Friday, October 24, 2008

it looks like another bad day for world economy

Stock markets around the world have dropped, in some cases by nearly as much as 10%. The Dow Jones Indices went into free fall this morning and lost over 400 points.

gold is down to $681 the price it was the beginning of the year.

and good news for us bad for OPEC nations is the fact that oil is done to $63 a barrel.

and the dollar is down

this recession originally looked like it was mainly going mostly just effect the "developed" nations but now investors are pulling their investments form emerging markets due to fears that those markets wouldn't be able to handle being hit hard by a financial crisis. Of course these withdrawals of money can be the very thing that would send these nations into a financial crisis.

I wonder if all this down turn is just due to the already nervousness of the market or was it giving a little push due to Greenspan's talk with the House Committee on Oversight and Government Reform yesterday, where he admitted that he was wrong (at least partly) on some of his views and in his hands off way of managing banks.

In a time when people are already nervous about the state of the economy that news is easily enough to make a lot of people feel unsafe about the market.

Thursday, October 23, 2008

Al-Queda hoping for a McCain win

it seems that on a number of Al-Queda blogs and sites people have been posting about their happiness over the fall of the world's stock markets.

and are hoping for a McCain win because they think he will do all the same things Bush that led to this mess and the war in Iraq.

well at least someone is happy :(

Tuesday, October 21, 2008

Hey you may get yet another stimulate the economy...yeah baby

it seems like Bush, Fed Chairman Ben Bernake and even Nancy Pelosi are backing the ideal of sending yet another check to the American tax payers in hopes that we will go out and stimulate the economy.

If past the check should come sometime after the election but before Christmas.

with the talk that sells are expected to be down for Xmas shopping this year I am sure retailers are happy about this.

the folks at are right in that this will have to be paid for some how (higher taxes or by causing inflation)

But it will also be spent and since right now people are holding back on their spending. which is making the bad problem of the economy worst it could be a good thing.

of course once again I think the money could be used in a better way.

for example instead of just giving us a check why not spend the money on fixing a bridge or something and paying an out of work construction working.

Tuesday, October 14, 2008

All Your Banks Are Be Long To U.S

Today President Bush and Treasury Secretary Paulson announce a plan to use $250 billion out of the $700 billion bailout bill to buy stocks in American banks.

or to put it simply the government is taking (part) ownership in the banks.

This move is of course done to help fix the troubled economy and countries around the world have taken similar actions.

As big of a change this is for the way we (America) have ran our banking system to give some since of normalcy a large chunk of the money ($125 billion) will go to the largest banks (Citigroup Inc., Goldman Sachs Group Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Merrill Lynch & Co., Morgan Stanley, State Street Corp. and Bank of New York Mellon Corp.)

This is keeping with who the FEDS bailed out in the past months.

wow, joking aside I'm really trying to take this all in. I know the ideal of America nationalizing its banks will make some people fell uneasy even if it only in part. But then those people will go into a crazy rant about becoming a communist nation.

Which I doubt will happen in America.

besides the government is only planning on buying 15% of the companies and in 3 years they can buy back their shares.

but this is still a very interesting development.

the Treasury department will be placing limits on executive pay and golden parachutes.

holy toledo Obama's plan to save the economy

In Toledo, OH Obama has laid out his plans to save the nation economy.

Obama is still pushing many of the same programs he has been running on since the beginning of this race but has added a few things that I don't remember seeing before.

Obama will offer companies a $3000 tax credit for every new employee they hire in the years 2009 and 2010.

extend a law that was passed earlier this year but expires at the end of the year that raises the amount of money small business can raise to $250,000

0 capital gains tax on money made by investments into small business.

for the years of 2008 and 2009 Obama will end the penalties placed on people taking money out of their IRAs due to hardship.

let Seniors delay taking their money out of their 401k (if they want to) instead of forcing them to take their money out by the time they are 70 1/2

tell the Sectaries of Treasury and HUD to be more active in fixing the terms on mortgages to better suit people.

end a loop-hole that allows judges to fix terms on second homes and vacation homes, but doesn't allow the judge to fix the terms on primary residence.

make sure people facing foreclosure have at least 90 days moratorium

give states $25 billion so they don't face budget crunches

be ready to give more help to the banks

the money for that $850 billion bailout shouldn't just go to mortgage assets but things like student loans, individual mortgages, car loans and other things.

credit for small business and local governments.

eliminate fees on the SBA

and have an emergency lending organization for small business (similar to the one that was in place after 9/11)

and they are blaming it on the Jews agian

it's really a shame that hard times like we are going through with world economy can bring out the worst in people.

yesterday I talked about how it was wrong to blame minorities and poor people for this crisis.

know I just read an article talking about how there has been a boom of people blaming Jewish people for the world economic downturn.

I'm sadden to hear this but I guess I shouldn't be to surprised Jewish people have taken the blame for financial troubles since the middle ages.

But still I guess I hoped we got past that short of thing (but then giving that there are so many people wanting to blame this on Blacks and Latinos I shouldn't have know better)

anti-Semitism and racism doesn't have any place in economics go please take that stuff to your Klan rallies and neo-nazi meetings.

Monday, October 13, 2008

dear racist classist it is not the poor or minorities that caused this economic crash

I have noticed a trend on blaming this crash on minorities. The truth is this is not the case.

Newsweek as an article showing why this isn't the case

in short the article notes that the programs people point at to say the crisis is due to bank being forced to give loans to minorities where placed mostly on regulated banks and most of the subprime loans didn't come from those banks.

in fact the article shows that giving loans to poor minorities isn't risky if you give them a fair loan. they brought up an example of microlending and a group called Nehemiah Homes which gives loans to the working poor in the new york area. out of nearly 3,900 loans they have giving out they have only had 10 defaults.

The article ends by pointing out that the problem really seems to come from lending to rich white guys that ran companies like AIG (I already wrote about how fast they sent the billions they got from the fed)

They where the ones that used the money riskly. Not the poor or the minorities.

Friday, October 10, 2008

Zero Dollar bill

on Tuesday artist Laura Gilbert was on wall street passing out 10,000 copies of her latest work of art...the zero dollar bill

the zero dollar bill is the artist's statement on the state of the economy.

The bill is printed on a sheet of paper showing both the the front and back on the front side of the paper. I'm guessing it's done this way so the artist wont be accused of trying to counterfeit or maybe she wanted to make sure no one spent it (but at 0 bucks that seems hard to do)

I wouldn't mind having a copy of her work, it's funny and tragic and the same time.

Thursday, October 9, 2008

AIG needs even more money

Just weeks after the feds gave AIG $85 Billion to stay afloat and not to long after reports that the heads of the company spent $442,000 on a week in trip the fed has decided to give the company another $34 billion.

it seems that AIG has already spent a good chunk (about $61 billion) of the money they got from the feed 2 weeks ago.

It seems that maybe reason AIG is in such trouble is because the company isn't managing its money to well. maybe instead of just handing the company more and more money they should only give the money if the company has better management.

Wednesday, October 1, 2008

the No Bail out plan

Peter DeFazio has done it again. He has came up with an alternative plan to the bail out that is being talked about in DC right now.

He figures his plan would either not cost tax payers money or at the least wont be that big of a cost.

here is his five point plan.


Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.

2) Require the Securities and Exchange Commission to restricting naked short sells permanently

This bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies "to protect the integrity and quality of the securities market and strengthen investor confidence." This rule prevents market crashes brought on by irrational short term market behavior.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies "to protect the integrity and quality of the securities market and strengthen investor confidence." This rule prevents market crashes brought on by irrational short term market behavior.

4) "Net Worth Certificate Program"

This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount "borrowed" as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.

Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.

In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.

5) Increase the FDIC Insurance limit from $100,000 to $250,000.

The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.

if you like it feel free to ask your congressperson to support it.

I think on of the big problems with the Paulson bail plan is the way it has been presented as it's this or nothing else and congress should have taken a little more time to look at other ways about it.

at least there are a handful of people like DeFazio that are at least looking at something different.