From One Disaster To Another
September 15, 2008 1:33 pm

Bonddad

....So let's sum up. Real (inflation adjusted) incomes for the vast majority of Americans declined this expansion. At the same time, people were already spending most of their incomes at the beginning of this expansion yet they continued to increased their spending for the duration of this expansion. Where did all of the new money for increased spending come from?

Tons of debt. At the beginning of this expansion total household debt outstanding stood at $7.6 trillion. That current figure is $13.9 trillion. That's an increase of 82%. To place that figure in perspective, total household debt outstanding is now almost as large as total US GDP. All of that does not exist in a vacuum; it has to go somewhere. And that's where we get to the current problems in the markets.....

....So, let's sum up all the points made above.

1.) Incomes shrank for most Americans over the last expansion.

2.) But Americans kept spending thanks to a mammoth increase in household debt.

3.) To increase the amount of debt in the system, lending standards were lowered.

4.) Lowered lending standards have led to a higher default rate from borrowers.

5.) Higher default rates have lowered the value of all the collateral backed by mortgages.

6.) Lowered collateral values have killed the balance sheets of literally every major financial company.

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Governor Palin's Reading List
September 15, 2008 2:03 pm

Robert F Kennedy, Jr.

Fascist writer Westbrook Pegler, an avowed racist who Sarah Palin approvingly quoted in her acceptance speech for the moral superiority of small town values, expressed his fervent hope about my father, Robert F. Kennedy, as he contemplated his own run for the presidency in 1965, that "some white patriot of the Southern tier will spatter his spoonful of brains in public premises before the snow flies."

It might be worth asking Governor Palin for a tally of the other favorites from her reading list.

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Obama and the Palin Effect
September 15, 2008 6:45 pm

Deepak Chopra

Sometimes politics has the uncanny effect of mirroring the national psyche even when nobody intended to do that. .....

.....She is the reverse of Barack Obama, in essence his shadow, deriding his idealism and exhorting people to obey their worst impulses. In psychological terms the shadow is that part of the psyche that hides out of sight, countering our aspirations, virtue, and vision with qualities we are ashamed to face: anger, fear, revenge, violence, selfishness, and suspicion of "the other." For millions of Americans, Obama triggers those feelings, but they don't want to express them. He is calling for us to reach for our higher selves, and frankly, that stirs up hidden reactions of an unsavory kind. (Just to be perfectly clear, I am not making a verbal play out of the fact that Sen. Obama is black. The shadow is a metaphor widely in use before his arrival on the scene.) I recognize that psychological analysis of politics is usually not welcome by the public, but I believe such a perspective can be helpful here to understand Palin's message. In her acceptance speech Gov. Palin sent a rousing call to those who want to celebrate their resistance to change and a higher vision.

Look at what she stands for:
--Small town values -- a denial of America's global role, a return to petty, small-minded parochialism.
--Ignorance of world affairs -- a repudiation of the need to repair America's image abroad.
--Family values -- a code for walling out anybody who makes a claim for social justice. Such strangers, being outside the family, don't need to be heeded.
--Rigid stands on guns and abortion -- a scornful repudiation that these issues can be negotiated with those who disagree.
--Patriotism -- the usual fallback in a failed war.
--"Reform" -- an italicized term, since in addition to cleaning out corruption and excessive spending, one also throws out anyone who doesn't fit your ideology.

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Financial Russian Roulette
September 15, 2008 7:47 pm

Paul Krugman, NYT

.......To understand the problem, you need to know that the old world of banking, in which institutions housed in big marble buildings accepted deposits and lent the money out to long-term clients, has largely vanished, replaced by what is widely called the "shadow banking system." Depository banks, the guys in the marble buildings, now play only a minor role in channeling funds from savers to borrowers; most of the business of finance is carried out through complex deals arranged by "nondepository" institutions, institutions like the late lamented Bear Stearns - and Lehman.

The new system was supposed to do a better job of spreading and reducing risk. But in the aftermath of the housing bust and the resulting mortgage crisis, it seems apparent that risk wasn't so much reduced as hidden: all too many investors had no idea how exposed they were.

And as the unknown unknowns have turned into known unknowns, the system has been experiencing postmodern bank runs. These don't look like the old-fashioned version: with few exceptions, we're not talking about mobs of distraught depositors pounding on closed bank doors. Instead, we're talking about frantic phone calls and mouse clicks, as financial players pull credit lines and try to unwind counterparty risk. But the economic effects - a freezing up of credit, a downward spiral in asset values - are the same as those of the great bank runs of the 1930s.

And here's the thing: The defenses set up to prevent a return of those bank runs, mainly deposit insurance and access to credit lines with the Federal Reserve, only protect the guys in the marble buildings, who aren't at the heart of the current crisis. That creates the real possibility that 2008 could be 1931 revisited.......

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The Palin Doctrine: Why the Neocons Are So Excited
September 16, 2008 11:35 am

Arianna Huffington

Sarah Palin may not have known what the Bush Doctrine was, but we're getting a pretty good idea of what the Palin Doctrine is. According to London's Daily Telegraph, the architects of the Palin Doctrine are a group of people who have been singularly wrong about virtually everything in the last decade -- the neocons, who have been briefing Palin for weeks. She's perfect for the neocons: likeable on the outside, a blank slate on the inside. They first fell in love with her in 2007, during a Weekly Standard-sponsored cruise. So nice to meet you, Governor. And don't forget, mai tais and preemptive invasions on the Lido Deck at four!

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Know Your Stuff, Obama Supporters
September 16, 2008 11:44 am

ShadowSD, DailyKos

• Obama will cut taxes for 95% of Americans; his middle class tax cut is 3 - 8 times bigger than McCain’s according to the non-partisan Tax Policy Center
• Obama’s budget adds up better than "we’ve seen in a Presidential candidate in a very long time"; his plan will leave 1.2 trillion dollars less debt than McCain’s (non-partisan TPC)
• McCain had to check with his staff when asked how many houses he owns and what kind of car he drives; he spends $250,000 a year on house servants alone


• US Troops overseas donated 6x more to Obama; our troops prefer his Iraq plan by 30 pts
• Obama always urged focus on Al Qaeda in Afg/Pak while McCain/Bush focused on Iraq/Iran
• Obama correctly predicted that invading Iraq would increase terrorism; Obama, alone among all candidates in urging focus on Pakistan last year, was vindicated by the recent turmoil there
• Non-partisan Disabled Veterans of America scorecard: McCain 20%, Obama 80%


• The Obama Presidential campaign is the first in living memory where average Americans own the biggest share: more than 50% of donations to Obama have been $25 or less, 80% have been $100 or less, and 93% have been $200 or less
• "You would have to go back a century and a half to name an incoming president with so few debts to repay"
• Obama and the DNC accept no federal lobbyist or PAC donations; McCain and the RNC do
• McCain has 133 lobbyists working for his campaign; his top staff is mostly DC lobbyists
• McCain got 10x more Top CEO donations than Obama in return for corporate tax breaks
• McCain's flip in favor of drilling was rewarded immediately with big donations from oil execs......

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McCain and equal pay for equal work
September 16, 2008 12:03 pm

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Obama, McCain and the Truth About Taxes
September 16, 2008 1:36 pm

Maya Schenwar

Unless you make more than $2.87 million per year, Barack Obama will not raise your taxes. In fact, he will probably cut them.

This reality has been trampled, twisted, turned inside out and scribbled over so many times by the McCain campaign that it is hardly recognizable amid the clutter, but the fact remains: Obama's plan would grant tax cuts to all Americans making less than $226,982 per year, with the largest cuts going to the poorest individuals. Only the wealthiest 0.1 percent of earners would have to pay more.

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Behold the power and glory of the scientific method!
September 16, 2008 5:01 pm

DAYTON, TN - A steady stream of devoted evolutionists continued to gather in this small Tennessee town today to witness what many believe is an image of Charles Darwin - author of The Origin Of Species and founder of the modern evolutionary movement - made manifest on a concrete wall in downtown Dayton.

"I brought my baby to touch the wall, so that the power of Darwin can purify her genetic makeup of undesirable inherited traits," said Darlene Freiberg, one among a growing crowd assembled here to see the mysterious stain, which appeared last Monday on one side of the Rhea County Courthouse. The building was also the location of the famed "Scopes Monkey Trial" and is widely considered one of Darwinism's holiest sites. "Forgive me, O Charles, for ever doubting your Divine Evolution. After seeing this miracle of limestone pigmentation with my own eyes, my faith in empirical reasoning will never again be tested." - The Onion -

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Money Market Fund Busts below the One Dollar mark: A Major Shoe Has Just Fallen
September 16, 2008 8:35 pm

by mikeypaw, DailyKos

The fact that Reserve Primary fund fell below the sacred $1.00 redemption price could have far reaching implications for the entire financial sector. Remember money funds are nearly ubiquitous throughout the entire financial sector and they are used for everything from corporate cash management to a parking place for un-invested funds of a pensioner. These funds sole raison d etre is to provide liquidity and safety for investors.

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The worst is yet to come
September 17, 2008 10:40 pm

'No market for old men,' TCW investment strategist warns in gloomy forecast

By Jonathan Burton, MarketWatch

Jeffrey Gundlach, chief investment officer at Los Angeles-based mutual-fund company TCW Group Inc., told clients on a conference call late Wednesday that the crisis in credit and housing may not abate for several years and is actually getting worse......

.....Gundlach based his assessment on a belief that housing prices still face several more years of decline, a protracted slump, he said, not seen since the Great Depression. Moreover, Gundlach said it's possible that home prices could be sluggish until 2022.

"If it's like the Depression experience -- and it sure is shaping up that way -- it could take several years.Maybe we won't see a bottom in home prices until 2014," he said.

Write-offs could top $1 trillion

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BUSH: I'VE ALMOST MISSION ACCOMPLISHED THE ECONOMY
September 19, 2008 9:48 pm

My fellow Americans, I am here to speechicate to you today about the economy and to tell you the money surge is working.

Just like when I bull-horned you all to go shopping after 9-11, I'm telling you to go shopping for stocks in the market place with all the stocks. I promise I will hunt down the terrorist killers who have been responsible for attacking Wall Street and smoke them out, dead or alive.

I am pleased that we have made sure that the wealth will stay with the wealthy who can continue their trickling down all over the American people.

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Most Transparent Markets, Part II
September 20, 2008 4:08 pm

How the "Bailouts" Taught Shareholders About "Transparency"

By Robert Folsom, EWT

......And, finally, now that you know what the regulators were not doing, there's the question of what they were doing. Keeping in mind that regulators actually regulate participants in a given market, let me summarize:

a) They never regulated market participants with the greatest potential of blowing up the system, such as hedge funds and credit default swaps

b) They deregulated market participants such as Bear, Lehman & AIG, who depended on the unregulated market participants

c) They retained regulatory control over market participants that had the least potential of doing damage, such as short-sellers. Run a Google news search on "SEC" and "short sellers" to see what I mean......

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Palin's Pastor a witch persecutor
September 20, 2008 9:00 pm

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Sarah Palin's John Birch Society Moment
September 20, 2008 9:14 pm

Jed Report

In the wake of the revelation that in 1995 Sarah Palin's reading materials included a copy of the John Birch Society Magazine, it seems to me that the media and intellectually honest conservatives should take another look at her ties with the pro-secessionist and Bircher sympathetic Alaskan Independence Party (AIP).

Even though Sarah Palin was not an AIP member, her husband Todd was a registered member from 1995-2002. Moreover, in 2000 Sarah Palin attended an AIP convention, and in 2006 and 2008 Palin recorded a video greeting for the AIP convention. Until it became a major campaign issue, members of the AIP said they had seen both Palins at party meetings in the mid-1990s.

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Al Franken's Saturday Night Live Return: Franken Helps Write SNL's McCain Skit (VIDEO)
September 21, 2008 9:01 am

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Rush Limbaugh Hates Mexicans (But in a Funny Way)!
September 21, 2008 5:48 pm

John Ridley

No, Rush didn't put one of those delightful "Just Hang in There" kitty- cat posters up in his "heavily fortified bunker." But according to a rather weepy piece in the Wall Street Journal, Rush is upset that the Obama camp is portraying him as being a bigot.

By quoting a bigoted statement he's made.

The Obama campaign is running new Spanish language ads in Colorado, Nevada and New Mexico which quote Limbaugh as using the phrase "stupid and unskilled Mexicans" and telling Mexicans to "shut your mouth, or get out" of America.

In his WSJ piece Limbaugh doesn't deny making the statements. His issue is that the statements are taken out of context.

Context?

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Obama: McCain's 'A Little Panicked'
September 21, 2008 8:46 pm

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