Alan Greenspan Destroyed the World, Darth Vader-Style

The Sky Is Falling, Really, Says Alan Greenspan

BLOOMBERG 10/23/08: Alan Greenspan, Fed Chairman from 1987-2006, conceded to Henry Waxman, Chairman of the House Committee on Oversight and Government Reform, that he may have been a wee bit wrong about the idea that self-interest and an invisible hand would regulate the markets.

Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony. Other rules should address fraud and settlement of trades, he said.

The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''

Today Committee Chairman Henry Waxman, a California Democrat, said Greenspan had ``the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.''

Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006. Policy makers are now struggling to contain a financial crisis marked by record foreclosures, falling asset prices and almost $660 billion in writedowns and losses tied to U.S. subprime mortgages.

Securities and Exchange Commission Chairman Christopher Cox and former Treasury Secretary John Snow also appeared at the House committee hearing.

Addressing the trio that oversaw the U.S. financial markets as the housing bubble developed, Representative John Yarmuth, a Democrat from Kentucky, characterized them as ``three Bill Buckners,'' referring to the Boston Red Sox first baseman whose fielding error some fans blame for the team's loss in the 1986 World Series.

These fucking Congressmen, they do the same damn thing everytime: they ignore or actively oppose regulation at the time when it would actually do some good. Then after disaster strikes (and this is disaster: countries are defaulting at a breathtaking rate—Hungary, Argentina, etc.—emerging markets are fragile because investors are pulling out and putting their money into wealthier nations that can afford to back up debt with guarantees.

Corporations can’t sell 3-month commercial paper. In a week or so the Fed will begin buying it, presumably to ease the market. Is this the trickle-down theory?

Greenspan actively fought regulation, especially during the run-up to the housing boom and throughout the bubble. When Brooksley Born, head of the Commodities Futures Whatsis, tried to get derivatives regulated, she was not only rebuffed, Greenspan and Robert Rubin, Clinton's Treasury Secretary, derided her concerns in front of Congress and managed to remove all of her enforcement powers. She resigned shortly afterward.

AmeriDream President Asks for Congress to Pass Downpayment Assistance

Ann Ashburn, President of AmeriDream, Inc., today released the following statement in response to former Federal Reserve Chairman Alan Greenspan's testimony before Congress regarding the current U.S. financial crisis. Dr. Greenspan identified the stabilization of the U.S. housing market as a key condition for economic improvement.

"We agree with Dr. Greenspan that housing prices must stabilize for our economy to recover," said Ashburn. "Homebuyers currently have little incentive to enter the housing market. Fortunately, we can fix this problem: Congress must reauthorize downpayment assistance funded in part by sellers, commonly known as DPA, which was eliminated October 1st of this year. A bipartisan coalition in Congress has introduced H.R. 6694 to achieve this goal. H.R. 6694 will bring creditworthy "main street" homebuyers - each of whom qualifies for an FHA loan - back to a housing market that desperately needs them. Without DPA, more than 300,000 homebuyers will remain on the sidelines annually. I urge aspiring homeowners and housing industry professionals to contact their members of Congress and tell them to support H.R. 6694. Our housing market depends on it."

Dr. Greenspan testified today that, "a necessary condition for this crisis to end is a stabilization of home prices in the U.S. They will stabilize and clarify the level of equity in U.S. homes, the ultimate collateral support for the value of much of the world's mortgage-backed securities. At a minimum, stabilization of home prices is still many months in the future. But when it arrives, the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards reengagement with risk." His entire testimony can be read here:

BACKGROUND: AmeriDream, a 501(c)(3) charity, was established in 1999 to provide housing-related programs to low and moderate income individuals and families. Many recipients are first-time homebuyers, minorities, legal immigrants, women headed households, and single-parents, achieve homeownership. AmeriDream provides a wide range of programs, including homebuyer education, loss mitigation counseling, community development, and privately-funded down payment assistance. These programs are provided at no cost to the taxpayer. AmeriDream not only seeks to help families purchase homes, but also provide them with the education and other resources needed to be responsible homeowners.

SOURCE: American Dream, Inc.

Copyright (C) 2008 PR Newswire. All rights reserved

Where is Roger? Stone, that is...

Andrew Cuomo, our current New York attorney general, is hot on the trail of dastardly financial institutions and their evil spawn. He got major companies to cough up the value of auction rate securities when the market froze because the companies sold them as the equivalent of cash but refused to make good. He had his attack dog Eric Dinallo, the insurance commissioner, reclassify credit default swaps as insurance, so they have to be regulated and carry cash reserves to cover claims against them. He pursued the executives at AIG who are still pocketing lots of cash even though now it's the taxpayers' cash courtesy of Hanky Panky.

He's Tony the Tiger chomping on the asses of these overpaid criminals. So my question is, where is Roger Stone to wiretap and stalk him? That's how the Republicans (and probably a few Democrats, like Shelly Silver) got rid of Eliot Spitzer, our last New York pit bull. It's the same way Richard Johnson gets the tip that Michelle Obama ordered lobster thermador and caviar at the Waldorf last night when the Al Smith dinner was held. The Emperor Club? VIP Lounge?

Medicare Part D or how to impoverish the elderly

The trumpeting cry behind the Medicare Part D program was that it would finally provide prescription drug coverage for the elderly and disabled. AARP, the powerful advocacy organization, rallied behind it, giving cover to that bastard.

But as it turned out, Bush created Medicare Part D as an insured pay flow for private vendors, middlemen between drug companies and hapless recipients. It is widely known that the government will not negotiate for lower drug prices for its vast constituency, unlike the Veterans Administration.

When I examine one case, that of a close relative who receives prescription drug benefits through a Medicare-preferred private insurer, it is obvious that the concern is not for the person who needs medicine but for the bottom line of the insurer.

She pays premiums of $100 per month (an increase of 80% from a year ago) for the opportunity to have $2400 worth of drug costs covered. The calculation of that $2400 includes the entire cost of the drug, not merely the co-pay. So if you buy a drug with a co-pay of $40 but the total cost of the drug is $350 (not uncommon), the $350 counts towards the $2400 initial coverage. Once you hit that $2400 mark, you fall into what is known as the "doughnut hole". (Meaningful name) Then confusion and dismay follow in short order.

In the "doughnut hole" you have to pay 100% out of pocket for your prescription drug costs until you have spent $3600. The calculation of that $3600 out-of-pocket figure includes your co-pays over the year. It's very confusing for her, and she can read without moving her lips.

The way it breaks down is: She pays about $100 monthly premiums, about $1200 per year, plus $3600 out of pocket for $2,400 worth of benefits. Unless somehow she gets through that $3600 doughnut hole intact in order to qualify for catastrophic coverage, wherein she only has to pay 5% of total drug costs.

So she pays $4800 for $2400 worth of benefits. But she has to keep paying the premiums in case she god forbid is diagnosed with something unexpected that may entail runaway drug costs (i.e. cancer, diabetes, et al). This is not insurance for her. This is insurance for them.

When I contacted this magnanimous "preferred" vendor, I didn't get the impression that the customer service reps were prepped and ready to serve. My vision was that of a desk, a chair and a telephone under a bare light bulb in an anonymous rent-by-the-month room-for-an-office. I have nothing against a bare bones operation. I just wonder where the profits are going. Maybe the CEO can send my aunt a postcard during his vacation in Tuscany, or the blueprints of his new McMansion. Then she'll feel better about skipping her insulin.

Oops! Russia Just took over BP

What a jolly theoretical world. British Petroleum (or BP, or Beyond Petroleum, as its tagline goes) is having a little trouble with its Russian partners in a venture known as TNK-BP Ltd. In fact, the head of the BP venture, Robert Dudley, has just fled Moscow, officially because the Russians wouldn't renew his work visa. Unofficially, he's been barraged by threats and intimidation from the Russian consortium, AAR, which owns 50% of the venture.

The Russian government denies that it backs the effort to force out BP in order to nationalize the company. It won't get involved, it says. It's merely a matter between Dudley and the consortium's dissatisfied board and shareholders. But Dudley says he's been subject to investigations, intimidation and inquiries. The three Is.

Update: Sammmy's Time Machine

Although it's hard to believe anything that The Post's Page Six publishes (their writers do have a habit of blackmailing people), the story has a ring of true wishful thinking. An anonymous trader who worked with Samuel Israel the Third in the mid-90s tipped off one of Richard Johnson's henchmen that the fugitive (now Armed and Dangerous) boasted to him that he built a time machine, and even brought acquaintances to see the contraption:

"This guy Sam was crazy and told people he was actually working on a time machine for the government," said our source. "He brought two of my friends from Wall Street into his basement and showed them some contraption. Now that's a nutcase."--NY Post, Page Six, 6/18/08, "Fled to the Past"

As I recall in the movie, Rod Taylor went back to the past and far into the future with his machine courtesy of the mind of H.G. Wells. In the future man was mute, enslaved by slavering overlords who fattened them up for food. Think progress.

Maybe he brought it with him in the RV. I'm sure his investors would love to step into it and set it backwards to the '90s. In fact, if it were possible according to the law of physics, all Wall Street financial institutions would leap into it and dial it back to the 1990s.

What Makes Sammy Run?

According to today's NY Times, the girlfriend of Samuel Israel III, Debra Ryan, was just indicted for aiding and abetting Sam's flight from justice on June 9.

Sam pleaded guilty in 2005 to defrauding investors of more than $400 million through his Bayou hedge fund. He was supposed to report to prison for a 20-year sentence on June 9. Instead, authorities found his abandoned GMC Enterprise SUV on the shoulder of the Bear Mountain Bridge overhanging the Hudson River with the phrase, "Suicide is Painless" scrawled in dust on its hood. No trace of Sammy. Although the bridge has had its share of suicide dives, the bodies were usually recovered within hours.

The investors in Bayou were furious. Not only was he sentenced to prison, he also agreed to pay back millions of pilfered dollars. They were not amused nor fooled by his middle finger homage to a cheeky anti-war movie. They knew who it was directed at.

As to the details coughed up by Ms. Ryan: Two days before his date with the slammer, the two of them packed up his white 2007 Coach Freelander Recreational Vehicle, NY license number EEN-5973. They attached a blue 2005 Yamaha motor scooter to it. Early in the morning of June 9 she drove her car alongside him driving the RV to a rest stop near Interstate 684, where he left the RV. Then she drove him back to their home in Armonk, NY, where presumably he got into his GMC Enterprise SUV and drove to the Bear Mountain Bridge to stage his poorly executed suicide attempt.

I'll be glad to work on the Sammy case for a 10% finders fee. It shouldn't be too difficult. I'll just keep my eye out for a portly, baldish white collar criminal with a bad back on a motor scooter or the same driving a barge-like RV with a nationally broadcast license number.

Keith & Richard (cont'd)

Someone in the audience asked how we could survive the Bataan Death March (also known as the Democratic primary battle). Richard, who, after all, is a comedian, said he was ill-equipped to answer that question. But he directed the audience to Bruce Springsteen's website and said quietly (for Richard) that if you support Obama and don't speak out, there is a special place in hell reserved for you.

After the talk, Jeff and I were milling about with members of the audience who were patiently waiting in queues at the signing table. As we were walking out of the Y, I suddenly grabbed him by the arm and took him back to that area. There were innovative graphic novel-like strips on the wall obviously done by young people, some in the manner of Japanese anime. Very imaginative. I vaguely remember that the plot of one concerned a female student/spy scheming with ominous characters about high school milk money. Lots of slanted lines, shadow and light.

We never got close to the wall. Keith Olbermann in the flesh was walking towards us. He was very tall. And big. (Speaking as someone who knows one, he has a big head too.) I was very excited and pushed Jeffrey up to him. Keith was surrounded by a tight group of affluent, older, well-dressed women. Jeff was very happy. He approached Keith like a close talker and said, "You've been one of my true heroes. Thanks for all you've done." He answered in a clear, deep, broadcaster's voice, "Thanks very much. Jeff: "I'm a sports fan." And: "I wish Channel 2, 4 and 7 could report news like you do." He leaned forward and loudly whispered, "Don't hold your breath."