Bank robber says bank bailouts justify abrupt withdrawal

San Francisco police investigators are seeking the public’s help in tracking down a suspect who walked into a downtown bank, explained that he was fed up with corporate bailouts and threatened to detonate a bomb.

The manager escorted the man to a private room, where the suspect explained that he was employed by an organization that is concerned about U.S. government bailouts of corporations. … The money, the suspect explained, "would go to people who deserve it."

Can you steal your own money? Can a legal defense be built around the idea that it wasn’t a bank robbery but actually as "taxpayer repossession"?

Chances are someone will try it soon – bank robberies are definitely on the rise. They jumped 19.5% during the fourth quarter of 2008 over the previous quarter.

A brilliant and simple guide to how we are being lied to about the meltdown

First appeared at BlownMortgage.com

There has been a deliberately high signal-to-noise-ratio ("the ratio of a signal power to the noise power corrupting the signal") around the financial fiasco. The reason for this is the same reason that a magician does patter — to divert your attention from the sleight-of-hand.

We have heard long explanations about how no one could have seen this coming and how we can’t fire the people who got us into this mess to get us out of it and how we are going to borrow our way out of a debt crisis and how the value of loans shouldn’t reflect actual market conditions when the market is a mess. All of which can be translated to, "pay no attention to the man behind the curtain."

I am not sure if this rises to the exact level of a conspiracy or if it just coinciding self-interest by people who stand to lose a lot of money if that curtain is pulled back. I am sure that the effect is the same as a conspiracy.

However, Bill Black thinks it’s a conspiracy and that’s good enough for me. In an interview on Bill Moyer’s show Mr. Black — the senior regulator during the S&L crisis & now a prof of economy and law at U. of Missouri — applies a brilliantly sharp Occam’s Razor to the entire fiasco. In less than half-an-hour he explains what went wrong, why and why what we’re doing won’t work. This is a truly bipartisan dissection. Watch it and learn.

My favorite part is his conclusion (transcript here):

So stop that current system. We’re hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what’s failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they’ve had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.

(Hat tip to Infectious Greed, Financial Armageddon, and Washington’s Blog)

Here’s part 1 of the interview, go here for part 2 and here for part 3.

"The tragedy of this crisis is that it didn’t have to happen at all." — William Black

“States consider drug tests for welfare recipients” — does this includes bankers?

“It’s not against the law to be poor in the U.S. but it might as well be.”

I read that somewhere once and wish I could remember where. It came immediately to mind when I read the following:

Lawmakers in at least eight states want recipients of food stamps, unemployment benefits or welfare to submit to random drug testing.

We seem to have a fondness for humiliating the poor in this nation. If you say “tax the rich” you get accused of class warfare. However no one raises much of a fuss if you want to impose some draconion requirement on those with the least.

Not sure how many people understand a basic fact of life: People do not like being on food stamps, unemployment or welfare. I speak with experience about being on unemployment. It is embarrassing to not be able to provide for yourself and, even worse, for your family. Now in case that wasn’t enough, states are starting to ask these folks to pee in a cup periodically to prove they are worthy of recieving the help they need to feed themselves.

“Nobody’s being forced into these assistance programs,” said Craig Blair, a Republican in the West Virginia Legislature who has created a Web site … that bears a bobble-headed likeness of himself advocating this position. “If so many jobs require random drug tests these days, why not these benefits?”

“Nobody’s being forced into these assistance programs”? Well, none of my friends are going willingly to them that’s for sure.

And yet we don’t ask the same of people who are being given billions of dollars to bailout companies they screwed up in the first place. Let me ask you a question: Which one of these groups is more likely to be able to afford drugs? Nevermind all those caps on executive compensation — I would be content if I knew the board and/or senior execs at any company getting federal bailout funds would have to submit to random drug testing for as long as they owed the government money. That would end the car companies’ begging in a hurry.

So if you’re a bankrupt bank — here’s a check. If you’re a bankrupt person — here’s a cup?

I am all in favor of people not being addicted to anything. Addiction is an ugly, destructive thing — whether that addiction is to drugs, alcohol, cigarettes or whatever. However — as any doctor will tell you — this is a medical issue, not a moral one. So Mr. Blair and company are willing to disqualify people from getting assistance if they have this medical issue — however there is no mention of providing health care to deal with that medical issue.

Meanwhile Jamie Dimon (CEO of JP Morgan who makes $18M annually and whose company has recieved $25B in taxpayer funds) and his ilk complain about “the constant vilification of corporate America.”

Which would you rather be: villified and rich or villified and starving?

How broken is the banking system?

My latest from over at BlownMortgage:

The most important number not included in Mr. Geithner’s bailout plan has nothing to do with who gets how much. That is all just fine-tuning and clearly not a number Geithner & Co. have figured out yet. (Why release a plan before you have figured that out? I dunno either.) The most important number not included in the bailout plan is one he knows and isn’t telling: How big is the problem? … (more)

The word of the year in American, English, German, Dutch, Austrian, Japanese, Chinese (Taiwan but NOT the People’s Republic) and William Safire

Well, the votes are in and whomever decides these things has spoken (unlike the Minnesota senatorial race. I say we just let the governor of Illinois decide) we now know what the words of the year are in many languages. Not surprisingly, they were all basically about one of two things: sex and money — except when they were about meat.

Winner: Safire.

Runner-up: Taiwan

GM argument against bankruptcy is a car wreck

The astoundingly badly run car maker says it won’t declare chapter 11 because “people won’t buy cars from a bankrupt company.” Given that GM’s sales have dropped 45 percent over the last year, how would this be any different from the current situation?

Not surprisingly the “it’s not our fault” argument is echoed by UAW President Ron Gettelfinger: “We’re here not because of what the auto industry has done. We’re here because of what has happened to the economy.”

This would be more believable if GM had been doing well before the credit markets went to hell. Let’s remember that we’re talking about GM here and what it’s track record is like. This is a company that even when it gets a good idea goes out of its way to kill it.

Quoth this great article from the WSJ:

This situation doesn’t stem from the recent meltdown in banking and the markets. GM, Ford and Chrysler have been losing billions since 2005, when the U.S. economy was still healthy. The financial crisis does, however, greatly exacerbate Detroit’s woes. As car sales plunge — both in the U.S. and in Detroit’s once-booming overseas markets — it’s becoming nearly impossible for the companies to cut costs fast enough to keep pace with the evaporation of their revenue.

In all this lies a tale of hubris, missed opportunities, disastrous decisions and flawed leadership of almost biblical proportions. In fact, for the last 30 years Detroit has gone astray, repented, gone astray and repented again in a cycle not unlike the Israelites in the Book of Exodus.

Remember Saturn? GM started an authentically different company that attained a beloved cult-like status and then all but killed it by not letting it put out new models. Don’t even get me started about the electric car and where the company would be today if they’d kept developing that program they killed after putting $1 billion into it. And then there’s the decades of lobbying against improving mileage standards that — had they been in effect — would have also saved their asses.

GM is also arguing that it’s basically under new management and that the guys who made all those stupid decisions have been replaced. Even if this is true, then let’s hold them accountable for the stupidity just since Rick Waggoner became CEO. For the last seven years their strategy has been, “we’re going to bet it all on the short-term profits to be made from SUVs.” Thus they launched Hummer et al. I’m supposed to trust a bunch of guys who couldn’t figure out that the price of gas fluctuates? Who couldn’t figure out that there was a difference between short-term profits and long-term viability?

Let’s make one thing clear — the term “US automakers” is a misnomer. When someone says they want to “bailout the US automakers” they really mean GM. Ford has said repeatedly that they have enough credit to get through and Chrysler is no more or less a US company than Honda or Toyota. The Big Three is in fact the Incompetent One.

Wait, I will bow to the Journal on this one: they’re going with “The Detroit Three” and that works for me.

Auto industry shoots foot and then reloads

At yesterday’s hearings by House Financial Services Committee on the potential bailout for the GM and other US-based auto companies,  the CEOs were asked which of them had flown by private jet into Washington for the hearing. All three raised their hands.

car-money“There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they’re going to be trimming down and streamlining their businesses.” — Rep. Gary Ackerman, D-New York.

While it may have been, as one writer described it, a cheap shot — it was no cheaper a shot than Ford CEO Alan Mulally arriving at Capitol Hill in a Ford Fusion hybrid.



Nothing happens until the new prez takes over. Good or bad?

My latest from BlownMortgage:

In a time of economic crisis, where every moment brings more bad/alarming news, what does it mean that the government is essentially in a holding pattern for the next two months?

Many people are concerned this will mean a continuation of the Paulson strategy of throwing good money after bad. (”Am I the only one worried that by the time Obama is sworn in on January 20th, the Paulson Treasury will have run through almost a trillion dollars to little or no effect?“) Currently there are attempts to qualify GM as a bank so it can get a cut of the bailout money (LOL!!!). A similar request by GE makes more sense to me because GE is a well-run company. Several large cities are also making requests for funds. Personally, I’d give funds to Wasilla before I’d hand a dime to GM.

Still others think that Paulson and the Congress will take this moment to do nothing — and that’s a good thing. Oklahoma Sen. Jim Inhofe thinks this is such a good thing that he wants to legislate a freeze on the remaining bailout cash. (Inhofe’s willingness to rip Paulson a new one is a great indicator of how the Bushies are closer to dead-duck instead of merely being lame: Senator Inhofe suggests Paulson “may have given the [bailout] money to his friends.”)

There’s more where that came from…

Scariest halloween costume ever?

CollateralDamage Jr. went out like this on Friday. The reaction was the same everywhere — a very rueful chuckle.

Hello, treasury department.

Hello, treasury department.

OMG

OMG

PS: It was all his idea.

Here are the key housing bailout questions no one is asking

Another one from BlownMortgage.com:

Here’s a heretical notion: How much CEOs get from the bailout doesn’t matter. It’s a smokescreen, red meat being tossed to the public to make it seem as though the bad guys won’t get away scott-free.

While limits on pay packages for executives whose firms seek assistance from the government will be part of the whatever settlement gets reached, it will have no real impact on the bailout. But it will give the politicians something to beat their chests about and say that they have stood up to Big Business.

Click on the link to read the rest.

Congress doesn’t even want to fiddle while Rome burns

I’ve got a gig as a guest blogger over at BlownMortgage.com. Here’s the start of my first post:

Every news story about the bailout makes it sound as if Friday is some sort of do-or-die deadline. It’s not. It is just the day Congress wanted to adjourn so they could get home and do some campaigning. Given the magnitude of the crisis and the size of the pig in this particular poke, it’s time for Congress to get its priorities in order. If ever there was a piece of legislation that needed to be carefully considered, this is it.

Click above to read more.

This is truly a bipartisan issue. Regardless of your political affiliation I urge you to do what I have already done and call your rep, senators and the Speaker of the House about this.

Do I think calling these people will make any difference? No idea. I take the approach of the baseball manager who was asked why he argued with the ump. “It’s all I can do.”