bigmagic’s posterous

The way to find out who is right (Treasury or its critics) is to EXAMINE THE LOAN TAPES. An independent examination of the underlying loan tapes -- and comparison to the IndyMac portfolio -- would help determine whether these loans or derivatives based on them have any right to be marketed in an open securities market, and any serious prospect of being paid over time at rates approaching 60 cents on the dollar, rather than 30 cents or less.

Note that even a small loss of capital, relative to the purchase price, completely wipes out the interest earnings on the Treasury's loans, putting the government in a loss position and giving the banks a windfall.

If I'm right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn't participate in the garbage-loan frenzy.

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As in Watergate, the truth and the proof are on the tapes. JK Galbraith weighs in on the distaff side.

The Geithner Plan FAQ

Q: What is the Geithner Plan?

A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit.

Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money?

A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.

Read the rest, worth it. Also Grasping Reality is worth a bookmark in your econ/politics section.

Brad DeLong is a one of the good guys, and former Deputy Assistant Secretary of the Treasury for Pres. Clinton. Also, Professor of Economics at U.C Berkeley, a Research Associate of the NBER, a Visiting Scholar at the Federal Reserve Bank of San Francisco, and Chair of Berkeley's Political Economy major.

There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

via dailykos.com

I visit Wingnuttia so you don't have to.. shudder

The Republican's Working Man hero Joe the Plumber could barely contain himself last night before a crowd of adoring, media-bashing conservatives.

"God, all this love and everything in the room - I'm horny," declared Joe, whose real name is Samuel Wurzelbacher.

The particular state of his libido was way too much information, certainly for the Sleuth.

More via The Sleuth at The Washington Post

TMI for Da Chief too! I think that the combination of redneck heroin (Oxycontin - Rushba the Hutt's favorite snack) and meth (every redneck's favorite party drug) and booze has finally gotten to poor not-Joe the not-Plumber.

New Orleans piano legend Eddie Bo dies at 79

Posted by Keith Spera, Staff writer, The Times-Picayune March 20, 2009 6:40PM

Singer-pianist Edwin Joseph Bocage, known simply as Eddie Bo, works the crowd at last year's New Orleans Jazz and Heritage Festival in New Orleans. He died Wednesday, March 18, at 79.

Eddie Bo, a potent, eclectic New Orleans pianist, singer, songwriter and producer who inspired a dance craze with his 1962 hit "Check Mr. Popeye" and later directed fans to "Check Your Bucket," died Wednesday, March 18, of a heart attack. He was 79.

A prolific artist, Mr. Bo adroitly distilled an excitable synthesis of rock 'n roll, rhythm & blues, jazz and funk.

"He was one of the last great New Orleans piano professors, kind of a bridge between Professor Longhair and Allen Toussaint," said New Orleans Jazz and Heritage Festival producer Quint Davis. "Everyone now has to remember to check their bucket on their own, without Eddie to tell us."

More via blog.nola.com

Eddie Bo was my favorite piano player in New Orleans. I never got to see Professor Longhair so Eddie Bo was my view into the long celebrated legacy of New Orleans piano players. There's a special DNA for New Orleans piano players, from Jellyroll Morton, Tuts Washington and Roosevelt Sykes to Professor Longhair and Eddie Bo and on to Allen Toussaint, Dr. John and Jon Cleary. (and James Booker) Something so funky it will never wash out. That picture above captures Eddie's spirit perfectly. Eddie Bo loved to play and you could tell, he always played his best, soulfull and funky. I never tired of seeing him play, it was always rewarding and fun. He played quite a bit with Snooks Eaglin, both are an irreplaceable part of New Orleans music. Losing both of them within a month will make this year's JazzFest feel kinda empty.

Update: I forgot to mention the Bayou Maharajah, James Booker. No list of New Orleans piano masters is complete without him, perhaps the most talented of them all and doubtless the most colorful and craziest mofo ever to sit at the keyboards.

Excellent short tick-tock history of the meltdown of AIG via it's Financial Products division, as opposed to its insurance companies, which are doing fine, not that it helps. Too Big to Fail sums it up pretty nicely. Note the critical roles of the credit ratings agencies (Moody's, Standard & Poors and Fitch) and, as always, Goldman Sachs, in this catastrophe. Keep an eye on the Goldman role. If there's any decent investigation on this (and I'm not holding my breath) I'll bet cash money Goldman was shorting AIG at the same time it was squeezing them for collateral. I'm reminded of a movie line - "It's not personal, Sonny. It's strictly business."

Goldman's hands are all over this thing; the AIG failure, the Big Sh*tpile, the Big Bailout, the works.

Here's a quote from the end (or maybe The End): - In October 2008, Gerry Pasciucco, a vice chair at Morgan Stanley, was brought in to wind down AIGFP. The unit, Pasciucco found, had $2.7 trillion worth of swap contracts and positions, and 50,000 outstanding trades with 2000 different firms, and 450 employees in six offices around the world.

Whoooo! Them's a lot o' onions brothers and sisters!

The bankster peeking out from his hidey-hole is Joseph Cassano, the mastermind behind it all. Oh, don't worry, he got his; $47MM in 2006, $24MM in 2007 and a $1MM per month AIG consulting contract after he was fired!

Privatizing profits and socializing losses, the American Bankster dream!

The Rise And Fall Of AIG's Financial Products Unit

By Zachary Roth and Ben Buchwalter - March 20, 2009, 9:36AM

As we delve into the back-story behind the collapse of AIG, we thought it might be useful to lay out some key factual information about the firm's Financial Products unit, known as AIGFP, whose disastrous credit default swaps brought the company to its knees. How and when did AIG Financial Products get started? Who ran it, and from where? How did it get into credit default swaps, and what exactly are they, anyway? And how did this group of derivatives traders eventually wind up bringing down one of the most admired financial firms in the world?

So here's a rundown of some of the key developments in AIGFP's tumultuous history -- many gleaned from a superb three-part December 2008 Washington Post series on the unit (parts 1, 2, and 3):

More via tpmmuckraker.talkingpointsmemo.com

For those willing to spelunk the depths of the AIG meltdown, I highly recommend the WashPo series.

Obamas Prepare to Plant White House Vegetable Garden - NYTimes.com

“The power of Michelle Obama and the garden can create a very powerful message about eating healthy and more delicious food. I don’t think it’s a stretch to say it could translate into real change.”

While the Clintons grew some vegetables in pots on the White House roof, the Obamas’ garden will far transcend that, with 55 varieties of vegetables — from a wish list of the kitchen staff — grown from organic seedlings started at the Executive Mansion’s greenhouses.

The Obamas will feed their love of Mexican food with cilantro, tomatillos and hot peppers. Lettuces will include red romaine, green oak leaf, butterhead, red leaf and galactic. There will be spinach, chard, collards and black kale. For desserts, there will be a patch of berries. And herbs will include some more unusual varieties, like anise hyssop and Thai basil. A White House carpenter, Charlie Brandts, who is a beekeeper, will tend two hives for honey.

The total cost of seeds, mulch and so forth is $200

More via nytimes.com

Pretty cool stuff. Sounds like a great garden. Getting your hands dirty, now that's commitment.

And a quote worth remembering..
"But the first lady emphasized that she did not want people to feel guilty if they did not have the time for a garden: there are still many changes they can make.

The Mighty Minds of Baseline Scenario, Simon Johnson and James Kwak, weigh in on the concept of "retention" at AIG. Hard to square the banksters' pleadings for retaining "the best and the brightest" with the knowledge that they are the same lame-brains that blew the place up.

A.I.G. can hardly claim that its generous bonuses attract the best and the brightest. So instead, it defends the payments by arguing they’re needed to retain employees who are crucial for winding down transactions that are “difficult to understand and manage.” In other words, only the people who stuck the knife into the American International Group can neatly extract it for a decent burial.

There is no reason to believe this.

More via nytimes.com

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A story in the NY Times about Trekkies building full-size replicas of the original TV series Star Trek Captain Kirk's command chair. I confess it made me want one too. Scotty, I need more power! Fire photon torpedos! Ahh, to boldly go...

It's hard out there for our feathered friends. But there's been progress too. "The study found that herons, egrets, ducks and other birds that benefit from wetlands conservation were rebounding." I have noticed that phenomenon here in California. The Pacific Flyway bird migration path is now populated with millions of birds using the reclaimed wetlands of the Sacramento River watershed. It used to be a mere 100,000 or so until the wetlands conservation started serious work in the 60's and 70's.

Here's a link SactoNatlWildlife2009 to some pix I took on my last visit to the Sacramento River wildlife refuge in January. You'll see snow geese, pipers, white heron, various ducks, sand hill cranes and red-tail hawks. The count on that day was over 2 million snow geese alone! It's the Serengeti Plains but with feathers. An amazing testimony to our ability to reverse environmental damage.

One Third of U.S. Bird Species Endangered, Survey Finds - NYTimes.com

Citing surveys by government agencies, conservation organizations and citizen volunteers, the report said that the population of grassland birds had declined by 40 percent and birds in arid lands by 30 percent. It estimated that 39 percent of bird species that depend on American coastal waters were in decline.

Many forest birds are threatened by urban sprawl, logging, wildfires and “a barrage of exotic forest pests and disease,” the study said.

In Hawaii, the home of more than a third of American bird species, the situation is particularly grim, the report said. Most of that state’s bird species are in danger.

More via nytimes.com