Another one Bites the Dust (WaMu)

NEW YORK/WASHINGTON (Reuters) - Washington Mutual Inc (WM.N) was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co (JPM.N) for $1.9 billion.

Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said.

The bailout came after the thrift suffered deposit outflows of $16.7 billion since September 15, the OTS said.

‘With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business,’ the OTS said.

Solid. Solid.

SEC Plans to Temporarily Ban Short-Selling

SEC Plans to Temporarily Ban Short-Selling

WASHINGTON — The Securities and Exchange Commission took its most aggressive assault against bearish stock bets by stating its intention to issue a temporary ban on short-selling.

SEC Chairman Christopher Cox briefed Congress late Thursday of the agency’s intention to take the extraordinary step of interfering with the market’s regular functioning. Short-selling is a trading strategy of selling borrowed stock in hopes it falls and can be repurchased at a lower price.

Well, that’s one way to prop the economy up. Can’t see anything wrong with this! Seems totally fine.

Sigh.

AIG May Get $85 Billion U.S. Loan in Return for Majority Stake

This is so beyond unacceptable, it actually infuriates me.

Sept. 16 (Bloomberg) — American International Group Inc., the biggest U.S. insurer by assets, has been offered an $85 billion U.S. loan in return for an 80 percent stake in the company, according to a person familiar with the situation.

The Federal Reserve was persuaded to offer the loan because of the risk that an AIG failure would threaten the stability of world financial markets, according to the person, who declined to be identified because negotiations were confidential. Efforts to find a private-sector solution failed because the company is too big and a long-term fix was needed, the person said.

Emphasis mine.

HERE IS THE LONG-TERM FIX, YOU RETARDS: STOP BAILING OUT COMPANIES WHO MAKE IDIOTIC HIGH-RISK BETS WITH NO CONSEQUENCES WHEN THEY FAIL.

Mark Cuban nails it on his blog. When you let companies freeroll the American taxpayer by making high-risk investments/acquisitions, everyone but the upper management loses. These companies CEO’s will walk with tens of millions of dollars of severance for making shitty business decisions. Would you take this job? Of course you fucking would.

The fact that not ONE of the posters on my Livejournal Friends List (Buff is probably sleeping, so he gets a pass) talked about this is unsettling. I just cannot understand people all up in arms about issues that ultimately have no traction (*cough* anything socially-related) in Congress, but don’t give two shits about the systematic destruction of our nation’s economy.

Lehman Brothers.

NEW YORK (AFP) - Lehman Brothers declared itself bankrupt Monday and Wall Street rival Merrill Lynch had to be taken over in a new financial earthquake that sent global markets into a slump.

I hate to say I told you so.

Actually, that’s a lie.

America’s Economy, Part 38.

By now I’m sure most of you have heard/read that Fannie Mae and Freddie Mac are being bought out by the federal government. You might ask, ‘What does that mean?’ - fortunately, this article has summed it up quite nicely with its first line:

WASHINGTON — Uncle Sam has just become the 800 pound gorilla in the U.S. mortgage market.

Yes, that’s right, the federal government has taken over yet another private enterprise simply because it was mismanaged and issued implicitly guaranteed loans that the taxpayers would have to protect, should the housing market tank. They believed that owning a house was some inalienable right for poor people, so they relaxed lending standards in a decent economic situation in America. Unsurprisingly, when the economy took a shit due to a combination of major deficit spending, reluctance from foreign investors, dumping money into the private sector by printing billions of dollars of increasingly worthless fiat money, and improving strength of the Euro, these propped-up organizations inevitably failed alongside a multitude of banks who irresponsibly over-leveraged their position on the subprime market.

On July 12th, I predicted that some large players would go down soon. This certainly qualifies, but I hardly think we’ve seen the last of it. See, for example, these retards making comments:

‘Effectively, the federal government has now become the nation’s mortgage lender,’ he said. ‘This takes a major financial threat off the table.’

(emphasis mine)

If by ‘takes a major threat off the table,’ you mean ‘puts it on the shoulders of the taxpayers who never wanted this,’ then yes, that is what happened.

People will talk in the upcoming elections about Obama and McCain. They will debate abortion rights, the need for ‘change’ in education/economy/drugs/whatever, the need to continue/end the war in Iraq, the need to increase/stabilize defense expenditures (no one wants to talk about decreasing the military budget), the need to expand/scale back social welfare programs, and other such tertiary issues that are ultimately meaningless, since none of it will get done. (The last major social reform was what, the Welfare Reform Act passed by the Republicans under a reluctant Bill Clinton?)

What does matter is this bullshit cronyism that is worse than widespread socialism. Liberals like to hold up the economy of today and say ‘This is what you get when the free market runs rampant! We need to keep corporate power in check!’ Two points:

1) No fucking shit, corporate power needs to be kept in check. However, it’s not because of the so-called ‘free market.’ It is because…

2) Government has expanded in size and scope under ALL presidents since World War II.

You hate deficit spending and think it’s irresponsible what the Republicans do? You can thank Democrat Lyndon B. Johnson, Civil Rights Mother-Fucking Hero to all black people. How about unbalanced and unchecked executive power? Democrat Franklin D. Mother-Fucking Polio-Afflicted Crippled-Ass Roosevelt, whom historians will tell you was our best president (or perhaps Abraham Lincoln, who nearly ruined this country).

What we have is not the free market. We have corporatism married to the government, which leads to widespread corruption. Laws cannot change this - they only increase the size and scope of what the federal government controls, which is ultimately influenced by rich lobbyists. The only way to stop the corruption is to limit what the federal government controls in our lives.

Read that, and remember it. And then ask yourself: ‘Why isn’t anyone talking about this as a solution?’

Well, that’s simple. It means less government jobs and less control for power-hungry politicians who are overwhelmingly a bunch of lawyers and rich, holier-than-thou arrogant fucks.

And no one is going to vote themselves (or their friends and family) out of a job.

Honor’s in the dollar, kid.

EIther you’re slingin’ crack rock or you have a wicked jump shot.

Truer words never spoken.

Recycling is Retarded.

I thought most intelligent people knew that recycling is a net economic (and environmental) loss, but it turns out that otherwise smart people (typically liberals, who I suppose are of questionable intelligence if they support leftist economic ideals) actually believe that recycling paper, plastic, and other shit* is a good thing.

If you also believe this, well, read this. And Google search any number of other studies that back it up. Because I am sick and tired of being forced to pollute the environment and increase my tax burden for no fucking good reason.

* Aluminum cans don’t apply. Ever wonder why they pay you to recycle cans and nothing else? If recycling was so good for the environment/economy, they would pay you to do it.

A Note on Gold, again.

I have entertained a few questions about gold as an investment, since I have posted tons of brags and graphs about how awesome I am at predicting the markets. In reality, I boast no such claim - gold as an investment is a relatively poor one, given the capital gains taxes and the storage costs of the actual metal if you own it, compared to an ETF like GLD. Held gold pays no interest or dividend, to boot.

A post in the Economics forum at 2+2 brought this up, and I felt it worth posting about. The reason that I made a significant purchase of gold was a hedge against monetary disaster, not as an “investment.” I would assume that Buff (ikilled007) had the same reasons as well.

So, “investing” in gold isn’t exactly the reason we chose to buy shares of GLD / buy gold coins. We did it because an intermediate understanding of economics indicated that hedging against domestic monetary risk would likely have a positive net gain. It was fairly obvious then, and now we are vindicated, as satisfaction with the government and the economy reaches rock bottom.

You cannot artificially manipulate the price of goods and services by printing tons of worthless fiat money and expect that the markets won’t push back. This type of analysis is not even worthy of economic analysis; it is simple arithmetic. When you intentionally devalue the purchasing power of one individual US Dollar, what do you think is going to happen?

Keynes was wrong, but it’s decades too late to point that out. Reserve banking will be the death of our economy.

Oh, the humanity (or: Kyle is usually right about these things)

Second-largest bank failure in U.S. history

The federal government took control of Pasadena-based IndyMac Bank on Friday in what regulators called the second-largest bank failure in U.S. history. Citing a massive run on deposits, regulators shut its main branch three hours early, leaving customers stunned and upset. One woman leaned on the locked doors, pleading with an employee inside: “Please, please, I want to take out a portion.” All she could do was read a two-page notice taped to the door.

The bank’s 33 branches will be closed over the weekend, but the Federal Deposit Insurance Corp. will reopen the bank on Monday as IndyMac Federal Bank, said the Office of Thrift Supervision in Washington. Customers will not be able to bank by phone or Internet over the weekend, regulators said, but can continue to use ATMs, debit cards and checks. Normal branch hours, online banking and phone banking services are to resume Monday. Federal authorities estimated that the takeover of IndyMac, which had $32 billion in assets, would cost the FDIC $4 billion to $8 billion. Regulators said deposits of up to $100,000 were safe and insured by the FDIC. The agency’s insurance fund has assets of about $52 billion.

This is only the beginning:

Do I get tired of posting this graph?

Not hardly.

NASCAR

Remember when racing fans said that Japanese automakers would never compete in NASCAR? Toyota now dominates through the Joe Gibbs Racing team.

Just another nail in the coffin of U.S. automakers.