Agitprop: Or How I Learned to Stop Worrying and Love the Propaganda

Signs of the Times

I saw this advertisement posted to a telephone pole the other day:

FREE LIMOUSINE FORECLOSURE TOURS

Tour economically-ravaged neighborhoods in style! You can point and scoff at all the derelicts who couldn't pay their mortgages - maybe even snatch a house for dirt cheap! Turns out these tours are big in these parts. After all, Orange County is ground zero for the mortgage meltdown.

At a school meeting this week, my wife mentioned that the meeting organizer opened their session with a few excerpts from a book called "Quotes from Great Leaders". The quote for the day came from St. Ronnie:

Recession is when your neighbor loses his job. Depression is when you lose yours.

Thankfully, it's a recession for me.

Can't say the same about my neighbor next door. 

Insuring Failure

Remember yesterday, when AIG CEO Edward Libby said that AIG’s other insurance businesses were just fine thank you?  Not so fast:

Thomas Gober, a former Mississippi state insurance examiner who has tracked fraud in the industry for 23 years and served previously as a consultant to the FBI and the Department of Justice, says he believes AIG’s supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being “healthy,” as state insurance regulators, ratings agencies and other experts have repeatedly described the insurance side, Gober calls it “a house of cards.” Citing numerous documents he has obtained from state insurance regulators and obscure data buried in AIG’s own 300-page annual reports, Gober argues that AIG’s 71 interlocking domestic U.S. insurance subsidiaries are in hock to each other to an astonishing degree.

Maybe someone should take a look at this.

Poor Richard

From his fainting couch, Richard Cohen clutches his pearls and complains that Jon Stewart was mean to CNBC and Jim Cramer:

What Jon Stewart needs is Jon Stewart. He could use a droll comedian to temper his ferocity and correct him when he’s wrong, as he was about the financial media, particularly CNBC and its excitable analyst Jim Cramer. They didn’t cover up the story of financial shenanigans. They didn’t even know it existed. 

Setting aside the fact that lots of people knew - shouldn’t CNBC have known about the problem? They’re the experts.

Now We're Paying Their Defense Costs

We just gave AIG $30 billion.  AIG is also suing us over a tax matter, so we’re paying to sue ourselves.  And now we’re going to pay for AIG to defend itself from … it’s former CEO:

This is sad and kind of awesome. Maurice “Hank” Greenberg, the man who built up AIG into the global powerhouse, before being forced out by Eliot Spitzer, is suing his old company for securities fraud. Greenberg says that mirepresentations by the company caused him to overpay for the stock.

It’s as though he killed his own parents and is now complaining because he’s a fucking orphan.

Wanker of the Week

Jacob A. Frenkel - AIG vice chairman, former Israeli central banker, and wanker:

Jan. 30 (Bloomberg) — At the World Economic Forum two years ago, Nouriel Roubini warned that record profits and bonuses were obscuring a “hard landing” to come. “I really disagree,” countered Jacob Frenkel, the American International Group Inc. vice chairman and former Israeli central banker.

No more. “Roubini was intellectually courageous, and he called the shots correctly,” says Frenkel, whose AIG survives only on the basis of more than $100 billion of government loans. “He gained credibility, and he deserves it.”

This is what happens when you fuck with Roubini.

Roubini See Global Gloom After Davos Vindication [Bloomberg]

Torch and Pitchfork Time Again

I want heads on pikes, and I mean it:

Three days after receiving $25 billion in federal bailout funds, Bank of America Corp. hosted a conference call with conservative activists and business officials to organize opposition to the U.S. labor community’s top legislative priority.

Participants on the October 17 call — including at least one representative from another bailout recipient, AIG — were urged to persuade their clients to send “large contributions” to groups working against the Employee Free Choice Act (EFCA), as well as to vulnerable Senate Republicans, who could help block passage of the bill.

And why, you might ask, have I posted a picture of an asshole in a Home Depot smock?

satyam means truth

Yesterday I posted on the Satyam fraud - Satyam is an Indian outsourcing company.  Pricewaterhouse Coopers is Satyam’s auditor.  And because PwC missed the $1 billion elephant in the room, they might have a problem:

PwC said it was examining [Chairman and CEO] Raju’s statement but could not comment further due to confidentiality issues.

The fraud could cause problems for PwC. Since Satyam was listed in the US, investors can turn to the courts there for recompense, and there are legal precedents for holding auditors accountable.

I love the smell of litigation in the morning.

$1 Billion Fraud at India IT Group [FT]

A Line Grows at Treasury

First it was the banks. Then Fannie and Freddie. Then AIG.  Then Shittybank. Then the automakers. Then the former millionaires created by Bernard Madoff.

And now the Donald Trump contingent wants in:

From the NY Times: A Wish List for Commercial Real Estate

Commercial real estate groups have been meeting with members of Congress, the Federal Reserve, the Treasury, the Federal Deposit Insurance Corporation as well as Mr. Obama’s transition team, to press their case. And they say they have a compelling one.

It's Beginning to Look a Lot Like Christmas

Well … maybe not so much.  At least from my point of view (NYC) there’s not nearly as much going on as last year.

With that out of the way, I have to ask you a question - isn’t this just awful?

Now that Walter Noel is in trouble for steering $7.5 billion into the Bernie Madoff abyss, the pristine reputations of his five gorgeous daughters - Corina, Lisina, Alina, Alix and Marisa - are getting tarnished, too.

Do you give a shit about these people?

Bush Creates Jobs, Just Not Here

Sweet.

Ramazan Baydan, owner of the Istanbul-based Baydan Shoe Company, has been swamped with orders from across the world, after insisting that his company produced the black leather shoes which the Iraqi journalist Muntazar al-Zaidi threw at Bush during a press conference in Baghdad last Sunday.

Baydan has recruited an extra 100 staff to meet orders for 300,000 pairs of Model 271 - more than four times the shoe’s normal annual sale - following an outpouring of support for Zaidi’s act, which was intended as a protest, but led to his arrest by Iraqi security forces.

Hope they make them in my size.

Stampede for Bush Shoe Creates 100 New Jobs [Guardian]

I Can Haz Bailout?

First it was the banks.  Then AIG.  Then Shittybank. Then the automakers.  Now it’s the former millionaires created by Bernard Madoff.

One week ago, Ronnie Ambrosino was a millionaire.

One week ago I owed less on my student loans than I do now.

Now, Ambrosino is among the long list of investors whose fortunes were allegedly wiped out by Bernard Madoff. Like them, she’s left hoping for a bailout that might never come.

I’m hoping Sallie Mae forgives my student loans.  And gives me a pony.

Mr. Ponzi, Meet Mr. Madoff

UPDATE: Before you read about Madoff, take a look at Preznit Bunnypants ducking to avoid thrown Iraqi shoes.  Sure he’s a war criminal, but he’s got pretty good reflexes for an old dude.

___________________________________________

This Ponzi scheme will probably be the largest and longest-running investment fraud uncovered during the downturn, but it will not be the last. It’s related to Big Shitpile because, among other things, hedge funds are some of the big losers. From the New York Times:

The zoning lawyer in Miami trusted him because his father had dealt profitably with him for decades. The officers of a little charity in Massachusetts respected him and relied on his advice.

A charity - this doesn’t look good.

carpocalypse

Remember Plymouth?  Oldsmobile?  Those car brands disappeared mostly because they duplicated another line’s models (in this case Dodge and Buick) by just changing the badges.  “Badge engineering” some called it.

Now GM must slim down.  The question is - which brands and nameplates to cut?

DETROIT — General Motors says it will eliminate eight nameplates by 2012.

But determining which vehicles will go isn’t as simple as finding eight sales duds in GM’s lineups. GM will kill more than eight vehicles — while adding several others — by 2012.

And what does GM consider essential?

Fool Me Once ...

It’s torch and pitchfork time again:

Dec. 2 (Bloomberg) — American International Group Inc., the insurer rescued from failure by the U.S., should name executives getting “retention” payments and explain why the awards are needed, said Representative Elijah Cummings.

AIG, which said in a September filing that 130 managers will get “cash awards” to stay through 2009, isn’t providing enough information, said Cummings, a Maryland Democrat on the House Committee on Oversight and Government Reform, in a letter to AIG dated yesterday.

And if you don’t think they’re going to steal it all, get a load of this:

Tales From the Bailout

I can’t resist posting this (from John Cole’s comments):

THE TRAGEDY OF THE AMERICAN AUTOMOBILE INDUSTRY:A Play in Three Acts

Dramatis Personae

BIG THREE, a manufacturer of automobiles
UAW, Big Three’s employee
MITT ROMNEY, an idiot

ACT ONE

BIG THREE: I have plans to build automobiles, but I need labor to do so!
UAW: I will labor for you if you will pay me $40 per hour.
BIG THREE: I will not pay you $40 per hour.
UAW: But I need to save for my inevitible retirement, and any health concerns that may arise.
BIG THREE: I will pay you $30 per hour, plus a generous pension of guaranteed payments and health care upon your retirement.
UAW: Then I agree to work for you!

Bend Over

You’re going to get fucked, and you’re going to like it.

Bloomberg:

Nov. 24 (Bloomberg) — The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

…

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

The Dear Leader also promises to get in on the action:

i can haz bailout?

WTF?

From the people that brought you GE Capital’s participation in the Temporary Liquidity Guarantee Program - FDIC is now insuring ‘Stored Value Cards’.

Exsqueeze me?

Yes, that would be Stored-Value-Cards  (and other non-traditional access mechanisms). According to the definition provided by the NY Fed these are:

… one of the most dynamic and fastest growing products in the financial industry. Anyone who makes purchases with a merchant gift card, places phone calls with a prepaid telephone card, or buys goods or services with a prepaid debit card is using a stored value card.

In other words, gift voucher cards, pre-paid telephone cards and any other prepaid debit cards.

More after the jump.

The Amazing Roubini

Roubini predicted this mess in 2006, but did anybody listen?  Nooooo ….

Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

“We’ve reached a situation of sheer panic,” Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. “There will be massive dumping of assets” and “hundreds of hedge funds are going to go bust,” he said.
…
“Systemic risk has become bigger and bigger,” Roubini said at the Hedge 2008 conference. “We’re seeing the beginning of a run on a big chunk of the hedge funds,” and “don’t be surprised if policy makers need to close down markets for a week or two in coming days,” he said.

See you on the breadlines.  More after the jump.

Nobody Could Have Predicted

In today’s episode of NCHP, we once again find the Bush administration hard at work hiding shit that we’re supposed to know about:

The Treasury Department has hired three outside firms this week to help administer its $700 billion, taxpayer-funded bailout of troubled banks. But some key details of those contracts remain a mystery.

The agreements with Bank of New York Mellon Corp. and Simpson Thacher & Bartlett LLP that the Treasury Department posted on its web site each had blacked-out paragraphs in the sections dealing with compensation.

Keep in mind, fellow Stinquers, that the costs of the accountants, law firms, and bankers that will be cleaning up after the Bush administration’s administration of our economy will be over and above what cash we’re injecting into the banks and insurance companies we now own.

More on this latest outrage after the jump.

Oh My ...

Since none of you bothered to bid, it looks like Iceland is officially bankrupt:

The credit crunch claimed its first sovereign scalp last night as Iceland readied itself to accept an International Monetary Fund (IMF) bailout. … The IMF may provide about $1 billion in emergency cash for Iceland with the balance lent by Norway, Sweden and Denmark and additional money possibly coming from Russia and Japan.
…
The IMF is likely to attach stringent conditions to the loan, including the stipulation that Iceland quickly deleverage its three nationalised banks Kaupthing, Landsbanki and Glitner.

Who’s next?  Pakistan? California? Did you forget Poland?

Report: Iceland to Accept IMF Bailout [Calculated Risk]

ru_craigslist > iceland > reykjavik

Small Country 4 Sale - €4.2 trillion Euros OBO

Located N. Atlantic Ocean, pop. 320,000; 285,274 BR; 279,305 FB; 102,992 HB; 103,000 sq. km. lot.  Excellent loc. due to global warming; first world infrastructure w/ old world charm.  Extras include abundant geothermal energy, great fish stocks, and Bjork. Recently 4th most productive country in world.  All reasonable offers considered. Payment methods acceptable: rubles, euros, MC, Visa, Diners Club.  No personal checks, no dollar-denominated offers.  Ask for Mr. Grimsson.

• it’s not ok to contact this poster with services or other commercial interests

PostingID: 86763248

Faith Based Accounting

“Mark to Market” accounting means that you show assets on your balance sheet at their market value.  Although the SEC and FASB (an organization that writes accounting rules) are resisting, the bright lights in Washingon are working to have the mark-to-market rule suspended:

Congressmen, banking lobbyists and companies including American International Group Inc. have urged the SEC to suspend fair-value accounting, saying it forces firms to report losses they never expect to incur. Federal Reserve Chairman Ben S. Bernanke and other proponents say removing the rule would erode confidence that firms are owning up to losses.

If we close our eyes, think real hard, and click our heels together three times, the toxic waste on our balance sheets will magically turn into ponies, and everybody gets one!

Representative Todd Tiahrt, a Kansas Republican, said the House probably would have approved a $700 billion bailout of financial companies yesterday had the legislation included a suspension of fair-value accounting. The House rejected the measure 228-205.

It would have passed “easily” if the rules had been suspended, Tiahrt, who opposed the legislation, said today in a Bloomberg Television interview.

Comrade Can You Spare $2 Trillion?

If you're confused about how us taxpayers will bail out everybody who fucked up, don't be.  Atrios explains:

The mystery all along throughout all of this is who would be missing the seat when the music stopped, who would be left holding the bag.

This is not a liquidity crisis. It's an insolvency crisis. People made bad loans, and other people made hugely leveraged bets on those loans, and still more people insured those bets.

And now the taxpayer gets the bill.

In short, we're fucked.  And this observation chills me to the core:

Not in the mood to call anyone out, but I am struck by the faith of some that the Wise Men In Nice Suits know what they're doing, conveniently ignoring the fact that these people let this disaster happen in the first place.

More after the jump.

Lehman to Liquidate?

Barclays stared into dull gray eyes of Hank Paulson, but he didn’t blink:

The leading proposal had been to divide Lehman into two entities, a “good bank” and a “bad bank.” Under that scenario, Barclays would have bought the parts of Lehman that have been performing well, while a group of 10 to 15 Wall Street companies would agree to absorb losses from the bank’s troubled assets, according to two people briefed on the proposal. Taxpayer money would not be included in such a deal, they said.

But that plan fell apart on Sunday, making it likely that Lehman would be forced to liquidate.

The issue is that no one knows what Lehman is worth, and this is especially true because its share of Big Shitpile may not be worth anything at all.

Roubini!

Damn I love this guy:

Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected.

And, sports fans, did you know Lehman and WaMu are tanking?  Stay tuned for another federal bailout!  Those fucking losses won’t socialize themselves!