Editorial

This is ridiculous and anyone who believes it deserves to eat The White House Dog's used food:

The administration's blog post argued that Clunkers helped to lower auto prices on the rest of the vehicle market as well, a fact the administration said Edmunds ignored.

What a total load of crap.

First, I personally walked into dealerships during the "CFC" program time, and every single one of those dealers was literally screwing everyone who walked into the door.

Normally, you can buy an American car for $100 or so over invoice price.  I have, in fact, not purchased one vehicle for more since I started buying cars!  My last "new" American vehicle, a 2002 Suburban, was bought during the 0% "craze" following 9/11 and even with the 0% financing I bought it for $1,000 UNDER factory invoice.  I saw no dealer willing to sell at anything approaching that number this time - they were all selling at full sticker, and two had their own "supplemental rip-off stickers" on the windows that they refused to negotiate on yet were full of junk (the usual "undercoating" and "fabric protection" for $250 garbage.)  People literally got robbed to the tune of $2,000, $3,000 and sometimes more than the rebate was worth on these so-called "deals."

Second, this "program" destroyed the low end resale market.  It literally took all those cars and crushed them!  If you were in the market for such a clunker as the only car you could afford they all disappeared for the duration of that program.  This did severe damage to sections of the used-car market and the consumers dependent on it.

This program was nothing other than a royal screwing of the American Consumer and a sop to the UAW, and that's a fact.  Edmunds got this exactly right and the White House is pissed off that they got called on their incessant lies by a very influential auto industry publication.

Well, boo-freaking-hoo Barry.

In a piece in The Dallas Observer, James Lieber opines:

Where did our wealth go? How do we claw it back? And when are we going to punish the culprits?

Heh, my refrain being sounded in the "mainstream media": Where are the cops?

He also calls out President Obama and the usual litany of campaign lies, including:

The Obama video portrayed John McCain as Keating's stooge and likened the S&L crash to the 2008 Wall Street meltdown, except that the current crisis is global and its bad guys are bigger and badder. Today's corporate villains were flashed on the screen, among them AIG, Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac. The opening narrator was Bill Black, a Ph.D. criminologist and former lead lawyer at the Office of Thrift Supervision who helped steer the brilliant federal effort that cleaned up the S&L industry and won more than 1,000 felony convictions of senior insiders while recovering millions of their ill-gotten dollars.

Those watching the compelling attack ad (still online) had every reason to believe that Obama's approach would be just as hard-edged and that felon-busting G-men would rout the crooks and recover our money.

This was not to be.

Yep.  In point of fact President Obama immediately post-election installed people who were personally responsible for the mess and were either complicit in or blind to the looting that happened during President Bush's Presidency, including Geithner, Shapiro, Summers and more.

Of course the looting has continued since, and in fact has picked up pace, since the "honest buck" is rather hard to make in a lending environment with no qualified and willing borrowers!

We've also got this:

So, where is the justice in the current crisis? Why have there been so few prosecutions and only feeble attempts, at best, to claw the money back? One reason may be that, in such infamous cases as the Lehman Brothers collapse and Bank of America's absorption of Merrill Lynch, the Fed and the Treasury were intimately involved with the financial elite's deal making at the time. It's difficult to prosecute others for securities fraud if you condoned the deals to begin with.

Ah, recognition of reality!  In the mainstream press no less.  Congratulations.  Better late than never!

More important, the nation's new top prosecutor, U.S. Attorney General Eric Holder, has a history of preferring that deviant corporations be held to no more than a "voluntary cooperation" system in which they investigate themselves privately.

Under the "Holder Memo," which he wrote in 1999 as deputy attorney general in the Clinton administration, bad-boy executives and their corporations who turn over evidence to the government qualify for lenient sentences and fines and, sometimes, for settlements without even indictments. The consequences of their crimes often amount to only the cost of doing business.

Oh, it gets better....

Black vents particular ire at Tim Geithner, who, as New York Fed chair, fiddled while Wall Street imploded; Henry Paulson (and Geithner again), who, as Treasury secretaries, refused to enforce a key banking law; and Alan Greenspan and Ben Bernanke, who, as Fed chairs, were supposed to regulate banks, especially the renegade mortgage units. The two Fed chairs closed their eyes to excess and continued to blow easy money into the bubble.

The key statute that the Treasury flouted under Paulson and Geithner is the Prompt Corrective Action (PCA) law. Congress passed it in the wake of the S&L scandal in 1991, and the first President Bush signed it. It's probably the best, fairest and clearest piece of financial legislation since the New Deal.

.....

The message from the Bush administration was clear: The PCA "ceased to be applied to the big boys," says Camden Fine, president of the Independent Community Bankers of America.

Gee, what's The Ticker been talking about for the last two+ years?

He continues....

Eventually, it became clear that "nothing was happening to the big banks, and everyone knew they were sliding south," Fine says. When four majors—Wachovia, National City, Bank of America and Citigroup—became critically undercapitalized, Fine went to FDIC Chairwoman Sheila Bair to ask why they weren't being subjected to the PCA law, which could have resulted in replacing their executives or even breaking them up. Fine likes Bair, who has a populist streak of her own and whom he finds to be a candid, "hard-as-nails regulator." But he says she "basically gave a non-response": that there were complicated issues and that, perhaps, if she had a free hand, action would be taken. "She was very sympathetic," he says, but what he gathered was that there "was great resistance from the political community."

It is called "regulatory capture" and it is what happens when you have NAKED BRIBES called "campaign contributions" and "lobbying" in Washington DC.

Yet this is exactly what we have had over the last twenty years in this country.  Justice?  Where?  Fair play?  Where?  Honesty?  Where?  No, what you have instead is a monstrous snake pit that occasionally spits out one or two vipers that are "sacrificed" to appease the masses.

The Dallas Observer gets the naked credit default swap issue right too:

Geithner told Congress that the government was "blindsided" last year by the explosive risk of the derivatives market, but can regulate it now. That's wrong on both counts. Everyone in Washington knew or should have known the risks in 2000, when the government stopped regarding these complicated bets as felonies and started calling them "investments." Then, as now, the main argument was that if American markets won't clear such swaps, someone else will. But two wrongs don't make a right; nor do a trillion.

Ding ding ding ding!

The danger that is being left unsaid - and unrecognized - is as I have asked repeatedly - is the government a cop or a felon?

Should the people come to the conclusion that The Government is in fact a felon - should there be no enforcement at the state level, no real move to "take back" authority vested in The Constitution, returning it to the states and to rein in the crooks, subjecting them to the just desserts for their crimes, there is a very real risk that The People will decide that there is only one way to obtain justice: through the actions of their own hand.

Lest you think this is an unrealistic view, I direct you to Mexico, where the police have become so corrupt that the people are now catching burglars and torturing them on their own.  Vigilante justice is swift, certain, and brutal.

But it is the logical and expected outcome when the people reach the breaking point.  Those who believe it "can't happen here" are deluded - it both can and will if our government does not stop condoning and in fact conspiring with the crooks that have robbed the people of this nation.  In the collapse of the 1870s there were multiple instances of bankers being pulled from their desks by angry mobs and strung up on the lamp-posts, and while I will not condone this sort of justice being meted out I can and do certainly understand it.

The States can step in and take this ball from The Federal Government in the prosecutor's arena, but whether this happens at the level of Eric Holder or in State AG offices it had better start soon.  Irrespective of claims that "the economy is improving" the facts on the ground are nowhere near that complimentary - job loss continues to accelerate, banks continue to operate that should have been shut down two years or more ago, and those who can pay are being looted to cover the debts of those who cannot.

Exactly where the breaking point of The American People lies is impossible to determine in advance, but once that point is reached it is too late to do the right thing.

Gee, who could have seen this coming?

On Monday the Federal Reserve held a major reverse repo test, as was announced by the NY Fed and by Zero Hedge. We have subsequently received several unconfirmed reports that the conducted test has been a disaster (we have calls into the Federal Reserve to confirm or deny this, we are eagerly awaiting their reply).

How do you do a reverse repo when there's no cash to tender?

Bottom line: JP Morgan/Chase appears to have only $21 billion in actual cash.  Their "Cash" position as stated on Yahoo Finance and other places includes deposits with banks and fed funds - that is, cash "equivalents" that are not actual money in their possession.

That, of course, doesn't count when The Fed wants to drain liquidity and needs to drain actual cash.

It also belies a bigger question - what is the true leverage ratio of JP Morgan/Chase, if their actual cash is only $21 billion?  Oh, that's kind of an ugly question, especially with some $700 billion in debt outstanding....

Are people really this dumb over at The Fed? 

It appears so, and begs the question - how big of a disaster are we about to undergo?

If you ever needed evidence of the rank, outrageous incompetence in our government, you need read no further than this article on GM:

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

Really?

You didn't know Steve?

What rock were you hiding under for the last two decades?

Anyone who had doubt that GM and Chrysler was entirely incompetent after the 2001 "Drive America" program with zero down financing and 125% LTVs written like candy to roll over underwater car loans has their head firmly planted somewhere that the sun has never illuminated.

The excuse-making idiocy now on display simply shocks the conscience.  The claim that allowing a bankruptcy would "destroy the Midwest" as some sort of excuse for what remains an idiotic structure is an outrage. 

Let us not forget that GMAC/Ally is again touting outsized CD returns as one of their "feature products" in a raw attempt to raise capital from depositors - backstopped not by prudent and sound lending but rather by the taxpayers!

There's dumb, there's intentionally blind, and then there's outrageous and pernicious looting of the US Taxpayer.

The entire litany of the US Automakers, all of whom (especially GM and Chrysler) should have gone bankrupt 20 years ago, is in the latter category.

I'll never buy a GM or Chrysler product again, simply because we have taken dead businesses and still, to this day, refuse to recognize what really happened nor have we held those responsible to account - including but not limited to Gettlescrewface at the UAW and the entire executive suite of GM and Chrysler.

Sorry folks, no $ale.

Have you had it with the scams, frauds, "mark to myth" and lies?

Tired of this sort of garbage - being punished for being responsible?

You may believe that your exemplary behavior shields you from unexpected credit card fees. Sadly, that is no longer the case.

You can stop it.

Yes, you.

All 330,000,000 of you.

Here's how.

Go withdraw all your money and business from the following institutions:

Bank of America
Wells Fargo/Wachovia
Citibank
JP Morgan/Chase

Those four.

Place your business with a local community bank or credit union in their place, and tell the above four institutions to "piss off."

I've resisted doing this, but the idea that banks are now going to try to penalize those who do not carry balances or pay late fees is the last straw.

This is a call for a boycott.

A call to break these institutions by destroying their deposit base and "net interest margin", one consumer at a time, as a protest against the outrageous actions these firms have taken in terms of risk and their shifting of the costs of that risk, which should have resulted in their failure and closure by The FDIC and OCC, onto the backs of their customers via outrageous fees, interest rates and costs, along with the direct subsidy being paid by all taxpayers generally.

Are not 30% credit card interest rates enough, while these four banks all can and do borrow at near-zero from The Fed and have issued debt with an FDIC guarantee (that is, funded by you)?

If that is not enough to dissuade you, how about Wells Fargo holding an unknown amount of Wachovia "off-balance sheet assets" at god-knows-what in terms of valuations - and justification for same - while cutting back HELOC lines and credit cards?

If not that, how about the practice of large banks re-ordering transactions to generate the maximum amount in overdraft fees, with the brunt of these fees and costs being born by those least able to afford it - the working class person?  Yes, I know, the banks, in response to "outrage" on Capitol Hill, recently have "agreed" to reduce the maximum number of overdraft fees they will charge, but what they didn't (voluntarily) agree to do is stop that practice entirely.  Oh, many will also allow you to overdraw your account at an ATM or debit terminal, and some will even display a "balance" at the ATM that includes uncleared funds in a puerile attempt to encourage you to do so.  That latter practice, by the way, has drawn pending legislation - a few years late, of course, and with no clawback of the ill-gotten gains (tens of billions of dollars) that have been stolen, er, "earned" over the last few years.

There is no law that says you must patronize firms that engage in practices that you find outrageous or abusive.  Indeed, it is your right and duty as an American to withdraw your consent to such practices by telling institutions such as this to go piss up a rope.

It is also your right to band together with others and persuade them to do so as well.

This is a call for all of America to do exactly that.

The "large banking industry" has effectively captured the regulatory and legislative apparatus of The United States to do their bidding, even when they screw up, instead of those costs being imposed on their shareholders and bondholders as it should be.

You have no duty to support or tolerate this, and indeed, if you ever want to see it change, you must stop providing these firms with your dollars - your deposits - and your loan business.

Wells Fargo/Wachovia
Citibank
Bank of America
JP Morgan/Chase

Tell them to go to hell and pull your business, whether it be small or large, and take that business to your local community bank or credit union.

Not only will you send a message, you'll reward those firms that provide you with quality service and a reasonable cost structure, instead of those who appear to use every opportunity to nickel and dime you to death.

These institutions, like all businesses, rely on customers in order to survive.

Deny them that business and these practices will change, or they will go out of business - as they should.