Taxpayers take on trillions in risk. You can call it a bailout, you can call it a safety net or you can call it a rescue package,but the bottom line is the American taxpayer is left footing the bill.
This is the biggest nationalization in U.S. history. Freddie and Fannie finance 3 out of 4 new mortgages. And now, the mortgage industry depends neither on willing buyers and sellers...nor on willing lenders and borrowers...but on the U.S. government. The Land of the Free has put its housing under the control of the state! Yes, there is still plenty of room for private initiative and private decision-making. But, ultimately, millions of Americans now depend on the U.S. government for the roofs over their heads.
I checked the U.S. Constitution for clarification. I am looking for a provision stating that the ‘U.S. Federal Government shall enter the mortgage finance business and use taxpayers’ money to rescue irresponsible lenders and dimwit homeowners from their own mistakes.’ It wasn’t there. But so what? If there is anything the government can’t do, I have yet to find it.
Of course, the idea of taxpayers bailing out the mortgage finance industry is ridiculous; taxpayers can’t even finance existing federal obligations. Not even close. This year for example, they’ll be a half trillion short. If you figured it properly, the deficit would be trillions more.
The government is in the business of stacking one monumental fraud on top of another...trying to give everyone the idea that he can live at someone else’s expense. Sooner or later, the whole mountain of flimflam falls down.
But don’t interpret a new bailout plan for mortgage investors as a sign that the financial stock bear market is over.It’s not – at least for banks holding the worst credit exposures. Over time, these institutions will have to confess losses; take write-downs; and raise new, dilutive capital. Many will be taken over by the FDIC, which wipes out shareholders.’ Investors were encouraged by the bailout anyway.
‘World markets soar after Freddie, Fannie bailouts,’ the AP reported.
The Dow rose 289 points yesterday. The dollar rose – to $1.41 per euro. And gold rose a little too – to $807.
Meanwhile, the Federal Highway Trust Fund went broke. Most likely, there will be many more where that came from.
*** Hmmm...even with the Fannie and Freddie bailout (briefly) propping up Wall Street, today it looks like there is no joy in Mudville, after all. Following the bailout news yesterday, stocks surged...but today is a different story. One the U.S. is more accustomed to.
This morning, the National Association of REALTORS released data from the Pending Home Sales Index, which projects home sales based on contracts signed during a given month (sounds like a fun job). The index for July fell to 86.5 down from the previous month’s reading, and down 6.7% from the same month in 2007.
Also affecting Wall Street this morning are lower oil prices. Even in peak hurricane season, prices for crude are staying in the $105 zone – much lower that the highs the United States faced in July.
All signs point to a sluggish economy, but here is the icing on the cake: the Congressional Budget Office says that the government will run a record $407 billion budget deficit this year...and there’s a very real possibility of it going even higher once you figure in Fannie and Freddie.
‘The economy is likely to experience at least several more months of very slow growth,’ the new report said. ‘Whether this period will ultimately be designated a recession or not is still uncertain, but the increase in the unemployment rate and the pace of economic growth are similar to conditions during previous periods of mild recession.’
But will these high numbers have any effect on Obama’s or McCain’s economic plans? Well, if this is any indication, both parties claim that they will extend Bush’s tax cuts if elected.
However, as the CBO points out, and we point out in I.O.U.S.A. – even if the Bush tax cuts were to expire in 2010, that would only solve about 10% of the United States’ financial hole. As David Walker says in the film:
‘When many Americans think of debt and deficits, their knee-jerk reaction is to blame the war in Iraq, or defense spending. Some people think that we can solve the country’s financial problems by stopping fraud, waste and abuse, or by canceling the Bush tax cuts. The truth is, the United States could do all three of these things and still wouldn’t come close to solving the nation’s fiscal challenges.
‘The U.S. already has $11 trillion in fiscal liabilities, including public debt. To this amount, add the current unfunded obligations for Social Security benefits of about $7 trillion. Then add Medicare’s unfunded promise: $34 trillion, of which about $26 trillion relates to Medicare (parts A&B) and about $8 trillion relates to Medicare D, the new prescription drug benefit which some claimed would save money in overall Medicare costs. Add another trillion in miscellaneous items and you get $53 trillion. The United States would need $53 trillion invested today, which is about $175,000 per person, to deliver on the government’s obligations and promises. How much of this $53 trillion do we have? Nada.’
Does this really promise big change in the course of U.S. financial markets?
After all, both companies trade on the New York Stock Exchange. The basic idea is that these companies supposedly belong to shareholders. These shareholders are owners just like the guy who owns the gas station on the corner or the husband and wife team that runs the French bistro on Main Street.
But Fannie and Freddie were never really private companies like these others. Entrepreneurs usually start businesses. Congress created the mortgage giants by charter (hence, they are called government-sponsored enterprises, or GSEs). And the two giants enjoyed many advantages from that parentage. Fannie and Freddie have long operated in a sort of limbo as a result, neither fish nor fowl. Both carry the implicit guarantee that if something went truly wrong, the government would come along and make it right.
And so it has. Bondholders are happy today. Stockholders are not. As I write, Fannie Mae is down 80% today. Freddie Mac is down 75%. I have no flag in either camp, but I certainly have no sympathy for the stockholders. Anyone who gave them a fair look could see that both GSEs were ticking time bombs.
Tuesday, September 9, 2008
Friday, August 29, 2008
تموز أنت ربيعنا
قصيدة للشاعر والاكاديميالفلسطيني الكبير د. أحمد حسن المقدسي( خاص بعرب تايمز)قصيدة مهداة الى المناضل السيدحسن نصرالله ورفاقه في النصر
لله ِ دَرّك قد حَمَيت َ حِـماناوالنصر ُ حَلـَّـَق َ في فـَضاء ِ سمـانايا صانع َ الأمجاد ِ كيف أتيتنا ؟أهديتنا نصرا ً وغيرُ ك خانـاأثبت َّ أن ّ النصر َ محض ُ إرادة ٍ والنصر ُ كان أمامـَنا البُرْهـانـاكنت َ الصَدوق َ وكان وعدُ ك َ صادقا ًلم تَخذِ ل ِ الأنصار َ والخِلانـافَوَثَبْت َ والفرسان ُ حولك َ عُصْبة ٌ أ ُسْـد ٌ إذا داعي الجهاد ِ دعانـاورجالك َ الأبطال ُ حولك َكلهُم ْأنـا التفــت َّ وجدْ تهم عُـقبا نـافإذا علي ٌّ سـاكن ٌ بنفوسِــهم وإذا حسين ٌ يسـكن ُ الأبد انــاأوْلَمْــت َ من جُثث ِ العدو ِ وليمـة ًأشْبَعْـت َ منها الد ُّود َ والغِـربانـافوعدتـَنـا ، وأتيْـت َ بالنصر ِ الكبير ِوعاد َ جيش ُ الخاسـئين َ مُـهـانـا***
ما كنت ُ يوما ً مُنـْشِدا ً في جَوقَـَـة ٍوَفـْق َ العَطاء ِ يُدبِّـج ُ الأوزانـاهي َ سُنة ُ الأحرار ِ في زَمن ِ الرذيلة ِوالخنـا : أن ينصروا الفرسـاناكم كنت ُ أطمح ُ في ارتواء ِ حُشاشتي ورجـعت ُ عن ْ آبارهـم ظمآنـايا أيها الصقـْر ُ المحلـِّـق ُ عاليـا ًوالآخرون تحولوا جـُرذانـانظـِّـف ْ لنا بيروت َ من ْ أوساخِهاوأعـِـد ْ الى عليائـه ِ لبنانـاتلك َ الأفاعي أخرجت ْ أنيابهـا وبـَنـَـت ْ على حـُلـُم ِ الخـَـراب ِ رِهانـاوتبادلوا الأنخاب َ مع ْ أسيادِهم سَـقـْط ُ الرجال ِ يُعاهــد ُ الشيـطانـاأطفَأت َ نا ر َ الطائفية ِ بعدمـا قـَـدَحوا الزناد َ ليُشعلوا النيرانـاأوّاه ُ كم أرْعبْتـَـهم حين َ الحسام ُإلى رقاب ِ الخائنين َ تدانـىفإذا بسَـعْـد يسْتجير ُ بجَـعْجـَـع ٍووليـدُهم يستـَنهِـض ُ الزُّعرانـالا ..لا تـُفاوض ْ زُمْـرة َ الشيطان ِ لا دِيْـن ٌ لمن يتوسَّـل ُ الشيـطانالا تـَلـْمَسَـن َّ يد َ الخيانة ِ والخنوع ِ ولا تـُـشَـرِّف ْ بالعِناق ِ جبانـافأولاء ِ خِـصيـان ٌ لدى أسيادهمدَعْـهُمْ لدى أسيادهم خِصْيانـامِـن ْ بعـد ِ مـا أذللت َ سيدَهمبساحات ِ الوغى ، هل تلتقي الأقنانـا ؟فكبيرُهم شَرَف ٌ لـه لو أنَّ' ليفني ' ترتديــه ِ لِنـَعْـلِها ' جُـربانـــا 'وشريْفـُهم فَخْــر ٌ له لو ' كوندوليزا 'عَـيَّنـَـته ببيتِـها سَـعْدانـادَعْهـم سيحترقون َ في نيرانِـهـمفالنار ُ تأكل ُ بعضـَها أحيانـا***
بيروت ُ يا وَجـَع القصيدة ِ لم أزل رَغـْـم َ المـَشيب ِ بعشقها ولهانـايا أيها الشيب ُ المُـعَـتـَّق ُ في المفارق ِ لـم أزل ْ بـِلـَواعـِجي نشـوانابيروت ُ أعوام تـُفرِّق ُ بيننـا لا هُنـْت ِ أنت ِ ولا ترابُك ِ هانـاهاتي كؤوس َ العشق ِ نشرب ُ خمرَهالا ضـَيْرَ لو خمر ُ الهوى أعمانـافلـَطالما آسَيْـت ِ جرح َ مُناضل ٍولكـل ِّ مُشْـتاق ٍ فـَتـَحْت ِ جَنانـالا تـُرْضِعي قطط َ الطوائف ِ بعدماقتلوا المسيح َ ودنسـوا الفـُرْقـانالافرق َ بين موحـِّـد ٍ ومُـثـَـلـِّـث ٍفـَلِمَسْـلخ ِ الأعداء ِ سِيْــق َ كِلانـالا فـــرْق َ في دين العدو ِ إذاالضحية ُ تعبد ُ الإنجيـل َ أو قرآنـابل ْ مَـن ْ تعَشـَّـى مِــن ْ أهِـلـَّـتِنـاســيجعل ُ – في غد ٍ – إفطارَه صُلباناذبحوك ِ يا بيروت ُ مرات ٍ مضت ْوكما نهضت ِ سَـتـَنهضين َ الآنـا***
يا لابـسا ً وَجَـع َ العروبة ِ حَـرْبَة ً نـَجـْـلاء َ ترقص ُ في صدور ِ عِـدانالولاكَ لــم تُفتـَـح ْ زنازين ٌ ولا حُـرِّية ٌ رفــَّـت ْ علـى أسـرانافـَلـْتـَهنئي أم َ الأسير ِ وزغردي فالشِّــبل ُ عاد َ بمجــدِه ِ مُـزدانـابشراك ِ يا أم الشهيد ِ فهللـي مـا عـاد َ رقـْـمَـا ً في العراء ِ مُهانـاودلال ُ بعد َ اليوم ِ تـَمشـُـط ُ شعرَها وببيـتها .. تتوسَّـط ُ الأحضـانا***
يا راوي َ التاريخ ِ حَـدِّ ث ْ عن فتى ًمَـلأ البلاد َ مَناعـة ً وأمـاناحَـدِّ ث ْ عن الأحرار ِ كيف تـَسَنـَّمواالعليـاء َ وانتـَصبوا بها فرسـاناحـَدِّ ث ْ عن الأمجاد ِ ضيعَها صعاليك ُالفسـاد ِ وضيـَّعوا الإنسـانالو أن َّ موجـات ِ الفسـاد ِ تفجرت ْ فوق َ الهضاب ِ لأحدثت ْ بركـاناتلك َ العـَواهـر ُ قايضت ْ أوطاننـا وتـَرَبـَّعت َ مـِن فوقنـا تيجـانايتحدثون عن الكرامة ِ بعـدمامـَسـَحوا غـُبار َ نِعالهم بـِلِحانافالحاكم ُ العربي ُّ قَـوَّاد ٌ هنـاك َوبيننـا يـَتـَمثــَّـل ُ الرحمـانـاوالحاكم ُ العربي ُّ سمـسـار ٌ يُقد ِّمناإلـى حاخـامهم قـُربانـالـو كان مـِثلـُك َ في العروبـة ِ قادة ٌ ما دنـَّـس َ الأوباش ُ طـُهر َ ذ ُرانـاالكـل ُّ تاجر َ بالقضيـة ِ فاغتنــى والشــعب ُ كان لوحــده ِ الخـَسْـرانـاكي يَـخلـُـدوا في حـُكـْـم ِ هاتيك َ المـزارع ِ أصبحوا لِعـَدونا الأعوانـامَـن ْ باع َ أولى القِـبلتين ِ وخاننــاهـل يـَنـْتـَخي لـِيُحرِّر َ الأوطانـا ؟إني لأسأ ل ُ : أي ُّ جيـش ٍ مِـن جيوش ِ المـُلْهمين َ لأرضـه ِ قد صانـا ؟هـذي جيوش ٌ مـا أتت ْ إلآ لتقمـَـع َ شـعبَها وتـُرَسـِّـخ َ الأدراناونضالـُها قتـْل ُ الشعوب ِ فكلـما ذبَحَــت ْ بريئـا ً ألـْبـِـسَـت ْ نيشـانا***
قــَرْن ٌ مضى من نكبة ٍ لهزيمــة ٍوجيوشــُـهم تـَتـَصَيَّـد ُ الفِئرانـاقـرن ٌ مضى والعاهرات ُ تسوسُــناوتـَسوقـُنا في حَقـْلها قـُطْعانـاحتى إذا عَرَّيْتـَــهم وفضحتـَــهمزادوا علـى طـُغيانِهم طـُغيانـافـَتـَعرَّت ِ الحِمْـلان ُ فـــوق َ عروشِهاوتـَصَنـَّموا بعروشـِـهم حِـملانـاهــم عِـلـَّـة ُ الأوطان عَـز َّ عِلاجها وتـَمـَـددوا في جـِسـْـمنا سَـرَطاناإني أرى ؟ بطـشـا ً وأفواهـا ً مـُكَمـَّمـَـة ً وشعبا ً خانعـا ً ومـُـدانـاها إنهـم ملأوا الجروح َ بِقـَيْحِـهم فأتـَيت َ تـــزرع ُ جرْحـنا ريحـاناإن ْ تـَـرْج ُ من تلك المقابر ِ نـُصْرَ ة ً أوْلـى بأن ْ تـَسْــتـَنـْهِض َ الأكفـانالـو كـان غيـرُك صادقـا ً حَقــَّـا ً لأدَّينـا علـى جـِلبابـه ِ الأركانـالكنـَّه في الحرب ِ أضعف ُ من أتان ٍ فـي الهروب ِ يُسـابِق ُ الغزلانـايـا أمـة ً رَهَــنت ْ مَصائرهـابأيدي المُـفسِـدين َ فأحـْرَزَت ْ خـذلانـاكـم مجرم ٍ سَــــيظل يجثـُـم ُ فوقنــاويَسـومُنا فوق الهوان ِ هوانـا ؟يا أمــة ً بَـلـَغ َ النـِّـفاق ُ بها لأن ْتنسـى الإلـه َ وتعْـبُد الســُّـلطاناما دامت ِ الأوطان ُ تحكمها الفطائس ُسـوف َ نغـدوا كلـُنـا أقـْنـانا***
أللـه ُ أكبر ُ كيف زلزلت َ العُروش َ فكنـت َ تحـت َ عروشـِـهـم بركـانامـا أروع َ النصـر َ الكبير َ لأمـة ٍ كـم عاشـت ِ النكـَسـا ت ِ والخـُسْـراناحـتى غـَـدَ ت ْ أُمْـثـُولة ً وحِكـاية ً أحزانـُهـا تتوالـد ُ الأحزانـانصْـر ٌ يـَهـل ُّ وقد حـَسِبْنا الإنكِسار طـواه ُ مَـع ْ أحلامنـا وطوانـاصِـرت َ الصـُـداع َ لِطـُغـْمة ٍ في غـَفلة ٍ رَكبـت ْ ظُهـور َ الناس ِ والأوطـانالولاك َ لا نصـر ٌ يـُغازل ُ مُقلتـيأو بسـمة تتوسـَّـد ُ الأجفانـاهـذي نواميس ُ الحيـاة ِ فسـوفتـُؤكـل ُ إن ْ تكن ْ مُستضعَفا ً ومُهانـافي الغابة ِ الصـَّمـاء ِ تكمن ُ عِبْرة ٌفالطير ُ فيهـا تأكـل ُ الديدانـاوعلى جبين ِ الدهر ِ تسكن ُ حِكْمــة ٌشـَـرَف ُ الفتى ألا يموت َ جبانـاوفـَـضيلة ُ النصر ِ المـُـظفـَّر أنـهقـد زادنـا بحقوقنـا إيمـانا***تمـّـوز ُ يحملنـا إلى شُـرُفاتِـه ِ ويُـقيـم ُ في صحرائنـا بسـتاناتمـوز ُ بالنصـر ِ العظيم ِ مـُحَـلـِّـق ٌ وقوافـل ُ الأفراح ِ فـوق َ رُبانـاتمـوز ُ بعــد َ اليوم ِ أنــت َ ربيعُنا ولـَـسوف َ نشطب ُ مِـن ْ غـَـد ٍ نـَيْـسانا***
يا سـيد َ النصر ِ الجميل ِ تحيَّـة ًكـل ُّ الشعوب ِ بحبكـم تتفـانىفي الفـِعْل ِ، فعلـُـك َقاطع ٌ، وإذا نطقـْت َنـَطقـْت َ مِنْ سِحر ِ البـَيـان ِ بيـاناأصبحـت َ للتحرير ِ عنوانـا ً وهـُم ْصـاروا لكـل ِّ خيانة ٍ عنوانـا
لله ِ دَرّك قد حَمَيت َ حِـماناوالنصر ُ حَلـَّـَق َ في فـَضاء ِ سمـانايا صانع َ الأمجاد ِ كيف أتيتنا ؟أهديتنا نصرا ً وغيرُ ك خانـاأثبت َّ أن ّ النصر َ محض ُ إرادة ٍ والنصر ُ كان أمامـَنا البُرْهـانـاكنت َ الصَدوق َ وكان وعدُ ك َ صادقا ًلم تَخذِ ل ِ الأنصار َ والخِلانـافَوَثَبْت َ والفرسان ُ حولك َ عُصْبة ٌ أ ُسْـد ٌ إذا داعي الجهاد ِ دعانـاورجالك َ الأبطال ُ حولك َكلهُم ْأنـا التفــت َّ وجدْ تهم عُـقبا نـافإذا علي ٌّ سـاكن ٌ بنفوسِــهم وإذا حسين ٌ يسـكن ُ الأبد انــاأوْلَمْــت َ من جُثث ِ العدو ِ وليمـة ًأشْبَعْـت َ منها الد ُّود َ والغِـربانـافوعدتـَنـا ، وأتيْـت َ بالنصر ِ الكبير ِوعاد َ جيش ُ الخاسـئين َ مُـهـانـا***
ما كنت ُ يوما ً مُنـْشِدا ً في جَوقَـَـة ٍوَفـْق َ العَطاء ِ يُدبِّـج ُ الأوزانـاهي َ سُنة ُ الأحرار ِ في زَمن ِ الرذيلة ِوالخنـا : أن ينصروا الفرسـاناكم كنت ُ أطمح ُ في ارتواء ِ حُشاشتي ورجـعت ُ عن ْ آبارهـم ظمآنـايا أيها الصقـْر ُ المحلـِّـق ُ عاليـا ًوالآخرون تحولوا جـُرذانـانظـِّـف ْ لنا بيروت َ من ْ أوساخِهاوأعـِـد ْ الى عليائـه ِ لبنانـاتلك َ الأفاعي أخرجت ْ أنيابهـا وبـَنـَـت ْ على حـُلـُم ِ الخـَـراب ِ رِهانـاوتبادلوا الأنخاب َ مع ْ أسيادِهم سَـقـْط ُ الرجال ِ يُعاهــد ُ الشيـطانـاأطفَأت َ نا ر َ الطائفية ِ بعدمـا قـَـدَحوا الزناد َ ليُشعلوا النيرانـاأوّاه ُ كم أرْعبْتـَـهم حين َ الحسام ُإلى رقاب ِ الخائنين َ تدانـىفإذا بسَـعْـد يسْتجير ُ بجَـعْجـَـع ٍووليـدُهم يستـَنهِـض ُ الزُّعرانـالا ..لا تـُفاوض ْ زُمْـرة َ الشيطان ِ لا دِيْـن ٌ لمن يتوسَّـل ُ الشيـطانالا تـَلـْمَسَـن َّ يد َ الخيانة ِ والخنوع ِ ولا تـُـشَـرِّف ْ بالعِناق ِ جبانـافأولاء ِ خِـصيـان ٌ لدى أسيادهمدَعْـهُمْ لدى أسيادهم خِصْيانـامِـن ْ بعـد ِ مـا أذللت َ سيدَهمبساحات ِ الوغى ، هل تلتقي الأقنانـا ؟فكبيرُهم شَرَف ٌ لـه لو أنَّ' ليفني ' ترتديــه ِ لِنـَعْـلِها ' جُـربانـــا 'وشريْفـُهم فَخْــر ٌ له لو ' كوندوليزا 'عَـيَّنـَـته ببيتِـها سَـعْدانـادَعْهـم سيحترقون َ في نيرانِـهـمفالنار ُ تأكل ُ بعضـَها أحيانـا***
بيروت ُ يا وَجـَع القصيدة ِ لم أزل رَغـْـم َ المـَشيب ِ بعشقها ولهانـايا أيها الشيب ُ المُـعَـتـَّق ُ في المفارق ِ لـم أزل ْ بـِلـَواعـِجي نشـوانابيروت ُ أعوام تـُفرِّق ُ بيننـا لا هُنـْت ِ أنت ِ ولا ترابُك ِ هانـاهاتي كؤوس َ العشق ِ نشرب ُ خمرَهالا ضـَيْرَ لو خمر ُ الهوى أعمانـافلـَطالما آسَيْـت ِ جرح َ مُناضل ٍولكـل ِّ مُشْـتاق ٍ فـَتـَحْت ِ جَنانـالا تـُرْضِعي قطط َ الطوائف ِ بعدماقتلوا المسيح َ ودنسـوا الفـُرْقـانالافرق َ بين موحـِّـد ٍ ومُـثـَـلـِّـث ٍفـَلِمَسْـلخ ِ الأعداء ِ سِيْــق َ كِلانـالا فـــرْق َ في دين العدو ِ إذاالضحية ُ تعبد ُ الإنجيـل َ أو قرآنـابل ْ مَـن ْ تعَشـَّـى مِــن ْ أهِـلـَّـتِنـاســيجعل ُ – في غد ٍ – إفطارَه صُلباناذبحوك ِ يا بيروت ُ مرات ٍ مضت ْوكما نهضت ِ سَـتـَنهضين َ الآنـا***
يا لابـسا ً وَجَـع َ العروبة ِ حَـرْبَة ً نـَجـْـلاء َ ترقص ُ في صدور ِ عِـدانالولاكَ لــم تُفتـَـح ْ زنازين ٌ ولا حُـرِّية ٌ رفــَّـت ْ علـى أسـرانافـَلـْتـَهنئي أم َ الأسير ِ وزغردي فالشِّــبل ُ عاد َ بمجــدِه ِ مُـزدانـابشراك ِ يا أم الشهيد ِ فهللـي مـا عـاد َ رقـْـمَـا ً في العراء ِ مُهانـاودلال ُ بعد َ اليوم ِ تـَمشـُـط ُ شعرَها وببيـتها .. تتوسَّـط ُ الأحضـانا***
يا راوي َ التاريخ ِ حَـدِّ ث ْ عن فتى ًمَـلأ البلاد َ مَناعـة ً وأمـاناحَـدِّ ث ْ عن الأحرار ِ كيف تـَسَنـَّمواالعليـاء َ وانتـَصبوا بها فرسـاناحـَدِّ ث ْ عن الأمجاد ِ ضيعَها صعاليك ُالفسـاد ِ وضيـَّعوا الإنسـانالو أن َّ موجـات ِ الفسـاد ِ تفجرت ْ فوق َ الهضاب ِ لأحدثت ْ بركـاناتلك َ العـَواهـر ُ قايضت ْ أوطاننـا وتـَرَبـَّعت َ مـِن فوقنـا تيجـانايتحدثون عن الكرامة ِ بعـدمامـَسـَحوا غـُبار َ نِعالهم بـِلِحانافالحاكم ُ العربي ُّ قَـوَّاد ٌ هنـاك َوبيننـا يـَتـَمثــَّـل ُ الرحمـانـاوالحاكم ُ العربي ُّ سمـسـار ٌ يُقد ِّمناإلـى حاخـامهم قـُربانـالـو كان مـِثلـُك َ في العروبـة ِ قادة ٌ ما دنـَّـس َ الأوباش ُ طـُهر َ ذ ُرانـاالكـل ُّ تاجر َ بالقضيـة ِ فاغتنــى والشــعب ُ كان لوحــده ِ الخـَسْـرانـاكي يَـخلـُـدوا في حـُكـْـم ِ هاتيك َ المـزارع ِ أصبحوا لِعـَدونا الأعوانـامَـن ْ باع َ أولى القِـبلتين ِ وخاننــاهـل يـَنـْتـَخي لـِيُحرِّر َ الأوطانـا ؟إني لأسأ ل ُ : أي ُّ جيـش ٍ مِـن جيوش ِ المـُلْهمين َ لأرضـه ِ قد صانـا ؟هـذي جيوش ٌ مـا أتت ْ إلآ لتقمـَـع َ شـعبَها وتـُرَسـِّـخ َ الأدراناونضالـُها قتـْل ُ الشعوب ِ فكلـما ذبَحَــت ْ بريئـا ً ألـْبـِـسَـت ْ نيشـانا***
قــَرْن ٌ مضى من نكبة ٍ لهزيمــة ٍوجيوشــُـهم تـَتـَصَيَّـد ُ الفِئرانـاقـرن ٌ مضى والعاهرات ُ تسوسُــناوتـَسوقـُنا في حَقـْلها قـُطْعانـاحتى إذا عَرَّيْتـَــهم وفضحتـَــهمزادوا علـى طـُغيانِهم طـُغيانـافـَتـَعرَّت ِ الحِمْـلان ُ فـــوق َ عروشِهاوتـَصَنـَّموا بعروشـِـهم حِـملانـاهــم عِـلـَّـة ُ الأوطان عَـز َّ عِلاجها وتـَمـَـددوا في جـِسـْـمنا سَـرَطاناإني أرى ؟ بطـشـا ً وأفواهـا ً مـُكَمـَّمـَـة ً وشعبا ً خانعـا ً ومـُـدانـاها إنهـم ملأوا الجروح َ بِقـَيْحِـهم فأتـَيت َ تـــزرع ُ جرْحـنا ريحـاناإن ْ تـَـرْج ُ من تلك المقابر ِ نـُصْرَ ة ً أوْلـى بأن ْ تـَسْــتـَنـْهِض َ الأكفـانالـو كـان غيـرُك صادقـا ً حَقــَّـا ً لأدَّينـا علـى جـِلبابـه ِ الأركانـالكنـَّه في الحرب ِ أضعف ُ من أتان ٍ فـي الهروب ِ يُسـابِق ُ الغزلانـايـا أمـة ً رَهَــنت ْ مَصائرهـابأيدي المُـفسِـدين َ فأحـْرَزَت ْ خـذلانـاكـم مجرم ٍ سَــــيظل يجثـُـم ُ فوقنــاويَسـومُنا فوق الهوان ِ هوانـا ؟يا أمــة ً بَـلـَغ َ النـِّـفاق ُ بها لأن ْتنسـى الإلـه َ وتعْـبُد الســُّـلطاناما دامت ِ الأوطان ُ تحكمها الفطائس ُسـوف َ نغـدوا كلـُنـا أقـْنـانا***
أللـه ُ أكبر ُ كيف زلزلت َ العُروش َ فكنـت َ تحـت َ عروشـِـهـم بركـانامـا أروع َ النصـر َ الكبير َ لأمـة ٍ كـم عاشـت ِ النكـَسـا ت ِ والخـُسْـراناحـتى غـَـدَ ت ْ أُمْـثـُولة ً وحِكـاية ً أحزانـُهـا تتوالـد ُ الأحزانـانصْـر ٌ يـَهـل ُّ وقد حـَسِبْنا الإنكِسار طـواه ُ مَـع ْ أحلامنـا وطوانـاصِـرت َ الصـُـداع َ لِطـُغـْمة ٍ في غـَفلة ٍ رَكبـت ْ ظُهـور َ الناس ِ والأوطـانالولاك َ لا نصـر ٌ يـُغازل ُ مُقلتـيأو بسـمة تتوسـَّـد ُ الأجفانـاهـذي نواميس ُ الحيـاة ِ فسـوفتـُؤكـل ُ إن ْ تكن ْ مُستضعَفا ً ومُهانـافي الغابة ِ الصـَّمـاء ِ تكمن ُ عِبْرة ٌفالطير ُ فيهـا تأكـل ُ الديدانـاوعلى جبين ِ الدهر ِ تسكن ُ حِكْمــة ٌشـَـرَف ُ الفتى ألا يموت َ جبانـاوفـَـضيلة ُ النصر ِ المـُـظفـَّر أنـهقـد زادنـا بحقوقنـا إيمـانا***تمـّـوز ُ يحملنـا إلى شُـرُفاتِـه ِ ويُـقيـم ُ في صحرائنـا بسـتاناتمـوز ُ بالنصـر ِ العظيم ِ مـُحَـلـِّـق ٌ وقوافـل ُ الأفراح ِ فـوق َ رُبانـاتمـوز ُ بعــد َ اليوم ِ أنــت َ ربيعُنا ولـَـسوف َ نشطب ُ مِـن ْ غـَـد ٍ نـَيْـسانا***
يا سـيد َ النصر ِ الجميل ِ تحيَّـة ًكـل ُّ الشعوب ِ بحبكـم تتفـانىفي الفـِعْل ِ، فعلـُـك َقاطع ٌ، وإذا نطقـْت َنـَطقـْت َ مِنْ سِحر ِ البـَيـان ِ بيـاناأصبحـت َ للتحرير ِ عنوانـا ً وهـُم ْصـاروا لكـل ِّ خيانة ٍ عنوانـا
Monday, August 25, 2008
Worthless Economy & Bankrupted Financial Institutions
When I first started in the financial industry in 1981 we were worried, but only about one company -the Chrysler Corporation. Prior to that, Continental Illinois was in the forefront. Later in my career, in 1998, it was Long Term Capital Management, the hedge fund founded by John Meriwether that captured our attention. Then we had Enron/WorldCom, and by early 2008 Bear Stearns became a worry and then a problem that needed fixing.
All of these events were isolated, dealt with, often with either direct assistance from Uncle Sam or an effort coordinated by our benevolent/socialist government financial authorities. Markets would become unnerved, fear would grow, and then the Government would step in to make sure that the systemic risk that had finally come to the surface didn't melt the entire planet.
But this is where it is "different this time". Not only is it different, I think it may be unprecedented in nature. When I look at my Bloomberg monitor each day that contains my 100 most important indices, companies, commodities, bonds, bond spreads, preferred shares, etc, I shudder. The reason I shudder is that my screen doesn't have just one "problem child". It looks like a screen that contains many "institutions that are near bankruptcy".
The Failed Fannie Mae/Freddie Mac Experiment
Let us talk about the "Fannie Mae/Freddie Mac Experiment. That experiment has now clearly failed and a bailout/privatization/nationalization of Fannie and Freddie is now being planned. While I have been expecting nationalization for quite a while, I am intrigued as to why the bailout is taking so long to accomplish. This is where it gets interesting and dangerous from a systemic point of view. My hunch is that the reason for the delay is that the Treasury Department is "peeling back the onion" on Fannie/Freddie and finding out just how much of a mess the two of them are in.
At last count, Freddie had Level 3 Assets of $151 billion while Fannie had $65 billion, for a not-so-paltry sum of $216 billion. When Freddie announced their results a couple of quarters back, they disclosed that most of their Level 3 Assets were of the "sub-prime" variety (the type of assets that started the whole Credit Crisis in the first place). They are also littered with Alt-A mortgages and are leveraged to the hilt.
Just how bad is the news at Fannie/Freddie? On Friday morning, Moody's downgraded their outstanding preferred stock 5 notches from A1 to Baa3 (a slight gradation above junk) and their Bank Financial Strength Ratings (BSFR) to D+ from B- (one/half notch above D, which is reserved for companies in default). According to Moody's, "the downgrade of the BFSR reflects Moody's view that Fannie Mae and Freddie Mac's financial flexibility to manage potential volatility in its mortgage risk exposures is constricted.....in particular, given recent market movement, Moody's believe these companies currently have limited access to common and preferred equity capital at economically attractive terms."
Moody stated : "The GSE's more limited financial flexibility also restricts their ability to pursue their public mission of providing liquidity, stability and affordability to the US housing Market. Fannie Mae and Freddie Mac currently make up approximately 75% of the mortgage market in the US. A reduction in the capacity of these companies to support the US mortgage market could have significant repercussions for the US economy. In an effort to thwart broader economic effects, Moody's believes the likelihood of direct support from the United States Treasury has increased."
Let me put it this way. "the american people" are about to become owners in Fannie and Freddie, whether we like it or not. The capital markets have shut on them both as their stocks trade in the $2-5 range, down from the $70-80 level just a year ago. And the yield on the outstanding preferred shares hovers in the 18-23% range, quite the bargain if they keep paying, but also it is the market's way of saying "beware the value trap", as the preferred shares may pay another dividend or two, but that is about it.
When the Treasury peels back the onion, I believe they will find a hornet's nest. I think we will see an initial bailout of $100 billion or so, with 2/3-3/4 going to Fannie (as it is a larger organization). The scenario I foresee however, just as happened at Merrill Lynch, Lehman Brothers and Morgan Stanley, is that they came to the financing window expecting to have borrowed enough, but then find they have to keep coming back repeatedly until the buyers go away or until "We The People" have thrown at least $500 billion at Fannie/Freddie to get them back on their feet again. This will also likely take an Act of Congress to raise the Treasury's Debt ceiling quite dramatically.
I will now identify who might be near bankruptcy.
What strikes me the most about impaired companies, whether they are automakers, airline companies, banks, brokers or GSE's, is that they seem to sing the same tune, or have the same pattern of behavior. This is how I have attempted in the past to identify what would be in trouble in the future (whether that was just to avoid their stocks and bonds from the long side or to try to profit from their missteps on the short side). It is a pattern that is not terribly dissimilar from the emo.
The first tip-off or "tell" is when a company releases earnings or some sort of positive announcement and the stock falls. Another important tell is the credit spreads of the debt as the company begins to widen. Then, the company will usually announce that "all is well" and is so great that they will buy back stock and not "cut the common dividend". After this comes the "acceptance" phase and write-offs/write-downs are announced and then some Sovereign Wealth Fund or Private Equity firm will inject capital or that a company within the same group will buy a "strategic stake". After a brief pop in the stock and short covering rally, the stock begins to fall further and credit spreads begin to blow out and preferred shares get hammered. Then, uh-oh, more write-downs and more write-offs and yes, another capital raise and finally a dividend cut to 'preserve capital'.
Sound familiar yet...?
All of this goes on for quite some time, until your stock price is so low that you would have to issue so many shares in a secondary offering that you dilute your shareholder base until it is unrecognizable. With this new share offering your credit, while still rated investment grade, trades like junk, and your preferred shares rise to double digit yields. Further, the former strategic buyers, Sovereign Wealth Funds and Private Equity firms have taken such a beating that there are no further buyers.
Yet the write-downs and write-offs continue unmercifully as the economy slows and credit is all but cut off. Eventually, dividends go to zero.
There are only a few things that can happen to the companies that are near bankruptcy "The Green Mile". Either you make it to the electric chair (in the movie "The Green Mile" it was called "Old Sparky") and cease to exist or you are eventually forced into the arms of a better capitalized institution. Over time, I expect a bit of both but mostly of the latter.
Keep in mind that if too many are allowed into the arms of Big Sparky", it will have a systemic effect as all the institutions are so intertwined because when one group of institutions are forced to mark their bonds to market, others are forced to do the same, ending in an ugly daisy chain. I think the chain has formed and that many are about to "walk the mile".
In the end, perhaps years from now, many banks and brokers will be merged into an international list of "good banks" or "bankrupted banks". Who are the Good Banks? They are likely Bank of America, Bank of New York, JP Morgan Chase, Northern Trust, State Street, US Bancorp, ABN Amro, Deutsche Bank, BNP Paribas, Royal Bank of Scotland, Barclays, Allianz and a few others.
The cycle begins with denial, and ultimately ends up in despair. At first, the company denounces that anything is wrong, but Mr. Market has a way of sniffing out who is imitating Pinocchio. Ultimately, the company ends up in despair when they need/want to raise capital to just be able to function normally, but alas, they cannot because the window of opportunity to raise capital has shut.
Let's use Lehman Brothers as the poster child of this sort of behavior.Before the credit crisis started, Lehman, at the time known for its savvy timing, suddenly came to market for $5 billion of long-term bonds when they didn't need capital-or did they know something was awry as I suspect? Last year, with the Credit Crisis in its infancy, Lehman announced a $100,000,000 stock buyback. The shares, as you would expect, popped on the news, but of course no stock was ever re-purchased. As the stock began to sell off, they kept saying that capital was not needed.
Then, on June 9, 2008 they sold 143,000,000 shares at $28 per share. As hedge fund manager David Einhorn said, "They've raised billions of dollars they said they didn't need to replace losses they said they didn't have." In between was an enormous preferred stock deal-75,900,000 shares at $25 per share at a rate of 7.95%. Those shares now change hands at $15 per share for a yield of 13.1%. Its pretty hard to turn a profit when your cost of capital is greater than 10%.
During this time, in January, the company actually raised its common dividend by 15% year-over-year. They have written off north of $8 billion since the Credit Crisis began and when they release earnings (or lack thereof) next month, estimates are for another round of $2-4 billion of write-downs. They have reportedly been trying to shop $40 billion of impaired real estate and they are mired in all sorts of Alt A, sub-prime, CMBS and CDO's and CLO's.
The best part is that they said they "shrank their balance sheet" when in fact they were sold to an "off balance sheet subsidiary" that they own part of. The bonds weren't sold, they were just "relocated". I sure wish I could do that when I make a mistake. And lets not forget that the Federal Reserve opened up the discount window to primary/dealers so that they could off-load a bunch of nuclear waste on to the Fed's balance sheet, which now looks like one big hedge fund in drag. And then the SEC temporarily changed short selling rules for 'the Group of 19' (the GSE's and Primary Dealers) for a few weeks, resulting in a short squeeze, but their shares still hobble along at recent lows.
On Friday, there was a rumor that the Korean Development Bank would buy Lehman, but again that turned out to be hogwash. And if they wanted to raise debt, like they say, "lotsa luck". Their bonds trade around +500 basis points to treasuries but my guess is that even if they could get deal done, they would have to come in the 10% range, again, uneconomic.
So now we have the recipe and an example for "a bankrupted institution":
Common stock too low to issue new shares.
Preferred stock yield too high to issue new shares economically.
Issuing debt is uneconomic.
More write-offs coming in days to come.
Business trends are awful.
Denial.
Now that we have identified the "poster child", let's find a few more... Or sadly, more than a few.
Zions Bancorp
Equity has traded down from $75 to $25.
Tried to issue a $200 million preferred stock offering at 9.5% but only was able to sell $47 million.
Their debt trades in the open market approximately 1,000 basis points above Treasuries, IF you can sell them, or 13 14%.
They are geographically in Utah, but spread out to Florida, Nevada and Arizona at the top of housing to take advantage of great opportunities.
They say they need $200-300 million capital. Good luck.
They maintained their common dividend.
KeyCorp
Common Stock has traded down from $40 to $11.
Preferred Stock trades at 13%.
Debt trades in the market at 10-11% dividend.
Cut dividend in half in July, still yields 6.5% even while they lose money.
Fifth Third Bank
Equity has traded down from $60 to $14.
There are no preferred issues outstanding.
Debt trades in 10-11% range if you can sell it.
Cut dividend by 75%.
Washington Mutual
Equity has traded from $40 to $3.
No preferred outstanding except convertible preferred.
Debt trades in the 20-25% range.
Cut the dividend to $0.01 per share in April.
Has admitted they will lose money for the next several years.
National City
Equity has traded from $40 to $5.
Preferred stock trades at 13-15%.
Sold a huge amount of shares at $5 per share in April.
Cut dividend to $0.01 per share in April.
Regions Financial
Equity down from $40 to $8.
Preferred Stock Trading at 10%.
Debt trades in the 10-11% range, if you can sell it.
Cut dividend by 75% in June.
Needs to raise $2 billion, according to Sanford Bernstein.
General Motor/GMAC
Equity has traded from $80 to $10.
Preferred stock trades in 18% area.
Short-term debt trades in 25-30% range.
Long-term debt trades in 17% range.
Eliminated common dividend in July.
Ford/Ford Motor Credit Co
Equity has traded from $60 to $4.
Preferred stock trades in 16-17% range.
Long term debt trades in the 18-20% range.
Eliminated common dividend in September.
Wachovia
Equity has traded from $60 to $14.
Issued a $3.5 billion "hybrid security" in February that now trades at 11%.
S&P has stated they cannot issue any more hybrids.
Sold 92,000,000 shars of a preferred stock in December at 8% that now trades $18 or 11%.
Cut common dividend twice since February to $.05 a share or 90%.
Debt trades at 9.5-10.5%.
CitiGroup
Equity has traded from 60 to 9.
Preferred Stock trades in 12% range.
Outstanding debt trades in 12-14% range.
Cut common dividend by 66%.
Sold 91,000,000 shares of common at $11 in April 2008.
Who are in the "Limping but Not Dead Man Walking Crowd"?
These companies would include those that may be 'too big to fail', have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include:
Citi
Merrill Lynch
Morgan Stanley
Suntrust
Legg Mason
Capital One
AIG
MetLife
Prudential
Summary - This is NOT Shaping Up to be a Pretty Couple of Years
I am certain that I have missed a bunch of names on the "Bankruptcy List", but the pattern is rather easy to discern. As I stated early on, when we have one or two firms in trouble, we can deal with it. But when we add rising unemployment, explosive debt growth in recent years and non-performing assets to many hobbled financial institutions with trillions of dollars of exposure, it is hard not to be concerned.
For this reason, I remain cautious towards credit, expect a hard sell-off in stocks into 2010, consolidation in the financial services industry and some pain, like it or not. I am just not sure where the capital will come from to bail everyone out simultaneously. And even if the capital showed up, it would likely come at a cost that is uneconomic and would likely be dilutive for many years to come.
All of these events were isolated, dealt with, often with either direct assistance from Uncle Sam or an effort coordinated by our benevolent/socialist government financial authorities. Markets would become unnerved, fear would grow, and then the Government would step in to make sure that the systemic risk that had finally come to the surface didn't melt the entire planet.
But this is where it is "different this time". Not only is it different, I think it may be unprecedented in nature. When I look at my Bloomberg monitor each day that contains my 100 most important indices, companies, commodities, bonds, bond spreads, preferred shares, etc, I shudder. The reason I shudder is that my screen doesn't have just one "problem child". It looks like a screen that contains many "institutions that are near bankruptcy".
The Failed Fannie Mae/Freddie Mac Experiment
Let us talk about the "Fannie Mae/Freddie Mac Experiment. That experiment has now clearly failed and a bailout/privatization/nationalization of Fannie and Freddie is now being planned. While I have been expecting nationalization for quite a while, I am intrigued as to why the bailout is taking so long to accomplish. This is where it gets interesting and dangerous from a systemic point of view. My hunch is that the reason for the delay is that the Treasury Department is "peeling back the onion" on Fannie/Freddie and finding out just how much of a mess the two of them are in.
At last count, Freddie had Level 3 Assets of $151 billion while Fannie had $65 billion, for a not-so-paltry sum of $216 billion. When Freddie announced their results a couple of quarters back, they disclosed that most of their Level 3 Assets were of the "sub-prime" variety (the type of assets that started the whole Credit Crisis in the first place). They are also littered with Alt-A mortgages and are leveraged to the hilt.
Just how bad is the news at Fannie/Freddie? On Friday morning, Moody's downgraded their outstanding preferred stock 5 notches from A1 to Baa3 (a slight gradation above junk) and their Bank Financial Strength Ratings (BSFR) to D+ from B- (one/half notch above D, which is reserved for companies in default). According to Moody's, "the downgrade of the BFSR reflects Moody's view that Fannie Mae and Freddie Mac's financial flexibility to manage potential volatility in its mortgage risk exposures is constricted.....in particular, given recent market movement, Moody's believe these companies currently have limited access to common and preferred equity capital at economically attractive terms."
Moody stated : "The GSE's more limited financial flexibility also restricts their ability to pursue their public mission of providing liquidity, stability and affordability to the US housing Market. Fannie Mae and Freddie Mac currently make up approximately 75% of the mortgage market in the US. A reduction in the capacity of these companies to support the US mortgage market could have significant repercussions for the US economy. In an effort to thwart broader economic effects, Moody's believes the likelihood of direct support from the United States Treasury has increased."
Let me put it this way. "the american people" are about to become owners in Fannie and Freddie, whether we like it or not. The capital markets have shut on them both as their stocks trade in the $2-5 range, down from the $70-80 level just a year ago. And the yield on the outstanding preferred shares hovers in the 18-23% range, quite the bargain if they keep paying, but also it is the market's way of saying "beware the value trap", as the preferred shares may pay another dividend or two, but that is about it.
When the Treasury peels back the onion, I believe they will find a hornet's nest. I think we will see an initial bailout of $100 billion or so, with 2/3-3/4 going to Fannie (as it is a larger organization). The scenario I foresee however, just as happened at Merrill Lynch, Lehman Brothers and Morgan Stanley, is that they came to the financing window expecting to have borrowed enough, but then find they have to keep coming back repeatedly until the buyers go away or until "We The People" have thrown at least $500 billion at Fannie/Freddie to get them back on their feet again. This will also likely take an Act of Congress to raise the Treasury's Debt ceiling quite dramatically.
I will now identify who might be near bankruptcy.
What strikes me the most about impaired companies, whether they are automakers, airline companies, banks, brokers or GSE's, is that they seem to sing the same tune, or have the same pattern of behavior. This is how I have attempted in the past to identify what would be in trouble in the future (whether that was just to avoid their stocks and bonds from the long side or to try to profit from their missteps on the short side). It is a pattern that is not terribly dissimilar from the emo.
The first tip-off or "tell" is when a company releases earnings or some sort of positive announcement and the stock falls. Another important tell is the credit spreads of the debt as the company begins to widen. Then, the company will usually announce that "all is well" and is so great that they will buy back stock and not "cut the common dividend". After this comes the "acceptance" phase and write-offs/write-downs are announced and then some Sovereign Wealth Fund or Private Equity firm will inject capital or that a company within the same group will buy a "strategic stake". After a brief pop in the stock and short covering rally, the stock begins to fall further and credit spreads begin to blow out and preferred shares get hammered. Then, uh-oh, more write-downs and more write-offs and yes, another capital raise and finally a dividend cut to 'preserve capital'.
Sound familiar yet...?
All of this goes on for quite some time, until your stock price is so low that you would have to issue so many shares in a secondary offering that you dilute your shareholder base until it is unrecognizable. With this new share offering your credit, while still rated investment grade, trades like junk, and your preferred shares rise to double digit yields. Further, the former strategic buyers, Sovereign Wealth Funds and Private Equity firms have taken such a beating that there are no further buyers.
Yet the write-downs and write-offs continue unmercifully as the economy slows and credit is all but cut off. Eventually, dividends go to zero.
There are only a few things that can happen to the companies that are near bankruptcy "The Green Mile". Either you make it to the electric chair (in the movie "The Green Mile" it was called "Old Sparky") and cease to exist or you are eventually forced into the arms of a better capitalized institution. Over time, I expect a bit of both but mostly of the latter.
Keep in mind that if too many are allowed into the arms of Big Sparky", it will have a systemic effect as all the institutions are so intertwined because when one group of institutions are forced to mark their bonds to market, others are forced to do the same, ending in an ugly daisy chain. I think the chain has formed and that many are about to "walk the mile".
In the end, perhaps years from now, many banks and brokers will be merged into an international list of "good banks" or "bankrupted banks". Who are the Good Banks? They are likely Bank of America, Bank of New York, JP Morgan Chase, Northern Trust, State Street, US Bancorp, ABN Amro, Deutsche Bank, BNP Paribas, Royal Bank of Scotland, Barclays, Allianz and a few others.
The cycle begins with denial, and ultimately ends up in despair. At first, the company denounces that anything is wrong, but Mr. Market has a way of sniffing out who is imitating Pinocchio. Ultimately, the company ends up in despair when they need/want to raise capital to just be able to function normally, but alas, they cannot because the window of opportunity to raise capital has shut.
Let's use Lehman Brothers as the poster child of this sort of behavior.Before the credit crisis started, Lehman, at the time known for its savvy timing, suddenly came to market for $5 billion of long-term bonds when they didn't need capital-or did they know something was awry as I suspect? Last year, with the Credit Crisis in its infancy, Lehman announced a $100,000,000 stock buyback. The shares, as you would expect, popped on the news, but of course no stock was ever re-purchased. As the stock began to sell off, they kept saying that capital was not needed.
Then, on June 9, 2008 they sold 143,000,000 shares at $28 per share. As hedge fund manager David Einhorn said, "They've raised billions of dollars they said they didn't need to replace losses they said they didn't have." In between was an enormous preferred stock deal-75,900,000 shares at $25 per share at a rate of 7.95%. Those shares now change hands at $15 per share for a yield of 13.1%. Its pretty hard to turn a profit when your cost of capital is greater than 10%.
During this time, in January, the company actually raised its common dividend by 15% year-over-year. They have written off north of $8 billion since the Credit Crisis began and when they release earnings (or lack thereof) next month, estimates are for another round of $2-4 billion of write-downs. They have reportedly been trying to shop $40 billion of impaired real estate and they are mired in all sorts of Alt A, sub-prime, CMBS and CDO's and CLO's.
The best part is that they said they "shrank their balance sheet" when in fact they were sold to an "off balance sheet subsidiary" that they own part of. The bonds weren't sold, they were just "relocated". I sure wish I could do that when I make a mistake. And lets not forget that the Federal Reserve opened up the discount window to primary/dealers so that they could off-load a bunch of nuclear waste on to the Fed's balance sheet, which now looks like one big hedge fund in drag. And then the SEC temporarily changed short selling rules for 'the Group of 19' (the GSE's and Primary Dealers) for a few weeks, resulting in a short squeeze, but their shares still hobble along at recent lows.
On Friday, there was a rumor that the Korean Development Bank would buy Lehman, but again that turned out to be hogwash. And if they wanted to raise debt, like they say, "lotsa luck". Their bonds trade around +500 basis points to treasuries but my guess is that even if they could get deal done, they would have to come in the 10% range, again, uneconomic.
So now we have the recipe and an example for "a bankrupted institution":
Common stock too low to issue new shares.
Preferred stock yield too high to issue new shares economically.
Issuing debt is uneconomic.
More write-offs coming in days to come.
Business trends are awful.
Denial.
Now that we have identified the "poster child", let's find a few more... Or sadly, more than a few.
Zions Bancorp
Equity has traded down from $75 to $25.
Tried to issue a $200 million preferred stock offering at 9.5% but only was able to sell $47 million.
Their debt trades in the open market approximately 1,000 basis points above Treasuries, IF you can sell them, or 13 14%.
They are geographically in Utah, but spread out to Florida, Nevada and Arizona at the top of housing to take advantage of great opportunities.
They say they need $200-300 million capital. Good luck.
They maintained their common dividend.
KeyCorp
Common Stock has traded down from $40 to $11.
Preferred Stock trades at 13%.
Debt trades in the market at 10-11% dividend.
Cut dividend in half in July, still yields 6.5% even while they lose money.
Fifth Third Bank
Equity has traded down from $60 to $14.
There are no preferred issues outstanding.
Debt trades in 10-11% range if you can sell it.
Cut dividend by 75%.
Washington Mutual
Equity has traded from $40 to $3.
No preferred outstanding except convertible preferred.
Debt trades in the 20-25% range.
Cut the dividend to $0.01 per share in April.
Has admitted they will lose money for the next several years.
National City
Equity has traded from $40 to $5.
Preferred stock trades at 13-15%.
Sold a huge amount of shares at $5 per share in April.
Cut dividend to $0.01 per share in April.
Regions Financial
Equity down from $40 to $8.
Preferred Stock Trading at 10%.
Debt trades in the 10-11% range, if you can sell it.
Cut dividend by 75% in June.
Needs to raise $2 billion, according to Sanford Bernstein.
General Motor/GMAC
Equity has traded from $80 to $10.
Preferred stock trades in 18% area.
Short-term debt trades in 25-30% range.
Long-term debt trades in 17% range.
Eliminated common dividend in July.
Ford/Ford Motor Credit Co
Equity has traded from $60 to $4.
Preferred stock trades in 16-17% range.
Long term debt trades in the 18-20% range.
Eliminated common dividend in September.
Wachovia
Equity has traded from $60 to $14.
Issued a $3.5 billion "hybrid security" in February that now trades at 11%.
S&P has stated they cannot issue any more hybrids.
Sold 92,000,000 shars of a preferred stock in December at 8% that now trades $18 or 11%.
Cut common dividend twice since February to $.05 a share or 90%.
Debt trades at 9.5-10.5%.
CitiGroup
Equity has traded from 60 to 9.
Preferred Stock trades in 12% range.
Outstanding debt trades in 12-14% range.
Cut common dividend by 66%.
Sold 91,000,000 shares of common at $11 in April 2008.
Who are in the "Limping but Not Dead Man Walking Crowd"?
These companies would include those that may be 'too big to fail', have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include:
Citi
Merrill Lynch
Morgan Stanley
Suntrust
Legg Mason
Capital One
AIG
MetLife
Prudential
Summary - This is NOT Shaping Up to be a Pretty Couple of Years
I am certain that I have missed a bunch of names on the "Bankruptcy List", but the pattern is rather easy to discern. As I stated early on, when we have one or two firms in trouble, we can deal with it. But when we add rising unemployment, explosive debt growth in recent years and non-performing assets to many hobbled financial institutions with trillions of dollars of exposure, it is hard not to be concerned.
For this reason, I remain cautious towards credit, expect a hard sell-off in stocks into 2010, consolidation in the financial services industry and some pain, like it or not. I am just not sure where the capital will come from to bail everyone out simultaneously. And even if the capital showed up, it would likely come at a cost that is uneconomic and would likely be dilutive for many years to come.
Deep Recession Ahead
The world economy is slowing down. The global financial system is falling apart.
The whole situation is a mess...a disaster for investors...a catastrophe for homeowners...a Waterloo for the financial industry. But it is God’s gift to us.
First...there is Ben Bernanke on the cover of an american magazine, looking rather serious, as he appeared before the U.S. Congress.The poor man was expected to explain what was going on. What could he say, but that the economy was beset by “numerous difficulties?” He had to play the politician, in other words – the cunning dumbbell...avoiding at all costs saying anything useful or true. Of course, it is true enough to say that the economy faces troubles, but that description of it hides so many absurdities...and so many errors...and so many vanities and hallucinations.
Why didn’t he just come right out and explain that Americans have been living beyond their means...and now they’re being forced to cut back? That’s what retail sales figures showed – that consumer weren’t spending so much. What’s surprising about that? Nothing at all...
But the news struck economists and financial reporters like a UFO sighting – they didn’t know what to make of it.
There’s also a photo of a long line in front of IndyMac’s door – waiting to get their money back. Mr. Bernanke might have also explained what was happening in the financial industry. Wall Street banks...Fannie Mae...Freddie Mac...IndyMac...Bear Stearns and the whole lot...made their money by peddling debt to people who already had too much. What did you think...that they could do that forever?
The headman at the Fed would have done us all a service, in my opinion, if he leveled with the nation.
“Look,” he might have said, “the prosperity we have enjoyed for the last few years has been largely an illusion; it was based on debt, leverage, and speculation. We all know you can’t get rich by spending more than you earn. And you can create real prosperity by borrowing money and spending it on consumer items. We’re now paying the price for those mistakes. Let’s just get it over with.”
Those words may or may not have been on call for him. He might have doodled something like that on the back of an envelope on the way to Capitol Hill. Maybe they came to him in a dream.
But when he got in front of the microphone, he realized that the truth is the last thing anyone wants to hear. He wisely avoided it, sticking with the stock phrases and standard wording of economic obfuscation.
Meanwhile, down the street, the U.S. president shifted from soporific twaddle to breathtaking imbecility.
“To the extent that we find weaknesses [in the financial system] we’ll move,” said the president of all the Americans, George W. Bush.
Mr. Bush has a weakness himself – for movement. He has presided over the most fidgety administration since Franklin Roosevelt. Not content to sit still, he spent more, borrowed more, and stirred up more dust than any previous administration. Now, he proposes a vast new expansion of the war against Free Enterprise.
Bailing out Bear Stearns, providing tax refund checks, and nationalizing Fannie and Freddie “signal a weakening of the administration’s ideological commitment to free-market principles,” says the Financial Times .
This administration has no commitment to any principles, as near as we can see. All it took was a terrorist attack in New York, and it threw over its entire conservative foreign policy in favor of reckless interventionism. And now we have a crisis in the financial industry. Of course, the big lenders, spenders and speculators are only getting what they deserve. Still, the Bush Administration is mounting an invasion.
I predict that it will have roughly the same results. Sweden, of all places, faced a major financial meltdown in 1991. The government hastened to intervene with a bailout. The cost – if translated to an American-scale economy – was more than $1 trillion. Mr. Bush’s intervention will cost that much or more.
When it looked as though inflation had the upper hand, the forces of deflation began a major counter-offensive. The artillery barrage began only a couple of weeks ago. Since then, the battle has shifted dramatically.
The balance of economic forces is contractionary, and inflation is not completely whipped. .
The banks are collapsing. The roof is caving in on housing.
So far, the black goo has confounded economists. The world economy is slowing down. People are cutting back on their use of energy. In the United States, families are taking vacations closer to home, for example.
Also, the Bernanke Fed was hinting strongly that it wouldn’t be lowering rates further – and might even be raising them. Under those conditions, the dollar was widely expected to go up...and the price of oil to go down.
Speculators are wagering that the United States will soften up the dollar still further...they’re betting on more trouble, that is... They’re dumping oil, because it will inevitably and eventually respond to the drop in economic activity. But they’re buying gold, because they also want safety – from the dollar...from defaults...from bankruptcies...and from the claptrap solutions of public officials.
If the ongoing deleveraging of the US economy weakened US consumption,the economy might go into a deep recession. US fiscal deficits would then soar and long-term US interest rates might jump. This could make the debt dynamics of the US government look very unpleasant. A flight from the dollar and dollar bonds might even ensue.
The whole situation is a mess...a disaster for investors...a catastrophe for homeowners...a Waterloo for the financial industry. But it is God’s gift to us.
First...there is Ben Bernanke on the cover of an american magazine, looking rather serious, as he appeared before the U.S. Congress.The poor man was expected to explain what was going on. What could he say, but that the economy was beset by “numerous difficulties?” He had to play the politician, in other words – the cunning dumbbell...avoiding at all costs saying anything useful or true. Of course, it is true enough to say that the economy faces troubles, but that description of it hides so many absurdities...and so many errors...and so many vanities and hallucinations.
Why didn’t he just come right out and explain that Americans have been living beyond their means...and now they’re being forced to cut back? That’s what retail sales figures showed – that consumer weren’t spending so much. What’s surprising about that? Nothing at all...
But the news struck economists and financial reporters like a UFO sighting – they didn’t know what to make of it.
There’s also a photo of a long line in front of IndyMac’s door – waiting to get their money back. Mr. Bernanke might have also explained what was happening in the financial industry. Wall Street banks...Fannie Mae...Freddie Mac...IndyMac...Bear Stearns and the whole lot...made their money by peddling debt to people who already had too much. What did you think...that they could do that forever?
The headman at the Fed would have done us all a service, in my opinion, if he leveled with the nation.
“Look,” he might have said, “the prosperity we have enjoyed for the last few years has been largely an illusion; it was based on debt, leverage, and speculation. We all know you can’t get rich by spending more than you earn. And you can create real prosperity by borrowing money and spending it on consumer items. We’re now paying the price for those mistakes. Let’s just get it over with.”
Those words may or may not have been on call for him. He might have doodled something like that on the back of an envelope on the way to Capitol Hill. Maybe they came to him in a dream.
But when he got in front of the microphone, he realized that the truth is the last thing anyone wants to hear. He wisely avoided it, sticking with the stock phrases and standard wording of economic obfuscation.
Meanwhile, down the street, the U.S. president shifted from soporific twaddle to breathtaking imbecility.
“To the extent that we find weaknesses [in the financial system] we’ll move,” said the president of all the Americans, George W. Bush.
Mr. Bush has a weakness himself – for movement. He has presided over the most fidgety administration since Franklin Roosevelt. Not content to sit still, he spent more, borrowed more, and stirred up more dust than any previous administration. Now, he proposes a vast new expansion of the war against Free Enterprise.
Bailing out Bear Stearns, providing tax refund checks, and nationalizing Fannie and Freddie “signal a weakening of the administration’s ideological commitment to free-market principles,” says the Financial Times .
This administration has no commitment to any principles, as near as we can see. All it took was a terrorist attack in New York, and it threw over its entire conservative foreign policy in favor of reckless interventionism. And now we have a crisis in the financial industry. Of course, the big lenders, spenders and speculators are only getting what they deserve. Still, the Bush Administration is mounting an invasion.
I predict that it will have roughly the same results. Sweden, of all places, faced a major financial meltdown in 1991. The government hastened to intervene with a bailout. The cost – if translated to an American-scale economy – was more than $1 trillion. Mr. Bush’s intervention will cost that much or more.
When it looked as though inflation had the upper hand, the forces of deflation began a major counter-offensive. The artillery barrage began only a couple of weeks ago. Since then, the battle has shifted dramatically.
The balance of economic forces is contractionary, and inflation is not completely whipped. .
The banks are collapsing. The roof is caving in on housing.
So far, the black goo has confounded economists. The world economy is slowing down. People are cutting back on their use of energy. In the United States, families are taking vacations closer to home, for example.
Also, the Bernanke Fed was hinting strongly that it wouldn’t be lowering rates further – and might even be raising them. Under those conditions, the dollar was widely expected to go up...and the price of oil to go down.
Speculators are wagering that the United States will soften up the dollar still further...they’re betting on more trouble, that is... They’re dumping oil, because it will inevitably and eventually respond to the drop in economic activity. But they’re buying gold, because they also want safety – from the dollar...from defaults...from bankruptcies...and from the claptrap solutions of public officials.
If the ongoing deleveraging of the US economy weakened US consumption,the economy might go into a deep recession. US fiscal deficits would then soar and long-term US interest rates might jump. This could make the debt dynamics of the US government look very unpleasant. A flight from the dollar and dollar bonds might even ensue.
Sunday, August 24, 2008
عصر الاحباط
أيا ابن كلا وبياع الحكايا.....................ياصانع الشحاطة والحطاطة والأماني
بدشداشة الهشاشة وهلا هلا...................تعجز دونها الكلمات وصفا والمعاني
وشاروخ يشبه الصاروخ مسابقا..................السكارى والمترنحين طربا بهذيان
يامن لاتعرف من الدنيا الا..............................النميمة والغنيمة والكاني ماني
ويامن عشقت الانبطاح ساجدا.............................متعلقا بكل أفاق متبجح جبان
ويامن اتخذت من السكون منهجا...................مرتكيا ونافخا بين الزوايا والأركان
وقلبت بفرح الليل نهارا ........................وقاومت بهمة الصناديد تقلب الأزمان
أتراك قادرا على عاديات الزمان.........................أم تذوق الذل مفعما بالهوان
مستجديا العون من هنا وهناك............متأرجحا بين الصدقات والمكارم والاحسان
يامن يمر الدهر محلقا بك سريعا............وتعد الحضارات وأهلها الدقائق والثواني
أما آن الأوان أيها المرتكي ......................والمضطجع أن تهب واقفا كالانسان
وتنفض غبار السبات كالممات........................وتترك التغني بالخوالي والأشجان
وتترك الآهات والنغمات جانبا...................وتلولح الأفاعي بين الزمامير والأغاني
وترنح الحشاشةوأهل الكيف والبشاشة...............بصفة ألصقت بهشاشة العربان
تاركا ترنح البطاريق والسلاحف........................لاحقا بركب الحضارات كالغزلان
وكفانا بشريعة الغاب مطية.......................وكفا الله البلاد شر القراصنة والحيتان
وشر الشقاق والنفاق وأهله................................وأهل التعلل بالذرائع والألوان
وشر كل حاسد بزوال نعمة ...........................وكل حاقد مزمن وخائن بحسبان
وبشر الصابرين على الأذى بيوم........................يشرق فيه الحق على الأكوان
وتبيض وجوه بلقاء ربها..............................وتسود أخرى بعذاب علقم متفان
فسارعوا ياأهل الهمم والشيم ..................الى الجد طمعا بجنات النعيم والرضوان
بدشداشة الهشاشة وهلا هلا...................تعجز دونها الكلمات وصفا والمعاني
وشاروخ يشبه الصاروخ مسابقا..................السكارى والمترنحين طربا بهذيان
يامن لاتعرف من الدنيا الا..............................النميمة والغنيمة والكاني ماني
ويامن عشقت الانبطاح ساجدا.............................متعلقا بكل أفاق متبجح جبان
ويامن اتخذت من السكون منهجا...................مرتكيا ونافخا بين الزوايا والأركان
وقلبت بفرح الليل نهارا ........................وقاومت بهمة الصناديد تقلب الأزمان
أتراك قادرا على عاديات الزمان.........................أم تذوق الذل مفعما بالهوان
مستجديا العون من هنا وهناك............متأرجحا بين الصدقات والمكارم والاحسان
يامن يمر الدهر محلقا بك سريعا............وتعد الحضارات وأهلها الدقائق والثواني
أما آن الأوان أيها المرتكي ......................والمضطجع أن تهب واقفا كالانسان
وتنفض غبار السبات كالممات........................وتترك التغني بالخوالي والأشجان
وتترك الآهات والنغمات جانبا...................وتلولح الأفاعي بين الزمامير والأغاني
وترنح الحشاشةوأهل الكيف والبشاشة...............بصفة ألصقت بهشاشة العربان
تاركا ترنح البطاريق والسلاحف........................لاحقا بركب الحضارات كالغزلان
وكفانا بشريعة الغاب مطية.......................وكفا الله البلاد شر القراصنة والحيتان
وشر الشقاق والنفاق وأهله................................وأهل التعلل بالذرائع والألوان
وشر كل حاسد بزوال نعمة ...........................وكل حاقد مزمن وخائن بحسبان
وبشر الصابرين على الأذى بيوم........................يشرق فيه الحق على الأكوان
وتبيض وجوه بلقاء ربها..............................وتسود أخرى بعذاب علقم متفان
فسارعوا ياأهل الهمم والشيم ..................الى الجد طمعا بجنات النعيم والرضوان
Thursday, August 21, 2008
تصبحوا على خير يا عرب..... الرجاء عدم التشخير
يمتلك العرب ثروات هائلة , يخُزن كثيرا منها في البنوك و الاسواق المالية العالمية و يستعمل بعضها لبناء الفنادق الراقية و مصانع البسكوت و الجحوش الفائزة في سباقات الفروسية و تلبية الحاجات الشخصية لاقلية من الاشخاص ذوي النفوذ و السلطة. لكننا كأمة ثرية بلاموال و المصادر الطبيعية و البشرية ما زلنا نعيش في عصر الجاهلية و ما زلنا نائمون.
اجل نحن نائمون على فراش من حرير مع مومس ساحرة الهيكل و الجمال!!
نحن امة تحب النوم لاننا في النوم نجد راحة في عدم التفكير و لذة في الاحلام
و في حب النوم تقطن احلامنا رغم سريان الزمان...الزمان يسير بلا وقوف على مدار الساعة و الايام, و نحن بلى ما زلنا نائمون... نعم نحن العرب النائمون و في النوم غياب عن العمل و الإنجاز.
رغم المساحات الزراعية الساشعة في السودان التي إن زُرعت بتمويل خليجي قد تعمل على مكافحة البطالة و الجوع فما زال فقراء العرب ينامون جوعا, لان شيوخنا و اسيادنا في الفنادق الراقية ما زالوا مع المومس ساحرة الجمال نائمون.
رغم توفر المصادر الطبيعية في شتى انحاء العالم العربي كمواد البناء فما زال الكثير منا بلا سقوف و حيطان ينامون لان شيوخنا و اسيادنا في سباق الجحوش يفتخرون و إن صحوا من النوم هذا ما يشاهدون.
نحن من اكبر الاسواق الإستيرادية في العالم, نستورد الغذاء و العلاج و السيارات و كل ما تصنعه البشرية, الا اننا عاجزون على بناء مصانع كل الحاجات التي نستوردها, لان اسيادنا في نومهم على الحرير في الفنادق و القصور المنعزلة عن غالبية شعوب الامة ما زالوا في المومس ساحرة الجمال يحلمون.
اجل نحن العرب النائمون, نائمون عن الساحة السياسية العالمية, نائمون عن المشاركة في الحفلات الرياضية العالمية,في المعارك نائمون, في المزارع نائمون, في المصانع و المعامل نائمون, في مختبرات البحث و العلوم, نعم نحن العرب النائمون.
رغم إرتفاع سعر برميل البترول فما زلنا نائمون و حتى دفع و دحل برميل فارغ في العاب بكين ما زلنا على ذلك عاجزون..أين المكرمات الملكية و الاميرية السامية!! الا يوجد هناك شيخ او ملك او امير ثري غير نائم في هذه الامة قادر على توفير مبلغا من المال لمجموعة من الاطفال و الشباب كي يتدربوا و يتقنوا مهاراتهم الرياضية على الساحة العالمية!!ام اننا بحاجة الى اكبر فندق و اكبر كاسينو كي تمارسوا مهارتكم و دعاراتكم!!
الحاكم الذي يهرب صورته و صورة زوجتة على كلاسين الفريق الرياضي, اليس هذا الحاكم قادر على فتح مصنع للكلاسين المزيفة بصور العائلة الملكية في بلده بدل إستيرادها من إيطاليا او فرنسا!!
الحاكم الذي يمتلك كلسونا يستعمله لخزن الاصوات و العطور, اليس هذا الحاكم قادر على تجميع هذه الصوتيات و العطور في زجاجات تقليدية تباع للسواح لجلب العملة الصعبة و تشغيل اياد عاملة.
الحاكم الذي ما زال نائما مع مومس اجنبية في اشهر فنادق باريس, اليس هذا الحاكم قادر على شراء تذكرة سفر للمومس كي تزور بلاده و يستفيد خادما دولارا او اثنين من البغشيش!!! نعم قادر !! اسف , خلل فني!!
ها هي ايران تطلق الاقمار الصناعية و تصنع الصواريخ طويلة المدى رغم القيود و الحصار, و انتم ما زلتم نائمون.
ها هي الصين تصدر جميع الانواع و الاشكال و الالوان الى كافة انحاء المعمورة و انتم ما زلتم في النوم تستوردون.
ها هي البرازيل, ها هي اوروبا, و قريبا جدا ها هي افريقيا في اسواقكم ..... وانتم نائمون.
ايها الحكام العرب في كل مكان.. في المخامر و الملاهي الليلية, في الفنادق و على الشواطىء الساحلية, في برك السباحة على متن الطائرات الخاصة و على طاولات القمار في الكاسينوهات الفاخرة, على تلال الشلوج التزليجية و في اعراس المنح النفطية... حان الان ميعاد الرجوع الى النوم.
تصبحوا على خير يا عرب!!
حلما سعيدا و مومس جميلا في فندقا جديدا!!
الرجاء عدم التشخير
America's War Economy
Yes, America's economy is a war economy. Not a "manufacturing" economy. Not an "agricultural" economy. Nor a "service" economy. Not even a "consumer" economy.Seriously, I looked into your eyes, America, saw deep into your soul. So let's get honest and officially call it "America's Outrageous War Economy." Admit it: Americans secretly love their war economy. And that's the answer to Jim Grant's thought-provoking question last month in the Wall Street Journal -- "Why No Outrage?"
There really is only one answer: Deep inside Americans love war. They want war. Need it. Relish it. Thrive on war. War is in our genes, deep in their DNA. War excites their economic brain. War drives their entrepreneurial spirit. War thrills the American soul. Oh just admit it, they have a love affair with war.They love "America's Outrageous War Economy."
Americans passively zone out playing video war games. They nod at 90-second news clips of Afghan war casualties and collateral damage in Georgia. They laugh at Jon Stewart's dark comedic news and Ben Stiller's new war spoof "Tropic Thunder" ... all the while silently, by default, they're cheering on their leaders as they aggressively expand "America's Outrageous War Economy," a relentless machine that needs a steady diet of war after war, feeding on itself, consuming our values, always on the edge of self-destruction.
Why else are Americans so eager and willing to surrender 54% of their tax dollars to a war machine, which consumes 47% of the world's total military budgets?
Why are there more civilian mercenaries working for no-bid private war contractors than the total number of enlisted military in Iraq (180,000 to 160,000), at an added cost to taxpayers in excess of $200 billion and climbing daily?
Why do they shake their collective heads "yes" when their commander-in-chief proudly tells them he is a "war president;" and his party's presidential candidate chants "bomb, bomb, bomb Iran," as if "war" is a celebrity hit song?
Why do their spineless Democrats let an incompetent, blundering executive branch hide hundreds of billions of war costs in sneaky "supplemental appropriations" that are more crooked than Enron's off-balance-sheet deals?
Why have Washington's 537 elected leaders turned the governance of the American economy over to 42,000 greedy self-interest lobbyists?
And why earlier this year did their "support-our-troops" "war president" resist a new GI Bill because, as he said, his military might quit and go to college rather than re-enlist in his war; now they continue paying the Pentagon's warriors huge $100,000-plus bonuses to re-up so they can keep expanding "America's Outrageous War Economy?" Why? Because Americans secretly love war!
They've lost our moral compass: The contrast between today's leaders and the 56 signers of the Declaration of Independence in 1776 shocks their conscience. Today war greed trumps morals. During the Revolutionary War their leaders risked their lives and fortunes; many lost both.
Today it's the opposite: Too often their leaders' main goal is not public service but a ticket to building a personal fortune in the new "America's Outrageous War Economy," often by simply becoming a high-priced lobbyist.
Ultimately, the price of their greed may be the fulfillment of Kevin Phillips' warning in "Wealth and Democracy:" "Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out."
'National defense' a propaganda slogan selling a war economy?But wait,
you ask: Isn't our $1.4 trillion war budget essential for "national defense" and "homeland security?" Don't Americans have to protect ourselves?
Sorry folks, but their leaders have degraded those honored principles to advertising slogans. They're little more than flag-waving excuses used by neocon war hawks to disguise the buildup of private fortunes in "America's Outrageous War Economy."
America may be a ticking time bomb, but they are threatened more by enemies within than external terrorists, by ideological fanatics on the left and the right. Most of all, they are under attack by their elected leaders who are motivated more by pure greed than ideology. They terrorize them, brainwashing them into passively letting them steal their money to finance "America's Outrageous War Economy," the ultimate "black hole" of corruption and trickle-up economics.
You think I'm kidding? I'm maybe too harsh? Sorry but others are far more brutal. Listen to the ideologies and realities eating at America's soul.
1. Their toxic 'war within' is threatening America's soul
How powerful is the Pentagon's war machine? Trillions in dollars. But worse yet: Their mindset is now locked deep in their DNA, in their collective conscience, in America's soul. Their love of war is enshrined in the writings of neocon war hawks like Norman Podoretz, who warns the Iraq War was the launching of "World War IV: The Long Struggle Against Islamofascism," a reminder that they could be occupying Iraq for a hundred years. His WW IV also reminded us of the coming apocalyptic end-of-days "war of civilizations" predicted by religious leaders in both Christian and Islamic worlds two years ago.
In contrast, this ideology has been challenged in works like Craig Unger's "American Armageddon: How the Delusions of the Neoconservatives and the Christian Right Triggered the Descent of America -- and Still Imperil Americans' Future."
Unfortunately, neither threat can be dismissed as "all in their minds" nor as merely ideological rhetoric. Trillions of tax dollars are in fact being spent to keep the Pentagon war machine aggressively planning and expanding wars decades in advance, including spending billions on propaganda brainwashing naïve Americans into co-signing "America's Outrageous War Economy." Yes, they really love war, but that "love" is toxic for America's soul.
2. America's war economy financed on blank checks to greedy
Read Nobel Economist Joseph Stiglitz and Harvard professor Linda Bilmes' "$3 Trillion War." They show how their government's deceitful leaders are secretly hiding the real long-term costs of the Iraq War, which was originally sold to the American taxpayer with a $50 billion price tag and funded out of oil revenues.
But add in all the lifetime veterans' health benefits, equipment placement costs, increased homeland security and interest on new federal debt, and suddenly taxpayers got a $3 trillion war tab!
3. America's war economy has no idea where its money goes
Read Portfolio magazine's special report "The Pentagon's $1 Trillion Problem." The Pentagon's 2007 budget of $440 billion included $16 billion to operate and upgrade its financial system. Unfortunately "the defense department has spent billions to fix its antiquated financial systems [but] still has no idea where its money goes."
And it gets worse: Back "in 2000, Defense's inspector general told Congress that his auditors stopped counting after finding $2.3 trillion in unsupported entries." Yikes, our war machine has no records for $2.3 trillion! How can we trust anything they say?
4. America's war economy is totally 'unmanageable'
For decades Washington has been waving that "national defense" flag, to force the public into supporting "America's Outrageous War Economy." Read John Alic's "Trillions for Military Technology: How the Pentagon Innovates and Why It Costs So Much."
A former Congressional Office of Technology Assessment staffer, he explains why weapon systems cost the Pentagon so much, "why it takes decades to get them into production even as innovation in the civilian economy becomes ever more frenetic and why some of those weapons don't work very well despite expenditures of many billions of dollars," and how "the internal politics of the armed services make weapons acquisition almost unmanageable." Yes, the Pentagon wastes trillions planning its wars well in advance.
There really is only one answer: Deep inside Americans love war. They want war. Need it. Relish it. Thrive on war. War is in our genes, deep in their DNA. War excites their economic brain. War drives their entrepreneurial spirit. War thrills the American soul. Oh just admit it, they have a love affair with war.They love "America's Outrageous War Economy."
Americans passively zone out playing video war games. They nod at 90-second news clips of Afghan war casualties and collateral damage in Georgia. They laugh at Jon Stewart's dark comedic news and Ben Stiller's new war spoof "Tropic Thunder" ... all the while silently, by default, they're cheering on their leaders as they aggressively expand "America's Outrageous War Economy," a relentless machine that needs a steady diet of war after war, feeding on itself, consuming our values, always on the edge of self-destruction.
Why else are Americans so eager and willing to surrender 54% of their tax dollars to a war machine, which consumes 47% of the world's total military budgets?
Why are there more civilian mercenaries working for no-bid private war contractors than the total number of enlisted military in Iraq (180,000 to 160,000), at an added cost to taxpayers in excess of $200 billion and climbing daily?
Why do they shake their collective heads "yes" when their commander-in-chief proudly tells them he is a "war president;" and his party's presidential candidate chants "bomb, bomb, bomb Iran," as if "war" is a celebrity hit song?
Why do their spineless Democrats let an incompetent, blundering executive branch hide hundreds of billions of war costs in sneaky "supplemental appropriations" that are more crooked than Enron's off-balance-sheet deals?
Why have Washington's 537 elected leaders turned the governance of the American economy over to 42,000 greedy self-interest lobbyists?
And why earlier this year did their "support-our-troops" "war president" resist a new GI Bill because, as he said, his military might quit and go to college rather than re-enlist in his war; now they continue paying the Pentagon's warriors huge $100,000-plus bonuses to re-up so they can keep expanding "America's Outrageous War Economy?" Why? Because Americans secretly love war!
They've lost our moral compass: The contrast between today's leaders and the 56 signers of the Declaration of Independence in 1776 shocks their conscience. Today war greed trumps morals. During the Revolutionary War their leaders risked their lives and fortunes; many lost both.
Today it's the opposite: Too often their leaders' main goal is not public service but a ticket to building a personal fortune in the new "America's Outrageous War Economy," often by simply becoming a high-priced lobbyist.
Ultimately, the price of their greed may be the fulfillment of Kevin Phillips' warning in "Wealth and Democracy:" "Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out."
'National defense' a propaganda slogan selling a war economy?But wait,
you ask: Isn't our $1.4 trillion war budget essential for "national defense" and "homeland security?" Don't Americans have to protect ourselves?
Sorry folks, but their leaders have degraded those honored principles to advertising slogans. They're little more than flag-waving excuses used by neocon war hawks to disguise the buildup of private fortunes in "America's Outrageous War Economy."
America may be a ticking time bomb, but they are threatened more by enemies within than external terrorists, by ideological fanatics on the left and the right. Most of all, they are under attack by their elected leaders who are motivated more by pure greed than ideology. They terrorize them, brainwashing them into passively letting them steal their money to finance "America's Outrageous War Economy," the ultimate "black hole" of corruption and trickle-up economics.
You think I'm kidding? I'm maybe too harsh? Sorry but others are far more brutal. Listen to the ideologies and realities eating at America's soul.
1. Their toxic 'war within' is threatening America's soul
How powerful is the Pentagon's war machine? Trillions in dollars. But worse yet: Their mindset is now locked deep in their DNA, in their collective conscience, in America's soul. Their love of war is enshrined in the writings of neocon war hawks like Norman Podoretz, who warns the Iraq War was the launching of "World War IV: The Long Struggle Against Islamofascism," a reminder that they could be occupying Iraq for a hundred years. His WW IV also reminded us of the coming apocalyptic end-of-days "war of civilizations" predicted by religious leaders in both Christian and Islamic worlds two years ago.
In contrast, this ideology has been challenged in works like Craig Unger's "American Armageddon: How the Delusions of the Neoconservatives and the Christian Right Triggered the Descent of America -- and Still Imperil Americans' Future."
Unfortunately, neither threat can be dismissed as "all in their minds" nor as merely ideological rhetoric. Trillions of tax dollars are in fact being spent to keep the Pentagon war machine aggressively planning and expanding wars decades in advance, including spending billions on propaganda brainwashing naïve Americans into co-signing "America's Outrageous War Economy." Yes, they really love war, but that "love" is toxic for America's soul.
2. America's war economy financed on blank checks to greedy
Read Nobel Economist Joseph Stiglitz and Harvard professor Linda Bilmes' "$3 Trillion War." They show how their government's deceitful leaders are secretly hiding the real long-term costs of the Iraq War, which was originally sold to the American taxpayer with a $50 billion price tag and funded out of oil revenues.
But add in all the lifetime veterans' health benefits, equipment placement costs, increased homeland security and interest on new federal debt, and suddenly taxpayers got a $3 trillion war tab!
3. America's war economy has no idea where its money goes
Read Portfolio magazine's special report "The Pentagon's $1 Trillion Problem." The Pentagon's 2007 budget of $440 billion included $16 billion to operate and upgrade its financial system. Unfortunately "the defense department has spent billions to fix its antiquated financial systems [but] still has no idea where its money goes."
And it gets worse: Back "in 2000, Defense's inspector general told Congress that his auditors stopped counting after finding $2.3 trillion in unsupported entries." Yikes, our war machine has no records for $2.3 trillion! How can we trust anything they say?
4. America's war economy is totally 'unmanageable'
For decades Washington has been waving that "national defense" flag, to force the public into supporting "America's Outrageous War Economy." Read John Alic's "Trillions for Military Technology: How the Pentagon Innovates and Why It Costs So Much."
A former Congressional Office of Technology Assessment staffer, he explains why weapon systems cost the Pentagon so much, "why it takes decades to get them into production even as innovation in the civilian economy becomes ever more frenetic and why some of those weapons don't work very well despite expenditures of many billions of dollars," and how "the internal politics of the armed services make weapons acquisition almost unmanageable." Yes, the Pentagon wastes trillions planning its wars well in advance.
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