Talk like a pirate

Am I wrong in believing that the final name of the stimulus bill will be the American Recovery and Reinvestment Reconciliation Act, or ARRRA? Arrr!

I'm going to copy and paste a fairly large section since it's really annoying to have to sign up for RGE. If posting large blocks of text is against rules then delete away please.

So why is the US government temporizing and avoiding doing the right thing, i.e. take over the insolvent banks? There are two reasons. First, there is still some small hope and a small probability that the economy will recover sooner than expected, that expected credit losses will be smaller than expected and that the current approach of recapping the banks and somehow working out the bad assets will work in due time. Second, taking over the banks - call is nationalization or, in a more politically correct way, "receivership" - is a radical action that requires most banks be clearly beyond pale and insolvent to be undertaken.  Today Citi and Bank of America clearly look like near-insolvent and ready to be taken over but JPMorgan and Wells Fargo do not yet. But with the sharp rise in delinquencies  and charge-off rates that we are experiencing now on mortgages, commercial real estate and consumer credit  in a matter of six to twelve months even JPMorgan and Wells will likely look as near-insolvent (as suggested by Chris Whalen, one of the leading independent analysts of the banking system).

Thus, if the government were to take over only Citi and Bank of America today (and wipe out common and preferred shareholders and also force unsecured creditors to take a haircut) a panic may ensue for other banks and the Lehman fallout that resulted from having unsecured creditors taking losses on their bonds will be repeated again. Instead if, as likely, the current fudging strategy - of temporizing and hoping that things will improve for the economy and the banks - does not work and in 6-12 months most banks (the major four and the a good part of the remaining regional banks) all look like clearly insolvent you can then take them all over, wipe out common shareholders and preferred shareholders and even force unsecured creditors to accept losses ( in the form of a conversion of debt into equity and/or haircut on the face value of their bond claims) as the losses will be so large that not treating such unsecured creditors would be fiscally too expensive.

So, the current strategy - Plan A - may not work and the Plan B (or better Plan N for nationalization) may end up the way to go later this year. Wasting another 6-12 months to do the right thing may be a mistake but the political constrains facing the new administration - and the remaining small probability that the current strategy may by some miracle or luck work - suggest that Plan A should be first exhausted before there is a move to Plan N. Wasting another 6-12 months may risk turning a U-shaped recession into an L-shaped near depression but currently Plan N is not yet politically feasible.

But with the government forcing Citi to shed some of its units/assets and the government starting stress tests to figure out which institutions are so massively undercapitalized that they need to be taken over by the FDIC the administration is putting in place the steps for the eventual and necessary takeover of  the insolvent banks.

You can expect a similar path and an eventual government takeover of most financial institutions in other countries - such as the UK - where many banks are effectively insolvent.

So while Plan A is now underway today's very negative market response to this Treasury plan suggest that it will not fly. Markets were expecting a more clear plan but also a plan that would bail out shareholders and creditors of insolvent banks.  Unfortunately that is not politically and fiscally feasible. It is thus time to start to think and plan ahead for for Plan N ("nationalization" of insolvent banks).

Or should we send it to the guy running the printer at the mint?

http://www.nytimes.com/2009/02/08/opinion/08kristof.html

Rail officials say the train robbers are swiping high end electronics from rail cars, including flat screen TVs.

I am sure they will use that imbecile,  Nadya Suleman, who had 8 more kids through implanted embryos, as their next attack against liberals.

Anyway, read the story I received.

Subject: REVISED EDITIOIN - LITTLE RED HEN
From Wall Street to Main Street and everywhere in between,
> stay up-to-date with the latest news.Story of the Little Red
> Hen
>
>
> Who will help me plant the wheat'? asked the Little Red
> Hen.
>
> 'Not I,' said the cow.>
>
> 'Not I,' said the duck.
>
> 'Not I,' said the pig.>
>
> 'Not I,' said the goose.
>
> 'Then I will do it by myself,' said the little red
> hen, and so she did.
> The wheat grew very tall and ripened into golden grain.
>
>
> 'Who will help me reap my wheat?' asked the little
> red hen.
>
> 'Not I,' said the duck..
>
> 'Out of my classification,' said the pig.>
>
> 'I'd lose my seniority,' said the cow.
>
> 'I'd lose my unemployment compensation,' said
> the goose.
>
> 'Then I will do it by myself,' said the little red
> hen, and so she did.>
>
> At last it came time to bake the bread.
>
> 'Who will help me bake the bread?' asked the little
> red hen.
>
> 'That would be overtime for me,' said the cow.
>
> 'I'd lose my welfare benefits,' said the duck.
>
> 'I'm a dropout and never learned how,' said the
> pig.
>
> 'If I'm to be the only helper, that's
> discrimination,' said the goose.>
>
> 'Then I will do it by myself,' said the little red
> hen.
>
> She baked five loaves and held them up for all of her
> neighbors to see.
> They wanted some and, in fact, demanded a share. But the
> little red hen said, 'No, I shall eat all five loaves.'
>
> 'Excess profits!' cried the cow. (Nancy Pelosi)
>
> 'Capitalist leech!' screamed the duck. (Barbara
> Boxer)
>
> 'I demand equal rights!' yelled the goose. (Jesse
> Jackson)
>
> The pig just grunted in disdain. (Ted Kennedy)
>
> And they all painted 'Unfair!' picket signs and
> marched around and around the little red hen, shouting obscenities.
> >
> Then the farmer (Obama) came. He said to the little red
> hen, "You must not be so greedy, Let's re-distribute the wealth!"
> >
> 'But I earned the bread,' said the little red hen.
>
> 'Exactly,' said Barack the farmer. 'That is what makes our free enterprise
> system so wonderful. Anyone in the barnyard can earn as
> much as he wants.
> But under our modern government regulations, the productive
> workers must divide the fruits of their labor with those who are lazy
> and idle.'
>
> And they all lived happily ever after, including the little
> red hen, who smiled and clucked, 'I am grateful, for now I truly
> understand.'
>
> But her neighbors became quite disappointed in her. She
> never again baked bread because she joined the 'party' and got her
> bread free. And all the Democrats smiled. 'Fairness' had been established.
>
> Individual initiative had died, but nobody noticed; perhaps
> no one cared...so long as there was free bread that 'the
> rich' were paying for.  
>
> EPILOGUE
>
> Bill Clinton is getting $12 million for his memoirs.
>
> Hillary got $8 million for hers.
>
> That's $20 million for the memories from two people,
> who for eight years, repeatedly testified, under oath, that they couldn't
> remember anything.
>
> IS THIS A GREAT BARNYARD? OR WHAT

Not great news for me personally.  Did some work for HC in the last year. But I'm sort of glad that I've waited to submit a new book proposal.

Harvard Law Dean Elena Kagan, President Obama's choice to represent his administration before the Supreme Court, told a key Republican senator Tuesday that she believed the government could hold suspected terrorists without trial as war prisoners.

From WashPo:

"Congressional efforts to impose stringent restrictions on executive compensation appeared to be evaporating yesterday as House and Senate negotiators worked to fine-tune the compromise stimulus bill.

Provisions to impose a penalty on banks that paid hefty bonuses and to cap pay at $400,000 for all employees at firms applying for additional government funds did not survive the compromise, sources said.

Business as before.

Bush stuck us with one last 800 billion dollar fling.
And now we're in for another round.

Will there be anything left?

And, of course, we're still spending incredible amounts of dough every single day in the sinkholes of Iraq and Afghanistan. No change there, either. None. Nada. N O T H I N G.

In a blow to the movement arguing that vaccines trigger autism, three Federal judges ruled Thursday against all three families in three test cases, all of whom had sought compensation from the Federal vaccine-injury fund.

[snip]

In his strongly worded decision, the special master, George L. Hastings Jr. ruled that the government's expert witnesses were "far better qualified, far more experienced and far more persuasive" than the Cedillos.

[snip]

While expressing "deep sympathy and admiration" for the Cedillo family, he [Judge ruled that they were "misled by physicians who are guilty, in my view, of gross medical misjudgment.

NYT

I really feel sorry for the parents of these children who have been exploited for purely financial gain by greedy lawyers and physicians. It is shameful.

they apparently REJECTED  a plan to let all Americans refi to a lower rate the frakkers

how does this stop jingle mail from those underwater:

writeup here

Under the plan being mulled, homeowners would have to make a case of hardship to qualify for new loan terms.

Housing policymakers weighed but have for now shelved one plan that would have seen the government stand behind low-cost mortgages of between 4 and 4.5 percent, sources said.