22
Jul
CONTAGION: Street Explosions and Financial Implosions
UPDATE WED JULY 25: Arrived in Syndney only to read a report that the country’s top HEDGE FUND is in serious trouble for the reasons spelled out below. Another report in the local press compares the CDO debt crisis to a “tidal wave.”
The NY Times reports today:
Top Lender Sees Mortgage Woes for ‘Good’ Risks
By VIKAS BAJAJ
Countrywide Financial, the nation’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.
The news from Countrywide, widely seen as a bellwether for the mortgage market, initiated a sell-off in the stock market, which is at its most volatile in more than a year. The Standard & Poor’s 500-stock index fell 30.53 points, or 2 percent, to 1,511.04, its biggest one-day drop in nearly five months. The dollar dropped to a new low against the euro, edging closer to $1.40 to 1 euro. Stocks opened sharply lower in Japan this morning.
The slumping housing market has become the biggest worry for the stock market, which just four days ago set records, because of its potential impact on the broader economy and financial system.
This crisis is clearly having a GLOBAL impact already. There is more woe to come.
Putting another CDO on the Barbie….
Posted Sunday July 22, 2007.
No regular blog today. I am off on a rare well-deserved vacation. But since I am so immersed in this credit issue because of my film IN DEBT WE TRUST, I just had to do a new piece abou the crisis and the “contagion” it is causing.
Back August 8.
“CONTAGION” COULD LEAD TO A FINANCIAL TSUNAMI
Explosions, Implosions and the Recession Around The Corner
By Danny Schechter
Mediachannel.org
Last week, there was panic in the streets of New York after a steam pipe exploded in mid-Manhattan. One person died, another is in coma, but the real fear is that asbestos belched into the air could have a deadly effect on many more people like it did at the World Trade Center in the aftermath of 911. In that event, city officials like Rudy Giuliani did not insist on protective clothing and safety rules. Thousands of rescue workers are still dying.
This time the city responded more swiftly with clean up crews in space suits. The cause of the explosion was determined to be buried beneath the surface in ageing infrastructure which only gets tended to AFTER highly visible accidents occur, rarely before. The public, initially worried about the presence of terrorists, appears to have relaxed when the culprit was identified as an old pipe.
New Yorkers are a hearty lot and the saying “shit happens” is commonplace.
Yet the real danger may not be explosions, but “implosions.” The exloding pipe could be well covered because it happened in one spot. The “implosions” I am going to tell you about are having a global impact and maybe harder to track.
The mayhem in Manhattan is actually further down the Island, in the downtown financial district where another shit storm is building steam although this one is hard for most people to decode unless they follow the business news closely and understand arcane terms like “securitization.” That describes a way in which mortgage money, often invested by poor people in subprime loans, is recycled by Wall Street firms and turned into leverage used to finance all of these buyouts we have been hearing about. They started out ripping others off but guess who is getting ripped off now?
It’s called “blowback.”
Armies of too clever by-a half money managers had been making a fortune on all of this with practices that are now being characterized as “outright fraud” by none other than President Bush’s Chairman of the Federal Reserve. Most of their wheeling and dealing flew under radar of public scrutiny with the press boostering the rise of the stock market without examining the precarious “infrastructure” under that street, also known as THE STREET.
I have been trying to blow the whistle on this scandal as have experts who know a lot more than I do. I wrote an article back in 2005 calling for better coverage of the credit and debt complex by the media. It appeared on Mediachannel and in Nieman Reports, a journalism magazine read by top editors. The reaction was minimal. Sure there been a slew of stories on consumer fraud and identity theft but not mny dissecting the process of financialization that permits big banks and Wall Street firms to dominate our economic and political system.
Progressive journalists for the most part were not paying attention either. Michael Moore’s film SICKO on the heath care crisis does touch on debt, so maybe this is changing.
I made a film too, IN DEBT WE TRUST (InDebtWeTrust.ccom) to sound the alarm but it was tough to get distribution to challenge the financial power structue when advertising by lenders and credit cards is all over the media. (We are setting up screenings and selling the DVD to promote a campaign by America for Debt Relief—see stopthesqueeze.org)
Then, as predicted but at first downplayed, the bubble began to burst. Suddenly, it was not just poor people to be blamed for being financially irresponsible—even as two million families face foreclosures of their homes— but the whole financial industry itself.
Wall Street is far more culpable than main street.
Last week, Credit Suisse, predicted a big stock market fall in 6 months because securities are overvalued. The Fed warned of l00 Billion in credit losses. The Guardian reported, “Some analysts said they feared a broader credit crunch if a collapse in confidence in the US mortgage market rippled out to other parts of the debt markets.” A NY Post article suggested that over two TRILLION dollars is at risk. Of course, all of this is speculative but as they say, when there is smoke in high places, fire can’t be far behind.
Last Saturday, the New York Times reported, “Anxiety over securities backed by risky mortgage and rising interest rates has roiled the credit market for several moths. Now the CONTAGION (caps mine) from those troubles seems to be spreading into other parts of the marketplace.”
Terms like “roiled” and “contagion” are insider words for a spreading panic Writing on Money And Markets.com, Mike Larson declares “ITS ALL HITTING THE FAN.
He says two Bear Sterns funds simply “VAPORIZED” explaining, “In plain English, here’s what happened:
“These funds invested in complicated mortgage securities
They used extensive leverage, or borrowed money, to improve returns …
Then, delinquencies and foreclosures started surging, and the value of the underlying loans and bonds tied to them began sinking fast.”
Now private equity firms which have been making monster deals built on debt are being squeezed. Much of the debt is being seen as junk. We have also learned that the agencies rating credit and debt offerings had their heads in their rear ends. They have lost credibility putting the market at more risk.
The excellent website Mi-explode.com reports that since late 2006 l00 major US Lenders have collapsed or “imploded.” The editor sums up the reasons this way: “Thank you greed; thank you delusion; thank you anti-regulation—we couldn’t have done it without you!”
The press is beginning to wake up and realize how important this is. They have been talking about the rise of the stock market as if that tells the whole story. Yes, some corporate profits are up but what’s happening down below is alarming. Note, the market fell nearly 150 points after last weeks high of 14000.
Business Week saya that the subprime crisis is spreading to other kinds of debt, and far more serious than thought writing it is “Only a surprise to those who listened exclusively to soundbite-based talking-heads belaboring “subprime” as an isolated implosion. Around here, long ago we were forwarding along data and analysis showing sharp rises in delinquencies in virtually all classes of consumer debt.”
More Contagion.
We are finally beginning to talk about real money and a real danger of the kind that terrifies bankers and the elite. They may not care about the poor, but they do about themselves! As Mike Larson suggests: “Ultimately, losses on subprime mortgage bonds alone may total as much as $90 billion, according to one estimate. Losses on collateralized debt obligations (CDOs), investment vehicles created from slices of various mortgage-backed securities and asset-backed securities, may total billions more.”
In an interdependent interlaced economy, a problem in one sector quickly ripples elsewhere just like the South East Asian financial crisis ten years ago. It’s like cancer, not easily checked or maybe a virus that’s not easily stopped.
I went to a dinner party last week and met a credit expert who works at one of Wall Street’s top investment firms. He acknowledged to me that the people shoveling out those subprime loans KNEW many of the borrowers couldn’t afford to pay back.
I asked: “So what happened to due diligence?” one of the “market disciplines” that these bankers are always preaching?
He shrugged, indicating that there was so much to be made that normal safeguards and standards were pushed to the side or forgotten. He says there are many investigations underway right now.
We can’t allow them to investigate themselves.
Where are the TV series on this pernicious corporate crime? Where are the investigative reporters showing how this is connected to government policies in the so-called “ownership society?” Where are the Democrats and their candidates on these issues? And where is the progressive community?
It is clearly time for our political and social movements to engage on this problem that is causing so much economic pain and revealing the gangsterism at the heart of the economy.
As Rick Perlstein explained on TomPaine.com, this problem is an issue and a movement for economic justice just waiting to happen. Once you look into it in depth, “You’ll find out how the’ foreclosure crisis spun of short-sighted Republicans’ political greed can spur a new (old) progressive politics of homeownership that could someday save the world..”
What are we waiting for?
News Dissector Danny Schechter edits Mediachnnel.org. He directed IN DEBTWE TRUST (InDebtWeTrust.com) Comments to dissector@mediachnnel.org. Please help organize screeinings in your town or community.
LETTER RE HAIRSPRAY:
spelled Buddy’s name wrong (!), she made some great points. Thought you’d want to
know that at age 14, in the summer of 1960, after finally passing one of many
auditions, I was selected to be a member of The Buddy Deane Committee. And that to
a skinny Jewish girl who loved to dance, and who took a great socio-cultural leap to
mix it up on TV with (white) kids from all over the city, Buddy was, and is
remembered as, a good guy. So, there’s another, pre-1963 “back story” to it all,
one that innocently ignores race but is greatly informed by class. Being part of it
was a defining life experience for me. Just wanted to share that with you, old
friend. Please let me know that you’ve received this.
All best,
Diane
PS: I love John Waters but have never seen any versions of Hairspray and don’t
intend to; I can’t stand seeing powerful stuff trivialized. Especially when bad
Baltimore accents are involved!
COULDN’T IGNORE THIS ON THE REJECTION OF CONDI
From an artice by Joel Brinkley ex-NYT in the SF Chronicle (via M Petrelis)
A few months ago, she decided to write an opinion piece about Lebanon. She enlisted John Chambers, chief executive officer of Cisco Systems as a co-author, and they wrote about public/private partnerships and how they might be of use in rebuilding Lebanon after last summer’s war. No one would publish it.
Think about that. Every one of the major newspapers approached refused to publish an essay by the secretary of state. Price Floyd, who was the State Department’s director of media affairs until recently, recalls that it was sent to the Wall Street Journal, the New York Times and perhaps other papers before the department finally tried a foreign publication, the Financial Times of London, which also turned it down.
As a last-ditch strategy, the State Department briefly considered translating the article into Arabic and trying a Lebanese paper. But finally they just gave up. “I kept hearing the same thing: ‘There’s no news in this.’ ” Floyd said. The piece, he said, was littered with glowing references to President Bush’s wise leadership. “It read like a campaign document.”
So I guess we are not the only ones who have problems with The Media. (Ha,Ha)
Ok, that’s it from me for now.
See youse guys later, mate.
Danny
Hey, Danny. Thought I heard your name on NPR:
http://www.npr.org/templates/story/story.php?storyId=12110868
If I recall, you’ve a guest spot in Interview with Buscemi?
Cathy from IC, Ithaca, New York
PS: got a copy of In Debt we Trust for the library.
July 23rd, 2007 at 2:01 pmRE: the Connecticuit Family that was murdered……When do we found out when the Police 1. found out that the family was being held hostage, and 2. when they arrived, and 3. what their plan was to rescue the hostages?
July 26th, 2007 at 10:50 amAnd then, when do we find out why these questions have not already been asked?
Question 4. Why were these two rejects not behind bars? With “20 prior convictions”, they should have been removed from society. No one should get 20 second chances at the expense of the citizens.
July 26th, 2007 at 1:29 pmI am about to inform you of a situation that will benefit all!! NO MONEY REQUIRED!! This is a situation where your assistance is required. The health and well being of alot of children is at stake. There is a business in central Kentucky that will go out of it’s way to endanger the health of anybody’s children for their own profit. I personally know of three children who stayed sick virtually all the time because of the actions of this business. Until their parents, with the help of a few friends, were able to get them away from the situation that was, what anybody with any common sense can see, the source of their problems. Now, those three kids are in excellent health and doing very well (at this time I would like to add a “Thank You” to all the brothers and sisters of the road who added their little bit of help to these children “Ride With the Wind” my friends) now that their life is no longer in danger from the actions of this business. Yes, I have notified the local officials, the BBB, the CDC, the newspapers, tv stations, state officials, and anybody else that should be responsible for stopping a business, or at least trying to stop them, from intentionally endangering the health of anybody, child or not!! Apparently committing a felony or twelve along the way doesn’t seem to bother them at all either, nor does it bother any of the public officials, who we pay taxes to, to let them get by with whatever that business deems as beneficial to their profit margin. If those public officials disagree with that statement, then ask them why it’s allowed to happen!! One can’t argue with the facts. If they did their job, it would not be happening. I KNOW what you are thinking. It doesn’t affect my life, or you could be thinking what my ex boss told me on several occasions, “I have enough money that disease can’t affect me or my kids”, or that’s what he told me on several occasions. (I’ll tell you his name at a later date, it’s the same as a huge ford dealer in central kentucky) But remember, your kids will come into contact with other people sooner or later. Whether it be at school, the mall, family re-union, trip to the hospital, (God willing that will not happen),but sooner or later they will come into communication with someone who probally was, or will be, affected by this business, possibly spreading a sickness to them that was allowed to be spread by this business. So the next time you hear a child cough, or hear of one that is so sick, they had to go the hospital, remember you could have possibly stopped it with one phone call. NO MONEY REQUIRED!! Call this business and tell them that you don’t appreciate what they are allowed to do, or call your local politician, or the county attorney’s office, just make it a call to someone, whoever you think will make a difference, anything is better than doing nothing. Doing nothing will allow the next family, who is moving into that same situation, as you are reading this, to become the next family to have serious health problems, possibly sick enough to lose their life!! ANY business that is allowed to do these type of things for their monetary gain, should not be allowed to exist. BUT FIRST, you must know how they are getting away with this activity. In order to do this, they require the assistance of our local PVA office (so that they can illegally transfer the taxes over into your name without filing the paperwork at the county clerks office, which also allows them to take the same property back, costing you everything, and allows them to re-sell the same property they just re-gained for free, that’s a serious profit margin), someone who refuses to accept the criminal charges that should be filed against them, and the local sheriff’s office to collect the taxes they illegally transfered into your name (are you sure they haven’t already transfered something into your name, after all they are looking to make more money at your health and expense), and to make sure you give the property back without a hassle, or go to jail, or keep paying them money!! The choice could be yours, or it should be, but it isn’t, which is why you need to make ONE phone call, and then tell one person about this situation so they can make their ONE phone call. Then they can tell one person, who can make ONE phone call, and so on and on… Maybe that way this business will begin to understand that what they are doing is bad wrong (no matter what the profit margin is), not to mention “highly illegal”, as my local prosecuter’s office agreed, before they found out it was one of their friends doing this. That way, when you next see a child that is sick or in the hospital, you can think to yourself, “I tried little bro, I tried. But the public officials in charge of enforcing laws to ensure your health and safety no longer thinks as much of you as they do their money, or their profit margin.” The biker that raised me as his own, WOULD NOT allow that, come hell or high water, as he used to say!! Back then, if a child was done that way and you could have stopped it with one phone call and didn’t, well the phone would have been ripped from the wall and used to do things that would probally get some serious prison time. (if you can’t picture it in your head then don’t ask) Now let’s also keep in mind that this doesn’t just affect small children. Yes, my health has also been permantely altered because of this activity I am telling you about. But don’t worry about me my friends, as I said, I was raised by an “old school biker.” I’ll accept whatever fate the road of life has in store for me, hell I’ve already done more in the last forty years than most will experience in their entire life. Some good, some bad, that’s the way it goes, take all with a grain of salt and keep riding!! But imagine seeing this being done to child after child, family after family, day after day, dollar after dollar. I’m not against making a profit, or running a business. I try to do just that by selling motorcycle parts, but I’m not writing this to sell you parts, or anything else that will take money out of your pocket and put it into anyone else’s pocket. I’m writing this to let you know that a bro needs your phone call to change the future, and possibly the life of a child. Will it be the same human being that will help you someday when you are in a serious bind, probally!! How will they then be there for you if you are not there for them and willing to make one phone call. NO MONEY REQUIRED, remember me telling you that!! Tell them that they will fix the problem and that you are not willing to let this go on any further!! When the shit hits the fan, remember, you could have turned the fan the other way with one phone call, causing the shit to get spread where it was supposed to go instead of on the kids so they could make a higher profit. This business sells homes that have walls full of black mold and mildew, rats and other critters that live off dead animals living in and around and under the homes, water that they frequently turn on and off for repairs but refuse to admit that the clumps and brown water is not safe to drink. A business that will allow some people to provide a “safe place” for underage girls to have sex with older men for drugs or money, I guess they got bills to pay also, after all it must be too hard to get a real job like the rest of us did. I guess it’s much easier to let illegal aliens have sex with your daughter and as many of her friends that will move in, like my neighbors have been doing for some time now. A business that doesn’t care if people are allowed to drink and drive around the neighborhood, or let’s select perverts stand around with their hands down their pants while they are drinking from a brown paper bag while watching kids playing. A business where those same perverts are allowed to threaten your life when you complain about them, simply because they are willing to pay them money to look the other way, or return the favor by stealing something from the one’s that complain so that they are too busy to complain. A business where the management refuses to obey state laws regarding the upkeep and safety of the neighborhood because it cost them money, money they must use to pay off the people responsible for regulating state laws, otherwise they would have no choice but to obey state regulations governing their business. A business that will gladly enforce rules and regulations on you that no one around you has to abide by, allowing other people to do their business in your yard, whether it be with the underage girls or their drinking and doing drugs, that way they can blame it on the ones who complain using that as an excuse to threaten people and take their property and resell it to make more money. A business that will allow those same perverts to urinate, among other things, on your home and property in order to make your health and enviorment a little more unfit to live in. A business that will allow people to ignore building codes in order to save a dollar, allowing sewer smells to back up into your home. A business that promotes staff infection to be spread thru the community, every person has a minor amount of staph in the human body, it’s is required to maintain a healthy balance in the body, however when high levels of mold and mildew are breathed in to the body it causes serious sinus infections which produces lots of sinus drainage and thereby causing the levels of staph to increase, saturating the human body with staph infection, causing severe illness and sometimes when allowed to increase can cause death, that is easily spread thru contact. A business that runs a neighborhood that even the school buses refuse to drive thru, allowing dozens of kids to stand in the road blocking traffic, at risk for getting hit by traffic passing by, while waiting on the school buses. A business that can erase your ownership with another phone call to the PVA’s office, then calling the sheriff’s office to have you removed, allowing them to start the whole process over with another family who is un-aware of the process the are about to be involved in. A business that will be doing everything they can to make sure I disappear once this letter gets out, anything to silence the voice that told you what they were doing, but have no fear, I don’t!! Let them give it there best shot, they should have never threatened me, I’ve met people like this in the middle of the street many times before, if I’m gonna go then that’s the best way for me to go I beleive, probally why they haven’t been able to put me in a pine box so far, as the last three that came for me found out. If you beleive a business should be allowed to do these things to your friends, family, or anyone for that matter, then I’m sorry I wasted your time. But if your like most civil minded americans and think that this is the type of business who should be stopped and have their owners and managers locked up to face their fate, then you should make that one phone call and make america a safer place for your kids to stay alive without risking their health to a disease that was allowed for the profit of any business owner. One phone call, and by the way, don’t do like our local tv stations did and call them to ask if they were doing anything illegal, naturally they will say no, check the county records if you really want to know, check the county records in my name. I AM proof they have done these things. If your planning on just asking them if they did anything wrong then the next time you pass a jail or prison, do the same to them, ask them if they were breaking the law, if they say no then let them out, like this business is allowed to be. Dial 502-863-5656, FAX number is 502-863-4321. United States country code if your dialing from outside the states. REMEMBER!! If they say it isn’t happening, or try to blame it on someone else, I have witnesses who are willing to testify, pictures, and copies of the records from the county courthouse that proves it!!
July 28th, 2007 at 5:31 pm