Post by jeffolie on Aug 24, 2007 11:55:42 GMT -6
More Stupid Dog Tricks From the Corporate Welfare-Nistas
Friday, August 24th, 2007 at 5:19 AM
Comments from Jean-Pierre Roth the head of Switzerland’s central bank echos the tin foil hat theme of Winter Watch. True to the Nth degree, but still kind of a funny thing to say for a central banker who has let carry traders and speculators have their way with the Swiss Franc.
Jean-Pierre Roth, president of the Swiss National Bank, said market turmoil was far from over as tremors from the sub-prime debacle continued to rock the world. “We’re certainly not at the end of the story. There are question marks surrounding the development of the American economy,” he said. “Something unbelievable happened.” People who had neither income nor capital got credit with very attractive conditions. Now reality is striking back,” he said.
In the last month the egregious non-existent lending standards aspect of the situation Roth describes has dramatically shifted. Now the crony capitalists and plutocrats are hard at work with three new “unbelievable” tricks to save their bacon:
Stupid Dog Trick #1: There are calls to save the debt Sheeple (translate themselves) and ho’moaners (Lee Wheeler term), the latest being an appeal from Bill Gross to socialize a couple hundred billion on others (presumably foreigners, and future generations of Americans?). This by “taking securities” (gee, from who?) in a housing price prop job. Corporate welfare-nistas like Gross, Kudlow and their ilk should be ashamed of themselves. If they truly wish to help the Sheeple as well as the average Brazil American, we would be hearing a lot more about shifting much more national income towards them and away from corporations via new tax, trade and labor policies. Of course none of that seems to be forthcoming at all from these money Boyz. What I do hear, is mostly about Wall Street and keeping their plutocratic feeding frenzy going via the socialization of losses. Saving ho’moaners is just the afterthought. Brazil Americans simply no longer have the income to support all the Ponzi finance that’s been created. Plutocrats and corporatists have used them up and spit them out, so now they need to come up with other marks such as the unborn.
Stupid Dog Trick # 2: The continuation of the Milky Way cover up theme rolled out earlier in the year. Bloomberg produced a must read piece about FASB rule 157 on Level 3 asset accounting. This is a clear step beyond the discredited mark to model, and on to mark-to-Milky Way, the corporate version of no doc, stated income.
You can thank the Financial Accounting Standards Board for this. The board last September approved a new, three-level hierarchy for measuring “fair values’’ of assets and liabilities, under a pronouncement called FASB Statement No. 157, which Wells Fargo adopted in January.
Level 1 means the values come from quoted prices in active markets. The balance-sheet changes then pass through the income statement each quarter as gains or losses. Call this mark-to- market.
Level 2 values are measured using “observable inputs,’’ such as recent transaction prices for similar items, where market quotes aren’t available. Call this mark-to-model.
Then there’s Level 3. Under Statement 157, this means fair value is measured using “unobservable inputs.’’ While companies can’t actually see the changes in the fair values of their assets and liabilities, they’re allowed to book them through earnings anyway, based on their own subjective assumptions. Call this mark-to-make-believe.
A variation of this stupid dog trick is to fail to reserve for losses, epidemic among financials. Combine the ingredients and they can just make up whatever financial results they choose.
Stupid Dog Trick #3 has more bark than bite, and I will coin this “smoke and mirrors”. The most popular smoke and mirror trick at the moment is the Elmer Gantry gambit, which involves getting “deep pocketed” types to shell out a billion here and there as investments in the dead man walking. The latest example of this really got the market got lathered up (at least overnight, or until the market opened), was Bankamerica’s $2 billion participation in a Countrywide Financial infusion. CFC just a few short months ago, when it should have been shoring up and conserving capital, was playing Wile E Coyote by throwing fists full of dollars (raised in another preferred stock offering) for stock buy backs at $35-40. Meanwhile insiders sold heavily. Now this week CFC sells BAC a preferred convertible at $18, with a 7.25% yield. We are supposed to be impressed? Besides what kinds of other exposure does Bankamerica have to CFC? They already own 16% of CFC stock. Could this be more about prisoner’s dilemma than an opportunity?
In an extremely interesting CNBC’s video (see link or transcript here), Angelo Mozilo indicates that CFC can not use the Fed discount window.
“Countrywide has a bank but is not a bank. Assets that rest in Countrywide home loans the mortgage company doesn’t have access to the window. The bank has access to the window but it doesn’t have the assets. And we can’t get the assets from Countrywide home loans to the bank because of what they call 23-a and b. Reg W doesn’t permit that interaction. Would have loved to do that. Couldn’t be done.”
Later in the interview he suggests that big banks have a stigma about using the discount window. Indeed the Fed release shows only $2 billion added in window borrowings this week. The real story however can be gleaned from Jean Pierre Roth’s comment in the blog opener, the attitudes of foreigners. In the latest week custodial holdings of US securities held by FCBs fell $10.6 billion, bringing the three week dump to $31.6 billion. Liquidity needs, or are FCB’s and foreigners just plain tired of sleazy smoke and mirrors?
wallstreetexaminer.com/blogs/winter/?p=1015#more-1015
Friday, August 24th, 2007 at 5:19 AM
Comments from Jean-Pierre Roth the head of Switzerland’s central bank echos the tin foil hat theme of Winter Watch. True to the Nth degree, but still kind of a funny thing to say for a central banker who has let carry traders and speculators have their way with the Swiss Franc.
Jean-Pierre Roth, president of the Swiss National Bank, said market turmoil was far from over as tremors from the sub-prime debacle continued to rock the world. “We’re certainly not at the end of the story. There are question marks surrounding the development of the American economy,” he said. “Something unbelievable happened.” People who had neither income nor capital got credit with very attractive conditions. Now reality is striking back,” he said.
In the last month the egregious non-existent lending standards aspect of the situation Roth describes has dramatically shifted. Now the crony capitalists and plutocrats are hard at work with three new “unbelievable” tricks to save their bacon:
Stupid Dog Trick #1: There are calls to save the debt Sheeple (translate themselves) and ho’moaners (Lee Wheeler term), the latest being an appeal from Bill Gross to socialize a couple hundred billion on others (presumably foreigners, and future generations of Americans?). This by “taking securities” (gee, from who?) in a housing price prop job. Corporate welfare-nistas like Gross, Kudlow and their ilk should be ashamed of themselves. If they truly wish to help the Sheeple as well as the average Brazil American, we would be hearing a lot more about shifting much more national income towards them and away from corporations via new tax, trade and labor policies. Of course none of that seems to be forthcoming at all from these money Boyz. What I do hear, is mostly about Wall Street and keeping their plutocratic feeding frenzy going via the socialization of losses. Saving ho’moaners is just the afterthought. Brazil Americans simply no longer have the income to support all the Ponzi finance that’s been created. Plutocrats and corporatists have used them up and spit them out, so now they need to come up with other marks such as the unborn.
Stupid Dog Trick # 2: The continuation of the Milky Way cover up theme rolled out earlier in the year. Bloomberg produced a must read piece about FASB rule 157 on Level 3 asset accounting. This is a clear step beyond the discredited mark to model, and on to mark-to-Milky Way, the corporate version of no doc, stated income.
You can thank the Financial Accounting Standards Board for this. The board last September approved a new, three-level hierarchy for measuring “fair values’’ of assets and liabilities, under a pronouncement called FASB Statement No. 157, which Wells Fargo adopted in January.
Level 1 means the values come from quoted prices in active markets. The balance-sheet changes then pass through the income statement each quarter as gains or losses. Call this mark-to- market.
Level 2 values are measured using “observable inputs,’’ such as recent transaction prices for similar items, where market quotes aren’t available. Call this mark-to-model.
Then there’s Level 3. Under Statement 157, this means fair value is measured using “unobservable inputs.’’ While companies can’t actually see the changes in the fair values of their assets and liabilities, they’re allowed to book them through earnings anyway, based on their own subjective assumptions. Call this mark-to-make-believe.
A variation of this stupid dog trick is to fail to reserve for losses, epidemic among financials. Combine the ingredients and they can just make up whatever financial results they choose.
Stupid Dog Trick #3 has more bark than bite, and I will coin this “smoke and mirrors”. The most popular smoke and mirror trick at the moment is the Elmer Gantry gambit, which involves getting “deep pocketed” types to shell out a billion here and there as investments in the dead man walking. The latest example of this really got the market got lathered up (at least overnight, or until the market opened), was Bankamerica’s $2 billion participation in a Countrywide Financial infusion. CFC just a few short months ago, when it should have been shoring up and conserving capital, was playing Wile E Coyote by throwing fists full of dollars (raised in another preferred stock offering) for stock buy backs at $35-40. Meanwhile insiders sold heavily. Now this week CFC sells BAC a preferred convertible at $18, with a 7.25% yield. We are supposed to be impressed? Besides what kinds of other exposure does Bankamerica have to CFC? They already own 16% of CFC stock. Could this be more about prisoner’s dilemma than an opportunity?
In an extremely interesting CNBC’s video (see link or transcript here), Angelo Mozilo indicates that CFC can not use the Fed discount window.
“Countrywide has a bank but is not a bank. Assets that rest in Countrywide home loans the mortgage company doesn’t have access to the window. The bank has access to the window but it doesn’t have the assets. And we can’t get the assets from Countrywide home loans to the bank because of what they call 23-a and b. Reg W doesn’t permit that interaction. Would have loved to do that. Couldn’t be done.”
Later in the interview he suggests that big banks have a stigma about using the discount window. Indeed the Fed release shows only $2 billion added in window borrowings this week. The real story however can be gleaned from Jean Pierre Roth’s comment in the blog opener, the attitudes of foreigners. In the latest week custodial holdings of US securities held by FCBs fell $10.6 billion, bringing the three week dump to $31.6 billion. Liquidity needs, or are FCB’s and foreigners just plain tired of sleazy smoke and mirrors?
wallstreetexaminer.com/blogs/winter/?p=1015#more-1015