"GOD BLESS THE CHILD..."
I'm a pretty big music buff. If I had to list my 10 favorite songs of all time, the first one that would probably come to mind would be: "God Bless The Child," as recorded by Billie Holiday in May, 1941. (Holiday co-wrote the song with Arthur Herzog, Jr. in 1939.)
Wikipedia (see link in previous paragraph) notes the origin and interpretation of this as:
In her autobiography Lady Sings the Blues[3] Holiday indicated an argument with her mother over money led to the song. She indicated that during the argument she said the line "God bless the child that's got his own." The anger over the incident led her to turn that line into a starting point for a song, which she worked out in conjunction with Herzog. In Jazz Singing Will Friedwald[4] indicates it as "sacred and profane" as it references the Bible while indicating that religion seems to have no effect in making people treat each other better.[5] The lyrics refer to a Biblical verse, probably Luke 19:26.[6]
The lyrics from "God Bless The Child," by Billie Holiday and Arthur Herzog, Jr.:
Them thats got shall get
Them thats not shall lose
So the Bible said and it still is news
Mama may have, papa may have
But God bless the child thats got his own
Thats got his own
Yes, the strong gets more
While the weak ones fade
Empty pockets dont ever make the grade
Mama may have, papa may have
But God bless the child thats got his own
Thats got his own
Money, youve got lots of friends
Crowding round the door
When youre gone, spending ends
They dont come no more
Rich relations give
Crust of bread and such
You can help yourself
But dont take too much
Mama may have, papa may have
But God bless the child thats got his own
Thats got his own
Mama may have, papa may have
But God bless the child thats got his own
Thats got his own
He just worry bout nothin
Cause hes got his own
But getting to the reason why I posted this diary...
"THEM THATS GOT SHALL GET. THEM THATS NOT SHALL LOSE."
(For the record, it pains me greatly to say this.)
Despite "our" rants and protestations and "their" assurances to the contrary, with every passing day, as far as the Wall Street bailout is concerned, it is beginning to look more and more as if we really are just being taken for the mother of all spin rides.
Yes, I'm very sad to report that it appears as if our government's just going to go right ahead and pump another $3- to $4-trillion down that blackest of holes--a/k/a a select group of 20-30 institutions--and there's little or nothing we can do about it. Not that there ever really was anything we could do about it.
No legislation to bitch about.
No calling out of anyone on this other than ranting about a relatively paltry few hundred million in "showcased" corporate excesses, and another $10 or $20 billion in absurdly excessive bonuses.
But, as far as that other $3,970,500,000,000.00 that our government's about to piss away on things other than directly supporting the 99% of us that won't benefit from these dollars, we're being told--virtually flat out--it's none of our damn business.
Much like that old joke about the dog licking his testicles, when we ask: "How can you do that to us?" We're told: "Because. We. Can."
"YES, THE STRONG GETS MORE WHILE THE WEAK ONES FADE."
From Bloomberg this afternoon: "Obama Seeks to `Clean Out the System' With Bank Test."
Obama Seeks to `Clean Out the System' With Bank Test
By Rich Miller
Feb. 24 (Bloomberg) -- President Barack Obama aims to dispel the cloud over U.S. banks that has driven their shares to a two- decade low by subjecting them to rigorous reviews and reviving the market for their toxic assets.
Officials will begin so-called stress tests of about 20 of the nation's largest banks tomorrow with the aim of ensuring they have sufficient capital to withstand the toughest of economic times. Institutions that aren't able to raise needed capital privately will get taxpayer money, regulators said yesterday.
(NOTE: Mr. President, exactly whose "system" is getting cleaned out here? The banking system, or the taxpayer's "cash system?")
Unfortunately, we also have this article from Bloomberg late today: "U.S. to Get Bank Ownership Stakes Only as Losses Rise." And, the reason I say, "unfortunately," is because there's some downright deceptive commentary here:
U.S. to Get Bank Ownership Stakes Only as Losses Rise.
By Craig Torres
Feb. 24 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke rejected the idea that officials plan to use reviews of banks' balance sheets as a pretext for government takeovers of the nation's largest lenders.
The Treasury will buy convertible preferred stock in the 19 largest U.S. banks if stress tests determine they need more capital to weather a deeper-than-forecast recession, Bernanke told lawmakers in Washington today. The shares would be converted to common equity stakes only as extraordinary losses materialize, he said.
"I don't see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when it just isn't necessary," Bernanke said at the Senate Banking Committee hearing.
Bernanke also "explained" to the Senate Banking Committee today that:
--"...it will be up to Treasury Secretary Timothy Geithner and the Obama administration to determine whether more bailout funds will be needed from Congress..."
--the "stress test" will include two different types of formats: i.) a mark-to-model forecast will be used, and alternative model will also be deployed (which will, supposedly, provide a more harsh future scenario)
The article continues to explain "Geithner's strategy," which includes a massive "public-private partnership" to purchase toxic assets, along with a $1 trillion program (a/k/a "TALF") "...to restart the markets for securities backed by consumer and business loans."
More from Bernanke:
The purpose of the stress tests on banks isn't to provide a "pass" or "fail" grade, Bernanke said today. Instead, the government wants to ensure that firms can meet their obligation to lend even if the economy worsens, he said.
--SNIP--
"The bank could convert the preferred to common to make sure that it has sufficient common equity, and only at that time, going forward, if those losses do occur, would the ownership implications become relevant," Bernanke said.
--SNIP--
Bernanke took issue with some observers' characterization of major U.S. banks as "zombie" firms, kept alive only through access to federal programs. They have "substantial franchise value," he said.
"HE JUST WORRY BOUT NOTHIN CAUSE HES GOT HIS OWN"
Bernanke's comments to the Senate Banking Committee, today, were quite troubling, especially if you actually paid attention to what the man said:
1.) All of these programs are, essentially, going to be run by the Federal Reserve, not the Treasury Department. The Fed is a private entity, and they really don't have to divulge much. At the end of the day, it's taxpayer's money, but there really is no requirement to obtain approval or pass legislation on this in Congress. Bernanke just goes ahead and orders it to happen (or, Geithner and Bernanke get together and accomplish same), and voila!
2.) We're told by Bernanke that they're going to use two models, neither of which appear to be mark-to-market models. Bernanke makes references to banks using them; but, that's irrelevant to the story. (Again, if you read it closely.) What this really means is that, if the Fed wants to cover projected values (i.e.: mark-to-model valuations) of these assets, based upon a hoped-for value at some future point, in terms of what they spend now, that's going to be up to them to decide, and not the taxpayer. (Their argument about this methodology is that if they don't offer the banks enough money, the banks won't sell their assets to the government. But, the banks leave out the minor detail that they can't sell these assets to anyone else right now. Ahhhh...those details will get you every time!)
3.) Bernanke makes reference to the banks' "substantial franchise," but insolvency is insolvency, no matter how you slice or dice it. The implication here is that goodwill payments may be made by the Fed for these banks' supposed intangible assets. But, again, that'll be all up to him.
4.) Lastly, and in light of a third, related news story on all of this type of strategy, today (see immediately below on how this strategy "worked out" for the taxpayer on the AIG deal), Bernanke's telling us they'd simply convert the government's preferred shares in these banks into common stock...but "only if losses occur."
Yeah, right!
So, how'd that strategy work out for AIG from last Fall? Also from today: "AIG's Liddy May Shift Strategy as Asset Sales Stall."
AIG's Liddy May Shift Strategy as Asset Sales Stall
By Zachary R. Mider and Hugh Son
Feb. 24 (Bloomberg) -- American International Group Inc. may scrap a plan to repay a $60 billion U.S. government loan by selling businesses, after failing to find enough promising bidders, said two people with knowledge of the matter.
Chief Executive Officer Edward Liddy, who took charge in September and unveiled the strategy the following month, has concluded it won't work, said the people, who spoke on condition of anonymity because the insurer's talks with the government are private. AIG is proposing additional ways to reduce the company's debt to the U.S., including handing over stakes in some operations directly to the government, a person said.
The talks come as AIG, already propped up with a total of $150 billion of U.S. aid, prepares to disclose a fourth-quarter loss of about $60 billion...
--SNIP--
AIG is also in talks about converting the government's preferred shares, valued at about $40 billion, to common stock, which would reduce pressure on the company's cash flow, a person with knowledge of that plan said yesterday. The preferred shares pay a 10 percent dividend, while the common pay none.
--SNIP--
"We continue to work with the Federal Reserve Bank of New York to evaluate potential new alternatives for addressing AIG's financial challenges," AIG spokeswoman Christina Pretto said yesterday, declining to be more specific. She didn't immediately return a call seeking comment today. Isaac Baker, a spokesman for the Treasury, declined to comment on AIG.
Uh, huh...and now Bernanke wants to do the same thing with the banks? Oh, now we get it!
I guess those discussions and deals will be "private," too.
But, other folks are "getting it..."
Robert Reich gets it: "Geithner's Plan: It's Not Transparent and It's Still a Bailout."
"Geithner's Plan: It's Not Transparent and It's Still a Bailout."
from http://robertreich.blogspot.com
Taken as a whole, this is hardly a model of transparency. To date, the Fed has already committed some $2.5 trillion to rescuing the financial system, yet no one outside the Fed knows exactly how or where this money went. The Fed is subject to almost no political oversight. Yet if the trillions of dollars the Fed has already committed and the trillions more it's about to commit can't be recouped, the federal debt explodes and you and I and other taxpayers are left holding the bag.
In other words, Geithner and Fed Chair Ben Bernanke continue to do pretty much what Hank Paulson and Bernanke did: They hide much of the true costs and risks to taxpayers of repairing the banking system. Those risks and costs should be put on the people who made risky bets on the banks in the first place - namely bank shareholders and creditors. Shareholders of the most troubled banks should be wiped out entirely. Bank creditors- except depositors - should take major hits. And top executives who were responsible should be canned. But Geithner and Bernanke don't want to take these steps for fear of spooking the Street. They think it's safer to put the costs and risks on taxpayers -- especially in ways they can't see.
Paul Krugman gets it: "Failure to Rise."
February 12, 2009
The [Bailout] plan sketched out by Tim Geithner, the Treasury secretary, wasn't bad, exactly. What it was, instead, was vague. It left everyone trying to figure out where the administration was really going. Will those public-private partnerships end up being a covert way to bail out bankers at taxpayers' expense? Or will the required "stress test" act as a back-door route to temporary bank nationalization (the solution favored by a growing number of economists, myself included)? Nobody knows.
Over all, the effect was to kick the can down the road. And that's not good enough. So far the Obama administration's response to the economic crisis is all too reminiscent of Japan in the 1990s: a fiscal expansion large enough to avert the worst, but not enough to kick-start recovery; support for the banking system, but a reluctance to force banks to face up to their losses. It's early days yet, but we're falling behind the curve.
And, Krugman again: "Krugman: What the Centrists Have Wrought," on the Obama administration's ability to come back to the Senate and the House for more funds for public stimulus legislation...after we bailout Wall Street with the really, really big bucks now...
February 7, 2009
The real question now is whether Obama will be able to come back for more once it's clear that the plan is way inadequate. My guess is no. This is really, really bad.
I've reported in previous diaries that the U.S. is already having a fairly difficult time clearing out its T-bill (and related finance vehicles) offerings within the context of, by far and away, the most aggressive sale of U.S. debt in the history of the U.S. Treasury and the Federal Reserve. ($2.5 trillion in debt financing, to be precise, throughout 2009.) At the moment, as the article links from today will acknowledge this, other currencies are tanking, too. But, that trend continuing--which helps to enable us to maintain a market for our paper--is by no means a certainty.
"RICH RELATIONS GIVE YOU CRUST OF BREAD AND SUCH
YOU CAN HELP YOURSELF BUT DONT TAKE TOO MUCH"
And, this is how we were planning on raising funds to cover all of these additional programs and deficits as we meander through 2009. But, look at what's happening (three articles from today, alone) with regard to the two largest--by far--sovereign buyers of U.S. paper right now: China and Japan. Read about it here...
We see coverage in the U.S. that indicates that China's appetite for U.S. paper isn't waning...but, how much of this is wishful thinking, and how much of it is real?
Full story here: "Clinton Urges China to Keep Buying Treasuries."
Clinton Urges China to Keep Buying Treasuries
By Indira Lakshmanan
Feb. 22 (Bloomberg) -- U.S. Secretary of State Hillary Clinton urged China to continue buying Treasury bonds to help finance President Barack Obama's stimulus plan.
The two nations' economies are intertwined and it wouldn't be in China's interest if the U.S. were unable to sell its government debt, Clinton said in an interview with Shanghai's Dragon Television today. China knows it needs a healthy American economy as its biggest export market, she said, adding that the U.S. must take "drastic measures" to stimulate growth.
"We are truly going to rise or fall together," Clinton said. "By continuing to support American treasury instruments, the Chinese are recognizing" that interconnection.
China, the largest holder of U.S. government debt, boosted purchases by 46 percent last year to a record $696.2 billion as the global recession spurred demand for the securities. The Chinese government said last week it plans to keep buying Treasuries, adding that future purchases will depend on the preservation of their value and the safety of the investment.
China continued to buy the U.S. debt amid a 27 percent increase in its holdings of foreign currencies in 2008. JPMorgan Chase & Co. predicted in a Feb. 6 report that China will keep buying Treasuries "not only for the near-term stability of the global financial system, but also because there is no viable and liquid alternative market in which to invest China's massive and still growing reserves."
--SNIP--
China's currency reserves of $1.95 trillion are about 29 percent of the world total.
Because, as of today, China's making statements that indicate there are too many problems at home for them to support the rest of the world at the moment...
China: "Stronger steps needed to boost growth: Hu."
Stronger steps needed to boost growth: Hu
Katherine Ng
The Standard
Wednesday, February 25, 2009
...The People's Bank of China said that pressure for prices to fall is strong when demand shrinks.
However, economists said financial markets should not "expect too much from the NPC."
"The NPC is likely to discuss macro policies that have near- and medium-term implications in view of the fast deteriorating global growth outlook, rather than detailed, actionable policy points," JPMorgan chief economist Frank Gong said.
And, all of a sudden, Japan's economy is looking worse than ours!
Japan: "Japan Exports Plummet 45.7%, Deficit Widens to Record."
Japan Exports Plummet 45.7%, Deficit Widens to Record
By Jason Clenfield
Feb. 25 (Bloomberg) -- Japan's exports plunged 45.7 percent in January, resulting in a record trade deficit, as recessions in the U.S. and Europe smothered demand for the country's cars and electronics.
The shortfall widened to 952.6 billion yen ($9.9 billion), the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The January drop in overseas shipments eclipsed a record 35 percent decline set the previous month.
Gross domestic product shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, and economists predict the slump will drag into this quarter. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. -- all of which forecast losses -- are firing thousands of workers, heightening the risk the recession will deepen.
--SNIP--
Japan's economy, the world's second largest, may shrink a record 4 percent in the year starting April 1, faster than this year's projected decline of 2.9 percent, according to the median estimate of 15 economists surveyed by Bloomberg News. The worst contraction to date was fiscal 1998's 1.5 percent drop.
So, who's going to cover all of this bailout for Wall Street, especially if we need more money to stimulate Main Street? What happens when the money's gone?
"MONEY, YOUVE GOT LOTS OF FRIENDS CROWDING ROUND THE DOOR
WHEN YOURE GONE, SPENDING ENDS THEY DONT COME NO MORE"