September 23, 2008
The devil is in the details of history’s largest bailout. With rebellion brewing in the grassroots of both parties, the Treasury Department is defending parts of the plan that are, shall we say, wrong. Case in point: Members of the Senate Banking Committee “are pushing for a provision that would require participating firms to grant the government warrants to purchase stock.” But Treasury is resisting, saying, “warrants would limit participation in the program” to failing banks only. In other words, non-failing banks won’t give their assets to the government, and would still get some of the giant money giveaway. But if they are not failing, why should they be rescued? Read More
September 22, 2008
While Congress debates what guidelines to impose on the largest bailout in history, some observers fret about the damage to come. Sub-prime mortgages may be just one wing of the house of cards that includes Credit Default Swaps. As this article from GlobalResearch.Ca defines them, “They are bets between two parties on whether or not a company will default on its bonds.” They have been portrayed as ways for banks to hedge against risks as banks delved into riskier and riskier loans. And because they have become another way for Wall Street to (literally) create money – by trading them back and forth – Credit Default Swaps are (were?) a huge business. How huge? Try twice the size of the U.S. Stock market: A recent Time magazine article says the “CDS market exploded over the past decade to more than $45 trillion in mid-2007, according to the International Swaps and Derivatives Association.” The U.S. stock market is valued at about $22 trillion. And falling.
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September 15, 2008
As the muck from the sub-prime mortgage meltdown threatens to smother Wall Street and the entire economy, a few journalists are looking into its connections with the current presidential campaign. (The few journalists, that is, not busy chasing stories about lipstick and pigs.) John McCain’s chief economic advisor is former Senator Phil Gramm. As Philadelphia Daily News reporter Dave Davies recently wrote, Gramm co-sponsored “the 1999 law that allowed commercial banks to get into investment banking. And Gramm was a prime architect of a 2000 bill that kept regulators’ hands off of ‘credit default swaps,’ an exotic financial tool which helped enable the bundling and selling of crappy subprime mortgages to investors.” Read More
July 30, 2008
The troubling trend of American homeowners choosing to simply walk away from homes facing foreclosure has caught the attention of the international media. News outlets stateside have been telling the stories of “walkers” all year. It has been estimated Read More
February 20, 2008
Has the U.S. hit a deadly recession, or it just resting? Either way, a “stimulus” proposal is coming from Washington. In the progressive American Prospect magazine, economist Robert Kuttner assigns lots of blame for the housing/credit bubble (including the Federal Reserve for allowing Read More
