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Obama’s failure to stop the projectile alien fish menace will cost him 2012

15 Jun

Allow me to be perfectly clear. The failure of Obama-appointed Asian Carp Czar to stem the rising tide of nondelicious projectile alien fish will cost him the 2012 election.

I read with alarm the recent news reports that the Asian Carp plague has not been stopped dead in its tracks since President Obama appointed John Goss in 2010 to lead a near $80 million, multi-pronged federal attack against Asian carp.

Yes, multi-pronged.

Illinois Sen. Dick Durbin bravely stated back then that “When it comes to the Asian carp threat, we are not in denial. We are not in a go-slow mode. We are in a full attack, full-speed ahead mode. We want to stop this carp from advancing.”

Yes, FULL ATTACK, FULL-SPEED AHEAD MODE. It was obvious we meant business. There would be casualties. There would be losses on all sides. But the finned threat had to be stopped, no matter how heavy the cost.

2011 Asian Carp Control Strategy Framework

The 2011 Asian Carp Control Strategy Framework cover, clearly illustrating the intimidating enemy the US faces

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Life in a Harem for the Prince of Brunei

28 May
Some Girls - My life in a Harem

Some Girls - My life in a Harem by Jillian Lauren

Today I was listening to the Howard Stern show and they had on Jillian Lauren, author of Some Girls: My Life in a Harem. This was the first time I heard of her or the book, and when I heard the premise my immediate reaction was that she was probably lying.

After listening to her story for a while it seemed to me she was not lying.  Looks like it might be an interesting read. The lifestyle described by her is one of unimaginable wealth.

The premise is basically that she was a teenager, starts getting into drugs and prostitution, then goes to a mysterious audition 0ne day. The audition turns out to be for the Prince of Brunei (I have not heard of the country either) who is worth 40 billion dollars; specifically to be his ‘guest’.

This actually entails being one of 40 or so women from around the world flown in to be in his Harem on the palace grounds. She describes lavish $100,000 shopping sprees, trips to singapore etc.  She talks of how women from the west were separated from the asian women in different compounds. A literal meat market to tickle his majesties fancy.  A recent update on the story is his Majesty apparently embezzled 9 billion from the royal treasury.

Jillian Lauren

Jillian Lauren

Corporations have free speech rights

18 May

I believe that a group of people have every right to pool their resources together to create videos, commercials, books, posters etc for their common interest. Whether they choose to do so as a corporation (like the ACLU does) or as a concerned group of citizens with a voice, the right to free speech is a sacred foundation of our constitution.

I personally feel trying to say corporations are not a person will not do anything, since the constitution allows free speech in general, not just of individuals. Or else the government could ban people from joining together to create speech. (like mothers against drunk driving). To me it seems obvious speech in general should be protected, not just from individuals. Banning speech because of its perceived negative consequences is censorship. I am wholly against censorship, especially if it is government-sponsored and especially if it is censorship of political speech.

I do agree however, that money plays far too large a role in politics. Its one of the major faults of capitalism. The needs of those with the most money is met far more than the needs of people with you know, actual needs. And usually the needs of those with money is to make more money and protect the money they have, even if it against the interest of the common man. As I have said before, I really am at a loss as to how to curtail the power of the wealthy, especially in a capitalist society like ours.

Some photos and video I took at the 2010 White House Correspondents Dinner

3 May

These are photos and video I took at the 2010 White House Correspondents Dinner in Washington, DC. We had a lot of fun. We saw alec baldwin, Ryan Seacrest, Jonas Brothers, Kal Penn (kumar), Colin Powell, Zach Galifianakis, Jimmy Falon, Jennie Sanford, Dennis Kucinich and wife.

Photos:
http://smg.photobucket.com/albums/v637/bboyneko/2010%20white%20house%20correspondents%20dinner/?albumview=slideshow

Video:


My opinion on the Citizens United v. Federal Election Commission supreme court decision

3 Mar

I agree that the Government should not restrict free speech, so have to agree with the Supreme Court decision. hear me out.

As it was written in the Chicago Tribune by Steve Chapman:

“If corporate advocacy may be forbidden as it was under the law in question, it’s not just Exxon Mobil and Citigroup that are rendered mute. Nonprofit corporations set up merely to advance goals shared by citizens, such as the American Civil Liberties Union and the National Rifle Association, also have to put a sock in it. So much for the First Amendment goal of fostering debate about public policy.”

Or as was written in Salon.com by Glenn Greenwald:

http://www.salon.com/news/opinion/glenn_greenwald/2010/01/22/citizens_united/index.html
“Either the First Amendment allows these speech restrictions or it doesn’t. In general, a law that violates the Constitution can’t be upheld because the law produces good outcomes….The First Amendment is not and never has been outcome-dependent; the Government is barred from restricting speech — especially political speech — no matter the good results that would result from the restrictions. That’s the price we pay for having the liberty of free speech.”

Basically, we all agree corporate corrupting influences on our democracy should be minimized..but the McCain–Feingold Act was not the (constitutional) way to do it. There has to be a constitutional manner to achieve the same goal without writing laws that limit free speech. Saying “you can’t air your ad in the 30-60 days before an election” is an obvious free speech muzzle, despite it’s good intentions. We need to find another way.

Another good defense of the Citizens United case:

http://uchicagolaw.typepad.com/faculty/2010/03/citizens-united-a-defense.html

“there are corporations on the side of almost all issues, especially when we remember that the ACLU, NRA, Sierra Club, AARP, Citizens United, and others are corporations too. Are those anti-corporate readers out there afraid of all of them or just some of them? If you like the ACLU and the Sierra Club, but not the NRA and the AARP, and as a consequence want to ban the speech of the former and not the latter, this is the road to totalitarianism. The Supreme Court is adamant that restrictions on speech cannot be based on content. Tolerating the speech of those we disagree with is one of our most sacred core values.”

Greece is in trouble

24 Feb

http://www.bloomberg.com/apps/news?pid=20601087&sid=auLLhrWZiKi8&pos=8

A fine mess in Greece. This could be start of a major unraveling of the Euro..the end of the unified monetary unit as it becomes painfully obvious that a currency whose value and stability relies on the fiscal management maturity and discipline of 27 different countries..all with their own governments, culture and economy, cannot stand.

On the plus side this may finally make travel to Europe affordable again as we start to see countries with enormous debt who switched to the Euro such as Spain and Portugal return to their native currencies, with extremely favorable exchange rates against the perhaps ironically more stable US Dollar.

The evil of Capitalism – George Cloutier’s example

11 Feb

https://i1.wp.com/graphics8.nytimes.com/images/2010/02/11/business/11sbiz_CA0/11sbiz_CA0-articleLarge.jpg

This article highlites the evil of Capitalism. The placement of profit above EVERYTHING. As this guy says, “Profits Aren’t Everything, They’re the Only Thing”.

http://www.nytimes.com/2010/02/11/business/smallbusiness/11sbiz.html

Here is a previous post I did on why Capitlism can be very evil:
https://carbonatoms.wordpress.com/2009/04/02/why-capitalism-sucks/

North Korea – Arirang Footage

10 Feb

http://www.vbs.tv/newsroom/vice-guide-to-north-korea-13-of-14

One of the most cool, bizarre things I have ever seen. This guy got into North Korea as a tourist and made a documentary about North Korea.

Understanding the right-wing crazy heads – why the right wing is so insane

9 Sep

https://i2.wp.com/photos-a.ak.fbcdn.net/hphotos-ak-snc1/hs250.snc1/9728_844290962067_8618897_51577728_4291738_n.jpg

I used to facepalm the birthers and other right-wing crazies and decided I’d never understand them.

And then it dawned on me, I DO understand them. I used to be a cult member, raised as a Jehovah’s Witness. I bought everything hook line and sinker and was a model JW walking the party lines, so to speak. gays are bad, gays deserve aids, god hates fags, etc.

I never actually THOUGHT about ANY of my beliefs or positions. I was told what to believe, and never questioned it. Homosexuality is from Satan, Catholics are actually worshiping Satan, only 144,000 people will go to heaven, the rest will live forever on paradise on earth. The other 6 billion humans will be killed by God. I prayed every day for God to slaughter 6 billion humans.

We used to go house to house knocking on doors, talking about which house we’d live in once God killed everyone. Seriously.

And I firmly believe the nuttiest of the right-wing are exactly like this. it’s no coincidence many are religious. They are told what to believe, what to spout, and do it. Logic does not apply. It never does when you are indoctrinated.

So i think I finally understand the nuttiness.

Why Capitalism Sucks

2 Apr
  • The capitalists generate their wealth by exploiting employees. An employee is not paid according to the true worth of his labor but according to what the employer is willing to pay him. The employer pays him less than what his labor is worth so that the employer can make a profit when he sells the produce.
  • Wealth and unequal distribution can create social problems (such as higher crime rates).
  • Government interference in markets can be skewed to benefit the wealthy. In particular, wealthy people have the financial means and incentives to influence or corrupt government officials and to lobby for favorable legislation.
  • Many people have little wealth left over after living expenses, so they can’t make it grow quickly. This further deepens the disparity between rich and poor.
  • Persistent long-term inequality of wealth undermines the motivation of the poor to improve their stance. This creates not only direct but perpetual sociological inequity.
  • Wealthy people save relatively more than poor people. Hence some economists believe that an unequal distribution of wealth undermines an economy’s mass buying power, effectively leading to lower aggregate sales, reduced wealth production, unemployment and crises.
  • Wealth is defined and judged incorrectly, in many different ways. In particular, people may attach value to things for seemingly irrational reasons (sentimental value). Some may also value spiritual development more than material wealth. Capitalism’s focus on absolute monetary value thus undermines the legitimacy of alternate paradigms.
  • The wealthy may not put their wealth to productive use. For example, they may buy land just to deny access to it to others, for personal or environmental reasons. They may buy out other companies that produce better products but are a competitor, and then sit on the product not allowing it to be released to the public.
  • When everything is done for profit, it creates immoral systems. For example, healthcare is currently for-profit. As a result insurance companies will seek whatever means possible to deny expensive care to people to maximize their profit. People who are poor can not afford health care and have a lower quality of life as a result. Many life-saving operations such as organ transplants are so expensive few can afford them and die instead.
  • The disparity between the laborer and the employer is enormous. Currently many executives earn over 500 times what their employees earn.
  • Companies can easily circumvent moral hazard of bad decisions by being ‘too big to fail’. The company is so large and employs so many people that if it were to fail the entire nations economy would plunge. The companies can use this is blackmail to the Government forcing the government to grant large bailouts. This therefore encourages exploitative and damaging investments and tactics by companies.
  • Capitalism encourages debt. Laborers are granted access to loaned money with interest, and encouraged to purchase large items they can not afford to purchase with cash like a house or a car or an education, and then enslaved to that debt for 30 years or more. By the time the debt is paid off the total money repaid is often times more than twice what was borrowed.
  • Capitalism does not care about individual people, only profit. As a result many companies try to get as much labor as possible from as few people as possible, ideally eliminating employees all together. The drive for cheaper labor to maximize profits results in labor being imported from overseas, which takes away jobs from those who live within the capitalist nation.
  • Capitalism encourages people to seek careers in whichever field generates the most income. Thus someone who would have been a promising teacher instead becomes an investment banker solely for the money. People do what pays the most, not what they love the most, or what they are naturally talented at. Vital work for social health such as teachers, social workers, librarians, are paid the least.
  • Capitalism discourages the pursuit of pure science. Funding is easy to find for profitable fields such as baldness treatment, impotence, obesity, skin care and other cosmetic issues, while funding for pure sciences such as theoretical physics, space exploration, etc are much harder to obtain.
  • Capitalism encourages people to seek to amass wealth and possessions rather than to help their fellow man or society. It breeds selfishness and discourages selflesness. There is no profit in helping those who have no means to repay you.
  • Capitalism displaces justice. The wealthy can afford more talented lawyers and buy their way out of excessive jail time or punishments. They can afford higher fines and fees. The poor can not afford good legal defense and suffer harsher sentences as a result.

15 Mind-Blowing Facts About Wealth And Inequality In America

Yes we can has

19 Jan

https://i0.wp.com/img.photobucket.com/albums/v637/bboyneko/Funny%20Images/yeswecanhas.jpg

I am headed to the inauguration tomorrow, I’ll post back afterwards how it went.

DC Lincoln Memorial Concert – Obama, U2, and a few people here and there

19 Jan

https://i1.wp.com/img.photobucket.com/albums/v637/bboyneko/crowds_lincoln_concert.jpg

here is a cellphone pic I snapped at today’s concert

Playmobile Security Checkpoint – Hilarious

14 Jan

Playmobile Security Checkpoint

https://i0.wp.com/ecx.images-amazon.com/images/I/41P26GW7ZVL._SS400_.jpg

Read the Reviews Here

I stumbled on this today, I am probably late to the game but the comments on that Amazon page are hilarious. Some gems:

After your passenger spends 4 hours getting past airport security (“I Love Freedom” T-shirt draws extra attention from security) you can have your character attend a George Bush rally from behind the 1st amendment barbed wire fencing 3 miles from Bush’s appearance where your character will be maced and beaten for being there. Then, to complete the trifecta of freedom your character can travel to the U.S.- Mexico border and help build the border fence while patrolling for hordes of brown skinned devils trying to sneak into our country and cut our grass.

I hear Playmobil is coming out with a waterboarding torture set. I think I’ll wait for that and buy them together to save on shipping.

While I’m sure your child will love this do we really want to reveal our security secrets to the terrorists? I bet al-Qaeda is training the next generation with this very product. I am saddened to learn that Playmobile hates America.

I suggest that Playmobil stamp “Arbeit Macht Frei” above the passenger portal on this item.

bush ducks and covers: matrix style

15 Dec

bush dodges shoes matrix

bush dodges shoe matrix

I made these today inspired by this:

Obama punches McCain

20 Nov

after seeing that YouTube I made this:

https://i2.wp.com/img.photobucket.com/albums/v637/bboyneko/Funny%20Images/obama_mccain_punch.gif

What the founding fathers said about guns and gun control

10 Nov

Considering the Obama administrations possible ban of assault rifles I thought I’d show some quotes:

“Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are ruined. The great object is that every man be armed. Everyone who is able may have a gun.”
– Patrick Henry

Militias, when properly formed, are in fact the people themselves and include all men capable of bearing arms.”
– Trench Coxe

“What, Sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty…. Whenever Governments mean to invade the rights and liberties of the people, they always attempt to destroy the militia, in order to raise an army upon their ruins.”
– George Mason

“To preserve liberty, it is essential that the whole body of the people always possess arms and be taught alike, especially when young, how to use them.”
– Richard Henry Lee

Those who hammer their guns into plowshares will plow for those who do not.”
– Thomas Jefferson

“The best we can help for concerning the people at large is that they be properly armed.”
– Alexander Hamilton

“What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance. Let them take arms.”
– Thomas Jefferson

Laws that forbid the carrying of arms…disarm only those who are neither inclined or determined to commit crimes. Such laws only make things worse for the assaulted and better for the assassins; they serve to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man.”
-Thomas Jefferson

Firearms stand next in importance to the Constitution itself. They are the people’s liberty teeth and keystone… the rifle and the pistol are equally indispensable… more than
99% of them by their silence indicate that they are in safe and sane hands. The very atmosphere of firearms everywhere restrains evil interference. When firearms go, all goes,we need them every hour.”
– George Washington

Not to mention the term ‘assault rifle’ when applied to civilian semi-automatic rifles is shamefully ignorant, inaccurate and misleading:
http://en.wikipedia.org/wiki/Assault_rifle

An assault rifle is a selective fire rifle or carbine firing ammunition with muzzle energies intermediate between those typical of pistol and high-powered rifle ammunition. Assault rifles are the standard small arms in most modern armies, having largely replaced or supplemented larger, more powerful battle rifles, such as the World War II-era M1 Garand and SVT-40. Examples of assault rifles include the AK-47, the M16 rifle, and the Steyr AUG.

Semi-automatic rifles, though confusingly classified in the USA as assault weapons by the now defunct 1994 Assault Weapons Ban, are not assault rifles as they are not selective fire. Belt-fed weapons or rifles with fixed magazines also do not meet the definition of an assault rifle.

It’s just incredibly ignorant and idiotic. How can a man so intelligent in so many other things be so woefully stupid when it comes to firearms? The great problem in our nation is handgun crime, not assault rifle crime. It boggles my mind.

Some great Obama victory celebrations

9 Nov

https://i2.wp.com/www.mediabistro.com/fishbowlLA/original/060922_BarackObama_Xtrawide.jpg

What would Martin Luthor King say?

6 Nov

It’s extremely ironic that on the day we elect the first black president of the United States, 70% of black voters in California voted to ban gay marriage by amending their state constitution.

gay marriage

I voted

4 Nov
BboyNeko (10:14:56 AM): i voted yay
bboy honda (10:15:04 AM): niceee
bboy honda (10:15:15 AM): how did it go?
BboyNeko (10:15:47 AM): bad, i died
BboyNeko (10:15:50 AM): got attacked by ninjas
bboy honda (10:19:39 AM): hahahhaa
bboy honda (10:19:42 AM): then who are you?
bboy honda (10:19:44 AM): ghost dan?
BboyNeko (10:20:19 AM): yeah
BboyNeko (10:20:23 AM): they have AIM in heaven

Wow McCain vs Obama dance battle

24 Oct

http://www.break.com/index/unbelievable-mccain-vs-obama-dance-off.html

this is very impressive, don’t know how they did the special effects

Obama is to Mccain

7 Oct

https://i1.wp.com/www.theage.com.au/ffximage/2008/04/03/wOBAMA_wideweb__470x347,0.jpg

IS TO

https://i1.wp.com/patdollard.com/wp-content/uploads/mccain_poor_guy.jpg

AS

https://i1.wp.com/www.egmcartech.com/wp-content/uploads/2008/05/ferrari_concept_2008_news_image003.jpg

IS TO

https://i2.wp.com/www.aohc.it/pentaxday/pday10/pd1059.jpg

Prophetic Onion article about the Bush presidency written before 9/11

7 Oct

http://www.theonion.com/content/node/28784

This was written BEFORE 9/11:

Bush: ‘Our Long National Nightmare Of Peace And Prosperity Is Finally Over’

(some choice excerpts)

WASHINGTON, DC–Mere days from assuming the presidency and closing the door on eight years of Bill Clinton, president-elect George W. Bush assured the nation in a televised address Tuesday that “our long national nightmare of peace and prosperity is finally over.”

During the 40-minute speech, Bush also promised to bring an end to the severe war drought that plagued the nation under Clinton, assuring citizens that the U.S. will engage in at least one Gulf War-level armed conflict in the next four years.

On the economic side, Bush vowed to bring back economic stagnation by implementing substantial tax cuts, which would lead to a recession, which would necessitate a tax hike, which would lead to a drop in consumer spending, which would lead to layoffs, which would deepen the recession even further.

“For years, I tirelessly preached the message that Clinton must be stopped,” conservative talk-radio host Rush Limbaugh said. “And yet, in 1996, the American public failed to heed my urgent warnings, re-electing Clinton despite the fact that the nation was prosperous and at peace under his regime. But now, thank God, that’s all done with. Once again, we will enjoy mounting debt, jingoism, nuclear paranoia, mass deficit, and a massive military build-up.”

“After eight years of relatively sane fiscal policy under the Democrats, we have reached a point where, just a few weeks ago, President Clinton said that the national debt could be paid off by as early as 2012,” Rahway, NJ, machinist and father of three Bud Crandall said. “That’s not the kind of world I want my children to grow up in.”

“Much work lies ahead of us: The gap between the rich and the poor may be wide, be there’s much more widening left to do. We must squander our nation’s hard-won budget surplus on tax breaks for the wealthiest 15 percent. And, on the foreign front, we must find an enemy and defeat it.”

Thomas Jefferson on the Economy

2 Oct

“Paper is poverty… it is only the ghost of money, and not money itself.”
Thomas Jefferson

“I sincerely believe the banking institutions having the issuing power of money, are more dangerous to liberty than standing armies.”
Thomas Jefferson

“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”
Thomas Jefferson

Timeline of the 2008 Financial Crisis

1 Oct

Here is a timeline I put together:\

  • Feb 13 2008
    • Feds give taxpayers $168 billion (stimulus package) in a desperate attempt to boost the economy
  • Feb 17 2008
    • Northern Rock goes belly up, Bank of England bails it out for $47 billion of British taxpayer money
  • Mar 16 2008
    • Bear Stearns goes belly up, J.P. Morgan Chase buys it for $1.2 billion. Feds finance this deal with taxpayer money.
  • May 2008
    • Feds infuse banks with over $260 billion in capital in an attempt to keep them afloat.
  • Sept 7 2008
    • Fannie Mae and Freddie Mac fail, are bought out by the federal government with over $200 billion of taxpayer money
  • Sept 14 2008
    • Merryl Lynch goes belly up, Bank of America buys it for $50 billion
  • Sept 15 2008

    • Single largest bankruptcy in recorded history (158 year old Lehman Brothers)
  • Sept 16 2008
    • AIG, largest insurer in the world goes bankrupt. Federal government bails it out for $85 billion of taxpayer money
  • Sept 24
    • Washington Mutual (120 year old WaMu) goes bankrupt. Single largest bank failure in US history. Talks still ongoing regarding saleof its assets.
  • Sept 29 2008
    • Single highest point drop to the stock market in recorded history, $1.2 TRILLION is lost in a single day.
    • Single Largest government bailout package in recorded history is brought for approval
    • Bradford & Bingley goes belly up, is bought out by Spanish bank Santader for £612 million.
    • Desperate US Gov increases available Term Auction Facility to $300 billion
    • Wachovia goes belly up, is purchased by CitiGroup for $2.2 Billion

The Financial Disaster 2008 – Summary of the Story so Far

29 Sep

https://i0.wp.com/i2.cdn.turner.com/cnn/2008/images/09/29/t1wide.mrkt.bail.mon.03.ap.jpg

What Happened?

What’s happened is that banks have mortgage backed securities that they had counted as assets, that they used for collateral for short term loans, as well as credit default swaps, etc. It turned out that those mortgage backed securities aren’t worth what they thought they were, so they have to retain more capital to cover the various loans and contract obligations they made. And it gets worse, because their credit rating is getting downgraded, and everytime they get downgraded, they need to hold more capital. It’s basically an inescapable spiral. They’re all so overleveraged, that as soon as their bonds get downgraded, they’re either going bankrupt or getting bought out, or both.

What this means is that these banks that are on the edge of insolvency literally cannot lend money without charging exhorbitant rates. It doesn’t matter how good your credit is, they don’t have any money to lend without tipping themselves over into insolvency. They need capital and they need it now, that’s what this bailout is supposed to accomplish. It’s supposed to give them a buffer so they can write off the bullshit Mortgages they own and get back into the business of loaning money.

The root of the problem

The problem is over leveraging, and the reason it gets to be a problem is that people put too much trust in a formula:

http://en.wikipedia.org/wiki/Black-Scholes

It’s a formula for pricing options and derivatives that allows you to balance every investment with a hedge in case something goes the other way. That’s what futures contracts and credit default swaps are about. The reason there were trillions of dollars of these out there is that they thought that everything was so carefully balanced and hedged, that no matter what happened, they’d be covered.

The problem is that when your models are based on faulty assumptions, you’ve gone so far out on a limb that you’re absolutely fucked when things go wrong. It’s what brought down LTCM a decade ago.

Say you have 100% to invest.

You want to earn as high a return as possible.

Now, you COULD loan that money out to someone for 3% interest. That’s pretty good.

But if you have really good credit and you can borrow money at say, 2%, then you can loan out 100 at 3% interest, and use that loan (which is an asset) as collateral to borrow, say $1000 at 2% interest and then loan it all out to a slightly riskier person for a 5% return — so instead of getting back $3 yearly, you’re now getting $50 yearly and have to pay $20 yearly in interest — boom, you’ve just multiplied your income by 1000%. Now, that 5% interest loan is a little bit riskier, so you kind of spread it around as 10 $100 loans instead of one big loan. But even then, you’re kind of fucked if more than 1 or two of those loans go bad — you’re still on the hook for all the money, but you’re not getting the returns to pay off the money you borrowed.

So what you do is you buy insurance from a third party for, say 1% of the loan, which pays you off in case any of those loans default. That’s basically a credit default swap. Now, with that in place, you can borrow and loan an almost unlimited amount of money nearly “risk-free”, with almost no initial capital investment.

You can see how this quickly gets out of control, particularly when you then decide to start selling insurance of your own. Now you have a bunch of banks essentially creating money out of thin air, and it’s all beautiful as long as the loans you’re making to the only actual source of wealth (ie, workers) don’t start defaulting in large numbers.

Which is what happened here. Suddenly all that free money has to be spent all at once, and *poof* it evaporates. All the money you thought you had is gone. It may not have been a problem, if they had kept a large enough cushion, but they counted all this money as ‘profit’, and kept siphoning it off into dividends and huge payments to executives/brokers, etc.

Long story short, there’s really nothing wrong with any of this as long as there are limits to how much you can leverage yourself to loan money out. People thought that hedge funds would eliminate risk, and what hedge funds do is externalize risk. Hedging eliminates your personal risk, but the risk still exists, it’s just been moved out to another company. That company then needs to hedge its risk out to another company and so on. It just expands and expands and expands until the economy literally can’t take any more risk on and then it all bursts, which is what we just saw. The economy is a closed system, you can’t remove risk entirely, ever.

https://i0.wp.com/i2.cdn.turner.com/cnn/2008/images/09/29/t1wide.mrkt.bail.mon.01.ap.jpg

What could happen next

(http://blogs.ft.com/maverecon/2008/09/those-whom-the-gods-would-destroy-they-first-make-mad/#more-312 )

The US stock market tanks. Bank shares collapse, as do the valuations of all highly leveraged financial institutions. Weaker versions of this occur in Europe, in Japan and in the emerging markets. CDS spreads for banks explode, as will those of all highly leveraged financial institutions. Credits spreads generally take on loan-shark proportions, even for reputable borrowers. Again the rest of the world will experience a slightly milder version of this. No US bank will lend to any other US bank or any other highly leveraged institution. The same will happen elsewhere. Remaining sources of external finance for banks, other than the facilities created by the central banks and the Treasuries, will dry up. Banks and other highly leveraged institutions will try to unload assets at fire-sale prices in illiquid markets. Even assets not viewed as toxic before will become unsaleable at any price.

The interaction of a growing lack of funding liquidity and increasing market illiquidity will destroy the banks’ business models. Banks will stop providing credit to households and to non-financial enterprises.Banks will collapse, both through balance sheet insolvency and through liquidity insolvency. No bank will be safe, not even the household names for whom the crisis has thus far brought more opportunities than disasters.

Other highly leveraged financial institutions collapse on a large scale. Households and non-financial businesses revert to financial autarky, among wide-spread defaults and insolvencies.Consumer demand and investment demand collapse. Unemployment shoots up. The government suspends all trading in financial stocks until further notice.

The government nationalizes all US banks and other highly leveraged financial institutions. The shareholders get nothing up front and have to wait for an eventual re-privatisation or liquidation to find out whether they are left with anything at all. Holders of bank debt get a sizeable haircut ‘up front’ on the face value of the debt and have part of the remainder converted into equity that shares the fate of the old equity.

We have the Great Depression of the 2010s.

http://www.youtube.com/watch?v=nUukDJCyqfM <— some opposition, well explained to the bailout

and here is a Very long, but excellent analysis of the current situation

My thoughts

But really, we are in uncharted territory. It’s very hard to say what will happen next.

It’s like cloning cattle..without genetic diversity one virus kills them all. We are a victim of lack of real diversity. The same weakness, reliance on mortgage-backed securities, and flawed mathematical models of guaranteed wealth will make EVERYTHING crash. The bailout will help for a very very short while, unthaw the economy for a tiny while, but our entire system of financing is broke. Hedge funds don’t hedge anything. Risk is not eliminated. Recession / depression is inevitable.

The mortgage crisis is not really the cause of this mess, but our entire system of economy (profiting from debt). All it does is encourage banks to lay more and more debt on the working class.

Workers are the only source of real income, it’s the real economy. Wall Street is this nether realm of a 2nd economy that speculates on where the real economy will go. It’s imaginary money rather than real money. If it wasn’t mortgages as a vehicle for debt, it would be something else.

And now the working class will have to pay off the speculative economies greed via probably a decade or more of indentured servitude.

Hedge funding did not shield risk at all, and just like cloning an entire herd of cows subjects them ALL to the same genetic flaws (one virus wipes them out without genetic diversity) our economy is going down the tubes by the same flaw since there never was any real diversity. Everything was spread out so thin in order to shield risk that ironically, everyone now would go down by the same risk..like dropping a single drop of poison in a glass of water the entire glass shares the drop of poison alike.

So to summarize: Predatory lending on the working class by banks fueled by an economy that like some sort of money vampire feeds off debt is the root cause of this. The bailout will only keep the banks afloat to lend to the public again in some other speculative debt-fueled economic push. It will start all over again and as always, the working class suffers.

Why do you think there was such a push to get the american people to own homes from 1938 onward? For home ownership, it is NOT because it is the wish of the Government to ensure every american gets to fulfill the american dream and own their own home. It’s because they want you to get a 300,000 loan. No one ‘buys’ a home. ‘Owning’ the home is an illusion. If you fail to pay on your home what happens? The bank takes it, because it’s their house. What you do own is an enormous loan.

Everyone gets a HUGE loan and then slowly, painfully slowly pays it off. The American economy feeds off debt. Thats the reality..thats what we all have to wake up to. Normally, someone getting a 500,000 loan to buy something when they earn, say, 60,000 combined household income would seem insane. But it was encouraged by the government because again, massive debt is what the economy thrives on.

Debt is a horrible thing to base an economy on. Keeping the public enslaved in debt to fuel the profits of the few at the top is immoral, it’s modern slavery. You are toiling in cotton fields for the master in his warm house and go to bed at night in a mud shack eating leftovers from their table as your dinner. Debt-fueld economy is nothing more than an enormous pyramid scheme, doomed to failure with only a tiny few at the top raking enormous, obscene profits.