Author: Zandar1

Earlier today BooMan talked about this CQ Politics article showing three scenarios in 2010:  The Dems lose 30 seats in the House and keep Congress, the Dems lose 50 seats in the House and lose it but keep the Senate, and the worst-case scenario where the Dems lost 65-70 seats and the Senate as well.

BooMan said:

I don’t like any of these three scenarios. Can I send them back?

You’d be wise to keep them, old friend.  Because if today’s Gallup likely voter poll models are any indication, things will be even worse come Election Day.
It breaks down like this:  Recall Nate Silver’s likely voter to House seat breakdown from April:

So, for example, if the House popular vote were exactly tied, we’d expect the Democrats to lose “only” 30 seats on average, which would be enough for them to retain majority control. It would take about a 2.5 point loss in the popular vote for them to be as likely as not to lose control of the chamber. So Democrats probably do have a bit of a cushion: this is the good news for them.

Indeed, today’s Gallup poll shows the registered voter numbers giving the Republicans a 3-point edge, which would put them just over what they needed to regain the House on Nate’s chart there.

But that’s the registered voter generic ballot numbers.

This is all about Gallup’s likely voter generic ballot numbers.

And here’s where the guillotine falls.

Gallup’s generic ballot for Congress among registered voters currently shows Republicans with 46% of the vote and Democrats with 43%, similar to the 46% to 46% tie reported a week ago. However, in Gallup’s first estimates among likely voters, based on polling from Sept. 23-Oct. 3, Republicans have a double-digit advantage under two separate turnout scenarios.

Holy shit.

Remember, Republicans need a 3 point lead in the generic ballot model to win the House back.  The two Gallup scenarios are R+13…and R+18.

Going back to Nate’s chart, that would give the Republicans 80+ seats under the high-turnout scenario…and would be off Nate’s chart on the low-turnout scenario, but 95+ Republican seats gained.

Armageddon.

Big column of Teabagger fire.

Forget the end of the Obama agenda, we’re talking the end of the Dems.  If Gallup is anywhere close to correct on its likely voter models, then we’re fucked with a jackhammer, people.

Gallup is convinced that the turnout for the Dems is going to be so godawfully miserable that the Republicans will be given complete control of Congress again.

They are convinced that we are so demoralized, that the country will jump off the cliff and burn, burn, burn.

If you know anybody, anybody at all who is of voting age, get them out to the fucking polling place this November.  Call them now.  Show them this article.  Show them the Gallup numbers and Nate’s model.

Show them that they’re calling for the Republicans to wipe us out in Congress.

Get them scared enough to get out there and vote like your country depended on it.

Because if Gallup is right, it does.

Knock, knock, America.  We’re about to apathy ourselves into extinction.

Fuck that.  I am not going out without a fight.  I’m getting people out to vote.  I’m calling people.  I’m making OFA runs here in the NKY for Navy vet John Waltz for Congress and I’m getting the word out to the rest of you that the only thing that matters in the end is you getting your ass out there to vote.

If we stay home, we die.  Gallup says we will to the point of Republican domination of this country, leaving Obama at their mercy.

This little story of hope and change didn’t end in 2008, folks.  So it’s time for all of us to put aside our differences and get out there and meet that wall head on.  Don’t care if you like Hillary or Obama.  Don’t care how you feel about his record not being good enough.  Don’t care how you feel about Rahm Emanuel or Robert Gibbs or Elena Kagan or Tim Geithner or Kathleen Sebelius or Elizabeth Warren.  Don’t give a shit about how you feel about hippie punching or the public option or Pakistan or Park51 or TARP or any of that.

We sack up or get fucked up on Election Day.

Make a choice to make a difference.  Vote.

They’re already counting us out to the point of our annihilation.

Time to change history.

Again.

Howdy folks.  Zandar again.  You know that whole foreclosure crisis we’ve been going through over the last two years or so?

Well, now we’ve got a problem.

In the last week multiple news stories have dropped involving what amounts to massive institutionalized mortgage fraud on the part of the big banks running the foreclosure mills in states like Florida, Michigan, and California.

The question at stake is simple:  Who really owns the mortgage that these banks are trying to foreclose upon?  In the age of securitized mortgage products, when bundles of mortgages were stacked up and chopped into financial cole slaw, the answer is nobody knows.  Many of the middlemen and intermediates vanished in the financial meltdown of 2008.  The rest were bought up by the megabanks:  GMAC Mortgage (now Ally Bank), JPMorgan Chase, Bank of America, and Wells Fargo.

The bottom line is that these megabanks have been acting like they own the title to houses and have been foreclosing on them at record speed.  The reality is in many cases, possibly hundreds of thousands of them if not millions, that simply isn’t true.

One Circuit Judge in Florida decided to ask about this in early September and discovered a clear case where JPMorgan Chase was servicing the loan, but Fannie Mae owned the mortgage.  JPMorgan Chase foreclosed on the home anyway, and the judge nailed them to the wall on it.

The problem is that ruling in Florida has thrown a harsh spotlight on the entire foreclosure industry in the last two years.
And here’s where things get interesting.  GMAC/Ally Bank last week, as a direct result of this hearing, halted home evictions in 23 states as well as sales of foreclosed properties while the company suddenly had a real (and not to mention massively fraudulent) need to double and triple check all the foreclosures it had been dealing with.

Then, on Wednesday, JPMorgan Chase announced it was doing the same thing.

“It has come to our attention that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel–without the signer personally having reviewed those loan files,” says JPMorgan spokesman Tom Kelly.

In the meantime, the company has requested that the courts not enter judgments in pending matters until the review is complete, a process they say should take a couple weeks.

“We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details,” Kelly adds.

Then today, Bank of America announced that they too would be looking over their foreclosures.

Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

Bank of America isn’t able to estimate how many homeowners’ cases will be affected, Dan Frahm, a spokesman for the Charlotte, N.C.-based bank, said Friday.

The move adds the nation’s largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

That last sentence there should scare the ever loving shit out of you, because that means that in 23 states, the last two years of home foreclosure sales may be completely fraudulent.  Hundreds of thousands of sales, if not millions.

Millions of people foreclosed on, evicted, and their homes sold to new people.

People evicted when they had no legal right to be by a bank that didn’t legally have the right to evict them.  Millions possibly thrown out of their homes without legal reason to have been.

And ad bad as that is, how about the entire foreclosure industry locking up like an engine with no oil and taking housing prices with it?

So, guess what happens to the assets of the banks if they don’t own the mortgages they say they do, and there’s no real way to prove that they do own the mortgages even if they do because of two years of fudging the paperwork and carrying on anyway?

Why, those assets would be worth…zero.  And what about the fourth megabank in this scenario?  That would be Wells Fargo, and they are doing everything they can to sweep the mess under the rug.  In fact, they are now speeding up foreclosure and short sale procedures instead of halting them.

In a memo e-mailed to short sale vendors last month and obtained by American Banker, Wells said it will no longer postpone foreclosure sales for those who do not close short sales by the date in their approval letter from the company. Only extension letters dated Sept. 14 or earlier would be honored, Wells said.

Hmm.  Three banks when caught are halting foreclosures.  One bank is making a mad dash to clear their decks instead.  You don’t think that’s where most of the mortgage fraud is, right?

Things are getting scary to the point that insurers will no longer underwrite foreclosure sales because of the liability of these massive numbers of possible fraud cases.

As more defaulting homeowners become aware of the lenders’ problems, they are expected to hire lawyers and challenge the proceedings against them. And if completed foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.

Apparently alarmed about such a possibility, one of the major title insurance companies, Old Republic National Title, has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage, the country’s fourth-largest home lender and one of the two big lenders at the center of the current controversy.

And if the insurance underwriters aren’t going to play ball anymore, the game is truly over.

In the span of roughly two weeks, the entire foreclosure machine has ground to a near halt, and there are potentially hundreds of billions if not trillions of dollars worth of mortgage fraud cases here, folks.

Talk about your October surprise.

Turn on the lights, and watch the roaches scatter…only that these roaches are so big, that they may very well trigger another financial crisis in the very near future.

We’re about to field test those Wall Street “too big to fail” regs, people.  And I don’t think anyone’s going to like the results.  

Buckle up.  Pay attention.  This one’s going to be HUGE.

This is what Delaware could be about to elect to the Senate in seven weeks.

A person who thinks masturbation is evil and that you shouldn’t be allowed to do it.

A person who thinks anyone to the left of her is a Socialist.

The United.  States.  Senate.  Folks.  Six-year term.  She thinks there’s just as much evidence for creationism as evolution, if not more.

Well, creationism, in essence, is believing that the world began as  the Bible in Genesis says, that God created the Earth in six days, six  24-hour periods. And there is just as much, if not more, evidence  supporting that.

Scared yet of this woman crafting laws for all Americans?  You should be.  You should be goddamn terrified of this woman if you disagree with her in any way.  She will be making laws for all of America, for all of us.  And the best part?  There’s a lot more where that came from.
Still think there’s no reason to vote?  What about Carl Paladino as Governor of the second most populous state in the country?

Carl Paladino — a millionaire developer who has acknowledged forwarding  racist and sexist emails, who has proposed turning empty prisons into  dormitory space for welfare recipients, and whose state party didn’t  even want him on the ballot — has won the Republican gubernatorial  nomination in New York.

Think he can’t win?

In April, Paladino acknowledged  forwarding emails including images of bestiality and derogatory  characterizations of President Obama, including one offering a video  clip of African tribesmen dancing that characterized the video as  “Obama Inauguration Rehearsal.”

The Tea-Party backed  candidate reportedly sent an e-mail depicting a horse having sex with a  woman and another that included a pornographic video and the headline  “Miss France 2008 F[*]ing.” He also reportedly sent out an e-mail  depicting President Obama and First Lady Michelle Obama as a pimp and  prostitute and one showing an airplane landing near black men with the  caption “Holy Sh*t. run ni**ers, run!”

He did this and still beat Rick Lazio by over twenty points. What makes you think he didn’t win specifically because he did this?  What makes you think Americans don’t agree with him on that?

In Orchard Park, a Buffalo suburb, Darryl Radt, who described himself  as a regular primary voter, said he had come to the American Legion post  to vote for Mr. Paladino “because he’s mad as hell and so am I.”

Ron Wojcik, 67, a retiree, said he was frustrated with Albany and  Washington and wanted someone different. “I want somebody who’s honest  and hasn’t been sucked into the system already,” Mr. Wojcik said. “The  system always seems to change people.”  

“Hey honey, you see this Paladino guy?  Hell Martha, one of THEM’S in the White House!  I like this guy, he ain’t afraid to say what everyone’s thinkin’!”

And so a multi-millionaire real estate tycoon bought his way onto the ticket and won votes for being a racist jagoff.  Don’t think he can win the general?  Keep telling yourself that.  Millions of pissed off Tea Party folks are going to make their votes count in November.  For those of you who think the Tea Party is harmless or as one friend told me last night “It’s just the pendulum swinging back the other way” then you’re badly underestimating what’s going on here.

The turnout models mean nothing.  They are all badly underestimating the number of people now willing to vote, and vote for hard-core nutjobs just to flush out the two-party system.  They’re literally drinking the drain cleaner.  They’re blaming the Democrats and the Republicans and they want a third option.  That third option is people like Christine O’Donnell and Carl Paladino.

Democrats have completely failed to tap into this anger.  Now it will be used against them with devastating results.  People who have never voted in anything but Presidential elections are going to be out in massive numbers in November for the Tea Party.  They are pissed.  They are looking to punish the system.  They will vote against their own self-interests, but they will vote.

What are YOU going to do in November?

It’s been a while since we’ve played Deal or No Deal folks, but unfortunately (and completely expected if you’ve been paying attention at all) it’s time for another major bank to step up to see which suitcase full of cash they’ll get from you, the American Taxpayer.

Today’s contestant, please welcome…CIT Group!

Troubled US business lender CIT Group is nearing a deal in its talks with federal regulators to obtain a government aid package, The Wall Street Journal reported.

The development came as corporate customers began to draw down on their credit lines Monday and Tuesday to the tune of several hundred million dollars, the Journal said, citing people familiar with the matter.

The cash-strapped company’s board, it added, had discussed a number as high as 775 million dollars for the drawdowns.

Under the aid plan, regulators would allow CIT, which operates in more than 50 countries and provides financial services to small and middle market businesses, to transfer assets from its holding company to its bank in Utah.

The Federal Reserve would let CIT pledge some of the assets at its discount window, and the company would move to refinance some of its existing debt, the Journal said, noting the aid package had not been finalized and the possibility of a deal remained uncertain.

US government officials are split over the amount of aid that should be given to CIT and, according to some, CIT is seeking to exaggerate the consequences of its potential collapse, the newspaper said.

“There is also the risk that propping up CIT will reinforce the stigma that Washington will bail out companies that aren’t even considered too big to fail,” it added. The government saved insurance giant AIG from collapse in September, citing concern it was “too big to fail.”

Standard & Poor’s has lowered CIT credit ratings to CCC+/C, citing “increased near-term liquidity concerns.”

S&P said CIT has more than one billion dollars of unsecured notes maturing in the third and fourth quarters, which could result in payments “that could become increasingly difficult to make.”

Ahh…but it’s not Hank Paulson asking bank CEOs to pick among the many trillions in those shiny suitcases this time, and George W. Bush calling the shots from the booth above as The Banker.  The show’s gotten a rewrite, kids!

Now it’s Timmy Geithner handling the M.C. duties, stepping up from Hank Paulson’s gofer last season…and The Banker?  None other than Barack Obama himself (The Obanker?)

So here’s the question:  will Obama stick to the script and allow Timmy to give away billions to “save” CIT Group, or will he call for a last-minute rewrite?  Obanker is in quite a spot.  He remembers what happened the last time The Banker was talked into saying “No Deal!”… to a little company called Lehman Brothers.  The resulting financial crisis nearly wiped out the playing field and did wipe out trillions upon trillions of dollars in global wealth.  At this point it’s not a question of if the American economy is badly wounded, but how many years…possibly decades…it will take to recover.

If it recovers at all.  CIT Group would be the fourth largest bankruptcy in American history if it happened.  Obama doesn’t have a choice but to save it, right?  CIT handles lending for nearly 100,000 retailers, big and small.  If they went under, the business lending market would shatter, perhaps becoming a fatal blow the the economy.  It’s not quite the global systemic risk that Lehman was, but it’s still significant…and our economy is in much worse shape than it was when Lehman went under.

Or does he?  My argument is that CIT has to die.  If it doesn’t, it’ll just be back several months down the road asking for more money.  As a matter of fact, I expect a hell of a lot more contestants for Deal or No Deal to pop up over the next 12-18 months.  Obanker’s real problem is the rules of the game.  At this point, there’s no downside towards being a bad faith player.  Moral hazard says you’ll get bailed out if you only get your tentacles around enough Jenga pieces to bring the entire structure down.  Make all the bad deals you want!  CIT did, and it represents the third generation of Deal or No Deal players.

Bear Stearns was first (No Deal!), followed by Fannie and Freddie(Deal!).  Then came Lehman Bros. opening up the second season of the game, getting a No Deal that spawned the entire industry getting Deals.

Now it’s season three.  CIT Group is the first contestant.  It won’t be the last.  Will Obanker save it, extending moral hazard, or kill it and send out a warning that a new Banker is in town?

Given the history of the game and this Banker, it’s only a matter of how much is in the suitcase.

Be prepared.

Also available at ZVTS.

The Thing That Will Not Die has returned from beyond to haunt the housing markets once again.  Yes folks, subprime mortgages are back, and all those homes foreclosed upon last year are still clogging up the balance sheets of big banks.

Now we’re seeing the Revenge of Subprime:  all those homes are being sold back into the market in bulk so that the banks can get whatever money they can for them instead of holding on through falling home prices.  Yves Smith at NakedCap runs down the details:

Now we have a new side effect of securitization: trusts dumping foreclosed houses. This looks to be a tragedy of the commons. While it seems rational for owners of foreclosed houses to liquidate inventory and move on (in theory, price discovery and market clearing are a good thing), the servicers are selling in bulk. If you have a lot of sellers dumping inventory at the same time, that is likely to produce an overshoot of housing price declines below historical levels in terms of relationship to rental prices and incomes.

The Wall Street Journal profiles the development in Atlanta, and Georgia has one of the fastest foreclosure timetables in the country, so this trend will be coming to your market soon.

From the Wall Street Journal:

The U.S. housing market is facing new downward pressure as holders of subprime-mortgage bonds flood the market with foreclosed homes at prices that are much lower than where many banks are willing to sell.

While nationwide figures are scarce, a review of thousands of foreclosures in the Atlanta area shows that trusts managing pools of securitized mortgages sold six times as many properties as banks during the six months ended March 31. And homes dumped by subprime bondholders sold for thousands of dollars less on average than bank-owned properties, the data show.

Yves here. That does not prove conclusively that the servicers are truly getting worse prices. The banks presumably were able to offload the best homes, and what is left will probably sell at deeper discounts. Back to the story:

Experts say this is a bad omen for residential real-estate prices and homeowners trying to sell or refinance, because the fire sales, many to cover soured subprime loans, put downward pressure on the value of nearby homes. All of this undermines federal efforts to stabilize the housing market and revive the broader economy….

In the Atlanta area, hit hard by foreclosures and declining home values in the past two years, mortgage-backed securitization entities completed 6,260 foreclosures in last year’s fourth quarter and the first quarter of 200…

Of those foreclosures, securitization entities sold 2,963 homes during the same period for an average of 62% of the original loan amount. Banks unloaded just 442 of the homes they foreclosed upon, with an average selling price of 69% of the original loan amount.

There still is much more inventory that mortgage-servicing firms are racing to sell for securitization trusts. Such entities tend to sell in bulk so that they can cut losses, finding it more cost-efficient to move homes through foreclosure and subsequent sale than to try to restructure the mortgage with the borrower…

According to Karen Weaver, global head of securitization research at Deutsche Bank AG, the steepest losses are on subprime loans, where lenders generally are recovering just 26% of the original loan amount….

Yves here. Read that last sentence again. Stunning. But that also says you could do ridiculously deep principal reductions and still come out ahead.

26% of the original loan amount?  Good lord, that’s insane!

In other words, mortgage loan servicers are stuck with piles of homes they haven’t been able to sell individually.  It’s gotten to the point where they are now selling all these subprime properties at fire sale rates…and in mass quantities.  That is putting tremendous downward pressure on the low end of the housing market once again.

In other words, we’re looking at yet another wave of price-crashing in the housing market.  There was evidence in Q2 that there was some price stabilization at the low end of the housing market (while prices were still tumbling in high end homes).  That evidence however is getting swamped as we speak by mortgage servicers unloading thousands of low-end homes into the markets.

In other words, housing prices may even accelerate their overall fall into Q3 and Q4 if this trend keeps up.  Couple that with resetting rates of ARMs in the second half of the year and it’s possible in some areas to see housing prices fall as fast or even faster as they did back in 2008.  That would be an unmitigated disaster right now, and would seem to indicate that we’re increasingly at risk for a double-dip recession.

After all, banks like Morgan Stanley are trying to go right back to selling near-junk bonds as AAA offerings, starting up the Great Game Of Three Card Monte once again.  Q3 2009 is beginning to look more and more like Q3 2008, folks.

Be prepared.

Also available at ZVTS.

It’s no surprise that the insolvent banks being propped up by taxpayer trillions continue to play games with America’s money.  After all, we’ve firmly established that the Obama administration is taking their cues from the financial industry on everything from accounting rules to the so-called “stress tests”.

Ahh, but it gets even worse:  Now we see the sweetheart deal the banks were given under the Geithner Plan were never acceptable in the first place…and the banks have no intention of participating in the program at all.

The Wall Street Journal reports that the Public-Private Investment Program — better known as Geithner’s Plan — might never live at all.

The Legacy Loans Program [LLP], being crafted by the Federal Deposit Insurance Corp., [as] part of the $1 trillion Public Private Investment Program [PPIP] … is stalling and may soon be put on hold, according to people familiar with the matter.[…]

PPIP was to be split between the FDIC program, which would buy whole loans, and one run by the Treasury Department focusing on securities. Treasury is expected to push ahead with its plan — the larger and more substantial of the two — and could begin purchases sometime this summer.

Given how much publicity — and controversy — Geithner’s plan received when it was announced last March, that might seem a bit odd. But the reasons appear to be twofold. First, few investors or banks want to work with the government. And second — and maybe more importantly — few investors and banks now think they’ll have to. The banks, in particular, are apparently enthused by their ability to raise private capital, and now think they can wait out the market turmoil and sell their toxic assets in a few years, when they’ll be worth more money.

And after all, with the back door bailout of the banks through AIG, and the mark-to-market accounting rules, the banks have all the money they need to appear solvent.  Why muck around with the government’s overt rules and regulations — including limits on executive pay — when they have all the money they need to “provide an adequate cushion” from the taxpayer to begin with?

And considering the cushion was negotiate down by billions anyhow, the banks are more than willing to let bygones be bygones.  They want the TARP money off the books, but they want to keep the AIG counter-payments, meaning they get free money without any strings attached.  Considering they continue to hold trillions in Weapons of Financial Destruction, the banks can continue to extory the under the table cash while looking like heroes denying the need for more overt government monies.

It’s a brilliant plan.  Confidence restored!  All it did was cost us trillions in taxpayer money that will never be repaid.

Ahh, but the last laugh may be on the banks.  With the commercial real estate market falling apart and the housing market still in shambles, rapidly rising unemployment will come back to haunt banks very soon.  Once again they will be in danger of going under…and then people will ask “Hey wait a minute…didn’t you guys just say you were all fine back in April and May?”

Alas, this second phase of the financial collapse may scuttle everyone.  So batten down the hatches, folks.  The rest of 2009 is going to be a nasty reckoning.

Be prepared.

Also available at ZVTS.

As disturbing as it is, here I am linking to an Obama story actually broken open by…Drudge.  But there you are.

In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: “We are out of money.”

C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we’ve made on health care so far. This is a consequence of the crisis that we’ve seen and in fact our failure to make some good decisions on health care over the last several decades.

So we’ve got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it’s putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don’t reduce long-term health care inflation substantially, we can’t get control of the deficit.

So, one option is just to do nothing. We say, well, it’s too expensive for us to make some short-term investments in health care. We can’t afford it. We’ve got this big deficit. Let’s just keep the health care system that we’ve got now.

Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything…

So, basically, Obama finally is admitting we’re fucked in a three-day weekend news dump.

I’ve been saying we’re insolvent for months now.  But to hear the President openly admit such a thing is shocking to say the least.  Obama goes on to say that major health care reform in order to reduce health care costs is essential, but it doesn’t matter.

What cost will Obama pay for the price of this admission?  He has finally decided to be honest about the numbers, thinking that maybe we have enough time to change fate.

But frankly, we’re too far gone.  We’re trillions in debt, with tens of trillions of unfunded liabilities in the hole, with hundreds of trillions in derivative instruments floating around, waiting to explode.

We’re not getting out of this one unscathed.  Obama, Timmy, and Helicopter Ben are printing money as fast as they can, creating credit at the rate of trillions a month, trying to pump dollars into a deflating economy with massive holes in it, like pumping blood into a man with a hole in his heart.

Obama is doing the only thing he thinks he can do, to create a huge credit bubble in order to prolong the inevitable, the likes of which will destroy our economy when it pops.

It’s a Greek tragedy if you think about it.  But you were warned.  I warn you again:  our standard of living is about to plummet.  It will in no way be pretty.  The results will almost certainly be massive social unrest and upheaval for years.

But it is coming.

Be prepared.

Also available at ZVTS.

Still think Obama’s going to close Gitmo?

President Obama on Thursday will try to take the reins on the debate over national security and rally support for his plan to shutter the military prison at Guantanamo Bay in what his administration is billing as a major address.

Seems like a no-brainer, right?

Don’t be so sure.

President Obama told human rights advocates at the White House on Wednesday that he was mulling the need for a “preventive detention” system that would establish a legal basis for the United States to incarcerate terrorism suspects who are deemed a threat to national security but cannot be tried, two participants in the private session said.

Obama wants to hold these guys forever without trial, people.

You think any Senator in the US will allow that in their state after yesterday’s roll call of the chickenshits?

Democrats aren’t going to come through on this.  Neither will the President.  They want to codify into law the right to incarcerate people forever with no trial.  Think about that.  Not even Bush and Cheney asked for that.  They just assumed they had the right to do it.

Once you do codify this into law, anyone is a target.  Period.

At what point do we call the Dems and the President out on civil liberties, or is this the price of universal health care and climate change legislation?

So, America got the “good” news on Thursday:  the banks are fine!  Everything is fine!  The financial sector passed the stress tests with flying colors!  Indeed, Friday was a banner day for bank stocks across the board.  Wells Fargo stock was up 14%.  PNC was up 19% and change.  Regions Financial leapt up bu almost 25%.  And Fifth Third Bank stock gained nearly 60% on the news that it only needed $1.1 billion in capital to meet the government’s strict requirements for a capital cushion.

Jim Cramer has declared the financial crisis all but over as a result.

Investors can buy almost any bank for the next week, Cramer said, as this group emerges from the black hole into which the credit crisis had pulled it. In fact, he called this a once in a lifetime move in the financials.

What’s happening? The stress tests, that’s what. The Treasury Department released its test results, and this sector is on much more solid footing than anyone had thought. Turns out Armageddon is no longer an option. Banks won’t be nationalized. The worst-case scenario that the most ferocious of bears warned against is off the table. With confidence restored, Wall Street is rushing back into these stocks.

Confidence in the system!  Crisis averted!  Tim Geithner is a hero!  The banks passed the stress tests easily, and credibility has been restored in our financial system!   The bears were wrong!
…or were they?

The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation’s biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

The overall reaction to the stress tests, announced Thursday, has been generally positive. But the haggling between the government and the banks shows the sometimes-tense nature of the negotiations that occurred before the final results were made public.

Government officials defended their handling of the stress tests, saying they were responsive to industry feedback while maintaining the tests’ rigor.

When the Fed last month informed banks of its preliminary stress-test findings, executives at corporations including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were furious with what they viewed as the Fed’s exaggerated capital holes. A senior executive at one bank fumed that the Fed’s initial estimate was “mind-numbingly” large. Bank of America was “shocked” when it saw its initial figure, which was more than $50 billion, according to a person familiar with the negotiations.

At least half of the banks pushed back, according to people with direct knowledge of the process. Some argued the Fed was underestimating the banks’ ability to cover anticipated losses with revenue growth and aggressive cost-cutting. Others urged regulators to give them more credit for pending transactions that would thicken their capital cushions.

At times, frustrations boiled over. Negotiations with Wells Fargo, where Chairman Richard Kovacevich had publicly derided the stress tests as “asinine,” were particularly heated, according to people familiar with the matter. Government officials worried San Francisco-based Wells might file a lawsuit contesting the Fed’s findings.

What?  You mean the results were rigged?  The Fed folded its hand?  Several banks failed even the far less than stressful tests and negotiated down their capital requirements even further?  Well, gosh, that explains why the results were “far better than expected”.  No wonder the banks made out like bandits Friday in the markets!

Why, no one could have predicted that the stress tests were nothing but a PR scam to buy time, or that the delay from Monday to Thursday would be used to fudge the numbers!  Nobody could have foreseen that the tests were designed to lull Americans to sleep while Obama declared the country’s largest banks to be Too Big To Fail!  Surely nobody foresaw the game plan was to reinflate another stock bubble to cover up the continuing collapse of our economy and to give the banksters every concession they ever wanted as Democrats and Republicans alike caved in to the people really running the country!

And yet, that’s exactly what happened.  From the get-go, Obama was faced with an enormous problem made worse by the Bush reponse to it.  But given the opportunity, Obama showed his true colors, preferring to put his trust in the people who got us into this mess.  And surprise, surprise…the stress test was a sham from the beginning.

Total losses from the financial crisis will range around $3 trillion dollars or more, depending on who you talk to.  We still have $2 trillion in losses to go.

The Fed says the banks will only need $75 billion more to survive these losses.  The banksters were willing to sue if the Fed said they needed more.  These lies are staggering, and the stress tests’ so called worst-case scenarios have already been broken.

The banks are insolvent.  The losses will continue to pile up.  It’s not a matter if if this will blow up in our faces, but when.

Be prepared.

Also available at ZVTS.

The banks are fine!

So wonderful in fact that the banks are arguing that the stress test results shouldn’t actually be released.

U.S. officials are leaning toward announcing the “stress test” results of individual banks next week instead of just summary results, a source familiar with administration talks said Thursday.

The source, speaking anonymously because talks are ongoing, also said officials will likely release the capital requirements of the 19 firms at their holding company level, not just the needs of their banking units. Some of the banks being tested, such as Bank of America, have large non-bank subsidiaries that were included in the assessments, the source said.

Regulators have stress-tested the 19 largest U.S. banks to determine their capital needs should economic conditions deteriorate further. The source said the announcement of the results has been pushed back, possibly to May 6.

Note the language.  “Possibly” we could see stress test results on Wednesday.  They are leaning towards “individual” results too, instead of releasing all the results publicly and at the same time.

I’m betting strongly that the banks that are hurting the most, the ones that truly are uncapitalized to the point of being insolvent?  You’ll never know who they are.  The banks will refuse to let the government release the results to us.  Forget Wednesday.  The banks are angling for “never.”
Such a last minute delay in the results the banks knew were coming for weeks now indicates strongly that the banks are in serious trouble.   If the results are made known to the public it could cause a run on the banks.  I was worried that the tests given the banks were indications that they couldn’t fail, they were so easy.  But the reality is that the banks have now failed the cream puff tests given to them so badly that they are warning the Fed of systemic collapse brought on by financial panic, and the banks don’t want the results to be released at all.  The Obama administration is clearly going along with this charade.

Officials said at the time the banks would learn how much extra capital regulators wanted them to have, and then they would have six months to raise that amount in the private market or could tap a new government capital facility.

Since then, the market appetite for the results has reached a fever pitch, forcing the Treasury Department to rethink its plan to keep detailed results of individual banks private.

The source said officials are well aware of the market’s sensitivity to the information, evidenced by the punishment some bank stocks have endured from leaked reports of the results and outside analysts’ versions of the tests.

“Everyone’s being very sensitive,” the source said.

Nobody could have predicted!  Here’s what happened, folks.  The Obama administration sold the bank stress tests too well!  Now the investing public actually believes these results are “objective and meaningful”, and in a way they are.  When Timmy and his crew rigged the tests so that any bank could pass, they never counted on a number of banks failing the test anyway.

Even a cursory look at the books shows America’s major financial institutions are zombie banks that should have gone into government receivership months ago.  And the banks are now so terrified of the results that they are playing the systemic collapse extortion card yet again.

I have been saying for months now that a receivership plan continues to be the only solution.  The banks must be made to give in, because right now any possible efforts to work with the Obama administration results in the banks getting 100% of what they want and the American taxpayer getting no accountability, no stake in the game, and no idea what is really going on.  The first real public accounting of the banks is now being all but scuttled before our eyes.

These bad banks must be forced into recievership.  They must be Chryslerized:  given a firm date and when they fail, taken over and restructured.  But that will never, ever happen.  The banksters that run the country will never allow it and Obama has no intention of doing it, he has already been given his orders.

Now the last chance of public accountability is being dismantled.  We’ve gone from all stress test results on May 4 to maybe some banks, maybe on May 6th…which of course will become no results whatsoever.  Our course towards disaster is now all but locked in.  The Fed will simply throw money at the banks extorting taxpayer money, and the creditor nations that own the US will throw money at us…or else.

That is until they run out of money and our economy collapses anyway.  There’s a reason Obama is trying to frantically implement popular social programs as soon as possible.  He knows what’s coming.

Now, so do you.

Be prepared.

Also available at ZVTS.