Islamic terrorists (they don't all claim to be al Qaeda) in Yemen managed to pull off another major attack, and failed. This time the target was the U.S. embassy, and the fifteen minutes of mayhem included two car bombs and ten or more gunmen. Apparently the plan was to set off the bombs near two of the entrances, then get into the embassy itself. These days, U.S. embassies in Islamic countries tend to be built back from the road, with local police and troops handling outer perimeter security (and U.S. Marines and contractors handling the embassy buildings defense). This attack was defeated by the Yemeni security forces, leaving six of the attackers dead. An Indian passerby was also killed, along with ten other Yemenis (including the American born wife of a Yemeni, both of whom died while standing in line to enter the embassy to get a visa for a trip to the U.S.) Four Yemeni security personnel were killed in the bombing and brief gun battle.
This is a major loss for the Islamic terrorists, as they have not only failed in their attack, but killed more Yemenis in doing so. This makes the terrorists less popular, and soon leads to their demise. This is a trend that has occurred time and again in the last few decades (in Egypt, Algeria, Saudi Arabia and Iraq). For the last year, Yemen has been increasingly aggressive in rounding up actual, or suspected, Islamic terrorists. In response, terrorists have set off bombs near the U.S. and Italian embassies, and a housing compound for foreigners, over the last year.
Al Qaeda in Yemen operations had actually peaked in 2000, when a suicide bomber took a boatload of explosives into Aden harbor and badly damaged a U.S. destroyer (the Cole). That attack killed 17 U.S. sailors, and brought down the wrath of Yemeni security forces, for a while anyway. Since September 11, 2001, the pressure has been steady, and hundreds of al Qaeda members and supporters have been arrested or killed. That has thwarted many attacks, and none of the ones that were carried out were as effective as the attack on the USS Cole. On the downside, convicted terrorists have been able to bribe their way out of jail, although they are often recaptured.
Counter-terrorism experts have long suspected that al Qaeda leaders had put a ban on operations in Yemen, in order to keep the local security forces inactive, because the place is so useful as a terrorist hiding place and a transit node for movement into other areas. The last thing al Qaeda wants is lots of counter-terrorism activity in Yemen. This is where Osama bin Ladens family originally came from, and he still has kin there. The Yemen government is willing to go along with the al Qaeda "truce", as this is good for the lucrative tourist trade. But there are too many Islamic radical factions, and not a lot of discipline to be found. So attacks continue. Some Yemeni officials would like to run al Qaeda out of the country. But most officials see this is as impractical. Many Yemenis are quite conservative in their religious beliefs, and tend to agree with al Qaeda. While this is a minority of the population, it is a fanatic one, willing to cause lots of trouble if stirred up.
#1
including the American born wife of a Yemeni, both of whom died while standing in line to enter the embassy to get a visa for a trip to the U.S.
Relative of Lackawanna Six jihadist killed in Yemen jihad attack on U.S. embassy School officials said Elbaneh was the daughter of Ali T. Elbaneh and the niece of Mohamed T. Albanna, two Yemeni-American community leaders who took plea deals in a case involving an unlicensed money-transmitting company that illegally sent at least $5.5 million to Yemen. Authorities never have alleged that the money was used for terrorist purposes.
In November 2006, U. S. District Judge William M. Skretny sentenced Ali T. Elbaneh to six months of home confinement for playing what federal prosecutors called a very minor role in the illegal business. Albanna received a five-year prison term.
Authorities said the dead woman also was related to Jaber Elbaneh, Mohamed Albannas nephew, a fugitive accused of traveling to a terrorist training camp in Afghanistan with the Lackawanna Six.
The United States was angered when Jaber Elbaneh, 42, convicted in Yemen for planning attacks on oil installations, was allowed to go free while appealing his 10-year prison sentence.
He has since been taken back in custody, Yemeni officials say, but Yemen has refused U. S. requests that he be handed over for trial on charges of providing material support or resources to a foreign terrorist organization. He is listed by the FBI as one of the worlds most wanted terrorists
Posted by: ed ||
09/21/2008 9:29 Comments ||
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Penny Pritzker is Barack Obamas chair for his campaign finance committee, sometimes also referred to as treasurer for Obamas campaign finance committee.
So Obamas campaign finance committees chairwoman is hosting Ahmadinejad on Thursday at the Hyatt.
The Pritzker family, Penny in particular, were pioneers in creating a new financial product in the late 1990s and early 2000.
#1
To make the connections even more interesting, theres a link between Penny Pritzker of Hyatt along with the subprime meltdown and ACORN (see community organizer: voter fraud).
So heres a woman who helped create the subprime mortgage fiasco and drove her bank into a half-billion dollar failure, was associated with an organization that is notorious for voter fraud, and is sinking the flagship of the Hyatt Hotel chain by inviting an aspiring mass-murderer of Jews to be a guest of honor there.
The subprime crisis. ACORN. And Mad Jad.
What a confection!
And this is the woman Barack Obama chose to handle his campaign finances.
#2
And this is the woman Barack Obama chose to handle his campaign finances.
All jokes aside, I sincerely hope she hasn't changed her strategies one Iota.
Let the Obamamessiah drown in debt, seems a fiting end for the Dem's past history to continue, but on a personal level.
Destroy yourself, not others.
Posted by: Redneck Jim ||
09/21/2008 7:31 Comments ||
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#3
Meet your new Secretary of the Treasury if Zero wins.
#3
Why do they present Sullivan as a conservative? The deranged moron clearly is not.
They lied, repeated lies, misquoted slurred and slimed. Rove mentioned as well. They are so convinced of their knowledge in spite of the fact that they are wrong. It was a lefty circle jerk. They would be dead from shock if they ever managed to touch the third rail in their liberal cocooned entertainment world - its called reality in ours.
You know, if someone tossed a grenade into that room, I bet that none of them would be missed.
#4
If you take these attacks against Sarah Palin seriously, as I do, you might consider joining me in declaring that 'I am Sarah Palin. Treat me as you would her.' These unprecedented personal attacks on her must stop. The only way I see that I can help is to stand up for and with her. In doing so, I am not standing up for her political or religious beliefs. I am not against any discourse on these subjects, only the personal attacks. I agree with many of her views and will deebate them. It not just her views that are under attack here. The attack has spread to her gender, her role as a mother, wife and even her personal appearance. Last week, I saw what I think was a utube entry showing her and McCain having sex. If I understood it correctly, it was not meant to be erotic. It was meant to demean and debase both of them. It must stop.
Posted by: Richard of Oregon ||
09/21/2008 17:05 Comments ||
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#5
The politics of personal destruction and intimidation being waged against Sarah Palin are an attack against the very foundations of our way of governing. It's important that the offenders (the left, this time around) be slapped down so hard that for the next generation or so anyone who even contemplates this sort of thing again is immediately rebuked by his/her own party.
There are things I don't like about McCain. And I'm a little leery of some of Palin's stated policy positions. But all of that is nothing compared to the importance of massive Republican success in this election - combined with a clear message to both parties to get their damned acts together pronto.
Last week, I saw what I think was a utube entry showing her and McCain having sex. If I understood it correctly, it was not meant to be erotic. It was meant to demean and debase both of them. It must stop.
Richard of Oregon, you make it sound as if there actually is such a video - which of course there is not. I don't know your views enough to know if I just read your post incorrectly or if you were attempting to be serious and thus a troll. Would you like to clarify?
Why hasnt she granted the fabled Washington Post an interview?
Maybe its because shes kinda busy right now.
Maybe its because youre not the Official Gatekeepers anymore and your oversized egos are in the way.
Maybe its because two long tv interviews in two weeks is enough.
Or just maybe its because you people have wiretapped her home and stolen her mail, accused her husband of infidelity, attacked her children, called her a whore, a thief, a liar and an unfit mother. If you could get any drunken Democrat guttersnipe from here to Anchorage to mouth an accusation between bouts of vomiting in an alley, you printed those accusations as facts on your front pages in screaming banner headlines.
Youre like some kind of Peeping Tom stalker, standing on a box outside her bathroom window, touching yourselves and mumbling I know she loves mewhy wont she talk to me?
Youre like a bunch of jaded old whoremongers in an old Western; as the calico cathouse curtains flap in the breeze, you look out the window and see a fresh-faced girl get off the noon train, holding her hat against the wind. Youre all thinking that in no time at all, youll have her working in Madame Hillarys DC House of Ill ReputeWhores Re-Formed While U Wait!
But I think shes going to have you working for her.
#1
Note to the MSM. You are teaching the Trunks that they can effectively communicate without you. If they win the White House in November, they won't need you to communicate with the American people. They can use the alternate media instead. They won't need a 'Press Office' anymore or your gad flies mucking up the White House anymore. Just a secretary to organize 'exclusive' interviews for 'friends'. Just remember, its the bed you made.
#2
"... every time you try to lob a grenade at her, you stumble and lose a few more fingers and toes as the bomb goes off at your own feet. ... [T]he charade is over. Americans are finally hip to your game. Cockroaches, meet Kitchen Light."
ROFL!
Righteous rant indeed. :-D
Posted by: Barbara Skolaut ||
09/21/2008 14:13 Comments ||
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#4
Why won't she grant the WaPo and interviews? Perhaps because the WaPo (and NYT and LAT) have lost any shred of credibility that they had with voters.
#5
The Washington Post, the NYT, and most other newspapers are only read by people who have already made up their mind. McCain does not need to talk to them.
The problem with the ABC interview was not ensuring that it was live. Allowing ABC to edit before showing was a mistake.
#6
Mmmmmm, not necessarily, DoDo - if the McCain campaign can get the truth out about their how their edits were actually lies to the American people.
Posted by: Barbara Skolaut ||
09/21/2008 18:49 Comments ||
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#7
The MSM is a delusional collection of Rags and rabid Video oracles that are determined to spread their Anti-American Lies & their Leftest Agenda!
THE MAINSTREAM MEDIA
IS SO WARPED AND CONCEITED THAT THEY HOLD FORTH THE PROPOSITION THAT IT IS ENTIRELY POSSIBLE FOR YOU TO PICK UP THEIR TURDS BY THE CLEAN END.
Posted by: Red Dawg ||
09/21/2008 20:57 Comments ||
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#8
Considering that Sarah drew an audience of 60k in a Florida city that normally boasts 75k, I think the WaPo needs her more than she needs them.
(Note....yes, I realize that not all 60k were from that town. But, The One's biggest crowd has been 75k and that was only for his "coronation". Florida was recently considered a battlefield state, but hell....I coulda told 'em that it was gonna go red after that delegate seating fiasco at the DNC....)
The Obama campaign has released new radio and TV ads in Spanish that seek to tie Sen. John McCain to anti-immigrant comments made by radio talk show host Rush Limbaugh.
The ads also suggest the Republican has "dos caras" -- "two faces" -- when it comes to his relations with Latino voters. The new messages, airing in Colorado, Nevada and New Mexico, come in response to recent Spanish-language ads by the McCain campaign that suggest Obama is responsible for the collapse of last year's bipartisan immigration reform efforts.
"They want us to forget the insults we've put up with, the intolerance," the television ad's announcer says in Spanish as a picture of Rush Limbaugh appears onscreen with quotes of him saying, "Mexicans are stupid and unqualified" and "Shut your mouth or get out."
"They made us feel marginalized in a country we love so much," the ad continues. "John McCain and his Republican friends have two faces. One that says lies just to get our vote and another, even worse, that continues the failed policies of George Bush that put special interests ahead of working families."
The companion radio ad uses the same script as above and then continues:"Don't forget that John McCain abandoned us rather than confront the leaders of the Republican Party. Many of us were born here, and others came to work and achieve a better life for their families -- not to commit crimes or drain the system like many of John McCain's friends claim. Let's not be fooled by political tricks from John McCain and the Republicans. Vote so they respect us. Vote for a change."
This Spanish-language ad battle started Friday, when the McCain campaign started airing a TV spot in Colorado, Nevada and New Mexico that laid the failure of comprehensive immigration reform at the feet of Obama and his Democratic colleagues, even though he supported the bipartisan efforts to enact such reforms and voted for their final proposal last year. It continued Tuesday when the RNC bought time in Nevada for a radio ad expressing similar arguments. The Obama campaign and Hispanic and pro-immigration reform groups denounced the ads as distortions.
"I think they don't want us to pay attention to the fact that John McCain's message in English is different than his message in Spanish," said Sen. Robert Menendez (D-N.J.) during a conference call with reporters today. "If the Latino community can't count on John McCain in the heat of an election, how can we possibly count on him when the heat is really on in the White House?"
Both candidates have aired Spanish-language radio and TV ads primarily in the Southwest and Florida, where growing Hispanic populations have the potential to help turn previously red states blue for Obama. A July survey by the Pew Hispanic Center gave Obama a wide lead over McCain nationwide among Latino voters, and Democrats don't plan to let the lead slip.
"Whenever we get a punch from Senator McCain, we're going to counterpunch harder," former transportation secretary Federico Pena said on the conference call. "We're not going to take any vote for granted." The Obama campaign also plans to start airing advertisements next week in Florida.
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"Whenever we get a punch from Senator McCain, we're going to counterpunch lie and distort harder," former transportation secretary Federico Pena said on the conference call.
I said in my last letter that America wanted President Musharraf out for five reasons but gave only four. The fifth is that America was upset with him for getting Observer status in the Shanghai Cooperation Organization, thus putting some of our eggs in the baskets of Russia and China, the two emerging poles that will soon challenge the single polar status of the USA.
I also forgot to tell you one lesson. We have to become self-reliant. We must. There is no other option. Otherwise perpetual slavery stares us in the face. Thus, sacrifices must be made by the well off. The poor have nothing to sacrifice. So long as you spend more than you earn and live on borrowed money, so long will you not be truly independent, living only an illusion of artificial well being. A stage then comes when you will become totally dependent, having mortgaged your future and your soul to the devil, as we nearly have. There is no redemption from hell except repudiation, which requires revolution. You just cannot escape it, son. Not if you want to be a proud and independent nation.
After last week's letter you asked whether our Army Chief General Kayani means what he says when he warns of retaliation if US-NATO soldiers raid Pakistani territory again. If it's a bluff, what if his bluff is called? The bluff was called last week when NATO helicopters tried to violate our airspace. After warning shots they retreated. We didn't blink. So relax. Kayani is a professional soldier. You don't become army chief without being baked in a piping hot oven of intense and extensive experience. Army chiefs don't make such statements lightly. The top brass consider all the pros and cons before doing anything. They know that if they retaliate the US could escalate the war.
They know too that they won't be alone then. The Taliban, other militants and the people of Pakistan and Afghanistan will immediately become one, like a mailed fist, for they will be fighting for the liberation of Afghanistan from foreign occupation, just as they did in the Eighties against another superpower. Behind us will be China, perhaps Russia too, as then it was America. The US doesn't even have the numbers to control Afghanistan. How can they match this?
A couple of days after the retaliation, Admiral Mullen came unscheduled to Islamabad. Morale skyrocketed. We had made the head of the most powerful military machine in the world "come running" to Pakistan. Don't fool yourself. While our leaders were talking with Mullen, NATO missiles were raining down on Pakistan. Look, America won't take this further. They can hardly handle Iraq and Afghanistan, how can they open another front against a country much larger than both of them put together with the strongest military in the Muslim world, nuclear-armed? What with its economy sinking into the morass of depression, not recession, it will be too hot to handle.
As to forcing us to "rollback" our nuclear programme, what the hell does that mean? We are already a declared nuclear country. Rollback happens during development, like stopping enrichment. Iran is at the rollback stage; we are far beyond. Where will they take so many of our missiles and warheads? It's not that easy. They are disassembled and housed in several places, which are constantly changed. Missile brigades guard them. This is not child's play. There are only two ways they can feel comfortable with our nuclear assets, one silly, one sensible. The silly one is to get a puppet government here to allow IAEA full inspections and perhaps also let America have a position in our command and control authority. The sensible one is to accept and admit Pakistan in the international nuclear club, where it will have to adhere to all the safeguards that other club members do. But American foreign policy is not famous for being sensible.
Don't worry about America's deputy foreign secretary Boucher or CIA chief Hayden wanting our ISI to the "reorganised". Hayden, apparently, has even presented a "plan" to the new rulers we have democratically elected to look after our sovereignty, integrity and ideological frontiers. The attempt to bring it under the Interior Ministry backfired. Look, son, who the rulers are doesn't matter. There is such a thing as the People. There is also such a thing as the national establishment. Politicians aren't its members. They think they run the country, but they actually work for the establishment without realising it. They can do what they like as long as they don't transgress our sovereignty, integrity and ideology (which they and most of our literate-uneducated are fuzzy about anyway), or let anyone else do so. If they do, they will be made mincemeat of. So don't worry. It's the CIA that needs reorganisation, what with its many failures, like not predicting 9/11.
You were confused over our former chief of general staff Lieutenant General Shahid Aziz's purported statement that Musharraf kept the army in the dark and handed over Pakistanis to America. Shahid Aziz has denied it. It was naïve of him to talk to a reporter, but I've told you that when it comes to real life retired generals (and bureaucrats) are innocents abroad who think that they are better at anything and everything than us "bloody civilians". When they parachute into reality at the end of their careers, the "bloody civilians" often give them a bloody nose. I've seen it happen time and again. Lost without a secretary and a driver, they try and escape anonymity by holding forth on television and in the press, thinking that we are all amnesiac fools. Anonymity is like death. The only way a man thinks he can beat mortality is by being known and recognised, forgetting that after his funeral rites are done and all the mourners have gone he will be forgotten anyway, unless he wins recognition for something good he has done for the country and the people. The bureaucrat who will never be forgotten is Akhtar Hameed Khan, who did so much for the poor. If your Dada is and will be remembered for anything, it is for his 'Translations From the Quran' and his television lectures on Islam. People talk of being charitable with those who finally see the light. But seeing the light like Abu Sufian the night before the conquest of Mecca makes one a hypocrite.
Shahid Aziz is not a hypocrite. He is not seeking publicity. He sounds appalled at what happened. As a soldier and a gentleman he is top drawer. He is a good man and a great patriot who has been unfairly sullied because he innocently dived into an unfamiliar pool of sharks. That is all. People shouldn't make a big thing out of it just to embarrass Musharraf. They don't realise how much they damage the country in so doing. Sadly, we have rubbed out that fine line that divides national interest from national damage. That includes a small part of the media that tars the rest with the same brush. Look, son, there are three things you must know.
Musharraf didn't keep the army in the dark on the War On Terror. Only those who are relevant are informed strictly on a need-to-know basis. The CGS knows whom the army arrests and hands over to the ISI. Thereafter it is none of his business for he doesn't need to know.
No Pakistani caught in Pakistan was ever handed over to America. They took only those they caught in Afghanistan. We sent a Colonel Mukhtar to inspect Guantanamo and on his report got many Pakistanis released.
We did allow electronic surveillance by drones. The missile attacks were unauthorised, Musharraf started reacting badly and his relationship with the US began souring. But as long as he was in power, no US or NATO soldier was ever allowed to set foot in Pakistan.
Here's a piece of advice. Never worry about what others may think of you as long as you are sure that you are doing the right thing. You are not answerable to them but to God alone. I'll tell you a story that shows how the media can say something else while telling the truth.
A pastor entered his donkey in a race. It won. He was so pleased that he entered it in a race again. It won again. The local paper read: "Pastor's ass out front." The bishop was so upset with this kind of publicity that he ordered the pastor not to enter his donkey in another race. The next day, the headline read: "Bishop scratches pastor's ass." This was too much for the bishop, so he ordered the pastor to get rid of the donkey. The pastor decided to give it to a nun. Next day's headline read: "Nun has best ass in town." The bishop fainted.
He informed the nun that she would have to get rid of the donkey, so she sold it to a farmer for $10. The following day the paper read: "Nun sells ass for $10." This was too much for the bishop, so he ordered the nun to buy back the donkey and lead it to the plains where it could run wild. The next day the headline screamed: "Nun announces her ass is wild and free." The bishop was buried the next day.
The writer is a senior political analyst
Posted by: john frum ||
09/21/2008 09:19 ||
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I figured this was another story about Biden and the Catholic Clergy
Posted by: Frank G ||
09/21/2008 11:19 Comments ||
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#2
"Sadly, we have rubbed out that fine line that divides national interest from national damage."
Dang! The DemocRats are in Pakistan too.
Posted by: Barbara Skolaut ||
09/21/2008 11:22 Comments ||
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#3
". We had made the head of the most powerful military machine in the world "come running" to Pakistan. Don't fool yourself. "
He'd best take his own advice with delusions like that.
The time is coming to treat Pakistan as an enemy. And dipshits like the author of that piece will not survive it.
They want to support the Taliban and live in the 12th century? OK, we can help with that. Simply take out the power plants and some key distribution centers, and water purification and a few key bridges, and let them rot in their own filth.
#4
BTW, that dipshit was the ghost-writer of "In the Line of Fire: a memoir" - the autobiography of Pervez Musharraf.
His father ghost-wrote "Friends not Masters", the autobiograpghy of another Pak dictator - Ayub Khan.
Posted by: john frum ||
09/21/2008 13:13 Comments ||
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#5
I think OS is right about the time coming to treat Pak as an enemy. Take them out, remove their nukes, and let India turn their country into a desert by preventing the Punjab rivers from flowing there.
There's a win-win there, too. Once Pak is Somalia east, India can tell its Muslims that if they cause any trouble at all, they'll have their citizenship revoked and be deported to the hellhole formerly known as Pakistan. Look at the former Pakiwakiland as being Gaza writ large. The Muzz will stay in line--or else.
#6
I think OS is right about the time coming to treat Pak as an enemy. Take them out, remove their nukes, and let India turn their country into a desert by preventing the Punjab rivers from flowing there.
There's a win-win there, too. Once Pak is Somalia east, India can tell its Muslims that if they cause any trouble at all, they'll have their citizenship revoked and be deported to the hellhole formerly known as Pakistan. Look at the former Pakiwakiland as being Gaza writ large. The Muzz will stay in line--or else.
With truly extraordinary speed, opinion has swung behind the radical idea that the government should commit hundreds of billions in taxpayer money to purchasing dud loans from banks that aren't actually insolvent. As recently as a week ago, no public official had even mentioned this option. Now the Treasury, the Fed and congressional leaders are promising its enactment within days. The scheme has gone from invisibility to inevitability in the blink of an eye. This is extremely dangerous.
The plan is being marketed under false pretenses. Supporters have invoked the shining success of the Resolution Trust Corporation as justification and precedent. But the RTC, which was created in 1989 to clean up the wreckage of the savings-and-loan crisis, bears little resemblance to what is being contemplated now. The RTC collected and eventually sold off loans made by thrifts that had gone bust. The administration proposes to buy up bad loans before the lenders go bust. This difference raises several questions.
The first is whether the bailout is necessary. In 1989, there was no choice. The federal government insured the thrifts, so when they failed, the feds were left holding their loans; the RTC's job was simply to get rid of them. But in buying bad loans before banks fail, the Bush administration would be signing up for a financial war of choice. It would spend billions of dollars on the theory that preemption will avert the mass destruction of banks. There are cheaper ways to stabilize the system.
In the 1980s, the government did not need a strategy to decide which bad loans to take over; it dealt with anything that fell into its lap as a result of a thrift bankruptcy. But under the current proposal, the government would go out and shop for bad loans. These come in all shapes and sizes, so the government would have to judge what type of loans it wants. They are illiquid, so it's hard to know how to value them. Bad loans are weighing down the financial system precisely because private-sector experts can't determine their worth. The government would have no better handle on the problem. But the government does have the 'cash', yes?
In practice this means the government would make subjective choices about which bad loans to buy, and it would pay more than fair value. Billions in taxpayer money would be transferred to the shareholders and creditors of banks, and the banks from which the government bought most loans would be subsidized more than their rivals. If the government bought the most from the sickest institutions, it would be slowing the healthy process in which strong players buy up the weak, delaying an eventual recovery. The haggling over which banks got to unload the most would drag on for months. So the hope that this "systematic" plan can be a near-term substitute for ad hoc AIG-style bailouts is illusory.
Within hours of the Treasury announcement Friday, economists had proposed preferable alternatives. Their core insight is that it is better to boost the banking system by increasing its capital than by reducing its loans. Given a fatter capital cushion, banks would have time to dispose of the bad loans in an orderly fashion. Taxpayers would be spared the experience of wandering into a bad-loan bazaar and being ripped off by every merchant. Makes sense to me, but I'm an engineer...
Raghuram Rajan and Luigi Zingales of the University of Chicago suggest ways to force the banks to raise capital without tapping the taxpayers. First, the government should tell banks to cancel all dividend payments. Banks don't do that on their own because it would signal weakness; if everyone knows the dividend has been canceled because of a government rule, the signaling issue would be removed. Second, the government should tell all healthy banks to issue new equity. Again, banks resist doing this because they don't want to signal weakness and they don't want to dilute existing shareholders. A government order could cut through these obstacles. I'm not sure I like what I think I understand about this, however.
Meanwhile, Charles Calomiris of Columbia University and Douglas Elmendorf of the Brookings Institution have offered versions of another idea. The government should help not by buying banks' bad loans but by buying equity stakes in the banks themselves. Whereas it's horribly complicated to value bad loans, banks have share prices you can look up in seconds, so government could inject capital into banks quickly and at a fair level. The share prices of banks that recovered would rise, compensating taxpayers for losses on their stakes in the banks that eventually went under. Someone suggested this is what the Gov was doing, and owuld eventually make a profit. Or was that just for Lehman Bros.?
Congress and the administration may not like the sound of these ideas. Taking bad loans off the shoulders of the banks seems like a merciful rescue; ordering banks to raise capital or buying equity stakes in them sounds like big-government meddling. But we are in the midst of a crisis, and it shouldn't matter how things sound. The Treasury plan outlined on Friday involves vast risks to taxpayers, huge complexity and no guarantee of success. There are better ways forward.
Posted by: Bobby ||
09/21/2008 07:02 ||
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I would absolutely love to own a business that couldn't fail, spend all you want, and when I'm broke, the Govt hands me cash to continue, WITH NO REPAYMENT EVER.
Posted by: Redneck Jim ||
09/21/2008 7:38 Comments ||
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#3
The solution is simple. Unwind all the debt that underlies real estate bonds, then revalue the bonds to their proper levels.
Financial institutions could start doing this tomorrow, but the folks running these institution won't permit that because frankly, they expect to get bailed out and they want to game this new system for their own profit.
If the government insists on buying bad debt, then taxpayers not only gets any future profits generated by these financial institutions they also get all executive bonuses over $1,000.
Additionally, the government reserves to sue every financial institution that made improper loans or failed to disclose all the details any financial transactions they made between 2000 and 2008, and recover any monies from anywhere.
#4
Fox Noise did an excellent how it happened this morninging. Sort of a Fannie and Freddie meltdown for Dummies, which I found quite helpful. Through banking de-regulation, appears we've gone back to the future with the mixing of bank loans and Stock Market gamblers. Same mess that helped bring on the Great Depression, hence the regulations put in place in the 1930's to keep banking deposits and loans OUT of the stock market. Fox emphasized that even though it showed Slick Willie signing the de-regulation legislation, there was quite enough blame to go around. Translation.... all of Washington and no one in Peoria was in on it.
#6
The suggested alternatives have problems of their own.
First, you can 'force' banks to issue new equity (that is, stock), but you can't force people to buy it. In an illiquid system, how do the other players come up with the tens of billions of dollars for each bank to raise its capital?
And if you have the government inject the equity by buying equity (stocks or warrants), you now have the government manipulating the banking system directly -- how long before President Obama puts Penny Pritzker in charge of naming all the new directors to the bank boards?
Sure, it's hard to figure out the value of bad loans -- that's what happens when loans go bad. But better to remove them from the books, let the economy recover, and sell the assets later when you can. The good part of the current plan is that it is self-limiting: as the Treasury Dept gets rid of the bad loans and assets it removes itself from the financial markets. Buy equity and you're in for the long haul.
Posted by: Steve White ||
09/21/2008 12:38 Comments ||
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#7
Thanks for some balance, Doc. It's sooo rare, these days.
Posted by: Bobby ||
09/21/2008 12:57 Comments ||
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#8
trolls smell funny
Posted by: Frank G ||
09/21/2008 14:38 Comments ||
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#9
Just like there are no self sustaining pure socialist economies. [Unless you classify Cuba and North Korea as 'sustaining'].
#10
Morgenson in the NYT today has a relevant opinion piece on this, RTWT.
An excerpt:
"A.I.G. had written $441 billion in credit insurance on mortgage-related securities whose values have declined; if A.I.G. were to fail, all the institutions that bought the insurance would have been subject to enormous losses. The ripple effect could have turned into a tsunami.
So, the $85 billion loan to A.I.G. was really a bailout of the companys counterparties or trading partners.
Now, inquiring minds want to know, whom did we rescue? Which large, wealthy financial institutions counterparties to A.I.G.s derivatives contracts benefited from the taxpayers $85 billion loan? Were their representatives involved in the talks that resulted in the last-minute loan?
And did Lehman Brothers not get bailed out because those favored institutions were not on the hook if it failed?
Well probably never know the answers to these troubling questions. But by keeping taxpayers in the dark, regulators continue to earn our mistrust. As long as we are not told whom we have bailed out, we will be justified in suspecting that a favored few are making gains on our dimes. "
AND
"Which brings us to Item 2 for policy makers. Stop pretending that the $62 trillion market for credit default swaps does not need regulatory oversight." This is the real iceberg ahead for all of us, the feds have said nothing about this whatsoever.
#11
Frank,you were not talking about Bobby, were you? Didn't recognize me when I was sincere?
Posted by: Bobby ||
09/21/2008 16:55 Comments ||
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#12
no - the troll that was in front of my comment- was "disappeared" by the Mods
Posted by: Frank G ||
09/21/2008 17:02 Comments ||
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#13
you, Mr. Bobby, are one of my favs, I would never dis you like that
Posted by: Frank G ||
09/21/2008 17:04 Comments ||
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#14
One thing they should do, but never will, is impose accountability.
Every C-level exec and the entire boards of these companies immediately be forced from their job, no golden parachute, and force liquidation of their estates and confiscate the money for the benefit of the taxpayers. Give them 10% of their estate after debt is satisfied, or $100K, whichever is less, and we the taxpayers take the rest as a penalty. This makes the PERSONALLY accountable. And it will certainly get the attention of those who follow them.
They screwed up, we are holding the bag -- they should be put IN that bag and barred from all employment within the financial sector.
Make the bankers and others pay a price as a consequence of them blowing up things to where we the taxpayers had to step in.
#15
OldSpook, the name of the guy who needs to be punished most is revealed in the third paragraph of this 1999 NYT article:
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders."
"The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring."
"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."
A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.
Rantburg was assembled from recycled algorithms in the United States of America. No
trees were destroyed in the production of this weblog. We did hurt some, though. Sorry.
