Spank the Bankers!

More about credit unions here.

Why Won't They Give Detroit Money?

Because these are factory workers not office workers, and people who don't sit at desks don't belong in the middle class.

The House will vote tonight on whether to pass an auto industry bailout plan. Everyone is complaining about how the CEOs of Ford, General Motors, and Chrysler are begging for taxpayer money as a result of bad business decisions. I agree that they shouldn't be riding around in corporate jets (the hybrid car road trip was a nice gesture), but I think the outrage is based on some fuzzy math and even worse memory.

The biggest three auto companies want = $14 billion
Bear Stearns merger with JP Morgan chase = $29 billion
American Insurance Group (AIG) = $150 billion
Fannie Mae and Freddie Mac = $200 billion
Citigroup = $300 billion
Troubled Asset Relief Plan = $350 billion!

You're right, the government must draw the line somewhere. Companies can't just go around begging for money because they made bad choices. And it's clear the line is drawn somewhere between financial services and manufacturing. So if your company invented exotic financial instruments that have never existed before, so complex and convoluted that their failure has dragged an entire world economy down into the gutter, rest easy. You surely aren't at fault. We'll just humiliate the manufacturers. People who never went to college shouldn't be allowed to own their homes and send their kids to college anyway. Bailout solved.

Meltdown Madness

Who's in??

20 Billion For Every Year He's Been Alive

Neel Kashkari
Curriculum Vitae

Objective: I am very interested in furthering my skills as the Interim Head of the Office of Financial Stability. I am highly qualified for this position because I have worked for the US Treasury for two whole years and all my buddies from Goldman work here now too. I have a lot of good ideas about what to do with the $700 billion because I used to build space ships. I'm 35 and I'm from Ohio, so I am confident that I can reinstill confidence in our shaky markets.

EDUCATION
- MBA, University of Pennsylvania (2002)
- MS, Engineering, University of Illinois at Urbana-Champaign
- BS, Engineering, University of Illinois at Urbana-Champaign

WORK EXPERIENCE
- Head of Subprime Fast-Track Loan Modification Plan, US Treasury Department (2006-present)
- Vice President, Goldman Sachs (2002-2006)
- Technology Developer for NASA Space Science Missions, TRW (sometime in the 90s)

SKILLS
- Excellent silent figurehead capabilities
- Eagle-like stare

Sweatshops Exist Because...

no one in their right mind would actually sit down and try to decipher all this shit unless they knew they'd be getting a hefty salary afterwords. All the normal people didn't take calculus in high school.

I own AIG!

And unfortunately, so do you, fellow taxpayer. Last night the fed decided to buy bad mortgage loans from investment banks to prevent more institutions from going under. NPR said that American taxpayers are going to own a "toxic porfolio" of the country's riskiest loans. And how will we pay for this sludge? Well, no one seems to be saying yet but I have a feeling it starts with C and ends with hina.

PS - here's a great linik to the BBC's layman's finance crisis glossary

Wall Street is a Nude Beach

Several months ago, financial ninja Warren Buffet (not pictured above, but wouldn't that be funny?) told Fortune Magazine that investment houses have been "swimming naked." Their risky investments, he warned, would soon reveal that the emperor has no bikini. And all that cash stuffed inside her chacha won't be enough to save us either.

Okay fine...Warren never extended the analogy to include genitalia, but he did refer to Wall Street as a nudist beach. In fact, he has been a harsh critic of the very folks that made him the richest man in the world for some time now. In the wake of the recent bankruptcies/bailouts/buyouts of major players Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, AIG, and Merril Lynch - it seems that "The Oracle" was correct yet again. Honestly, I'm glad that there will be fewer of these arrogant little I-Bankers pontificating in class, but unfortunately these corporate collapses will effects much more than just my school.

One of Warren's biggest warnings surrounds the financial instrument called derivatives. WAIT WAIT WAIT! Before your eyes start glazing over and you scroll down to watch that karaoke video again, let me 'splain it to you!

If an investment is a gamble, then a derivative is a gamble on that gamble. So basically, its like betting on how an investment will perform, instead of on the investment itself. For example, let's say my brother bought a baby racehorse with the hope that it would grow up to win the Kentucky Derby and make him lots of money. I come along today and agree to purchase that horse in a year, before he's old enough to race. Although the price I have offered is less than my bro might make if he won big at the Derby, it's less risky because anything could happen to his horse as it grows up. If his horse is really fat in one year and can't run, then the price I'm offering today is more than he'd get if he tried to sell it on craigslist. But alternately, if his horse is the next Big Brown then I am rich as hell.

JUST BEAR WITH ME A LITTLE BIT LONGER

The contract between my brother and I is called a derivative . There are a number of different varities (options, puts, calls, etc) and they can get extremely complicated. What is so potentially dangerous about derivatives is that the profits and losses are recorded right away, even though no money has actually changed hands and typically won't for years. That gets tricky when all my brothers come home asking to cash in all the contracts I've made...My man Warren said derivatives are "financial weapons of mass destruction." See BBC article for more. Even the FDIC says that derivative activity in the US is more than $56 trillion! Yikes!

So why should us lefties care about the bankers booted off Wall Street, dripping wet and naked? Well, because we and our friends and family (that is, normal people) will be hurt far more than the heads of major financial institutions when the house of cards crumbles. The former Enron and WorldCom execs are doing just fine. But us, we're going to have be smart about our choices over the next couple years and that starts with understanding what these oligarchs are doing with our money (or lack thereof)...

On a personal tip, I'm shopping around for fire-proof safes to start stashing money Great Depression style. I'll TRY to stop racking up my credit on used high-tops from ebay. When the crash comes, I'm going to be prepared in full newsie attire. We all have to play our part, and I'm fairly certain that mine involves a vest.