Doc 224899

Wall Street Breakfast: Must-Know News

The paper-based and debt-based sectors are getting ready to pull major indices down; while gold and other precious metals are shrugging off that down pressure. Friday's gold chart showed how resilient spot gold actually is, in spite of the Nervous Nelly opening price and the panic-driven interday low, because the closing price avoided penetration of important supports.

Don't look at London gold prices; look at Dubai prices - Dubai gold quotes tell you where the well-informed money is going.

Is Dubai's Default a Black Swan Event?

Recipe for UAE "black swan event":

1) Start with last night's Dubai World mini-default.

2) Add the Abu Dhabi announced reluctance to cover Dubai's loan debt.

3) Then, replicate the event in early 2008 when the main fiber optic internet cable was severed in two places simultaneously in the Mediterranean Sea and the Persian Gulf, which shut down banking for a day or two in the UAE, parts of Europe and India, and other parts of the Middle East, and globally slowed up all internet operations everywhere else including the USA.

That, my friends, would cause sufficient panic among traders pressing to cash out their long positions that people holding gold contract options in COMEX would choose to take delivery of physical gold rather than trade the contract options for dollars, and we all know COMEX can't actually cover all the contracts with physical gold. COMEX defaults, people cash out their stock positions in the major exchanges, and the dollar drops like a stone.

That could be the scenario of a full-blown Black Swan Cascade.

Is Obama Forcing Citigroup to Downsize?

Speaking of the President's Pay Czar Kenneth Feinberg...what is he getting paid, and what czar regulates the pay of Obama's czars?

Why Mortgages Aren’t Modified and What a Ruling Stopping Foreclosures Means

Blah, blah, blah. Yadda, yadda, yadda.

A bunch of legalistic hogwash, twisting words around, and the outcome is that Americans' lives are ruined.

Let's stop wasting our money on this legal system, and make lawyers and courts accountable for their blunders.

Can somebody tell me how many dollars in legal fees and taxes were flushed down the hopper paying for the lawyers and judges and magistrates and law clerks who engineered this disaster?

Why We Were Right Not To Nationalize the Banks

We don't want the same government taxing us that runs the banks where we store our money.

Were it the case that the government taxed us and ran the banks, it would only be a matter of time before the government announced that it would automatically withdraw money from our accounts to pay any tax obligation it could dream up.

By not paying back two thirds of the claims in Cash For Clunkers, the government is likely to bankrupt a good portion of the retail arm of the automobile industry that it purportedly is bailing out to keep it from going bankrupt.

They simply have so much bureacracy, so many convoluted policies, so much administrative complexity and administrative inefficiency that they can't competently execute even small, simple programs like Cash For Clunkers or the Veterans' Tuition Reimbursement Program.

The Nationalization Debate: Confused by Surowiecki

I do not want the government that taxes me being the same government that owns the bank where my money is deposited.

If people kept their money in banks run by the government, there would be no way to prevent that government from engaging in tyranny.

If the government owned the banks, then the IRS would be........would be the KGB!

Are the Big Banks Gaming the Taxpayer?

Who gets to pick which mortgages go into each bundle, group, or traunch?

Do you get to pick them over before you put your money down?

Is there any way to weed out the mortgages that you believe are going to disproportionately foreclose or disproportionately pay off?

Why Banks Want to Return TARP Money

It may be that Banks have started to recognize that accepting TARP money will carry some obligations down the road that they don't want to be bound to.

Say you are Joes' Bank, and you take TARP money. Then, say that President Obama wants to throw cash from private investors at bad minority mortgage paper to prevent a disproportionate number of foreclosures among first-time minority homebuyers from becoming an issue politically, so he makes a plan that involves banks buying bundles of sub-prime minority mortgage paper. Joe’s Bank wants no part of the bad mortgage paper, realizing it’d be a bad investment, but then the government starts leaning on them to buy the bad mortgage paper, and it looks like regulators are going to come and make an assessment of the bank’s liquidity and patterns of using TARP money unless they buy the bad mortgage paper. Nobody puts it in writing, but when Joe’s bank buys the bad bundled mortgage paper, all of a sudden the regulators aren’t interested in them anymore.

And that's what banks want to avoid.

Let's Quit Worrying About Bankers' Bonuses

The theatrical display of indignation that Obama and Cuomo are showing is not just a convenient partisan political put-on: it is the most blatant sort of hypocrisy.

If President Obama wanted to “make the American people whole again” by assuring that tax dollars weren’t wasted, he would vigorously oppose the common practice, still followed, of siphoning 10 or 20 percent of government contract dollars to “minority contractors” who often just stand around and do nothing while the non-minority contractors actually do the work. Everybody who has worked on a large public works job knows this is the case, more often than not, except for those specific jobs where the “minority contractors” do everyone a favor and don’t even show up, which at least keeps them from being under foot.

My message to the president is “Please make me whole” by ending the practice of paying “minority contractors” for work they can’t even do, while maintaining the official fiction that they’re on the job and pulling their own weight.

I’m still waiting to see some bricks on mortar in our infrastructure initiative. Maybe it’s the case that “minority contractors” have already been awarded the contracts, and are already doing their customary fine job of standing around with one shovel for every 5 “workers”, or just staying home.

Why Bank Nationalization Will Never Happen

The Best Argument Against Nationalizing Banks: The government that taxes you would also be the government that stores your money in its banks. Stop and think about how tyrannical our federal government would be if it could tax us any way it wanted, and directly withdraw funds from our bank accounts and place it in the government’s accounts. At any point that the government decided the citizens were being inconveniently unpleasant or insufficiently submissive it could announce a new tax was in effect and take whatever money it wanted from the accounts of citizens to pay the tax. Under such a government the citizens would become little more than slaves or serfs.

As it stands now, the Internal Revenew Service (IRS) is, for all intents and purposes, completely above the law. On the basis of whim or error it can declare any of us delinquent in paying our taxes, demand payment with penalty fees added on, and there is almost no possible way of opposing it even when it is wrong (and it is wrong about 50% of the time). If the government operating the IRS also operated the banks, we would all be entirely powerless to prevent it from taking our entire life savings at any moment.

Once American banks are nationalized, they will never become un-nationalized. It is fallacious and specious to say nationalizing banks would only be a temporary measure. The income tax was supposed to only be a temporary measure, and the federal government promised that the income tax would never rise above 1%, and we have seen how that worked out.

If we are at all concerned that the government robs us and wastes tax money on stupid programs that we find loathsome or insufferable or unconscionable, we should recognize that nationalizing banks would completely free the government to spend all our money on anything it wanted at any moment, and we would be powerless to prevent it.

The only safety any of us would have would be with private, Swiss-style banks. This would immediately result in a complete separation between the majority of people, who couldn’t afford such banks, and a small privileged minority who could afford them.

Geithner Unable to Break with the Past

Geithner spoke, and Wall Street replied by dropping Dow below 7900 within minutes. That was an immediate response by "We, the People", without any influence from partisan politicians or talking heads in the news media, to a plan described by the leading financial expert in the Obama cabinet.

You can bet that Obama and his cronies will try to blame this on Republicans, saying that Republicans were being obstructionist and uncooperative, but that will just be another lying Democrat-style attempt to cast off responsibility and distort the issues.

The facts are that Obama's plan, since he claims it is his plan, is a crummy plan that won't help people who play by the rules and work for a living, and the flaws have been recognized by the brighter and better Americans who invest the money they've already made (rather than complaining and demanding and hoping the government will give them money they don't have yet).

Here's a thought for Obama: rather than trying to please the nation's most unsuccessful people, try and please the nation's most successful people (whose opinions should mean more, if you stop and think about it for a moment). Then, if the nation's most successful people are pleased, and more successful, and the government supports their efforts, then the successful ones will take care of the unsuccessful ones as a matter of generoisity and charity. Right now Obama is trying to please the losers at the expense of the winners, and the cost of that strategy will bankrupt the entire country.

Obama’s Compensation Limits Amount to Zip

"Obama limits CEO compensation"?

There is no legal way he can do that!

Who does he think he is? What does he think he is? He isn't some king or dictator. He is bound by laws, and there is no law that enables him to barge into corporate activities and impose regulations that haven't been passed into law.

Somebody needs to start keeping closer tabs on the way this guy is misusing executive privilege, over-stepping the law, and acting like a despot.

Isn't anyone else frightened by this slick, unilateral usurpation of power and influence, unfettered by checks and balances?

The corporate CEOs in question have all been functioning in a manner consistent with the community standard for professional practices in their field of endeavors. The entire financial community has been taken down by the inevitable consequences of many factors functioning over time, and it has occurred all over the globe. Everybody who was at the helm of a financial organization made decisions that, now, appear to have been disadvantageous. Up until a couple of years ago the most influential people in the world saw them as the standard for success. Pointing at them now, and demonizing them at this point, is nothing more than politically advantageous scape-goating.

We can't afford to let our government get away with distracting us from a careful study of the government's contribution to this mess by theatrically pointing at corporate management's contributions.

We also can't afford to allow a velvety usurpation of executive government power.