Or the Birth of Kings. 


What's your choice? Comet Lulin reaches its closest approach to the planet this evening, at 38 million miles, about the same time the President addresses the nation about the financial crisis and the responses so far by the Obama administration. The President will use dramatic language to illustrate portentous times: "The weight of this crisis will not determine the destiny of this nation." Since the last time the President spoke to the prime time audience, the market is down 1000 points and the mood is decidedly Wagnerian. There is anecdotal evidence that the White House economic team is in disarray, or in denial, or is generally disconnented, disorderly and unfocused. Reports coming to me over the last two weeks point to more chos and decline of the markets and the national confidence. The President is in an untidy situation, since whatever cheering he does tonight will wear off by Thursday and Friday close. Any rally is a sucker's rally. We broke support at 750 on the SPX, and that has meaning. There is air below to the 450-600 level. That is ugly, inevitable, in fact market savvy, because we must test the prior support, and the prior resistance, in order to stabilize. The raging question of the moment is nationalization of the big banks. My sources tell me that the question is answered. The market says nationalization is already achieved, and what is needed now is for the Treasury and White House to quit stalling and move. Nouriel Roubini joins with Martin Wolf, Charlie Gasparino, Calculated Risk, Naked Capitalism and many more to urge swift action, to nationalize temporarily, shed the junk, and sell the good bits private. Lots of good bits that will bring premium. What is the bad stuff that won't have any buyers for some time? See example below.
Citi Toxic Asset from Naked Capitalism.
No White House pep talk can solve this ruin, and the Treasury is pushing our money into the bank that owns this folly. The TARP, the stimulus bill, the stress test, pulling Ben Bernankes's beard, nothing can solve this but time and laughter. And there are likely hundreds of these ludicrous schemes, and everyone of them paid millions in bonuses to the genius bankers who fashioned them.
Now consider this observation from a reader in comments:
I have a personal anecdote about Citi and the difficulty of spotting how bad their loans actually are. I'm involved with a $300 million condo-hotel development in the Caribbean. Citi has the whole loan (i.e., they didn't securitize or otherwise sell participations in the loan). Even now, we expect the hotel needs at least another $100 million to finish construction and open (we are no longer under any delusions that more than a handful of buyers will close on the condo portion of the condo-hotel). So, in other words, Citi is $275M into this project, and it's not certain that the completed hotel will even be worth the extra $100M required to complete and open. Hence, one might plausibly value this $275M loan at zero (i.e., a complete write off). I cannot imagine any stress test would uncover what a huge loss is on the way in the next 12 months. In fact, this loan has not even been pawned off to the nonperforming/distressed debt/workout section of Citi because the interest reserves make it "seem" like the loan is still performing, not to mention that completely out of date pro formas make it "seem" like (i) equity will come in to finish the project and (ii) condo sales will pay down a huge part of the principal once construction is complete. This scenario must be present in a large number of Citi loans, especially in their somewhat active foreign development divisions. Citi must be so far from solvent that it's not even funny. Only hyperinflation in the dollar could ever make it possible for the borrowers to pay back some of these loans. I'd bet that the sooner we face reality on some of these loans and just halt future fundings, the less money the taxpayers are going to lose. As it is, it's almost too late. Too bad for the US taxpayer.
The Comet.
Do you want to change your vote for what Comet Lulin harbingers? The fifth horseman is fear? Louisiana's Bobby Jindal will deliver the GOP's response after the President's remarks. He calls the President's stimulus plan "irresponsible." Right now, this seems generous. The Obama administration maintaining Citibank and Bank of America one more day is delusional.

Hey everybody!!! Look US up in a few years and we'll have the stuff you just can't do without!!!
No more Korean batteries for American hybrids!!! No more solar panels from, you know, those Japanese. China? We all know everything they make is , well, inferior.
'America, America, God shed his grace on thee
And crown thy good with brotherhood
From sea to shining sea'
From the Democratic National Convention; sung by M McDonald... most stunningly, too
It was a well rehearsed and toned speech given by President Obama. Short on details of how a nation state could be sending trillions of dollars out against this mess and still be in good faith on it's floating currency.
It is a given that this financial meltdown is going to come due sooner rather then later. We simplily can not kick THIS CAN down the road too much further.And we can count on the idea that there will be taxes far over the ludicrous 2% top wage earners.
Right now if we were begin in earnst to dig out from under these accrued spending bills it would cost every man, woman, and child a tune of half a million dollars.
that certainly could not be met by taxing the top 20% much less the top 2 %...
I believe the term is to "Time to pay the Piper"
I am a firm believer of a 18 month moratorium on the personal income taxes a reduction of the capital gains tax to a rate of 17% or less and tax incentives on capital/home improvements that are Energy Efficient
A Federally funded state allowance to get the unemployed out onto the public works projects
I am Not John Galt...
I am real... and this proposal is as well...if we genuinely feel this government is moving in the wrong direction we need get vocal and stop standing on the sidelines as these crooks,scoundrels, and snake oil salesmen pitch their tents in front of the treasury mints
Hardly anyone would argue that higher education in America is hugely expensive.
The interior walls of the Russian Cultural Center in Chennai (India) are covered with framed, glossy, black and white photographs of present Russian (Putin) royalty. In the foyer are bulletin boards flush with flyers inviting young Indians to consider applying to Russian universities for advanced study. Fees are posted in large print as an incentive for young Indians to chose the Russian option should they feel so inclined as to study abroad.
And yet, most Indians (who can afford it) choose American universities over the Russian ones. And if they should ultimately decide to take up Russia’s offer, they are more likely to cut their studies short and return home early. (Racism currently runs rampant in Russia.) Indians have been conditioned to believe that the American model overall is much more attractive. It is seen as representing the height of cutting edge innovation in every accredited academic field. Culturally too, America is seen as holding the lead. Russia, on the other hand, is generally considered as being decidedly second or even third rate. As one young Indian told me recently, “If Russia were my only option for studying abroad, I might as well stay home.”
Paradoxically, once these Indians actually enroll in American universities, they are bombarded with the very ideology that has shaped their perception of the communist block. When they then return home once again, they will have had a good education in Marxism. They will have learned that each American excess deprives someone (possibly even someone in their own country) of a meal. And thus, they will come to see America as the very vortex of evil in the world. The mantra they will return with is that ‘America has 5% of the world’s population while, at the same time, consuming roughly 25% of the world’s energy’. This makes America criminally liable of the rape of the planet’s resources. A second tier of blame has recently come into vogue with all the attention given to (the hoax of) “global warming”.
The clarion call has gone out for America to stop its criminal practices. The accusations have been persistent and leveled from all corners of the globe. And America feels defensive and, aided by the shame of clear fiscal malfeasance on the part of its political class, scales back.
That’s where we now find ourselves. Americans have become frugal. They no longer buy all the stuff they used to. Now the nations of the world are scratching their heads and wondering why their own economies are tanking. Using the car as a metaphor, America can be seen as the engine. Other countries are the windshield wiper motor, the door lock/unlock mechanism, the trunk release, etc. – all of which do not work if the engine refuses to start.
Now we find ourselves in the odd position of where both the Russians and the Chinese are lecturing us simultaneously on the virtues of capitalism.
Here's a little ditty you might enjoy:
http://www.youtube.com/watch?v=58bHytrkAnw
Peter, The Indians are coming to America for the hard sciences not for a liberal Arts education. Recall that when Bollinger invited Ahmindinjad to Columbia, many of the hard sciece professors signed a letter of protest.
Obama has to promise free higher education since he has decided to cap executive pay. Why pay so much for college if your earnings potential has been capped. Then it begs the question of what happens to all the current studnt loans that are outstanding. That is another of the moral hazards that Rick Santelli & Co. can rail about when the education plan will be rolled out.
Hey at leaset the Indians know how to launch satelittes. The NASA satelitte to measure CO2 emissions never left orbit. Maybe we will have to suffice with the Japanese satelitte's data, although their scientists are a little more skeptical about global warming. As per John Tierney this is one area in which some scientists have let policy trump science and discovery.
Since we are speaking of the Jindal comet and science, it is interesting that some pundits have dismissed him as a candidate for higher office due to his creationist beliefs.
TOXIC ASSETS/READER COMMENT ABOVE
The reader comment above about a hotel/condo loan is, by definition, a commercial loan. These types of loans are not yet even on the radar of the MSM. Right now the conventional wisdom is that it is only the residential home loans, mortgage-backed securities of home loans and CDOs made out of mortgage-backed home securities that are causing all the problems.
When you consider that mortgage-backed securities can also be made out of commercial real estate loans and that CDOs can be made out of almost anything, it is easy to see why these bad loans are called 'toxic'.
David Faber in an CNBC program called 'House of Cards', which explained a little about the housing crisis, interviewed Alan Greenspan, who said that even he -- with over 100 PHDs in economics at the Fed when he was there -- couldn't understand the complexity of CDOs, it's easy to see why there's some difficulty in pricing them now. It's also easy to see that no one knew what they were buying when these CDOs were originally sold.
Mr. Faber also interviewed the mayor of a small town in Norway, north of the Arctic Circle. She bought a highly rated CDO for her town thinking it was a safe investment in mortgages, but now it's worthless and her town is in real financial trouble. It turns out this CDO was not even based on mortgages. It was based on corporate loans.
Today, someone who worked at Fanny or Freddie said on CNBC that it took him about five years to figure out a proper stress test for his GSE because of the number of variables in doing so. He also said that Citi is far more complex than Fanny or Freddy-- so he would not feel comfortable w/any stress test that was completed in just a few months.
Q: Where does this leave us? A: With no easy solutions and a long time frame on when we will get out of this.