OPEC's holiday gift to us: Oil at $36 a barrel

Almost nobody got the peak in oil prices right in July.

Looks like it’s the same story on the way down.

Near-term crude futures crashed through $40 a barrel today, falling $3.84 to end at $36.22, the lowest since 2004.

Oil bulls, the Organization of the Petroleum Exporting Countries among them, thought $40 would hold. It did two weeks ago, when crude slid to $40.81 on Dec. 5, only to rebound to nearly $48 four trading sessions later.

This time, despite OPEC’s pledge Wednesday to cut another 2.2 million barrels of daily production, or 8% of the cartel's output, the oil market’s bears showed they’re still in control.

The selling today is partly a function of the expiration Friday of the January oil futures contract. Because of excess supply in the market, oil for current delivery is selling significantly below oil to be delivered in a month or more.

But Peter Beutel, head of energy consulting firm Cameron Hanover in New Canaan, Conn., thinks OPEC unwittingly struck another blow to market psychology Wednesday by emphasizing, at the top of its communique, that the supply cut was 4.2 million barrels.

Whoops -- they meant that was a cumulative 4.2 million, including 2 million barrels already offline since September.

Buyers initially came in on the 4.2-million number, then quickly fled when they realized the new cut was 2.2 million barrels, Beutel said. Oil ended down $3.54 a barrel Wednesday, setting the scene for more selling today.

Maybe we should consider this OPEC’s holiday gift: More relief at the gas pump.

Stephen Schork, head of energy research firm Schork Group in Villanova, Pa., thinks prices could fall to the mid-$20s by early next year, as demand continues to decline amid the global economy's slump.

What's more, he says, too many investors have been betting that $40 would mark the bottom, which means there’s room for psychology to get much more negative now that $40 is history.

"Markets trade on psychology as much as on fundamentals," he said. "No one believed that OPEC had control when prices were going up, and now no one believes they have control on the way down." That begets more selling and keeps potential buyers sidelined, he said.

Beutel said the final low price, whatever it turns out to be, may shock everyone, much the same as the peak of $145 a barrel in July was a shocker.

"Things that go up too much, come down too much," he said.

-- Tom Petruno

Photo: Better to wait to fill up? Prices at a Massachusetts gas station today. Credit: Elise Amendola / Associated Press

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Comments

At 36 dollars per barrel, Exxon Mobil will still bring in at least a billion dollars profit this upcoming quarter. So, no mercy to them. Bring on the holiday cheer. IT'S ON!

Posted by: The word of reason | December 18, 2008 at 04:31 PM

We seriously need to get on with the business of becoming energy independent. While we are doing the happy dance around the pumps with the lower prices OPEC is planning yet more production cuts and will not quit until they achieve their desired price per barrel. The record high prices this past year have done serious damage to our economy and society. It would cost the equivalent of 60 cents per gallon to charge and drive an eelctric car. If all gasoline cars, trucks, and suv's instead had plug-in electric drivetrains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota.WE must move forward with energy independence. We have the knowledge, we have the technology, what America lacks is a plan. Jeff Wilson has a new book out that is beyond awesome. The Manhattan Project of 2009 Energy Independence NOW. He walks you through every aspect of oil, what it is used for besides gas, our depletion of it. The worlds increased need ie 3rd world countries becoming more modernized and consuming more. He explains EVERY alternative energy source and what role they can play to replace oil. His research is backed up with hard data and even includes a time frame and proposed legislative agendas to wean America off oil. www.themanhattanprojectof2009.com

He also has a VERY interesting article posted on the Better Place Blog called How Much Electricity Would It Take To Replace Gasoline you can read it at...http://planet.betterplace.com/profiles/blogs/how-much-electricity-does-it

Posted by: Tay | December 18, 2008 at 04:36 PM

Good news for once ,we are the scewer rather then the screwee. If is time develop alternatives asap and say good bye to the middle east..

Posted by: Steve | December 18, 2008 at 04:50 PM

Great news, but gas prices are going up again, two increases in two days, is it holiday travel gouging or what?

Posted by: jim | December 18, 2008 at 07:42 PM

Now that gasoline prices are down, let's finance a Manhattan Project type effort for an alternative with a $2/gal tax.

Posted by: martscan | December 19, 2008 at 05:14 AM

Martscan, are you nuts? $2/gallon tax? Yes, let's add more taxes to everyone when the economy is so bad. At a +$2/gallon tax, you can say good bye to anything being a semi-reasonable price (i.e. food, clothing, anything that relies on transportation) - thus leading to an increased homeless population and a generation of malnourished families. Oh yes, +$2/gallon tax sounds oh so wonderful.

In reality, people may now just be able to survive the economic crunch because they are not having to put 40% of their paycheck into their gas tank (ok, that was a random number, but the concept holds true - people can afford more when less is being spent to fill their transportation). Leave the taxes alone. People don't need more taxes squeezing them to death.

Posted by: Nick | December 19, 2008 at 11:20 AM

How is oil below $40 a good thing? That means our economy is falling apart faster. People, realize that oil at the current price means our economy is broke. You can thank all the bailouts and the Fed. What a bunch of fools. How can anyone have any confidence in this monetary system full of crooks and manipulators. Gold is looking great.

Posted by: Jim | December 19, 2008 at 11:54 AM

Nick: Am I nuts? Perhaps, my former wife certainly thinks so. But when it comes to our dependency on oil, and the cyclic tread mill of price peaks and troughs with its disruptive effects on our economic lives, not to mention our health and the environment, I don't think so. The whole public discussion of "oil"; offshore drilling, oil company profits, gasoline and diesel prices, fossil fuels, boogie man OPEC, etc...has a certain parallel to the costs of the Iraq war...everyone is against the costs, but no one is willing to sacrifice one dime to reduce the deficit or finance solutions to oil dependence.

Yes, there is hoarding, speculation and manipulation in any market or commodity that is traded in auction fashion, but the basis for all price determination is supply and demand, as we are so vividly witnessing now with current oil prices. If aggregate demand for oil was suppressed intentionally, beyond the effects of a recession, who is to say the price wouldn't drop below $1.00.gal? At that price level a $2.00/gal tax, while onerous to our natural aversion to taxes, would hardly cause the increase in homelessness to which you refer..an unlikely hyperbolic result in any event. As to under nourished families, we have them regardless of the price of gas...join me in voting for increased social services and welfare. While that is another subject, surely the wealthiest country in the world should be expected to care for those of its population who are hungry and ill, wouldn't you agree?

Denmark, with gas prices of $10/gal, has a higher standard of living than the U.S. Why is that? And though 25 years ago they relied on the Mideast for over 90% of their energy needs, today their reliance on the Mideast is 0%. They did it with increased taxes which forced them to develop alternatives...and in the process create new industries, capital formation, jobs and an economy devoid of the perceived whims of OPEC. Denmark produces over 20% of their energy by wind power, the U.S. less than 1%...they recycle heat from coal powered plants to heat homes, they have stiff efficacy standards on building products and appliances, they incinerate trash and recycle that heat into power, over 50% of urban transit is by bike. In short, they punish expensive energy and waste and reward conservation and inexpensive energy. And they do it primarily with taxes...and it works.

Posted by: martscan | December 19, 2008 at 03:30 PM

Fed warns on economic outlook, and cites deflation fears

Money & Co.
Fed warns on economic outlook, and cites deflation fears
12:43 PM, November 19, 2008

Federal Reserve policymakers are expecting the economy to continue to contract through the first half of 2009, and possibly beyond that point, according to the minutes of their last meeting.

They also all but confirmed that they’ll cut their benchmark interest rate again, even though it’s already at a mere 1%.

From the Oct. 28-29 meeting minutes, released today:

Participants generally expected the economy to contract moderately in the second half of 2008 and the first half of 2009, and agreed that the downside risks to growth had increased. While some expected an improving financial situation to contribute to a recovery in growth by mid-2009, others judged that the period of economic weakness could persist for some time.

Participants saw the potential for financial strains to intensify if some investors, such as hedge funds, found it necessary to sell assets and as lending institutions built reserves against losses. Participants were concerned that the negative spiral in which financial strains lead to weaker spending, which in turn leads to higher loan losses and a further deterioration in financial conditions, could persist for a while longer.

As for the next likely move with interest rates:

Members anticipated that economic data over the upcoming inter-meeting period would show significant weakness in economic activity, and some suggested that additional policy easing could well be appropriate at future meetings. In any event, the committee agreed that it would take whatever steps were necessary to support the recovery of the economy.

The Fed also nodded to its fears about a potential broad-based deflation of prices: "Some saw a risk that over time inflation could fall below low levels consistent with the Federal Reserve's dual mandate of price stability and maximum employment," according to the minutes. That's code for deflation.

Some Fed officials felt that "more aggressive easing should reduce the odds of a deflationary outcome."

The government today reported that the consumer price index slid 1% in October. Even excluding food and energy costs, the index was down 0.1%.

A little deflation is a good thing; a lot would be an economic catastrophe. Think Japan 1995-2005. See my recent column on deflation risks, here. http://www.latimes.com/business/la-fi-newpetruno1-2008nov01,1,7570107.column


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I couldn't agree with deflation fears more. We certainly have all the ingredients for a perfect deflationary recipe. Weakening global economies, decreasing inflation rates (save Zimbabwe), rising unemployment, rising govt debt, declining aggregate demand, the ongoing housing bust, incredible excess capacity and mountainous debt, decreasing collateral values and increased credit restrictions...and a finite, corrective monetary policy at the end of the string....as Keith Jackson was wont to say, 'whoa Nellie!' There is nothing in history that says we couldn't emulate Japan's decade long malaise.

Posted by: martscan | November 20, 2008 at 06:26 AM

The Fed's rate at zero? It's no longer a far-fetched idea

11:45 AM, October 30, 2008

Just a day after the Federal Reserve dropped its key short-term interest rate to 1% -- matching the generational low reached in 2003-04 -- the betting is intensifying on another cut.

Trading in futures contracts on the federal funds rate, the Fed’s benchmark, implies a 51.4% probability that the central bank will slash the rate to 0.50% on or before its next meeting on Dec. 16, according to Bloomberg News data.

On Wednesday, the probability of a cut to 0.50% was 32%.

At a minimum, the futures market expects the Fed to take its rate down to 0.75% on Dec. 16.

Rate expectations may be cueing off the government’s report today that the economy shrank at an annualized rate of 0.3% in the third quarter. Although analysts figured the economy had contracted in the period, the details were ugly -- particularly the 3.1% decline in real consumer spending, the biggest drop since the vicious recession that began in 1980.

There are psychological reasons why the Fed would prefer not to cut its rate below 1%. The closer the Fed gets to zero, the more likely that investors will worry the U.S. economy is facing a long period of misery on par with what Japan faced after its real estate markets crashed in the early 1990s.

The Bank of Japan had to maintain its benchmark interest rate at or near zero for most of the 1999-2006 period, before policymakers finally felt comfortable that the economy was in a sustainable recovery.

The wording of the Fed’s statement on Wednesday suggested that "they may [cut] again if necessary, but are probably hoping that they will not have to take the zero-option on rates," said Christopher Rupkey, economist at Bank of Tokyo-Mitsubishi in New York.

Others see more cuts as inevitable. "I think the Fed is going lower," said Tom Higgins, chief economist at investment firm Payden & Rygel in L.A. "Zero is the floor."

Given the severity of the credit crunch and what that has wrought in the economy, he said, the Fed’s attitude can only be, "Why not throw everything at it?"

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Marty's

Present monetary policy, from here down, is virtually maxed out and meaningless. Lenders are not going to loan to borrowers who are at their limit and consumers, losing equity by the day in their prime asset, their houses, are gun shy when it comes to borrowing.

Like it or not, the days of Milton Freidman and Greenspan are over...the next administration will have 27 yo PhDs poring over tomes authored by Keynes and Galbraith to get us out of this morass with the least amount of pain. I have often been pilloried for maintaining that 'free markets' don't exist, and are a myth perpetuated by those who profit, with impunity, until the piper has to be paid. Unfortunately, all of us have to pay the piper who only played a tune for a few.

The fallacy of 'supply side' economics and tax incentives for the wealthy that capital formation can be utilized for "job creation", is nothing but a cruel ruse. How ironical that the guy who, correctly, proposed progressive taxation is none other than Dr. Strangelove's (McCain) hero, Teddy Roosevelt. That I can enjoy an above average income sitting on my butt, while millions of Americans physically sweat in a futile attempt to maintain a standard of living that can't match that of a dozen countries, and because of depreciation I pay hardly no taxes, is not right. Middle class consumers, the very core of our entire economic life, from a strictly economic sense that would benefit all of us, should be the target of tax relief...not the very wealthy who have great portions of their wealth invested in foreign countries. Or simply stashed offshore so they might enhance their tax shelters.

We need a complete overhaul of our financial system, starting with refunds of obscene management compensation in companies that effectively caused 4M home foreclosures. Lenders receiving govt money should be compelled to loan those amounts above reserves. The ethanol program should be canceled immediately and millions of ag acreage returned to edible foodstuffs. We can't control or modify oil prices, an international commodity, but we could alleviate domestic food costs. Home owners facing foreclosure should be allowed to stay in their homes...paying an amount into an escrow account until a program can be devised to mitigate the problem nationally. Any company 'too big to fail' should be reorganized before it is simply bailed out. Public works and infrastructure projects should be instituted asap. Confidence and consumerism must be restored...else nothing will work.

Posted | October 31, 2008 at 08:49 PM

A winning hedge fund manager's bitter farewell letter

4:01 PM, October 17, 2008

The most entertaining reading on the Web today may be the farewell letter from former Santa Monica hedge fund manager Andrew Lahde, who famously scored huge gains last year by correctly betting on the meltdown in subprime mortgage-backed securities.

The letter to clients begins with a vicious attack on the hedge fund industry itself and the U.S. "aristocracy," and ends with a plea for using hemp as an "alternative food and energy source."

Lahde, 37, nailed the subprime collapse, and reaped a reported 866% one-year return on his call.

But after that brilliant move, he shunned publicity. Last month, he said he was returning clients’ money and leaving the fund business because he considered the risks in the financial system to be extreme.

In his farewell letter, obtained by Portfolio.com, Lahde writes:

"Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their BlackBerries or other such devices. What is the point? They will all be forgotten in fifty years anyway. . . . I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the BlackBerry away and enjoy life."

Read the entire letter here.

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I understand Lahde perfectly. I did +811% last year, mostly in feeder cattle and oats. And, I have no reason not to think I couldn't do it this year, but I too have basically quit. Not so much for enjoyment though, I'm a cynic.

Posted by: martscan | October 17, 2008 at 05:27 PM

to be cynical means your drawing farther away from god..... when you come back to him you will realize god is everything and without him this country, you, everything is nothing.....

andrew lahde i like this guy, you can tell he has a good heart.

Posted by: stacy | October 17, 2008 at 08:21 PM

Stacy:

You couldn't be farther from the truth of my cynical nature. I am, in fact, in the process of refining a business plan in which I model a business based on the "Church of the Golden Doorknob." Briefly, members join for a modest fee and as they progress in spirituality, by following my fail-safe, step by step, easy to understand CDs (free postage), a penitent member progresses on the path to eternal bliss in the company of the "god" of their choice (we presently offer all the standards of Christianity, Islam, Hindu, etc...more to follow), and each level of spirituality gained affords the member the privilege of accessing the next elevated level by buying the next doorknob, i.e., copper, brass, silver, etc, ultimately attaining the right to purchase the "golden doorknob" for $100,000...while they last. As the founder of this religion, I do enjoy the perk of sitting at the right hand of god...for free. How much closer can I get?

Posted by: martscan | October 18, 2008 at 12:53 PM

Fwd Mail: BUSH'S FAREWELL SPEACH

Please, read this whether you are voting for Mcain or Obama. Even if you hated or liked President Bush this article should explain the course this nation is headed for.

PRETTY MUCH SUMS IT UP

BUSH'S RESIGNATION SPEECH
The following 'speech' was written recently by an ordinary Maine-iac [a resident of the People's Republic of Maine ]. While satirical in nature, all satire must have a basis in fact to be effective. This is an excellent piece by a person who does not write for a living.

The speech George W. Bush might give:

Normally, I start these things out by saying 'My Fellow Americans.' Not doing it this time. If the polls are any indication, I don't know who more than half of you are anymore. I do know something terrible has happened, and that you're really not fellow Americans any longer.

I'll cut right to the chase here: I quit. Now before anyone gets all in a lather about me quitting to avoid impeachment, or to avoid prosecution or something, let me assure you: There's been no breaking of laws or impeachable offenses in this office.

The reason I'm quitting is simple. I'm fed up with you people. I'm fed up because you have no understanding of what's really going on in the world. Or of what's going on in this once-great nation of ours. And the majority of you are too damned lazy to do your homework and figure it out.

Let's start local. You've been sold a bill of goods by politicians and the news media.
Meanwhile, all you can do is whine about gas prices, and most of you are too damn stupid to realize that gas prices are high because there's increased demand in other parts of the world, and because a small handful of noisy idiots are more worried about polar bears and beachfront property than your economic security.

We face real threats in the world. Don't give me this 'blood for oil' thing. If I were trading blood for oil I would've already seized Iraq's oil fields and let the rest of the country go to hell. And don't give me this 'Bush Lied...People Died' crap either. If I were the liar you morons take me for, I could've easily had chemical weapons planted in Iraq so they could be 'discovered.' Instead, I owned up to the fact that the intelligence was faulty.

Let me remind you that the rest of the world thought Saddam had the goods, same as me. Let me also remind you that regime change in Iraq was official US policy before I came into office. Some guy named ' Clinton ' established that policy. Bet you didn't know that, did you?

Now some of you morons want to be led by a junior senator with no understanding of foreign policy or economics, and this nitwit says we should attack Pakistan , a nuclear ally. And then he wants to go to Iran and make peace with a terrorist who says he's going to destroy us. While he's doing that, he wants to give Iraq to al Qaeda, Afghanistan to the Taliban, Israel to the Palestinians, and your money to the IRS so the government can give welfare to illegal aliens, who he will make into citizens, so they can vote to re-elect him. He also thinks it's okay for Iran to have nuclear weapons, and we should stop our foreign aid to Israel. Did you sleep through high school?

You idiots need to understand that we face a unique enemy. Back during the cold war, there were two major competing political and economic models squaring off. We won that war, but we did so because fundamentally, the Communists wanted to survive, just as we do. We were simply able to out spend and out-tech them.

That's not the case this time. The soldiers of our new enemy don't care if they survive. In fact, they want to die. That'd be fine, as long as they weren't also committed to taking as many of you with them as they can. But they are. They want to kill you, and the bastards are all over the globe.

You should be grateful that they haven't gotten any more of us here in the United States since September 11. But you're not. That's because you've got no idea how hard a small number of intelligence, military, law enforcement, and homeland security people have worked to make sure of that. When this whole mess started, I warned you that this would be a long and difficult fight. I'm disappointed how many of you people think a long and difficult fight amounts to a single season of 'Survivor.'

Instead, you've grown impatient. You're incapable of seeing things through the long lens of history, the way our enemies do. You think that wars should last a few months, a few years, tops.

Making matters worse, you actively support those who help the enemy.
Every time you buy the New York Times, every time you send a donation to a cut-and-run Democrat's political campaign, well, dang it, you might just as well FedEx a grenade launcher to a Jihadist. It amounts to the same thing.

In this day and age, it's easy enough to find the truth. It's all over the Internet. It just isn't on the pages of the New York Times, USA Today, or on NBC News. But even if it were, I doubt you'd be any smarter. Most of you would rather watch American Idol or Dancing with Stars.

I could say more about your expectations that the government will always be there to bail you out,even if you're too stupid to leave a city that's below sea level and has a hurricane approaching.

I could say more about your insane belief that government, not your own wallet, is where the money comes from. But I've come to the conclusion that were I to do so, it would sail right over your heads.

So I quit. I'm going back to Crawford. I've got an energy-efficient house down there (Al Gore could only dream) and the capability to be fully self-sufficient for years. No one ever heard of Crawford before I got elected, and as soon as I'm done here pretty much no one will ever hear of it again. Maybe I'll be lucky enough to die of old age before the last pillars of America fall.

Oh, and by the way, Cheney's quitting too. That means Pelosi is your new President. You asked for it. Watch what she does carefully, because I still have a glimmer of hope that there are just enough of you remaining who are smart enough to turn this thing around in 2008.

So that's it. God bless what's left of America.

Some of you know what I mean. The rest of you, kiss off.

PS - You might want to start learning Farsi, and buy a Koran.




Marty's Message:

Why aren't any of these bullshit tracts signed? This PR piece of dreck has obviously been planted by a professional firm hired by "oil friends of George" or "good ole Texas boys for George"...God knows the group aligned in "Cowards for George" is simply too big to control and lacks the chumminess of a more collegial group, perhaps "Coke up, Party up, Drink up In George's Beneficience", CUPUDUIGB for short, or some such group of filthy rich pigs that kick in dough for the right to kiss George's dumb ass and keep their space at the (high) hog feeding trough. All this in a vain attempt to bolster George's pathetic presidential legacy...and deflate the cheers of the heirs of James Buchanan.

If the person who wrote, what oat meal brains consider clever, this sophomoric "speech" best suited to a Junior High burlesque, thinks for a living as well as he doesn't write for a living...he lives a life bereft of simple conveniences, and no claims on 'reason' or logical thinking whatsoever. Its a good bet he never met a Jesuit, let alone studied Thomas Aquinas. Well, let's have at this faux joker.

For openers, Bush's pop rating is more like 28%, threatening HST's lowest record, so he doesn't know fully 72% of his fellow Americans...not the 50% cited in the maniac's speech. Incidentally, there is a legal maxim which contends that if any part of a witness'es testimony can be impeached, the entire testimony can be discarded...as this should be. But its too much fun jousting with someone who must have a pointy head shaped by years of wearing a dunce hat in cold Maine.

His "quitting" the presidency shouldn't shock anyone. If the dunce that wrote this only did a simple exercise in past performance handicapping this plug he would have learned of all past endeavors Bush has 'quit' on. In the interest of husbanding space, it is sufficient for the purpose of learning Bush's commitment perfidies to name but one, the Natl Guard. I suppose the maniac could make the case that some yahoo, red neck Southern politician's run for dog catcher was, at the time, more important to the nation's welfare than George's fighting in Viet Nam...but given what we have come to know about George, its probably best he stayed out of the war...we lost it soon enough without him.

Sorry George, UN mandates aside, you did break international laws, not to mention tacit United States honor and heretofore policies. You ARE a war criminal...and if we were to lose this fiasco, you'd be hanged. Rightfully so.

Sorry George, you can quit, after all, that's your family's birthright...but not because American citizens don't know what's going on in the world. YOU, you dumb prick, spent millions of your corporate masters' dough getting elected to the office whose oath binds YOU to the responsibility of knowing what's going on in the world. Most Americans are too busy busting their asses to put food on the table and clothing their kids to spend much time researching the cultural history of the Taliban, and their dependence on the economic ramifications of the poppy crop, vis-a-vis Pakistan's relationship to Afghanistan's agricultural markets and their combined economic influence on the cocaine trade in Western cultures. Come to think of it, you probably don't know either.

Sorry George, you're too shortsighted to realize that people are concerned about beachfront property, polar bears and the lowly titmouse because they know our planet's ecosystem is directly related to human well-being. We also know its a little over your head, not within your ken. Perhaps in your dotage, sitting on your porch in Crawford, someday you'll read a book which begins beyond, "see Spot run."

Your right about the intelligence on Iraq being faulty, AFTER your neocons doctored it for public consumption. The CIA, our premier foreign agency, never stamped their imprimatur on their reports to you...Wolfowitz and Cheney Co. did. As to the rest of the world, oh, right, let's see, Chad, Nigeria, Iceland, Ireland and I believe , was it Costa Rica...all their foreign intelligence agencies that had operatives in Iraq and spy satellites working day and night, they ALL agreed with YOUR assessment, right? And, no, George, you couldn't have planted WMDs in Iraq...it simply wouldn't fly...too many traitors that would have flipped...probably for dough from the Natl. Enquirer...or maybe Entertainment Tonight. Goofball. Yea, you 'owned' up to it months after you were nailed...you lying prick. Oil? IT WAS OIL AND IT IS OIL. PERIOD. And why was the first order, the very first order effected by our Grand Poobah...Bremer, that Iraq oil no longer be traded in petroeuros but in petrodollars? You know, of course, that not 1 in 100,000 Americans understands seignerage, don't you George, you prick. And why was the only building in all of iraq ordered protected be the Oil Ministry? And why are the big 6 oil companies enacting contracts with the iraq govt that gives them the most oppressive oil rights ever gained in the Mid-East, surpassing the Aramco contracts of 65 years ago in Arabia? You also know, don't you George, that an American garrison will be maintained in Iraq as long as the oil holds out, don't you, you prick.

Now for the fucking maniac that wrote this bullshit. Obama is no nitwit...and for someone to say a black, a black, can become a member of the Harvard Law Review..not to mention being elected to the presidency of the Harvard Law Review and a Magna cum Laude to boot...only says one thing for a fact...and that is whoever said this is a certified asshole and bona fide oat meal brain. 2. Obama never said we should attack Pakistan...you fucking propaganding liar. 3. Obama never said he wanted to make peace with Iran, you fucking liar. 4. Obama never said what you claim about Iraq, Afghanistan or Israel, money to the govt for illegals, nuclear weapons and stopping foreign aid to Israel......YOU LYING MOTHERFUCKING PIECE OF SHIT. DO YOU THINK EVERYONE IS LAST YEAR'S XMAS TREE...LIKE YOU? Enough already, if anyone reading this guy's nonsense believes it...well, you're beyond the pale...and come January, 2009 payback begins.

Send me this guy's name, I will personally see to it that MY message about him gets to 40 or 50,000,000 Americans via cyberspace...this authoritarian, fascist propaganda shit has to be stopped, its not funny and these thinly disguised naziis should be fought tooth and nail. I'm doing my bit...what are YOU doing about it?

Why I am voting Democrat

Re: Why I am voting Democrat

I'm voting Democrat because English has no place being the official language in America.

I'm voting Democrat because it's better to turn corn into fuel than it is to eat.

I'm voting Democrat because I'd rather pay $4 for a gallon of gas than allow drilling for oil off the coasts of America.

I'm voting Democrat because I think the government will do a better job of spending my money than I could.

I'm voting Democrat because when we pull out of Afghanistan and Iraq, I know the Islamic terrorists will stop trying to kill us because they'll think we're a good and decent country.

I'm voting Democrat because I believe people who can't tell us if it will rain in two or three days, can now tell us the polar ice caps will disappear in ten years if I don't start riding a bicycle, build a windmill or inflate my tires to proper levels.

I'm voting Democrat because it's all right to kill millions of babies as long as we keep violent, convicted murderers on death row alive.

I'm voting Democrat because I believe businesses in America should not be allowed to make profits. Businesses should just break even and give the rest to the government so politicians and bureaucrats can redistribute the money the way they think it should be redistributed.

I'm voting Democrat because I believe guns, and not the people misusing them, are the cause of crimes and killings.

I'm voting Democrat because when someone with a weapon threatens my family or me, I know the government can respond faster through a call to 911 than I can with a gun in my hand.

I'm voting Democrat because oil companies' 5% profit on a gallon of gas are obscene, but government taxes of 18% on the same gallon of gas are just fine.

I'm voting Democrat because I believe three or four elitist liberals should rewrite the Constitution every few months to suit some fringe element that could never get their agenda past voters.

I'm voting Democrat because illegal aliens are not criminals, are not sucking up resources through government aid, hospital services, education, or social services, but are just people trying to make a better life by coming to America illegally. We can't blame them for that, can we?

I'm voting Democrat because now I can now marry whatever I want, so I've decided to marry my horse.



Marty's :

* Because an official language is contrary to the very essence of this country. The 'great melting pot' did not conduct organized 'English only' campaigns, inasmuch as all my friends growing up spoke foreign languages at home...its all their parents knew...German, Polish, Italian, Greek and some, even Gaelic. English only is nothing but prejudice and bias against Hispanics made official. It is un-American.

*Because, while I am in favor of incentives to spur alternate energy sources, I am opposed to Republican sponsored corporate welfare in the form of farm subsidies (90% of which go to huge, profitable, Republican corporations) for ethanol...which is a bust. $1.00/bushel on corn in various credits is a crime.

*Because all the estimated oil which could be produced from these sources wouldn't lower the cost of a gallon of gasoline by as much as $0.02/gal. The whole oil deal/drilling/refineries is bullshit..fostered by big oil. For christsake, they spend millions, sub rosa, supporting 'greenies' and buying up battery technology...to keep the propaganda going...while they literally rake in tons of money...and I say, good for them. Why would companies that are making the greatest profits in the history of the world want to upset the applecart? Who wants to kill the goose that lays the golden eggs by increasing supply? Oil companies are NOT patriotic organizations, they are profit making enterprises that don't care if they make their profits in dinars, zlotys, yen, dollars, yuans, pounds or wampum.....all of which are converted into eurodollars and warehoused on the Isle of Man or other havens, only to be repatted when they are given a tax waiver by, heretofore Republican, Congresses. If you were the CEO of EXXON and learned your company had discovered the largest oil field ever, would you even announce it, causing oil prices to sink to, say, $10/bbl...or would you simply store it..leave it where it is for future use? If consumption stays static or rises little, lower prices would mean lower revenues, right? Why would any businessman want lower revenues with the same margin that he had on larger revenues? He wouldn't...and he won't. For chrissake, get your head in the game.


*Because no administration in the history of the United States has ever spent MORE money, that we don't have, and run up the largest deficits in history, making us beholding to foreign creditors that now are buying huge chunks of our financial system...once the largest and most powerful in the world. Open your goddamn eyes, we are witnessing the dissasembly of U.S. power...money. How the fuck can any Republican, conservative asshole say, with a straight face say that Dems are spenders and flaming socialists when a REPUBLICAN administration, a REPUBLICAN Treasury, a REPUBLICAN Federal Reserve and a REPUBLICAN Wall Street...engineers the largest single socialistic bailout in history? I termed these anti-capitalistic measures 'Billionaire Socialism' 18 months ago...the taxpayers are "all in" for the risks, the liabilities, but only scraps...which will never be seen...of the upside. 2 years ago, the alpha group of hedge managers were screaming at Dem committees to leave their incomes alone and taxed at cap gains rates because they were considered "carry interest", a 15% rate instead of a top ordinary rate of 35%. FYI, the individuals in the group made from $240,000,000 to $3,000,000,000 EACH, in 2007. Is one man, sitting at a computer manipulating huge amounts of money, basically unregulated, entitled to earn $3 BILLION dollars with a few keystrokes? Consider this, managers get a management fee of about 2% on assets they manage and 20% of profits. They get nothing, of course, on losses but neither do they kick in any of their own dough. Imagine a manager having 20,000 December oil contracts long and 20,000 Jan 2009 contracts short. Same commodity that can only be pennies apart in price. Let's say the Jan contracts have a loss of $100M...and the Dec have a corresponding gain of $100M. What is to prevent the manager from selling the Dec contracts, click, click its done. Nothing. He just made $20M for himself...but the $100M loss, while not taken is still on the books and exposed to higher margins and further losses...so he, click, click, sells 20,000 contracts of February 2009 contracts...a hedged position...neutral...until he plays games with this spread again. The statements to the fund investors shows the profits...but doesn't have to show the losses..as yet untaken. Voila!! But as soon as things go awry...it is the same multi-millionaire Wall Streeters that are running and begging to Washington for a bailout. Fuck Republicans, Gramm-Leach-Bliley and their 18th century laissez-faire, imperialistic economic philosophy. Just today the Fed agreed to a $37B loan to AIG, on top of the $85B they got 2 weeks ago. This is the same AIG that just spent over $400,000 of YOUR dough playing golf, drinking and getting hand jobs at the spa in Dana Point...I have to hand it the Republican corporate types, when they fuck the taxpayers, you amd me, they do it at 5 star resorts, that's classy. When low down, sleazy, black and poor liberals, such as ACORN, fuck the public...they do it in grimy, homeless tent cities.


*Because we should have never criminally invaded Iraq...for the oil and only the oil. Oil is our our life blood...and if it takes whatever means to assure a supply of it for the next 50 years, so be it, but at least don't so egregiously bullshit the American people. We could have assassinated Saddam and bought, paid for, a tractable Iraq regime for a fraction of the price we are still paying were it not for the maniacal neo-coms, including Dr. Strangelove, McCain. We did it with Central America 100 years ago, South America and the Shah of Iran...with 10 times the oil of Iraq, cheap. And our pact with the Arabs was nothing but a business contract even after they nationalized oil. With our power, was is NOT necessary. Further, the corporate/military complex runs this country and if we didn't have an enemy, a threat, requisite to sustain our ability to kill every soul on earth...we'd invent one. Unfortunately, there is only a very small market for used tanks, and none for used missiles and ammo, ergo, we must keep producing more, exponentially, for obvious financial reasons. We are already setting up little nuances of adversarial notices with China...who will someday own us. Getting to the terrorists part of your "vote"...that the United States could not locate and kill bin ladin in 7 years is bullshit...total fucking bullshit. That we could not have zeroed in on him, satellites can read license plates from 100 miles up, stake out a 100 or 1,000 sq mile sector and eradicate everything within it is preposterous. I'll let your wondrous imagination divine why we haven't yet killed bin Ladin.

*Because I'm tired of assholes like you that believe the asshole in the WH that says he talks with God, well, what the fuck, Eve talked to snakes, didn't she? And the thought of the boozing, horseshit pilot, lying, craps shooting gambler, dirty-leg fucking, phony 'hero' that confessed and signed papers admitting he was a war criminal, a treasonous violation of the military code punishable by death, low, dirty, characterless, no integrity, half nuts, Napoleanic crazed McCain and the narcissistic, vicious, horseshit mother, self-serving Boondock Bimbo...disgusts me.

*Because I'd rather see a potential human development arrested when it is but a mass of nebulous cells, than waiting until they develop into loving, happy babies whose brains we splatter like tapioca with our bombs. Or perhaps we wait until they are 18...and we can use them for grist in our imperialistic drives for economic hegemony all over the world. What the fuck, 55,000 in Viet Nam, 5 or 6,000 lives blown apart in the nid-east, families torn asunder...cost measued in mere peanuts relative to the gains and, as Dr. Strangelove would say, "honor."

You really don't want to hear my reasons on the rest of your items, do you?

Election 2008

From Fwd Mail:

Abraham Lincoln said, "You can fool all the people some of the time and some of the people all the time, but you can't fool all the people all the time." Unfortunately, the future of this country, as well as the fate of the Western world, depends on how many people can be fooled on election day, just a few weeks from now.
Right now, the polls indicate that a whole lot of the people are being fooled a whole lot of the time.
The current financial bailout crisis has propelled Barack Obama back into a substantial lead over John McCain-- which is astonishing in view of which man and which party has had the most to do with bringing on this crisis.
It raises the question: Do facts matter? Or is Obama's rhetoric and the media's spin enough to make facts irrelevant?

Fact Number One: It was liberal Democrats, led by Senator Christopher Dodd and Congressman Barney Frank, who for years-- including the present year-- denied that Fannie Mae and Freddie Mac were taking big risks that could lead to a financial crisis. It was Senator Dodd, Congressman Frank and other liberal Democrats who for years refused requests from the Bush administration to set up an agency to regulate Fannie Mae and Freddie Mac. It was liberal Democrats, again led by Dodd and Frank, who for years pushed for Fannie Mae and Freddie Mac to go even further in promoting subprime mortgage loans, which are at the heart of today's financial crisis.
Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic Advisers to the President. So did Bush's Secretary of the Treasury, five years ago. Yet, today, what are we hearing? That it was the Bush administration "right-wing ideology" of "de-regulation" that set the stage for the financial crisis. Do facts matter? We also hear that it is the free market that is to blame. But the facts show that it was the government that pressured financial institutions in general to lend to subprime borrowers, with such things as the Community Reinvestment Act and, later, threats of legal action by then Attorney General Janet Reno if the feds did not like the statistics on who was getting loans and who wasn't. Is that the free market? Or do facts not matter? Then there is the question of being against the "greed" of CEOs and for "the people." Franklin Raines made $90 million while he was head of Fannie Mae and mismanaging that institution into crisis.
Who in Congress defended Franklin Raines? Liberal Democrats, including Maxine Waters and the Congressional Black Caucus, at least one of whom referred to the "lynching" of Raines, as if it was racist to hold him to the same standard as white CEOs. Even after he was deposed as head of Fannie Mae, Franklin Raines was consulted this year by the Obama campaign for his advice on housing!

The Washington Post criticized the McCain campaign for calling Raines an adviser to Obama, even though that fact was reported in the Washington Post itself on July 16th. The technicality and the spin here is that Raines is not officially listed as an adviser. But someone who advises is an adviser, whether or not his name appears on a letterhead. The tie between Barack Obama and Franklin Raines is not all one-way. Obama has been the second-largest recipient of Fannie Mae's financial contributions, right after Senator Christopher Dodd. But ties between Obama and Raines? Not if you read the mainstream media. Facts don't matter much politically if they are not reported.

The media alone are not alone in keeping the facts from the public. Republicans, for reasons unknown, don't seem to know what it is to counter-attack. They deserve to lose. But the country does not deserve to be put in the hands of a glib and cocky know-it-all, who has accomplished absolutely nothing beyond the advancement of his own career with rhetoric, and who has for years allied himself with a succession of people who have openly expressed their hatred of America.

Marty's:

I'm pleased to rebut this, and I need no canned, politically partisan, scripted distortions, lies and innuendos to do it. This type of political slander is known as "ratfucking" in the patois of the trade and it originated with the Nixon campaign and perfected by Lee Atwater...and, of course, refined by his acolyte, Rove. The basic premise is taken from the modern master of propaganda, Goebbels, which, in essence says that if the facts do not agree with your agenda, change the facts. Certainly, both political parties have used smear tactics, mud slinging, tricks, etc going back 200 years, but it has only been the careful study of the psychological principles of "mass psychology", espoused by Goebbels, with its subtle uses of constructs that aim at character assassination...which has made Rove the supposed "genius" political operative. I'm no match for Herr Rove, but I know something of history. Let's take a closer look at this tract from the standpoint of FACTS.

Lincoln's admonition has become part of conventional wisdom, yes? Yes, and it is the kernel of truth contained in his pithy statement that is evidenced in Palin's 'popularity' falling like a rock...with a greater distance on the downside yet to be reached, but it will. Anyone thinking that this person is remotely capable of being a senior executive officer of the United States is nuts...and a right wing, evangelical member of the Republican base...which has hated McCain for years and might have stayed home...but will now vote for him...but will not change the Republican demographics from those of Bush's voters.

The entire "lie" of the attached tract is that the Democrats caused our current financial crisis. While there is plenty of blame to go round, sins of comission and omission by both parties, it is the Republican philosophy of "free markets" embodied in the laissez-faire economic theory that is at the very roots of the causative factors for this mess. The Glass-Steagle Act, which delineated areas of operation, responsibilities, reserves, etc in the financial sector..primarily banking, and was formulated to prevent the abuses wrought by the pre-Depression excesses, served us well for nigh on 70 years. With the advent of the Reagan years of deregulation, particularly picking up on Carter's modified, and necessary, dereg measures and emboldened by the effective breaking of union power in this country (the start of the decline of the middle class standard of living**) and culminating in the goofy Gingrich "contract with America"...led by a country hick of an econ prof at a jerkwater school, Phil Gramm, Glass-Steagle was repealed by his Gramm-Leach-Blifel Act. Based on classic laissez-faire economic principles once suited to an 18th century imperialistic England and touted as 'free markets' being the end-all of economic progress...and a repudiation of the New Deal, Keynes, Galbraith theories implemented by FDR...who the Phil Gramms of the world hate...this act virtually opened a floodgate to financial supermarkets offering products that not even the creators of which understood...ironically, products sold by the billions as risk modifiers and abaters were, by themselves, contributing to risk...and the classic human trait of greed overcoming fear (risk) ran rampant...witness the estimated $52 TRILLION still extant in credit default swaps and the huge, ongoing, buybacks of auction rate securities.

Getting back to the literal joke of claims purported to be 'facts' in this hack job....it is downright childish in its presentation. "But the facts show that it was the govt that pressured financial institutions in general to lend to subprime borrowers, with such things as the Community Reinvestment Act (it was passed in 1977...and is NOW being blamed?) and, later, threats of legal action by then AG Janet Reno if the feds did not like the statistics on who was getting loans and who wasn't." Seriously, who wrote this? Who WAS the govt? What WAS the CRA? What did the law SAY? That someone would write such vague and inane statements is beyond irrational...it is intentional distortion...the implication that Janet Reno, arbitrarily, would THREATEN anyone is laughable...that "if the fed did not like" is beyond irrational...since when are laws implemented or not enforced on "the fed" not "liking" that stats? I can write 10 pages here on the CRA alone, 10 pages on the "Financial Services Modernization Act" (Gramm) which permitted banks selling everything from stocks, insurance, travel to washing machines...and also did away with restrictions on consolidation...and Gramm also insisted on expanding the number of banks exempted by CRA. But rather than mentioning all the political and legal wranglings involved...suffice to say that since the Republicans had the hat trick of govt...all 3 branches...why didn't they change everything which, whoever wrote this junk, they now criticize as being done by Democrats? The FACT of the matter is that banks made money on the basis of CRA...a Federal Reserve study in 2003 and a similar study conducted by the Competitive Enterprise Institute both found that there was no clear evidence of the CRA increasing lending in low income neighborhoods than in higher income areas. Why does not the author of this junk mention the Depository Institutions Deregulation and Monetary Act which exempted federally chartered savings banks from state usury laws? Why did not the author of this junk mention the study done in 2002...2002, by Engel and McCoy on the predatory lending practices of CRA lending institutions that were leading to foreclosures against low-income people of color and the elderly....before the housing bubble...and bust?

Franklin Raines. Was NEVER an Obama "adviser", and is not now. That some staffers have called him does not make him an adviser. Raines stepped down from a PRIVATE company in 2004...2004! He headed a company that dealt with literally trillions of dollars in mortgages and was subject to REPUBLICAN HEADED REGULATORY AGENCIES, why did they not do their jobs? His misfeasance did not involve mortgages...it involved altering accounting practices that were of differing interpretation which afforded him a bigger bonus than he otherwise would be entitled to...so what? If he was culpable of a felony...I would bet that a REPUBLICAN Attorney General would have prosecuted him...and he should have been sent to jail...but he wasn't, and it wasn't for lack of trying by REPUBLICAN REGULATORS. "ratfuckers" reported his parachute was $220M...when it was $12M and $140K a month...chicken feed for a guy that ran a PRIVATE company of that magnitude. End of story. The whole Raines deal was "ratfucking'...even Herr Rove commented, publicly, on the McCain campaign crossing the line on bald faced lies.

Obama and "second-largest recipient" of Fannie Mae's contributions: I've had the official FEC list for months. What does this NOT tell you? For one thing, Obama received dough from both Frick & Frack..not just Fannie...and it also doesn't mention that he is a presidential candidate...likely to win....and a committee member of the majority party...why the hell wouldn't he receive big contributions from companies that traditionally lobby politicians that hold positions of power that affect the company? Why didn't the author of this junk tell us that Frick and Frack contributed to 353 OTHER members of congress and why didn't the authour of this junk also tell us that right behind Obama in contributions received were REPUBLICAN Senator Bennett from Utah and the REPUBLICAN REPRESENTATIVE from AL, Bachus, who received over $100,000...MORE than ANY other representative? And why hasn't the author of this junk told us of the lobbying done for Frick by the McCain staffers...in one case getting $45,000 a month and another, lasting up til August, of $15,000 a month!! I was taught that sins of omission bore the same gravity as sins of comission...whoever wrote these distortions has bought him/herself a passport to hell...provided, of course, he is a Bible believing, upstanding, God fearing Christian...albeit a ratfucker in his mortal life. Oh, you don't think so? OK, I'll amend my statement, he's just a rat.

This is really a crude piece of contrived bullshit...fit for morons that are swayed by even the smell of shit, let alone reading real shit like this.


ANONYMOUS:

I was a fellow POW at the Hanoi Hilton of John McCain and was held for 6 years, six months longer than the "Crown Prince", as McCain was known since his father was the top dog and Admiral in the Pacific. I, along with most of the POWs, was tortured to an extent of not even being able to remember for how long...after awhile you simply lose all conception of time and the sense of pain. But one thing I'll remember til the day I die is that I, and hundreds of other equally tortured POWs, never confessed to being a war criminal...I was always aware of my oath and the military code to which I swore...I never signed any paper or made any recording which would have violated my oath. John McCain did. I'm no hero...but I ain't no coward either.


Marty's:

If I had the technical know how to send that POW story to, say, 25,000,000 registered Republican voters, how many voters, in Lincoln's words, would it fool into voting for Obama, without even mentioning his name? There is only one FACT in this statement, the rest is total fiction, completely made up, false, contrived bullshit. The fact is that McCain confessed to being a war criminal while he was a prisoner of an enemy of the United States. Who can argue that the VC, hearing an Admiral's son, a warrior of the great enemy, the exalted and most powerful United States, who can argue that the VC, on hearing this confession, was not empowered to kill more U.S. troops than they would otherwise, had they not heard what amounted to a pep talk by the hero McCain? That is a treasonable offense punishable by death. Private Slovak was put to death for the 'crime' of being 'shell shocked.' Of course, Pvt. Slovak's father was not an admiral.

How the Democrats Created the Financial Crisis: Kevin Hassett

Commentary by Kevin Hassett


Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

To contact the writer of this column: Kevin Hassett at khassett@aei.org

Last Updated: September 22, 2008 00:04 EDT



Marty's :

I'd be pleased to counter this blatant piece of pure partisan, manufactured, political bullshit. And I won't do it in the sense of a "Marty Memo", but rather in a dispassionate, factual manner...and I invite debate on what I have to say. Let's start tearing this asshole a new asshole. For openers, Fannie & Freddie, Frick & Frack, F&F, did NOT cause our present troubles by 'exploding' (jesus christ, "bystanders injured in the blast" is such a corny metaphor and sophomoric...and a tip-off of a populist propagandist...what dreck!). The root causes of the massive problems we now face go back to the repeal of the Glass-Steagle Act. Enacted during the depression, Glass-Steagle served us, the economy and the proper functioning of markets for decades, and it this did quite well, having survived the test of some 70 years. It did this by primarily delineating those areas in which financial institutions, companies, were allowed to operate and what the responsibilities, limitations and duties of these institutions were, and WERE NOT, within their respective, defined areas of operations. "Free marketers", the vested money class of the country, represented for the most part by the Republican party, felt that Glass-Steagle, and other laws and regulations, hampered their philosophy and constrained those activities which they felt would more clearly open markets to the free, unfettered, natural inclinations of markets and economic policies that, allowed to be free and unregulated, would benefit them and make for a better America. Spearheading the effort of the Republicans to accomplish the overthrow of Glass-Steagle was Phil Gramm...a country hick, jerkwater school econ prof from Texas turned politician. After the Republican "contract with America", Gingrich's manifesto to himself, of 1994...Gramm went to work and in 2000 Glass-Steagle was repealed...this was followed by enactment of the Gramm-Leach-Blifel Act. What his act effectively did was to permit every Tom, Dick and harry in the financial, and other, industry(s) to create, and sell, any financial department and product they wished. You could walk into a bank, open a traditional savings account, a demand deposit account, a money market account, buy a CD, and also buy stock and insurance...as could Prudential Insurance. While many technical, market restrictions and regulations were modified, the real bugaboo was the lack of enforcement of extant regulations, after all, the Federal Reserve, the Treasury, the Office of Thrift Supervision, the SEC and the FDIC were all headed and staffed by Republicans...shades of Goodling at the DOJ...markets were booming, banks were booming, construction was booming so, what the hell, let the good times roll...and if a big Wall Street firm, in conjunction with banks, hedge funds and private equity outfits were designing complex derivative products, such as credit default swaps...there are presently $50 TRILLION worth out there...and trading billions of dollars "OTC"...off markets and totally unregulated...why, not to worry, "free markets always correct themselves". (All of this, all of it, was fueled by Greenspan's monetary policy....money didn't cost anything...as Jack Welch, the GE icon, said just today). My ass! Designed to allay risk, swaps and other derivatives actually increased risk...a little sub firm of a big investment firm, having total capitalization of a mere $4.5M...wrote default swaps on a UBS deal of $1.5BILLION...!!! Talk about leverage!!! When the subprime crap started to hit the fan....incidentally, tell me 1 in 1000 home buyers that would understand these terms of their loan...."Purchase of a $200,000 house for $400,000...no money down, no substantiating documentation, a 30 year interest only with an amortization term with a 7 year call, a 3.5% starting rate for 3 months, then a flat 5% rate for 9 months, then an adjusting series of 6 month terms pegged to the 3 month LIBOR or the 11th District COF or the 12 month constant rate of the 5 year Treasury Note, whichever is higher, a 14% cap with a 4 point max in any one adjustment period with a 2% floor on the downside in the same period. negative ammo, no assumption and a pre-pay penalty. 2 points out front, $9,000 closing cost, to be added to the principal of the loan balance." Frick & Frack did NOT make this loan...F&F never originated loans...banks and mortgage companies made these types of loans to people they knew, actuarially, could not pay them back...but they couldn't care less as they immediately sold the loan to a packager who, in turn, designed various 'CDOs', collateralized debt obligations, depending on tranches, slices, of risk and returns...who in turn sold them to institutions, other packagers, pension plans, insurance companies, etc...all over the world. F&F, of course, as the largest buyer of mortgage loans in the country, facilitated the process..and over leveraged themselves like everyone else...but they did NOT MAKE these loans. In fact, truth be known, F&F was rather conservative, relative to the practices of other firms. The asshole that wrote this piece mentions Fannie owning $388B of "high-risk" mortgage investments.....oooh! scary, those bastards!!!...but wait a minute....what constitutes "hifg-risk"? will an enormous 20% be NG?...if so, that is a paltry $76B......and even that poetion can be sold for something....and what % of $5 TRILLION does $388B represent? Peanuts!! And, this asshole goes on to say, as if he is Solomon himself, "...trillions of dollars in play (this ain't no game, kid) were only low-risk investments if real estate prices continued to rise." Hey Solly, no shit!! Did F&F drive house prices down? Asshole goes on to say, "Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes." Let's cut the bullshit...anything after 2000 is on the Republicans' watch. Period. No if, but, dog, rabbit...its the Republicans' shit we are in. Here goes the asshole sophmore..."legislative momentum", "world-class regulator" (where did he get this...thin air...and stop with the hyphens), "two accounting miscreants" "were less eager to be associated with them. The time was ripe. (for what?)." I think I'm going to puke. Asshole continues, "In 2005,6, 7, a blizzard of terrible mortgage paper FLUTTERED OUT OF THE FANNIE AND FREDDIE CLOUDS, burying many of our oldest and most venerable institutions," I now have dry heaves. WHAT mortgage paper, name it! WHERE did it FLUTTER to? WHICH 'venerable' institutions were 'buried'? In 2005. 2006, 2007...NONE!! The FEC has published the total contributions made by F&F to 354, repeat, 354 members of Congress in the past 18 years. Of the top 25 recipients of F&F money, 12 are REPUBLICANS. Let me repeat this, of the top 25 recipients of Freddie and Fannie money, 12 are REPUBLICANS and 13 are Democrats...which is to be expected of the party holding the chairs...and 25 is not divisible evenly. Not only did asshole fail to cite this stat, while he cites Hillary being the 12th largest recipient of F&F largess...he conveniently omits REPUBLICAN Senator Bennett from Utah who received $107,999, only 18K less than Obama..and Bennett is guaranteed not to be the next president....and is in the minority to boot! And why did asshole omit good ole Rep. Bachus of AL...the Representative recipient of either party that received the most amount from F&F...$103,300. Asshole also failed to mention, of individual contributions, Dr. Strangelove, McCain, received MORE money from them than harry Reid, the Majority leader of the gd Senate! A SIN of omission is no less an insult to God, and a passport to hell, than a SIN of commission! (I'm surprised asshole didn't have some God and Bible bullshit flutter into his gobblygook distortions and lies, to enhance his faux attempt at legitimacy).

Commodity prices dive as traders bail out again

10:54 AM, September 16, 2008

Leading up to the Federal Reserve’s announcement on interest rates in about 20 minutes, commodity markets are doing their best to give the central bank some cover if it wants to ease credit.

Every one of the 19 commodities in the Reuters/Jefferies CRB index is down today. The index overall was off 2.2% to 340.56 at about 10:45 a.m. PDT, its lowest since early December.

Nickel prices have plunged 6%, corn was down 5.3%, wheat was off 4.8% and silver was down 4.5%.

Crude oil has fallen $4.88, or 5.1%, to $90.83 a barrel, the 11th decline in 13 sessions.

The selling appears tied in large part to investors’ and traders’ mad worldwide rush to raise cash, amid fears that things could get much worse in the financial system.

"The run to cash is really hurting commodities as much as anything," Darrell Holaday, president of Advanced Market Concepts in Manhattan, Kan., told Bloomberg News. "Everybody wants cash and bonds. Anything else carries way too much risk and you can’t blame them. Their investments have turned completely sour."

From the Fed’s perspective, investors’ deepening aversion to risk is an ugly thing for the financial system.

But if commodity prices keep falling, or just stabilize, the inflation worries that have gripped central bankers worldwide since the start of this year are going to fade.

And if they can stop freaking about inflation, the Fed and its peer banks will have much more leeway to pump money into the system and keep it functioning until this crisis of confidence passes.

Photo: In the commodity pits. Gino Domenico / Bloomberg News

source: http://www.typepad.com/t/trackback/816965/33522664

Comments

And so many tried to convince it was not speculators moving the price of oil so fast. I guess this means the speculators, stuck now with $140 contracts are leaving tens of billions of dollars on the table.

Posted by: Dan | September 16, 2008 at 12:01 PM

The principal problem: 4 out of 100 borrowers who should not have gotten mortgages and who have defaulted. The liberal policies of the Clinton administration are the root of this evil.

Liberal policies that made Banks (forced by LAW ) banks to lend to people who would not even been allowed into a bank due to their bad credit, lack of assets and low/no income. Who ran Freddie/Fannie Mac? Are these people now helping run/advising the Obama campaign? (YES!). Wake up America; liberals and the Obama campaign want you (uninformed masses) to believe that it was the Bush policies of under regulation when it really was over-regulation that caused this problem. Before Bill Clinton and Rep. Barney Frank forced through these new rules, banks had set and logical criteria to lend to people. This crisis is due to typical liberal (feel good) policies of Democrats and a few ignorant republican pols. Liberals are great at feelings and hope and change that bankrupts America. Good job liberals! Now abmit your mistakes & lets fix this mess with sound fiscal banking regulations that reward good credit, steady income and financial responsibilty.

Posted by: Alex Ploud | September 16, 2008 at 02:16 PM

Dan:
For your information, speculators of the stripe you refer to, sophisticated traders utilizing complex algorithms that trigger thousands of trades in a nano-second involving billions of dollars might have $140 (oil?) contracts... sold short. Further, I assure you that traditional speculators, floor traders, scalpers, chartists, fundamentalists, seat of the pants types, doctors, bricklayers, et al...are not still long oil contracts at $140..and perhaps they lag the moves of hedge funds, pools, CTAs, etc. but, for the most part, they too are short, unless they have spreads, straddles, butterflys or other relationship trades involving $140 long side trades.

Posted by: martscan | September 16, 2008 at 06:20 PM

Alex Ploud:

I take great exception to your comments.

For openers, what "law" are you referring to that forced banks to lend to borrowers who had no incomes, no assets and no credit? Frankly, I don't think such a law has ever existed. But if you can evidence the source of this law, I'd like to read it. The delusion of a law aside, who CREATED the loan products that apparently are the "root of this evil"? Was it the Clinton administration, the banks and mortgage companies or the average slob that wanted to buy a 3 BR split level? I can't recall during the boom Clinton years, a real estate bubble forming on the basis of the administration devising esoteric lending instruments. If you have evidence of this, I'd like to know your source. Perhaps Jack and Jill walked into their local bank and TOLD the loan officer, "we want to give you a mortgage for a $400,000 loan, secured by property worth $300,00, we want the dough to come from Fannie Mae, neither my wife and I work..we're on welfare. We have no money to put down and we want a 3 month teaser rate of 3.5%, adjusting to, say, 5% for 9 months then adjusting thereafter to the 3 month LIBOR rate, plus a margin spread of 350 points or to the 12 month constant rate of the 5 yr Treasury Note, or the 11th District Cost of Funds plus a 200 point spread, whichever is greater, with a cap of 14% and a max boost of 4 points and a 2 point floor in any one adjustment period, assumable and no pre-pay penalty, we agree to negative amortization, a 30 year ammo term with a 7 year call. And shake it up, we're late for our dart game at the bar." Of course, no upstanding, Sunday-go-to-church Christian, conservative, Rotarian, Elk, Moose, Chamber of Commerce (in good standing) member, REPUBLICAN BANKER would ever agree to such an outlandish proposition, would they Mr. Ploud? You are aware, aren't you, of Gramm's $750,000 lobbying fee from UBS and his efforts to get the anti-predatory lending laws modified?

Freddie and Fannie did not make loans to individual borrowers...and I doubt 'those people' (who are "these people"?) are advising the Obama campaign. Incidentally, Obama wrote Bernanke and Paulson over 18 months ago, 18 months ago..warning them, in essence, of the financial pitfalls that have come to beset us. I know of no Republican that did ANYTHING of an alarmist nature regarding an impending financial melt down.

Bill Clinton and Barney Frank did NOT force through any legislation formulating "new rules". In fact, it was Phill Gramm, and his economic theories and philosophy of the imperialistic 18th century, that changed the rules of the "logical criteria" to lend to people via his ramrodding the Gramm-Leach-Bliley Act through their Republican Congress in 1999. That act repealed a great many of the set rules and "logical criteria" that had been in place since FDR..the greatest Liberal of them all...who just happened to save what we erroneously call 'capitalism' today..it is, of course, Billionaire Socialism. You do know, don't you Mr. Ploud, what Gramm's efforts accomplished, yes? And I'm sure you are familiar with the provisions of Gramm's other legislative, "evil" opus...the CFMA, Commodity Futures Modernization Act. That's the beauty that gave free rein to upstanding, stellar, Republican firms of the Enron ilk to rape and plunder at will. I don't suppose there's any need to mention Gramm's wife's connections to the CFTC..you do know he is McCain's economics mentor and will probably be Treasurer of the US should Dr. Strangelove, perish the thought, get elected.

I look forward to reading your reply and learning of your sources for your liberal bashing.

Posted by: martscan | September 16, 2008 at 07:36 PM