Tuesday, September 30, 2008

A bailout solution we can live with

There are thousands of people who come to this site (I have no idea why, but thank you), I figure I better offer a solution to this mess that we can all live with. A solution that does not reward the crooks on Wall Street and helps Main Street.

Solutions that I can live with:

1) Raise the FDIC limit to $5 million on bank deposits and $5 million insurance on money market accounts.

2)Once #1 is in place and the risk of capital flight is gone, start shutting down the insolvent banks and fire the management. Lets not let some Zombie banks stay alive for the next 3-5 years and get this credit crisis behind us.

3)The economy is in a recession and will be in one for some time, lets get on to some Keynesian Economics and start investing in jobs and projects that will move us forward. We need to re-build our crumbling infrastructure and construct projects that will allow us to become energy independent (nuclear, wind and solar investments). If we are going to spend trillions of dollars, why waste it on buying garbage from insolvent banks? Why not invest the funds in the USA and on projects that will create millions of jobs?

Some common sense thinking on this horrible bailout plan.

From CNN.com:

Commentary: Bankruptcy, not bailout, is the right answer

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth

Monday, September 29, 2008

LMFAO!! Paulson is an idiot!

WSJ, May 7, 2008:

WASHINGTON -- Treasury Secretary Henry Paulson said U.S. financial markets are emerging from the credit crunch and that "the worst is likely to be behind us," marking possibly the most optimistic comments yet from the Bush administration on the financial crisis.

Mr. Paulson's comments, made in an interview Tuesday, reflect Treasury's view that the administration and the Fed have already taken steps necessary to quell the situation.

Saturday, September 27, 2008

Bank Failure

This one is across the pond.


Treasury to nationalise B&B bank

Troubled bank Bradford & Bingley is to be nationalised, the BBC has learned.

Officials from the Treasury and the Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future.

BBC News business editor Robert Peston says the Treasury will almost instantaneously sell to a bank, or a number of banks.

The bank will be nationalised using special legislation the Treasury put
through when it took Northern Rock into public ownership earlier this year.

The measure is expected be announced on Sunday night or Monday morning.

Friday, September 26, 2008

No soup for you!

Does this mean these guys will need to learn the phrase "would you like to supersize that"?


State revokes real estate licenses of Crisp, Cole

David Crisp and Carl Cole’s real estate licenses have been revoked by state regulators.

The decision, released today by the California Department of Real Estate, ended license hearings held this summer regarding a mortgage fraud case against Crisp, Cole and several employees that was filed last September.

Thursday, September 25, 2008

Bank Failure

BushCo can't stop the tsunami

Washington Mutual is DONE! :

On September 25, 2008, the banking operations of Washington Mutual, Inc -
Washington Mutual Bank, Henderson, NV and Washington Mutual Bank, FSB, Park
City, UT (Washington Mutual Bank) were sold in a transaction facilitated by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC).

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled the following information which should answer many of your questions.

Monday, September 22, 2008

Another mogul not his paying bills on time and Supreme Bean closes

Like many developers in the current downturn, Moreland has experienced some financial difficulties of late:

Last Friday, Moreland’s Val Verde LLC defaulted on a $5.4 million construction loan against a 126-lot residential project on the south side of Hosking Avenue, east of South H Street. More than $3.1 million was in arrears as of Sept. 17, the default filing showed. The May 2007 loan was made by PFF Bank and Trust.

Last month, Moreland’s Monte Carlo LLC defaulted on a $15.4 million loan against northeast Bakersfield property near Highway 178 and Miramonte Drive.

In addition, liens and lawsuits from contractors and subcontractors have piled up against various projects in recent months, county filings show.

Workers: Supreme Bean closes, leaving them without paychecks :

Supreme Bean, a Bakersfield chain of drive-thru coffee stations acquired by a Texas company earlier this year, appears to have gone out of business.

It was unclear Monday whether the closure of the chain’s at least eight locations was permanent.

Employees were notified Saturday that they were not to return to work. When they asked how to obtain their final checks, one worker’s manager suggested she file for unemployment benefits.

Maybe Moreland and the owners of Supreme Bean can call up Bush/Paulson and see if they can get in on this bailout...free ponies for everyone.

Friday, September 19, 2008

Bank Failure!

Bushco can't stop the on coming train...


On September 19, 2008, Ameribank, Inc., Northfork, WV was closed by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled the following information which should answer many of your questions

Privatize the profits and Socialize the losses

Today is the day whatever form of crony capitalism we had was lost. King Geroge Bush has now decided to Privatize all profits and Socalize the losses.

Where was Chimpy Bush during this run up? He was signing the praises of an "ownership society". Meanwhile the fat cats on Wall Street were being paid BILLIONS in bonuses.

Now we the American taxpayer must foot the bill for this mess, while the richest of the rich get to walk away with all the profits. $1 trillion to $2 trillion will be the price tag for the bailouts of Bear Stearns, Fannie Mae, Freddie Mac, AIG, actions by the Treasury and Fed and the cost to run and step up RTC2.

Welcome to the USSRA!

Monday, September 15, 2008

Commerical real estate market crumbling.

Where were these experts in this article when I was predicting a crumbling in the market? I know, they were cheer leading and talking their book. We are only in the early stages of this CRE bust. I have driven around town and there are many developments with zero or only a few tenants. As the Great Unwinding begins both the strong and weak hands will fold.

From the Bakersfield.com:

Victims of bad timing and economic conditions that have clobbered mom-and-pop store owners, Bakersfield’s independent retail market is struggling to an extent not seen since the 1990s.

The vacancy rate among Bakersfield’s standalone shopping centers has reached about 13 percent — double what it was a year to 18 months ago, according to Scott Underwood, a broker at Grubb & Ellis/ASU & Associates.

“It’s going to be a while before all this retail space is absorbed,” he said.

Friday, September 05, 2008

Defaults and foreclosures continue to grow...no bottom in sight

From Bakersfield.com:

One thousand properties foreclosed in Kern County during August, county figures show, the most ever for records going back to 1995

Default notices also hit a new all-time high. Lenders recorded 1,326 last month, numbers from the Kern County Recorder’s office show, reversing slight declines in June and July.

Tony Ansolabehere, the county’s assistant assessor, estimates there are currently about 5,600 foreclosed properties still owned by lenders in the county. Most are homes, he said.

“There’s a lot of inventory out there that needs to be absorbed,” Ansolabehere said.

Details at the County website