We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Our Recent Essays Behind the Front Page
Friday, March 14. 2008
Spitzer and Obama: "Non-judgemental nonsense." Sowell
Related: Monogamy is unnatural, says Spitzer defender. Oh, really??? A comment from Frontal Cortex
Does "big business" like free trade? Cafe hayek
How our media has gotten Americans killed.
America is a nation of givers. The American
But why are we giving our money to these dudes?
White House confusion about gun rights
Related, from Insty:
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Obama and the Minister
By RONALD KESSLER
March 14, 2008
In a sermon delivered at Howard University, Barack Obama's longtime minister, friend and adviser blamed America for starting the AIDS virus, training professional killers, importing drugs and creating a racist society that would never elect a black candidate president.
The Rev. Jeremiah A. Wright Jr., pastor of Mr. Obama's Trinity United Church of Christ in Chicago, gave the sermon at the school's Andrew Rankin Memorial Chapel in Washington on Jan. 15, 2006.
Trinity United Church of Christ/Religion News Service
Sen. Barack Obama and the Rev. Jeremiah Wright
"We've got more black men in prison than there are in college," he began. "Racism is alive and well. Racism is how this country was founded and how this country is still run. No black man will ever be considered for president, no matter how hard you run Jesse [Jackson] and no black woman can ever be considered for anything outside what she can give with her body."
Mr. Wright thundered on: America is still the No. 1 killer in the world. . . . We are deeply involved in the importing of drugs, the exporting of guns, and the training of professional killers . . . We bombed Cambodia, Iraq and Nicaragua, killing women and children while trying to get public opinion turned against Castro and Ghadhafi . . . We put [Nelson] Mandela in prison and supported apartheid the whole 27 years he was there. We believe in white supremacy and black inferiority and believe it more than we believe in God
His voice rising, Mr. Wright said, "We supported Zionism shamelessly while ignoring the Palestinians and branding anybody who spoke out against it as being anti-Semitic. . . . We care nothing about human life if the end justifies the means. . . ."
Concluding, Mr. Wright said: "We started the AIDS virus . . . We are only able to maintain our level of living by making sure that Third World people live in grinding poverty. . . ."
Considering this view of America, it's not surprising that in December Mr. Wright's church gave an award to Louis Farrakhan for lifetime achievement. In the church magazine, Trumpet, Mr. Wright spoke glowingly of the Nation of Islam leader. "His depth on analysis [sic] when it comes to the racial ills of this nation is astounding and eye-opening," Mr. Wright said of Mr. Farrakhan. "He brings a perspective that is helpful and honest."
After Newsmax broke the story of the award to Farrakhan on Jan. 14, Mr. Obama issued a statement. However, Mr. Obama ignored the main point: that his minister and friend had spoken adoringly of Mr. Farrakhan, and that Mr. Wright's church was behind the award to the Nation of Islam leader
Instead, Mr. Obama said, "I decry racism and anti-Semitism in every form and strongly condemn the anti-Semitic statements made by Minister Farrakhan. I assume that Trumpet magazine made its own decision to honor Farrakhan based on his efforts to rehabilitate ex-offenders, but it is not a decision with which I agree." Trumpet is owned and produced by Mr. Wright's church out of the church's offices, and Mr. Wright's daughters serve as publisher and executive editor.
Meeting with Jewish leaders in Cleveland on Feb. 24, Mr. Obama described Mr. Wright as being like "an old uncle who sometimes will say things that I don't agree with." He rarely mentions the points of disagreement.
Mr. Obama went on to explain Mr. Wright's anti-Zionist statements as being rooted in his anger over the Jewish state's support for South Africa under its previous policy of apartheid. As with his previous claim that his church gave the award to Mr. Farrakhan because of his work with ex-offenders, Mr. Obama appears to have made that up.
Neither the presentation of the award nor the Trumpet article about the award mentions ex-offenders, and Mr. Wright's statements denouncing Israel have not been qualified in any way. Mr. Obama nonetheless told the Jewish leaders that the award to Mr. Farrakhan "showed a lack of sensitivity to the Jewish community." That is an understatement.
As for Mr. Wright's repeated comments blaming America for the 9/11 attacks because of what Mr. Wright calls its racist and violent policies, Mr. Obama has said it sounds as if the minister was trying to be "provocative."
Hearing Mr. Wright's venomous and paranoid denunciations of this country, the vast majority of Americans would walk out. Instead, Mr. Obama and his wife Michelle have presumably sat through numerous similar sermons by Mr. Wright.
Indeed, Mr. Obama has described Mr. Wright as his "sounding board" during the two decades he has known him. Mr. Obama has said he found religion through the minister in the 1980s. He joined the church in 1991 and walked down the aisle in a formal commitment of faith.
The title of Mr. Obama's bestseller "The Audacity of Hope" comes from one of Wright's sermons. Mr. Wright is one of the first people Mr. Obama thanked after his election to the Senate in 2004. Mr. Obama consulted Mr. Wright before deciding to run for president. He prayed privately with Mr. Wright before announcing his candidacy last year.
Mr. Obama obviously would not choose to belong to Mr. Wright's church and seek his advice unless he agreed with at least some of his views. In light of Mr. Wright's perspective, Michelle Obama's comment that she feels proud of America for the first time in her adult life makes perfect sense.
Much as most of us would appreciate the symbolism of a black man ascending to the presidency, what we have in Barack Obama is a politician whose closeness to Mr. Wright underscores his radical record.
The media have largely ignored Mr. Obama's close association with Mr. Wright. This raises legitimate questions about Mr. Obama's fundamental beliefs about his country. Those questions deserve a clearer answer than Mr. Obama has provided so far.
Mr. Kessler, a former Wall Street Journal and Washington Post reporter, is chief Washington correspondent of Newsmax.com and the author of "The Terrorist Watch: Inside the Desperate Race to Stop the Next Attack" (Crown Forum, 2007).
Habu: If Obama decries this nigger why is it he's followed him for twenty year? If Obama gets elected and we'll have a new KKK develop and the next Rodney King episode it will be open season on niggers. Obama is lying about his feel'ins, Michelle is hating America and their spiritual leader is a full blow nigger racist. Great WH folks.
This piece behind the Wall Street Journal wall so I had to print it all.
It's this kinda thing that makes a joke out of "The Southern Poverty Law Center run by Morris Dees. The SPLC putatively identifies hate groups and spends great effort getting the federal government to place them on watch lists.
But Dees doe NOTHING about this type of thing apparently buying into the outrageous fallacy that minorities by definition can't be racists.
Well, protect you own cause if Obama makes it to the top the strutt'n won't stop. Every African American will be uncontrollable in their pride which is fine until they turn to alchemy to reach for reparations and other (can there be more however) special treatment.
Bad News Obama and his Alinsky tactic of "there's only the fight" which is to be won at the cost of lying and misrepresentation for a short period of time. Anyone buying into this guys line of bull shit is begging for a nation more greatly divided than we've seen since 1861-1865.
From the Thomas Sowell piece:
"In this age, when it is considered the height of sophistication to be "non-judgmental," one of the corollaries is that "personal" failings have no relevance to the performance of official duties.
What that amounts to, ultimately, is that character doesn't matter. In reality, character matters enormously, more so than most things that can be seen, measured or documented.
Character is what we have to depend on when we entrust power over ourselves, our children and our society to government officials.
We cannot risk all that for the sake of the fashionable affectation of being more non-judgmental than thou.
Currently, various facts are belatedly beginning to leak out that give us clues to the character of Barack Obama. But to report these facts is being characterized as a "personal" attack.
Barack Obama's personal and financial association with a man under criminal indictment in Illinois is not just a "personal" matter. Nor is his 20 years of going to a church whose pastor has praised Louis Farrakhan and condemned the United States in both sweeping terms and with obscene language .
The Obama camp likens mentioning such things to criticizing him because of what members of his family might have said or done. But it was said, long ago, that you can pick your friends but not your relatives.
Obama chose to be part of that church for 20 years . He was not born into it. His "personal" character matters, (Habu comment here....that's called an endorsement) just as Eliot Spitzer's "personal" character matters -- and just as Hillary Clinton's character would matter if she had any."
White House confusion about gun rights
There is a place for born agains. In the case of Geo. Bush's conversion from alcohol and debauchery to being born again his embrace was too much.
It has shown a good side in sticking with certain valuable principles but abandoning others such as support for the Second Amendment.
Dick Cheney knows the importance of the one amendment that stands guard and protects all the others. Thank goodness enough of the American population continue to understand the 2A's value to our freedom. If that understanding is misread by the SCOTUS there's gonna be one helluva fight.
I'm not stepp'in in any queue to turn in my firearms and if enough Americans stand with me it will never happen. It would be unenforceable.
THE FED'S DESPERATION MOVE
I do not have a new message here; we have known
for a long time that advance preparation and a
strong balance sheet are the keys to riding out a
financial storm. As I have emphasized before, the
Federal Reserve can deal with liquidity pressures
but cannot deal with solvency issues.
William Poole, President
Federal Reserve Bank of St. Louis
February 29, 2008
The Federal Reserve System announced a new program on March 11. The announcement was not quite gibberish, but it was close. This much was clear: it is a $200 billion
The stock market bulls thought, "Wow! That's huge!
That will solve the problem!" They did not read the
details of the proposal.
The announcement was an implicit admission of a
looming credit crisis of monumental proportions: an
unprecedented write-down of bank assets. Why? Because
these assets, rated AAA by the big three ratings agencies,
are nowhere near AAA.
Banks are facing new rules on financial reporting:
mark to market, meaning the end of the book value (face
value) game that they have played for decades. This is the
Financial Accounting Standards Board Rule 157. It goes
into effect for banks this quarter, which ends on March 31.
Bankers are going to have to report the truth or else
face criminal penalties. Why, they even might turn into
Eliot Spitzer! That's what happens when you play fun and
games, as accountants have been allowed to do.
The solution? Sell these promises to pay at market
prices. This would have included the promises to pay
issued by Fannie Mae and Freddie Mac, the two mortgage-
investing companies that account for 40% of the American
mortgage market, and which have accounted for at least 70% of new mortgages written over the last six months.
That solution would have brought economic reality to
the investment world's attention: the AAA ratings have been
overly optimistic. The FED rushed to the rescue. It offered to auction off U.S. Treasury debt in its portfolio, which is always AAA-rated, in exchange for AAA-rated private debt. This will allow banks to transfer to the FED questionable assets in exchange for assets that cannot be downgraded in today's markets: Treasury debt.
The FASB's Rule 157 does not apply to the FED. It
will not have to report a capital loss.
This program was seen by mutual fund managers as an
increase in liquidity. It was in fact a last-minute
desperation move by the FED to stop a free-fall in the
credit markets and possibly even a lock-up of the banking
system. If that is the meaning "increased liquidity,"
fine. But this was not how the FED or anyone in the media
explained the new program.
The FED timed its announcement of this proposed
"temporary" $200 billion asset swap just in time for the
opening bell of the New York Stock Exchange on March 11.
Sure enough, the Dow soared 416 points that day. The next day, it fell by 46 points, after having climbed early in
the morning by 150 points.
We have learned that a FED press release can goose the
stock market for one day. Then the market sinks. Stock market optimists who have lost money all year want to believe that the FED can achieve the following with
a new program:
1. Overcome the liquidity crisis
2. Overcome the solvency crisis
3. Overcome sinking residential real estate markets
4. Avoid the imminent fall in the commercial real
5. Restore bankers' confidence in other bankers
6. Restore confidence in the credit rating services'
credit rating services
7. Reverse the dollar's slide
8. Reverse the falling stock market
If the FED could do any of this, don't you think it would have done so by now?
We have seen all of this unfold since last August.
The stock market recovered its July high by mid-October.
In fact, it was even a bit higher. The optimists thought
the FED was on top of things when it announced the new,
"temporary" Term Auction Facility. It also announced lower
federal funds target rate. Happy days were here again.
Then reality reasserted itself. Down, down, down the
market fell. Take a look at the chart of the S&P 500.
A LOSS OF CONFIDENCE
We are seeing a broad-based loss of confidence in the
American economy. This is affecting just about everything:
housing prices ("the great American dream"), the stock
market, the international currency market, the commodities
market, the municipal bond market, and the banking system.
Only the T-bill market seems immune. There has been a rush into T-bills, driving rates below 1.5%. This indicates
looming panic in the other capital markets: a flight to
This loss of confidence is forcing huge changes in
America's capital markets. We are seeing a move from
confidence to doubt. Such a move always has a price: an
increased risk premium on loans.
The Friday before the FED's announcement, a media
story appeared on a looming default by the Carlyle Capital
Corporation, the legally separate mortgage investment
entity of the giant Carlyle Group, whose investors include
George H. W. Bush and the Bin Laden family. Carlyle
Capital Corp. could not meet margin calls. The margin call
was $400 million.
Understand, this was not the total value of the fund.
This was just the initial margin call.
On March 13, the bad news came true. The company
could not meet these margin calls. The price of the shares
fell by 95% in the Amsterdam market, where it is traded.
It announced that it had defaulted on $16.6 billion.
When some poor guy in a Fannie Mae-funded home leaves
because he cannot make the monthly payment, this is called
walking away. When it is done by a corporation set up on
the Channel island of Guernsey, it is not called walking
away. It is called going bankrupt.
In July, the fund had tapped the public for $300
million in capital. In July, things were still rosy. The
Dow was at 14,000. That was then. This is now.
"If Carlyle's lenders want their money right away, they'll liquidate the fund," said Hank Calenti, a London-based analyst at RBC Capital Markets. "That will put pressure on already stressed credit markets."It sure will!
"At this point we are exploring all options" for Carlyle Capital, Emma Thorpe, a spokeswoman for Carlyle Group in London, said in a telephone interview. She declined to specify the options being considered.
I think what Ms. Thorpe meant was that she is sending
out her resumé to everyone in her Rolodex.
The organization at one point held $22 billion in
mortgages issued by Fannie Mae. Its debt to equity factor,
according to the "New York Times" (March 7), was 32 to 1.
The Carlyle Capital Corporation was confident in its
portfolio -- confident enough to establish a 32 to 1 debt-
to-equity ratio. But why? Carlyle's fund has said its so-called agency debt has an "implied guarantee" from the U.S. government.
I believe the appropriate phrase here is this: "There's a sucker born every minute." P. T. Barnum never said it, but it's true. Some of them are (or were) rich. There will be similar events. Count on it.
"This is not only a problem for Carlyle," Jochen Felsenheimer, the Munich-based head of credit strategy at UniCredit SpA, wrote in a note to clients today. "We expect a further flood of downgrades especially of higher-rated securities, putting enormous pressure on the system."
Now, we must get to the famous bottom line. Carlyle
Capital Corp. was not acting alone. There were
"counterparties." Carlyle's counterparties are a dozen Wall Street firms including Citigroup Inc. and Deutsche Bank AG, according to the fund's annual report. The banks use repurchase agreements to lend money and require securities be put up as collateral. As the perceived creditworthiness of asset-backed bonds declined, the amount of money that can be borrowed using them as collateral fell.
Who else? The "New York Times" (March 7) listed these
lenders: UBS, Merrill Lynch, Lehman Brothers, JPMorgan
Chase, ING, Deutsche Bank, Credit Suisse, Citigroup, BNP
Paribas, Bear Stearns, and Banc of America .
Do you begin to get the picture? This was why the FED
announced its credit swap plan in March 11. The economists
saw what is obviously coming."Carlyle won't be the end of it," said Greg Bundy, executive chairman of Sydney-based merger advisory firm InterFinancial Ltd. and a former head of Merrill Lynch & Co.'s Australian unit. "There's more to come. The problem is no one can give you an educated guess about how much."
If you go to the Carlyle Capital Corporation's website(act now -- this offer is limited!), you will read the following: "Quality diversified assets, steady current income." Diversified? Did they think that $22 billion of
Fannie Mae debt was diversified? Then we read this:
Carlyle Capital Corporation Limited ("CCC") is a closed-end investment fund domiciled and registered as a limited company under the laws of Guernsey, Channel Islands. CCC invests in a diversified portfolio of fixed income assets including high-grade mortgages and credit products. CCC's day-to-day activities and investment portfolio are managed by Carlyle Investment Management L.L.C., whose investment professionals have extensive experience in the areas of mortgage finance, leveraged finance, capital markets.
These were clever people -- too clever by half. They are now overseers of a stricken company, which was incorporated so far away, so distant from lawsuits. The
best and the brightest put their money in this company,
which was the financial equivalent of the Hindenberg.
In January, 2005, William Poole, the President of the
Federal Reserve Bank of St. Louis, gave a speech on the
GSE's: Fannie Mae and Freddie Mac. He sounded a warning.
An understanding of the risks facing Fannie Maeand Freddie Mac -- which I will sometimes refer to as "F-F" to simplify the exposition -- is important from two perspectives. First, investors should be aware of these risks. Although many investors assume that F-F obligations are effectively uaranteed by the U.S. Government, the fact is that the guarantee is implicit only. I will not attempt to forecast what would happen should either firm face a solvency crisis, because I just do not know. What I do know is that the issue is a political one, and political winds change in unpredictable ways.
A second reason to understand the risks is that sound public policy decisions depend on such understanding. To reduce the potential for a financial crisis, risks need to be mitigated. He ended with a strongly worded warning that themanagers of Carlyle Capital Corp. did not take seriously
One thing I think I know for sure is this: An investor who ignores the risks faced by Fannie Mae and Freddie Mac under the assumption that a federal bailout is certain should there be a problem is making a mistake.
THIS WILL GET MUCH WORSE We are in the early stages of a write-down of assets not seen since the Great Depression. This is going to go into the history textbooks.
The man who predicted this most eloquently was Dr.
Kurt Richebacher. He died on August 24, 2007, two weeks
after the events he had long predicted began. He regarded
the expansion of credit under Greenspan as laying the
foundation of the worst post-World War II economic
contraction. He seemed like John the Baptist, crying in
the wilderness. He seems today more like Jeremiah, the
author of Book of Lamentations.
These stories of busted investment companies will
continue for the rest of 2008 and well into 2009. My fear
is that the stories will get worse as time goes on.
Because the financial industry is at the center of this
recession, the economy is at great risk. It is one thing
for manufacturing firms to go bust in a recession. There
are fewer of them these days inside the United States.
We are now seeing huge banks in trouble. When they
cease lending, the economy will topple. Declining capital
due to credit market defaults will cause banks to reduce
lending. They will not be operating on a 32-to-1 ratio.
Economic growth comes mainly from small companies that
get big. So does employment. These are the companies that the capital markets generally ignore. Local banks are
their source of loans. They will find that when local banks are in the middle of an international credit crisis,loans become very difficult to obtain. I saw this in Texas
in the S&L crisis, 1984-87.
If this recession lasts only a year, I will be pleasantly surprised. The recovery will be weak. Why? Because this time confidence in the FED will be at rock bottom.Confidence of the Federal government is already low. Congress is impotent. There will be a new President. None of the candidates inspires confidence in people with money to invest
We hear the phrase "systemic crisis" too often.
Systemic crises are real, but they rarely manifest
themselves until after time has run out. In the interim,
nothing is done to correct them.
The FED is facing what appears to be the early phase of a systemic crisis. The stock market has not reflectedthis yet. It is slowly declining, with fits and starts. It is not collapsing.
My suggestion is that you do not pay much attention to
upward moves in response to new programs offered by the
Federal Reserve System. If it could do anything other than
inflate the money supply, it would not be coming up with
late-night emergency bailouts to be announced just before
the opening bell of the New York Stock Exchange. Gary North
WS FIRM BEAR STEARNS NEEDS BAILOUT
BSC) with secured funding for up to 28 days, in conjunction with the Federal Reserve Bank of New York.
J.P. Morgan also said it's working with Bear to secure permanent financing or "other alternatives" for the brokerage firm.
Our liquidity position in the last 24 hours had significantly deteriorated ( Habu comment...our greed factor vastly exceeded our brainpower) ," Alan Schwartz, chief executive at Bear, said in a statement. "We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations. ( Habu comment ..we're in deep , deep do do, about to lose our homes in the Hamptons and we're wetting our pants)
"Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity," he added. "We have tried to confront and dispel these rumors and parse fact from fiction."
(Habu comment..But we've been in the business of lying and deception so long we've forgotten how to tell the truth or recognize reality)
Despite those efforts, Schwartz said "market chatter" had undermined Bear's liquidity.
Bear has been hit hard this week by growing concerns that it's struggling to trade with some counterparties. Some market participants have been worried about Bear's exposure to the dwindling mortgage business and its holdings of securities backed by home loans. Trading is the lifeblood of brokerage firms, so when counterparties pull back trouble often ensues.
Bear built a business focused on originating mortgages and repackaging them into mortgage-backed securities and collateralized debt obligations, reaping profits from the whole real-estate financing process.
But when the subprime-fueled mortgage crisis hit last year, "Bear did not get out of the way fast enough,( Habu comment...we were to greedy and stuck on stupid) " Dick Bove, an analyst at Punk Ziegel & Co., wrote in a note to clients earlier this week.
"Consequently, its balance sheet, its business operations, and its reputation were all hurt badly. One key result of this is that the firm's borrowing costs rose sharply according to reports," he said.
Because the broadening credit crunch has undermined Bear's business model, the firm may end up being acquired ( Habu comment..BOHICA folks), he added.
Alistair Barr is a reporter for MarketWatch in San Francisco.
Novak has gone over the edge while beating around the Bush, calling our Republican President left of Hussein.
SCOTUS can't roll back decades of gun laws (infringements) whatever they rule in the DC case.
Even if Heller has a right to arm himself with handgun he'll still have to register it.
If it's registered, it may be construed that, it is a weapon under the control of the local government and part of it's militia armory.
DC could still rewrite law and retain unloaded, key-lock or breakdown provisions for handguns.
But if Heller is cool he can have it locked and loaded in his home and keep it out of the pervue of any chicklett he may bring in or any freind who ain't really, to avoid the $500 fine, if such ordinace carries same fine as current one does.
But if he decides him heap big chief and decides to take it to the streets in defense of any of his percieved violated rights instead of going to courts like a civil American, as he has done to date, he'd be loosing his arm real quick to another arm of DC's militia.
Folks I know I've posted more financial data than most of you can stomach but I am very concerned that the roof is about to cave in...learn to grow potatoes etc,,it could and is getting very ugly.
The Big Whoosh: Is This the Beginning
11:30:01 AM March 14th, 2008
The Bear Stearns liquidity crisis may very well go down as the beginning of the big whoosh that must happen before anybody can see the light of day in this financial crisis.
One thing that gets lost in the noise about Bear Stearns, and why a bailout is critical, is that it’s a broker-dealer for many big hedge funds and wealthy individuals .
If the hedge funds and rich folk get caught here, without a net, you imagine possible domino effect throughout the brokerage and banking industries as people start pulling out cash and heading for safer pastures, such as trust companies.
And to think, just yesterday, S&P tried to suggest that the end of the subprime mess was in sight. Hate to break the news to them: The subprime slime was just the tip-o-the-rapidly melting iceberg
Whoever is left with credit will make fortunes buying distressed credits over the next few months.
I agree and am thinking banks, BD -- anytime now -- JPM, WFC for starters. AIG also, well beat down & cleaned up, and coiled. I got into WFC sometime back and it has held close to my buy-in through the latest few months of blizzard -- AIG & JPM are similarly clean and are gonna be getting a LOT of biz on that basis.
Don't worry about it ladies.
Me ain't reading Lesko nor y'all's insipient rant on lucre, since, y'all's knighterrantric post suggesting
disaster, "armegeddon... in the morning".
I do enjoy y'all's taste in hats, though.
If Billy Jeff weren't already the Hat in charge of George, I'd nominate ya.
Thomas Sowell for President.
Walter Williams for VP
My apologies for jumping in here with my same propensity for connections-but--do you suppose that the current activities by the Bush Administration with regard to the gun rights case and their failure to defend even something that seemingly uncomplicated--do y'a suppose that their current actions regarding this subject has anything to do with their need to consolidate some monetary position. Perhaps, it has more to do with the need to assure post administration pay offs than we can see from here. D'ya think?
Me don't think Bush has such Reaganesque motives.
I found, following paragraphs from US News link, on point and illustrative of Bush's motive.
What limits? If the court embraces an individual right to bear arms, the result is less clear. A big question is how far that freedom extends. In the past, the Supreme Court has recognized a government's ability to limit or regulate nearly every constitutional right; the freedom of speech, for instance, does not extend to shouting "fire" in a crowded theater. It's a position the Bush Justice Department appeared to recognize when, in supporting individual gun rights, it cautioned the Supreme Court against defining that right so broadly that it effectively restricted the government's ability to place limits on gun ownership. Such a ruling, the Justice Department said, could invalidate existing federal laws, including the machine gun ban.
But a ruling in favor of a restricted individual right—one that allowed some government regulation of guns—could, paradoxically, do more harm than good to the gun-rights lobby. An endorsement of individual rights would come as a moral victory, but support of restrictions could represent a loss; it could tacitly uphold most of the gun control legislation across the country.
"Even if the Supreme Court says [bearing arms] is an individual right, it's not likely to be the end of state and local government efforts to enact gun laws," says Jon Vernick, a public-health professor at Johns Hopkins University. "There are at least two parts to any answer to the question of what we might expect to see next: What does the Supreme Court say is permissible, and what do policymakers think is possible?"
Gun control witness...
RE:A church of lies and hate. That's not my Christianity.
Here is an Irish blessing NJ, from Aunt Sal.
Second insight: we have been watching the housing market for several years now. It has become clear to me that many people have turned their backs on placing their "retirement investment" into the stock market. It was clearly corrupted by mid 1990's. The result was that many people felt more comfortable to have their retirement capital in an investment(house)they could control. That is not to speak to their lack of ability--simply to state that thousands of people had already turned their backs on the corruption on Wall Street.
I agree. I told many of my collegues that after the S&L, Enron, and the dozen of other corruption eruptions on WS that America wasn't coming back. Actually WS doesn't really give a flip about the small investor..stick 'em in a managed fund and just collect the trails. It's the big deals they're always in search of..your average broker is just that, average with a whiff of larceny.
So America went to bigger houses with prices puffed up by charlatan appraiser in league with banks and brokerage houses and Carlton Sheets telling everybody "flip,flip,flip....then the rise in equity gave a bad case of the greedy to Joe Sixpack who cashed that in for a big screen TV.
Then securitization set in and new "investments" backed by Freddie Mac and Fannie Mae owned mortgages seduced the investors who were "smart" and stayed in the market to buy these instruments putatively backed by the full faith and crdit of the USA.... WS sliced those tranches up every way possible until nobody knew what was what in valuations.
Then someone said, Hell I ain't pay'n $600,000 to live in a chicken coop....others recoiled in horror..this man was a real estate renegade, a heretic, but he also right and sane and burst the balloon.
Now none of the big brains can value what they own and the jingle envelopes are arriving with the upside down homeowners house keys inside. The banks and brokerage houses are begging for relief but the FEd can only handle liquidity not solvency...and that's where we're now at...can Bear Stearns remain solvent? Bank of America? Merrill Lynch, Lehman Brothers, JPMorgan
Chase, ING, Deutsche Bank, Credit Suisse, Citigroup?
We don't know and probably won't for several years of real pain...big brains my ass.
What a pleasure to read Thomas Sowell. Brilliant with no need to flaunt it.... perfect.
Can a wounded Bear survive ?
By Riley McDermid, MarketWatch
Last update: 2:41 p.m. EDT March 14, 2008
NEW YORK (MarketWatch) -- As Wall Street struggles to get a handle on the liquidity bailout for Bear Stearns Cos., the question is looming large: Can the brokerage survive this crisis?
Wall Street observers already are weighing in, with many market professionals saying it's only a matter of time before Bear (BSC:The Bear Stearns Companies Inc
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BSC 33.21, -23.79, -41.7%) succumbs to market pressure.
"A company is only as solvent as the perception of its solvency," Oppenheimer analyst Meredith Whitney wrote in a note Friday. "When a company that is leveraged over 30 to 1 faces a crisis of liquidity and confidence of creditworthiness, that company will be unable to leverage its collateral and its leverage will be forced down to 1 to 1."
Investors are voting with their brokerage accounts, pushing down shares of Bear at last check down $21.75, or 39%, at $35.25 on volume of more than 146 million shares.
On a conference call Friday, Bear Stearns executives revealed that they have had, and would continue to have, talks with their investment bankers, Lazard Ltd., about their "alternatives" -- a Wall Street euphemism that often means putting up a company or part of it for sale.
People..this is monumental ..a company solvent just weeks ago now going under involuntarily......
So you're saying to youself as several commenter's did over at MarketWatch...let Bear Stearns go under before it takes government money with it.
Well lets look at that. First off the government has no money, it's your money and my money. Secondly because Bear Stearns (BS) is the deepest WS firm into securitized mortgages they also have a grip on Freddie Mac and Fannie Mae as US Gov backers of the full faith and credit of the mortgages. Now that doesn't mean the Gov HAS to step in and bail out these mortgages (which they did with $200 billion last week) it just ruins the credit standing of Freddie Mac and Fannie Mae which in turn lowers the value of every mortgage they have, and they have a ton, 40% of the American mortgage market, and which have accounted for at least 70% of new mortgages written over the last six months.
Look for some WS suicides, seriously. It would be the honorable way...wait what am I saying ...mixing WS with honor, huh....and this happened like lighting .. as I've said WS has totally uncoupled itself from reality. There are going to be a lot of zombies riding the trains home tonight..
On the bright side an entire new crop of potential Jr, High teachers has just been unleashed.
BSC survives--with the 28 day loan--to become part of JPM, is my prediction. Collateral leveraged x 10 only has to fall 10% to wipe out the position--that's what has happened--but that collateral still exist at 90% (in the model) value, and has appreciation potential once the mass delevering stops forcing everything to the cashier regardless of earning potential. This weekend may be the bottom -- these things need a huge failure before the posse rides in to rescue the bargains. The posse this time is gonna be the world's central banks, and they're gonna do it this weekend. The Asians & Europe will open down on Monday, USA futures will follow, and the Fed will use that to step in pre-open and drop the FFR 75 or 100 beeps. We're gonna inflate like mad--we have to, there's no choice. The good CPI numbers announced this morning (which were running our futures skyward a couple hundred points before BSC crapped out) mean we do have some time to do this before we have to start the inflation fight -- a fight which will last a few years probably, and will keep the economy underperforming due to higher interest rates while the financils system regains health with the high spreads and steep yield curve.
This is my IMHO big picture as of this minute.
My call...JPM has second thoughts as they examine a company who's CEO claimed last week that BSC had 17 billion, only to be bankrupt today...more will come out and JPM won't touch 'em.
BSC will sink Titanic like. Fredddie Mac and Fannie Mae already under intense pressure of losing their AAA ratings may get downgraded which will really exacerbate the sub prime mess.
The FED lowering rates 100bp won't do anything for this situation. It may give the market a bump but BSC is dead.
Europe will use this as an opportunity to continue wrenching business away from the US which was the entire purpose of the EU in the first place. Europe is no longer an ally of the USA but adversarial to our interests .
All of this is a continuation of the global realignment following the (non) end of the Cold War. I see no aid from any area, just more muck for us to slog through, including the Democratic Socialists.
but JPM already knows BSC inside out -- they clear for them. That's what spooked everybody so much--that JPM could know BSC collaterals and still yet feel they needed Uncle Sam's loan. Either the collaterals were way way overvalued, or else JPM is just scared of the market risk (rather than the fundamental risk).
If that is the case then JPM is party to the collaspe. check out this from the London Times:
Bear Stearns exposed as a bank saddled with toxic sub-prime debt
By Ambrose Evans-Pritchard
Last Updated: 11:27pm GMT 14/03/2008
Big American finance houses have collapsed before. Continental Illinois required a $4.5bn (£2.25bn) bail-out in 1984 after coming to grief in Texas as the oil boom deflated.
• Bear crisis could spark UK recession
• Bear Stearns succumbs to Wall Street's worst fears
• Bear Stearns seeks investors to keep it afloat
The giant hedge fund Long Term Capital Management was saved by a club of banks in 1998 under the guidance New York Federal Reserve. The fund blew up after Russia's default, which ravaged its portfolio of Danish, Italian and Spanish bonds.
Bear Stearns bank has been hit
by the sub-prime mortgage crisis
On both occasions the US economy was in rude good health. The damage was quickly contained.
The implosion of Bear Stearns is more dangerous.
A host of other banks, broker dealers, and hedge funds have played the same game, deploying massive leverage at the top of the credit bubble to eke out extra yield. Dozens of them are saddled with the same toxic debt - sub-prime property, credit cards, auto loans, and mountains of unsold paper from the merger boom.
This time the market for default insurance is flashing bright red warning signals across the entire spectrum of US finance.
The swap spreads on Lehman Brothers rocketed to 465 yesterday, mirroring the moves in Bear Stearns debt days before. Fannie Mae and Freddie Mac - the venerable agencies created by Roosevelt that underpin 60pc of the $11 trillion mortgage market - had a heart attack on Monday. Their bonds were in free-fall, threatening to set off another cascade of bank writedowns.
These are not sub-prime outfits. They sit at the apex of the US mortgage credit industry. Hence the dramatic move by the Fed this week to offer a $200bn lifeline, agreeing to accept Fannie Mae and Freddie Mac issues as collateral.
Had the Fed delayed, many traders believe Wall Street would have plunged through resistance levels risking a full-fledged crash.
The 'monoline' bond insurers - MBIA, Ambac, and others - that guarantee most of the $2,600bn market for US municipal bonds have seen their shares collapse by 90pc since the Autumn.
They are still battling to raise enough to capital to save their 'AAA' ratings. Should they fail, the insured bonds will be downgraded in lockstep. Pension funds would be forced to liquidate huge holdings. As New York Governor Eliot Spitzer said before his own liquidation, such an outcome is too dreadful to contemplate.
You have to go back to the banking crisis of the Great Depression to find a moment when the financial system as a whole seemed so close to the precipice .
Although 4,000 US banks failed in the early 1930s (mostly small ones), it was a long-drawn out affair. The bank runs began in the Prairies as falling food prices caused farmers to default in 1930. It seemed to be a local problem.
The crisis reached New York in December 1930 when the Bank of the United States succumbed to panic withdrawals. Legend has it that the 'WASP' clearing banks refused to back a rescue because of the bank's Jewish links.
In those days the contagion spread slowly to the rest of the world. It is much swifter now. The Swiss bank UBS has suffered US sub-prime losses on a scale to match Merrill Lynch and Citigroup, thanks to the curse of mortgage securities.
We are now experiencing the first truly major crisis of financial globalisation ," said the Swiss central bank governor Philipp Hildebrand this week.
Never before have banks seen such destruction of their balance sheets in such a short time. Moreover, there are signs that the problems are spreading. The risk premiums on commercial property, consumer credit and corporate loans have risen sharply ," he said.
Debt levels have been much higher than in the Roaring Twenties; the new-fangled tools of structured credit are more opaque: the $415 trillion nexus of derivative contracts is untested. Nobody knows for sure if the counter-parties are able to deliver on vast IOUs, or whether the construct is built on sand.
What keeps Federal Reserve officials turning at night is fear that the "financial accelerator" will now set off a vicious downward spiral . There is a risk of "very adverse economic outcomes," said Fed vice-chair Don Kohn.
Albert Edwards, global strategist at Societe Generale, said the toppling banks are merely a symptom of a deeper rot. "The banks are not the problem. Nor even the grotesquely leveraged funds. The problem is that an economic bubble financed by ridiculously loose monetary policy is unravelling ," he said.
"US house prices have a lot further to fall, which will simply crush the global economy. The lesson from Japan in the early 1990s is that the death dance goes on and on and on," he said.
The Fed blundered badly in the Slump, delaying rate cuts for too long. It allowed the money supply to implode.
It is acting with breath-taking speed this time. Rates have already been cut from 5.25pc to 3pc, and will be slashed again this week. New means of showering liquidity on the banking system are being devised each weak.
As luck would have it, the world's greatest expert on the financial causes of depressions - Ben Bernanke - happens to be chairman of the Federal Reserve.
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As I said if JPM knew and sat by and allowed this to happen they have culpability and probably some legal exposure. At minimum they didn't do what they could have to ameliorate the situation
habu, BCS suffered a full-fledged ''run'' by its hedge fund clients. It started building a couple days earlier, when close-in low-strike put volumes suddenly increased by three or four times average daily. Today, you could've bought Mar puts struck at half the share price for 50 cents and sold 'em a couple hours later for ten bucks. That is a ''run''. Starting now in the next few minutes you can hiccup, blow your nose, swallow some food, blink, cough, fart, pee, dump, scratch, fall down, get up, holler and tap dance, but you have to do them all in series, you can't do them all simultaneously.
IOW, the psychology killed 'em. This bubble can work out but not if the psychology blows up.
some good post-closing info -- evenhanded, half fear half hope. recommend article "Why Bear Stearns' tremors could signal bottom" -- may help you get some sleep this weekend--
This bubble can work out but not if the psychology blows up.
Well manipulating numbers is a helluva lot easier than controlling panic. I understand what your saying buy JPM obviously didn't know BSC inside out or they would have acted earlier.
As for the bottom, did you read my #19? I don't think too many people know what's what.
WS is begging for a 200bp drop on or before the 23rd. 200bp!..that my friend is panic not management.
If another bank goes down, (which BSC did and was given emergency CPR -cash phor resusitation) then I don't think much will stop the psychology of fear and panic from going to the top of the peg.
Were gonna see in the next few weeks which way the wind is blowing.
JPM knew BSC's book -- what JPM did not know and could not know was that BSC's clients were going to suddenly and en masse pull their cash out. Dirty little secret, no bank anywhere ever can handle a ''run'' -- they have investment portfolios themselves, which need to be sold to raise the sudden need for cash. Takes time -- and lack of time is what makes a 'run' a 'run'.
not to say that we're not in a helluva mess -- we are -- in a year we'll still need a big spread between short and long rates (to solve the banking system-freeze) and since Fed only controls short end and dollar can't long stand a 1% FFR, the mkts will run up the long end and the cost will be much-reduced economic activity. we're gonna be low and slow for awhile.