Holte's corner

Meltdown continues

Treasury to Temporarily Guarantee Money Market Funds
Paulson Describes Moves as 'Powerful Tactical Steps'

"He was clear about the stakes: The seizure of world credit markets
and the erosion of confidence in the health of seemingly strong
financial firms had put the underlying economy at risk."

These are all cascading effects caused by years of built up bad loans, increasingly deceitful practices; enabled by "anything goes" policies of deregulation and privatization championed by the ideologues of the right wing n our country. McCain and the Republicans may talk about change, but this ideology makes them fundamentally unable to cope with this crisis. And despite all the rhetoric about limited Government, deregulation and privatization; their essential strategy is to privatize profits while piling the risks on the rest of us.

Which is what this bail-out does: Millions of dollars for the CEO's and insiders who forked us over.

http://tinyurl.com/Depression-Era-Fund

www.barackobama.com

By Howard Schneider, Neil Irwin and Binyamin Appelbaum
Washington Post Staff Writers
Friday, September 19, 2008; 2:43 PM

The U.S. government took dramatic steps today to restore confidence
in money-market mutual funds, generally considered one of the
economy's important safe investments, whose health had come under
threat this week.

Senate Majority Leader Harry Reid, D-Nev., speaks to reporters after
members of Congress met with SEC Chairman Chris Cox, 3rd left, and
Treasury Secretary Henry Paulson, fourth from left, Speaker Nancy
Pelosi, D-Calif., and Federal Reserve Board Chairman Ben Bernanke.
right. Congressional leaders met with financial leaders late into the
evening Thursday, Sept. 18, 2008 on Capitol Hill in Washington.
(Lauren Victoria Burke - AP)

The Treasury department announced it was dipping into a Depression-
era account to offer insurance similar to that provided for cash
accounts in banks by the Federal Deposit Insurance Corp. The
insurance fund is limited to $50 billion and meant to be available
only for a year. In addition, funds that participate will have to pay
a fee -- potentially undercutting the slim returns that such funds
earn.

With roughly $3.5 trillion resting in such funds -- more than half
the value of deposits held at U.S. banks -- a run against them could
prove catastrophic. Market funds are major buyers of short-term debt,
which is issued by financial companies and other corporations to
finance day-to-day activities.

At a morning news conference, Treasury Secretary Henry M. Paulson Jr.
described the move as one of a number of "powerful tactical steps to
increase confidence in the system." In addition to Treasury's action,
the Securities and Exchange Commission placed a two-week ban on short
selling the stocks of 799 financial companies, and the Federal
Reserve announced it would expand take further steps to increase the
flow of money to banks and financial firms.

Paulson also announced that Fannie Mae and Freddie Mac, the mortgage
giants seized by the government earlier this month, would buy more
mortgages to support the housing and mortgage market.

"These two enterprises must carry out their mission to support the
mortgage market," Paulson said.

The Federal Reserve, meanwhile, took actions of its own to try to
keep the nation's money-market mutual funds functioning smoothly.
Using emergency authority it was granted in the Great Depression --
and already exercised this year in the rescues of Bear Stearns and
American International Group -- the Fed will lend money against
assets held by money-market funds.

In effect, money-market funds experiencing a cash crunch will be able
to put up asset-backed commercial paper they hold, and, through a
bank, get cash from the Fed in exchange. Money-market mutual funds
hold about $230 billion in asset-backed commercial paper, senior Fed
staffers said. The investments are called that because they are
backed by credit card receivables, auto loans and the like, rather
than the general credit of the company issuing them.

.....

http://tinyurl.com/Depression-Era-Fund

When the truth looks radical

Mike has a now closed thread about Governor Palin where he demurrs that some of what he'd heard sounded extreme. Well he is right, there is some hyperbole. Palin is extreme. But much of what sounds like hyperbole, is true. No matter that Robin will spam and spin away like a Taz on steroids when it comes to her. She's a willing pawn in a big game and not a reformer or an agent of change.

But there are a lot of reasons why the left should be worried.

Palin is a side-show and a distraction, and frankly, I think her candidacy was designed that way. The real issues are:

1. The meltdown of the housing market.
2. The concentration of power into the hands of a shrinking pool of very wealthy people.
3. The various programs which marginalize or even negate democracy and the voice of ordinary folks.
4. The complicity of Democrats, who think they can deal with people who want to deal them out, and so take a blind eye to efforts to deal them out. In essence, some democrats don't seem to mind spy programs or corrupt politics as long as they get their share.
5. Election Fraud hasn't stopped. And most of the leadership is afraid to deal with it.

The K Street plan hasn't ended simply because a few Republicans were knocked off or got arrested. We still have electronic voting machines that can be easily turned to vote one way or another.

All this talk of "change" is just a rovian-black strategy to confuse people. He has no agenda for change, no plans to help anything but his cronies, and the same policies as Bush and Company. All he can do is to marshall all his forces to instep criticize Obama.

Chris

Further reading;

http://www.stealingamericathemovie.org/

On a yaht with a bunch of Con Artists

Wonder where McCain was on his birthday in 2006? I don't know why he
went there, but it does raise interesting questions about the guy's
judgment.

http://www.thenation.com/doc/20080929/berman_ames

"John McCain has been hammering rival Barack Obama for being little
more than a vapid "celebrity" and "elitist." But The Nation has
obtained a photo revealing just how star-struck a straight-talking
maverick can become when offered the chance to celebrate his birthday
aboard a yacht filled with celebrities--even if one of those celebrity
types turns out to be an A-list con man."

Because he thought the man could bring him money and the Catholic Vote.

More:

http://www.thenation.com/doc/20080929/berman_ames

http://www.thenation.com/doc/20080929

Replacing Bad Concepts with better ones II

Kevin Phillips writes in his book "Wealth and Democracy" in chapter 7.1 that there are 12 shared characteristics of "Capitalist Heyday" periods. There is also a thirteenth characteristic, these eras are always followed by crashes.

The twelve:

1. Conservativ politics and ideology, with mostly Republican Presidents, [but even the Democrats dominated by conservatives], but even Democratic Presidents in those eras -- Grover Cleveland, Bill Clinton -- tend to be economic conservative.

2. Skepticism of Government -- from laissez-faire to program cuts and dereglation and emphasis on markets and the private sector.

3. Exaltation of business, entrepeneuralism, and the achievement of free enterprise.

4. Replacement of public interest politics with private interest politics, with high levels of corruption.

5. Aspects of survival of the fittest thinking -- from Social Darwinism to welfare reform and globalization.

6. Labor Unionweakness and/or membership decline

7. Major economic and corporate restructuring -- repeated merger waves and the rise of trusts, holding companies, leveraged buy-outs, spin offs [interlocking directorates] et al.

8. Obstruction, reduction or elimination of taxes, especially on corporations, personal incomes, or inheritance.

9. Pursuit of disinflation -- supportive of creditors -- in response to prior inflation (from the Civil War, World War II, and Vietnam era).

10 A two tier economy with stronger prosperity along the coasts and in the great lakes area, and greatest weakness in the commodity producing interior.

11. Concentration of wealth, economic polarization, and rising levels of inequality.

12. Bull markets and rising, increasing percarious levels of speculation, leverage and debt.

This describes the previous era. Which is over. Things have happened exactly as Ravi Batra, Kevin Philips and other dissident economists predicted.

Now each of these either represents the application of certain concepts, or represents the consequences of the application of those concepts.

When somebody is attached to Bad concept they will respond to bad results with recommendations for more of the same. A bad concept is like a poison that everybody believes is a medicine.

Most concepts are medicines when actually used right, but poison when used improperly. They are only "bad concepts" when they are applied wrongly.

Chris

Replacing bad concept with better concepts I

I watched the speeches leading up to Palin's speach on Faux News. I didn't make it to Palin's speech because I only made it two thirds the way through Rudy Giuliani's speech before I got sick to my stomach and had to visit the bathroom. My mind kept translating his words into German, and images of Goebbel kept popping into my mind.

The primary concern of the Republicans is "homeland security" and the Republicans have this weird bifurcation where they complain about Democrats wanting a "nanny state" while they want a leader (translation Fuhrer) who will keep them safe and get peace through conquest (victory). Try translating a Republican speech and keep an open book of 1930's German speeches handy while doing so. You'll get sick too -- unless you like 1930's German methods.

But anyway that isn't what I set out to write about. I guess it will have to do for today. I don't have much time.