I Am An Oracle!

This is a post from one of my old blogs and I thought that I would post it so you can see that the Bailout was foretold.

11 December 2007

Pres Helps Struggling Home Owners

Well he, Bush,last week gave a plan to help the homeowners struggling with ARMs. OK is it help? NO f*cking way! It will be a short, very short term fix for the homeowners but it will be a major boom for the financial services that created this problem.

Sorry to say, there is no long term help in his plan. And only a small percentage of homeowners will see any, any assistance in this move.

You DO realize that foreclosures are up 94% over last year? Right? They are up 18% over last month. Anytime the government gets involved in saving a market, the notion of free markets goes down the toilet.

The saddest thing about this situation is that the financial institutions will come out of this pretty good. The borrowers will LOSE their homes. That is somehow okay as long as the financial sector does not suffer. Is this what you want from your government? If so, you are a sick f*cker!

Where Is The Love?

Yesterday Paulson spoke for 45 minutes explaining the progress of the bailout and the markets bombed for a third straight session.

An increasingly despondent Wall Street fell for the third straight session Wednesday as investors absorbed another series of dismal corporate reports and news that the government won’t buy banks’ soured mortgage assets after all. The Dow Jones industrials dropped more than 410 points, and all the major indexes lost more than 4 percent.

The stock market has lost about $1 trillion over the past three days, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks.

The market started the day falling on more signs that companies are being hurt by a severe pullback in consumer spending. Macy’s Inc. said it lost $44 million in the third quarter as sales at the department store retailer fell more than 7 percent. And consumer electronics retailer Best Buy Co. slashed its fiscal 2009 guidance on fears that consumer spending will erode even further.

Paulson also announced a new goal for the program to support financial markets that supply consumer credit in such areas as credit card debt, auto loans and student loans. He said, “with a stronger capital base, our banks will be more confident” to support economic activity.

Still nothing Paulson said would lead me to believe that there is anything being done for the people.  But wait!  All involved keep saying that the possiblity of a profit being made is good and that would mean that the taxpayer made money…….thinking…….does that mean we all will get checks?  Or is that just a way to keep the taxpayer at bay and smiling?

Paulson is getting little or no love for his plans…..he rushed the bailout through Congress with the prediction of a failing economy…..they passed the bill…and the economy failed…..is it not about time to regroup and fins a way to make Main Street the most important thing?

My Fav Couple: Fannie & Freddie

I recently asked in one of my post, just what the bailout was doing for Main Street.  Well here is my answer.

Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, will accelerate anti- foreclosure efforts by streamlining loan modifications to lower monthly payments for more struggling homeowners.

Fannie and Freddie, operating under a government conservatorship, will target loans in which borrowers are at least 90 days delinquent and have high loan-to-income ratios, officials from the Treasury and the Federal Housing Finance Agency said today at a press conference in Washington. The companies may offer homeowners reduced interest rates and longer terms of as much as 40 years to trim monthly payments.

“This new protocol will be a standard for the industry to quickly move homeowners into long-term sustainable mortgages,” Neel Kashkari, the Treasury’s interim assistant secretary, said in a prepared statement.

The initiative expands efforts by the Hope Now Alliance, a group of investors, advocacy groups and mortgage lenders and servicers such as Citigroup Inc. and Wells Fargo & Co. that Treasury Secretary Henry Paulson helped create last year. The success rate in the past for “curing” delinquent loans with modifications similar to what the government proposes was about 50 percent for both prime and subprime borrowers with damaged credit, according to data from the Mortgage Bankers Association

The effort to stem foreclosures and the depressed house prices they perpetuate entered a new phase on Tuesday as Fannie Mae and Freddie Mac announced a fast-track program meant to make hundreds of thousands of mortgages affordable to people who can’t currently meet their monthly payments. The roll-out follows on the heels of new loan modification programs at JP Morgan Chase and Citigroup, but the move at Fannie and Freddie, which together hold or guarantee some 58% of single-family home loans, has the potential to reach much farther since the mortgage industry often takes its cue from the two entities.

Under the new program, homeowners with mortgages held by Fannie and Freddie who are at least 90 days delinquent will be eligible to have their monthly payment reduced to 38% of gross income, as long as they’re not in bankruptcy and can illustrate a hardship or change in financial circumstances. This model, based heavily on a streamlined loan modification program the FDIC is implementing at the failed lender IndyMac, is a strong endorsement of the idea that doing a lengthy analysis of homeowners’ finances is taking too long to make a dent in the nation’s housing woes.

But the details of how, exactly, monthly payments will be lowered has raised concern in certain quarters. In a news conference explaining the program, James Lockhart, who runs the agency that oversees Fannie and Freddie, highlighted three tacks: reducing interest rates, extending the length of loans and, in some cases, deferring payment on part of the principal. There is a big difference, though, between permanently reducing an interest rate and doing it temporarily. And the new program doesn’t forgive principal, only defers it, which may not go very far at a time when some 18% of mortgage holders owe more to the bank than their house is worth. “If all they’re doing is lengthening the loan maturity, it may reduce the economic stress a little bit, but it doesn’t deal with the main problem, which is you have an underwater loan,” says Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.

Sorry to say thast this is just anotrher band-aid for a gunshot wound.  Fan and Fred hold only a small percentage of the mortgages and this will only help a small percentage of trouble homeowners.  Sorry, my question is still valid, what and when can Main Street expect help or is Wall Street the only concern?

Feeding Frenzy At Treasury

Well the NY Times has the article written by Mark Landler and David Kirkpatrick.

When the government said it would spend $700 billion to rescue the nation’s financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool.

Many new supplicants are lining up for an infusion of capital as billions of dollars are channeled to other beneficiaries like the American International Group, and possibly soon American Express.

Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie — and the growing uncertainty over who qualifies — has thrown Washington’s legal and lobbying establishment into a mad scramble.

The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.

The Congressional bailout law gave the Treasury broad authority to decide how to spend the $700 billion. Under the terms of the $250 billion capital purchase program announced last month, cash infusions are available to “qualifying U.S. banks, savings associations, and certain bank and savings and loan holding companies, engaged only in financial activities.”

That definition has grown to include private banks and insurers like Allstate and MetLife, which own savings and loans. It may also encompass industrial lenders like GE Capital and GMAC, the financing arm of General Motors, provided they win approval to reclassify themselves as a bank or savings and loan holding company.

Law and lobbying firms that specialize in government contracting fired off dispatches to clients and potential clients explaining opportunities in the new program. Capitalizing on the surge of interest, several large firms, including Patton Boggs; Akin Gump; P & L Gates; Fried, Frank, Harris, Shriver & Jacobson; and Alston & Bird, have set up financial rescue shops.

Like a shark feeding frenzy, lobbyists are scurrying around trying anything that will get a piece of the bailout pie.  And the people wait.

Yet Another Pyramid Found

This is way cool.

Archaeologists have discovered a new pyramid under the sands of Saqqara, an ancient burial site that has yielded a string of unearthed pyramids in recent years but remains largely unexplored.

The 4,300-year-old monument most likely belonged to the queen mother of the founder of Egypt‘s 6th Dynasty, and was built several hundred years after the famed Great Pyramids of Giza, antiquities chief Zahi Hawass told reporters in announcing the find Tuesday.

The discovery is part of the sprawling necropolis and burial site of the rulers of ancient Memphis, the capital of Egypt‘s Old Kingdom, about 12 miles south of Giza.

Hawass’ team had been excavating at the location for two years, but only determined two months ago that the structure, with sides about 72 feet long, was the base of a pyramid. The pyramid is the 118th discovered so far in Egypt, and the 12th to be found in Saqqara. Most are in ruins; only about a dozen pyramids remain intact across the country.

Hawass said he believes the pyramid belonged to Queen Sesheshet, who is thought to have played a significant role in establishing the 6th Dynasty and uniting two branches of the feuding royal family. Her son, Teti, ruled for about a dozen years until his likely assassination, in a sign of the turbulent times.

The last new pyramid, found here three years ago, is thought to belong to the wife of Teti’s successor, Pepi I.

In June, Hawass’ team unveiled a “rediscovery” at Saqqara — a pyramid believed to have been built by King Menkauhor, an obscure pharaoh whose pyramid was first discovered in 1842 but was later buried in sand.

Obama Backpeddles on Lobbyists

Yesterday I wrote about Obama introducing a “ban” on lobbyists in his administration and today I have to say…oops….maybe I was a bit premature.

As written in boston.com:

President-elect Barack Obama, who vowed during his campaign that lobbyists “won’t find a job in my White House,” said through a spokesman yesterday that he would allow lobbyists on his transition team as long as they work on issues unrelated to their earlier jobs.

Obama’s transition chief laid out ethics rules – which also bar transition staff from lobbying the administration for one year if they become lobbyists later – and portrayed them as the strictest ever for a transfer of presidential power.

But independent analysts said yesterday that the move is less than the wholesale removal of lobbyists that he suggested during the campaign – and shows how difficult it will be to lessen the pervasive influence of more than 40,000 registered lobbyists.

During his campaign, Obama declared: “I have done more to take on lobbyists than any other candidate in this race. I don’t take a dime of their money, and when I am president, they won’t find a job in my White House.”

That left unclear whether he was referring to the relatively small number of staff members in the West Wing or to the hundreds of political appointees throughout an administration. Obama’s campaign website said a lobbyist could join the administration as long as he or she didn’t work on “regulations or contracts directly and substantially related to their prior employer for two years.” He also proposed that political appointees be prohibited from lobbying the executive branch for the remainder of the administration, if they left government.

During the campaign, Obama’s anti-lobbyist rules weren’t ironclad. His staff included some lobbyists, though his aides said they stopped all such activities once they joined the campaign full time. He accepted fund-raising help from lobbyists registered with states and took money from associates and family members of federal lobbyists.

The change of administration and the prospect of dividing up billions of dollars to bail out Wall Street firms and to stimulate the economy are bound to create more business for lobbyists.

The Bank Of American Express

Everybody is looking to save their collective butts with hand outs from the government.

American Express (AXP 23.98) is now licensed as a bank holding company and will be regulated by the Federal Reserve.  The company grew into its own by issuing credit cards to well-heeled customers, but strains in the economy and broader financial system led to write-downs and increased loss provisions.

Status as a bank holding company does not mean American Express will change its focus away from the payments industry.

Operating as a bank holding company provides American Express stability and flexibility in the current environment, while expanding its deposit-taking capabilities — a relatively inexpensive source of funds.  The newly granted status also enables American Express to issue debt backed by government guarantee.  Additionally, American Express now has access to Treasury’s Troubled Asset Relief Program (TARP), which will allow the company to put up dodgy assets in exchange for fresh capital.

Access to such resources helps solidify the firm’s balance sheet and mitigate against losses.  For the third quarter, American Express reported increased net loan write-offs, increased loss provisions, and intentions to restrain loan growth.

People, please wake up!