Turning a negative into a positive

Digging for votes

I’ve spent the better part of my weekend laying out and digging a couple hundred square feet of lawn along side my home for a new mulch bed. A couple hundred square feet doesn’t sound like much until you have to turn it over with a pick and shovel. All I can say is I that I hope I recover before next weekend when I have to plant the new shrubs and add the mulch. Ouch.

My neighbor is AD National Guard. He just got back from an 18 month tour of Afghanistan. He helped haul the shrubs off my truck while our kids tossed a football around with the dogs madly chasing and barking at them. He’s just got back from recruiter school. My wife and he ended up talking shop until the sun dropped enough to drive her inside with a shiver. She’s been recruiting for the USN for 8 years now….she just reupped for the last four before reaching 20. We met in the Navy in the mid 80′s and will be celebrating our 20th anniversary this December. She’s a Cuban/PR girl who grew up on 90th and Amsterdam in Manhattan back when that nabe was sketchy as hell LOL. The only other thing I’ll say about her is that I’m the luckiest guy I know. She’s the best.

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“The Bush administration, which took office as social conservatives, is now leaving as conservative socialists.”

-Allan Mendelowitz

Well that pretty sums it up I think.

Congratulations folks.
We are all now in the banking business!

Banking and Insurance! Aren’t they the second and third oldest professions??

looks reasonable on the surface I guess….as reasonable as government stomping on free markets can possibly appear…

http://money.cnn.com/news/newsfeeds/articles/djf500/200810141743DOWJONESDJONLINE000670_FORTUNE5.htm

“A Treasury official compared the government stakes as “plain vanilla (mmmmm icecream) preferred shares,” saying they wouldn’t be structured
so as to be punitive. Yet he noted several features designed to make the program less appealing for firms compared with the status quo of no government ownership.

Participating firms won’t need to shut off dividends to existing shareholders. However, they won’t be able to increase dividends to common shares or repurchase common stock for three years.

In exchange for its investment, the government will receive warrants to purchase common shares with a market price equal to 15% of the cash it has sunk into the firm. It will receive a 5% annual dividend that will rise to 9% after five years.

Firms also will have to submit to tough restrictions on executive pay, including banning so-called “golden parachutes” to departing executives as well as pay awarded for excessive risk-taking. Also, compensation based on results that turn out
later to be wrong can be “clawed back” by shareholders under the program. These restrictions, which were attached to the legislation by lawmakers, also apply to firms selling their rotten assets directly to the U.S. government rather than
through an auction or other competitive mechanism. In addition, Treasury has added one other executive pay condition for firms receiving government equity stakes: Companies can’t deduct compensation of more than $500,000 per senior executive for tax purposes. Under current law, companies can deduct up to $1 million.

These executive pay restrictions, which will last as long as Treasury owns stock in an institution, give participants reason to work to quickly buy back their shares.

Treasury has also sought to spur participating firms to access the capital markets. A condition of the program bars firms from buying back the government’s shares for three years unless the firm raises private capital.”

What a deal right??!!
This honestly makes me feel better than buying the bad paper. That was insanity.

Obviously the markets have certainly reacted strongly.

The move on Monday was biblical.

I’ve never seen anything like the past two weeks. I’m just an amateur….I can only imagine how some of the pros are feeling. I’m hearing liquor sales in Manhattan have surged. Seriously.

However….you knew it was coming right???

I just can’t believe that things are all sunny skies and thornless roses from here on out.

There is still a massive amount of bad paper based on questionable mortgages holding untold amounts of negative equity out there.
I know the banks have written off a lot…and we’re pumping up their balance sheets with I don’t think it can be done with the money the Feds are talking about.

The article quoted above actually had this as the headline.

Bush Administration Mulls Use Of 2nd Tranche Of TARP Funds
Dow Jones
October 14, 2008: 05:43 PM EST

By Jessica Holzer and Meena Thiruvengadam

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The Bush administration is mulling whether to tap the second installment of its $700 billion authority
to rescue the U.S. financial system as it looks set to burn quickly through the first $250 billion with its new bank
recapitalization plan.

WOW. I guess $250Billion just doesn’t go as far as it used to.

At this rate they will burn through that cash by the election.
I’d dearly love to know the date of the last infusion of cash.

If the banks don’t start lending…its all moot. That rhymes with boot.
LIBOR is the benchmark….it’s narrowing so that’s good. Cali sold a bunch of paper today…thats good….unless you live in Cali of course.

However, consumer debt is staggering. Everyone is tapped. The cheaper fuel certainly helps but doesn’t matter much if you can’t make your car payment.

My point to all this. Be careful. This thing isn’t anywhere near over.
The fed money in this bailout is going to run out soon. The banks will be back. And I think they will be joined by other companies threatening too big to fail.

What happens after that is anyone’s guess.

Ideas for the housing market: What’s the best way to swallow some bad medicine?

Roubini has been right on this thing from the very beginning. I think that warrants our attention.

Here’s a blurb from his 10/8 oped in Forbes.

http://www.forbes.com/opinions/2008/10/08/recession-depression-keynes-oped-cxnr1009roubini.html

“The flawed $700 billion Troubled Asset Relief Program (TARP) legislation will have to be modified in three ways to:
a) allow for direct government injection of public capital in banks in the form of preferred shares, matched by private capital
contributions by current shareholders (via suspension of all dividend payments and matching Tier 1 capital provided by private
shareholders); b) implement a clear plan to reduce the face value of mortgages for distressed homeowners and avoid a tsunami of
foreclosures; c) do a rapid and radical triage between solvent banks and insolvent banks that need to be rapidly closed.”

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First diary …..so please excuse the formatting…
I just saw this article and got done pouring myself 3 fingers of Johnny Walker Black.

I never thought I’d see the day.

Apparently the sheriff of Cook County, IL, that’s Chicago for those not familiar with the area, announced that he would no longer enforce the eviction notice on foreclosed properties.

The implications boggle. Lawlessness is only the beginning. If this becomes a trend we could see the major cities of this nation become inhabitable. Imagine if you’re a hard working family doing the right thing and paying your rent/mortgage….and you get to watch your neighbors live for free. What will that do the property values of the honest owners/buyers in that community? What if you’re not a big bank but a private investor? You are expected to forfeit your property? Would you?

Can anyone else this quickly degrading into violence as private enforcers are employed to do the sheriff’s job?

I mourn for this nation tonight. I fear our best days may be behind us.

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http://apnews.myway.com/article/20081008/D93MFL900.html
Sheriff in Ill. county won’t evict in foreclosures

Oct 8, 2:19 PM (ET)

CHICAGO (AP) – Residents of foreclosed properties in Chicago and other parts of Cook County don’t have to worry about deputies forcing them out. Sheriff Tom Dart says that starting Thursday his office won’t take part in evictions.

Dart says he’s concerned that many of the people being evicted are renters who were unaware that their landlords have been failing to pay their mortgages. He says his deputies have no way of knowing whether they’re removing someone who has defaulted on a loan or someone who has been faithfully paying rent.

Dart says he thinks he’s the first sheriff in a major metropolitan area to stop such evictions during the ongoing foreclosure crisis.

Dart says the number of mortgage foreclosures in Cook County has skyrocketed and will probably keep rising.