The Weakest Link Finds a Weaker Link. 
The torchlit mob surrounding the AIG castle now so dominates the TV that Treasury can take advantage of its momentary placidity to hire the chief economist of Citigroup "to work on domestic financial issues." Blink, blink. I repeat that the chief economist of the wrecked and disdained Citigroup, a scholarly and ebullient economist named Lewis Alexander, has been hired by Tim Geithner, the Secretary of the Treasury, who cannot find deputies or assistants to fill the empty offices and abandoned building around him. And what did Lewis Alexander do to earn this trusted post during a national crisis caused by the housing bubble and its predatory exploiters? Chiefly, he took substantial money from Citigroup in exchange for his cool tones about the "sanguine" and stable state of the housing market in the US. Wall Street Journal reporter David Enrich (who will join me Sunday 22) finds a peculiarly wrong-headed quote from a February 28, 2007 interview on PBS with Susie Gharib -- when she asked Mr. Alexander if the recovery was now in question after a rocky day on the street, "... I think we're going to have a normal kind of housing cycle that's going to last through the middle of this year." Later in 2007, Alexander was seemingly vindicated, when the stock market went to all time highs, in the summer and then again in October. (We know now this was a blow-off.) In closer examination of the Susie Ghraib interview with Alexander, we can find a chilling arrogance. Susie Ghraib asked about "the new buzz word," "sub-prime mortgages," and Mr. Alexander replied,
"...There`s no question that we`ve had a lot of innovation in the mortgage financing system and credit standards eased a lot, particularly towards the end of the cycle, and we`re seeing the payback for that now. You`re seeing higher rates of delinquencies on these sub-prime mortgages and that is going to be a challenge for some mortgage issuers. But there`s an awful lot of credit out there. Interest rates are still very low. Mortgage credit is still quite available and, therefore, that`s going to limit the magnitude of the spillover on the rest of the economy."
Was this an isolated instance of Lewis Alexander's rosiness about housing? Apparently not. Looking at the record two months earlier, December 2006, in an interview with Forbes.com, Mr. Alexander was cocky to the point of flippancy about the housing market and its flush and extravagant Baby Boomers:
For the United States, the risks to this bland outlook are greater on the growth than on the inflation side. But even here, Alexander is sanguine.
The downturn in the housing sector may not be as bad as some doomsayers are predicting. After all, the rate of household formation, the most basic driver of housing demand, is on an upswing. And another demographic factor, the aging of the Baby Boomers, will help to prop up demand: Purchases of second homes by this crowd has been a major driver of the housing boom and may not abate sharply.
Meanwhile, supply should remain fairly tight, Alexander argued, thanks to laws barring housing construction on huge tracts surrounding many hot markets, like Silicon Valley and Boulder, Colorado.
The downturn in the housing sector may not be as bad as some doomsayers are predicting. After all, the rate of household formation, the most basic driver of housing demand, is on an upswing. And another demographic factor, the aging of the Baby Boomers, will help to prop up demand: Purchases of second homes by this crowd has been a major driver of the housing boom and may not abate sharply.
Meanwhile, supply should remain fairly tight, Alexander argued, thanks to laws barring housing construction on huge tracts surrounding many hot markets, like Silicon Valley and Boulder, Colorado.
During what we know now to have been a staggering housing bubble, now into the history books with tulips and the flappers, Lewis Alexander sniffed and declared that the second homes purchases of the aging Baby Boom would help stabilize housing demand and prices. The same Baby Boom that is now wrecked, its wealth reduced by 40%, its prospects bleak as it must compete for retirement resources with the federal debt costs. The chart (at right) shows how, from the moment Lewis Alexander spoke, the months of supply of new homes climbed like a ballistic missile. New housing stock is now higher than during any recession in forty-five years. This is the new hire at Treasury. Next, the Bin Laden Group gets contracts building bridges with the new stimulus money. And then, Treasury outsources printing hundred dollar bills to the really good presses in North Korea. And yes, AIG sends money to Hamas.
As the old saying goes "people is policy." Turbo-Tax Tim Geithner's hiring of this Lewis Alexander loser only serves to provide more evidence of the obvious -- the trillion dollar Federal "bailouts" are actually meant to cover up for failed policies, pay off political allies, and perpetuate the same ideologically-driven programs that shoved our economy into the ditch in the first place. Our new nomenclatura will spare no (taxpayer) expense to preserve and extend their power and, of course, will never admit their mistakes. And their friends and sycophants will never lack for well-paying jobs while the average American Joe and Jane go begging. This, I fear, is the only change left to us to believe in, courtesy of Barack Obama.
Did I see headlines of "new" housing starts uptick to a pace of 538K? Not a recovery indicator, but, a rebound? What does that mean?
Why are builders starting on new homes? Where did they get the money to speculate or it would be interesting to know the percent of these that are actually custom homes and not spec houses.
God Bless America!!
In a perverse way, I must tip my hat to the American news media that have spent the past eight years making mountains out of molehills and are now faced with the daunting task of making molehills out of mountains. It says something for an institution so adroit in changing course at a moment's notice; turning on a dime, even as dimes are in short supply.
For weeks now, our State's major newspaper has been delivered daily to our door free of charge (and without our approval). It is essentially dead, doing what it has always done, predictably; a twitching corpse - but with a twist.
Consider the following passage from Roberto Calasso's book, "Ka":
"I know that for many of you the real torment is that you must abandon your dear bodies. You imagine, not unreasonably, that the happiness of a disembodied spirit has something dreary about it. But that is not the case. After death, you will find yourself wandering through a haze, shouting without being heard, but all at once it will be you who hear. You will become aware that someone is following you, like an animal in the forest, only now in the darkness of the heavens. The person following you is your oblation, the being composed of the offering you made in your life. In a whisper, he will say to you: 'Come here, come here, it is I, your Self.' And in the end you will follow him."
this is from the Wall Street Journal story on capping salaries at failed firms, from Feb 17: clearly the idea of "the toughest rules" needs explanation:
http://online.wsj.com/article/SB123375514020647787.html
....The administration imposed the toughest rules on the "exceptional institutions," figuring they won't be in a position to argue. Compensation for "senior executives" -- a term left undefined and subject to negotiation with Treasury -- would be capped at $500,000. Any pay above that would have to come as restricted stock, which could vest only after the recipient of bailout funds repays its debt to the government with interest.
Such companies will have to disclose their executive compensation structures and submit them to shareholders for a nonbinding vote of approval. The top 25 officials of an "exceptional assistance" company could have their bonuses and other incentive compensation "clawed back" by the company if they knowingly provide inaccurate information that helped bolster their pay.
The top 10 senior executives will be barred from any severance package if they are fired. The next 25 executives will be limited to a year's compensation upon termination.
Some reflection on fighting and winning-
MIAMI GARDENS, Fla. – The flag traveled around the world and through the deserts of Afghanistan and Iraq. Sgt. Felix Perez brought it from home as a reminder and an amulet. The flag never left his Army backpack.
It accompanied Perez to Dolphin Stadium on Tuesday night. He needed some luck for his team, the United States, in its must-win World Baseball Classic game against Puerto Rico. Perez wore a Team USA hat and a Team USA hoodie, and his little sister, Jessica, draped his flag across her shoulders. The United States’ 6-5 come-from-behind victory in the ninth inning sent them into a frenzy. She danced around. He sat in his motorized wheelchair and roared.
Continued at:
http://sports.yahoo.com/mlb/news?slug=jp-perezteamusa031809&prov=yhoo&type=lgns
If Paulson hadn't run around back in September yelling that the sky was falling, perhaps Congress would have had a chance to write a better piece of legislation that addressed these things in advance. Instead, they continue to re-act rather than act.
I saw on Rasmussen yesterday that 44% of the American public believes that 100 individuals with names randomly selected from a phonebook could do a better job than our current Senate. Wonder why it's only 44%?
AIG's trading floor in Stamford, CT USA, where all those credit swaps were sold, now has armed guards.
The companies that bought these "cheap" versions of insurance should only get pennies on the dollar, not the full amount. They Swap buyers knew there was more risk over traditional insurance policies.
THe American taxpayers should not be subsidizing the poor investments of wall street and foreign financial firms, their investors should bear this risk.
The premise for helping these institutions is for them to work their way out and be able to "repay" the outlay granted them. Isn't this an investment principle rather than some nefarious scheme to enrich a selected few??
To my understanding, this funding is due and payable. We must have some confidence in this undertaking. I sure would like to see them come out of this leaner and meaner and ready to do business enterprise. Don't people learn from their mistakes? Does this only apply to working stiffs? Personally, I think it's viable. Maybe we'll earn some dividends and get paid for them down the road? We sure bought them for a good price. Let’s hope it works out to our benefit.
What's going on elsewhere? The domestic oil and gas companies are laying off, stacking rigs, shelving promising projects... AGAIN!!! WE NEED COHESIVE STRATEGIES FOR THE ENERGY INDUSTRY WE DEPEND ON TODAY!!! WITHOUT A PLAN THERE IS NO SO CALLED BRIDGE THAT CAN TAKE US INTO THE FUTURE!!!
Spence - There is a cohesive plan in place with regard to energy. It's called 'starve America of it'.
Whose plan is it? There's an oil glut right now