A colossal game of “Chicken”

The clip above shows Franklin D. Roosevelt campaigning for the US presidency in 1933, using eerily familiar rhetoric. The clip opened the second portion of last week’s episode of The Explainer (which you can watch on YouTube), which focused on the Great Depression (in it, I asked my guest to expound on his blog post, Smartly protectionist). The Great Depression has provided a lot of grist for the mill in recent years, for example see A history lesson from the Great Depression – How the World Works – Salon.com

Today, I was going to focus on what’s going on in America but I’m down with the flu so it will have to be for next week.

For the past couple of weeks watching Bloomberg’s been a riveting experience as experts try to grapple with the goings-on in markets in the US and elsewhere. Non-experts, too: Question for a Management Class makes for quite interesting reading.

On the eve of the US House of Representatives voting on the bailout, a group of American economists released an open letter calling on representatives to reject the bailout plan. Columnist Will Hutton in The Guardian pointed out the argument at the heart of the economists’ opposition (and, by all accounts, among US voters who had House Republicans spooked about a popular backlash if they voted for the White House-proposed bailout plan):

And although some conservatives in Britain and America continue to make the ideological case against any government action as a response to the recent turmoil – governments necessarily do everything worse than the market – they have no alternative proposal about how to restore trust once it has gone. Trust is a reciprocal relationship, dependent upon a desire to be considered decent and honourable. Even in the dog-eat-dog financial markets, trust and integrity are matters of self-interest. However amoral you may be, it is in your interest to care about your reputation, because if you behave badly you will not do business with me – or others – on favourable terms again.

But the scale of the personal rewards now available in London and Wall Street – £15m-£20m at the top is the norm – along with the greed-is-good doctrine associated with extreme laissez-faire economics, has trashed the need for individuals to worry about integrity. They don’t need to be concerned about their reputations; they just need one deal or one year at the top and they need never work again. The incentive structure has so departed from one of the principal norms of fairness – proportionality between value added and reward – that it has eviscerated trust relationships and integrity.

Everybody tries to ‘game’ the system on their route to vast personal fortunes – whether short-selling, packaging up dud mortgages as prime mortgages or telling lies about their financial viability – and the result is that the system is getting wise. The best course today in any financial transaction is to presume zero integrity. Credit is drying up and with it the very lifeblood of the economy.

Worse, now that the system is in trouble, financiers are turning to taxpayers in the US and Britain for help without understanding the other key principal of fairness – that we will consider helping those who for no fault of their own get into trouble, but not those who freely created their own bad circumstances.

Hank Paulson certainly acted decisively in launching his plan, but the former Goldman Sachs CEO, who negotiated a special exemption from tax when he took the job, like his former Wall Street colleagues is not well endowed with the fairness gene. It polluted the very design of the scheme.

He knows that unless the US government does something comprehensive, the entire financial system is at stake, but his original plan was designed to bail out the system intact. It made no demands that any financial executives sacrifice pay or bonuses despite having driven their firms and wider economy to the point of bankruptcy. He does not want the government to provide new bank capital to help recapitalise a bust banking system. Instead, he wants the government to buy their toxic debt and so leave the banks unreformed. On top he wanted complete discretion to act as he chose without any oversight.

American economists of every persuasion signed a joint letter complaining not at the aim of the bail out, which is plainly vital, but for its lack of fairness. Conservative papers and politicians echoed the complaint. Suddenly, Wall Street is coming back to earth. The transactions from which it skims such riches are built on the savings of ordinary Americans to whom it has obligations, as it has to other Wall Street firms. What we know now about the yet to be agreed compromise is that Paulson has accepted Congressional oversight, will offer direct help to distressed US homeowners as well as banks, and will accept some constraints on the worst excesses of executive pay.

But the core proposal remains. The government will buy toxic debt rather than inject government funds into the banks’ capital base, in other words, reject even partially nationalising the entire US banking system as the Swedes had to in 1992. I don’t know – nobody does – whether the Paulson plan would be sufficient or whether ultimately the Americans will have to go for nationalisation. What I do know is that unless there is a radical and government-led change in ownership, structure, regulation and incentives so that the principles of fairness are put at the heart of the Anglo American financial system – proportionality of reward and fair distribution of risk – there is no chance of the return of trust and integrity upon which long-term recovery depends.

In the end the House of Representatives rejected the White House plan. FT.com / In depth – House rejects US bail-out bill, stitched the news together with failures and rescues in the UK, Benelux and Germany; and in House to Wall Street: Drop dead – MarketWatch says the Republicans were the ones who blinked:

Republicans voted against the bill by a two-to-one ratio, and in the process rejected their own leadership, who had worked for nearly a week to craft a bill that could gain a majority. Nearly 100 Democrats also voted against the bill, spurning their leadership.
Many Republicans in the House were never persuaded that the credit crunch in the financial system is an impending disaster deserving of taxpayer aid. Politicians who had cut their teeth on free-market principles couldn’t accept the idea that the federal government should back up the banks who had foolishly bet everything on the housing bubble.
Or they didn’t want to face the voters in six weeks and explain why a Republican would vote for the biggest government bailout ever.
The result was that markets previously poised to celebrate, engaged in an orgy of selling instead, with something of an atmosphere not only of cutting already heavy losses, but of vengeance. In the days leading to the House vote, the weekend negotiations took place against a backdrop of analysts warning that if the market didn’t get what it wanted -a bailout anaylists previously said the markets viewed with unease- then the market would crash.

In his blog, Howard Lindzom put it bluntly:

The market has been demanding a large scope bailout plan for weeks. The market has been chewing through financials one by one until it gets what it wants.

Let’s not kid ourselves, the markets are rigged. The bailout is a wimpy ass way to deal with the problem for sure, but a $1.2 trillion loss in market cap was just TODAY’s tradeoff. The market wants some extra rigging short-term and a meltdown is/was the trade-off.

The people in Washington know very little about a lot of things. That is their specialty, their claime to fame. They know shit ass less than nothing about the stock market and the MOOD of America that matters (money). Today, you saw what a bad mood can bring from traders. Tomorrow and for the next week you will see what panic brings as the selling accelerates.

This crisis though is not about the stock market, it is about THE CREDIT MARKETS. There is NO access to capital. We are shut down for business. Way worse than after 9/11 when the markets were closed. At least than, we were out shopping at the request of our President. Now we are just deer in the headlights at the whim of the House of Reps and Congress and Senate who just seem out to punish the rich. Bullshit politics. Everybody has a chance to be famous. They are really punishing everybody else.

The FED is out of bullets and we have absolutely zero leadership or hopes of any leadership soon.

On that sobering note, as the New York exchange plunged (777 points), and then Asia, too (biggest drop since 1987), An analyst on Bloomberg dryly said, “Cash seems to be the safest place to put your money now.” Commodity prices had their biggest drop in 52 years (since the index began). The Australian Prime Minister issued a statement appealing to the US Congress to pass the emergency measure, a sentiment echoed by the Japanese Finance Minister.George W. Bush will address his countrymen shortly before the markets open on Tuesday.

This seems a colossal game of “chicken,” with political leaders answerable to voters pitted on a collision course with financiers normally dismissive of nations, sovereignty, etc., demanding a bailout from the political leaders, otherwise everything comes crashing down. It’s interesting that as today wore on, the analysist began to speak rather confidently of the bailout being passed by the end of the week.

The Republican nightmare is obviously straight out of the Hollywood version of populist Huey Long’s barely fictionalized movie biopic, All the King’s Men:

 

Here at home, people have been nervous ever since insurance giant AIG ended up being taken over by the US government to prevent its collapse. See Business – Are my Philam investments safe? in INQUIRER.net

There are also concerns, now, over the possibility of bank runs and to head off potential panic, the Central Bank has tried to make soothing noises. See Business – How safe is my money in the bank? also in INQUIRER.net

Salve Duplito, who authored the two articles above, then goes on to point out that instead of hand-wringing, some sober planning is in order for ordinary people: Money Smarts » How are you dealing with the crisis?

As for the economists, Nouriel Roubini takes a kind of grim satisfaction in not turning out to be a Cassandra (see The Worst Financial Crisis Since the Great Depression and the subsequent The Shadow Banking System is Unravelling:Such demise confirmed by Morgan and Goldman now being converted into banks) while Roubini then looks at the proposed 700 billion dollar bailout plan and compares it to other bailouts in the past: Is Purchasing $700 billion of Toxic Assets the Best Way to Recapitalize the Financial System? No! It is Rather a Disgrace and Rip-Off Benefitting only the Shareholders and Unsecured Creditors of Banks

Whenever there is a systemic banking crisis there is a need to recapitalize the banking/financial system to avoid an excessive and destructive credit contraction. But purchasing toxic/illiquid assets of the financial system is not the most effective and efficient way to recapitalize the banking system. Such recapitalization — via the use of public resources — can occur in a number of alternative ways: purchase of bad assets/loans; government injection of preferred shares; government injection of common shares; government purchase of subordinated debt; government issuance of government bonds to be placed on the banks’ balance sheet; government injection of cash; government credit lines extended to the banks; government assumption of government liabilities.

A recent IMF study of 42 systemic banking crises across the world provides evidence on how different crises were resolved. First of all only in 32 of the 42 cases there was government financial intervention of any sort; in 10 cases systemic banking crises were resolved without any government financial intervention. Of the 32 cases where the government recapitalized the banking system only seven included a program of purchase of bad assets/loans (like the one proposed by the US Treasury). In 25 other cases there was no government purchase of such toxic assets. In 6 cases the government purchased preferred shares; in 4 cases the government purchased common shares; in 11 cases the government purchased subordinated debt; in 12 cases the government injected cash in the banks; in 2 cases credit was extended to the banks; and in 3 cases the government assumed bank liabilities. Even in cases where bad assets were purchased — as in Chile — dividends were suspended and all profits and recoveries had to be used to repurchase the bad assets. Of course in most cases multiple forms of government recapitalization of banks were used.

But government purchase of bad assets was the exception rather than the rule. It was used only in Mexico, Japan, Bolivia, Czech Republic, Jamaica, Malaysia, and Paraguay. Even in six of these seven cases where the recapitalization of banks occurred via the government purchase of bad assets such recapitalization was a combination of purchase of bad assets together with other forms of recapitalization (such as government purchase of preferred shares or subordinated debt).

In the Scandinavian banking crises (Sweden, Norway, Finland) that are a model of how a banking crisis should be resolved there was not government purchase of bad assets; most of the recapitalization occurred through various injections of public capital in the banking system. Purchase of toxic assets instead — in most cases in which it was used — made the fiscal cost of the crisis much higher and expensive (as in Japan and Mexico).

Thus the claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit — at a huge expense for the US taxpayer – the common and preferred shareholders and even unsecured creditors of the banks. Even the late addition of some warrants that the government will get in exchange of this massive injection of public money is only a cosmetic fig leaf of dubious value as the form and size of such warrants is totally vague and fuzzy.

Others have tried to translate the amount in human terms:CJR: What Can You Buy For $700 Billion?

It would reimburse banks, home owners, and local governments for nearly 9 million foreclosures – It could prevent over 200 million foreclosures – It could buy 8.6 billion monthly Metrocards – The government could rebuild Katrina-ravished New Orleans and Gulf Coast… three and a half times – Roughly 538 Yankee Stadiums could be built – 5.4 million students could be sent to a public university – It equals nearly 520 times the amount of Amtrak’s current operating budget – It is $14 billion more than the U.S. spent during the Vietnam War

Another economist, Carsten Hermann Pillath, offers up an approach based on evolutionary economics and cultural science, bringing up game theory and the prisoners’ dilemma (see The financial crisis: a humble evolutionary economist’s perspective).

Over at Left Flank, you can find links to scientists weighing in with their efforts to relate the financial news with Chaos Theory! See Black Swans and Charlatans.

Jeff Jarvis, in Stewardship v. ownership of our news, money, and society took a cue from the unfolding crisis and criticizes mainstream media and it’s efforts to control how their content is processed, used, and redistributed on the World Wide Web.

The political fallout, if any, is something else, altogether. I’ve been silent for some weeks because I’ve been trying to get beyond simply reacting to the news, and instead, trying to make sense of where we are and where we ought to go; I’ll attempt to start piecing my thoughts together when I’ve recovered from the flu.

319 comments

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    • d0d0ng on October 8, 2008 at 11:56 pm

    rego on, “Do I believe that he will be a better president than Mc Cain.? Im not sure. I believe that remains to be seen. How wll America survived the current crisis naman will not entirely depend on the coming president eh. ”

    Without debates, Americans have fairly chosen in mind their president. The impact on debate is to help those undecided voters. The poll result simply show that swing on which is only a part of the population.

    Everybody knew McCain. Obama in most part is questionable. This is reflected in the voting age. 40+ will go for McCain while voters less than 40 will go Obama which is consistent for the known fact that younger ones go for riskier choices.

    Unlike in the Philippines, the Americans put much weight on decision of how much a potential president will listen to the people to govern America. That puts Clinton in economic boom and Bush in the war times.

    • d0d0ng on October 9, 2008 at 12:53 am

    “As far back as 5 years ago, the US military had always been worried that there is no “hot line” direct phone link between the US State Department and the equivalent in Iran.”

    There is no such need. We don’t ask Iran, we rely on our military commander. Both candidates knew US unilaterally can go to war as provided for in its charter. The straight of Hormuz is the chokepoint for oil shipments coming Persian Gulf. The US military providing protection is tested almost daily by the Iranian gunboats. The military has clear mandate and instruction in any possible engagement.

    • supremo on October 9, 2008 at 1:47 am

    ‘But Obama (correctly, in my opinion) continues to say that the US should start high-level contacts and discussions with the likes of North Korea and Iran.’

    Sabi lang ni Obama yan. Baka naman pag President na siya umulan na lang ng tomahawk sa Tehran parang si Clinton.

  1. Unlike Filipinos who chose Arroyo, Americans are not into ivy league school backgrounds to become president.

    Ah, good. Great choice, that Bush, by the way. Good luck on McCain. Believe me, you need it.

    Love the Republican fear and panic in in the morning.

  2. Pilipinos get easily offended. Don’t take it personally. It is true that you have your opinion. It also true that your opinion doesn’t count if you cannot vote.

    Elections are personal choices. Are you voting McCain because your wife says so? I’m a businessman whose present income depends entirely on the US stock market. I may not be a voter, but I am a stakeholder, your banks make money out of my money, my opinion counts. My vote doesn’t.

    • d0d0ng on October 9, 2008 at 4:30 am

    “Great choice, that Bush, by the way.”

    Yes, we voted for him in the war. Bush is not popular in the world but that was American decision not world decision.

    • supremo on October 9, 2008 at 4:35 am

    ‘Love the Republican fear and panic in in the morning.’

    Hey Crappola! Don’t forget that Dubya kept GMA from declaring martial law. Obama as President may not care so much.

    • leytenian on October 9, 2008 at 4:39 am

    “Obama Sued in Philadelphia Federal Court on Grounds he is Constitutionally Ineligible for the Presidency”

    In the lawsuit, Berg states that Sen. Obama was born in Kenya, and not in Hawaii as the senator maintains. Before giving birth, according to the lawsuit, Obama’s mother traveled to Kenya with his father but was prevented from flying back to Hawaii because of the late stage of her pregnancy, “apparently a normal restriction to avoid births during a flight.” As Sen. Obama’s own paternal grandmother, half-brother and half-sister have also claimed, Berg maintains that Stanley Ann Dunham–Obama’s mother–gave birth to little Barack in Kenya and subsequently flew to Hawaii to register the birth.

    good luck Obama

    • d0d0ng on October 9, 2008 at 6:03 am

    Thank you for asking. I can tell resentment when you suggest a wife (Filipino culture) can decide on ones vote.

    Anyway, I am very sorry of your plight having income dependent entirely on US stock market. It is at its worst. Just this weekend a 45 yr old accountant that worked before with PriceWaterhouse killed his entire family including a 19 yrs old son -Fulbright UCLA scholar, just because of losing an entire family fortune invested in a holding company. We used to walk along the curving lanes with beautiful houses in the vicinity of tragic incident at Porter Ranch, am familiar with the place. I too lost a fortune in stock options but that is life as taking more risks.

    Your hope is on McCain, not Obama. McCain was the first one to prioritize attention (and pause the debate) to the crisis – a trademark of a leader. US is in the period of deflation. Obama’s plan will put US among the top 6 countries with highest taxes in the world. The unemployment of current high taxed countries exceeded 8%. That means US companies will move more operations abroad, double unemployment, drive out small businesses from competition (3/4 of small businesses earned $250k or more, will be taxed by Obama). Unlike Clinton, Obama will change rule on union – easier for them to come in than before, increasingly detrimental to US production and increase entitlement to union workers. That is how we assess impact on US business operation.

    • UP n grad on October 9, 2008 at 6:08 am

    d0d0ng: are you claiming that you voted for Dubya? ❓

    • d0d0ng on October 9, 2008 at 6:23 am

    I voted for Clinton in his 2 terms for economic reason. I voted for Bush in his 2 terms for war. I will vote for McCain for both economic and war.

    Plain and simple.

    • UP n grad on October 9, 2008 at 6:24 am

    to tongueTwisted: I bought some shorts in May/June/July and I’m happy for it…. SH, PSQ, DOG, DUG, EFZ.

    • leytenian on October 9, 2008 at 6:35 am

    america needs a bipartisan leadership. McCain is known for that. When america’s economy is weak, extremism may become stronger. MCain is better for national security and stabilizing the economy. The Republican ticket is also good for Asia.

    • d0d0ng on October 9, 2008 at 6:42 am

    UPn – this is probably the best time to scoop up the clobbered stocks out there. But who has the extra mileage after losing in the financial crisis.

    • rego on October 9, 2008 at 7:39 am

    “Without debates, Americans have fairly chosen in mind their president. The impact on debate is to help those undecided voters. The poll result simply show that swing on which is only a part of the population” -Dodong

    I was not impressed by last night’s debate in terms of issues. Both candidates are saying nothing new and there was really no knock out punch from either side. well Mc Cain did come up with something new , the bail of home mortages. But the presentation is so vague.

    However, personality wise, I believe na malaki ang laman ni Obama. He is cool , consistent and cautious . compared to Mc Cain.

    • leytenian on October 9, 2008 at 7:55 am

    Obama is likely to adopt protectionist policies. And don’t just look at what he says. Obama’s voting record is more anti-trade than McCain’s or even Biden’s. Protectionism will benefit neither the US nor Philippines.

    http://www.freetrade.org/congress?senator=84

    • rego on October 9, 2008 at 8:04 am

    here the reason why both candidate should stop
    negative campaigning

    http://www.cnn.com/2008/POLITICS/10/06/independent.voters/index.html

    • rego on October 9, 2008 at 8:07 am

    I totally I agree withis one after watching last night debates…

    http://www.nydailynews.com/opinions/2008/10/08/2008-10-08_obama_keeps_momentum_in_debate_with_mcca.html

  3. UPn,
    Good job! Since January, it’s pretty much a hit-and-run game I’m playing I’m almost burned-out. Love the volatility though. It pays having former colleagues handling your account. Yesterday I was +18% on VRML.PK. (oooopss!) Not bad for a day’s work.

    • d0d0ng on October 9, 2008 at 10:07 am

    I just got home and 2 things happened. It never happened before but there were messages from 6 different mortgage companies offering lower rates and a couple more calls. I told them call me back if they can guarantee 5% or less 30 yrs fixed no closing cost with cash outlay. The agents were eager to call me back as soon as they can firm up their programs.

    Apparently, Treasury Department recently announced that they fasttracked selection process of bailout contractors. Second, McCain’s homeowner bailout rather than Wall Street put priority on homeowners and working Americans. Obama is on demolition job to discredit McCain and out of touch of what is going on behind the scene. As homeowner we care less as we already lost value of our stocks, what matters is our home and our pocket.

    The other thing, we just got our mail-in votes. In 5 minutes, it is done and for mailing tomorrow – McCain for president.

    • UP n grad on October 9, 2008 at 10:33 am

    to leytenian and d00d0ng: you folks should read this and pass in on. Testimonials to John Mccain from POW’s. Page 4 starts with :
    There is no question that McCain suffered hideously in North Vietnam. His ejection over a lake in downtown Hanoi broke his knee and both his arms. During his capture, he was bayoneted in the ankle and the groin, and had his shoulder smashed by a rifle butt. His tormentors dragged McCain’s broken body to a cell and seemed content to let him expire from his injuries. For the next two years, there were few days that he was not in agony.
    ..
    ..
    According to Dramesi, one of the few POWs who remained silent under years of torture, McCain tried to justify his behavior while they were still prisoners. “I had to tell them,” he insisted to Dramesi, “or I would have died in bed.”

    Another one who provide a testimonial to McCain is Colin Powell’s former chief of staff:

    “It took guts to go through that and to come out reasonably intact and able to pick up the pieces of your life and move on,” says Wilkerson, Colin Powell’s former chief of staff, who has known McCain since the 1980s. “It is unquestionably a demonstration of the character of the man. .

    http://www.rollingstone.com/news/coverstory/make_believe_maverick_the_real_john_mccain

    ———–
    Rego : you should read the article, too.

    [d0d00ng: not for you. It makes no mention of the MILF attacks against civilians.]

    • hvrds on October 9, 2008 at 11:23 am

    “Apparently, Treasury Department recently announced that they fasttracked selection process of bailout contractors. Second, McCain’s homeowner bailout rather than Wall Street put priority on homeowners and working Americans. Obama is on demolition job to discredit McCain and out of touch of what is going on behind the scene. As homeowner we care less as we already lost value of our stocks, what matters is our home and our pocket.” Stupid is as stupid does.

    Is McCain stupid? It certainly looks like it. $300 billion to bail out homeowners.

    For the stupids like McCain.. Retail mortgages have been already sold to wholesalers through brokers like Fannie Mae and other investment banks.

    The are now consolidated under bonds called asset backed securities and sold to many other institutions who also bought insurance versus default called credit default swaps.

    The treasury is about to buy some of these securities that have turned toxic. Hence the underlying values -home prices are a big unknown as they have dropped and still continue to drop in certain areas of the U.S.
    Naturally these instruments also hold property rights to these homes. Home owner could not pay for his mortgage.

    Is McCain suggesting that the government simply buy these mortgages for the principal amount of the loan or the appraised value of the home at the start of the process. The present fair market value of the home is unknown.

    Pray tell who is going to set the price of the buyout???

    Isn’t the Treasury already going to do that on a wholesale level?????

    Is McCain suggesting that the government pay full value for these securities at full face value? But the guys who did the shit will get a windfall and the taxpayer will get the short end of the stick…

    But McCain is a maverick… That is a dammed stupid idea.

    Is McCain that stupid!!!!!Or was he trying to impress the stupids elsewhere…

    • hvrds on October 9, 2008 at 11:39 am

    In Short the price of housing in the U.S. today is a moving target!!!!!!! Headed mostly down……

    Who will peg it down in the short term to allow a fix??????

    Maybe Sarah could by invoking the God of Mr. Market, Ronald Reagan…

    • UP n grad on October 9, 2008 at 12:18 pm

    hvrds: you have been taken by d00d0ng’s nonsense bullshit that he has gotten phone calls from mortgage lenders because the Treasury has already fasttracked and selected some bail out contractors.

    The Treasury is fast tracking… yes… but one has to wait at least a couple more days before any winners get announced!!!!

    http://money.aol.com/news/articles/_a/treasury-works-rapidly-to-pick-bailout/n20081007180909990015?ecid=RSS0001

    • d0d0ng on October 9, 2008 at 11:26 pm

    hvrds – i love your rant but it tells me something that you are not a homeowner and out of reality. By this time, majority of overfinanced homeowners have already filed bankruptcy. There is oversupply of bank owned or foreclosed properties out there. We walk everyday, and saw these abandoned huge houses in every other corner a unique holloween treat in 2008. You can say good riddance, they should not have the houses in the first place.

    The people who are left in the neighborhood are those who can met their monthly mortgage but now are threatened by job layoffs as economy is contracting, lost savings and high property taxes, next in line for bankruptcy.

    The current option right now effective July 2008, is to refinance a home loan with lender and homeowner to compromise on the loss of market value. Besides a little relief on homeowner, the loss recognition will devalue the mortgage securities further and continue to put burden on the financial market.

    McCain’s plan is simple. FHA will wipe out the original loan, kept the value of securities stable, prevent further deterioration and hold unemployment related to financial crisis. The bigger beneficiary is the homeowner who will have lower monthly payments and low property taxes on new loan fixed at 30 yrs. The difference between loans will be in the federal books amortized in 30 yrs making a speedy recovery in the mortgage market in 5 yrs. The plan will start in January 2009 when McCain will become president.

    This is big boost to Filipino nurses who can refinance their loans at low rate. My friends in healthcare are spreading word to vote for McCain for the homeowner bailout.

    • supremo on October 10, 2008 at 3:37 am

    I rather vote for a make believe maverick than a make believe natural born citizen.

    • d0d0ng on October 10, 2008 at 4:06 am

    Darn, things are getting titanic.

    There will be another financial earthquake coming ahead. While the national government is sorting on the bailout for banking and financial companies, there is a looming meltdown of state and local government. California is already $3billion in a hole for its 2008-09 budget and is borrowing $7billion (by selling municipal bonds on the market where there are no takers) for running current operation and services against tax receipts that are not available until 2009. Both governor and senators are talking with Treasury Secretary but the latter balked of starting a precedent of bailing out all 64,000 issuers of municipal debts. New York which is the hardest hit of wallstreet crises and lost revenues is also looking for solution.

    Both Obama and McCain are reassuring the public that all the problems can be fixed. But no one has told the public that we hit an iceberg and we need more lifeboats or bailouts as we will know in the coming weeks when states will be asking for help as the entire econony will start to sink.

    May God help us.

    • leytenian on October 10, 2008 at 5:10 am

    We need a president that gets more respect from all networks. Obama for me is too inexperienced and risky in terms of having a bipartisan style of management. The financial crisis is no longer about democrats and republicans, this is a joint effort and teamwork.
    Records show McCain more bipartisan:)
    http://www.washingtontimes.com/news/2008/sep/15/records-show-mccain-more-bipartisan/?page=3

    • leytenian on October 10, 2008 at 5:16 am

    dodong is right,

    people who lost their jobs, in the process of foreclosures ( lis pendens )has four options.

    1. deed in lieu of foreclosures. you pay the bank for all back charges at SALE datae. The last day in court after 3-6 months of extensions of non payment
    2. short sale
    3. mitigate loan and delay payment- defer monthly payment to 6 months. most banks allow this.
    4. refinancing. common for ARM loans or homeowners with high interest rates.

    a homeowner can delay foreclosure or defer up to 1 year especially if one hires a lawyer.

    those options may not apply to investors. depending on the bank and income qualification.

    • rego on October 10, 2008 at 8:28 am

    UPn,

    Yes I’ ve just read your link. But honestly Im not very interested on those kind of article. Thats the reason why I was never ever tempted to open all the links provided by leytenean. What I actualy do is that I keenly observed the behavior of each candidates by my self and and read read read read what they are offering to the public or their platforms.

    I dont know but for some reason, I trust Obama more than Mc Cain. Especially after the last debate. I had a very negative vibes on Mc Cain based on how he behave on that debate. Sad to say, to me he has not learned so much from his very long stay in the senate.He is sooooooooooo unpresidential.

    I just realized after the debate , that Mc Cains politics is just soooooooo jaded for me and Im having a hard time relating to it. I dont think he is maverick, I actually find him to be very erratic . He said he will not debate but in the last minute he decided for it. His sense of judgement also scared me when he choose Palin as vice president. What kind of vice president is that ( This also the reason why I did not vote for Gloria when he choose Noli as vice president)

    I have been reading a lot about Mc Cain platforms and most of them is not appealing to me. I used to think that his healthcare platform was better than Obama. ButI after Obama rebutted him in the last debate, I dont think it was a good idea at all. Then one group of undecided voter that was inteviewd by Katie Courix after the deabte said , Mc Cain healtcare program is not applicable to peopel with existing precodition. And of cours I believ heatlcare is a right not a responsibility that Mc esouses.

    I was very interested ont Mc Cains home owners mortgage bail -out becuase I though that was the right thing to do than bailing out the Wall St. However, I am not reading any positive feedback about it. I actually actually have my own home remodling company on the side on top of my regular job in a Construction Company, Right now I am maintainng 6 expensive houses in Manhattan, Brooklyn and Greenport ( worth $2M -up ) on the weekends. Curently Im fliiping a two family brownstone house in Jersey City. I know how bad really is the housing market. So I know how really really bad is the housing sector. Three of my caucasian regular clients that I asked so far also dont like the bail-out plan of Mc Cain. And off course, just like Dodong , this is not the only main economic concerns of the people now. There is the shrinking 401K , fear of losing jobs and so on and on. so I dont thnk this will help much the majority of the people

    On foriegn policy, I am more comfortable with Obamas style than Mc Cain.

    I ised to think that there is nothing wrong with Mc Cains offshore drilling, but again after Obama explanation during the debate. I feel that it is actually a wrong policy.

    And then there are just so many negative campaign coming from Mc Cains side. Even worst, they made Palin as their attack dog. Who would want to listen and believe Palin after hisdismal performance in two interviews and a so so perfromance in the debate?

    I have also some negative feeling on Obama but they are much much fewer compared to Mc Cain. One thing that I dont like about Obama, is that just like Mc Cain, I dont think he really really know what to do about the Economy, I am not getting a very good presentation on what is really wrong with the economy form both of them. To me it is very important that they really understood the problem
    before they present the solution. I really really waiting for these two candidate to say something about the what is wrong with current economic structure rather than just blaming the greed and dergulation. What structural changes ( aside from deregulation) they are going to implement to correct the problem. But the good thing is, I watched one epsisode of Charlie Rose this week and one non partisan panelist was optimistic about Obams becuase he has a very well respected group economic adviser. Even Warren Buffet , that Mc said woul be the best Treasury secretary to have is an Obama supporter

    So believe now that Obam is much better choice than Mc Cain. And Im very interested and excited to know how he will perform in office.

    • leytenian on October 10, 2008 at 9:49 am

    Given the above, the following would be great questions for Barack Obama

    1. Why did you stand silent in 2005 and vote with the other Democrats to block very financial reforms which would have prevented the current crisis in the financial markets?

    2. One of the primary reasons so many bad mortgage loans were made in the first place is that “community organizers” like ACORN, for which Obama worked, spent decades pressuring banks and bank regulators to do more to make mortgages available to people without much in the way of income, assets, or credit. These campaigns often were couched in racially inflammatory terms. Does Obama still think that banks should have made these loans?

    3. Why did you not favor punishment for the former CEO of the bankrupt Fannie Mae, Franklin Raines, a man who personally made $90 million over a few years while cooking the books Enron-style at Fannie Mae? And why did you have Jim Johnson, former Fannie Mae Chairman, helping you pick you VP before the pure embarrassment made him resign?

    4. How can you blame John McCain and the Republicans for this mess when you yourself supported the easy credit policies and refused the needed reforms for these programs?

    5. How can you blame John McCain and the Republicans for this mess when you yourself supported the easy credit policies and refused the needed reforms for these programs?

    Even Bill Clinton new
    http://www.youtube.com/watch?v=XsynspIqAoE&feature=related

    Fannie Mae CEO, Daniel Mudd calling Obama and the Dems the “Family” and “Conscience” of Fannie Mae. He admitted that Fannie Mae has lent more money to more minorities and more underserved individuals than any single company in history.
    http://www.youtube.com/watch?v=usvG-s_Ssb0

    • rego on October 10, 2008 at 7:38 pm

    Just corrected some grammatical and typo errors. Sorry about the earlier post .

    UPn,

    Yes I’ ve just read your link. But honestly Im not very interested on those kind of article. I did not even read all of them I just scan it. Thats the reason why I was never ever tempted to open all the links provided by leytenean. What I actualy do is that I keenly observed the behavior of each candidates by my self and and read read read read what they are offering to the public or their platforms.

    I dont know but for some reason, I trust Obama more than Mc Cain. Especially after the last debate. I had a very negative vibes on Mc Cain based on how he behave on that debate. Sad to say, to me he has not learned so much from his very long stay in the senate.He is sooooooooooo unpresidential.

    I just realized after the debate , that Mc Cains politics is just soooooooo jaded for me and Im having a hard time relating to it. I dont think he is maverick, I actually find him to be very erratic . He said he will not debate but in the last minute he decided for it…He is attcaking Obama for inexperience but look he choose a vice president is obvioulsy very very much inexpereinced on national and international politics. His sense of judgement also scared me when he choose Palin as vice president. What kind of vice president is that ( This also the reason why I did not vote for Gloria when she chose Noli as vice president)

    I have been reading a lot about Mc Cain platforms and most of them is not appealing to me. I used to think that his healthcare platform was better than Obama. But after Obama rebutted him in the last debate, I dont think it was a good idea at all. Then one group of undecided voter that was inteviewd by Katie Couric after the debate said , Mc Cain healthcare program is not applicable to people with existing precodition. And of course I believe healthcare is a right not a responsibility that Mc Cain espouses.

    I was very interested on Mc Cain’s home owners mortgage bail-out plan because I thought that was the right thing to do than bailing out the Wall St. However, I am not reading any positive feedback about it. I actually have my own home remodeling company on the side on top of my regular job in a Construction Company, Right now I am maintainng 6 expensive houses in Manhattan, Brooklyn and Greenport ( worth $2M -up ) on the weekends. Curently, Im fliiping a two family brownstone house in Jersey City. So I know how really really bad is the housing sector. Three of my caucasian regular clients that I asked so far also dont like the bail-out plan of Mc Cain. And off course, just like Dodong said this is not the only main economic concerns of the people now. There is the shrinking 401K , fear of losing jobs and so on and on. so I dont think this will help much the majority of the people.

    On foriegn policy, I am more comfortable with Obamas style than Mc Cain.

    I used to think that there is nothing wrong with Mc Cains offshore drilling, but again after Obama explanation during the debate. I feel that it is actually a wrong policy.

    And then there are just so many negative campaign coming from Mc Cains side. Even worst, they made Palin as their attack dog. Who would want to listen and believe Palin after her dismal performance in two interviews and a so so perfromance in the debate? And geez, look at those Palin gaffes, it give me an impression na ang bobo bobo nya!

    I have also some negative vibes on Obama but they are much much fewer compared to Mc Cain. One thing that I dont like about Obama, is that just like Mc Cain, I dont think he really really know what to do about the Economy, I am not getting a very good presentation on what is really wrong with the economy form both of them. To me it is very important that they really understood the problem
    before they present the solution. Im really really waiting for these two candidate to say something about the what is wrong with current economic structure rather than just blaming greed and dergulation. What structural changes ( aside from deregulation) they are going to implement to correct the problem.

    But the good thing is, I watched one epsisode of Charlie Rose on PBS this week and one non partisan panelist was optimistic about Obama becuase he has a very well respected group economic adviser. Even Warren Buffet , that Mc said would be the best Treasury secretary to have is an Obama supporter. Then I heard one wall st executive before the debate that it would not be agood idea for both candidates to give all the details of their economic policies in pubic because any policies that would have a negative impact on the stock market could sent the the market spiralling down even more. So I can let this one pass and wait when Obama is already in office.

    So believe now that Obama is much better choice than Mc Cain. And Im very interested and excited to know how he will perform in office.

    • rego on October 10, 2008 at 8:07 pm

    Excellent questions for Obama Leytenean! Now my question is why Mc Cain did not brought these questions during the debates? His campaign is very much on the mudslinging mode any way.? Could it be because these questione doesn’t really matter much to the independent and undecided voters? And if Mc Cain raise these kind of questions, the Obama camp will even definitely just relataliate with similar questions? Eventually turning this campaign into a mudslinging contest?

    I dont know with you but to me both of these candidates has skeletons in their closet , has some dark past and no one is imaculately clean. I feel that if you based your selection process in these manner you will end up not choosing anyone even in the primary stage. Or just choosing the lesser evil. But how would measure that “evilness” How would decide which one is lesser.

    To me, politics is about relating to people. So it very very important that you present yourself to the voters particularly the undecided voters that dictates the result of the election, in a very relatable and likable manner. The obama campign is doing really really well in these aspect. Thats the reason why they are leading in the polls.

    Personally I would chose candidates whose actions/ behaviour and policies is more compatible with my mine. I would chose a candidate whom Im more comfortable with.

    And my choice is Obama. And if you choice is Mc Cain, thats fine!.

    Have a nice week end.

    • leytenian on October 11, 2008 at 4:49 am

    rego,
    glad you like obama and you accept that i like mccain. that’s fair and civilized. have a great weekend to you too.

    • UP n grad on October 11, 2008 at 8:40 am

    John McCain is getting booed more often at his rallies.

    By Republicans!!!!

    ….McCain was booed by his own supporters Friday when, in an abrupt switch from raising questions about Barack Obama’s character, he described the Democrat as a “decent person and a person that you do not have to be scared of as president of the United States.”

    This was in response to a white woman who said :

    I don’t trust Obama,” a woman said. “I have read about him. He’s an Arab.”

    ———————————

    Blowback….. Palin especially has been stoking the hate, and the polls shows hate-mongering only stokes their own while the independents are getting much more annoyed at the McCain / Palin campaign.

    Can McCain shove the racism genie back into the bottle?

    • hvrds on October 11, 2008 at 9:46 am

    Credit default swaps, Collateralized debt obligations and Collateralized loan obligations.

    ARM’s and fixed rate mortgages have been around for a long time.
    Fannie Mae was established in the 1930’s. Freddie Mac in the 1960’s. They were established primarily to give everyone a chance to own a home. That is no secret.

    Who indirectly sets the price for mortgages ? The Fed sets the price for short term rates. Who then sets the price for mortgages/. Indirectly the executive. Fixed rate mortgages are set based on the treasuries ten year note.
    ARMs’ are set on the basis of two year notes.

    The Fed acts as a check and balance as it sets the rate that banks lend to each other. The real culprit in monetary policy is the executive and fiscal policy with the Congress.

    Sometimes though the Fed like Greenspan becomes political. .

    Clinton left Bush with a budget surplus. Interest rates were low for that reason.

    The war happened and Greenspan instead had to help pay for the war and at the same time Bush cut taxes instead of increasing them to pay for the war.

    Bubble time….

    Then you had the orgy or jihad versus regulation of the financial markets…

    In comes the CDS to help out selling CDO’s and CLO’s
    Let us take a look at McStupid’s solution. Buy the debt of homeowners. But the debt has already been sold and resold. Now institutional investors and governments own the debt that has been consolidated.

    Even Russia owns some of that debt. Why was everyone so excited and why did it have good credit ratings. Because it was supposedly insured…. But who was looking over the shoulders of the insurers. Mr Market. But when people realized that there was too many policies coming in to be collected on that started a run.

    Obama and McCain and the rest of Washington had no clue concerning this so called instruments of mass destruction. Let the markets sort themselves out. Let the buyer beware.

    Now the NYSE is approaching the loss of the 1929 crash principally due to the fact that banks and institutions have a big hole in their balance sheets…. The flight to liquidity had started and it is now becoming more and more of a shut down of liquidity.

    Government now have to nationalize their banking systems since most people are putting their money into banks to lend to the state anyway. The U.S. will eventually lower overnite rates to almost zero to help recapitalize banks with public money.

    This is about wholesale banking. Mortgages are given at the retail level. they are then sold to Fannie and other investment banks who then resell them. The same with Equity loans, credit card loans and car loans.

    They are sliced and diced based on risk models of credit risk. They they are insured just like life insurance based on life expectancy.

    • leytenian on October 11, 2008 at 10:29 am

    credit default swaps

    http://www.youtube.com/watch?v=a1lVOO9Y080

    • leytenian on October 11, 2008 at 10:44 am

    Now imagine this scenario played out on a global scale, with the health of multinational banks and corporations — and the portfolios of untold individuals — at stake.

    Fannie Mae and Freddie Mac should be rated AA…
    http://www.youtube.com/watch?v=IMJciPFv5BE&NR=1

    connect all that with Obama’s ACORN , CRA extending loans to uncreditworty individuals . it is a fact that Obama’s legal experience is in litigation… Has he really understood the consequences of his actions? what is he going to to next? His relationship with previous Fannie CEO Raines cannot be ignored.
    http://www.youtube.com/watch?v=68D9XrqyrWo

    Barack Obama & Friends Caused U.S. Economic Crisis
    http://www.youtube.com/watch?v=RbkEAR2GgiA

    i hope people will get it this time.

    • UP n grad on October 11, 2008 at 8:46 pm

    The latest polls puts McCain at 41%.

    This is just about as low as a Republican presidential candidate can get. What it means is in fact what has become evident —- that the only remaining people interested in the Palin/McCain campaign rallies are the diehard kooks who believe that “Obama is an Arab… Obama is a Hussein…. Obama is a Muslim”. The independents and the conservative-Democrats have lost interest in watching or hearing Palin and McCain exhort the crowds about skeletons-in-the-Obama-closet or “lack of patriotism” stuff.

    • grd on October 11, 2008 at 9:34 pm

    that’s the spirit leytenian. twist and shout. go go go!

    • leytenian on October 12, 2008 at 12:29 am

    20% of the bail-out will go to ACORN . ACORN is supposed to be a non-partisan organization but conflict of interest exist because ACORN endorse Obama therefore Obama can be bought and corrupt.

    Shocking!—Democrats Trying to Give Bailout Money to Obama’s Owner ACORN

    http://www.youtube.com/watch?v=YxHancIezQA&feature=related

    • UP n grad on October 12, 2008 at 5:30 am

    I guess 3 days from now, someone will bring up the idea —- just don’t vote / why bother?


    First, let’s get something clear: Like the candidates or not, someone’s going to win. And yes, voting might boil down to choosing the least-bad – as opposed to the best – candidate. But that’s our democratic burden, imperfect as it is.

    We need only look at the 1998 elections in Venezuela to understand why Americans must never let the don’t-vote mentality take hold.

    The choices Venezuelans faced were awful. One candidate was from a corrupt political class that had ruled the country for decades and had used the presidency to enrich a well-entrenched oligarchy. The other was Hugo Chávez, a former army lieutenant colonel imprisoned for leading a failed, bloody coup in 1992, who had miraculously received subsequent permission to seek elective office.

    This man openly thumbed his nose at democracy and exploited the political laziness of Venezuela’s middle- and upper-class voters. Some chose not to vote. Others used the election holiday to fly to Miami. But the alienated working class swamped the polls and swept Mr. Chávez to victory.

    Once in office, he held numerous follow-up elections seeking to dissolve the legislature, rewrite the constitution and eliminate term limits so he could stay in office indefinitely. Venezuelans were slow to react as they watched him systematically dismantle the economic, judicial and political structure, rewrite laws and dissolve their democratic system.

    They eventually organized mass protests and get-out-the-vote campaigns. But by then, it was too late. Venezuelan democracy, as they had known it, was gone. Boy, do they regret not taking that 1998 vote more seriously.

    Above is from Dallas, Texas.

    http://www.dallasnews.com/sharedcontent/dws/dn/opinion/points/stories/DN-robberson_12edi.State.Edition1.1e94385.html

    • rego on October 13, 2008 at 4:34 am

    Leyetenean,

    I have one question for you. In case Mc Cain wins this election, how you feel waking up someday with a terrible news that Mc Cain died in office and Sarah Palin being the constitutional succesor became teh president?

    • leytenian on October 13, 2008 at 5:38 am

    rego,

    Worst case scenario, it will not affect my vote but if mccain will really die in office, then i have no choice but to be supportive for Palin to carry on his/her duty.

    i have a question to you too. Do you think there’s a conflict of interest exist between Obama’s campaign providing $800,000 to ACORN. An organization that advertise on its website as a non partisan organization and yet endorse Obama as their presidential candidate. Check this video for a fact:

    http://www.youtube.com/watch?v=iM708EjH0bs

    • KG on October 13, 2008 at 8:25 am

    leytenian,

    the only way they could validate that they are non partisan is to come clean that they are also funding the other side.

    Support everyone then you are already non partisan.

    • UP n grad on October 13, 2008 at 9:15 pm

    Recent survey reported by the Dallas, Seattle and Washington DC papers — that more than half of voters, 51 percent, said that McCain, if elected, would largely continue to lead the country in the direction Bush has.

    And that sentence, in a nutshell, summarizes why McCain will lose.

    —————–
    And the Palin hooohahhhh and her constant jibber-jabber about Ayers and Acorn? The effect is zilch, nada, zero. Now, the newspapers report that even
    McCain’s supporters are now less enthusiastic about his candidacy, returning to levels not seen since before the Republican National Convention.

    • leytenian on October 13, 2008 at 11:07 pm

    Records show that McCain will be running the country in a bipartisan style of management. With the current financial crisis, there’s no more room for footsie footsie. When money is an issue, teamwork is necessary.

    “The Washington Times reported September 15 that Senator John McCain, the Republican presidential nominee, has a stronger record of bipartisanship than does Senator Barack Obama. Whether looking at bills they have led on or bills they have signed onto, Mr. McCain has reached across the aisle far more frequently and with more members than Mr. Obama since the latter came to the Senate in 2005.”

    • UP n grad on October 14, 2008 at 12:03 am

    to Leytenian (and to Amadeo and supremo): if you are voting for McCain because you don’t like Obama’s bloodline or because you are simply anti-Democrats, then vote the way you want to vote. But if you are voting for McCain because of his leadership skills, then even the Washington Times will tell you to think again. October 3, 2008, the Washington Times says about John McCain and the Republican Party:

    What is happening of late raises questions about Mr. McCain’s leadership qualities, Mr. McCain’s coattails and the . . . .the Republican leadership in both chambers.

    Only in America would the president say there is a crisis at hand that needs the full time and attention of Congress, and then his own party – that would be the Republicans – fail to deliver to its leader. One chamber, the House, tells the president no and goes on holiday. Leadership, not experience, and hero-worship, not moral clarity, had a lot to do with that outcome.

    Mr. McCain, aka Sir Anti-Earmark, was considered our knight in shining armor, coming off the campaign trail to the rescue of Main Street, Wall Street and both ends of Pennsylvania Avenue. In the end, his lack of leadership delivered disappointment. Mr. McCain’s insertion into the deliberations either left his party brethen twisting in the wind or further stiffening their spines on the bailout. But then he turned around and did the unconscionable: Mr. McCain voted “yea” on the pork-laden Senate version of the bailout.

    Mr. McCain broke his own rule and disavowed his own principle. His armor remains forever tarnished.

    Mr. McCain cannot defend his support for this lard: Manufacturers for children’s wooden arrows get $6 million; $192m goes to Puerto Rican and Virgin Islands rum producers; auto-racing tracks get $128 million. .

    • leytenian on October 14, 2008 at 1:27 am

    Michelle Obama herself is Racist.

    “My experiences at Princeton have made me far more aware of my ‘blackness’ than ever before,” the future Mrs. Obama wrote in her thesis introduction. “I have found that at Princeton, no matter how liberal and open-minded some of my white professors and classmates try to be toward me, I sometimes feel like a visitor on campus; as if I really don’t belong. Regardless of the circumstances underwhich I interact with whites at Princeton, it often seems as if, to them, I will always be black first and a student second.”

    “The thesis, titled “Princeton-Educated Blacks and the Black Community” and written under her maiden name, Michelle LaVaughn Robinson, in 1985, has been the subject of much conjecture on the blogosphere and elsewhere in recent weeks, as it has been “temporarily withdrawn” from Princeton’s library until after this year’s presidential election in November. Some of the material has been written about previously, however, including a story last year in the Newark Star Ledger.

    Obama writes that the path she chose by attending Princeton would likely lead to her “further integration and/or assimilation into a white cultural and social structure that will only allow me to remain on the periphery of society; never becoming a full participant.”

    “Why a restricted thesis?” asked blogger-pastor Louis Lapides on his site Thinking Outside the Blog. “Is the concern based on what’s in the thesis? Will Michelle Obama appear to be too black for white America or not black enough for black America?”

    • leytenian on October 14, 2008 at 1:45 am

    I thought her senior thesis was a reflection of immaturity and insecurity because she wrote it when was on her 20’s . But When she said ” for the first time I have proud of my country”

    in my own view, i don’t like people who are given so much and are ungrateful. she should be proud.

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