Glenn Wilson

Via email:

This is an actual sign posted off Bunker Hill in West Houston. One must keep a sense of humor during tough times....

Power outages dropped to 114,000 customers Monday as crews worked block-by-block to repair transformers and lines serving individual homes and businesses.

At 9 p.m. Monday, 5 percent of CenterPoint Energy's 2.3 million customers were without electricity 17 days after Hurricane Ike knocked nearly everybody in the greater Houston area off the grid.

Early Monday, the transmission company announced all major line repairs were complete, but CenterPoint spokesman Floyd LeBlanc said later that crews were still wrangling with isolated problems among its 91,000 line fuses.
About 114,000 sit powerless as new issues pop up

Labels: Hurricane Ike

The $700 Billion bailout bill failed yesterday. Meanwhile:

The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

Fed Pumps Further $630 Billion Into Financial System

Responding to ongoing strain in credit markets, the Federal Reserve, European Central Bank, Bank of Canada, Bank of England, Bank of Japan, Denmark's National Bank, Norges Bank, Reserve Bank of Australia, Riksbank and Swiss National Bank announced plans to increase funding operations worldwide. ...

The Fed announced that its swap agreements have been increased to $620 billion from $290 billion, with the European Central Bank accounting for $240 billion, $120 billion from the Bank of Japan, $80 billion from the Bank of England, $60 billion from the Swiss National Bank, $30 billion from the Bank of Canada, 20 Billion from the Reserve Bank of Australia, $30 billion from the Swedish Riksbank, $15 billion from the Norges Bank, and $15 billion from the Denmark's National Bank.

Global Central Banks Increase FX Swap Facilities With Fed

The increase to $75 billion per auction will triple the supply of 84-day maturity credit to $225 billion from $75 billion. ...

The Federal Open Market Committee (FOMC) has authorized a $330 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide funding for U.S. dollar liquidity operations by the other central banks.

Federal Reserve Press Release

The revolution will not be right back after a message
about a white tornado, white lightning, or white people.
You will not have to worry about a dove in your
bedroom, a tiger in your tank, or the giant in your toilet bowl.
The revolution will not go better with Coke.
The revolution will not fight the germs that may cause bad breath.
The revolution will put you in the driver's seat.

The revolution will not be televised, will not be televised,
will not be televised, will not be televised.
The revolution will be no re-run brothers;
The revolution will be live.

The Revolution Will Not Be Televised

Labels: economy

From Eugene Robinson:

"Our investigation found significant evidence that political partisan considerations were an important factor in the removal of several . . . U.S. attorneys." ...

The [Justice Department] investigators reported being stonewalled by the White House, saying they were unable to look at all the evidence "because of the refusal by certain key witnesses to be interviewed by us, as well as by the White House's decision not to provide internal White House documents to us." ...

In releasing the report, Attorney General Michael Mukasey announced that he had ordered a new investigation to "pursue this case wherever the facts and the law require," including possible criminal charges. By most accounts, Mukasey has taken pains to cleanse Justice of the partisan taint that Gonzales left behind. Whatever ultimately comes of this disgraceful episode, however, we already know enough to put it in context.

The people who have been running our government for the past eight years have nothing but contempt for government. They believe only in politics and ideology, in that order. First, win elections by any means necessary. Second, once in a position to act in the public good, govern with the ideological conviction that government is either irrelevant or harmful to the public interest.

Politics Over Prosecutors

A majority of Democrats voted for this bill.

A majority of Republicans voted against this bill.

The Dow is down about 500 600 700 777 points on the day.

I'm not that big a fan of this bill (but it seems we do need to do something) and maybe this will help us get a better bill (although my expectation is we will get this bill or something worse).

Labels: economy

Iraq and Judgment
On the one hand, John McCain was a big advocate for invading Iraq. On the other hand, Barack Obama opposed the invasion of Iraq.

OBAMA: And so John likes -- John, you like to pretend like the war started in 2007. You talk about the surge. The war started in 2003, and at the time when the war started, you said it was going to be quick and easy. You said we knew where the weapons of mass destruction were. You were wrong.

You said that we were going to be greeted as liberators. You were wrong. You said that there was no history of violence between Shia and Sunni. And you were wrong. And so my question is...

(CROSSTALK)

LEHRER: Senator Obama...

OBAMA: ... of judgment, of whether or not -- of whether or not -- if the question is who is best-equipped as the next president to make good decisions about how we use our military, how we make sure that we are prepared and ready for the next conflict, then I think we can take a look at our judgment. transcript

McCain Campaign Ad Based on the Debate:


McCain versus McCain


VP Picks and Judgment

Sarah Palin:


Joe Biden:



Which Presidential candidate do you think has exercised the best judgment and is most likely to work with both parties to move our country forward?

Labels: iraq

Ike made landfall about two weeks ago. The Laura Recovery Center lists over 300 people still missing in its database.

People reporting missing after Hurricane Ike, from a database by the Laura Recovery Center.
(from a comment):

This is the first I've heard about people trying to find the hundreds and hundreds of people who were on the coast for the storm, specifically on Bolivar, who aren't there any more.

Ike's missing

"We expect to see a huge improvement in outage count by the end of the weekend," CenterPoint spokesman Floyd LeBlanc said Friday when about 377,000 customers of 2.3 million still were without power because of Hurricane Ike.
Most may see power by Sunday

Warren Adams insists that there is nothing special about the way the home was constructed. It was built to Galveston County code, he said, which anticipates 130-mile-per-hour winds on the seaward side of the county.

But the elevation may have helped. Adams said he built high, in part, to get a break on flood insurance. The home sits 15 feet above ground.

"The piece of land my house is sitting on was probably one of the highest above sea level in the area, about 8 or 9 feet above sea level before we even started the house," he said. "I think the house is about 16 inches higher than it needs to be."
Ike obliterated most homes, but spared one on Church Street

Swimming in the shimmering Gulf of Mexico may seem inviting this weekend, especially after long hours spent cleaning homes, but people should say out of the water, said Peter Davis, chief of Galveston Island Beach Patrol.

Davis said an order prohibiting swimming in the Gulf that Mayor Lyda Ann Thomas issued soon after the storm remains in effect. It may be rescinded next week after water quality experts and debris removal teams assess the Gulf near the Seawall.

Ike swept debris as well as possible hazardous materials into the water, Davis said. Much of the debris is partially buried in the sandy Gulf bottom and is exposed at low tide. Concrete chunks, steel pipes, bushes, trees and other debris litter the sand.
Galvestonians warned to stay out of water

Labels: Hurricane Ike

Update: Republican Thaddeus Otter on the Paulson Splurge:


Update: Sarah Palin on the Bailout:

Labels: economy

For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. ...

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess. ...

How the Democrats Created the Financial Crisis

Wow! I guess John McCain is really a reforming, regulator, after all? And despite the common wisdom, it is Democrats that want less regulation ("small government") and Republicans that want more regulation ("big government")? Maybe not.

1. The article is written by an adviser to the McCain campaign. Not exactly an unbiased source. Of course, that does not prove it is not true.

2. Some analysis that I have read of the bill is that despite it's name, it would have worsened the lack of oversight, not made it better. Other analysis says the opposite. It is a long bill and I have no opinion at this time. But, let's just assume for the sake of discussion that it would have been good, added needed regulation and would have helped to stop the recent problems with Freddie Mac and Fannie Mae.

3. The article points out that John McCain was a cosponsor and implies that therefore he was leading the fight to get this bill passed and he was a reformer and tried to add regulation to Freddie and Fannie and that would have saved us from the current mess!! Except, that is not how it went down. Is John McCain a cosponsor of the bill? Why, yes he is, look here: S.190 Sponsors and Cosponsors. But look at the dates. He joined as a cosponsor 14 months after the bill was introduced and after it was dead in the water. I think the technical term for this is "political stunt."

4. If McCain had helped with this bill when it was introduced he might have been able to help get it to a vote and passed by the (Republican Majority) Senate in 2005:

Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and faced hostility from the Bush administration.

Adamant that the only solution to the problems posed by Fannie and Freddie was their privatisation, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all.

"We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed," Mr Oxley says.
Oxley hits back at ideologues

So McCain did not help with the bill when it was introduced; it was Bush, not Democrats, that kept it from succeeding in the (Republican Majority) Senate and McCain did not sign on until after the fact.

McCain did not lead on this. He followed Bush's lead. The Bush administration was responsible for this bill dying, not Democrats.

Ok. What other banking and mortgage bills did John McCain sponsor or cosponsor in this time frame? This is the only bill sponsored or cosponsored by McCain in the last two sessions of Congress that deal with mortgage or banking reform.
S. 190
Sponsors and Cosponsors
S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005

What about Barack Obama? Here is the list of bills sponsored or cosponsored by Obama in the same timeframe dealing with mortgage or banking reform:
S. 98
Sponsors and Cosponsors
S. 98 [109th]: Community Choice in Real Estate Act

S. 2280
Sponsors and Cosponsors
S. 2280 [109th]: STOP FRAUD Act

S. 1356
Sponsors and Cosponsors
S. 1356: Industrial Bank Holding Company Act of 2007

S. 1181
Sponsors and Cosponsors
S. 1181: Shareholder Vote on Executive Compensation Act

S. 1222
Sponsors and Cosponsors
S. 1222: STOP FRAUD Act

S. 2452
Sponsors and Cosponsors
S. 2452: Home Ownership Preservation and Protection Act of 2007

S. 2595
Sponsors and Cosponsors
S. 2595: S.A.F.E. Mortgage Licensing Act of 2008

John McCain Tuesday September 23, 2008 on Paulson's Bailout Plan:


Barack Obama on the Economy:

Maybe Sarah Palin can help John McCain out here?

(about the 4:50 mark)
COURIC: But he's been in Congress for 26 years. He's been chairman of the powerful Commerce Committee. And he has almost always sided with less regulation, not more.

PALIN: He's also known as the maverick, though. Taking shots from his own party, and certainly taking shots from the other party. Trying to get people to understand what he's been talking about — the need to reform government.

COURIC: I'm just going to ask you one more time, not to belabor the point. Specific examples in his 26 years of pushing for more regulation?

PALIN: I'll try to find you some, and I'll bring them to you.

Draw your own conclusions.

Labels: economy

March 2008:

Pretty good story on the coming fight over financial regulation. But it lets the Bushies off way too lightly, by suggesting that lack of coordination between agencies led to the awesome failure of regulators to take action against the bubble:
...
The lack of oversight, in short, was no oversight: it was part of the plan.
Hiding behind the invisible hand

December 2007:

Meanwhile, during the bubble years, the mortgage industry lured millions of people into borrowing more than they could afford, and simultaneously duped investors into investing vast sums in risky assets wrongly labeled AAA. Reasonable estimates suggest that more than 10 million American families will end up owing more than their homes are worth, and investors will suffer $400 billion or more in losses.
...
It’s no wonder, then, that he brushed off warnings about deceptive lending practices, including those of Edward M. Gramlich, a member of the Federal Reserve board. In Mr. Greenspan’s world, predatory lending — like attempts to sell consumers poison toys and tainted seafood — just doesn’t happen.
...
Of course, now that it has all gone bad, people with ties to the financial industry are rethinking their belief in the perfection of free markets. Mr. Greenspan has come out in favor of, yes, a government bailout. "Cash is available,” he says — meaning taxpayer money — "and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this."
Blindly Into the Bubble

July 2003:

The agencies-the FDIC, Federal Reserve Board, Office of the Comptroller of the Currency, Office of Thrift Supervision, and National Credit Union Administration-announced they have formed a joint task force to undertake a three-year review of 129 separate rules. The review will focus on finding more streamlined and less burdensome ways to regulate banks.

"We are calling on bankers to help us determine how to improve and streamline the regulatory process," Reich continued. "We are serious about this effort, we are committed to it, and we intend to achieve results." he said the three-year time frame would allow sufficient time to solicit "substantial and significant" input from bankers as well as consumer groups and other interested parties.
Federal agencies plan three-year review of regulatory burden

Sneaking Suspicion

My sneaking suspicion is that they started with a determination to throw money at the financial industry, and everything else is just an excuse.
A sneaking suspicion

Labels: economy

Craig Ferguson on Capitalism and Democracy


Bailout Proving to Be Tough Sell on Capitol Hill


Cafferty wants to know why McCain doesn't want to debate


Craig Ferguson on McCain suspending his Campaign

Labels: economy

GALVESTON, Texas — Thousands of Galveston residents are back on their island city — many for the first time since fleeing Hurricane Ike nearly two weeks ago.

Residents return to Galveston after Ike

"We were driving the other day and I said I can't look at it. It makes me want to throw up. It's so disturbing," Castillo said.

Roughly 75 percent of Galveston's homes are uninhabitable. There is limited sewage facilities and few medical services. Rats and snakes have infested the city's ruins. And the city is under a 6 a.m. to 6 p.m. curfew.

Roughly 75 Percent of Galveston's Homes Are Uninhabitable

Labels: Hurricane Ike

Where did all that money go?

Auditors:

"This is a smoking gun," says Christopher Peterson, a law professor at the University of Utah who has been studying the subprime mess and meeting with regulators. "It suggests that auditors working for Wall Street investment bankers knew how preposterous these loans were, and that could mean Wall Street [ed: and auditors] liability for aiding and abetting fraud."

Auditor: Supervisors Covered Up Risky Loans

(Remember Arthur Andersen and Enron:

Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations. In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after being found guilty of criminal charges relating to the firm's handling of the auditing of Enron, the energy corporation, resulting in the loss of 85,000 jobs.

Since the ruling vacated Andersen's felony conviction, it theoretically left Andersen free to resume operations. However, as of 2008 Andersen has not returned as a viable business even on a limited scale. There are over 100 civil suits pending against the firm related to its audits of Enron and other companies.
Arthur Andersen)

Rating Firms:

In 2000, Standard & Poor's made a decision about an arcane corner of the mortgage market. It said a type of mortgage that involves a "piggyback," where borrowers simultaneously take out a second loan for the down payment, was no more likely to default than a standard mortgage.

While its pronouncement went unnoticed outside the mortgage world, piggybacks soon were part of a movement that transformed America's home-loan industry: a boom in "subprime" mortgages taken out by buyers with weak credit.

Six years later, S&P reversed its view of loans with piggybacks. It said they actually were far more likely to default. By then, however, they and other newfangled loans were key parts of a massive $1.1 trillion subprime-mortgage market.

How Rating Firms' Calls Fueled Subprime Mess

Wall Street Compensation:
Billions went into excessive compensation to senior executives based on profits that were an illusion. (The compensation is not "excessive" because it was large. It is excessive because it was based on profits and revenue that we now know did not accurately reflect the toxic waste on their books). Some might call that fraud. If there was fraud (they knew) or negligence (they should have known) then some of that money may be recoverable back to the firms/their shareholders.

2007:

...bonuses split among employees of Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns will in fact add up to about $38 billion, beating last year's record. And all that despite each firm (besides Goldman) losing all their market value!

Wall Street Bonuses Biggest Ever, Again!

They needn't have worried. Wall Street bonuses totaled $33.2 billion in 2007, down just 2 percent, by the estimates of the New York state comptroller's office.

Seven of Wall Street's biggest firms boosted their total compensation and benefits to a combined $122 billion, up 10 percent since 2006, despite seeing their net revenue collectively fall 6 percent, according to Equilar, an executive-compensation research firm based in California. Mortgage-related losses reported by the seven firms totaled $55 billion and wiped out more than $200 billion in shareholder value.

The Bonuses Keep Coming

2006:

All told, this year's bonus pool for Wall Street executives hit $23.9 billion, the New York State Comptroller's office estimates.

To a great extent, Wall Street's biggest banks are prospering because they've all expanded beyond their traditional businesses into the trading of complex financial products.

And yet, some observers doubt that the big firms can keep breaking one earnings record after another.

"There's a disconnect between the economy and the financial system," says Richard Bove, who tracks the financial services industry for Punk Ziegel. "Income has to be generated somewhere. The financial sector has taken on a life of its own not connected to what's going on in the economy and, ultimately, that has to be addressed."
It's a Wall Street bonus bonanza

2005:

Early estimates of the 2005 bonus pool reach as high as $19 billion.

Please, Sir, I Want Some More.

December is the month for year-end bonuses for Wall Street’s traders, brokers and investment bankers and this year the top layers are expected to pocket some $17 billion in incentive payouts

Billions in bonuses for Wall Street execs, mayor denounces “selfish” transit workers

Treasury Secretary Paulson Grabs about $500 Million from Goldman Sachs:

The incoming Treasury secretary, Henry M. Paulson Jr., was awarded an $18.7 million cash bonus for half a year of work as the chief executive of the Goldman Sachs Group, the company said yesterday.

Goldman filed with regulators last Thursday for a sale of Mr. Paulson's 3.23 million common shares, worth $491.6 million based on that day's closing price.

It said Mr. Paulson also owned restricted stock worth $75.2 million, plus options to buy 680,474 shares. His holdings were equal to 1.02 percent of Goldman's common shares, the investment bank said.

Goldman awarded Mr. Paulson about $38.8 million of compensation for its 2005 fiscal year, mainly in restricted stock, making him Wall Street's highest-paid chief executive.
Goldman Gives Ex-Chief $18.7 Million Bonus

“This financial crisis is a direct result of the compensation practices at these Wall Street firms,” said Paul Hodgson, a senior analyst at the Corporate Library, a governance research group.

In Bailout Furor, Wall Street Pay Becomes a Target

Its time to start talking about a clawback provision as the grounds of any bailout. As I have argued in the past, I have no problem with people making millions or billions IF THEY EARN IT.

But these guys above? If every man woman and child in the USA is going to be on the hook for a Wall Street Incompetence Tax of $5-10k each, then the folks who brought us this mess, and took bonuses under the false pretense that the profits they generated were real, should also shoulder some of the costs . . .
CEO Clawback Provisions in the Bailout?

In a negotiation between a government official and banker with a bonus at risk, who will have more clout in determining the price? The Paulson RTC will buy toxic assets at inflated prices thereby creating a charitable institution that provides welfare to the rich—at the taxpayers’ expense. If this subsidy is large enough, it will succeed in stopping the crisis. But, again, at what price? The answer: Billions of dollars in taxpayer money and, even worse, the violation of the fundamental capitalist principle that she who reaps the gains also bears the losses. ...

Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded? For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists.

Why Paulson is Wrong (pdf)

Labels: economy

(at about the 5:25 mark)
Egbert (W.C. Fields): Was I in here last night and did I spend a $20 bill?
Bartender Joe (Shemp Howard): Yeah.
Egbert: Oh boy, what a load that is off my mind! I'd thought I'd lost it.

You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them.

Press Gaggle Via Conference Call with Deputy Press Secretary Tony Fratto on the Economy

I thought the banking system and the economy was in a crisis and there was an emergency need for this bailout. But many of the banks we want to give truckloads of money to are doing just fine. They don't actually need the money but might be willing to take it if we said "please." We will have to talk the banks into taking the $700 billion. Crisis, what crisis?

Oh boy, what a load that is off my mind! I'd thought we'd lost it.


more animals

We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all.

Radicals

Wall Street Reckoning! Rep. Marcy Kaptur goes for the pitchforks and torches:

You have perpetrated the greatest financial crimes ever on this American Republic. You think you can get by with it because you are extraordinarily wealthy, and the largest contributors to both presidential and congressional campaigns in both major parties.

Obama's rational and thoughtful statement:


McCain's experience in financial crisis and scandals:

Labels: economy

Oh Lord, won’t you buy me a Mercedes Benz ?
My friends all drive Porsches, I must make amends.
Worked hard all my lifetime, no help from my friends,
So Lord, won’t you buy me a Mercedes Benz ?

Oh Lord, won’t you buy me a color TV ?
Dialing For Dollars is trying to find me.
I wait for delivery each day until three,
So oh Lord, won’t you buy me a color TV ?

Oh Lord, won’t you buy me a night on the town ?
I’m counting on you, Lord, please don’t let me down.
Prove that you love me and buy the next round,
Oh Lord, won’t you buy me a night on the town ?

Mercedes Benz

Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke are scheduled to testify today before Congress on their massive bailout program.

Here are some questions I would like to hear asked:

1. You two gentlemen have been wrong about the Housing crisis, missed the leverage problem, and understated the derivative issue. Indeed, you two have been wrong about nearly everything since this crisis began years ago. Why should we trust your judgment on the largest bailout in American history?
13 Questions for Paulson & Bernanke

Use the form below to submit bad assets you'd like the government to take off your hands. And remember, when estimating the value of your 1997 limited edition Hanson single CD "MMMbop", it's not what you can sell these items for that matters, it's what you think they are worth. The fact that you think they are worth more than anyone will buy them for is what makes them bad assets.
Click Here.

I’ve had more time to read the Dodd proposal — and it is a big improvement over the Paulson plan. The key feature, I believe, is the equity participation: if Treasury buys assets, it gets warrants that can be converted into equity if the price of the purchased assets falls. This both guarantees against a pure bailout of the financial firms, and opens the door to a real infusion of capital, if that becomes necessary — and I think it will.
Daddy doesn’t know best

Is watching everyone rush off to read Chris Dodd’s proposal, and rather than read it and judge it on the merits of the proposal, read it and compare it to the ridiculous opener from Paulson. Instead of reading the Dodd proposal and saying “this is a good idea” or “this sucks hard,” we will be treated to a few days of “well, it was better than what Paulson suggested.” Which, no doubt, will be true, because what Paulson asked for was completely ridiculous- “Give me a trillion dollars and then piss off.”

... one of the real and fair knocks against Dodd is that he is wholly in bed with the banking and insurance industries? But somehow, because we are a nation of morons, we will judge giving 700 billion to someone with no strings unacceptable, but giving 700 billion to someone with a few caveats about CEO pay is somehow teh awesome. And who will be the white knight to bring us this reform? The guy in the Democratic party most in bed with the people who screwed up.
The Next Thing That Will Piss Me Off

What Gingrich's wish list tells us is that the dumping of private debt into the public coffers is only stage one of the current shock. The second comes when the debt crisis currently being created by this bailout becomes the excuse to privatize social security, lower corporate taxes and cut spending on the poor. ...

We have seen this many times before, in this country and around the world. But here's the thing: these opportunistic tactics can only work if we let them. They work when we respond to crisis by regressing, wanting to believe in "strong leaders" ...

So let's be absolutely clear: there are no saviors who are going to look out for us in this crisis. Certainly not Henry Paulson, former CEO of Goldman Sachs, one of the companies that will benefit most from his proposed bailout (which is actually a stick up). The only hope of preventing another dose of shock politics is loud, organized grassroots pressure on all political parties: they have to know right now that after seven years of Bush, Americans are becoming shock resistant.
Now is the Time to Resist Wall Street's Shock Doctrine

Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.
Paulson Debt Plan May Benefit Mostly Goldman, Morgan

When I get to the bottom
I go back to the top of the slide
Where I stop and turn
and I go for a ride
Till I get to the bottom and I see you again
Yeah, yeah, yeah
Do you don't you want me to love you
I'm coming down fast but I'm miles above you
Tell me tell me come on tell me the answer
and you may be a lover but you ain't no dancer

Go helter skelter
helter skelter
helter skelter
Yeah, hu, hu
I will you won't you want me to make you
I'm coming down fast but don't let me break you
Tell me tell me tell me the answer
You may be a lover but you ain't no dancer

Look out
Helter skelter
helter skelter
helter skelter
Yeah, hu, hu
Look out cause here she comes

The Beatles - Helter Skelter

Labels: economy

Labels: Hurricane Ike

Email from Treasury Secretary Paulson via Chris Hayes:

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 Gram, 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

Labels: economy

Nighttime on The City of New Orleans,
Changing cars in Memphis, Tennessee.
Half way home, we'll be there by morning
Through the Mississippi darkness
Rolling down to the sea.
And all the towns and people seem
To fade into a bad dream
And the steel rails still ain't heard the news.
The conductor sings his song again,
The passengers will please refrain
This train's got the disappearing railroad blues.

Good night, America, how are you?
Don't you know me I'm your native son,
I'm the train they call The City of New Orleans,
I'll be gone five hundred miles when the day is done.

The City of New Orleans by Steve Goodman

A notable voice that predicted much of the current mess is Nouriel Roubini. Here's Nouriel:
The shadow banking system is unravelling:

Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.

The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.

Thus the financial crisis of the century will also envelop European financial institutions.

Say Goodbye To The Investment Banks

The era of the independent investment bank appears to be over.

Goldman Sachs and Morgan Stanley, the only two major investment banks left standing, sought and won Federal Reserve Board approval to become bank holding companies late Sunday.

The moves come on a weekend when the Treasury Department proposed a sweeping and controversial $700 billion bailout of the U.S. banking industry. The Treasury has asked for broad powers and little oversight to buy mortgage-related assets from U.S. banks over the next two years to alleviate the strain on the lending markets, which are choked with bad assets.

I guess this will enable them to get a share of the $700 billion?

Wall Street in crisis: Last banks standing give up investment bank status

In a statement released overnight, the Fed said its board had approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies and authorised credit to the two firms "against all types of collateral" that commercial banks can use to get loans from the central bank.

Dollar May Get `Crushed' as Traders Weigh Up Bailout

``The downdraft on the dollar from the hit to the balance sheet of the U.S. government will dwarf the short-term gains from solving the banking crisis,''

``The fact that they mentioned taxpayer money implies that they're going to issue debt. If there's going to be a huge new supply of Treasuries, this will be dollar negative. It's too much for the dollar to take.''

Another drawback for the dollar is that the Fed's key rate is 3.4 percentage points less than the rate of inflation, the most since 1980, so investors lose money by investing in short- term U.S. fixed-income assets.

A $700 billion expenditure on distressed mortgage-related assets would roughly be what the country has spent so far in direct costs on the Iraq war and more than the Pentagon’s total yearly budget appropriation. Divided across the population, it would amount to more than $2,000 for every man, woman and child in the United States. NY Times

And raises the national debt ceiling to $11.3 trillion which is over $35,000 for every man, woman and child in the United States.

Morgan Stanley freezes merger talks with Wachovia: Report

US investment giant Morgan Stanley has frozen talks on a merger with Wachovia bank but is pressing on with talks for CIC of China to end up with a big stake in it, a media report said on Monday.

But Morgan Stanley continued to pursue talks to sell a big slice of its capital to Chinese sovereign wealth fund China Investment Corporation (CIC), the report said.

Media reports have suggested that CIC could end up with 49 percent of Morgan Stanley.

So, US taxpayers will bail out a company that may be 49% owned by the government of China?

It gets better:

Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.
...
If a battle does develop in Congress over foreign participation, UBS, among others, is poised to make just these arguments.Foreign Banks Hope Bailout Will Be Global

Former Texas Sen. Phil Gramm has emerged as the key behind-the-scenes economics/Wall Street guy for John McCain and is being touted as the treasury secretary in waiting. link

U.S. Sen. John McCain's presidential campaign faces questions regarding a top economic adviser's work for Swiss banking giant UBS Warburg.

Economist and former U.S. Sen. Phil Gramm is vice chairman of UBS Investment Bank and has lobbied Congress on the company's behalf. link

Of course, the Swiss deserve their fair share too! And, isn't it nice to see the man that may be the next U.S. Treasury Secretary shoveling U.S. Taxpayer money to a foreign bank?

Mitsubishi UFJ Financial Group Inc (MUFG), Japan's largest bank, said on Monday it planned to acquire as much as 20 percent of U.S. investment bank Morgan Stanley as part of a broader strategic alliance. link

We have said more than once that the the US in the same position as Thailand and Indonesia, circa 1996, except we have the reserve currency and nukes. It looks like we will have the opportunity to see how those two assets influence the end game. Why You Should Hate the Treasury Bailout Proposal

Nukes may be our saving grace economically? "Nice little country you got there. I'd hate to see anything bad happen to it." Tony Soprano would be so proud.

As we quoted Paul Krugman in yesterday's post:

Anybody that knew what was going on would be in a bomb shelter by now.

I see Krugman's comment as half-joke and half-hyperbole. There are real economic problems in the US and in the world and they have been brewing for some time. These problems require rational and thoughtful responses instead of knee jerk $700 billion handouts to the people that caused or contributed to the problems or stood idly by as they festered.

It was only a month ago Paulson was reiterating to anyone who would listen how sound our banking system is. The fact of the matter is that neither Paulson nor Bernanke saw this coming, yet now Congress is supposed to trust they now "know" the solution. Open Letter To Congress

Meanwhile, what is an investor to do? Here's your piece of the America Pie:

And in the streets: the children screamed,
The lovers cried, and the poets dreamed.
But not a word was spoken;
The church bells all were broken.
And the three men I admire most:
The father, son, and the holy ghost,
They caught the last train for the coast
The day the music died.

Don McLean - American Pie

Labels: economy

“we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

That's great, it starts with an earthquake, birds and snakes, an aeroplane and Lenny Bruce is not afraid. Eye of a hurricane, listen to yourself churn - world serves its own needs, dummy serve your own needs. Feed it off an aux speak, grunt, no, strength, the Ladder start to clatter with fear fight down height. Wire in a fire, representing seven games, and a government for hire at a combat site. Left of west and coming in a hurry with the furys breathing down your neck. Team by team reporters baffled, trumped, tethered cropped. Look at that low playing. Fine, then. Uh oh, overflow, population, common food, but it'll do to Save yourself, serve yourself. World serves its own needs, listen to your heart bleed dummy with the rapture and the revered and the right, right. You vitriolic, patriotic, slam, fight, bright light, feeling pretty psyched.

It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.

R.E.M. - It's The End Of The World

Or is it just another money grab and power grab?

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Text of Draft Proposal for Bailout Plan

Economist Paul Krugman explains:

Anybody that knew what was going on would be in a bomb shelter by now.

[Krugman's money is] in a money market fund which I felt was safe but that might not be safe either at this point.

Probably we don't have everything melt down in two days, which is really what could've happened.

The best scenario is the economy's probably going to get worse for another year and the housing market is going to get worse for another two years.

This is not the answer, this is just avoiding disaster.

We really need a better Government than we've got.

And where is Paul Krugman?

I'm in basement classroom with some crepe paper over the windows.

What? No bomb shelter available?

Krugman: No Deal.

If Wall Street gets away with this, it will represent an historic swindle of the American public

Labels: economy

Aside 1: I ran some errands earlier today and passed two gas stations. They were both open with no wait for gas.

Aside 2: A comment on this article Life and death after Ike says:

I have been in Houston for 6 weeks, and rode throught the Hurricane without damage. There is a lot of damage around, and unreported, there has been a huge loss in the bird population.

What struck me was how well everyone has behaved.

In Houston before the Hurricane, it was stated that emergency services would stop answering to calls when the wind speed reached 50 mph. I heard police and fire sirens at 3:30, when wind speed peaked at 90 mph. At that speed, branches and signs (from the frontage of shops) become deadly.

People with generators have hooked them to their own, and neighbors, refrigerators.

Supermarkets placed power points outside so that people could charge their cell phones.

As I waited in line for a supermarket to open, people with working phones lent them to people without.

May traffic lights are without power, the motorists automatically treated them as four way stops, allowing cyclists like me, to cross unhindered and in turn.

People down here been wonderful.

And I agree, people have behaved quite nicely.

Safe Room
Anyway, Safe Rooms. You need to have one if you are going to ride out a hurricane in case a window is broken and glass is flying all about, or a tornado forms near you, or a tree falls on the house or simply, for peace of mind. Ours is a deep closet under the stairs. We lined the floor with couch cushions and spent some of the night in there when the winds got bad and the big oak tree in front was dancing around. We had a battery powered radio and could listen to a TV station's updates on the storm progress and status.

Our cats Simon and Schuster rode out the storm with us. When the storm was at its worse we had them with us in the safe room. They were locked into their cat carriers so we did not have to close the door or scramble to find them if something happened. We have two carriers that are the same and they were each in one. Well, Schuster just cried up a storm about being locked up. Meow. Meow. MEOW! MEOW! Nonstop.

After a while when the winds died down and we could not stand it anymore we opened up the cat carriers and let them both out. Simon left the safe room to investigate what he had missed. Schuster ran over to the other carrier, got inside, laid down and started purring. I guess he wanted to be in ther other (identical) carrier?

Labels: Hurricane Ike

Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So you gotta let me know
Should I stay or should I go?

Should I Stay or Should I Go? - The Clash

But in a bid to avoid the panicked response to Hurricane Rita in 2005, in which 110 people were killed in the evacuation compared to only nine in the storm, Houstonians were told to board up their windows, clear their rooms of furniture and stock up on food and water.
Hurricane Ike: Houston residents ordered not to evacuate as deadly storm hits

I live in an area that was not under a mandatory evacuation order. In fact, we were requested to not evacuate to keep the roads clear for those in low lying areas (the mandatory evacuation areas). Isn't that insane? Don't evacuate? Actually, it is a very reasoned, thoughtful approach:

Authorities confirmed a total of nine deaths in the Houston metropolitan area, all from post-storm debris-clearing work, house fires or carbon monoxide poisoning by generator use.
Ike's US Toll Hits 51

On the other hand many people in low lying areas that were subject to storm surge that were under a mandatory evacuation order chose to stay put:

After hurricane Ike pushed churning floodwaters 30 miles onto the so-called "Cajun prairie" of southwest Louisiana, National Guard and other rescue crews fought the elements for three days before reaching some 200 oil rig roughnecks, fishermen, and cattle farmers who ignored evacuation orders.

What rescuers found is an image that will confound and concern emergency managers everywhere after a historic storm where an estimated 140,000 people ignored dire warnings of "certain death" in the storm's path.
Defying Ike: Why 140,000 stayed behind

I think the Houston area approach towards evacuation was pretty good but we need to improve at getting people to leave (or get help to leave if that is what is needed) in mandatory evacuation areas and we need to get better at keeping people from killing themselves with generators and power tools after the storm.

Labels: Hurricane Ike

Some Photo and Video Collections:
Pre- and Post-Storm Photo Comparisons - Bolivar Peninsula, TX

IKE BLASTS HOUSTON, GALVESTON


DEVASTATION ON THE BOLIVAR PENINSULA

Interview with Storm Survivor Frank Sherman and other footage from KHOU.com

Liveblog note: As of 1:17 the number of confirmed dead in Texas from Ike now stands at 23. I believe this does not include the dead friends of Frank Sherman (see video above) as those bodies have not been recovered as far as I know. This is just the number of confirmed dead.

Liveblog note: 2:20 PM: Houston Independent School District (HISD) announced that approximately half of the 300 HISD schools will be opening Tuesday morning. Update: Here is a list of opening HISD schools.

Labels: Hurricane Ike

Just in from KHOU:

Another 3 people dead from carbon monoxide poisoning from a generator. If you run a generator put it outside and not near an open window.

Do not put it in the house. Do not put it in the garage. Do not put it in near an open window. People that do these things are killing themselves and their family.

Katy ISD will reopen Monday.

Port of Houston has just reopened.

Labels: Hurricane Ike

Gilchrist is or was a town on Bolivar Peninsula.

Via Weather Underground's Dr. Jeff Masters September 17 blog entry The destruction of Gilchrist, Texas.

Many of you have probably seen the photo of Gilchrist, Texas showing complete destruction of the town of 750 people, save for one lone home. High-resolution satellite imagery made available by NOAA's National Geodetic Survey (Figure 1) confirm that of the approximately 1000 structures existing in the town before Hurricane Ike, only about five survived the hurricane. Approximately 200 of these buildings were homes, and it is thought that some of the residents attempted to ride out the storm in their homes. According to media reports, about 34 survivors from Gilchrist and the neighboring communities of Crystal Beach and Port Bolivar have been fished out of Galveston Bay in the past few days. Rescuers who have reached Gilchrist have not been able to find any victims in the debris because there is no debris. Ike's storm surge knocked 99.5% of the 1,000 buildings in Gilchrist off their foundations and either demolished them or washed them miles inland into the swamplands behind Gilchrist. Until search teams can locate the debris of what was once was Gilchrist, we will not know the fate of those who may have stayed behind to ride out the storm.

Figure 1. The town of Gilchrist, Texas before and after Hurricane Ike. Image credit (top): Googlemaps.com, DigitalGlobe, GeoEye, Houston-Galveston Area Council. Bottom: National Geodetic Survey.


Liveblog Update 12:40am from Galveston News Conference, Galveston County Judge Jim Yarbrough:

We are starting to have conversations with Chambers County because there are debris piles over in Chambers County and areas that surround the Peninsula that have not been fully reviewed yet and we'll be working with Chambers County because they may be physically over there but they may find bodies that originated over in our county...

Undoubtedly we know we will find more and some we may not find that just may be missing persons that are never found. That's reality.

Labels: Hurricane Ike

This is the continuation of my initial Ike post from my chess blog: We're fine after Ike. I intend to do several more posts on Ike. Hurricane Ike made landfall Saturday morning but we could start feeling the effects where I live on Friday, one week ago. Let's start with some background in the form of some geography and some history.

Geography
Here is a map of the Houston/Galveston area. We live on the far west side of Houston near Interstate 10 and Highway 6, just to the east of Katy, Texas. Our house is about 80 feet above sea level and 60 miles from the coast. Galveston Island is to the southeast of Houston and the Bolivar Peninsula is to the northeast of Galveston.


View Larger Map

[Live blog note: (9/19 10:50am) I'm watching TV right now and the Marines have just landed on Galveston.]

History

A well respected man in his time, Cline was the first meteorologist to provide reliable forecasts of freezing weather. He also provided some of the first available flood warnings on the Colorado and Brazos rivers. However, in 1891, he wrote an article in the Galveston Daily News in which he gave his official meteorological opinion that the thought of a hurricane ever doing any serious harm to Galveston was "An absurd delusion". Many residents had called for a seawall to protect the city, but Cline's statement helped to prevent its construction.

He was proven tragically wrong on September 8, 1900 when the Galveston Hurricane of 1900 hit the island killing thousands in what remains the biggest natural disaster in US history. Cline's wife, Cora, who was pregnant with their fourth child at the time, was one of those who perished in the storm. Cline himself was nearly drowned, but he managed to survive, as well as to save his youngest daughter, six-year old Esther. Joseph Cline saved Isaac's other two daughters, 12-year old Allie May and 11-year old Rosemary.

In his autobiography, Cline claimed that he took it upon himself to travel along the beach and other low-lying areas warning people personally of the storm's approach. However, no eyewitnesses reported seeing Cline warning people along the beach. It is known that at around noon on September 8, Cline issued a hurricane warning without authorization from the Bureau's central office in Washington, D.C.. However, writer Erik Larson argued in his book Isaac's Storm that Cline did not warn anyone in Galveston prior to that.

Galveston is the site of the worst natural disaster ever in the United States.

The Galveston Hurricane of 1900 is to date the deadliest natural disaster ever to strike the United States.

Estimates of deaths from that storm range from 6,000 to 12,000. Thousands were washed out to sea making it very difficult to determine the number of dead with any precision.

From the Amazon page for the book Isaac's Storm: A Man, a Time, and the Deadliest Hurricane in History:

In Isaac's Storm, Erik Larson blends science and history to tell the story of Galveston, its people, and the hurricane that devastated them. Drawing on hundreds of personal reminiscences of the storm, Larson follows individuals through the fateful day and the storm's aftermath. There's Louisa Rollfing, who begged her husband, August, not to go into town the morning of the storm; the Ursuline Sisters at St. Mary's orphanage who tied their charges to lengths of clothesline to keep them together; Judson Palmer, who huddled in his bathroom with his family and neighbors, hoping to ride out the storm. At the center of it all is Isaac Cline, employee of the nascent Weather Bureau, and his younger brother--and rival weatherman--Joseph. Larson does an excellent job of piecing together Isaac's life and reveals that Isaac was not the quick-thinking hero he claimed to be after the storm ended. The storm itself, however, is the book's true protagonist--and Larson describes its nuances in horrific detail.

[Live blog note: (9/19 10:59am) It was just reported that 1.2 million CenterPoint customers are without electricity (I think that is about half) and 50% of Entergy's customers are without electricity.]

Labels: Hurricane Ike