Wednesday, September 24, 2008

Cash for thrash...

"I must tell you, there are those in the public debate who have said that we must act now. The last time I heard that, I was on a used-car lot," "The truth is, every time somebody tells you that you've got to do the deal right now, it usually means they're going to get the better part of the deal."
Rep. Mike Pence, R-Indiana.

The thrash for cash plan is rubbish- and I don't just mean figuratively, I mean literarily. It is Paulson trying to save his buddies. Makes no sense to me why he had Section 8 to deny oversight and even contained clauses for golden parachute! Mouthing stuff like free market when the plan is exactly a short circuit of free market is just trying to eat your cake and have it Paulson. The absence of the man on top- Bush that is- is even more befuddling. If it comes to thrashing political opponents and cowboy talk- one can count on Bush and Dick Cheney. But alas they are missing in action as Rome burnt. How can Paulson propose a plan that helps wall street, reward their bad behavior with no single clause on how to protect homeowners on main street who invariably are the ones paying for this package? Makes no sense to me unless you figure that this White House is one that is for the wealthy, powerful and well connected- they don't give a damn about main street. Never did; but somehow they sold main street a lie: "we are the guys you can drink beer with"!
But maybe times are changing. Once upon a time, Republicans mocked regulation and government spending--and the voters laughed along. But who's chuckling now? The collapse of investment banks, like the collapse in the mortgage securities market, was a by-product of insufficient regulation. Meanwhile, it's "old-fashioned" Democratic ideas like Social Security--a program Republicans have campaigned to privatize--that insulate senior citizens from drastic declines in the market. And government spending doesn't sound so awful if it means universal health insurance, which can reduce the threat of financial calamity for working families. Democrats have tried to shift the tax burden upward, so that the wealthy pay more of their growing largesse. After eight years of Bush tax cuts reversing that progress--and middle-class incomes stagnating--the case for making the tax code more progressive again is ironclad. I have never seen anytime in politics where the left and right seem to agree so much on regulating private business- it appears that after Enron (result of energy deregulation) and Lehman/AIG et al (result of financial deregulation)- regulation is no longer a swear word.
Again, it appears cash is forever king. The market intervention by the Feds via their cash for thrash plan is another reason for you to stay out of the market.You should not put your money in a market that is more closely correlated to unpredictable temperature in Washington DC and not the free wily nilly of demand and supply. The essence of free market is that you can make sense of the rules- which by the way suddenly became Paulson- the El Dorado of wallstreet bad behavior turn treasury secretary. Talk about the fox guarding the sheep pen
Speaking of cash on hand, it is not a coincidence that Japanese companies and Warren Buffet are the ones coming to the rescue of Morgan Stanley and Goldman Sachs well as other wall street thrash collectors. It makes sense that the thrifty, disciplined and saving conscious Japanese economy and the oracle of Omaha are the saving grace of the flamboyant, living on credit wall street boys. Personal Lesson: Save, Save, Borrow less. The trade, credit and personal savings deficit of the US is a bigger threat than terrorism to the demise of this super power.
My Own Anti-Paulson Proposal - simple and straightforward:
- Banks literarily modify mortgages for first and second home owners at zero cost to homeowners ; removing balloon rates and correctly pricing payments to fit real income and actual housing value depreciation. Judicial oversight on bank and customer dealings should be provided by county/city/municipal courts.

- Real estate speculators are forced to declare bankruptcy i.e. those flippers or execute a short sale at bank own convenience. No oversight for this deal- so the bank is free to screw the speculators.

-Banks write down their losses due to modifications which affect the bundled CDOs that support such mortgages.

- Banks seek the Fed loan to cover these losses in return for tax payer equity in these entities in return for interest instead of capital. Equity balloons (just like the damn ARM they were peddling) into larger equity by the Fed if loan is not repaid within a set period. The upside for the banks here is that they are free to keep paying their ridiculous golden parachute-- it is just a loan anyway and the faster they can't pay , the more likelihood they going to loose their shirt to the Feds.

Me thinks my plan is fair, and helps main street, punishes bad behavior (of Wall street and speculators), allows the economy escape a credit crunch by allowing the bad boys to remain liquid while creating a floor beneath the housing market and avoiding a situation where foreclosures & bankruptcies drive down the values of even the sane borrowers in the larger economy. My plan tackles the source of the problem- exotic loans to people who can otherwise afford conventional ones. It is high time the rich also contribute to the large welfare that they have absconded for too long under George Bush a la tax cuts and bail outs.

Here is a very interesting proposition on how an auction of distressed asset should work..from slate.

Sunday, September 14, 2008

Fast Forward...If you Care to

I have an interesting prediction...

In November, Obama will lose NH of the states Kerry won , win IA, NM, and CO and still hold 269, a tie.


Check out it plays out...

The regular North eastern bastion of liberlism are quickly called between 7.00 to 8.00 ET for Barack. New Hampshire is the sole hold out- too close to call; with Barack leading with mere 500 votes and countless rural counties (well known bastion of independent thinkers and feminazes) uncounted. As the result of the Midwest and South trickles in by 7.30 to 8.30 PM big surprises. Iowa, Michigan, Penn, Minn. declared in quick sucession for Barack; Missouri, Indiana, Florida called for John Sidney McCain. Virginia and Ohio however remains too close to call; looks like mid-term 2006 all over again except without Missouri.

By 9.00 the south is Peach red...couple of Senate/Congressional seats Harvests in North Carolina, Texas and Florida cheers up the now gloomy democratic watchers. Barack requests for a quick cup of Koolaid- he is a brotha today. Screw the lemonade. He ponders whether he should backslide and go a quick drag- Michelle gives him a quick stern look..."fool don't play with me" she snarls.

Alright, back on TV Y'ALL is about to wee. The Western results start dripping in by 9.00 PM ET. New Mexico was a surprise quick call for Barack. Nevada, Arizona and Utah fell in quick sucession to the republicans. The key surprises? The Dakotas, Nebraska and Montana are too close to call. Fox News go blank. Cali, Washington, Oregon and Hawaii are called for Democrats..and then the bad news, Ohio for McSame. Your republican friends are blasting your are sick to your stomach
By 11.00 PM ET Montana, Nebraska and the Dakotas all get called for McCain. Virginia and Colarodo are the final hold outs and Obama is 10 electoral votes from victory. At 12.00 PM ET the Colorado Secretary of State declares all the state's 9 electoral vote for Barack. He is at 269. Virginia like 2006 asks us to wait till the next morning.

Well...Barack is at 269...the worst outcome is a draw. He chants. He mounts the stage and he declares victory. Since the House is in favor of the Democrats, he would effectively win the White House. The next morning, VA goes for McSame. It is 269-269. The House chooses the winner in case of a draw. It was a congressional landslide for the democrats with victories beyond wild dreams in even red state congressional districts.

And people say mid-term elections aren't important?Your supreme court, my congress...payback is a ,,

My Electoral College Scenario

Sunday, September 07, 2008

The Real Capitalists Across the Atlantic

I am just getting into the 8/5/10 mode after my trip to naija; it appeared I narrowly missed malaria. It took me a little longer than 2006 to get into the daily mode back again...but am good now. My people, naija dun..simply translated- naija sweet. Things are happening..very fast too. Progress, capitalism and entrepreneurship is oozing everywhere one goes.

College students and young grads are leading this charge; there is innovation in virtually every industry. It is not particularly unusual to speak with an average twenty something and find out he or she is into two to three enterprises: I mean legit ones too. Technology, Financial Services and Entertainment appears to be the booming industry. It is interesting that Agric and Petroleum which are by far more consequential to Nigeria's GDP are not the headliner industries.

Take for example the entertainment industry; there is all these 60 in 1, even 80 in 1 disc that is in vogue now; everything from European league matches, to compilations of popular Nollywood, Hollywood and Bollywood studios and to hit Nigerian music videos (and there are bunch of those...shot in other West African countries, South Africa and the West) - one will find on wares across major cities. XXX rated movies are already being compiled too for those who care to know. Aight, its all entertainment get with the program. The soccer crazy Nigerian fans are also making brisk business from soccer especially the national team and European club related merchandise especially the Jerseys. Thankfully Arsenal Jerseys are by far the most popular along with Chelsea, Man U and Liverpool. I got a Gunner shirt, Liverpool as well as Super Eagles Jersey (home and away) at very attractive prices too. Hey, they might not be the original but I bet you cannot tell if you see em. As a testimony to the widening market for Nigerian movies, nearly of them are now subtitled in French to cater to the wider African francophone countries who cannot get enough of Nollywood productions.

As usual, the state governments except for that of Oyo (which is so inept) are by far outperforming the federal government in terms of performance. Mr. Fashola of Lagos deserves special mention as an action governor. The BRT lanes/mass transit and the boardwalk projects are among a few transformational projects that Lagos state govt. is putting in place to deal with an already horrible infrastructural situation.

As per I was in naija for my sis wedding, it all went well. Added couple of pics here & there for those who care. Naija dun o jare.

P.S: Congrats to the Dream Team IV for a sterling performance at the Olympics. Go Eagles


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