Remarks From Remarksman

March 12, 2009

Jim Cramer – Liar

Filed under: Uncategorized — BrianB @ 5:51 pm
Tags: , ,

Jon Stewart on The Daily Show had an interview scheduled with CNBC’s Rick Santelli last week. Santelli cancelled, so The Daily Show spent several minutes destroying CNBC’s claimed reputation as ‘Your Source for Business News.’ The segment expertly skewers CNBC, you can watch it here. Several of the many CNBC clips showing inaccurate predictions included Jim Cramer, host of CNBC’s “Mad Money” show. Jim Cramer seems to have made the foolish decision to attack Jon Stewart in retaliation. How smart is it to attack someone who’s specialty is making fun of people?

Cramer wrote a long article at MainStreet.com to “defend himself” from numerous ‘misguided attacks.’ He also toured several shows on NBC networks to ‘clear things up.’ The Daily Show had a great response in which more of Cramer’s lies are exposed. You can watch it here.

But that’s not the worst of Cramer’s lying. The Huffington Post points out an interview of Cramer on TheStreet.com available on YouTube. In the interview, Cramer describes things he did to manipulate the market when he ran his hedge fund. Here are some quotes pulled from the interview and featured in the HuffPo article:

He calls [manipulating stock prices] “a fun game, and it’s a lucrative game.” He suggests all hedge fund managers do the same. “No one else in the world would ever admit that, but I could care. I am not going to say it on TV,” he quips in the video.

He also calls Wall Street Journal reporters “bozos” and says behaving illegally is okay because the SEC doesn’t understand it anyway.

Here are some gems:

  • On manipulating the market: “A lot of times when I was short at my hedge fund, and I was positioned short, meaning I needed it down, I would create a level of activity before hand that could drive the futures,”
  • On falsely creating the impression a stock is down (what he calls “fomenting”): “You can’t foment. That’s a violation… But you do it anyway because the SEC doesn’t understand it.” He adds, “When you have six days and your company may be in doubt because you are down, I think it is really important to foment.”
  • On the truth: “What’s important when you are in that hedge fund mode is to not be doing anything that is remotely truthful, because the truth is so against your view – it is important to create a new truth to develop a fiction,” Cramer advises. “You can’t take any chances.”

This is the culture of the “Wall Street” people and businesses we are bailing out.

Advertisements

February 1, 2009

Fed Borrowings Grow At Alarming Rate

Filed under: Uncategorized — BrianB @ 5:29 am
Tags: , , , ,

I posted a Fed Borrowings chart back in August that seemed worrying at the time… Check out the latest ( December 2008 ) data:

Federal Reserve Borrowings by Depository Institutions as of Dec 1 2008

Federal Reserve Borrowings by Depository Institutions as of Dec 1 2008

(Source: Federal Reserve Bank of St. Louis)

Borrowings are now about three times as much as they were in August.

October 27, 2008

Iron Knee on How Screwed We Are

Iron Knee has posted a couple articles, today and yesterday on PoliticalIrony.com, discussing the awful actions the Bush Administration is taking during its last few months. Here is a list of recent events (most of it enumerated in the Political Irony posts):

  • Banks are using the bailout money to buy up other banks.
  • Banks are using the bailout money to give bonuses to investment bankers.
  • The Office of Surface Mining (OSM) has failed to enforce the Stream Buffer Zone Rule in regards to mountain-top-removal coal mining in Appalachia, so now they’re planning to just do away with the rule.
  • Bush (along with a willing and apparently stupid Congress) agreed to sell nuclear technology to India, which never signed the NPT. (I wrote about this when the bill passed.)
  • AIG (one of the largest recipients of federal bailout money) may have used bailout money to lobby Congress to pass that India nuclear tech bill.
  • And now we are apparently killing people in Syria via cross-border raids from Iraq.

It seems that Bush and his corporate welfare administration cronies are concentrating on extracting every dollar and benefit, and executing every idiotic plan they can during these next few months because it looks like Obama will win the election. It’s difficult not to feel like we’re looking for deck chairs on the Titanic on a grand scale. Like Iron Knee says, we are screwed.

The Wrong Bailout

The administration is trying to loosen the credit market by pumping money into banks by buying supposedly preferred shares (which have no voting rights). Their idea seems to be that if banks have plenty of money, they will hand out loans. As we’re seeing, that is not what banks will do with the money. Instead, the government should be creating new business. It could increase spending on critical infrastructure: fix up a bunch of our decaying highway bridges, build new electric transmission lines, build big solar thermal plants in the southwest, build big wind power fields in the northeast, build geothermal power plants in the northwest. Build or subsidize these kinds of projects and in addition to creating jobs, loans will be requested by contractors — loans which have a great chance of being repaid. Loans that the banks will be happy to make.

The Works Project Administration (WPA) from the Great Depression didn’t hand money out to banks, it built valuable infrastructure for the country and put unemployed people to work. But just last week, Fed Chairman Ben Bernanke told Congress they should start thinking about another stimulus package. Congress already seems to be thinking along the same lines as the “economic stimulus package” from earlier this year. Note to Congress: Handing out cash to taxpayers so they can buy new plasma screen televisions is not the same as the WPA.

I’d be surprised that Congress and the Bush Administration can get it all so wrong, but it’s not surprising if you consider how much the financial industry spends on lobbying and campaign donations. And don’t forget “Clean Coal.”

October 4, 2008

Bailout Blues

Filed under: Uncategorized — BrianB @ 9:03 pm
Tags: , , , , , ,

It’s just politics in the good ol’ U.S. of A.: If you add enough pork to a stupid bill, you can get it passed.

That is pretty much what led to the passage of the big bailout bill yesterday. It makes no sense to add a bunch of “un-funded” tax breaks to a bill that already massively increases the national debt, but sense often does not figure into how our congress operates. Here is a quote from an opinion piece written by James Grant that will show up in tomorrow’s Washington Post (Hat tip: The Big Picture):

Low interest rates, easy money and malleable accounting rules are what plunged Wall Street into crisis. Yet it is low interest rates, easy money and malleable accounting rules that top the list of federal fixes. The unifying theme of the new bailout bill, all 451 pages of it, is the hair of the dog that bit you.

The unblinkable fact is that Americans own too much house. We overpaid and overborrowed, and many of us are “upside down,” as the car dealers say. What to do? Recognize the losses and write them off. What not to do? Inflate the currency and debase accounting standards.

But inflation and debasement are the very policies being put in place. The Federal Reserve, not waiting for Congress, embarked last month on a radical program of money-printing. Reserve Bank credit — the raw material of bank lending — is growing at the year-over-year rate of 61 percent.

Credit creation is the Fed’s signature crisis-management policy: Let a bubble inflate, then watch it burst; clean up with lots of dollar bills.

So, we’re stuck with a stupid plan and a bunch of pork. What can we do?

Representative Brad Sherman (D-Calif.) was one of those who voted no. He has issued a statement calling for pressure on Congress and the media to keep an eye on the money (Hat tip: MojoBlog):

Today, Congress approved the $700 billion Wall Street Bailout Bill. Under the Bill, hundreds of billions of dollars will be used to buy toxic assets currently in safes in London, Shanghai, and Riyadh, Saudi Arabia. Bailed out Wall Street firms will use their bail out money to pay million dollars a month salaries, and to even increase them to two million dollars a month. (For details, see paper at BradSherman.house.gov.)

Our economy will not do well in the months to come, and dropping $700 billion on Wall Street is not going to make things much better. But now Wall Street will use the same fear mongering tactics which were used to pass the Bill, in order to justify the bill.

In order to pass the Bill, Wall Street declared that unless they received $700 billion in unmarked bills, the Dow would drop by 4,000 points and blood would flow in the streets. The passage of the Bill will have little positive economic effect, and the fall and winter will be bad times for our economy. But in the coming weeks, Wall Street will justify the Bill by saying that we averted those very same calamities they had predicted during their successful effort to create panic, and pass the Bill.

The worst abuses of the Bill can be minimized if Congress, and especially the press, begins an unprecedented level of ferocious oversight:

  • We have to make sure that Paulson spends the money and the orderly rate of less than $50 billion month (as he has promised), not at a frantic pace that spends it all by January 20th, 2009.
  • We have to make sure that Paulson treats all financial entities fairly, whether they be firms he likes, or firms he doesn’t like. (It will take incredible investigative journalism to see whether the executives of any bailed-out firms are making secret contributions to Section 527 organizations, which are responsible for a big chunk of today’s political advertising).
  • When a firm receives a billion dollars in bail-out cash, we must report on which of its executives are receiving that cash in the form of salaries in excess of $1 million a year. (The bill allows unlimited salaries to be paid by bailed-out firms, and does not contain a provision preventing the bail-out cash from being used to pay those salaries.)
  • Each time a U.S.-headquartered entity sells billions of toxic assets to the Treasury, we must ask whether that U.S. entity is just acting as an intermediary. We must ask whether those toxic assets were in foreign safes on September 20th, 2008. We must be aware of the China two-step (described in a paper at BradSherman.house.gov), in which a foreign investor who made bad business decisions can sell toxic assets to a U.S. entity on Monday, and Paulson can buy those toxic assets with taxpayer dollars on Tuesday.

No one will ever be able to prove that the Bailout Bill helped or hurt our economy during the coming fall and winter. Only two things are certain: the bill will provide hundreds of billions of dollars to investors who made bad decisions and Wall Street executives; and our children and grandchildren will now face a national debt that is hundreds of billions of dollars higher.

For another interesting tidbit on how we got into this mess, check out this post at The Big Picture. Extract:

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

Guess who was the CEO of Goldman Sachs, one of the five banks making this request: Henry Paulson. I think that makes him particularly unqualified to repair the damage.

Update (Oct. 5)

Barry Ritholtz provides a succinct explanation of the financial crisis, then analyzes Fannie Mae’s (and Freddie Mac’s) role in the mess. Excellent reading.

September 21, 2008

The Giant Pool of Money

Filed under: Uncategorized — BrianB @ 5:42 am
Tags: ,

While it is still not clear what the big government bailout of all the “toxic waste” mortgage derivatives really means, there was a radio program on This American Live back in May that is very helpful in understanding how we got into this economic mess. Click here to open the page in a new window. You can click “Full Episode” on that page to listen to the whole hour-long program. It starts a little slow, but is worth listening to if you have time.

Meanwhile, a friend has pointed out that it may not have been coincidence that just weeks after Elliot Spitzer openly accused the Bush administration of helping foster the sub-prime loans and predatory lending practices that led to the current crisis in his Feb. 14 Washington Post Editorial he was politically destroyed by an unusual investigation. Was he targeted and politically destroyed for making the accusation? There is what seems like a balanced article at the Huffington Post with an analysis.

March 13, 2008

Who is the Fed Bailing Out?

Filed under: Uncategorized — BrianB @ 5:50 pm
Tags: , , ,

It’s not obvious to me or, I suspect, to most US citizens what the Federal Reserve Bank’s recent decision to lend $200,000,000,000 ($200 billion) to banks and other financial firms means.

The Fed created a new division of itself in order to make these loans, and the loans are for 28 days, instead of the overnight loans that the Fed has traditionally provided. The Fed will accept mortgage backed securities, the main source of the current credit problems, as collateral for those loans. Steven Pearlstein thinks it was a smart move to everyone’s advantage, as he explains in this Washington Post column.

Dean Baker disagrees. He wrote an interesting blog article a couple days ago wondering why people weren’t being more critical of the move. Then he wrote another article after Pearlstein’s column came out.

I’m with Dean Baker on this. If I remember correctly, the Bush family has a big connection to the Carlyle Group, one of the hedge funds mentioned as needing bailing out in the Pearlstein column. Can you say, “Taxpayer funded bail-out of the Bush family’s massive fortunes?”

February 27, 2008

Funny Stick-Figure Subprime Primer

Filed under: Uncategorized — BrianB @ 5:48 pm
Tags: , , ,

I’m not sure who created this slideshow, but it is a pretty funny way of explaining how the subprime mortgage meltdown occurred. Warning, contains naughty words!

Create a free website or blog at WordPress.com.