AMERICA'S $1.2 TRILLION DOLLAR HOSTAGE

Lost in all the noise about 999 plans and 50 Points plans and Sigmas and whatever other is a fact that no one seems to be talking about:

$1.2 TRILLION in US corporate assets are currently being held in foreign banks.  You know, those foreign banks that are about to start popping like a string of firecrackers.

These are cash assets US corporations have left overseas because of the US's extortionate taxes if they are brought back into the country.

If the US companies tried to pull them out now it would probably begin the collapse.  It may not even be possible to pull them out in time, with the European economy's future being measured in weeks if not days by many analysts.

If the US companies did bring the cash back now, they would take a 1/3 hit in the assets.  That would be enough to push a lot of institutions under.

If they don't bring it back, it all goes away when, not if, the Eurobanks collapse.

So all the fancy plans you hear about.  Forget them.  They're obsolete already.

What we need in a leader is not a PowerPoint presentation, but the character and values to stand up and face the coming crisis.

This gets interesting...

... according to sources involved with Chase, the feds are instructing the banks to freeze all mortgage apps and refis under the current guidelines and programs pending a major change...

LOOTER IN CHIEF

Kennedy Gets Hard Lock on Hellfire!

Make that "another Kennedy." And not the naughty-bad-fun kind of Hellfire, either...

Patrick Kennedy denied Communion by bishop over abortion.

Predictably, the lefties are squawking that this represents a violation of the 1st Amendment separation of Church and state.  In light of the recent UK court ruling that belief in global warming constitutes a religious conviction, I wonder if that means they believe Cap and Trade is unconstitutional as well...

Well, in any case, I'm sure Old Joe P. and Ted are waiting for him with a hearty slap on the back and a fresh cup of brimstone.  Now, I am obliged, of course, to hope that the pill-popping, drunk driving degenerate (nothing like family traditions) will find repentance, because the Church would welcome him back... but I'm not holding my breath.  The Kennedies are basically what you'd get if Eugene O'Neill wrote the Oresteia trilogy and I think they have to play out their curse to the last tragedy...

Erudite Boston Thug Explains the rest of Obama's Bank Scam...

...with the help of the world's greatest CPA...

"It's Byzantine," Marty said.
"You find it Byzantine?" I said.
"Me, the world's greatest CPA. I'm in awe."
"Is it legal?" I said.
"Oh, God no."
"Can you explain it to me?"
"I can oversimplify it drastically," he said.
"Oh, good."
"As far as I can tell, your culprits are Barack Obama* and Tim Geithner.* Do you know what a special purpose entity is?"
"No."
"A special purpose entity is a device often used for securitization of debt."
"I urge you to oversimplify," I said.
"It was always my intention," Marty said. "Say you have a shop, Spenser's Sandwich Shop. You have a bunch of customers who buy their sandwiches on credit, for which convenience you charge them one percent a month. So at the end of the day you have earned a hundred bucks plus one percent a monthl. But there's nothing in the cash register. What you do is, you create a special purpose entity, and call it, say, Susan's Equity Trust. You can invest your own money in this trust, but at least three percent of it has to be independent capital. Then you sell your hundred dollar's worth of accounts receivable and its interest payments to Susan's Equity Trust. Now at the end of the day you have a hundred in cash. Susan's Equity Trust, in turn,sells shares in itself to investors eager to make one percent a month on the sale of sub sandwiches. So Susan gets a markup. The investors get their money back in installments plus the one percent interest. Got it?"
"Yeah, sure, banks do that with mortgages, don't they? Car dealers?"
"Lots of people do it and it's perfectly legitimate."
"Even when banks and car dealers do it?"
"Amazing but true," Marty said.
"But in the case of the Administration?"**
"Obama and Geithner*** were creating SPE's to hide debt. Remember what I told you. They had a ton of earnings but not much cash."
"The old mark to market accounting trick."
"Very good."
"So the absence of cash would begin to create debt."
"Right again," Marty said, "or one or another project was a losing proposition."
"And payment on the debt would use up cash."
"It would."
"So they needed to keep these matters off the books, or their profit picture would suck and people would stop buying their stock."
"Gracelessly put, perhaps," Marty said, "but not innaccurate."
"And the SPE's were their solution."
"Better," Marty said. "They could sell one operation or another, that had a lot of debt, to the SPE and show it on their books as income."
"And that's legal?"
"Remember what I said about conditions?"
"Essentially that the SPE needed to be independent of the creating company."
"Right. These aren't. They're owned mostly by the Federal Government, through the bailout funding.**** And the money they raised to create the SPE's was guaranteed by the Federal Government."*****
"So they weren't independent of the Federal Government."
"Nope, and as they developed, some of these outfits began to have interests antithetical to the country's but very beneficial to Obama and Geithner.****** You want to hear how?"
"Jesus Christ no," I said. "I never want to have this conversation again."
"Which is why you are not a world-class CPA."
"Thankfully," I said. "Isn't there somebody supposed to approve stuff like this?"
"Board of directors."
"They approved?"
"The banks'******* boards of directors, as far as I can see, would have approved compulsory pederasty if urged by Obama and Geithner."
"Isn't there any outside accounting?"
"There is, some of the best accounting firms in the Northeast, and Obama and Geithner's Treasury department."********
"So much for them... Is there trouble ahead?"
"For the banks? You better believe it."
"Any indication Obama knows this? Or Geithner?"
Marty smiled at me.
"How nice for them."

(Abridged from Bad Business, a Spenser novel by Robert B. Parker. Names marked by *'s have been changed by this blogger. No endorsement or sympathy on the part of Robert B. Parker is intended, implied or even anticipated. Seriously. None whatsoever. Period. Have you seen the size of that bastard?)

Erudite Boston Thug Explains New Banking Rules...

... with the help of the world's greatest CPA. 

"So whaddaya know?"

"You know what mark to market accounting is?"

"No."

Marty looked pleased.

"You wouldn't understand detail anyway," Marty said. "Say you kept a ledger, which in your case is unlikely, but say you did, and you're making knuckle knives.  You sell one to Hawk for a buck,and you debit your asset column one dollar, and credit your liabilities column one dollar.  The two columns are always supposed to be equal."

"I don't have a ledger," I said. 

"I know," Marty said, "and if you did, the columns would never be equal. But this is hypothetical."

"And Hawk's already got a knuckle knife."

"Shut up and listen," Marty said. "So you keep your ledger and somebody says how much money you got and you say a buck, and they say show me and you take the buck out of your pocket and wave it under their nose.

"But," he said, and paused expectantly.  "Suppose you and Hawk have a deal.  He'll buy a knife every year for five years.  So you debit a buck from the asset side, and you credit five bucks on the liability.  Because that's what the deal's worth over time."

I nodded.

"Get it?" Marty said.  "See the problem?"

"What if Hawk dies or backs out of the deal?"

He was thrilled.

"Or somebody comes by in the first year and says show me the cash?" he said.

"I take out my one dollar."

"And suppose the guy that's asking has just fixed your sink, and seeing that you have five dollars in revenue, does it for credit, and now wants his five smackers?"

"I don't think I've heard anyone say smackers since I donated my Perry Como albums."

"Never mind that.  What I described in grossly oversimplified terms is another kind of accounting called mark to market."

"Thank God for the gross oversimplification," I said.

"And here's a little embroidery," Marty said. "Say you think the cost of knuckle knives will go up over time, so you, or probably I at your behest, because you pay me a monstruous retainer every year and I am in your pocket, make a projection of how much the price will rise, and decide that they'll be worth two bucks, five years hence."

"Hence."

"Yeah, hence. I went to the fucking Wharton School, remember.  So now you've got a deal worth ten simoleons and you credit that.  But how much actual cash you got?"

"A simoleon."

"See?"

"And the advantage of that is it inflates your revenue."

"Yes."

"Which makes your stock worth more."

"Yeah, and if you need to show an even bigger profit you can just move the curve."

"Predict that knives will sell for two-fifty," I said. "And then I can show a credit of twelve-fifty."

"Exactly."

"And it's legal."

"Sure, mark to market is perfectly legal, often useful, sometimes necessary, in companies where a reasonable curve can be predicted.  But it's less, ah, appropriate for a company whose product may fluctuate wildly because of war, or climactic events, or political decisions, or economic circumstance, or the death of some Arabian sheik."

"And you might find yourself with a cash-flow problem."

"Yeah.  You have to pay your employees, for example, in cash.  If you have debt to service, and you're cash-poor, you have to service that in cash.  And you have to do it now, not five years from now."

"So," I said. "Worst case?"

"You can't pay your bills.  You go bankrupt."

(Abridged from Bad Business, a Spenser novel by Robert B. Parker)

Now don't you feel reassured about our financial institutions?

Then the Nub of Mr. Geithner's Gist...

...if I understand it correctly, is that Fannie Mae and Freddie Mac buying up toxic assets and creating financial 'instruments' secured by them was a bad idea that cratered the mortgage industry and collapsed the economy, but the Treasury Department buying up toxic assets and creating financial 'instruments' secured by them is a great idea because we're going to pay for them with folks' pension money.

I guess the right letterhead makes all the difference.