Risk Rap

Rapping About a World at Risk

Economy Starts to Freeze Up

They say if they don’t get this TARP deal done the credit markets will freeze. Heck they were saying that all this afternoon on CNBC. Its amazing how tempers are flaring even on CNBC about this bailout. They are trying their best to sell it, but Americans don’t like to be told what they must do. God bless em. Barney Frank and Nancy Pelosi have been trashing McCain all day. They think a deal will be struck by this weekend. The markets are hopeful this will be the case.

Today US equity markets were mixed with the S&P 500 up and the Dow is holding tough at 11,000 plus. Incredibly the DOW was up by 121 points after the FDIC seizure of WAMU and sale of assets to JP Morgan. Next up for seizure is Wachcovia and National City. Fortis the large Belgian Bank said today that it is sufficiently capitalized to remain solvent. As the banks continue to fall like so many cascading dominoes pretty soon the severity of the economic crisis will be more apparent. Make no mistake we are in a rough spot. The US dollar remained stable and US Treasuries yields are falling as money seeks a safe haven.

The Labor Department expects employment to fall by 90,000 jobs in its September Employment Report. Today the Commerce Department revised down second quarter GDP by .5% to annual growth of 2.8%.

This debate looms large and Obama and McCain have lots to talk about. Good thing McCain put country first and decided to show up. His countrymen want to hear what he has to say and don’t deserve a cold shoulder from this old warrior.

Heres a great song by Ray Charles and Betty Carter Baby its Cold Outside.

Risk: political apathy

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September 26, 2008 Posted by | banking, credit crisis, EESA, jazz, McCain, Obama, politics, TARP | , , , , , , , , , , | Leave a comment

Foggy Mountian Breakdown

It was all going along as planned. Paulson’s 3 page USS TARP was carefully constructed and sitting in dry dock. His exemplary stewardship and all out PR campaign had all oars in the water and the crew rowed with great athletic precision. America’s Chief Fear monger “W” was recruited to address the nation to explain the complicated nuances of mortgage backed securities and issue a stern warning about the cataclysmic consequences if we failed to act positively on TARPs adoption.

The free marketeers of Wall Street had skillfully wheeled their Trojan Horse into the heart of the capitol city of the free world. Disguised as a kind of Noah’s Ark to float the ship of state through the pending economic tsunami; the ships Captain Henry Paulson, tour director W and the able crew of yeoman Democrats implored their countrymen to quickly board the Ark to avoid the pending economic apocalypse. The cost of steerage passage, a cool $700 BN. A small price to pay for a tiny slice of economic subsistence pie.

The deal that was done became undone as the Maverick from Arizona boldly sailed into town on an apolitical hydrofoil boasting a “Nation First” bumper sticker and presumingly powered only by fuel efficient populist sentiment. He sat at the feet of his party leader the BIG W, smiled for the camera, fingered his pen, said little and did much less. He took great risk to accomplish this feat. He sat on the right side of the table, exposing the left side of his melanoma scarred face to the frenzied cameras of the political paparazzi. McCain did not care that his least flattering side was exposed. It was truly a moment of profiles in courage.

This morning WHOO HOO WAMU was seized by the FDIC and sold to JP Morgan. TPG a very clever private equity firm lost a big chunk of its investors capital (see Risk Rap post 4/9/08). Even the fat cats are taking a haircut on this one. Yes the banking crisis is real and the rising tide of economic duress needs drastic and immediate attention.

There is a great reluctance by my countrymen to sheepishly accept this deal. I think they believe in the principles of free market capitalism that has been religiously preached to them by the very same leaders who are now resorting to the impressment of their tax dollars to force them aboard this life raft. I hope we understand the price we may pay for the courage of our convictions.

For now the TARP deal, like the stasis in our government and the frozen debt markets are broke and lost in a foggy mountain breakdown. Watch this space for periodic progress reports as we chart the fantastic odyssey of our rudderless ship of state.

Music: Earl Scruggs and Friends, Foggy Mountain Breakdown

Risk: depression, recession

September 26, 2008 Posted by | elections, McCain, Paulson, politics, TARP | , , , , , , , , , | Leave a comment