Comments on: No Blank Check http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/ Random samplings from a universe of ideas. Mon, 09 Nov 2009 11:26:47 -0600 http://wordpress.org/?v=2.8.4 hourly 1 By: Chris Hutcherson http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43435 Chris Hutcherson Thu, 02 Oct 2008 17:29:36 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43435 Now that the Senate has passed the 700 billon bailout has Obamas destiny been sealed? Now that the Senate has passed the 700 billon bailout has Obamas destiny been sealed?

]]> By: Speedy Gonzalez http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43428 Speedy Gonzalez Thu, 02 Oct 2008 15:23:29 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43428 TwisMinion, sounds very much like the true story that you probably never will hear on primetime news. John Galt maybe got munched by the Utility Monster on the way to Dystopia. In the Stone Age you threw a rock in the head on the guy who got something you wanted badly. Then we had culture and civilization, prohibiting the "rock method". Our brains though, have not changed much since the Stone Age, and many of us seems to have a lot in common with the good old savage. So what do savages among us do if they want something very badly, and don't want to go to jail? Well, it's quite simple, use paper and impenetrable words instead of rocks and you're completely safe. One dollar, or billions, doesn't matter as long as it's done on paper. Maybe it's time for the next step in civilization, legislate on global level against the "paper method"... TwisMinion, sounds very much like the true story that you probably never will hear on primetime news. John Galt maybe got munched by the Utility Monster on the way to Dystopia.

In the Stone Age you threw a rock in the head on the guy who got something you wanted badly. Then we had culture and civilization, prohibiting the “rock method”.

Our brains though, have not changed much since the Stone Age, and many of us seems to have a lot in common with the good old savage. So what do savages among us do if they want something very badly, and don’t want to go to jail? Well, it’s quite simple, use paper and impenetrable words instead of rocks and you’re completely safe. One dollar, or billions, doesn’t matter as long as it’s done on paper.

Maybe it’s time for the next step in civilization, legislate on global level against the “paper method”…

]]> By: TwisMinion http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43427 TwisMinion Tue, 30 Sep 2008 08:26:04 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43427 Bring back the Glass-Steagall Act or, get ready for more three card monte... Here’s a big factor to why we’re in the mess we’re in... The Glass-Steagall Act was repealed allowing banking to be involved in securities and speculation and to sell bank assests as investment paper. Step 1. John Q gets a loan at a reduced interest rate, in two years it will double but by then he can refinance and avoid the higher rate. His debt to income ratio can’t justify the home with the rate increase but the bank goes by the low interest intro rate to make the loan, not the rate that will kick in later. Step 2. The bank, knowing that John Q is truly a high risk loan, sells his mortgage to a hedge fund for a small profit, thereby divesting themselves of any future risk. They do this with all of they’re riskier loans, keeping the less risky loans selling the others to the public via Wall Street. Rinse and repeat millions of times. Step 3. Housing market bubble pops, John Q. can’t get the lower rate refinancing on his home because the homes value didn’t increase and there is a negative equity situation now. So now he is stuck and the loan goes into default. Step 4. John Q. thankfully had invested his money wisely over the years into a 401K and so will be able to adjust to the rising costs. Step 5. Turns out John Q’s 401K mutual funds were full of bank mortgage paper and his 401K investments shrink considerably having been invested in his own mortgage, and soon there is no way to hedge his financial hemorrhaging, and is soon a renter with a bankruptcy and foreclosure. Step 6. Banks can’t sell off, unload their high risk John Q loan paper to John Q investors fast enough, and the pyramid falls leaving the banks holding much more of the high risk loans then they ever intended on actually assuming themselves... Step 7. Give as much money as possible to the short sellers who made money in step 1 and predicted step 6. Step 8. Demand that 700 billion of John Q’s tax dollars be given to the banks for the high risk loans they made and failed to unload onto John Q’s now depleted 401k that has rendered him home ownerless... So John Q lost $ on the house interest rate, lost $ on his 401k and is now asked to lose $ again in tax dollars... How many times must he pay for this house that he is no longer living in? Add to this that many big banks were gearing up hard money funds for the expected foreclosure market boom... and we can see that it was far from unforeseen. The word ‘looters’ comes to mind... But where is the John Galt in all this? Bring back the Glass-Steagall Act or, get ready for more three card monte…

Here’s a big factor to why we’re in the mess we’re in…

The Glass-Steagall Act was repealed allowing banking to be involved in securities and speculation and to sell bank assests as investment paper.

Step 1. John Q gets a loan at a reduced interest rate, in two years it will double but by then he can refinance and avoid the higher rate. His debt to income ratio can’t justify the home with the rate increase but the bank goes by the low interest intro rate to make the loan, not the rate that will kick in later.

Step 2. The bank, knowing that John Q is truly a high risk loan, sells his mortgage to a hedge fund for a small profit, thereby divesting themselves of any future risk. They do this with all of they’re riskier loans, keeping the less risky loans selling the others to the public via Wall Street. Rinse and repeat millions of times.

Step 3. Housing market bubble pops, John Q. can’t get the lower rate refinancing on his home because the homes value didn’t increase and there is a negative equity situation now. So now he is stuck and the loan goes into default.

Step 4. John Q. thankfully had invested his money wisely over the years into a 401K and so will be able to adjust to the rising costs.

Step 5. Turns out John Q’s 401K mutual funds were full of bank mortgage paper and his 401K investments shrink considerably having been invested in his own mortgage, and soon there is no way to hedge his financial hemorrhaging, and is soon a renter with a bankruptcy and foreclosure.

Step 6. Banks can’t sell off, unload their high risk John Q loan paper to John Q investors fast enough, and the pyramid falls leaving the banks holding much more of the high risk loans then they ever intended on actually assuming themselves…

Step 7. Give as much money as possible to the short sellers who made money in step 1 and predicted step 6.

Step 8. Demand that 700 billion of John Q’s tax dollars be given to the banks for the high risk loans they made and failed to unload onto John Q’s now depleted 401k that has rendered him home ownerless…

So John Q lost $ on the house interest rate, lost $ on his 401k and is now asked to lose $ again in tax dollars… How many times must he pay for this house that he is no longer living in?

Add to this that many big banks were gearing up hard money funds for the expected foreclosure market boom… and we can see that it was far from unforeseen.

The word ‘looters’ comes to mind… But where is the John Galt in all this?

]]> By: Sandy http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43451 Sandy Sat, 27 Sep 2008 20:08:01 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43451 The government should not buy those assets. This is a game with moving pieces. The government's current policy (helping, ad hoc) is good. Support institutions as needed. Get equity in them or provide insurance. Make the people who gained, pay. The government should not buy those assets. This is a game with moving pieces. The government’s current policy (helping, ad hoc) is good. Support institutions as needed. Get equity in them or provide insurance. Make the people who gained, pay.

]]> By: Donna J. Bergevin http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43434 Donna J. Bergevin Wed, 24 Sep 2008 15:28:36 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43434 I have no famcy words for the state of the economy. It seems to me that all of the people that stand to loose their huge appettites for all of the very expense and privileged way of life that they and their families live and crave for: For instance, private islands, private jets, lavious homes all over the world, and no other way of living is good enough for them will just kick back and watch the struggling people of this great country, loose their homes, loose their jobs and their cars. etc..... I am one of those regular americans that live from month to month and always struggle to get by. The children in my family get what they need because, like everyone else, worked and still do to make sure that they learn that the capitalistic privileged. (Those that feed off the hard working everyday people) that rob all of us, so they can live high on the hog, can sit back and say. "The American Government will make sure that we are OK. I find the wealthy privileged repulsive. They finance our homes, cars. clothes. and even our food. And if somethying goes wrong in our lives. Those privileged say. So sorry, to bad, pay up or your out in the street. Its just more money for them. Why should we help bale them out. They could give a damn what happens to us or our children and elderly. If all of the people of this country haven't noticed, once we raise our families, and work hard all of our lives. When you reach the good old age of 65, you are no longer needed by these financial institutions and the younger population. All of the sudden, more financial giants, get richer, by saying. These elderly disposable people are of no use to society anymore. So now, this gives them the right to decide that they can now make huge amounts of money from these disposible human being by opening retirement communities and ripping off the rest of their money, retirement, social security(and I don't even want to get started on that joke). What's that word Obama used (BITTER) I could call it a lot of other things, but I guess that would politley discribe the condition. It is just a vicious circle that goes on and on. So I guess ( whatever these privileged robbers) can just kick back and know that the American Government will PROTECT them, or the world just can't function with out their GREED. I hope they are all snug and comfortable in their fancy world. I really must quit or I could let my mouth get me in alot of trouble. Not even freedom of speech exist anymore, unless you have the finances to buy the time. Thank you very much DJB. I have no famcy words for the state of the economy. It seems to me that all of the people that stand to loose their huge appettites for all of the very expense and privileged way of life that they and their families live and crave for: For instance, private islands, private jets, lavious homes all over the world, and no other way of living is good enough for them will just kick back and watch the struggling people of this great country, loose their homes, loose their jobs and their cars. etc….. I am one of those regular americans that live from month to month and always struggle to get by. The children in my family get what they need because, like everyone else, worked and still do to make sure that they learn that the capitalistic privileged. (Those that feed off the hard working everyday people) that rob all of us, so they can live high on the hog, can sit back and say. “The American Government will make sure that we are OK.
I find the wealthy privileged repulsive. They finance our homes, cars. clothes. and even our food. And if somethying goes wrong in our lives. Those privileged say. So sorry, to bad, pay up or your out in the street. Its just more money for them. Why should we help bale them out. They could give a damn what happens to us or our children and elderly. If all of the people of this country haven’t noticed, once we raise our families, and work hard all of our lives. When you reach the good old age of 65, you are no longer needed by these financial institutions and the younger population. All of the sudden, more financial giants, get richer, by saying. These elderly disposable people are of no use to society anymore. So now, this gives them the right to decide that they can now make huge amounts of money from these disposible human being by opening retirement communities and ripping off the rest of their money, retirement, social security(and I don’t even want to get started on that joke). What’s that word Obama used (BITTER) I could call it a lot of other things, but I guess that would politley discribe the condition. It is just a vicious circle that goes on and on. So I guess ( whatever these privileged robbers) can just kick back and know that the American Government will PROTECT them, or the world just can’t function with out their GREED. I hope they are all snug and comfortable in their fancy world. I really must quit or I could let my mouth get me in alot of trouble. Not even freedom of speech exist anymore, unless you have the finances to buy the time. Thank you very much DJB.

]]> By: changcho http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43433 changcho Tue, 23 Sep 2008 20:12:36 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43433 "There’s no question that part of the idea here is "Something needs to be done in a hurry — let’s smash something through that gives us unchecked power, while everyone is panicking and not likely to ask too many questions."" I believe this scenario is what N. Klein calls 'disaster capitalism'... “There’s no question that part of the idea here is “Something needs to be done in a hurry — let’s smash something through that gives us unchecked power, while everyone is panicking and not likely to ask too many questions.”"

I believe this scenario is what N. Klein calls ‘disaster capitalism’…

]]> By: TwisMinion http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43450 TwisMinion Tue, 23 Sep 2008 18:03:51 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43450 hmmmm.... we could have built 35 LHC's with that money.... also it is... More than 2 dollars for every penny that has ever been minted by the US treasury... 7 pennies for every cell in the average human body... If carefully stacked in pennies, the pennies would reach a height of 69 million miles, which would be enough reach the planet mars and continue for another 21 million miles into space... in the other direction the stack would pass both inner planets and reach more than two thirds of the distance to the sun... hmmmm…. we could have built 35 LHC’s with that money….

also it is…

More than 2 dollars for every penny that has ever been minted by the US treasury…

7 pennies for every cell in the average human body…

If carefully stacked in pennies, the pennies would reach a height of 69 million miles, which would be enough reach the planet mars and continue for another 21 million miles into space… in the other direction the stack would pass both inner planets and reach more than two thirds of the distance to the sun…

]]> By: Mark Hedges http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43432 Mark Hedges Tue, 23 Sep 2008 09:42:57 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43432 Yeah, way. Why not give $700 billion to forgive all debts to the Small Business Administration, and use the rest to pay teachers and build high-tech factories and distributed green energy systems to give us jobs and help us regain an export surplus. We might have to cut up our credit cards, but that would do far more good than letting failed laissez-faire economics continue. Besides, where does this $700 billion come from? You think the government has those assets? No, we're borrowing it from China through T-bills. You think the Dragon's going to forgive your mortgages when the U.S. goes bankrupt and has to turn over these "assets" i.e. your house to foreign countries to cover the maturing bills? Traitors in our midst. Get a rope. Yeah, way. Why not give $700 billion to forgive all debts to the Small Business Administration, and use the rest to pay teachers and build high-tech factories and distributed green energy systems to give us jobs and help us regain an export surplus. We might have to cut up our credit cards, but that would do far more good than letting failed laissez-faire economics continue. Besides, where does this $700 billion come from? You think the government has those assets? No, we’re borrowing it from China through T-bills. You think the Dragon’s going to forgive your mortgages when the U.S. goes bankrupt and has to turn over these “assets” i.e. your house to foreign countries to cover the maturing bills? Traitors in our midst. Get a rope.

]]> By: Speedy Gonzalez http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43449 Speedy Gonzalez Mon, 22 Sep 2008 18:48:36 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43449 <strong>Preferred Shares</strong> In Europe we hold our breath. If all goes wrong, we will go down together. I don't think you could talk about "mistakes" on Wall Street. The financial white sharks probably know what they are doing, and (shark) products like <strong>NINJA Loans</strong> (No Income No Job No Assets) indicate that this is a fact. A blank check may not be the right medicine for white sharks. The Nobel Laureate in Economics, Joseph E. Stiglitz says, "<em>the champagne corks are popping on Wall Street, because they found a new sucker - the American taxpayers</em>". The solution, according to Stiglitz, is <em>Preferred Shares</em>: <a href="http://www.youtube.com/watch?v=lZQgzTZ6Xc4" rel="nofollow">http://www.youtube.com/watch?v=lZQgzTZ6Xc4</a> Preferred Shares

In Europe we hold our breath. If all goes wrong, we will go down together. I don’t think you could talk about “mistakes” on Wall Street. The financial white sharks probably know what they are doing, and (shark) products like NINJA Loans (No Income No Job No Assets) indicate that this is a fact.

A blank check may not be the right medicine for white sharks.

The Nobel Laureate in Economics, Joseph E. Stiglitz says, “the champagne corks are popping on Wall Street, because they found a new sucker – the American taxpayers“.

The solution, according to Stiglitz, is Preferred Shares:
http://www.youtube.com/watch?v=lZQgzTZ6Xc4

]]> By: Neil B http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/comment-page-1/#comment-43431 Neil B Mon, 22 Sep 2008 18:47:31 +0000 http://blogs.discovermagazine.com/cosmicvariance/2008/09/21/no-blank-check/#comment-43431 It is good to challenge the Paulson plan, and I think e.g. Krugman did a good takedown in "No Deal" out 9/20. Dodd's plan is an improvement, but Dodd is flawed with having irons in this fire (still, "lesser of two evils.") However, we have to stay on top of the after-the-fact blame game, which Republicans and allies want to blame on Democrats and liberal sentiments (like, the horrible impulse to make it easier for low-income/minorities to borrow money and own their own home (never mind that GWB constantly said he too wanted to support "the ownership society", boost home ownership etc.) For example, this fairly blatant propaganda piece in Bloomberg news is trumpeted on Drudge, and now we see that Drudge is pushing Palin-McCain very hard ("sure" but it wasn't so clear before, maybe "girl"friend Coulter is pushing him.) Note Bloomberg news very tied to finance world interests - BTW should Mike Bloomberg have ever been considered a great VP etc. choice considering his AFAIK involvement with that sector?): How the Democrats Created the Financial Crisis Kevin Hassett http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0 He blames it all on Fannie and Freddie, and the Democrats wanting to extend the pool of loan eligibles - to hell with repackaging, no income checking, phony ratings, etc., that are much more at cause for what happened. I warn you, this will get around and must be beaten back now, not later! It is good to challenge the Paulson plan, and I think e.g. Krugman did a good takedown in “No Deal” out 9/20. Dodd’s plan is an improvement, but Dodd is flawed with having irons in this fire (still, “lesser of two evils.”) However, we have to stay on top of the after-the-fact blame game, which Republicans and allies want to blame on Democrats and liberal sentiments (like, the horrible impulse to make it easier for low-income/minorities to borrow money and own their own home (never mind that GWB constantly said he too wanted to support “the ownership society”, boost home ownership etc.)

For example, this fairly blatant propaganda piece in Bloomberg news is trumpeted on Drudge, and now we see that Drudge is pushing Palin-McCain very hard (”sure” but it wasn’t so clear before, maybe “girl”friend Coulter is pushing him.) Note Bloomberg news very tied to finance world interests – BTW should Mike Bloomberg have ever been considered a great VP etc. choice considering his AFAIK involvement with that sector?):

How the Democrats Created the Financial Crisis

Kevin Hassett

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

He blames it all on Fannie and Freddie, and the Democrats wanting to extend the pool of loan eligibles – to hell with repackaging, no income checking, phony ratings, etc., that are much more at cause for what happened. I warn you, this will get around and must be beaten back now, not later!

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