Posted by
rycK on Wednesday, October 15, 2008 10:57:57 AM
Friedman of the NYT [briefly] Collides with Economic Reality.
Something is Wrong Here. Depression on the Way.
The New
York Times—aka the Walter Duranty Papers has a 90+ year history of apologizing for Communism, propping up losers, dictators and despots
in their opinion columns and scrounging for new ways to reinvent Marxism.
The Times has historically praised a swarm of disgusting parasites who parade
as ‘leaders’ in the world and issues ‘prizes’ in many fields for practicing far
leftist politics. Sometimes, the writers who pose as ‘analysts’ and ‘experts’
who share their delusions with the diminishing list of readers run astray of
the True Beliefs that prop up the leftist journalism standards at this paper.
We must now marvel at today’s
comments by Thomas L. Friedman:
“Our financial bubble, like all bubbles, has many complex
strands feeding into it — called derivatives and credit-default swaps — but at
heart, it is really very simple. We got away from the basics — from the fundamentals of prudent lending and borrowing, where the
lender and borrower maintain some kind of personal responsibility for, and
personal interest in, whether the person receiving the money can actually pay
it back. Instead, we fell into what some
people call Y.B.G. and I.B.G. lending: “you’ll be gone and I’ll be gone” before
the bill comes due.”-- Why How Matters by Thomas L. Friedman
This
brief encounter with reality must be contrasted with the kind of psychotic
fluff we hear from a colleague in California [soon to go broke] named Pia
Lopez at the Sacramento
Bee newspaper:
The Lopez Theory of Economic
Rehabilitation:
“But the role of
loans for people who don't qualify for a lower-cost, prime loan should be to provide them with a loan so they can build a credit history and refinance into a conventional loan with better
terms when their credit improves.”—Pia
Lopez, Sacramento Bee.
Does
anybody detect any disconnect with the notions of “personal responsibility” and this notion that people with poor
credit should get a loan so they can build a credit history? Is this a circular
essay? How do you rehabilitate people with poor credit [drug addicts, perverts,
illegal aliens, mental midgets and liberals] by giving them more money? Why not
give a wino a double ration of Tokay in the hope that they will stop drinking?
Where is the Friedman praise for Carbon Caps and
energy taxes?
Where does the money come from?
And for
the foreclosures we read from Lopez:
“The best way out
of the current mess that avoids a taxpayer rescue is for lenders to modify
loans.”--
Pia Lopez, Sacramento Bee.
Who absorbs the debt? The banks? We can wonder
if Lopez has read the newspapers on the salient question whether the banks can
survive bankruptcy. Does she realize that the Fed is giving away about 300 bln
in cash to the banks to save them from going down and hoarding cash?
I thought that the taxpayers were on the slimy
hook for the bank excesses now? We can inspect the phony leverage and insanity
at Bear Stearns where they tried to collect and repackage the worthless mortgages
from the CRA [the phony Community
Communist Reinvestment Act] They have the money to modify loans? Really?
Here is the Bear Stearns Situation [One of
NYC’s homies formerly located at 383 Madison Avenue, between East 46th Street and East 47th Street]:
“As of November 30, 2007 Bear Stearns had
notional contract amounts of approximately $13.40 trillion in derivative financial instruments,
of which $1.85 trillion were listed futures and option contracts. In addition,
Bear Stearns was carrying more than $28 billion in 'level 3' assets [ dog
droppings] on its books at the end of fiscal 2007 versus a net equity position
of only $11.1 billion. This $11.1 billion supported $395 billion in assets,[4]which
means a leverage ratio of 35.5 to 1. This highly leveraged
balance sheet, consisting of many illiquid and potentially worthless assets,
led to the rapid diminution of investor and lender confidence, which finally
evaporated as Bear was forced to call the New York Federal Reserve to stave off
the looming cascade of counterparty risk which would ensue
from forced liquidation.”
So, now we have to do what[?]:
“The bank writing the mortgage got away from how because it was just passing
you along to a bundler. And the investment
bank bundling these mortgages got away from how because it didn’t
know you, but it knew it was lucrative to bundle
your mortgage with others. And the
credit-rating agency got away from “how” because there
was just so much money to be made in giving good ratings to these bonds, why
delve too deeply? And the bank in Iceland got away from how because, hey, everyone
else was buying the stuff and returns were great — so why not?”- Why How Matters by Thomas L. Friedman
-
So, what do we do Friedman? Get back to
‘basics?’ What about foreclosures?
Tell us all about the rest of your
line of reasoning……….
“Charles Mackay wrote a classic history of
financial crises called “Extraordinary Popular Delusions and the Madness of Crowds,”
first published in London in 1841. “Money ... has often been a cause of the
delusion of multitudes. Sober nations have all at once become desperate
gamblers, and risked almost their existence upon the turn of a piece of paper.
To trace the history of the most prominent of these delusions is the object of
the present pages. Men, it has been well
said, think in herds; it will be seen that they go mad in herds, while they
only recover their senses slowly, and one by one.”
“And so it must be with us. We need to get back to collaborating the old-fashioned way. That is, people making decisions based on business
judgment, experience, prudence, clarity of communications and thinking
about how — not just
how much.”
So, we can repeal the CRA? It wasn’t a ‘herd’ that passed the
phony Marxist CRA and bundled the crap into
some kind of psychotic leveraged investment package. No, this is the ultimate liberal economic
dream. They [liberals in Congress] can now
tax away everything and ‘redistribute’ the wealth debt.
Too late Friedman. The horse died. Get set for a
depression and NYC can lead the circus. The food riots will start there first.
Shall we ‘spread the
wealth around…(with higher taxes)’ [Obama quote] or shall ‘we spread the misery
around’ [rycK quote]?
This is the biggest
opportunity the left-liberals has had to grab wealth since the October Revolution.
rycK
Comments
to: ryckki@gmail.com
On June 22, 2007,
Bear Stearns pledged a collateralized loan of up to $3.2 billion to "bail
out" one of its funds, the Bear Stearns High-Grade Structured Credit Fund,
while negotiating with other banks to loan money against collateral to another
fund, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund.[13] The funds were invested in thinly
traded collateralized
debt obligations (CDOs)
found to be worth less than their mark-to-market value. Merrill Lynch seized $850 million worth of the
underlying collateral but only was able to auction $100 million of them. The
incident sparked concern of contagion as Bear Stearns might be forced to
liquidate its CDOs, prompting a mark-down of similar assets in other
portfolios.[14][15] Richard
A. Marin, a senior executive at Bear Stearns Asset Management
responsible for the two hedge funds, was replaced on June 29 by Jeffrey
B. Lane, a former Vice Chairman of rival investment bank, Lehman Brothers.[16]
During the
week of July 16, 2007,
Bear Stearns disclosed that the two subprime hedge funds had lost nearly all of
their value amid a rapid decline in the market for subprime mortgages.