As someone often embarrassed by my own typos, I was secretly delighted to get this BREAKING NEWS ALERT from the Washington Post with a big fat typo in its headline: “Obama Signs Bill Expaning Children’s Health Care; Move is a first step toward president’s promise of universal coverage.”

I don’t care how they type it, “expaning” health care is a good thing.

OBAMA WARNS OF CATASTROPHE
MADOFF WHISTLEBLOWER TESTIFIES
FINANCIAL NEWS NOW TOP TOPIC

The rhetoric is escalating, or maybe catching up with reality as Barack Obama sounds more and more desperate in demanding that Congress pass his recovery plan. The crunch seems to be coming. The plan may have problems but no plan could be worse.

Also, the President took a whack — which of course, our media played to the hilt, from he-who-is-back-from-the-dead, Dick Cheney, warning of the dangers of a terror attack should Obama as much as deviate one iota from his oh-so-successful war on terror strategy.

Remind me, before he was whisked off to a secret location, what did he do to prevent 911? He and Bush keep saying how they kept Americans safe but never mention the number of Americans killed in Iraq and Afghanistan. Oh, well.

Meanwhile, something important:

WASHINGTON – President Barack Obama said Wednesday the recession will turn into “a catastrophe” if the economic stimulus is not passed quickly, lobbying anew for the plan as its price tag climbed above $900 billion and drew more criticism.

The president rejected several complaints about the plan, including arguments that tax cuts alone would solve the problem or that longer-term goals such as energy independence and health care reform should wait. Obama opposed such piecemeal approaches.

Instead, he argued that recalcitrant lawmakers need to get behind him, saying the American people embraced his ideas when they elected him president in November.

LATER, WED NIGHT: (AP) The Senate voted Wednesday night to give a tax break of up to $15,000 to home buyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Barack Obama’s recovery plan.

What Bill Promises To Do

MoveOn calls on members to press for its passage. This is how Noah Winer of MoveOn describes the bill’s key benefits

• Creates or saves 3 million to 4 million jobs in the next two years.

• Averts “literally hundreds of thousands of teacher layoffs”—and doubles funding for the Department of Education.

• Creates 500,000 green jobs and doubles our clean energy production.

• Immediately helps unemployed folks get affordable health insurance.

Some folks are arguing that it should be bigger, and they’re probably right, but this is the best down payment on economic recovery we have seen, and it needs to be passed.

2) The stuff that’s being singled out for criticism amounts to a tiny fraction of the bill—like anti-smoking programs that make up less than one-ten-thousandth of the spending. They would have you believe this is the centerpiece of the bill. It is not. This kind of nit-picking is pure politics.”

What is to be done asks Robert Borosage:

What will the Obama administration do with the banks that are now on life support? Pump in more taxpayers’ money to keep the zombies alive? Radical surgery? Pull the plug? The decision — with new announcements rumored for next week — is critical to any recovery plan.”

HOT RUMOR OF THE MOMENT: New banks in trouble: Sun Trust and Regent. Word on the street–they will be gone by next week.

Our Pirates and Theirs By John Feffer h/t to Susan Winstead

Here’s the plot of Pirates of the Caribbean 4. The film opens with Johnny Depp as Jack Sparrow dropping anchor in New York harbor. He descends on Wall Street with his mates and, after a quick costume change at Brooks Brothers, storms the boardrooms of Merrill Lynch, Citigroup, and other major firms. They don’t need sabers to rake in the haul. Jack’s a clever pirate. He takes advantage of the tools at hand. Applying mortgage-backed securities and collateralized debt obligations, Jack seizes billions of dollars in booty. He distributes huge bonuses to his crew for a job well done. And just before the government steps in to clean up the mess, the pirates scramble back to their ship and set sail.

Quick question: Why are more than a dozen of the world’s navies converging on Somalia to battle pirates there instead of sailing into New York to capture the Wall Street pirates? After all, CEOs benefited from $20 billion in taxpayer money using tax loopholes, according to an IPS study. Surely the global economy would be made more secure by forcing former Merrill Lynch CEO John Thain, who doled out $4 billion in executive bonuses even as his company was collapsing, to walk the gangplank than by cracking down on the bands of privateers in the Horn of Africa.

Everyone agrees, however, that the pirates of the Somali coast have raked in quite a lot of money, somewhere around $30 million in 2008. That’s more than a few pearls and pieces of eight. But compare that to the bonuses that Wall Street employees took home last year: $18.4 billion.

At least the Somali pirates were good at their jobs.

Save the Date — February 11, 2009 — What Did the Banks Do With Bailout Monies? Congress is finally asking as the Charlotte Observer reports:

Feb. 4–The chief executives of eight of the country’s largest banks, including Bank of America Corp. and Wells Fargo & Co., are being asked to detail how they spent federal bailout money at a House committee hearing next week.

The chairman of the House Financial Services Committee, Rep. Barney Frank, said he hoped the hearing would help dissipate some of the anger that average Americans feel about the government extending loans to banks through the $700 billion Troubled Asset Relief Program, or TARP.

“They’re getting a lot of money. They made a lot of mistakes. They’ve got to lean over backwards not to offend people in terms of compensation and everything else,” said Frank, a Massachusetts Democrat. The hearing, scheduled for Feb. 11, is yet another sign of problems with the government’s hasty decision to directly pump money into hundreds of banks. Though the U.S. Treasury has already doled out money to the banks that will be testifying, it can place more restrictions retroactively.

Heads of 10 bailed-out banks took home $200 million in 2007

Company proxy statements filed in the spring of 2008 show that executives at eight other banks, which collected more than $75 billion in TARP funds in recent months, also collected tens of millions of dollars in 2007. Their salaries alone didn’t reflect it, however.

• James Dimon, the chairman and chief executive of J.P. Morgan Chase, had a $1 million salary, but earned $30 million in total pay. J.P. Morgan got $10 billion from taxpayers after taking over failing investment bank Bear Stearns last year.

• John Stumpf, the president and chief executive at Wells Fargo, had a salary of $749,615, but total compensation of $12.57 million. A Wall Street Journal analysis put the total figure at $13.3 million. Wells Fargo has received $25 billion in TARP money.

• Lloyd Blankfein, the chairman and chief executive of Goldman Sachs, received a $600,000 salary, but collected total compensation of $70.3 million, according to the company - $68.8 million according to the Journal’s analysis. Goldman also has received $10 billion from the government.

• John Mack, the chairman and chief executive of Morgan Stanley, was paid $800,000 in salary and $1.6 million in total compensation. A year later, the company received $10 billion from TARP.

• James Rohr, the chief executive of the Pittsburgh-based PNC Financial Services Group (a beneficiary of $7.5 billion from TARP), received $950,000 in salary, but $18.45 million in total compensation, according to the company.

• Richard Davis, the chief executive of Minneapolis-based U.S. Bancorp (a $6.6 billion TARP recipient), had an $850,032 salary and $4.3 million in total compensation. The Journal put compensation at $7.3 million.

• Richard Fairbank, the chief executive of Richmond, Va., bank Capital One Financial, which got $3.6 billion from the government, had total compensation ranging from the Journal’s estimate of $17 million to the company’s figure of $20.4 million. No salary was listed in company disclosure forms.

• James Wells III, the chief executive of Atlanta-based SunTrust Banks [rumored to be gone by nest week], earned $1 million in salary, but his total compensation ranged from the company’s estimate of $3.4 million to the Journal’s $6.35 million. Suntrust has received $3.5 billion from TARP.

boingboing.net calculates: Bailout costs more than Marshall Plan, Louisiana Purchase, moonshot, S&L bailout, Korean War, New Deal, Iraq war, Vietnam war, and NASA’s lifetime budget — *combined*!

Crunching the inflation adjusted numbers, we find the bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

More Implosions, Depression A Possibility

As of today 328 major lending operations have IMPLODED, and the D word is finally coming out of the closet: The Times of London reports:

(British Prime Minister) Gordon Brown appeared to acknowledge for the first time today that the world economy was heading for a 1930s-style “depression.” Mr. Brown stumbled slightly over his words at Commons question time, just a week after admitting that Britain was facing a “deep” recession.”’

I was sent a report on Global Risks distributed at the World Economic Forum in Davos. It is sobering, saying the credit crisis is now of “Systemic proportions.”

It cites a number of factors that put the global economy at risk including:

1. Deteriorating fiscal positions in The US, UK, France, Italy, Spain and Australia.

2 Significant reduction in China’ s growth

3. Continued depreciation of asset prices.

4. Deflation replacing inflation as key concern.

MADOFF WHISTLEBLOWER FEARED FOR HIS LIFE

AP: WASHINGTON – The man who waged a decade-long campaign to alert regulators to problems in the operations of fallen money manager Bernard Madoff told Congress Wednesday that he had feared for his physical safety.

Harry Markopolos also assailed the Securities and Exchange Commission in his first appearance before lawmakers. The SEC failed to act despite receiving credible allegations of fraud from Markopolos about Madoff’s operations over a decade.

Because of the agency’s inaction, “I became fearful for the safety of my family,” Markopolos said at the hearing of a House Financial Services subcommittee.

“The SEC is … captive to the industry it regulates and is afraid” to bring big cases against prominent individuals, Markopolos asserted. The agency “roars like a lion and bites like a flea” and “is busy protecting the big financial predators from investors,” he said.

RELATED: Investment News on the SEC Response (sic):

At one point during the hearing, SEC acting general counsel Andrew Vollmer claimed executive privilege in declining to answer some questions.

Subcommittee chairman Paul Kanjorski, D-Pa., asked Mr. Vollmer if he had obtained executive privilege from the U.S. attorney general.

“No … this is the position of the agency,” Mr. Vollmer said.

Did the SEC instruct him not to respond to questions? Mr. Kanjorski asked.

The commission supports this position, Mr. Vollmer said, but “the answer is no.”

Mr. Kanjorski asked if Mr. Vollmer was asserting executive privilege on his own.

“No, I wouldn’t say that,” Mr. Vollmer said.

SEC spokesman John Heine did not have an immediate response.A Massachusetts law school dean that lost money invested with swindler Bernard Madoff said that the Securities and Exchange Commission (SEC) was “willfully, horribly negligent” in failing to monitor his operation.

Lawrence Velvel, dean of the Massachusetts School of Law at Andover, said, “The SEC’s incredible willful negligence” to not seriously investigate Madoff’s operations despite repeated red flags and written warnings of his criminality probably makes the agency liable to legal action by aggrieved investors. The SEC, he said, “has no discretion—none—to fail to follow up, with serious investigations, when presented with knowledgeable, detailed, obviously highly competent, and in many respects easily ‘checkable’ allegations of…a huge fraud that is fooling thousands of people, stealing billions of dollars, and causing horrible injustice.”

Equally bad, says Velvel, the SEC was responsible for a lot of people being sucked into Madoff in the first place, because in 1992 it publicly announced that there was no fraud.

• Dana Milbank: Madoff Private Eye Has the Action — Now All He Needs Are the Lights and the Camera

SUB-CRIME SCANDAL

The truth is suddenly coming out. I am vindicated and disgusted that it has taken this long. This is not me blowing my own horn here because what I have been reporting and raving about is not some secret I unearthed but information which was out there for all to see.

I just came across this letter from a young man who was a master mortgage fraudster and now wants to help agencies stop fraud. His name is Christopher Jared Warren and he has written a confession as part of a resume, which has been published on the Housing Doom website. It describes his work for a financial services agency:

“AFG would partner with developers and buy real estate at 50 cents on the dollar, then sell it to his “financial consulting” members for 80 cents on the dollar, we’d appraise the properties at 100 cents on the dollar artificially inflate the purchase prices so the loans were at 80 AFG would credit back the down and the closing costs. AFG would net 25 points per closing and promise the buyers they would cover the mortgage payment, property management and even buy them free life insurance policy if they bought enough houses. This is what you call a classic ponzi scheme because it requires exponential growth to continue. Words I never knew or understood prior to my experience there. Even in that volatile and crunching down market, fraud was still easy to execute. Another $44m funded while I managed the firm, until I got kicked out for starting my own title and escrow company.

The complete operation was highly illegal and a form of a ponzi scheme. Still, I had no problems or resistance in getting close to fifty million in mortgages purchased and closed. Loomis Wealth and AFG Holdings ended up getting indicted by the Department of Justice after extensive investigation by the FBI and the IRS. There is currently an investigation into my role with this firm and likely I myself will be indicted.

Built a fraudster by my trainers in corporate America. Mastered the fraud. Trained others in the fraud. Paid by the fraud. Mastered mortgage banking, escrow, real estate. Every scam possible: fraud for profit, fraud to fund loans for the under-qualified, fraud of evasion of taxes, reverse flipping, flipping, false liens, software manipulation.

And it utterly disgusts me. Looking back at the life I have led, I beg a higher power for forgiveness. For mercy.” Read his 7-page letter.

WORLDWIDE ECONOMIC PROTESTS SPREAD — Why Aren’t We?

Americans are rightfully angry about the economic decline, but with a few small exceptions, quietly so. Why? It depends on whom you ask. Explosive anger is spilling out onto the streets of Europe. The meltdown of the global economy is igniting massive social unrest in a region that has long been a symbol of political stability and social cohesion. It’s not a new trend: A wave of upheaval is spreading from the poorer countries on the periphery of the global economy to the prosperous core. READ FULL STORY HERE

WAPO: Deluge Is Holding Up Benefits to Unemployed By Chris L. Jenkins

Thousands of people in the Washington area and hundreds of thousands more across the country are waiting longer than they should for unemployment benefits at a time when they need the money the most because rising joblessness is overwhelming claims offices, records show.

RELATED: Where does your state rank?

Americans everywhere are feeling the recession’s pain – some more than others. Interactive map listing unemployment, foreclosures and budget deficits.