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Leonid wrote:CrossingWallStreet

Now that the Feds own 80% of AIG, which is one of Manchester United's largest sponsors. So our government now sponsors Man U.

Actually Leo, we all (U.S. taxpayers) now sponsor Manchester United. Go Reds! I mean, Forza Reds!

The Wall Street Journal

Mounting Fears Shake World Markets
As Banking Giants Rush to Find Buyers

By TOM LAURICELLA, LIZ RAPPAPORT and ANNELENA LOBB


Fear coursed through the U.S. financial system on Wednesday, as hope for a resolution to the year-old credit crisis faded.

Stocks tumbled, concern grew about which financial firm would fall next, and investors rushed toward the safe haven of government bonds in the wake of the collapse of Lehman Brothers Holdings Inc. and the crisis at insurer American International Group.

The market turmoil is doing more than inflicting losses on investors. Borrowing costs for U.S. companies have skyrocketed, and the debt markets have become nearly inaccessible to all but the most creditworthy borrowers.

The desperation was especially striking in the market for U.S. government debt, long considered the safest of investments. At one point during the day, investors were willing to pay more for one-month Treasurys than they could expect to get back when the bonds matured. Some investors, in essence, had decided that a small but known loss was better than the uncertainty connected to any other type of investment.

That's never happened before. In a special government auction on Wednesday, demand ran so high that the Treasury Department sold $40 billion in bills, far beyond what it needed to cover the government's obligations.

"We've seen crisis. We've seen recession. But we've not seen the core of the financial system shaken like this," says Joseph Balestrino, a portfolio manager at Federated Investors. "It's just crazy."

A 449-point selloff took the Dow Jones Industrial Average to its lowest level in almost three years, leaving it 23% below where it stood a year ago. Volume on the New York Stock Exchange was the second highest in history, falling just shy of the record set on Tuesday. The VIX, a widely watched measure of market volatility that is often referred to as the "fear index," shot up to its highest level since late 2002.

In Europe, stock markets lost roughly 2% of their value. In Russia, the scene of recent massive declines, trading on the country's major exchanges was halted for the second day in a row, this time only an hour and a half into the session. Gold prices rose 9% to $846.60 an ounce amid the global turmoil.

"Forget about retail investors, all the pros are scared," says one broker. "People have no idea where to put their money."

For now, "if you have cash, you're going to put it in the short-term, most liquid stuff you can," says Steve Van Order, fixed-income strategist for Calvert Asset Management.

Adding to the fear was a loss in a prominent money-market fund, the Reserve Primary Fund, which held Lehman Brothers debt. It was the first time since 1994 that such a fund, which is supposed to be as safe as a bank account, had lost money. The loss was made worse by a run on the fund. Over two days, investors pulled more than half of their assets from the fund, once valued at $64 billion.

"This is a panic situation" in the bond markets, says Charles Comiskey, head of U.S. government-bond trading in New York at HSBC Securities USA Inc.

Riskier assets were sold off. Yields on bonds issued by financial companies hit a record high of about six percentage points above U.S. Treasurys. In the market for credit-default swaps -- essentially insurance against default on assets tied to corporate debt and mortgage securities -- fears increased on Wednesday about whether counterparties would be able to honor their agreements. Investors tried to reduce their exposures to two more big players in the market, Goldman Sachs and Morgan Stanley. That sent the cost of protection on both Wall Street firms soaring to new highs.

In the stock market, the pressure on financial firms continued, with Morgan Stanley stock dropping 26% and Goldman Sachs shares losing 19%.

Investors say the government takeover of AIG and Lehman's bankruptcy are evidence that the situation is grimmer than all but the most pessimistic had expected. Problems have spread from complex debt markets tied directly to the housing market into plain-vanilla corporate bonds.

"Another front is opening," says Ajay Rajadhyaksha, head of fixed-income research at Barclays Capital.

Some fear that the dwindling ranks of investment banks, coming at a time when commercial banks are pulling back on their own use of capital, will prolong the credit crunch.

"It's unclear who is going to be a credit provider going forward, and if having fewer credit providers means higher costs of borrowing going forward," says Basil Williams, chief executive of hedge-fund managers Concordia Advisors.

Ordinarily, bondholders are better protected from losses than stock investors. But the events of the past two weeks have shown that they are vulnerable, too. The Federal Reserve's rescue of AIG doesn't protect the company's bondholders. That's because the deal, which consists of a high-priced loan to the company from the government, requires AIG to pay the Treasury before current bondholders. If AIG can't raise enough cash by selling assets, bondholders won't be fully repaid.

As a result, despite the Fed lifeline, some AIG debt is changing hands at just 40 cents on the dollar, less than half of the price one week ago. Now that Lehman has defaulted on its debt, its senior bonds are worth as little as 17 cents on the dollar, traders say.

That's spilled over to other financial names seen as under stress. Bonds of Morgan Stanley are trading at around 60 cents on the dollar. Goldman Sachs's bonds are trading at prices in the range of 70 cents on the dollar.

As the bond prices dropped, their yields rose. The spread between yields on corporate bonds and safe U.S. Treasurys have blown out to the widest levels traders have seen in years. On Wednesday, yields on investment-grade corporate bonds were more than four percentage points higher than comparable Treasury bonds, according to Merrill Lynch. Junk bonds ended the day more than nine percentage points over Treasurys, approaching the 2002 high of 10.6 percentage points, according to Merrill.

Short-term debt markets, where companies borrow overnight or in periods up to one year, have dried up. The money-market fund managers who normally buy such short-term debt have suffered losses on their holdings of debt in Lehman Brothers and other financial institutions.

If companies can't borrow in the short-term debt markets, they may be forced to draw down on their revolving credit lines, yet another drain on banks' dwindling capital.

The Lehman bankruptcy also pressured the market for leveraged loans, which are used by private-equity firms to finance buyouts. When the firm attempted to sell some of its loan holdings earlier this week, prices dropped toward 85 cents on the dollar, according to Standard & Poor's Leveraged Commentary & Data.

The damage has gone beyond banks and brokerages. Ford Motor Credit Co., the finance arm of Ford Motor Co., paid 7.5% for overnight borrowings on Wednesday, says one trader. Typically, the rate for such debt would be about one-quarter percentage point over the federal-funds rate, which is currently 2%, he says. Even for companies considered of the safest credit quality, the cost of overnight debt is soaring. General Electric Co. was forced to pay 3.5% for overnight borrowing on Wednesday, the trader says. In normal times, GE, which has the highest debt rating, would have to pay the equivalent of the federal funds rate.

"There's no evident catalyst for ending the pain," says Guy Lebas, chief fixed-income strategist at Janney Montgomery in Philadelphia.

Leonid wrote:Part of the Fed's deal is that AIG's CEO had to go, but what happens to this kid?

http://www.youtube.com/watch?v=9VvGW98D3XA

LOL Leo. The poor kids will not be able to sleep at night.

Actually, the AIG had U.S. Adult Soccer Association concerned. We have our liability and secondary medical insurance through USASA and they just switched policies with AIG.

Falc

We should claim Man U. season tickets.

I almost forgot - Forza Juventus!

The Wall Street Journal
Your Cash: How Safe Is Safe?
By JANE J. KIM

As the financial system reels from one disaster after another, financial planners, estate planners and bank officials say they've been receiving calls from panicked savers concerned about the safety of their deposits.

The Federal Deposit Insurance Corp. guarantees bank deposits up to $100,000 per person, per insured institution. But what if you have a lot more cash than that?

For years, savers have gotten around the FDIC's $100,000 limit by spreading their cash across multiple institutions. It's certainly safe, but it's an onerous process. Now, growing numbers of people are turning to other means that allow them to keep hundreds of thousands of dollars safely stowed away under FDIC protection.

One product that has been attracting attention lately is an informal trust account known as a "payable on death," or POD, account. To set up a POD account, depositors must name a beneficiary or beneficiaries who will receive money if the primary account holder dies. For each qualified beneficiary, the FDIC will boost insurance coverage by up to $100,000.

Other strategies include:

Brokered CDs. Buying multiple certificates of deposit at once through a brokerage firm provides a fast way to spread out money across different institutions, capturing the full FDIC protection.

In recent weeks, Dan Kohn of New York started using brokered CDs through Vanguard Group's Vanguard Brokerage Services as a way to quickly spread out his money across different banks. He could probably find higher yields by searching for local deals, but brokered CDs provide a "mixture of convenience and safety," says the 35-year-old Mr. Kohn, the chief operating officer of the Linux Foundation, a nonprofit group that promotes the use of the Linux computer operating system. "I don't want to set up eight new accounts."

CDARS. This deposit-placement service, short for Certificate of Deposit Account Registry Service, disperses deposits into different individual CDs of up to $100,000 each, up to a maximum covered amount of $50 million. Customers deposit their money with a participating bank, and CDARS -- which is run by the Promontory Interfinancial Network LLC in Arlington, Va. -- disperses the deposit in individual CDs up to $100,000 in 2,350 member banks across the country.

Retirement accounts. Money deposited in IRAs, Roth IRAs and certain other retirement plans is insured up to $250,000.

Joint accounts. Deposit accounts owned by two or more people are insured up to $100,000 for each account holder listed.

Credit unions. Deposit insurance for credit unions works in much the same way as FDIC insurance does for banks and thrifts, except that the funds are insured by the National Credit Union Share Insurance Fund.

Revocable trusts. Under this estate-planning strategy, the owner assigns beneficiaries but retains control of the assets during his lifetime. The FDIC insures the interests of each beneficiary up to $100,000 each. Some are formal trusts, which are typically set up by an estate attorney. Others, such as POD accounts, can be created when the account owners add certain terms and the names of the beneficiaries to the bank's account records.

William Wright, a financial planner in Wichita, Kan., says he's working with one client who has over $1 million at a local bank to move the money into other types of deposit accounts, such as trust and joint accounts, and products such as annuities.

On the basis of ease alone, POD accounts appear to be finding a larger audience lately. The FDIC doesn't publish data on the number of these accounts, but the agency confirms it is getting more questions from consumers about how to set them up and has been seeing more of them on the books when it takes over banks after they fail. So far this year, there have been 11 bank failures, and 117 banks that were on the Federal Deposit Insurance Corp.'s "watch list" at the end of the second quarter.

Last spring, Robert Ring of Boise, Idaho, added his three children as beneficiaries to a money-market deposit account at IndyMac Bank. That meant his account, which totaled $300,000 at the time, was fully insured.

Thanks to that move, "it was a total nonevent for me" when IndyMac collapsed in July, says the 39-year-old software engineer. "I heard about the closure on a Friday afternoon, and all my money -- about $150,000 at the time -- was there the following Monday." He's also using PODs to protect money he's parked in a savings account at Alliant Credit Union in Chicago.

For savers, PODs can be a quick way to extend their FDIC coverage without the hassle and paperwork of opening multiple accounts across several institutions. "It's a convenience factor," says Mr. Ring. "You can get your FDIC coverage by setting up accounts at six different banks, but that's just a headache, come tax time, with all the extra paperwork and 1099s you have to wait for."

POD accounts do come with certain limitations. For starters, only certain relatives count as qualified beneficiaries. Spouses, children, grandchildren, parents and siblings are OK. Nieces, nephews and grandparents aren't. The depositor retains control of the account until his death, in which case the money is distributed to the beneficiaries.

When the POD account contradicts the depositor's will, it can send family members to court to fight over the estate. Austin Frye, a financial planner and estate attorney in Aventura, Fla., says he's seen cases where clients inadvertently disinherited their children in a POD account.

Mr. Frye recalls one case in which one of his clients had been added to his father's CD to help manage the account. When the father died, the money in the CD went directly to that son -- even though his will had specified that the money was to be split equally between the custodial son and another son who lived out of state.

"You could ruin your estate plan," Mr. Frye says. "The courts are loaded with these cases."

Geoff Sauter of Dover, Mass., says he got some conflicting advice on how to set up a POD account. Based on the advice of one representative at T. Rowe Price Group Inc., he decided to add his wife and three children to a CD to make sure his $400,000 was fully covered. A few days later, after his wife's broker questioned that strategy, he called back the firm and spoke with a different person who told him his deposits weren't fully covered. "So I panicked and started calling other people," he says.

The 58-year-old engineering-firm salesman says T. Rowe Price eventually got back to him and told him that his money was, in fact, fully covered. "Apparently, there is some confusion in the industry," he says.

"It's unfortunate that in the course of several conversations, Mr. Sauter was given some conflicting information," says Brian Lewbart, a spokesman for T. Rowe Price. "But in the end, we're certainly pleased he ended up with the correct information."

Despite the multitude of options, many savers still choose to spread their risk around by simply opening accounts at different banks. D.C. Harris, a retired accountant who lives in the San Francisco Bay area, had her money parked in a CD at Wachovia Corp. But worries about the solvency of that bank and others, such as Washington Mutual Inc., recently prompted her to put her savings in CDs at other banks, including Citigroup Inc.'s Citibank.

"I'm more scared than I've been in my life about our economy and our banks," says the 65-year-old. "I'm thinking about moving my money to United Bank of the Mattress."

Religion of Peace

From the Daily Telegraph:

Islamist militants attacked the heavily-guarded US embassy in Yemen with a car bomb and rockets, killing at least ten people.

Four civilians and six members of the police died in the attack, a spokesman for the Yemeni security forces said. The six attackers - one wearing an explosives belt, also died. There were no casualties among US diplomatic staff.

Here you go Leo ....

They're in good hands, Falc. We can cook fish and chips too. We can even spray our pans with a real Bertolli oil -

U.S. plans what may be most comprehensive fix yet for credit crunch - to take on mortgage debt from banks...

Finally. The system MUST BE thoroughly cleansed. Then it would function again.

Religion of peace

From the Sunday Times:

Rescue teams were hunting for survivors today in the ruins of Islamabad’s Marriott Hotel, where a massive truck bomb blamed on al-Qaeda killed at least 53 people.

Among the dead were a German, an American and the Czech ambassador to Pakistan, Ivo Zdarek, who had phoned his embassy from the burning hotel shortly after the attack pleading to be rescued.

"We will rid the country of this cancer,” Mr Zardari, who took office less than two weeks ago, said in a message to the nation after the attack.“


P.S. No you won't. We will. One day.

The Wall Street Journal
Taking Revenge on the Rich Will Not Bring Recovery
By AMITY SHLAES


Police short sales and block them, says Securities and Exchange Commission Chairman Christopher Cox. Fire the SEC chairman, says John McCain. Investigate those short sellers, say state attorneys general. Hold hearings to grill Wall Streeters says Nancy Pelosi. "Fire the whole Trickle-Down, On-Your-Own, Look-the-Other-Way crowd" says Barack Obama, and "get rid of this whole do-nothing approach to our economic problems." The Democratic presidential candidate wants public affirmation of his argument that the whole free-market philosophy of economics has been wrong.

Some of this talk carries an implicit suggestion: Do what I say or we will have another Great Depression. And no wonder: This September feels a lot like autumn 1929.

But there's an important fallacy here. The stock market crash of October 1929 and the Great Depression were not the same thing. What made the depression great was not magnitude but duration -- the fact that unemployment was still 20% 10 years later. In the 1930s, policies like the ones described above did not speed recovery; they impeded it.

Not long after the market crashed to 199 from its 381 high at the end of the summer of 1929, President Herbert Hoover turned on short sellers. Like our SEC, he demanded a curb on short sales. "Bear raids" or "bear parties" were to be stopped; the blame for the crash all belonged to "certain gentlemen."

Then, as now, there was a lengthy discourse on the difference between "normal" short sales and "naked" ones. New York Stock Exchange President Richard Whitney argued that curtailing such sales postponed unavoidable pain -- or even made it greater.

It was wrong, he said, to vilify shorts. "Such a contract to deliver something in the future which a person does not own is common to many types of business," Whitney carefully spelled out in layman's language. "When a builder contracts to build a skyscraper he is literally short of every bit of material." Yet the anti-short and anti-Street mood grew. In a spirit every bit as zealous as Sen. McCain, lawmakers assigned attorney Ferdinand Pecora to lead a commission hunting for wrongdoing on Wall Street.

Most observers have concentrated on the corruption that was indeed uncovered by investigators. Whitney, for example, discredited his own argument when he emerged later as a trickster and embezzler.

But the most important fact about this early period is the Dow's movement. Clean-up pronouncements cheered voters, and momentarily, the Dow Jones Index rose a bit later in 1929. But the hostility whipped up by politicians scared a market already well spooked by monetary, banking and international challenges. By summer 1932 the Dow plummeted to the 50s range. This was the year Hoover created the Reconstruction Finance Corp., after which Washington's rescue entity of today is supposedly modeled.

In 1933 there was a moment when the U.S. really did seem poised for recovery -- the moment of Franklin Roosevelt's inauguration. Confronting the banking crisis, President Roosevelt did what President Bush, Congress and the Treasury are likely to do in coming days: create a mechanism to sort out banks and their holdings, to separate good assets from bad.

Such an office can shorten a crisis -- the Resolution Trust Corporation, created to deal with the 1980s Savings and Loan debacle did. There was nothing necessarily partisan about the process. Hoover's Treasury secretary, Ogden Mills, and Roosevelt's new Treasury secretary, William Woodin, sat together at the task, just as Republicans and Democrats presumably will now. The establishment of the SEC in 1934 likewise set the country up for recovery.

But like today's politicians, Roosevelt also used the downturn as a weapon to trash markets generally. The New Dealers even used the same mocking phrases Mr. Obama does today. The rich might think that wealth trickled down, Roosevelt's speechwriter Sam Rosenman would later note, but "Roosevelt believed that prosperity did not 'trickle' that way."

In 1933 and 1934, Roosevelt went on the attack. The Sergey Brin of the 1920s was Samuel Insull, the Chicago utilities magnate who created the format for the modern electrical grid, taught housewives about refrigerators, employed thousands and proved it was possible for the private sector to raise the prodigious amounts of cash necessary for utilities, the most capital-hungry of industries. But the credit crunch killed off Insull's leveraged companies, rendering shareholder portfolios worthless.

Insull was extradited from Greece and hauled back to Chicago. A jury refused to convict him of fraud. But federal or state prosecutors continued to harry him until he died of a heart attack or stroke in 1938.

The deity of the markets, the Alan Greenspan of the 1929s, was Andrew Mellon. He served as Treasury secretary to Presidents Harding, Coolidge and Hoover. In 1932, while Mellon was still in office, a young Democratic Congressman from Texas -- Wright Patman -- launched a campaign to impeach him.

The Roosevelt administration was more systematic. Treasury Secretary Henry Morgenthau instructed a staff lawyer, Robert Jackson, to prosecute Mellon for tax evasion. Jackson hesitated. Morgenthau, anticipating New York's Eliot Spitzer, insisted, saying, "You can't be too tough in this trial to suit me." Jackson then jumped up, exclaiming, "Thank God I have that kind of boss," as Morgenthau recounted in his memoirs.

A grand jury declined to indict Mellon. The government then began multiple actions against him. Exoneration came, but only after Mellon's death. Roosevelt put Jackson on the Supreme Court.

In these years, the market was trying to recover, but prosecutors and tax collectors kept getting in the way. Mrs. Pelosi might note that even after the Pecora Commission finally completed its hearings, unemployment was still 20% rather than 10%.

Roosevelt's first effort at raising wages to revive the economy, the National Recovery Administration, was declared unconstitutional. Next came the Wagner Act, which led to massive unionization. Wages increased and unemployment even dipped a bit, but productivity did not rise in commensurate fashion. This contributed to companies' struggles, as Lee Ohanian of UCLA has shown. Industrial production plunged. In 1938, John L. Lewis of the CIO attained the apogee of his power, but unemployment was again at that appalling two in 10.

The signal Washington emitted in these years was clear: Not Open for Business. A poignant moment came in August, 1937, when Mellon died in Southampton, N.Y. When this star of their old firmament winked out, investors felt themselves in uncharted waters. Other negatives -- rising labor costs, regulatory tightening, a doubling of reserve requirements for banks -- suddenly seemed insurmountable. The market dropped from 189 in August to 120 by the next February, well below the lowest ebb in 1929.

A desperate Treasury Secretary Morgenthau traveled to New York to placate a crowd of 1,000 economists and businessmen at the Hotel Astor in November, 1937. The audience laughed at him for daring to try. By the next year the New Dealers were quietly telling themselves their anti-wealth experiment was over -- and turning to the impending war in Europe.

The point for us in our own fragile moment is clear. To be sure, clean up is necessary. It can even help the market -- some. But in the long run what works politically is different from what works economically. Revenge, however sweet, cannot bring recovery.


Ms. Shlaes, a senior fellow at the Council on Foreign Relations, is author of "The Forgotten Man: A New History of the Great Depression" (HarperCollins, 2007).

Religion of peace


In Central America more people died form Israeli Jewish weapons and their training of death squads under the direction od the USA during the war created by the USSR and the USA.

Saluti guys,

I'm back, more or less, if you care. ;) Actually I was on a business trip last week. I was out prospecting for gold. I suppose Washington, D.C. may have been a better option. I hear they were giving away billions and billions.

It's really quite a sad state of economic affairs. Greed uncheck by risk management gets ugly. The blame belongs at the top of the government and the conniving corporate leaders down to the American people who couldn't or wouldn't say no to what appeared to be easy money.

Someone in the British media said that conservatives love their ideology because it's socialism for the rich and capitalism for the masses. Sad, but true.

P.S. Bineaz, welcome back. When Klondike happens, only people who sell shovels make money. Remember that -

Did you find any gold? The price of gold has been sky rocketing during this whole mess.

National Review
Jay Nordlinger

There has been a lot of talk lately about the Bush Doctrine — because Sarah Palin was supposed to have been undone by it. (My eye.) I liked something a reader wrote: “With Russian warships being invited to South America, and nations there expelling our diplomats, are we worried about the wrong doctrine? Should we instead start thinking again about the Monroe?”

Longtime readers of this column know that I have strong views about Rep. Charles Rangel of New York. He is one of Fidel Castro’s best friends in the Free World. He is not merely an apologist for Castro. He is an ardent advocate of him, if you appreciate the distinction. It’s not just that he makes excuses for him. He champions him.

Rarely have Free World officeholders been so staunch for a brutal dictator.

And everyone loves him — Rangel, that is. (Many love Castro, too.) “Good ol’ ‘Chollie,’” they say — quick with a quip, every journalist’s pet. Even some conservatives have fallen for his act.

You have heard what he said when asked about Gov. Sarah Palin: “You got to be kind to the disabled.”

I could write for pages about this, but let me pose two questions: If a conservative Republican said the same about a Democratic vice-presidential nominee, would he be able to remain in public life? And second: How can conservatives have discussions with liberals, when this is the way they think and talk about us?

Many people mind that Rangel — the chairman of the House Ways and Means Committee — is a big-time tax cheat. I mind that he’s a moral skunk.

You know that, last week, Joe Biden praised higher taxes as patriotic. You may also remember that Rangel has long denounced tax cuts as . . . racist. But of course. He once said, “It’s not ‘spic’ or ‘nigger’ anymore. They say, ‘Let’s cut taxes.’”

What a beaut, “Chollie” Rangel. And you will not find a more beloved politician among the Washington press corps, unless, of course, he is Barack Obama.


... Many people wrote about the hacking into Palin’s e-mail — but more than that, about the relative media indifference to it. It seems to me that the “MSM” basically yawned. Would they have done the same if Obama’s e-mail had been stolen and disseminated?

You remember “Passportgate” from 1992. That was a very, very big deal. Of course, when Clinton appointees at the Defense Department leaked classified information from Linda Tripp’s national-security file — that was no big deal. And this was the very violation for which Charles Colson went to jail (as he, among others, reminded me). (I spent a good part of 1998, 1999, and 2000 reporting and writing on such matters.)

Have a reader letter: “The same liberals who become apoplectic at the thought that some CIA/NSA cube-dweller may be sifting through Osama bin Laden’s e-mail without a warrant are perfectly blasé about what happened to Palin. How can that be? Would the waterboarding of Sarah be okay, too?”

That could be a real quandary.

Here’s another reader letter: “When Sarah Palin found out that her e-mail account had been compromised, she closed it. That sounds like the logical thing to do. But the website that posted her stolen mail called that action an attempt to ‘destroy evidence.’ So you see, the bad guy in this situation is Palin, not the hackers.” Well, of course — didn’t we all know that?


A woman received an e-mail whose Subject line was “Brilliant Strategy.” And this is what the e-mail said :

Dear Friends:

We may have thought we wanted a woman on a national political ticket, but the joke has really been on us, hasn’t it? Are you as sick in your stomach as I am at the thought of Sarah Palin as Vice President of the United States?

Since Palin gave her speech accepting the Republican nomination for the Vice Presidency, Barack Obama’s campaign has raised over $10 million. Some of you may already be supporting the Obama campaign financially; others of you may still be recovering from the primaries. None of you, however, can be happy with Palin’s selection, especially given on her positions on women’s issues.

So, if you feel you can’t support the Obama campaign financially, may I suggest the following fiendishly brilliant alternative? Make a donation to Planned Parenthood. In Sarah Palin’s name. A Planned Parenthood donation is tax deductible, while a political donation isn’t.

And here’s the good part: When you make a donation to PP in her name, they’ll send her a card telling her that the donation has been made in her honor.

And this is what our correspondent wrote (to me):

Imagine getting this e-mail. Imagine telling women to make a donation to Planned Parenthood in Sarah’s name so that she’ll get a card. Her crime, of course, is that she has chosen life, that she is self-made, and that she has a beautiful family. And she’s happy.

As a woman who was a liberal on Long Island before 9/11 made me rethink things and Mark Steyn’s America Alone hammered it home, I’ll tell you what is spurring some of the most intense hatred from the sisterhood: Sarah makes them remember their own choices, i.e., their abortions, their commitment to self over family, to self over country, to self over God.

But the first one, well, that’s the kicker — we liberal gals were so blasé about abortions back in the day. Now we look at Sarah and think, “What if?” So . . . college would have been deferred a few years, and we ended up divorced from our first husbands anyway, so maybe a shotgun marriage that resulted in our true firstborn wouldn’t have been so bad, and are we really so happy now?”


This next letter is from a very thoughtful Detroiter who has long been a liberal Democrat — and who has been turning, turning (like some other people we know):

Well, although I do have qualms about her present fitness to be president, Jay, I like her. And her nomination and the reaction to it is significant for me personally — it marks my final break with liberalism, even of the more center-left variety.

It’s one thing to criticize her political qualifications, and there are legitimate questions about that. The Left’s and the media’s reaction to her has been disgraceful and disgusting. Equally vile are those people who are perfectly capable of opposing her politically while speaking up for her right to be treated fairly — but who fail to do so.

If nothing else, this should put paid to the notion that the Democratic party supports and cares about average Americans. If I hadn’t already decided to vote for McCain on national-security grounds, I would do so simply because people like this should not have the power to deal with the lives of ordinary people.

I thought Jonah Goldberg somewhat overstated the case in his book about the fascist roots of much liberal thought and conduct; I’m no longer so sure.

Me neither, baby.

Do you-all know what a Kronstadt is? In 1921, Russian sailors, soldiers, and others rose up against the Bolshevik regime. (Never again would there be such an uprising, until the very end.) Ol’ Lenin suppressed the revolt as only he (and his disciples) could. This disillusioned some in the West — and marked the end of their affection for Communism.

From then on, “Kronstadt” became a term for “that which caused a break with Communism.” “What was your Kronstadt?” “Oh, the Kirov murder.” Or the show trials. Or the Secret Speech. Or Budapest, or Prague, etc. Some people never get their Kronstadts — like the famous, wealthy, and revered British historian Eric Hobsbawm. Such people stay true even now.

Well, American liberals experience Kronstadts, too. I could write a book. (Hey, there’s an idea . . .)


Have you noticed that liberals have a habit of calling conservative leaders stupid? Do we do the same? I don’t think so, actually: We simply say their leaders are wrong (or distasteful or repulsive or whatever).

They called Eisenhower stupid. In fact, when I was about 13, I read a Philip Roth book, because I heard there was sex in it. (There was.) And one of the characters described Ike as “illiterate.” So I told my grandfather that Eisenhower had been illiterate. He said, “Where’d you get that?” I flushed.

They called Goldwater stupid. They didn’t call Nixon stupid, they called him bad instead (which he was, to a degree). They called Ford stupid. They of course called Reagan stupid — very stupid. They didn’t call 41 that — he was just goofy, or elitist,, or unacceptable. They called Quayle stupid. Dole, I can’t quite remember — I think they mainly said he was old, bitter, and mean. W., they called stupid. And now Palin.

Stupid, stupid, stupid. There’s a word for people who level that charge against such people: stupid.


On the Corner last week, I remarked a bumper sticker: “Who Would Jesus Bomb?” I commented on both its grammar and its character. The sticker, you see, mocks Christians and War on Terror supporters at the same time. A two-fer (or something).

Many, many people wrote in about that, including one who said, “Whom would Jesus bomb? The same people we are, only with perfect intel and perfect aim.”

I’m not endorsing this, but . . . I thought it was amusing. Hope you agree.

yawn.

How Wall Street Lied to Its Computers
By Saul Hansell

So where were the quants?
(Credit: Fred R. Conrad/The New York Times)


That’s what has been running through my head as I watch some of the oldest and seemingly best-run firms on Wall Street implode because of what turned out to be really bad bets on mortgage securities.

Before I started covering the Internet in 1997, I spent 13 years covering trading and finance. I covered my share of trading disasters from junk bonds, mortgage securities and the financial blank canvas known as derivatives. And I got to know bunch of quantitative analysts (”quants”): mathematicians, computer scientists and economists who were working on Wall Street to develop the art and science of risk management.
They were developing systems that would comb through all of a firm’s positions, analyze everything that might go wrong and estimate how much it might lose on a really bad day.

We’ve had some bad days lately, and it turns out Bear Stearns, Lehman Brothers and maybe some others bet far too much. Their quants didn’t save them.
I called some old timers in the risk-management world to see what went wrong.
I fully expected them to tell me that the problem was that the alarms were blaring and red lights were flashing on the risk machines and greedy Wall Street bosses ignored the warnings to keep the profits flowing.

Ultimately, the people who ran the firms must take responsibility, but it wasn’t quite that simple.
In fact, most Wall Street computer models radically underestimated the risk of the complex mortgage securities, they said. That is partly because the level of financial distress is “the equivalent of the 100-year flood,” in the words of Leslie Rahl, the president of Capital Market Risk Advisors, a consulting firm.
But she and others say there is more to it: The people who ran the financial firms chose to program their risk-management systems with overly optimistic assumptions and to feed them oversimplified data. This kept them from sounding the alarm early enough.
Top bankers couldn’t simply ignore the computer models, because after the last round of big financial losses, regulators now require them to monitor their risk positions. Indeed, if the models say a firm’s risk has increased, the firm must either reduce its bets or set aside more capital as a cushion in case things go wrong.

In other words, the computer is supposed to monitor the temperature of the party and drain the punch bowl as things get hot. And just as drunken revelers may want to put the thermostat in the freezer, Wall Street executives had lots of incentives to make sure their risk systems didn’t see much risk.
“There was a willful designing of the systems to measure the risks in a certain way that would not necessarily pick up all the right risks,” said Gregg Berman, the co-head of the risk-management group at RiskMetrics, a software company spun out of JPMorgan. “They wanted to keep their capital base as stable as possible so that the limits they imposed on their trading desks and portfolio managers would be stable.”

One way they did this, Mr. Berman said, was to make sure the computer models looked at several years of trading history instead of just the last few months. The most important models calculate a measure known as Value at Risk — the amount of money you might lose in the worst plausible situation. They try to figure out what that worst case is by looking at how volatile markets have been in the past.
But since the markets were placid for several years (as mortgage bankers busily lent money to anyone with a pulse), the computers were slow to say that risk had increased as defaults started to rise.

It was like a weather forecaster in Houston last weekend talking about the onset of Hurricane Ike by giving the average wind speed for the previous month.
But many on Wall Street did even worse, as Mr. Berman describes it. They continued to trade very complex securities concocted by their most creative bankers even though their risk management systems weren’t able to understand the details of what they owned.

A lot of deals were nonstandard in many ways, “so you really had to go through the entire prospectus and read every single line to pick up all the nuances,” Mr. Berman said. “And that slows down the process when mortgage yields looked very attractive.” So some trading desks took the most arcane security, made of slices of mortgages, and entered it into the computer if it were a simple bond with a set interest rate and duration. This seemed only like a tiny bit of corner-cutting because the credit-rating agencies declared that some of these securities were triple-A. (20/20 hindsight: not!) But once the mortgage market started to deteriorate, the computers were not able to identify all the parts of the portfolio that might be hurt.

Lying to your risk-management computer is like lying to your doctor. You just aren’t going to get the help you really need.
All this is not to say that the models would have gotten things right if only they were fed the most accurate information. Ms. Rahl said that it was now clear that the computers needed to assume extra risk in owning a newfangled security that had never been seen before.
“New products, by definition, carry more risk,” she said. The models should penalize investments that are complex, hard to understand and infrequently traded, she said. They didn’t.

“One of the things that has caused great pain is complex products,” Ms. Rahl said. That made me think back to some of the great trading debacles of the last century, such as the collapse of Askin Capital Management, a hedge fund that fell apart because of complex mortgage security investments gone bad. Wasn’t the moral of those stories that you shouldn’t put your money (or your client’s money) in something you didn’t understand? Furthermore, even if you are convinced you do understand it, you’re not going to be able to sell it when you need the money if no one else does.

“In some ways there is nothing new,” said Ms. Rahl, who helped investigate what went wrong at Askin. “The big deals are front-page news, then they go into the recesses of people’s memories.”

And, ultimately, the most important risk-management systems are the ones that have gray hair. “It’s not just the Ph.D.’s who must run risk management,” Ms. Rahl said. “It is the people who know the markets and have lifelong perspective.” And at too many firms it is those people who failed to make sure the quants really did their jobs.

The Wall Street Journal
Does Wall Street Owe Main Street An Apology?


Democratic Sen. Sherrod Brown of Ohio summed up at today’s Senate hearing the anger from tens of millions of Americans on the proposed $700 billion bailout of the financial sector. Wall Street, he argued, “didn’t care one bit” what its mortgage practices — the ones that created today’s mess — were doing to neighborhoods in Cleveland and around the country.

Then came his interesting but odd question: Do you think Wall Street owes the American people an apology?

Mr. Brown didn’t quite specify what the apology would do. Some Wall Street executives probably would be happy to offer one — in writing and on camera — in exchange for a $700 billion bailout.

But the question went to the heart of the trouble that Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke face in selling the unprecedented emergency plan to Congress and the public over the course of a week.

Mr. Bernanke was a Princeton University economics professor before joining government earlier this decade (first as a Fed governor, then as a White House economic adviser, then as Fed chairman). Mr. Bernanke earlier noted that he was criticized upon taking the job for his lack of Wall Street ties. “I’ve never worked on Wall Street,” he explained. “I don’t have those interests and those connections.” Mr. Bernanke sought to explain repeatedly that if credit markets don’t function, jobs will be lost, houses will face foreclosure and the economy will contract.

Responding to Mr. Brown’s question, Mr. Bernanke again said Main Street is tied to Wall Street through credit. “Wall Street made a lot of mistakes and regulators made a lot of mistakes.” Under follow-up questioning again, Mr. Bernanke was forced to note that Wall Street “is an abstraction” — a statement even more true this week after the two surviving independent investment banks converted into bank holding companies.

Mr. Paulson is from Wall Street, leading Goldman Sachs before joining the Bush administration.

“I share the outrage that people have,” he said. “It’s embarrassing to look at this. It’s embarrassing to the United States of America. There is a lot of blame to go around” for irresponsible lending practices, overly complex securities and rating-agency failures.

“Let’s fix the problem to have the least negative impact on them and then go out and try to deal with all these problems and minimize the likelihood that this would happen again,” Mr. Paulson said.

The Wall Street Journal

From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP

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 Gramm, 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

Iranian President Mahmoud Ahmadinejad spoke to the UN General Assembly today

http://www.cnn.com/2008/WORLD/meast/09/23/ahmadinejad.us/index.html

Leo...from your article

Mr. Paulson is from Wall Street, leading Goldman Sachs before joining the Bush administration.

“I share the outrage that people have,” he said. “It’s embarrassing to look at this. It’s embarrassing to the United States of America. There is a lot of blame to go around” for irresponsible lending practices, overly complex securities and rating-agency failures.

“Let’s fix the problem to have the least negative impact on them and then go out and try to deal with all these problems and minimize the likelihood that this would happen again,” Mr. Paulson said.


Do you remember me railing these past years about all of this? I was outraged at the sudden surge in the money supply, the lowering of interest rates, and easy availability of loans that fueled speculation in housing and commodities. Only in the past 6 months did I find about the ratings fraud, mostly from Wall Street friends of mine.

I'm only all the more outraged. Forget me, but what about legions of middle Americans who's sons and daughters are fighting, dying, and being wounded in our wars? What happens when their families lose homes and get squeezed, whilst cronies get away with their ill beggotten gains...whilst foreigners flush with strong currencies against the dollar buy our national assets...foreigners whom often come from nations helping to kill our troops?

This is beyond partisan politics. People are truly being given every reason not to fight and uphold a society where the least common denominator is favored over the productive and financially diligent. My nest egg used to be about 5x my yearly salary. Well, now it is about 3x my salary.

Sure, I make more money now...but I'm not that good.



Well, at least I have another 30 years or so till retirement. Maybe they will have fixed this by then...this being fucking inflation and the fucking dollar.



What can one do but laugh, right?

What is this world coming to? Strippers have the right to legal representation. When did the barter system become illegal? Is this not America any longer?

Lawyers can’t accept nude dances as payment
September 23, 2008

Lawyers may not allow clients to perform nude dances in their office as a way of reducing their legal bill, the Illinois attorney disciplinary commission has decided.

The commission suspended attorney Scott Erwin from practice for 15 months after he asked a professional exotic dancer to perform several private dances in his office and then issued her a credit of $534 toward her $7,000 fee.

The pair met in 2002 at a club called “Heartbreakers,” and while talking, realized they had been speaking on phone earlier about some pending legal matters.

Erwin is the former chair of a DeKalb County committee charged with finding ways to provide low-cost legal services to people who can’t afford them. The client has since given up exotic dancing and is working as a real estate agent.

TOM HARRISON, Exhibit A

Source: The Chicago Tribune.

Mate - So where do we go from here? The Paulson plan will not pass Congress and rightfully so. However the government bails out Wall Street, it should only do so to make it functional, not profit from its own failings. As for borrowers, whether for mortgages, home or other types of credit, no handouts. Give them an opportunity to pay their debts. Congressional leaders looking to bailout those who borrowed over their heads is wrong too.

CrossingWallStreet

Thanks Hugo

From Comrade Chavez:

"I nationalize strategic companies and get criticized, but when Bush does it, it's OK," Chavez said on weekly television program Sept. 21. "Bush is turning socialist. How are you, comrade Bush?"


NYC Strippers Screwed by Sucky Stocks

Is stripping too big to fail?

So the NYC economy is headed for the crapper, sure -- but who's really suffering? Weep for the strippers.
We're told first-hand by the pole-gymnasts at joints like the Penthouse Executive Club in NYC that biz has come to a grinding halt -- and to add insult to injury, strippers say one-dollar bills have replaced tens and twenties. Oh, the humanity!

Sources tell us traffic at some super-exclusive Manhattan nightspots is down 40-50% since the wheels came off.


Swedish Prostitutes Want to Pay Taxes

Who knew?

More and more Swedish prostitutes want to pay taxes in order to receive the social welfare benefits that come with doing so.
“So far this year I’ve spoken with several women who want to make things right,” said Pia Blank Thörnroos, a legal expert with Sweden’s Tax Authority, to the Göteborgs-Posten (GP) newspaper.

While it remains against the law to purchase sex in Sweden, selling sex is perfectly legal according to Sweden’s unique prostitution law, which came into force in 1999.

Moreover, prostitution has been considered a business activity in Sweden since 1982 and as a result proceeds from the sale of sex subject to taxation just like any other form of income.

“You have to keep track of all your income and expenses; all compensation should be accounted for,” explained Blank Thörnroos.

“One should really have accounting records. And in actuality [customers] should write out a receipt, because the transaction is considered a private operation which is subject to value added tax. But customers’ names need not be on the receipt.”

Income recorded on prostitutes’ tax returns gives them the right to sick-leave pay, parental leave benefits, and a pension.

“It’s important to pay taxes if you want to live a normal life,” said ‘Lisa’, a prostitute who spoke with the newspaper.

I'm not sure "Lisa" understands the irony of her statement.


Warren Buffett Made $7 Billion on Friday

Shares of Berkshire Hathaway (BRKA) gapped up $18,990 on Friday which is an increase of 14.8%. Given that Warren Buffett owns 350,000 shares, that increased his wealth by about $6.7 billion. (Buffett also owns two million shares of Class B stock which increased by $345 yesterday, but that only added $700 million to his fortune.)

The Class A shares jumped up about $10,000 starting at 3:57, which means Buffett made over $3.5 billion in about three minutes.

Wow, a rough day for strippers.

Falc and Leo

The world is turning upside down. Man, I need a drink...and a lap dance. Maybe they'll give them in exchange for my deploying their web sites?

Prostitution is no differntthan acting or politics. Legalize it, regulate it and tax it. It makes social, economic and isa more realistic practice that is a hell of a public health policy.

Inspect them like the FDA inspects meat.

Or like the SEC inspects Wall Street?

I am pro regulation. The free market is a fantasy. Left to their own devices men are prone to corruption and unchecked greed.

Palo, it's the same the other way around. Left to their own devices, kings and lords kill.

And there is the beauty of checks and balances. But those cannot exist when the Constitution is twisted for the benefit of a few in the name of peace. Peace canot be obtained under the cover of night and the violation of human rights.

The Wall Street Journal
September 24, 2008

Quote of the Day

"Lunch customers used to order a main course, dessert, coffee and a bottle of wine. Now they're limiting themselves to a main course, tap water, and giving up the rest. Of 75 customers in this lunchtime, none had a bottle of wine," Jean Guillaume, owner of Le Bouquet brasserie on Boulevard Haussmann in a business district of Paris's chic 8th arrondissement, tells the Guardian, which reports that France's tradition of the three-course restaurant lunch is in danger of being killed off by the economic crisis. Around 3,000 traditional French restaurants, cafes and bars went bust in the first three months of 2008, and unions predict a further rush of closures as people worry about making ends meet the paper says, adding that the number of French restaurants going bankrupt rose by 25% from last year, and cafes forced to close were up by 56%.

CrossingWallStreet




The Eurozone is Officially in a Recession

There's been a debate on whether the U.S. economy is in a recession. The pro-recession crowd says that it's obvious we are. The anti side tells us the numbers keep saying no. Now the Financial Times says the Eurozone is now in a recession:

The eurozone has fallen into recession, with industry particularly badly hit by the fall-out from global economic turmoil, results of a closely watched survey indicated on Tuesday.
Private sector output in the 15-country region contracted in September for the fourth consecutive month, according to eurozone purchasing managers’ indices. The pace of decline was the fastest since the aftermath of the September 2001 terrorist attacks in the US, with manufacturing faring worse than services.

The latest data indicated that, even if the crisis on Wall Street has yet to have a direct impact on eurozone economies, global economic storms have pushed the region into a technical recession – two quarters of contracting gross domestic product.

The eurozone composite purchasing managers’ index – covering services as well as manufacturing – fell from 48.2 in August to 47 this month. A figure below 50 is meant to indicate a contraction in activity.

No really, how much is $700 Billion ?

http://www.slate.com/id/2200718/?y=1

Land of the Free ?

5th Grader Suspended For Anti-Obama Shirt.

http://www.myfoxcolorado.com/myfox/pages/News/Detail?contentId=7490636&version=6&locale=EN-US&layoutCode=TSTY&pageId=3.2.1

I'm happy to see this man raising his son with conservative values.