Friday, September 12, 2008

Global No Confidence Vote: Deal or No Deal

Is everybody ready for the newest game on Wall Street?

It's time to play Deal or No Deal, America!

Despite all protestations by Helicopter Ben and Hammerin' Hank, the Fed held an emergency Friday night meeting to discuss the future of Lehman Brothers. Deal, or No Deal?

The game is on, but it's not like anything you've seen with Howie Mandel. In this version, Hank and Ben are trying to pick a bank to buy Lehman Brothers, but the problem is this: All of the suitcases are winners, and they are waiting to be filled by Treasury and The Fed! The financials have called Treasury and The Fed's bluff. No buyer has stepped up to the plate to save Lehman...not without a sweetheart deal like JP Morgan Chase got for Bear Stearns.

In other words, what if all the pretty girls on Deal of No Deal said "Hey Howie, one of us is a millionaire! We'll stop the show unless you and The Banker make US an offer!" It's a mutiny, and everything's topsy-turvy now.

So now, the clock is ticking. If Hank and Ben don't pick a suitcase and fill it up with enough taxpayer money before Sunday's No Deal. And No Deal is the end of the game for America.

The Fed said "We won't give a sweetheart deal, we're still The Banker!" The financials replied "You're full of shit. You have until Sunday, and then Lehman goes under and takes the entire financial sector down with it...and that will lead to a complete loss of confidence in the markets. Game over. We're The Banker in this game now, and you've got to make a Deal. You have no choice!"

The Street knows that Hank and Ben have no choice. Failure to save Lehman Bros. will ruin WaMu, AIG, Wachovia, and trigger a sweeping collapse of the markets. They will crash and take our economy with it.

We've entered Moral Hazard territory now. The Banker is now the Player, and the Suitcase Suits are now calling the shots on the show. After Bear Stearns and Fannie and Freddie, dozens of banks and financials are now Too Big Too Fail. The only thing keeping these banks afloat is the general consensus that the Fed will bail them out.

If Lehman goes under, people will be asking "Am I next?" They will panic. They will cause panic runs on the financials that are on the edge right now. The companies that have lost half their value in the last 12 months will lose the other half in 12 hours. It will be a massacre.

The game of Deal or No Deal is on.

Tonight's meeting means the Fed blinked first. Banks will be bailed out with magically created fiat money. Failure to do so by the Fed will end the fiat money game...and the US economy.

You'd better believe that Hank Paulson has his marching orders. His orders are to save the economy until the election, then it becomes the next President's problem. In the halls of power, frantic calls are being made and gentlemen's agreements are being reached tonight.

The Fed couldn't directly bail out Lehman. But nobody wants to be the guinea pig to save them, because whoever does take Lehman is going to have to make the deal next time...and then next time...and then next time. They'll be in for the Fed right up until the bad deals close THEIR doors.

Nobody wants to be the sacrifice. The larger banks think they will all make it. They are waiting for the Fed to make them the Deal of the Century. And they know the longer they wait, the better the deal gets.

As Hank and Ben make offers, the financials are just laughing. They know one of them has the suitcase with billions of taxpayer money. They are waiting for a high enough offer from The Banker.

And The Banker has no choice either. The clock is ticking. Asian markets open in less than 48 hours. If there's No Deal on the table by 7 PM Sunday, then people will start asking why...why Fannie and Freddie got the MOTHER of all Deals, and Lehman Bros. gets nothing. Everyone else will quit the game in anger.

Global financial meltdown. And the financials know they have all the power in this equation for now, especially in a tight election year. Bread and circuses (and crappy gameshows with Howie Mandel) keep America fat and happy. If those stop, the American people start getting out of control. They start realizing they've been used for generations. They start to rebel.

So very much is at stake in this game of Deal of No Deal. There's an entire global financial system to lose. But the Fed has already lost. They made the precedent with Bear Stearns and Fannie and Freddie. Now they have to decide how to bail out the rest, or the financials will pull the plug on the game and everyone will lose.

As it is of course, the American taxpayer is the big loser. You and I are paying for this game, and it's a game we can't afford anymore. The Fed has a few months to go before dumping the disaster in the next President's lap, but that plan came unraveled. The bailout of Fannie and Freddie gave Wall Street two days...and even then Lehman Brothers was falling.

Not even the largest bailout in the history of the universe could give the Fed more than a couple of market sessions worth of relief.

So we wait as The Banker makes offers to the girls with the suitcases for a big enough Deal...or it will be No Deal for the global economy.

And the best part is when the next major financial goes under, Washington Mutual, AIG, whoever...we get to play Deal or No Deal all over again!

The only loser is you.

And eventually...The Fed will be out of deals to make. The game ends when the Fed and the financials reach No Deal.

And so does our economy.

Be prepared.

Cross-posted at the Frog Pond.

I Don't Like Ike

...because this thing is going to barrel straight up the Galveston Bay ship channel, and it's going to screw Houston over. First priority is the people of Texas, and from what I've been hearing and reading, a lot of folks in Houston and Galveston decided to stay. The storm was heading for Corpus Christi, not Houston. It's too late for a lot of folks right now. The loss of life and damage could be catastrophic.
Massive Hurricane Ike bore down on the Texas coast on Friday, driving a wall of water into seaside communities and threatening catastrophic damage.

Waters rose rapidly as Ike moved within hours of striking low-lying areas near Houston with a possible 20-foot (6-metre) storm surge in what may be the worst storm to hit Texas in nearly 50 years

"Our nation is facing what is by any means a potentially catastrophic hurricane," said U.S. Homeland Security Secretary Michael Chertoff, warning that Ike's storm surge could present the gravest danger.

"This certainly falls in the category of pretty much a worst case scenario."

But the rest of the country could be in for a hell of a gas shock. Houston/Galveston up to Port Arthur is Refinery Row for up to a quarter of America's total refining capacity. As the Scholars and Rogues guys explain:

This map shows the 6 meter (20 foot) flood zone from sea level rise. It’s likely the worst-case for the storm surge. Feel free to scroll around, especially up to Port Arthur on the Texas-Louisiana border.

This site has all the oil refineries in the US on it. Zoom in on the Houston area and compare the two maps. If you look closely at Texas City, between Galveston and Houston, and well within the 20 foot flood zone, you’ll find three refineries - BP Products North America, Marathon Petroleum, and Valero - and there’s another close to Houston that might also be flooded, depending on how big the surge is when it reaches the Houston Ship Channel - ExxonMobil Refining.

If you drag the refining map over to Port Arthur, there’s two more that might be hit of the storm surge gets into Sabine Lake (unlikely, but possible) - Valero’s Port Arthur Refinery and Motiva Enterprises.

The three at highest risk combine to refine 798,000 barrels of oil a day. Add the ExxonMobil refinery and that jumps to 1.384 million barrels of oil per day. And if the two Port Arthur refineries I mentioned are damaged, then that’s another 565,000 barrels per day.

And if we include the other four refineries that are out of the flood zone but still in high wind damage areas (i.e. Houston), that’s yet another 860,000 barrels per day of oil refining capacity. Outside the flood area of Port Arthur are two more refineries with another 603,000 barrels of capacity at risk.

All told, Ike has the potential to directly damage via storm surge, wind, and rain-driven flooding 12 refineries in Houston and East Texas that combine to refine 3.412 million barrels of oil per day. As of the end of last week, the EIA data says that total barrels of oil refined in the U.S. was 13.483 million barrels. These 12 refineries at risk represent 25.3% of the entire U.S. refining capacity.

That refining capacity could be offline for weeks, if not months.

Worst case scenario and these refineries are heavily damaged for months? Gas prices at or above $5 a gallon nationally. Strategic oil reserves will do nothing for refining capacity. This means gas shortages in the South and Midwest, quite possibly.

The GOP will certainly say DRILL DRILL DRILL DRILL and still expect you to vote for them. Remember that when the scope of the failure here become apparent.

Lehman A Bit To The Left

Lehman Bros has gone from a market cap of $11.5 billion on Monday morning to $2.5 billion this afternoon.

At this point it only matters who disposes of the body.

Disrespectful Uppity House Negro Is Disrespectful

Dear Barry --

Are ya mad yet?

-Zandar PS: It's of course all bullshit.

The Numbers

FiveThirtyEight has McSame ahead now. We'll see if Obama can gain some over the next two weeks or so.

Leave It To Whoopi

As Baba Wawa and the Whoopster just tear ass into John McSame.
The ladies of "The View" confronted John McCain today for lying in recent attack ads. In arguably his toughest interview yet, View co-host Joy Behar asked McCain:

"There are ads running from your campaign... Now we know that those two ads are untrue, they are lies. And yet, you at the end of it say you approve these messages. Do you really approve these? Barbara then threw in her condemnation, by telling McCain: "You, yourself said the same thing about putting lipstick on a pig..."

Watch the video at the link.

Well, This Can't Be Good Either...

The latest Gallup generic ballot poll is very disturbing for the Dems.
A potential shift in fortunes for the Republicans in Congress is seen in the latest USA Today/Gallup survey, with the Democrats now leading the Republicans by just 3 percentage points, 48% to 45%, in voters' "generic ballot" preferences for Congress. This is down from consistent double-digit Democratic leads seen on this measure over the past year.

Not good. Not good at all. Can you imagine a GOP House/Senate/White House under McSame/Palin?

Move to Canada. Seriously. Wake the hell up, Dems. Your country is slipping away. The post-convention bounce won't hold...but it may be time to put ideas of 300 House seats and 60 Senate seats away and take the majority.

Jesus, Obama. FIGHT BACK.

Bailout? What Bailout?

Helicopter Ben pretends it's not coming.
Concern that Lehman Brothers Holdings Inc may fail to find a buyer because the U.S. government is reluctant to provide financial backing sent the investment bank's shares tumbling to a nearly 14-year low on Friday.

Lehman's bonds also dropped ahead of what is expected to be a series of frantic calls this weekend between Lehman, U.S. regulators and potential bidders. Bank of America Corp is widely seen as a leading contender, with British bank Barclays Plc also cited as a possibility.

The Financial Times reported that BofA, the No. 2 U.S. bank by assets, was considering a joint bid for Lehman along with private equity investor JC Flowers and sovereign wealth fund China Investment Co.

Lehman shares fell as much as 16 percent in early trading, though they trimmed those losses following the FT report. Lehman declined to comment.

"I think they're going to have to draw a line at some point," Rose Grant, managing director of Eastern Investment Advisors in Boston said of Washington regulators. "This could be the point."

The credit maelstrom is threatening other financial companies, including leading brokerage Merrill Lynch & Co Inc and American International Group Inc, once the world's largest insurer by market capitalization. AIG plunged 21 percent, while Merrill slid 5.6 percent.

Here's the reality of the situation, folks: the special Fed discount borrowing window is already a bailout of Lehman, and it's still not working.

The Fed's refusing to bail the company out for now, but if that doesn't happen, the financials are DONE. A full fledged-panic will ensue, and they will have to bailout the entire sector.

The Fed bailout option is the only thing keeping Lehman out of being a penny stock right now. WaMu and AIG too. No bailout? No financial sector.

A decision will be made this weekend to bail out Lehman. It's coming. If not, the stock market crashes due to a total loss in confidence as dozens of financials disintegrate.

Option 3 will be a buyer magically appears. Don't count on it. It's bailout or it's the end of the game.

In Which Zandar Answers Burning Questions

Today's question comes from Greg Sargent at TPM Election Central:
Will any Republican -- anywhere -- condemn the sleaze that the McCain campaign is cranking out on a now-daily basis?
A: Fuck no.

This has been another installment of Zandar Answers Your Burning Questions.

Le Sigh, Le Moan Part 4

It wouldn't be a weekday without more GOP concern-trolling that Obama should have picked Hillary. Today's contestant: RealCrappyPolitics blogger Marianne Means.

"Not a good fit" was about the closest an Obama mouthpiece came to an explanation. Meaning, one assumes, that he couldn't bear a competing shining star. McCain, of course, has no such worries. He is who he is, and Palin cannot challenge that. But she is proving so popular, if the raft of recent polls are sustained, that she is becoming a big political figure in her own right. At the moment, she is still a political stunt, but a successful one. In their first ad featuring Palin, the GOP shows the pair together and an announcer proclaims, "They'll make history," a not-so-subtle message that she could be the first female vice president.

She is the anti-Clinton, opposed to every domestic and social policy for which Clinton has worked for decades, yet she is pulling away hordes of white female voters who refused to settle for Obama after he dumped Hillary.

Gender may have an initial appeal only, but it could last if Palin proves to be clever and softens her hard-line anti-abortion, anti-stem cell research, anti-gay rights, anti-everything modern positions of the past. She's running for the second spot, not the top one. We'll see. The oddest thing about Palin's candidacy is that motherhood has suddenly moved into a top priority for political leadership. This is brand new, and a reflection of the fact her religious-right supporters want to promote her "family values," which differ from the standards of the past.

Sexual abstinence before marriage, for instance, has been dropped from the list of moral imperatives for the feminine ideal, given unmarried teen Bristol's inconvenient pregnancy.

This is just....stupid. Sarah Palin softening her positions? Mahahahahahahahahaha *smack* SHUT IT.

Cartoon Of The Moment

Obama can't win if the election is about if the media is sexist or not.

Spiking Cindy's Story

[UPDATE] Spiked no longer. Now on the front page of the WaPo. TalkLeft has more.

The Cindy McSame painkiller story that I talked about yesterday was spiked by the Washington Post Thursday, the proof coming from the website of (of all places) the Everett Daily Herald in Washington State. The website accidentally published the wire story late Thursday from the Washington Post that the Post itself spiked.
While McCain's accounts have captured the pain of her addiction, her journey through this personal crisis is a more complicated story than she has described, and it had more consequences for her and those around her than she has acknowledged.

Her misuse of painkillers prompted an investigation by the Drug Enforcement Administration and local prosecutors that put her in legal jeopardy. A doctor with McCain's medical charity who supplied her with prescriptions for the drugs lost his license and never again practiced medicine. The charity, the American Voluntary Medical Team, eventually had to be closed in the wake of the controversy. Her husband was forced to admit publicly that he was absent much of the time she was having problems and was not aware of them.

"So many lives were damaged by this," said Jeanette Johnson, whose husband, John Max Johnson, surrendered his medical license. "A lot of good people. Doctors who volunteered their time. My husband. I cannot begin to tell you how painful it was. We moved far away to start over."

McCain's addiction also embroiled her with one of her charity's former employees, Tom Gosinski, who reported her drug use to the DEA and provided prosecutors with a contemporaneous journal that detailed the effects of her drug problems. He was later accused by a lawyer for McCain of trying to extort money from the McCain family.

"It's not just about her addiction, it's what she did to cover up her addiction and the lives of other people that she ruined, or put at jeopardy at least," Gosinski said in an interview this week.

Cindy and John McCain declined repeated requests to be interviewed for this article. The McCain campaign also declined to comment.

Based on the limited details they have provided in earlier interviews, it is impossible to tell the full story of a difficult period in their lives. The following account of Cindy McCain's prescription drug abuse and her and her husband's efforts to deal with it is based on official records, including a report by the county attorney's office in Phoenix, and on interviews with local and federal officials involved in the probe.
So we know now that the story exists (written by Kimberly Kindy) and that the WaPo spiked the story on purpose because of course it's greatly damaging to the McSame campaign. And I can see why, this one would basically ruin McSame.

But it's still a story.
Even far from Washington, politics took a toll on Cindy McCain. In 1989, she was pulled into a Senate investigation that focused on her husband and four other senators who had intervened with regulators on behalf of savings-and-loan owner Charles Keating.

When questions arose about a vacation the McCains took to Keating's home in the Bahamas, Cindy McCain, as family bookkeeper, was asked to document that they had reimbursed the Keatings, but she could not. She has repeatedly cited the stress of the Keating Five scandal and pain from two back surgeries that same year as reasons for her dependence on painkillers.

Her charity, AVMT, kept a ready supply of antibiotics and over-the-counter pain medications needed to fulfill its medical mission. But it also secured prescriptions for the narcotic painkillers Vicodin, Percocet and Tylenol 3 in quantities of 100 to 400 pills, the county report shows.

McCain started taking narcotics for herself, the report shows. To get them, she asked the charity's medical director, John Max Johnson, to make out prescriptions for the charity in the names of three AVMT employees.

The employees did not know their names were being used. And under DEA regulations, Johnson was supposed to use a special form to notify federal officials that he was ordering the narcotics for the charity. It is illegal for an organization to use personal prescriptions to fill its drug needs.

"The DEA told me it was OK to do it that way," Johnson told The Washington Post recently, in his first media interview about the case. "Otherwise, I never would have done it."

The county report showed that Johnson told officials he knew it was wrong, but he wrote prescriptions at McCain's request at least twice.

After Johnson wrote the prescriptions, McCain, and sometimes her secretary, picked them up from his home. Once they were filled, Johnson was supposed to maintain custody of the narcotics, but he said he let McCain control them and carry the medications in her luggage on charity trips.

No one tracked the narcotics in between the charity's missions, the county report shows.

When the county investigator asked Johnson where the charity stored its narcotics, he said they were in a safe. When asked where the safe was located, Johnson said he had never seen it.

Officials with other medical charities contacted by The Post said it is unusual to distribute narcotics overseas, particularly in Third World countries where medical teams treat disease and infection rather than performing painful surgeries.

Some of the doctors and nurses who went on McCain's missions said they never saw narcotics on AVMT trips and would have discouraged carrying such medications. "You don't bring narcotics into a foreign country, especially with people who have machine guns around," said Michele Stillinger, a nurse during a 1991 AVMT mission to Bangladesh.
Remember folks, this story exists. It's leaked. The WaPo had it but spiked it, and it leaked anyway. We'll see if any media outlets dare to pick up on the story.

Today's Sarah Palin Lie...

...that will be repeated sixty million times by the media and driven into the minds of voters as subconscious truth is this lovely act of
telling an Iraq-bound brigade of soldiers that included her son that they would "defend the innocent from the enemies who planned and carried out and rejoiced in the death of thousands of Americans."
Yay. It doesn't matter. Every time Sarah Palin lies, it gets repeated by the media and hammered into the brains of the people who just don't give a damn enough to check the truth, and I'm betting that's about 90% of us. Once again the GOP dominates the 24-hour news cycle.

Sarah Palin is going to lie her way straight into Washington, and we're too lazy, ignorant, and complacent to defend our country from her. We truly deserve the hell we get if McSame wins.


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