by gjohnsit, posted by permission
Last April the Bush Administration changed the rules so that the Federal Home Loan Banks could take a more active part in propping up the housing bubble.
The looming financial difficulties have not prevented the Bush administration from expanding the F.H.A.’s role to help ease the nation’s foreclosure crisis. Since September, more than 150,000 homeowners have refinanced through F.H.A. and officials hope that the number will increase to 400,000 by the end of the year.
In doing so, the FHLB dramatically increased their share of the overall mortgage market right when the market was collapsing.
Ferengi Rule of Acquisition no.22 says:
A wise man can hear profit in the wind.
Apparently, the same goes for hearing the clink of bad money.
You know the phrase “Bad money drives out good money” – a/k/a Gresham’s Law. Take a google twirl around the world press, and you will see it’s all the rage these days. You see it popping up everywhere.
by gjohnsit – crossposted with permission
The situation at the mortgage giants of Fannie Mae and Freddie Mac continue to get worse. The news yesterday is that Fannie Mae lost another $25.2 Billion last quarter and has requested another $15.2 Billion bailout just to stay afloat.
“We expect the market conditions that contributed to our net loss for each quarter of 2008 to continue and possibly worsen in 2009, which is likely to cause further reductions in our net worth,” Fannie Mae said in a statement.
The other player here, Freddie Mac, is watching defaults on its mortgage debts accelerate to record highs. Freddie will need another bailout as well.
This all sounds very tragic, not to mention costly for the taxpayer, but would it surprise you to learn that this was no accident? It was designed by the Bush Administration.
Finally. A grown-up version of the popular 1970s Schoolhouse Rock TV series. Media designer Jonathan Jarvis uses a creative web animation to explain the “short and simple story of the credit crisis.”
From the Congressional Record in 1935:
While 60 percent of the families in America contributed only 1.6 percent to the total savings of the country, 2.3 percent of all families contributed 66-2/3 percent to all savings, and 60,000 families at the top of the economic ladder saved almost as much as 25,000,000 families on the lower rungs. Corporate surpluses rose from $8,500,000,000 in 1923 to $16,000,000,000 in 1929. These accumulations of the few sought outlet through investment in plant facilities. Contrasted with the 10 percent rise in wages between 1922 and 1929, the production of machinery increased 91 percent and of capital equipment 70 percent. Production mounted beyond any possibilities of market absorption.
For a short while we staved off inevitable disaster by the pipe dream of installment selling and by lending Europe money with which to buy our own products. But when the domestic market finally closed to further investment, and foreign trade collapsed because our own people had no money with which to buy European goods, the crash came.
79 Cong. Rec. 7567 (1935).
by gjohnsit posted with permission
“Banking was conceived in iniquity and was born in sin. The bankers own the earth.”
– Sir Josiah Stamp, 1927
It was a news story that didn’t get much traction. Yet it is a reflection of all that is wrong with the world of finance today.
Curious about CEO pay in those days before we had heard of limiting them to poverty wages in the mid-6 figures? What could be more of doldrum than mid-February in the midst of a serious recession? So how about a fun website that lets you see how the CEOs got paid, who got how much TARP money, and more? And why is it that worker pay is always blamed for the trouble we are in?
by gjohnsit – posted with permission
Friday’s headline economic numbers were bad. Really bad.
The jobless rate rose to 7.6 percent from 7.2 percent in December, the Labor Department said today in Washington. Payrolls fell by 598,000, the biggest monthly decline since December 1974.
Those are some ugly numbers. They are awful enough to stand on their own without comment…but they aren’t the end of the story.
In fact, the news is much worse than that.
by BruceMcF at Burning the Midnight Oil
OK, so, to make an egregiously long story merely excessively long, a very strange thing happened on the road to the Stimulus Package. As Rep. Oberstar told the U.S. Conference of Mayors:
That is why we set forth this $85-billion initiative from our committee. It’s been reduced in the final going. We expect that it’ll come out somewhere around $63 billion, but $30 billion for highways.
The reason for the reduction in overall funding … was the tax cut initiative that had to be paid for in some way by keeping the entire package in the range of $850 billion.
As I described in Transport Stimulus: You’re Doing It Wrong, actual effective stimulus spending was shortchanged — and in particular spending with substantial long term economic and strategic benefits — to “pay for” tax cuts.
by BruceMcF at Burning the Midnight Oil
There is this big emphasis on “shovel ready projects” in the Stimulus Bill … but now that the details are coming out, we can see that in transport, its just a load of horseshit used as an excuse for supporting business as usual.
The headline numbers are $30b highway spending, $10b for public transport and rail:
- Transit Capital Assistance, $15.9b in shovel ready projects, $6b in funding
- Amtrak, more than $10b in capital backlog, $0.8b in funding
- Fixed Guideway Infrastructure Investment, $50b capital backlog, $2b in funding
- Capital Investment Grants, $2.4b in already approved projects, $1b in funding
I got a “shovel-ready” project for you … shoveling out the bullshit from the Bush Administration Department of Transport and replacing the pandering to the oil companies with a concern for America’s Economic Future.