MediaChannel.org

THE NEW WORD: “Investors, “skittish” after the Bernard Madoff and R. Allen Stanford investigations, are sending daily tips on suspected Ponzi schemes to U.S. regulators, Commodity Futures Trading Commission member Bart Chilton said.

“There’s a Ponzi-palooza out there,” Chilton told reporters today in Arlington, Virginia. “As people are looking at these Ponzi schemes in the media, they start thinking, well, are my investments OK? So we get tips.”

Chilton, a Democrat on the five-member commission, said Congress should give the agency the authority to impose criminal charges for wrongdoing. The agency can now only file civil complaints and must ask the Justice Department to seek jail terms for violations of its rules.”

Ponzi schemers Have Needs: AP reports: Bernard Madoff is seeking to keep a $7 million Manhattan penthouse and an additional $62 million in assets, saying they are unrelated to the fraud that authorities say cost victims more than $50 billion.”

BUSH DOCUMENTS SHOW 98 TORTURE VIDEOS MISSING
MARKET FALLS, MAY NOT COME BACK ANY TIME SOON
DEMS DEBATING MORTGAGE REMEDIES

The financial news is, to quote Wolf Blitzer, “It’s going to get worse, as they say, before it gets even worse.” Huh? The NY Times Reports: Dow Below 6,800; Lowest Close Since ’97

Concerns about financial companies and worries over Friday’s unemployment report continued to erode the markets.”

Garald Calente of the Trends Institute fears a rebound is not likely:

“The markets are collapsing.

All the pundit’s cautious predictions and business media’s hopeful expectations at the New Year for an economic turn around and imminent market bottom were dead wrong. There will be no turn around in the second quarter of 2009 or 2010 or 2011 … America and much of the world has entered “The Greatest Depression.”

The global financial system, built on endless supplies of cheap money, rampant speculation, fraud, greed, and delusion is terminally ill and will not be coaxed into remission by stimulus packages nor restored to health by government buyouts and bailouts.

Today, the MSCI World Index of stocks in 23 developed nations fell 4.9 percent to 713.75, the lowest closing level since March 2003, and its Emerging Markets Index slid 5 percent. The Dow followed, plunging 300 points, closing below 7,000 for the first time since 1997.

There is no stock market bottom in sight. The only figure that can be forecast with confidence is that the Dow won’t reach zero!”

The right is blaming Obama “Socialist” measures. They say the recovery bills are not working as if they are Alka Seltzer pills. He’s responsible. Never mind that he’s only been in office 46 days. It’s all his fault. That’s their mantra. I say: Yo, bully boys on the right. This is real, a system meldown. Yo spelled backwards is OY!

THE UPS AND DOWNS OF THE DEBATE

Everyone in sales knows about the “elevator pitch.” The idea is to be able to shape and deliver a business generating deal with a short spiel in the time it takes an elevator to go to the first floor. The assumption behind this is that attention spans are short and getting shorter, and that, hence, no one has times for a detailed proposal. This could be one reason for the lack of real due-diligence or just plain thought when banks bought and sold worthless securities.

“Oh, a CDO” sounds good, Give me twenty. Oops have to go. Have your girl call mine.”

Inane conversations like this imaged discourse no doubt helped get us in the mess we are in. Just yesterday, I was chatting about the new billions sunk into AIG. One guy, who was in the elevator from l to lo, was just dismissive. “The hell with them,” was his considered opinion. “ Let them sink, and let’s start over.”

The other guy in the elevator started shaking his head. That was it—an economic “debate” in our times. The next think you know, AIG will be twittering us with its needs.
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AIG ALL BUT GONE (t/h Barbara Flaska)

Business Week realizes we’re not putting just pennies on a dead man’s eyes. “To the average U.S. taxpayer, the math may not sound right: After pumping in about $150 billion of federal money, American International Group posts a quarterly loss of almost $62 billion — the largest in history. And now it will have access to $30 billion in new cash from Washington.”
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Hugh Hendry, Chief Investment Officer at Eclectica, told CNBC that “AIG is really no longer with us.”

Hendry sees AIG as being in line with the others moving like specters towards the veil beyond. Hendry added, “We live in a very strange, twilight period where we pretend that a lot of these financial companies are still with us. I think the reality is they left the business last year.”

“If we had governments actually saying listen, the financial sector is insolvent, we would be on the first positive step to moving way from that situation,” Hendry said.
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The Rag Blog: Why AIG is important and How Bernanke Is Obscuring the Problem

AIG IS SUEING THE GOVERNMENT

Evidence of some life remains in response to a poke. In the midst of its negotiation with the federal government over revised terms of its bailout, AIG sued its US benefactors over a disputed $306 million in taxes (with interest and penalties), stemming from AIG’s “use of a controversial type of ‘tax arbitrage’ transaction that authorities are challenging across the world.”
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Don’t Just Worry About The Banks—Farm Belt In Peril
James Howard Kunstler

The way we produce our food has been organized at a scale that has ruinous consequences, not least its addiction to capital. Now that banking is in collapse, capital will be extremely scarce. Nobody in the cities reads farm news, or listens to farm reports on the radio. Guess what, though: we are entering the planting season. It will be interesting to learn how many farmers “out there” in the Cheez Doodle belt are not able to secure loans for this year’s crop.

My guess is that the disorder in agriculture will be pretty severe this year, especially since some of the world’s most productive places — California, northern China, Argentina, the Australian grain belt — are caught in extremes of drought on top of capital shortages. If the US government is going to try to make remedial policy for anything, it better start with agriculture, to promote local, smaller-scaled farming using methods that are much less dependent on oil byproducts and capital injections.
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CAN THE FDIC RESCUE OUR BANK? ONLY 19 Billion Backs 48 Trillion

“FDIC argues that bank failures will only cost the DIF $65 billion over the next five years. In reality, bank failures have cost us far more than that already. TARP and the Fed’s various lending arrangments are backdoor methods meant to rescue banks that would otherwise have to be rescued by FDIC via the front door.'’
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Eric Falkenstein comments on Seeking Alpha

A major difference between banks, and nonbanks, is the inherent susceptibility towards runs. No bank can withstand a run, which is a major reason why we have Central Banks to act as Lenders of Last resort. The key is simply that a bank is a way to intermediate between savers and investors. Most investments take a year, or 5 years, to generate any return. If you sell them before completed, you will usually sell them at a loss irrespective of their worth. Most savers want the ability to retrieve all of their money instantly, in case they need to pay for some emergency.

The solution to this problem, is to rely on the statistics that imply most people will not want all their money right away at the same time. Indeed, with deposit insurance, there are few consumer runs on banks as happened in the 1930s and before. But most banks and large complex financial institutions have lots of short term debt that rolls over, and if a sufficient number of investors do not roll over their debt, the bank either has to issue long term debt, or liquidate their assets. In times like 2008, both scenarios were inconsistent with viability. Thus, a problem today is that we have no idea what the assets of a bank are really worth, because the information provided by banks does not allow someone outside to know the proportion of mortgages they hold
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SCHOOLS SEE UNCANNY SPIKE IN NUMBER OF HOMELESS CHILDREN
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PROS SAY U.S. RECESSION LOOKS ENDLESS
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DEPARTMENT OF MISSING VIDEOS

The Justice Department revealed today that 98 torture tapes have disappeared. The Bush Administration had first insisted there were no videos,. Then they admitted there were two. And now, that number has skyrocketed to 98.

AP Report: WASHINGTON – A newly released Bush administration legal memo from 2002 claimed that the president has an unfettered right to transfer suspected terrorists to other governments without regard for whether they would be subject to torture.

The memo appears to underpin the Bush administration’s use of extraordinary rendition, a secret program of moving terror detainees to nations where they were imprisoned and, in some cases, reportedly tortured.

The document is one of nine made public Monday detailing the Bush administration’s expansive definition of presidential power.