The Plebian

Pretty Economic Pictures for the Illiterate Masses

PPIP = TARP v.1.0

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Im tired, frustrated and will simply cut to the chase.

The Public Private Investment Program is a scam.  George Orwell should give these asses an award for doublespeak. 

Here is an excerpt from Dr. Housing Bubble today that helps bring to light some of the details of the program…

I remember when the $700 billion Troubled Asset Relief Program was released back in the fall on the pretense that it was going to buy toxic assets.  Remember the storm that created?  The public was appalled and that initial gut reaction was proven to be right.  Ultimately the first $350 billion of the TARP went directly to banks as capital injections and did absolutely nothing for the health of our economy and ultimately was a major safety net for the banks.  Yet the bad assets remained.  No credit lending to average Americans.  Bad assets still there.  TARP 1 was a gift to banks and Wall Street.  Which brings us to the PPIP.

The problem with the PPIP is that it is designed to provide a major subsidy to so-called private investors to buy up toxic assets.  This is a misnomer.  Why is that?  Language is important in any legislation and especially when presenting a money grab like this one.  First, there is very little about this plan that encourages the “private sector” in buying these toxic assets.  At least it isn’t private in the sense that you and 95 percent of Americans would like to think of it as private.  That is to say, if you had some capital laying around and wanted to buy up some toxic assets yourself, you would not be able to do so?  Why?  Well let us take a look at the application for this PPIP on the Financial Stability website:

ppip-application

I’ll get into the details of the plan later in this article but this application pretty much sums up everything that is wrong with this program.  First, participating institutions must have the capacity to raise $500 million of private capital.  This is great for bailout participants that are deemed too big to fail since they’ll have that money easily accessible.  Next, they’ll need a minimum of $10 billion in market value assets under management.  This is important to keep out the riff raff of “small time investors” since only the big boys know how to mange money.  Finally, the deadline for the PPIP application is get this, April 10, 2009 at 5:00pm Eastern Time.  Bwahahaha!  They already know who is going to get the bids!  So much for that “open” market place notion.  They spent such a long time devising this plan and now they expect solid plans to come out in a little over 2 weeks?  The Treasury already has an idea who is going to play in this game on taxpayer funds and it is the same institutions that created this mess.

If you want a sense of who stands to benefit just look who posted massive rallies today:

bigwinners

Even though the market posted a “broad” 7 percent rally, many of these firms tripled that in the same day.  And don’t think this rally was somehow spurred by the retail investor sitting on the sideline.  You mean the unemployed ran back in to gamble in the stock market?  You mean to tell me that 50 percent of those in our country that are 1 or 2 paychecks away from financial trouble knew to invest in these firms that stand to benefit the most from this poorly planned investment program (the real PPIP)?  Amazing isn’t it?  This was a major gift to Wall Street.

Bernie Madoff’s Tweets (First Night in the Slammer)

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This is pretty funny, although site went down quickly.

Compliments of Barry Ritzholtz of The Big Picture…hat tip.

Congress and AIG: Pot Meet Kettle

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I am experiencing some intense fraud fatigue as of late, and the most recent AIG shenanigans is pushing me to the tipping point.  But, alas there is one aspect of this issue that has yet to reach the MSM and thats a simple reminder of how hypocritical Congress has been in regards to scape goating AIG executives. 

According to opensecrets.org, AIG has been a heavy hitter in the world of lobbying Congress for decades.  And I’m sure to the disappointment of all you political partisans on the left or right, AIG was an equal opportunity collusionist, splitting their donations 50/50 between the two major parties.

Below is a list of top political receipents of AIG lobbying over the last decade.  So remember, next time you hear one of these prominent people complain about corporate irresponsibility, keep in mind how they helped to perpetuate the corruption.

Name Total Contributions
Dodd, Chris (D-Conn) $280,238
Bush, George W (R-Texas) $200,560
Schumer, Charles E (D-NY) $111,875
Obama, Barack (D-Ill) $107,332
McCain, John (R-Ariz) $99,249
Baucus, Max (D-Mont) $90,000
Kerry, John (D-Mass) $85,000
Johnson, Nancy L (R-Conn) $75,400
Sununu, John E (R-NH) $69,049
Clinton, Hillary (D-NY) $59,515
Lieberman, Joe (I-Conn) $57,900
Rangel, Charles B (D-NY) $53,582
Giuliani, Rudolph W (R-NY) $50,250
Lazio, Rick A (R-NY) $48,600
Ensign, John (R-Nev) $44,569
Bayh, Evan (D-Ind) $43,700
Larson, John B (D-Conn) $43,000
Biden, Joseph R Jr (D-Del) $41,350
Baker, Richard (R-La) $41,032
Torricelli, Robert G (D-NJ) $39,000
D’Amato, Alfonse M (R-NY) $38,750
Carper, Tom (D-Del) $37,213

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Main Stream News has a few Diamonds in the Rough

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I rarely read anything from the media powers that be that truly informs me of the ‘big picture’.  This article from CBS is an exception. 

FTA:

Now that the housing bubble, stock market bubble and commodities bubble have popped, the market is trying to adjust to non-bubbly conditions. Laws and regulations that interfere with that process can delay that adjustment and prolong the recession. (If a failing business is artificially propped up, valuable resources are being wasted rather than being used for productive purposes.)

Plus, the money for these bailouts has to come from somewhere. Last month Bloomberg News put the tab so far at $9.7 trillion, enough to hand each U.S. household a check for around $92,000, or pay off 90 percent of home mortgages in the country.

That money, of course, will come from taxes. We’ll borrow some from China, the largest foreign holder of Treasury debt, with the promise of paying it back with interest. Some will come from the Federal Reserve printing it, a move that devalues the greenback and leads to taxation through inflation.

At some point, though, the bailout costs will simply become too immense. George Mason University economics professor Russ Roberts wrote this week: “We can’t keep GM and AIG and Fannie and Freddie and every insolvent bank and every mortgage afloat. It can’t be done. It’s not a strategy. It’s just desperation to avoid pain. We’re going to have to start letting them fail. Sooner is better than later. Otherwise, we continue to throw good money after bad.”

We can’t bring back the bubble economy. But until our esteemed elected representatives in Washington figure that out, don’t expect an end to this downturn anytime soon.

It’s kind of funny that when certain voices were saying the very same things about our debt-driven consumption system a few years ago before reality showed its ugly face, mainstream media ignored these issues and people who did try to bring it to light were considered crazy or radical. 

I don’t know which is better, to be a sane person in a crazy world, or a crazy person in a sane world.  I feel I have lived in both now.

Wonderful Infographic Explaining the Credit Crisis

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While researching some graphic software for work, I ran across this excellently done animated infographic on Flowingdata.com.  While it doesn’t include all of the complexity that revolves around the issue, it does pin point Wall Street’s and Main Street’s roles.

FYI: Take a glance at some other presentations available on the website as well.  There is some pretty cool content.

Possibly the Best Daily Show Segment EVER!

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On Thursday night, Jon Stewart devoted an 8 plus minute segment to calling in all the bullshit in the cable news network CNBC, bashing people who solely claim foolish homeowner’s are to blame, and last but not least corrupt Ponzi schemers. 

And I say to all of them too, FUCK YOU!

Weening off the Addiction…

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CNBC via the Energy Information Administration has reported that oil demand has retreated back to 1998 levels in the United States.  Additionally, the Oil Drum released a fun little graph yesterday showing Saudi Oil production and its peak in 2005.  It seems both demand and supply are retreating.