September 2008 archive

The Inevtiable conclusion

You know you will soon be getting these in the mail:

Dear American:

I need to ask you to support an urgent secret business relationship
with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country
has had crisis that has caused the need for large transfer of funds of
800 billion dollars US. If you would assist me in this transfer, it
would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my
replacement as Ministry of the Treasury in January. As a Senator, you
may know him as the leader of the American banking deregulation
movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need
the funds as quickly as possible. We cannot directly transfer these
funds in the names of our close friends because we are constantly
under surveillance. My family lawyer advised me that I should look for
a reliable and trustworthy person who will act as a next of kin so the
funds can be transferred.

Please reply with all of your bank account, IRA and college fund
account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission
for this transaction. After I receive that information, I will
respond with detailed information about safeguards that will be used
to protect the funds.

Yours Faithfully
Minister of Treasury Paulson

The Bailout is Bullshit!

Ok, seriously now, y'all have to stop this Bailout from ever happening. This is the most ridiculous shit I've ever seen in my life. Let's review this for a second:

1) You have a consumer-based economy that relies totally on consumer's wealth, which means that it relies on home-ownership wealth, because that's where the american people have their wealth concentrated, in their homes.

2) You have a stagnating economy where everyone told you that the only safe bet is investing and flipping houses, and that one can make millions doing just that without much effort really. So many people start buying houses they can;t afford thinking that they will be able to flip them to other people and make a quick buck in the process, and they are aided in that with banks making mortgage taking very easy.

3) You have banks and lending institutions that wanted to raise their revenues, but no serious economic or manufacturing expansion was being sought out by the industry leaders (with industry moving to India and China and all) and thus no business loans, so they start focusing on giving out personal loans and mortgages. Realizing that there are so many real eligible homeowners out there, they start to give out mortgage loans to people they know can't afford it, hoping that most will eventually be able to afford them and that this will somehow diversify the risk and give them some method of hedging against any economic crisis that may occur if the bubble bursts. But just in case they can;t do that, they will lump a couple of those mortgages together, call them "financial instruments" or "derivatives", and then will sell them to Insurance companies, making the cash now, but with the gurantee that they will collect the money for them and cover the loans that fail to keep making payments. They figured, hey, how many of those could exist anyway? And then they took that money and gave it out as more bad loans, because, what's the worse that could happen?

4) The Insurance companies realize that they have a lot of money, and they need to invest it in order to be able to pay the insurance premiums for those customers who died, houses burned, whatever. So they take the cash they collect from their customers and decide that they need to invest it in something profitable, long-term and secure. Where to invest, where to invest? Oh boy, I know, the housing markets. And those Banks are offering to sell us those financial instruments comprised of hundreds of mortgages on a discount, and will promise to cover the loans if the customers failed to pay up. That sounds like a great deal, and a very secure one at that. And no, we won't check to see if those mortgages are good or bad, after all, the banks must've did their homework on this. They just don't dole out money to anybody who asks. Right?

5) And so far we have the making of the housing bubble: People who want to make a quick buck start buying houses they can't afford and sell them to other people for profit, who in turn buy them on mortgages they really can't afford, and take them and try to sell them to other people for profit, who in turn buy them on mortgages they really really really can't afford take them and try to sell them for profit, until that is no longer possible because the price has hit a ceiling and no one is willing to pay that much for that house anymore. So those plucky home investors find themselves facing one of two choices: 1) Either face foreclosure on the house, and thus lose whatever money you made on it, and the bank ends up with a piece of property that no one wants to buy at its current price anyway, and the investors's credit rating gets fucked and possibly affects all his other loans and mortgages, or 2) they sell the house at a loss, take a second mortgage on their own home, which they they really can't afford now, so they start getting behind on their payments, face foreclosure, lose their own house to the bank and become homeless. And when that happens, they will look at you with sad eyes and say "I don't know how this happened. They told me that house prices always go up".

6) And now the banks are freaking out, because they now have lots of overvalued property- thanks to all those bad loans- and little cash, so they start going after those who have been paying their mortgages on time and up their rates, cause, hey, we gotta make our money back one way or another. So those who have been financially responsible start getting fucked, many of them unable to make those payments now either, so they also lose their houses, and the bank ends up with more property no one wants to buy, and thus faces bankruptcy and possible shut down.

7) And now the insurance companies start to freak out because the banks are unable to collect the mortgage payments, and are unable to cover the price of the house and are entering the arena of going concern- i.e. they might just get bankrupt and shut down. So they start going through their books to see how many such bad mortgages they have bought in those financial instruments anyway, and low and behold, it's in the billions. They better start calling other financial institutions for help, quick. Wait, everyone did this? Fuck, I guess it's time to ask the government for help. They have money up the ass anyway.

8) The executive branch of the government realizes that the people paying their campaign contributions are about to go bankrupt, and shut down. So they freak out. They also freak out more when they are told that when this will happen, those companies will bring down the stock market, which will bring down the whole world economy, unemployment will rise and everyone will suffer. So those companies, regardless of their reckless behavior, need to get bailed out immediately. How much of a bailout you say? 700 billion dollars? That sounds about right to me. Send it to congress!

9) The nice people in congress are divided over the Bailout: Should they give it to the companies that were irresponsible in their lending, buying bad mortgages and not really checking them? Or should they bail out the people who knowingly took out mortgages they can't afford in order to make some quick profit and never saw this logical end coming? The question of the day becomes "Which irresponsible group should we help out?" , instead of "Why are we helping those irresponsible people anyway?" or "Ain't 700 billion dollars just a tad too much money to spend on failing irresponsible financial institutions, especially that this is the taxpayer's money we are talking about here?"

10) And finally, there is you, the good ole responsible working American, who didn't try to make a quick buck and who took only mortgages he/she could afford. Suddenly you find that the rates on your mortgage went up for no reason, so your house is in jeopardy, followed by an announcement by your bank that it is going bankrupt, and those savings you've put in there? Ehh, might not be there anymore dude. Oh, and the part of your savings you've put in the stock market or let those financial institutions invest for you in their mutual funds (part of which, naturally is invested in the housing market), well, that's going to shit as well. But don;t worry, the government will take the money you gave them, and give it to all of those people instead of spending it on government programs- such as education or road maintenance, or medicare- like they told you they would. And if they can;t afford to make such a payment, they will issue bonds to other countries which you later on will have to pay anyway. Don't you just feel blessed to live in the greatest country in the world now?

People, wake up. Fuck the financial institutions, let them fail. Fuck those people who gambled with your future, let them be homeless. And fuck the government that wants to bail them with YOUR MONEY, it's your money anyway, and having it used to reward stupidity and recklessness is surefire way to waste it. There is no averting this economic crisis, it's here to stay and it will be a while before it goes away. Deal with it, and move on, because all of this bailout talk is nothing but a short-term solution to a long-term problem. Just do nothing, and let the market correct itself.

Trust me, you will be better off, in the long run, that way!

In Laymen's terms

*Location: random Irish bar on 42nd and 6th in Manhattan
* Date: few days ago, around 7 pm
*Who: Me and my friend K., whom I've known since college

K: Ok, so you have studied all of this economic stuff. Can you please
explain to me what the hell is going on and why are people this freaked
out?

Me: Ok, do you want me to go with route of laying out all
the financial terms and how it all played out, or would you rather I go
with the simplistic Laymen's terms of it all?

K: Go with Laymen's terms.

Me: Ok, so imagine the economy as this big nice Bonfire y'all have created a while ago.

K: Ok…

Me: And instead of enjoying this bonefire, you know, getting warm next to
it, or roasting marshmallows on it or something, you keep obsessing
about making the fire bigger. Every year the fire has to be bigger than
the year before or you have all somehow failed at something. So you
keep throwing wood to the fire, because it has to keep getting bigger,
right? Well, as any stupid camper would tell you, if you keep getting
the fire bigger one of two things will happen: Either you will run out
of wood, and the fire will eventually cool down and be put out, or the
fire will get to be so big, that no one will be able to control it, and
it will burn everything around it.
K: And which happened here?

Me: Both!

K: We are screwed, aren't we?

Me: In more ways than one my dear. More ways than one!

Links to the economic crisis

Palin defends McCain on the Economic crisis quote, and helps explain what he meant. Now, Hero, I know you ain't the economics guy, but when Barracuda – she who never took a single economic theory class- defends you, maybe it's time you get yourself an adderal prescription and some books. Just saying!

Bush is assuring world leaders that his efforts of instituting corporate socialism is under way, and that the 700 billion dollars he is doling out of tax-payers money to help failing financial institution will be spent regardless, because, like, what's 700 billion dollars in the big scheme of things anyway?

There is a short-selling ban at the moment for a number of companies and it includes GM and GE, in order to stop regular people from abusing the current economic situation to make money, stating that such abuse is usually reserved to his friends only. Come on people, it's a market correction and thus we are all fucked, let's all make money here.

And finally, Obama seems to be gaining in the polls thanks to the economic crisis, which I guess is supposed to make his supporters happy. Good on you Obama, you get the presidency of a debt-laden government and a failed economy. You sure you still want this?

Obama pulls out of North Dakota..

…..after pulling out of Georgia and Alaska, and instead moving them to Minnesota (which he should have easily) and Wisconsin. By doing that he is closing down 11 offices in that state alone. The reason why I am bringing this up is due to that previous post I wrote about Obama running out of money. He is out-raising McCain all right, but he also has a much bigger on the ground operation than he probably needs, and it's costing him lots of money. For a lack of a better term, the overhead is killing him. Add to that fact that people will be less likely to donate now to him due to the current economic crisis, and you find that McCain's decision to just go with Federal funds to be an interestingly smart choice, in hindsight of course!

Oh well, one month to go.

Help feed Sarah Bernhard

She is a fifth rate comedian who used to be something in the 80's and needs some publicity and money. So she went off and insulted Palin, calling her a turncoat Bitch and hoped she gets gang-raped by black brothers in New York. Cause that's what other women wish on women who disagree with them: Rape!

But I digress, she needs the work, people. And that's why she urges people to send the video to everybody. And she did say that the rape thing is part of "a larger nuanced argument". Cause there is a lot of nuance into wishing women to get raped.

God I love US politics and the freaks it unleashes!

Ask Alec Baldwin

Hey people,

I am having a Q&A session with none other than Alec Baldwin next week, which should be interesting to say the least (I will be trying really hard not to scream " You are worthress Arrec Bardwin" to his face every 2 minutes. God Help me I want to soo bad!). That being said, since y'all have been patient with me and all, if you do have a question of your own that you want to ask the leader of F.A.G., please leave it in the comment section and I will pick the best two questions and give them to the man to his increasingly round face.

Oh, and by the way, I am still blogging over there. Come over and make some noise! 

DC, NYC, Austin Texas

I know, I suck, I haven;t been updating, even though I have like 30,000 new links to share everyday. maybe I should get my del.ici.ous account and do those instant link posts that other people do. Hmmm… Anyway, on to bigger news.

People, By now you know that when I come to the US i usually stick to Boston, New York or DC. This time it's no different…almost. I will also be coming to Austin Texas for a bit. So, if you are a fan of this blog, and wanna meet up, send me an e-mail @ sandmonkey at gmail dot com, and let's meet up and put some faces to the names.

See you soon, hopefully…

SM 

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