June 6, 2009

This Is Why The Chinese Laugh At Us…

Filed under: Economy,MSM Biz/Other Bias,Taxes & Government — Rose @ 2:07 pm

Not suprisingly, it took some doing to wrap my thoughts around this article because it was so poorly written.  With a little scrutiny however, one can see the two distinct agendas behind the Fred/Fan mess still at work, as well as the bottom line options and consequences.

Since the author doesn’t seem to know the meaning of “transitional statements” or “segues,” I’ll try to piece it together to make my point (“Exit Strategy” link is mine)…

June 2 (Bloomberg) — Christopher Cox, in one of his last acts as Securities and Exchange Commission chairman, took Fannie Mae and Freddie Mac’s regulator to task in a letter questioning whether the agency was upholding its legal duty to “preserve and conserve” the mortgage companies’ assets.

Cox asked in the Jan. 16 letter to Federal Housing Finance Agency Director James Lockhart whether the government-sponsored enterprises were being pressed too hard to bolster U.S. housing markets at the expense of profits. As a member of an oversight board advising Lockhart, Cox urged Lockhart to develop an “exit strategy” from government conservatorship that would restore the companies’ finances.

….. Public demands on the companies may prevent their emergence from government control, Cox said in the letter. He warned of “significantly” adding to taxpayer liabilities.

Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac are the largest U.S. mortgage-finance companies, owning or guaranteeing about 55 percent of single-family loans. They were seized by President George W. Bush’s administration in September as their losses deepened.

….. Fannie Mae and Freddie Mac were among the few remaining sources of mortgage credit after the housing market collapse last year. The Bush administration pushed the companies to reduce fees and loosen credit standards to stem foreclosures.

Obama went further than Bush, making the companies a central part of his plan to save as many as 9 million homeowners from foreclosure through low-cost refinancing and easing of loan terms. Fannie Mae and Freddie Mac are required to cover $25 billion of the administration’s $75 billion loan-modification program called Making Home Affordable.

“Fannie and Freddie are being used by the Obama administration, as they were by the prior administration, as social policy tools,” said Joshua Rosner, an analyst with independent research firm Graham Fisher & Co. in New York.

Both companies said in securities filings last month that policy demands are hampering their recovery, and may leave them dependent on government aid.

….. Fannie Mae has reported a combined $86.8 billion in net losses going back to the third quarter of 2007, and Freddie Mac has logged $63.6 billion in losses over the same period. To remain solvent, the companies have requested a combined $84.9 billion in taxpayer funds from a $400 billion pool set up by the Treasury after their takeover.

At the core of their troubles are about $152.3 billion in subprime and “Alt-A” assets acquired mostly from 2005 through 2007, according to Lockhart. Cox said in the letter that the volume of “high risk mortgage products” owned or guaranteed by Fannie Mae and Freddie Mac may be closer to $1.7 trillion.

Failure to make Fannie Mae and Freddie Mac financially sound would impose expanded burdens on the Treasury and private debt markets because their $1.7 trillion in unsecured debt and $4 trillion in mortgage bonds are so widely held, he said. The government would bear responsibility even though the companies’ liabilities aren’t technically backed by its full faith and credit, he wrote.

The U.S. may be forced to assume the companies’ liabilities, increasing the $11.3 trillion in outstanding U.S. debt by about 50 percent and hampering the Treasury’s ability to borrow, Cox said.

OK, so while sinking deeper into debt and losing money by the minute, Fred/Fan is juggling both a socio-political agenda (keeping Joe CantMakeEnough in the home he should have never been approved to buy) and a financial agenda (getting Fred/Fan OUT from under the United States Government).

Additionally, that discrepancy between what number (in bold above) constitutes Fred/Fan’s high risk mortgage products is outrageous.   Given that the political agenda of Fred/Fan’s hacks in the US government made it possible for them to procure & package toxic assets long before 2005-2007, the number is arguably closer to Cox’s $1.7 trillion.

Now I’m no finance wiz, but logic dictates that first and foremost, they have to get the toxic assets off the books.  Otherwise, Fred/Fan eventually becomes yet another government entitlement program.

So, do we learn from our mistakes and escort ”Johnny CantMakeEnough” into a more realistic living situation NOW, deal with (i.e., write off) the toxic assets and take the hit upfront OR or do we put the entire US Government on the hook and increase the $11.3 trillion in debt by half?

Newsflash: The United States Government does not have a lender of last resort. And when the Chinese stop buying our debt and call in their loans, what will happen?  My guess is that they will either accept land that our government takes from us as partial payment, or call in the loans.  What in the world do our “Gee, socialism looks great on paper” dimwits in DC think will happen then? See Zimbabwe (full PDF here).

Well that is when missiles in China will start fine-tuning in on us (I won’t assume here that our sensitive bunch in DC have the guts to defend this country).

Ha, ha…it’s all very funny, isn’t it?

Shotgun Wedding: Court Docs Reveal Govt. Likely Forced Chrysler Deal With Minimal Knowledge of Fiat

ChryslerFiat0609.jpgEven if they ultimately lose their last-minute court battle, the Indiana pension funds defending their rights as secured first-lien creditors of Chrysler have done a valuable deed.

A $10,000 Democratic Party donor, Lauria, despite clear evidence of intimidation of his originally larger pool of clients by Obama himself (in his April 30 speech announcing the company’s bankruptcy filing) and his car guys, has nonetheless bravely pursued the important contract law and fiduciary duty issues involved in the shortchanging of his clients for several weeks.

Wait until you see the word the government lawyer used to describe Lauria.

As a result of Lauria’s legal efforts, we have also learned of e-mails showing that the government drove the Chrysler-Fiat deal over Chrysler management concerns, and did so despite more than likely knowing very little about shotgun marriage partner Fiat.

Documents forced out as a result of Lauria’s legal efforts include e-mails showing that the government drove the Chrysler-Fiat deal over Chrysler management concerns, did so despite more than likely knowing very little about shotgun marriage partner Fiat.

All of this and more is in a report published last night in the Wall Street Journal by Neil King Jr. and Jeffrey McCracken.

Here are key paragraphs revealing containing items I expect most of the rest of the establishment media to ignore (bolds after title are mine):

U.S. Pushed Fiat Deal on Chrysler

The Obama administration rushed an alliance between Chrysler LLC and Fiat SpA despite Chrysler’s worries about Fiat’s financial health and its willingness to share technology, according to internal company emails.

The emails show Fiat ignoring requests for documents and trying to change contract terms late in the talks. A Chrysler adviser at one point said the deal risked looking as if the U.S. auto maker and the Treasury Department, which helped broker the pact, were “in bed with a shady partner.” In another note, an official referred to the Treasury Department as “God.”

….. On Friday, a federal appeals court upheld Chrysler’s Fiat deal, dismissing a challenge by dissident Chrysler debt holders. But the court also issued a stay until 4 p.m. Monday — leaving a small window for Thomas Lauria, the lawyer pursuing the case, to appeal to the Supreme Court. One judge on the three-judge panel suggested the Supreme Court should have “a swing at this ball.”

Mr. Lauria’s persistence led one government lawyer in the Chrysler case to dub him a “terrorist” in an email to a Chrysler adviser.

….. The emails, which run from mid-March until early May, were put into the court record following a request by Mr. Lauria, the lawyer fighting the bankruptcy on behalf of various Indiana pension and investment funds that hold Chrysler bank debt. They argue that the case has trampled on established bankruptcy law.

….. Chrysler’s advisers told the company their Italian counterparts were refusing to provide sufficient financial information to evaluate the deal. A team sent to Fiat headquarters in Turin, Italy, reported back on March 14 that “no financial due diligence … has or can be performed.”

An internal memo 13 days later from Chrysler’s advisory team also said Fiat’s “off-balance-sheet investments” in joint ventures around the world posed an economic risk and a political risk,” including the appearance that “Treasury/Chrysler” was “in bed with a shady partner.”

Eight days before President Barack Obama announced his support for the alliance in an April 30 speech, Chrysler officials were still bristling over what they considered Fiat’s unwillingness to provide even basic information about its finances.

….. Fiat is putting in no cash.

….. Despite the push to do a deal with Fiat, Chrysler advisers continued into April urging the Treasury to think again about a potential merger with GM. Earlier talks between the two auto giants had broken down in November, and the Obama administration put little stock in the idea.

How did “Treasury/Chrysler” get from “lacking basic information” about Fiat’s finances to completing sufficient due diligence to support making the deal with a very complex company in eight days? Additionally, Fiat’s “off-balance-sheet investments” seem to have a whiff of Enron-like potential.

The two WSJ reporters also reveal how the government, despite the urgings of Chrysler management, refused to explore the viability of combining it with deeply troubled but at least financially transparent General Motors.

The funds are appealing to the Supreme Court. Bloomberg reports that “A creditor bid for Supreme Court intervention would likely go first to Justice Ruth Bader Ginsburg, who handles emergency matters from the New York-based federal appeals court that ruled yesterday. She could act on her own or refer the request to the full nine-member court.” Justice Ginsurg’s gatekeeper function would appear to indicate that the Indiana pension funds will see not see justice served.

Cross-posted at NewsBusters.org.

Positivity: Houston D-Day veteran receives Legion of Honor medal

Filed under: Positivity — Tom @ 6:58 am

From Houston, USA and Normandy, France:

June 5, 2009, 8:33PM

Decades passed before Houston’s Clyde Combs told his children he was part of the massive D-Day invasion when Allied troops fought past Nazi mines and machine guns to storm France’s beaches and march on to liberate Europe.

Neither did he mention he was aboard a superfast attack craft on June 6, 1944, and helped protect the west flank of invading forces as they established a beachhead, fished dead sailors out of the sea, and hunted for German soldiers fleeing in the darkness.

The 84-year-old former Navy PT boat crewman didn’t tell, he said, because he didn’t think anyone cared.

“It wasn’t considered a big deal,” said Combs, who still has a full head of hair and is probably lean enough to climb into his Cracker Jack uniform. “You were in the war, and you made it back and whatever,” he said. “No, I didn’t discuss it.”

On Friday, Combs was inducted into France’s prestigious Legion of Honor to commemorate the battle’s 65th anniversary today.

With the passing of time, as the offensive was pushed into history books, public interest grew in events surrounding the D-Day invasion. A massive fighting force, including more than 150,000 personnel, 5,000 ships and 11,000 planes, pushed across the English Channel and roared ashore along the Normandy region’s coastline.

“The invading armada was one of the largest armadas in the world’s history,” Combs said. “And to have been a small, tiny part of it in any way is such a privilege.”
A train to Normandy

Combs and dozens of American D-Day veterans are back in France for the anniversary. They were awarded their Legion of Honor medals in a ceremony at Napoleon Bonaparte’s tomb.

The veterans are to mark D-Day with a train ride to Normandy, for a ceremony and gathering during which Combs is to meet President Barack Obama as well as the leaders of Canada, Britain and France.

Combs and one other Navy veteran, who was on a landing craft that day, are expected to offer brief remarks at one of the events at the hallowed beachside cemetery, where more than 9,300 American service members are buried. Combs said he plans to speak from the heart but has no prepared remarks.

Combs would be the last to say he was special. As he sees it, then 19, he was doing his part at D-Day, doing the job he was trained to do.

The real heroes are the thousands of service members killed on D-Day, he said.

About 10,000 Allied service members died that first day of the battle, including 1,068 sailors.

“There are others far more deserving than I,” Combs said. …..

Go here for the rest of the story.