Monthly Archives: September 2024

Trying to make sense of it all…

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First, dash over to Salon and read this Tom Tomorrow cartoon. It establishes some context for the bail out proposal. Now let’s look at derivatives — investments (or “bets”) that are meant to spread and reduce portfolio risk. Thanks to RB for forwarding this, it originated here.

Analogies are never perfect, but here’s one using horse racing. Don’t expect a perfect correspondence to the banking situation, but I think it is close enough for government work.

Joe goes to the track and bets $2 on a horse.

Two guys standing nearby get into a discussion and Fred says to Sam, “I’ll bet you $5 that Joe wins his bet.”

Next to them are Bill and Bob. Bill says: “I’ll bet you $10 that Fred welshes on his bet if he loses.”

Next to them is Sally. Sally says: “For $3 I’ll guarantee to Bill that if Bob fails to pay off, I’ll make good on the bet.”

Sally then goes to Mary and borrows the $7 needed in case she has to ever pay off and promises to pay back $8. She doesn’t expect to every have to pay since she believes Bob will always make good. So she expects to net $2 no matter what happens to Joe.

A quick calculation indicates that there is now 2+5+10+3+7 = $27 riding on the outcome of the horse race.

Question how much has been “invested” in the horse race?

Answer:

$50,000 by the owner of the horse who is expecting to recoup his investment from the winnings of the horse and other future deals. Everyone else is gambling, not investing.

The author goes on to say: “…when you hear everybody saying this is a crisis caused by the housing collapse, be skeptical. We are in the midst of a classic pyramid or Ponzi scheme and there is no way out except for people to lose a lot of money. All that is different this time is that it is the taxpayers who are being asked for the cash.”

Somebody seems to have gotten the message, because instead of the quick banking industry bail out that would have merely been a first installment on the American tax payers paying down (for the “greed is good” crowd) the trillions of dollars worth of casino-like losses on derivatives that are emerging due to the mortgage crisis, today the bailout was rejected by the House of Representatives. Congress has finally told GW Bush, “Fool me once, shame on me, fool me again and again, well f**k you.” It remains to be seen what government will do, but in any case they won’t get it done before the end of the quarter tomorrow, so we can expect some rocky third quarter reports from the corporate world.

The Times of India says,

Some indication of [the derivative market's] anatomy has been revealed in a report released this month by the Bank of International Settlements (BIS) in Basel, Switzerland. These guys should know, because BIS is the mother of all central banks. It lends money to central banks of other countries, clears international give and take and generally keeps track of financial markets.

According to its quarterly report, the total amount outstanding in the derivatives market was $677 trillion at the end of 2024.

Half the world’s derivative trading takes place in the US. How much of the trillions of dollars worth of vapor produced by the gamblers in the derivatives market is toxic? How much links directly to institutions and institutional clients that are sinking or have been sunk by the mortgage mess? I’ve seen estimates of five to eight trillion dollars, but have no clue what those were based on. Suffice it to say that the “bail out” would probably have been a 10% down payment on covering the markers that the free marketeers have outstanding.

If this kind of thing happened on the street, somebody would have broken kneecaps by now. As it is, the corporate elite feel entitled to a “bail out.” This brings us back to the Tom Tomorrow cartoon. If we don’t bail them out, they threaten to take all of us down with them. A collapse of insurance funds, pension funds, devalued equities held by the widows and orphans that Wall Street has always been so proud to serve — these things could pauperize a sizable chunk of the middle class. What will Congress do to cushion the impact?

green eggs and spam

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Sessum …kvit your kvetching.

Launcher

Emergency Economic Stabilization Act of 2024

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They haven’t voted on it yet, in fact they probably won’t vote until Wednesday, after Palin has had time to lobby for earmark provisions and McCain has finished his assessment on the impact of the bill on Indian gaming, but the text of the EESA 2024 has been released. The full 110 page pdf of the bill can be accessed here. The Financial Standard, reporting from tomorrow, Monday, Sept. 29 in the Asian market money-shed says,

Finally, at the 11th hour, and to avoid further downward pressure on financial markets when they open this week, the US Congress agreed on the final details of the US$700 billion rescue package, named the Emergency Economic Stabilization Act of 2024 (EESA).

In a press release issued today, Sunday September 28, 2024, the House Committee on Financial Services summarized the key provisions of the bill as follows:

SUMMARY OF THE “EMERGENCY ECONOMIC STABILIZATION ACT OF 2024”

I. Stabilizing the Economy
The Emergency Economic Stabilization Act of 2024 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit, which is vital to a strong and stable economy. EESA also establishes a program that would allow companies to insure their troubled assets.

II. Homeownership Preservation
EESA requires the Treasury to modify troubled loans – many the result of predatory lending practices – wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes.

III. Taxpayer Protection
Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program from financial institutions.

IV. No Windfalls for Executives
Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits “golden parachutes” and requires that unearned bonuses be returned.

V. Strong Oversight
Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse.

I sure hope that there’s enough time for grandstanding and posturing between now and Wednesday night. I wonder what effect waiting until October first will have on the markets? Tuesday the 30th marks the last day of the third quarter 2024, and Wednesday October 1 the beginning of the fourth.

Keep your senses tuned for much mumbling and grumbling about the timing.

Values and the Financial Crisis

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Mary Ellen McNish, General Secretary of the American Friends Service Committee, offered these suggestions and observations regarding the so called “bailout” in a letter she sent this week.

Our nation is in trouble:

Economic inequality is at its highest level since the Great Depression. The U.S. economy has shed 600,000 jobs this year. Food banks and homeless shelters are turning people away. While our nation spends $720 million a day on the Iraq war, millions of households face a winter without heat because social programs have been starved of funds for eight years. In our global household, 26,000 children under 5 die from preventable causes every day.

Principles which may provide a helpful lens through which to evaluate proposals to strengthen the economy include:

  1. Human rights. Solutions should nourish the dignity and human rights of all people as called for in the Universal Declaration of Human Rights. This includes an inherent human right to food, shelter, health care, and an adequate standard of living. People should be free to exercise political and civil rights in order to obtain these economic rights.
  2. A seat at the table. How can we solve this problem in a way that moves toward greater transparency and justice? Taxpayers who will be expected to foot the bill for solutions should have a say in the process. Congress should heed public input and take a strong oversight role. People can call Congress and join groups working on this issue. Over the long run, we can all help “democratize the economy” as members of credit unions, cooperatives, labor unions, community groups, and as shareholders and voters. Civic engagement increases democracy. Undue political influence by corporate and financial interests limits it.
  3. The common good. Solutions should benefit the many, not the few. As feminist activist Barbara Deming once wrote, “We are all part of one another.” The way the crisis on Wall Street is resonating on Main Street and around the world is a poignant example of this truth. A society cannot move ahead when it leaves anyone behind.
  4. Social responsibility. Solutions should include a role for a strong public sector and a responsible private sector that sees itself as part of a community of people accountable to each other. A business ethic that supports worker rights, protects the environment, and pays livable wages nurtures human dignity and rights. Those rights are harmed by unethical practices which transfer resources away from workers, shareholders, and communities.

McNish suggests that a plan to strengthen the economy viewed through this lens would include limits on executive pay, fair and progressive taxation, strengthened regulation and public control, and measures to reduce foreclosures, create jobs, and re-fund human needs.

She concludes,

We are all part of one another. Our society cannot abandon people and communities and expect to remain healthy and whole. We cannot afford to keep accumulating debt while giving tax breaks to the most affluent and paying for a $720 million-a-day war. We have to make choices. Congress should not rush into hasty solutions as it rushed into the Iraq war. Rather, solutions must come from a place of our deepest values and with the utmost care.

Entrepreneurial ideas for these parlous times…

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Wheelbarrow business. As the hyper-inflation bears down on us we will soon have to trundle wheelbarrow loads of money in order to buy a loaf of bread.

Molotov cocktail business. With troops soon to be garrisoned in our communities the time will come when we want to express our displeasure with tank treads tearing up the roads.

Weekly reality TeeVee show starring John and Sarah McSame. Guest appearances by papa Bush, mama Bush, and all the little Bushies.

Snakes. As the secular society collapses and the freakazoids from jesusland take over, they will need snakes to handle in their strange sabbath rituals.

Snake oil. Many uses. A US Health and Human Services Department contract should assure a long term cash flow. Explore biomass alternative energy possibilities. Bottle with patchouli scent and market as a personal lubricant.

Financial Counselor. Invent your own assets and sell them to your clients.

Quality print shop. High demand for quality print jobs in the stock certificate and derivatives businesses.

Black bread bakery. Cheap flour stretched with sand and dirt to bake loaves of highly profitable and barely nourishing black bread for the impoverished masses.

More to come, I’m sure.

Quotes of note…

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All via Google Quotes:

“This president has us engaged in three wars — one of necessity in Afghanistan and one of choice in Iraq. But he also has been at war on labor’s house since the day he was elected.”
– Joe Biden

“I’ve been so focused on state government, I haven’t really focused much on the war in Iraq.”
– Sarah Palin

“Today, my call for a time frame to remove our troops from Iraq has been echoed by the Iraqi government and even the Bush administration.”
– Barack Obama

“I do not want to keep our troops in Iraq a minute longer than necessary to secure our interests there. ”
– John “Crash” McCain

… and via fivethirtyeight.com:

Just ahead, over the rolling wheatfields all golden beneath the distant snows of Estes, I’d be seeing old Denver at last. I pictured myself in a Denver bar that night, with all the gang, and in their eyes I would be strange and ragged like the Prophet who has walked across the land to bring the dark Word, and the only Word I had was “Wow!”

– Jack Kerouac, “On the Road”

Army Regulars to be Stationed Here in Preparation for Battle at Home

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3rd Infantry’s 1st BCT trains for a new dwell-time mission. Helping ‘people at home’ may become a permanent part of the active Army

By Gina Cavallaro – Staff writer
Posted : Monday Sep 8, 2024 6:15:06 EDT
Copyright Army Times

The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.

It is not the first time an active-duty unit has been tapped to help at home. In August 2024, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.

But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2024 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.

“Right now, the response force requirement will be an enduring mission. How the [Defense Department] chooses to source that and whether or not they continue to assign them to NorthCom, that could change in the future,” said Army Col. Louis Vogler, chief of NorthCom future operations. “Now, the plan is to assign a force every year.”

The command is at Peterson Air Force Base in Colorado Springs, Colo., but the soldiers with 1st BCT, who returned in April after 15 months in Iraq, will operate out of their home post at Fort Stewart, Ga., where they’ll be able to go to school, spend time with their families and train for their new homeland mission as well as the counterinsurgency mission in the war zones.

Stop-loss will not be in effect, so soldiers will be able to leave the Army or move to new assignments during the mission, and the operational tempo will be variable.

Don’t look for any extra time off, though. The at-home mission does not take the place of scheduled combat-zone deployments and will take place during the so-called dwell time a unit gets to reset and regenerate after a deployment.

The 1st of the 3rd is still scheduled to deploy to either Iraq or Afghanistan in early 2024, which means the soldiers will have been home a minimum of 20 months by the time they ship out.

In the meantime, they’ll learn new skills, use some of the ones they acquired in the war zone and more than likely will not be shot at while doing any of it.

They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.

Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.

The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”

The package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and, beanbag bullets.

(read the whole article…)

[tags]holy shit[/tags]

Voter Suppression Wiki

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Baratunde Thurston offers the Voter Suppression Wiki at (yes) VoterSuppressionWiki.wetpaint.com

You can also find them on twitter at http://twitter.com/votesuppression

[tags]I will just hate it if we have take to the streets at my age, you say you want a revolution, america has one last chance to get this stuff right[/tags]