Saturday, May 9, 2009

Global No Confidence Vote: Stress Test Shell Game

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.

Commissioning A Failure

If there's one trick the Obama administration has learned from the Bushies, it's the art of the Friday Night News Dump. This week, it's the fact that Obama is bringing back the Bushies' failed system of military commissions to try terror suspects.
The military commissions have allowed the trial of terrorism suspects in a setting that favors the government and protects classified information, but they were sharply criticized during the administration of President George W. Bush. "By any measure, our system of trying detainees has been an enormous failure," then-candidate Barack Obama said in June 2008.

In one of its first acts, the Obama administration obtained a 120-day suspension of the military commissions; that will expire May 20. Human rights groups had interpreted the suspension as the death knell for military commissions and expected the transfer of cases to military courts martial or federal courts.

Officials said yesterday that the Obama administration will seek a 90-day extension of the suspension as early as next week. It would subsequently restart the commissions on American soil, probably at military bases, according to a lawyer briefed on the plan.

"This is an extraordinary development, and it's going to tarnish the image of American justice again," said Tom Parker, a counterterrorism specialist at Amnesty International.

A White House official said no final decision has been made, and one source involved in the discussions said the plan awaits Obama's approval.

I'm going to go to the right for criticism of this, starting with Andy McCarthy from the Corner:

The Obama campaign slandered the commissions, just like it slandered Gitmo, military detention, coercive interrogations, the state secrets doctrine, extraordinary rendition, and aggressive national-security surveillance. Gitmo is still open (and Obama and Holder now admit it's a first-rate facility), we are still detaining captives (except when Obama releases dangerous terrorists), the Obama Justice Department has endorsed the Bush legal analysis of torture law in federal court, and Obama has endorsed state secrets, extraordinary rendition, and national-security surveillance (and the Bush stance on surveillance has since been reaffirmed by the federal court created to rule on such issues).

Do these people ever get called on their hypocrisy?

It's necessary to point out that Obama capaigned to end all of the above, and then turned out to expand every instance of Bush's system, and yes, this most certainly makes Obama a hypocrite of the first order. However, it's important to notice that Obama is certainly being attacked on the left on this, most notably by Marcy Wheeler:

So, to wind this toward a conclusion, this Obama gussied up swine of military commissions is a pig that ain't gonna fly. It is a patina of change on that which is not. And it is a sham; because there is no need for it, traditional criminal courts are situated to handle these matters just fine once you get past the Republican hysterical shrieking. Traditional courts have handled Zacharias Moussaoui, Jose Padilla, the Blind Sheik Abdel-Rahman, John Walker Lindh and numerous others. Criminal courts have the CIPA process to deal with classified information in a professional and equitable manner. Have there been errors and problems in some of the cases to date; yes, absolutely, but almost all were the fault of malicious and unethical prosecutors, not the inability of the system to handle the matters. Lastly, traditional courts have at least the appearance of neutrality, a concept that simply is absent in the tribunals run by the American military out of the Pentagon.

The bottom line is that no matter how you shine it up, military tribunals are wrong, convey the wrong message to the rest of the world and are nothing but a lazy dodge by an American government complicit in an eight year litany of wrongful acts. President Obama should stop the madness right here and now, try the detainees in a just system for the world to see and start reclaiming the high ground.

I personally don't understand it. Candidate Obama clearly laid out what was wrong with the system. President Obama is bringing it back in almost unaltered form.

It's another strike against this President. In many ways he is a vital improvement, but in other ways he really is worse than Bush.

The Republican Alternative To Obamacare

As Kimberly Strassel opines in the WSJ with a fatalistic air of inevitability, there is no GOP alternative plan.
Listen. That sound of silence? That's what's known as the united Republican response to President Barack Obama's drive to socialize health care.

The president has a plan, and he's laid it on the table. The industry groups that once helped Republicans beat HillaryCare are today sitting at that table. Unions are mobilized. A liberal umbrella group, Health Care for American Now, is spending $40 million to get a "public option," a new federal entitlement that would kill off private insurance. Democrats passed a budget blueprint that will allow them to cram through that "public option" with just 51 votes.

Republicans? They're trying to figure out what they think.

It boggles my mind that Republicans (being all about choice as a factor to drive prices down) are suddenly afraid of competition. The two biggest complaints about health care in the US is cost and availability, not quality. "The government will put private insurers out of business and we'll all be on six-month waits to see a nurse!" Yes, because insurance companies would never want to compete for tens of billions of health care dollars each year.

The current plan of "private insurers driving up costs at roughly three times the rate of inflation" isn't working. Maybe somebody should step in and lower costs. What do the Republicans have for an alternative?

The White House is targeting folks like Chuck Grassley, Orrin Hatch and other Senate Republicans who back in 1997 voted for the State Children's Health Insurance Program, which was pitched by Democrats at the time as a modest program to help poor kids. It has, of course, become exactly what Democrats always intended it to be: a ballooning federal entitlement that is today transferring middle-class children from private insurance onto the federal rolls. This might be thought of as a teachable moment. But now Republican "moderates" are all ears for the administration's soothing suggestions that perhaps the "public option" can be "structured" so as to protect private insurance. Uh-huh.

Another group of Republicans are still going 50 rounds over taxes -- namely, whether a deduction isn't a more principled and cleaner way than credits to equalize the tax treatment of insurance. This is a legitimate debate, but one that should've been had 10 years ago when Republicans were in the majority. While the GOP fiddled, Democrats focused the argument on "uninsureds," which has made a tax deduction (which would only cover those who pay taxes) even less politically palatable.

Still mind-boggling. Republicans think the government providing health care for kids is a bad idea, and they're still complaining about tax credits versus deductions when 45 million Americans have no health care and when they get sick, they go to hospital emergency rooms and get taxpayer-provided care anyway.

Republicans still think health care is a privilege only of those who can afford it, and there are tens of millions of Americans who can't afford it.

When the GOP was in power, they did everything they could to kill universal health care. If we had put a plan in place 15 years ago, it would have been much cheaper and much more effective now. We've been waiting since 1994 for the great GOP alternative to universal health care. They've done nothing.

Now the Democrats get a chance.

The Huckster And The Con Man

One is GOP former Gov. Mike Huckabee, the other is a term for a rip-off artist, but the Republicans might want to take note of what he has to say anyway.
Days after national Republicans launched a new campaign to broaden the party's outreach, former upstart presidential candidate Mike Huckabee says the GOP is at risk of becoming "irrelevant as the Whigs."

In an interview with the California newspaper The Visalia Times-Delta, Huckabee said the GOP would only further decline in influence should it alienate social conservatives — largely considered the most energetic and loyal faction of the party.

"Throw the social conservatives the pro-life, pro-family people overboard and the Republican party will be as irrelevant as the Whigs," he said in reference to the American political party that largely disbanded in the mid 1800s.

"They'll basically be a party of gray-haired old men sitting around the country club puffing cigars, sipping brandy and wondering whatever happened to the country. That will be the end of the party," he said in the interview published Thursday.

Huckabee's comments come the same day former Vice President Dick Cheney warned his party's leaders not to moderate their views as they launch an effort to regain control in the nation's Capitol.

"The idea that we ought to moderate basically means we ought to fundamentally change our philosophy," Cheney also said. "I for one am not prepared to do that, and I think most of us aren’t," he told conservative talk-radio host Scott Hennen.

Yeah, because if the GOP doesn't somehow become the party of religious intolerance, social bigotry, draconian spending cuts and irrational hatred of moderates, they just might fail politically, independent voters will reject them wholesale and the Democrats will end up controlling Washington or something...

StupidiNews, Mother's Day Edition

Related Posts with Thumbnails