, leaving federal insurers stuck with tens of billions of dollars in bad loans. In 1989, after eight months of debate, Congress created the Resolution Trust Corp. to make depositors whole, investigate allegations of wrongdoing and deal with the husks of the S&L industry.

At the time, skeptics warned that government was reaching too far into the marketplace, and predicted darkly the RTC would be saddled with bad assets for generations.

Indeed, the government ended up owning shopping centers, homes and resorts, along with an odd collection of assets put up as collateral for S&L loans, including Picasso and Warhol paintings, a 30-horse merry-go-round, a Colonial-era whiskey distillery, a drawstring made from Martha Washington's gown and 800 units of semen from a registered Brahma bull.

By the time the S&L cleanup was over, it had cost U.S. taxpayers about $124 billion in non-inflation-adjusted dollars, according to FDIC research. Mr. Davison, the FDIC historian, wrote in a 2006 journal article: "Perhaps a measure of the RTC's success is that little more than a decade after it closed, this agency that provoked so much debate is now largely forgotten."


Bush is ingorning the constituiont when he has Paulson engineer bailouts and seizures. Leaders lead. The bailouts are now. He should hold firm instead of raping the taxpayers.


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