Friday’s Mini-Report

Today’s edition of quick hits.

* This really isn’t good: “Wall Street plunged again lower Friday amid renewed fears that the financial sector’s troubles with bad credit won’t soon end and that some consumers are buckling under signs of a slowing economy. The Dow Jones industrials finished down nearly 250 points. The arrival of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. Traders appeared to grow more pessimistic ahead of reports next week from the nation’s biggest financial institutions. Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co. are all slated to weigh in next week. Adding to investors’ unease, Merrill Lynch might take a $15 billion hit from its exposure to soured subprime mortgage investments, according to The New York Times. The nation’s largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.”

* He’ll come bearing gifts: “The Bush administration will notify Congress on Monday of its intent to sell $20 billion in weapons, including precision-guided bombs, to Saudi Arabia, moving up the announcement to coincide with the president’s arrival in Riyadh, The Associated Press has learned. Despite concern about the deal from some lawmakers, the State Department, which last month said it would delay the notification until after Congress comes back into session, will announce the proposed sale on Jan. 14, a day before the House returns to work and more than a week before senators return to Washington, said a senior official.”

* Shouldn’t there be some kind of FCC rule against raving lunatics buying quality newspapers? “Religious broadcaster Pat Robertson is considering making an offer for The Virginian-Pilot, a daily newspaper he has criticized for its coverage of him and his activities. The Pilot is the flagship newspaper of Norfolk-based Landmark Communications Inc., which announced last week that it was evaluating whether to sell all its assets, including The Weather Channel. ‘Although the price for The Weather Channel is a little rich for my blood, I am considering a potential bid for the Pilot and have asked my attorneys to look into it,’ Robertson said in an e-mail statement provided Friday by his assistant, G.G. Conklin.”

* Interesting campaign controversy: “When John McCain’s presidential campaign all but went broke, it borrowed money from its bank using its fundraising list as collateral. Problem: McCain’s own privacy policy promises donors he won’t sell their information. That seems to put the Republican senator’s campaign in a pickle; either it pledged to its bank proceeds from something it can’t sell, or it offered to violate its own promise to donors.”

* What, exactly, do we know about the recent events in the Strait of Hormuz? Slate’s Fred Kaplan takes a look, and highlights how best to “prevent a naval war with Iran.”

* Dan Froomkin: “So what’s President Bush got to show for his three-day visit to Israel and the West Bank? Not much more than a bunch of pretty pictures for his scrapbook.”

* I don’t doubt Dennis Kucinich’s sincerity about a New Hampshire recount, but I do doubt his willingness to pay for one: “The New Hampshire Secretary of State’s office said Kucinich can have a recount but he will have to pay for it. Under state law if a candidate loses by less than 3 percent they can pay a flat $2,000 for the recount. If they lose by more than 3 percent they have to pay the entire cost.”

* The Wall Street Journal editorial page believes “the economy could use another tax cut.” At least they’re consistent in their absurdity.

* Interesting observation about Edwards: “[I]t was Edwards who forced a new style of politics [this cycle], untethered by the fear and timidity of the 90s, adamant that liberalism was an electoral boon and economic justice a popular sentiment. Knowing they had to defend against his challenge, both Hillary and Obama edged closer to his appeal. This left the Edwards campaign without much substance on which to distinguish itself, but it left the Democrats in a much stronger position overall, and forced them to argue for, and commit to, a much broader and more inspiring agenda than we otherwise might have seen.”

* John Cole coins The [Jonah] Goldberg Principle: “You can prove any thesis to be true if you make up your own definitions of words.”

* An independent pro-Huckabee group called Common Sense Issues is utilizing robocalls to help get the message out about their guy. How many robocalls? 5 million.

* Does Chris Matthews have a problem with women?

* My friend Blue Girl reads GAO reports so I don’t have to. This time, the subject is port security.

* And finally, the president is apparently a little uncomfortable with John McCain’s idea of keeping U.S. troops in Iraq until 2108. NBC News asked Bush, “John McCain has been saying on the campaign trail that the American people would accept U.S. troops remaining in Iraq for a hundred years. Do you agree with that?” He responded, “I don’t know if a hundred years is the right number. That’s a long time.” Well said, Mr. President.

Anything to add? Consider this an end-of-the-day open thread.

What’s going on in the credit markets should now be referred to as the “subprime crisis.” Subprime loans were on the tip of the iceberg, the canary in the coal mine of a much larger lending crisis. The real problem has been a combination of predatory lending practices, such as low “teaser” rates suckering in borrowers from poor to rich, originating loans without the proper due diligence to risky borrowers (not only those with poor credit but also to those overextending themselves) and then quickly selling the risky loans to unsuspecting buyers, allowing recent home buyers to mine excessive amounts of “phantom” equity out of their homes, over-appraising properties to increase fees and interest paid, rampant speculation on an overheated housing market and a number of other unscrupulous practices.

Why grumble about a name? Because blaming the current credit market woes on the subprime market makes this whole mess look it’s all the fault of poor people who never should have had loans in the first place when, in fact, poor people were just a subset of the larger group of suckers.

  • We are starting into a recession which might go to a depression.

    Lowering interest rates cannot fix a broken system that is over spent, does not reinvest in its own people and infrastructure, in debt up to its nostrils, and where the middle class is sinking into poverty. If all the money goes to the top 1% which it now does under our deregulated “fair trade” corporate rule economy less & less money is available to more & more people…creating a very unstable situation. It isn’t good for people and it isn’t good for our earth.

    Just heard a smattering of economist Ravi Batra on Thom Hartmann today…sounded interesting. He thinks the best thing for America in the coming election would be an Edwards/Obama or Obama/Edwards ticket. He deemed Clinton as too steeped in the corporate tradition…so that even if she wanted to get us out she couldn’t.

  • Wall Street plunged again lower Friday amid renewed fears

    And this is what Republicans want to tie retirement benefits to.

    Pat Robertson buy a newspaper? Two Words: Reverend Moon.

    Next on the Weather Channel: Who Is God Punishing with Storms this Week?

  • Sorry everyone for the typos in #1. I was trying to say that the current financial mess should not be called the subprime crisis, as the newspapers have been parroting, for the reasons stated in the post. The king of typos strikes again.

  • The good news: that’s $20 Billion dollars less that the Saudis will have to buy American banks!

    The bad news: that part of the world is unlikely to become less explosive if more explosives are added to the mix.

  • I thought all the smart people said Wall Street went down because of the Iowa results.

    Seriously now, which do you think scares Wall Street more:

    Huckabee, McCain and Obama or

    Merrill Lynch and Citigroup each losing more than $10 billion???

  • Petrado, you’re absolutely right — subprime loans were merely the first place the lending bubble was noticed.

    Credit at all levels has been squeezed, and alt-A and prime defaults are skyrocketing along with the subprimes. Too many consumers got greedy (across economic strata), and too many lenders played fast-and-loose with the rules or ignored them altogether.

    The blame should be squarely placed on mortgage lenders, hedge funds that traded in CDOs and other dubious securities, ratings agencies that pretended the securities were safe, and regulators (including the once-lauded Al Greenspan) who looked the other way when unsound financial practices inflated an enormous asset bubble.

  • What was it that many economic pundits said about six weeks ago? Something to the effect that this “subprime” aka as predatory lending crisis could be weathered. So far I don’t see that happening and the numbers are getting worse.

    Wait till someone realizes that the credit market is heavily tied in with the derivatives market and the fact that the number value of all those derivatives is much more than the entire net “worth” of the Earth.

    So the wholesale mass deregulation of the fiscal markets was a good thing?

  • Should it be legal to require the candidate to foot the bill of a recount?

    Sheesh.

    And is there any way that a paper can actually be competed with, anymore? Most of the distribution is pretty solid and isn’t likely to change anymore.

  • * Does Chris Matthews have a problem with women?

    Undoubtedly. Matthews has a highly paid position from which he spews the kind of boorish comments and commentary that would land many men (or women) in sensitivity training. My guess is the guy is tremendously insecure about his own “potency” and responds accordingly to anyone by whom he is either titilated or intimidated, i.e., those who push his buttons – good and bad. I cannot forget how Matthews palpitates for Manly Men like Rudy and Flight Deck Dubya. It is as embarrassing to listen to him reveal his man crushes as it is to witness his apparently deep-seated fears of castration. Matthews is puffed up by his celebrity, but deep down I suspect the guy a puddle of inadequacy. I’ll bet his fantasies do not fall far from Bill O’s falafel tree. What I do not know is whether the insecurity to which Matthews gives voice is something that resonates with a wide audience. His comments about Hillary reveal a mindset that is not so very different from that “articulated” by the “Iron My Shirt!” crowd: Women can enjoy success via their looks or via association with a powerful, talented man. Any woman who is smart, seeks and wields power and (by extension) challenges men is – at her essence – an emasculator both of the men she challenges AND of those who simply witness the challenge. Tweety doesn’t mind being made to seem “small” by Manly Men, but boy does he loathe the prospect of being made to look small by a chick.

  • I don’t doubt Dennis Kucinich’s sincerity about a New Hampshire recount, but I do doubt his willingness to pay for one: “The New Hampshire Secretary of State’s office said Kucinich can have a recount but he will have to pay for it. Under state law if a candidate loses by less than 3 percent they can pay a flat $2,000 for the recount. If they lose by more than 3 percent they have to pay the entire cost.”

    There’s got to be some idiot out there who can pay for the recount. Rupert Murdoch?

  • “”John McCain has been saying on the campaign trail that the American people would accept U.S. troops remaining in Iraq for a hundred years. Do you agree with that?” He responded, “I don’t know if a hundred years is the right number. That’s a long time.” Well said, Mr. President.”

    This is great. Now we know our president has the intellectual capacity to understand a hundred is a pretty big number, larger than ten or twenty or fifty, or “just a comma in history.” when speaking about all the Amuricans killed in Iraq. I always thought he was one of those “one, two, three, infinity” simpletons (courtesy of George Gamow).

  • I’m calling out Corporate America on this one:

    I notice that more corporations are supporting Hillary:

    http://www.opensecrets.org/politicians/contrib.asp?CID=N00000019&cycle=2008

    Than are supporting Barack:

    http://www.opensecrets.org/politicians/allcontrib.asp?CID=N00009638

    Let me tell you why that is an incredibly ignorant thing to do:

    America is a trillion dollar brand that is based on equality, justice, and the worship of talent.

    Barack Obama and his extended family encompass all three major races on the planet and at least two of its major religions.

    Crossover appeal?
    Think Tiger Woods on steroids.

    If you want the possibility of having 5.5 billion people on this planet craving your goods…

    Then I suggest you wake up and drop Snow White and the seven Republican dwarfs.
    They are all losers carrying as much buzz as black and white TV reruns from the 1950s.
    They are soooo fucking yesterday.

    Wake up.
    Get off your goddamn asses…
    And start investing in your future potential profits…

  • Hillary must apologize for Rep. Clyburn’s concerns! How dare she claim that Lyndon Johnson signed civil rights legislation, and how dare Bill call Obama’s candidacy a fairy tale???

    Aren’t these racist comments?

  • $20 billion of arms to one of the worst regimes in the world. Who will they use these weapons on? Why, anyone they like. Iran, Shiite Iraqis, Israel, or us, if they’re toppled by their home-grown Wahabi fanatics.

    Take a dangerous region, add weapons, stir.

  • I don’t think Chris Matthews is insecure. I think he is empty. Not even helium makes those kind of sounds.

  • Take a dangerous region, add weapons, stir. -Veritas78

    That’s right Veritas… What better way to mess the region up, so they can gin up the fear mongering again. Plus, that would give all the Wahabi fanatics that much more reason to overthrow the royal family. Now they’d have billions of dollars worth of weapons! dubya is such a putz.

    And this from Dependable Renegade…

    Interesting:
    President Bush had tears in his eyes during an hour-long tour of Israel’s Holocaust memorial Friday and told Secretary of State Condoleezza Rice that the U.S. should have bombed Auschwitz to halt the killing, the memorial’s chairman said.

    Let’s just contemplate for a moment how patently STUPID his “bombing Auschwitz” comment is…

  • I’m just glad Pat Robertson didn’t own the Weather Channel back in 2005.

    “And here in this satellite photo, you can obviously see Hurricane Katrina take on the shape of a six-week-old fetus, only proving God’s hatred for our country due to legalized abortion.”

  • Back in 1972, when the Shah of Iran was our bestest buddy, Nixon offered to sell him our latest military technology. One result was that the Shah ordered 80 Grumman F-14 Tomcat fighters. Thirteen were delivered before the Shah was deposed in 1979. Although the supply of spare parts was cut off by the U.S. (Except when they were graciously provided by the Reagan administration via the Israelis during the Iran-Contra affair) the Iranians managed to obtain them from other sources. Iran is still flying those aircraft.

    Why is this important? Well, until 2006, the F-14 was the Navy’s first-line fighter. It’s still a very capable and dangerous aircraft. The Navy had planned to fly it through 2008.

    Now, thirteen F-14’s wouldn’t make a huge difference in an all-out war but, it does point out the danger of supplying advanced weaponry to “safe” regimes.

  • “Wall Street plunged again lower Friday amid renewed fears that the financial sector’s troubles with bad credit won’t soon end […] — CB

    As long as the CEOs are safe and receiving their low-tax, multi-million, bonuses… I think I feel safe too. Had to cut down on my Christmas gifts to family this year, but I know that the well-being of the country’s top 1% is more important than that.

    “The Bush administration will notify Congress on Monday of its intent to sell $20 billion in weapons, including precision-guided bombs, to Saudi Arabia […] — CB

    Well… We do need the money, if only to pay those bonuses… And I’m sure that Saudi Arabia, being such a democratic country, will use those weapons well.

    Out of curiosity… *Why* is Bush’s admin notifying Congress of its intentions? Does the Congress have the power to stop the sale?

    * I don’t doubt Dennis Kucinich’s sincerity about a New Hampshire recount, but I do doubt his willingness to pay for one: […]

    Willingness? Or ability? It’s not as if he”d been raking it in, from all and sundry… Judging by our commenter company, those who can stomach a slightly cooky approach to politics, prefer the more authoritarian/exclusive version (as presented by Ron Paul), so that’s where their money had been funneled.

    * And finally, the president is apparently a little uncomfortable with John McCain’s idea of keeping U.S. troops in Iraq until 2108. — CB

    Only because, despite his close and personal relationship with God, he does not expect to be reading about his Amazing! Miraculously High! post-retirement poll ratings in 2018. For him. “legacy” means something you can cash in on within a year or two of retiring from office, not something they’ll name after you (Bush/McCain Iraq doctrine) once you’re 6ft under.

  • I’m not particularly worried about even 80 F-14s or even F117s in the hands of Iran.

    Why?

    Because they have no reason to attack anyone not inside their borders. They know they won’t get away with skirmishes or all out fighting like Iraq was willing to do – because they never had, nor never courted, a superpower as buddy.

    At least this time we’re selling defensive weapons – not bio or chemical weapons or long-range missiles. Even if an overturned Arabia wanted to fight Israel, they’d be cutting their own throat to do so. And even then, Israel is more than able to defend itself, with what we’ve given them.

    On that point, I think we should give up on all this selling of weaponry.

  • It’s funny that Bush can decide on his own who we sell $20 billion of weapons to.

    Isn’t Saudi Arabia a country that beats women for committing adultery (according to it’s fifth-grade inspired definition of what’s “cheating”- being alone with Johhny)? And isn’t their petroluem product basically going to be obsolete once these alernative energy cars are being produced in large numbers by the end of 15 years or so?

    It’s funny that we give so many weapons to Saudi Arabia. They’re “stable” (according to some kind of a Henry Kissinger definition) now, but they might be somebody we have to fight in 10 years or so. You never now how the winds of change are going to blow and who is going to get into power. We’ll be up against a modern air force we trained and precision guided weapons, then. Surely, though, if this ever becomes a concern, the Republicans will just use it as an excuse to push for giving a huge contract to arms manufacturers to produce $20 billion-a-piece, ultra-maneuverable aircraft for us, or something like that.

  • From Enzio’s Clock, a respected investor website for global trend traders-

    Market Crash Imminent: Get Out While You Can
    posted on: November 12, 2007

    Finally our bleating of the past year is turning to reality. Watch for the usual over-reactions now. For the past few weeks, every bit of news has been forced into the “good news” cookie cutter. Now, watch every bit being squeezed into the “bad news” cookie cutter.

    1. Our take on current convulsions

    We are not going to waste your time and money by saying “I told you so” – regarding a falling market and a rising yen.

    Thus, we’ll re-iterate our long-held views that:

    the sub prime crises are deeper than markets initially wanted to accept the yen will climb now that carry trades get unwound America’s Economic Time keeps rotting away. Beijing may say that she is tightening, but who ever believed that Beijing runs all of China? “de-coupling” is a figment of the imagination: fear and greed, not rationality and sobriety, run the markets. Things are not different this time around, and certainly never in the short term! We have reasons to buy China, but want to wait until the dust has settled and the wounded leave the hospitals…

    2. How to save money off this idea

    We have just now asked the Bank to sell all individual stock positions, the view being that this is the beginning of the end. That is because markets not only swing from buy to sell, but they also start discounting news. So, as we put forth recently, we thought that that by selling in mid-December we would beat the rush to the door. Today, we have fast-forwarded this and sold out completely.

    Going from the fall of 1976 to the fall of August 2000, here is the anatomy of a crash (using Wall Street as our gauge):

    the market has fallen on average about 17 months, with 9 months give or take, so it could fall from six to 26 months. My hunch is that the fall will last shorter – at least through 1Q08 Over these eight corrections, the market has fallen by an average of 17% (the worst was the August 2000 crash, when the market plunged 44%; in 1987, it ultimately fell by 20%), give or take 12%. This means that the market could fall from 5-29%
    3. How to make money off this idea

    We have taken the sales proceeds and will be going into a “short” ETF on the S&P.

    Also, we have kept all of our commodity ETFs, the logic being that there will be flight to safety, as in: gold, palladium and platinum. Meanwhile, we expect “Muddle East” tensions to rise, so up goes the price of oil even more.

    Enzio von Pfeil

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