patrick.net

kona_three, I apologize. I think i didn't get the point you were trying to make in your earlier post.
I am very skeptical on why paulson took the new job though ;-)

kona_three,

just to make sure you respect Paulson enough, as the CEO of Goldman, he couldn't have cashed out a significant amount of his shares (total $450M then market value) without raising eyebrow.

Therefore, he took the Treasury job so that he was *required by law* to cash out all his shares, tax-free. He pumped MBS sales at Goldman to clients while shorting them at the same time, making GS very profitable on these big trades.

Please do not mis-under-estimate the intelligence of our Secretary of Treasury.

kona_three :

You seem to know a lot about Paulson's butt hair. Are you his asshole or a turd that came out of it ?

But you are right. Neither WaMu nor LEH came to my door asking for my money. They simply decided to die quietly. Just like all other banks who are never going to expect a dime in help from the Govt. No bank is asking for Govt help. And even if some banks do take money from Govt, that's fine - because they are not the only ones. Lot of people/institutions steal money from Govt. Big deal. Everything is fair.

All hail King Henry ! He deserves a medal of honor - wait, let's just hand over our country to him.

OO says : Therefore, he took the Treasury job so that he was *required by law* to cash out all his shares, tax-free

excuse my ignorance but why is tax free ?? WTF is going on in this country.

This news is first uncovered by Economist a couple of years back and then caught on fire over the internet.

There is a special rule only applicable to government officials if they have to sell shares to avoid conflict of interest. Of course there would be HUGE conflict of interest of Paulson still held on to his Goldman shares not that there is none after his divestiture.

So the rule has it, if the person is required to divest due to conflict of interest, he is exempt from paying the tax arising from such sale (because obviously the government made him do so).

Here is a more detailed description of this transaction
http://www.marketwatch.com/News/Story/43xRFhd1RRlnqg1H1BkmTP4?siteid=google&dist=TNMostMailed

Economist has some quite juicy stories for the US.

It once talked about a wacky tax loophole that the super-rich enjoys so that they pay almost no tax. If you make $200K, you probably hit AMT. If you make $200K to $1M, you are probably screwed pretty hard, but once you make over a $1M, you are home free.

Somehow the tax law has it that if you make over $1M a year (which I never experienced for obvious reasons), the your capital gains tax rate reverts back to...5%. And, better still, if you make very little in normal income, your capital gains tax is 5%. Now you understand why all the CEOs are taking $1 pay? the $1 determines their capital gains tax bracket, only we the worker bees have to pay $15% to 20% capex tax, the CEOs only pay 5%. In fact, the richest people in the US make almost all their income from capital gains.

Now you understand why all the CEOs are taking $1 pay?
During the dot com bust era, the CEO at our company in an all hands said we (the worker bees) are better compensated than him since he only makes $1, he basically said we were lucky to have jobs so we should not expect any raises. What an a**hole.

excuse my ignorance but why is tax free ?? WTF is going on in this country. It is tax free to entice these people to take government posts. Otherwise, there is no incentives to work for the government (how patriotic is that).

After seeing many corrupt and lawless countries in the developing world, I'd say the difference between the US and these countries is, corruption is formalized and legalized at a much higher level, but the scale of corruption is just as rampant if not more.

Among the developed countries, the US is certainly not the beacon of light for economic and political morality, quite quite far from it, you probably need to look at Scandinavia for best practice. American politics and businesses are extremely corrupt, just that everything is packaged as a part of the "process". Political contribution by businesses can be labeled as "bribing" in the developing countries, but this is part of the political process. Funding a research report that says what you want to say could be "outright misinformation" in the developing countries, but here, we are just presenting another angle of the "scientific fact".

Developing countries are also more "primitive" in their practice of corruption, the officials and businessmen just break the laws outright. Here we are playing a much more sophisticated game, because you can actually pay to influence the law to your liking! So you don't even need to break the law to accomplish the same purpose of injustice, you can observe the law very strictly to still get away with what you want, and that is what the lawyers are for.

OO :
Thanks for all the info. It further strengthen's my belief that the system is completely rigged. Now i know why obama is always screaming that the system is rigged in favor of rich. noway i am voting for mccain.
time for making the system more fair.An unfair system san never be productive. It needs to be fair both to the rich and poor.
These republicans have raped the country for the past 8 years using thier trickle down bullshit theories.

I knew about the capital gains tax but i am surprised at how paulson got tax free $450 million. Its disgusting. no doubt , paulson is a crook.

While i am not a big fan of people who abandon thier country when its in trouble, i am still sympathetic to the retiree’s who would want to consider the option

This is all relative, just look at what transpired in the last 2 weeks. The leadership of this country is a joke, the bail-out bill is now over 400 pages with all kinds of pork in it. The government is so corrupt that it is amazing, if this is the Titanic, people should not think they can save the ship. I am not close to retirement but I have a sizable 401k, it could easily get cut in half when the USD is devalued.

OO says : Developing countries are also more “primitive” in their practice of corruption, the officials and businessmen just break the laws outright. Here we are playing a much more sophisticated game, because you can actually pay to influence the law to your liking! So you don’t even need to break the law to accomplish the same purpose of injustice, you can observe the law very strictly to still get away with what you want, and that is what the lawyers are for.

Absolutely right. Thats what i realized over time in this country.
When i first landed here, i was amazed by the apparent corruption free society.
My instincts were always saying its too good to be true as people cannot be so different in any country.My instincts were right.

3000 years ago, Confucius said, if the king doesn't act like a king, you as his subject do not need to act like his subject.

What he said was, in any country there was an implied social contract. The government (king) is supposed to look after its people, and in return, the people should respect and fight for their government (king).

However in today's America, such a social contract is broken. Obviously Bush or Cheney or Paulson or anyone of the power to be doesn't give a f*ck to us the people. Then why should we fulfill our part of the social obligation?

That is why it is completely noble and legal to look after our own interest and our own interest only, there is no abandonment, because we are abandoned at first. There is no betrayal, because we are betrayed first.

OO says : "That is why it is completely noble and legal to look after our own interest and our own interest only"

I thought thats how america and american capitalism is supposed to work irrespective of whether the govt(king) acts like a king or not.

I learnt the lesson in my company when it laid of bunch of workers and one of the top management guy told me that there are no loyalties in a bussiness contract ( employement) ...its pure business. thats the basic assumption. People who have other assumptions are fools. now i guess the same assumption holds true for the country as well. everybody is for themselves - the american mantra esp republican one. If you assume something else , you are apparently a fool.

Wow - watch whatever you can of Sherman's debate last night. He is opposed to THIS bailout and he revealed at least some of what was discussed in the closed door session. Amazing stuff.

@ TOB re: one week shutdown

I saw this from a friend who lives on Kitco, and um, I have my doubts:

1) Odd wording in the supposed closure sign quotes.
2) The last thing you do is let the mail clerks at 10,000 branches see your intention to take a holiday weeks ahead of time. No security. Can we say "Bank Run" class? Goood...

Kaptur and Sherman are heros.

The Original Bankster Says:
pics of Russia in the 80s

They seem happier and less stressed out than sheeple in the Bay Area. :-)

This is an article and a video that shows the ecological disaster associated with foreclosure:

People are literally leaving houses full of perfectly good belongings that are simply dumped in a big container and carried to the landfill.

http://kcet.org/socal/2008/09/foreclosure-alley.html

Foreclosures will someday end, and people will recover, but landfill is forever.

Presumably: Chaney, Paulson.

StuckinBA
How would you like to see this in your household:

BA Jr: Pa, it ain't Halloween yet. Why is there a head on a pitchfork in the yard.
BA : Son, you must learn this good. When something real bad happens, there's always someone to blame. And in these United States, you'll get ahead by making sure it ain't yourself. And when you find someone, skewer em' but good. Pops is just stickin' Hanky Panky Hank here.
BA Jr: OK Paw. Mrs. Johnson gave me detention yesterday and it wasn't my fault. Can give give me a pitchfork so I can stick her? Can I, Pa?

The biggest problem in this country is that everyone is looking for someone to blame. Some members of Congress are just a reflection of the deteriorating values in this country. So I did not join in the discussion in this site to debate the value of the bailout, or moan about the $3K it's supposed to cost each of us. I just hate the pitchfork at the start of this discussion. It makes me wonder when they will break out the noose and white hoods.
Anyway, I am done with this site. Disappointed, since I have followed it for a while now.

Kona_three,

I agree we should not ONLY blame Paulson. Why, the real estate agents and the rest of the REIC(tm) are primarlily to blame. The real estate agents were the foot-soldiers of greed, and the ultimate weapons of mass depression.

A housing site is certainly irrelivant in the broader context of what is now happening.
However, there ARE real bandits here. And they are still making money in THIS bailout. UP TO NOW they created and gamed a system. NOW they have moved into making us look likechumps and idiots.
Try RGE monitor.
Try Mish.
Read anything put out by Sherman.

Of course, you are free to choose your own media sources and draw your own conclusions.

But let me leave you with one last bit of housing on this housing site:

Even if the government offers fixed 5.25% loans, the market MUST return to historic levels. Buying anytime in the near future will mean this:

1. You will lose at least 20% as the market continue to correct (well, depending on where you buy). This will make you not be able to sell or move unless you want to realize that loss. This is very risky in the current job market.

2. The looming global contraction will reveal a number of businesses that could only exist in world of cheap credit. Even state governements will be under massive stress. I say this because everyone must seriously assess just how safe their emplyment is.

We are officially in the next inning...

http://biz.yahoo.com/cnnm/081003/100308_california_crisis.html

What a surprise... CA blew all of our mind-boggling property tax over the last 8 years. On what I wonder? It certainly wasn't the roads...

Over the next couple weeks, America will begin to realize that our entire government is no better off than WaMu was, or a distressed homeowner is. They just have more freedom with their accounting.

So much for "safe" government jobs.

According to C-span.org, the vote on HR-4124 is *supposed* to take place "about" 1230pm EST, meaning in 2 minutes (note that the timestamp on this blog lags by 1 hour).

kona_three :

If you are now saying that we are just a bunch of whiners who are moaning "It's someone else's fault" - then what did you really read/learn on this site for last 2-3 years ?

We have a socio-political system in this country that needs to be fixed. Instead of accepting whatever our lords throw at us, we are exercising our democratic right to express our dissatisfaction.

We have discussed ad infinitum on this site about who is to blame for the housing bubble. A bubble of this size requires participation from a large number of diverse players and we all know who they are.

The anger against Paulson is about the proposed "fix". I hate that solution, and I am doing whatever little I can do to oppose it. Someone may love that solution and is free to support it. This freedom to disagree about the correctness of the solution and motives behind it is precisely what makes this country democratic. This has nothing to do about passing the blame onto someone else.

Nobody is blaming your hero for the bubble that happened. We are outraged by his "solution" - which is going to make matters even worse IMO.

Duke,
One of my favorite sites is the PrudentBear. I am certainly not buying a house yet, and over the past year have moved more than 80% of all my assets into cash, foreign currency (not Euro, since I don't buy things that are high priced) gold, and selected convertible preferreds. I am certainly not a bull at this point.

I have no problem at all with the markets and economy correcting. Business cycles are part of the climate of a capitalist system. Selfishly, I do want to be able to pick things up for cheap(er) later on even. But I do not want to see a dislocation which would destroy the US economy. No question NAR, greedy loan brokers, etc should be swept from the system. But there are many babies in this bathwater, small businesses built up by people who work their way up rather than speculate their way up. My judgment is that this plan will not solve the downward correction, but will help prevent a massive dislocation that will not let these innocent parties the time to adjust and survive.

The Original Bankster:
The way I understand it, NO ONE who took out a mortgage, or took out a HELOC, and is unable to pay is forgiven and does not have to pay it back. Only difference is now they would owe the money to the government instead of the bank.
When this bill first came out, one of the things the DEMs wanted to add on was "mortgage relief" for the people who bought houses they could not afford. I totally disagree and wrote to Feinstein (a lot of good that does, I know) to voice my displeasure.

The biggest 'regulations", for want of a better word, wrong with this debacle is 1) people were allowed to purchase a home with no money down and 2) people are allowed under the law to walk away from their obligations with nothing more than a rap on their credit rating which counts for less these days. If I ruled this country, no one would be allowed to buy a house without 20% down, and if they walked away, I would take their stock, rip open their safe deposit box and would consider going after their mother's and grandmother's assets (kidding).

So no way am I advocating letting the dumbasses and/or speculators off the hook. If they all croaked, that would not jeopardize my world all that much. But I figure we need the banks, and good people need some credit to tide them through this mess.

Wow, I was going to joke a couple of days ago that Wells Fargo would own Citi in a year or two... Looks like Wachovia is more desirable without Citi's dead wood. Nice to see Wells (and Buffet) take the bullet instead of the FDIC (and taxpayers).

WTF is this U.S. Treasury, supplementary financing account
Nothing new here. What I posted previously: The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives. Don't worry, they'll pay it back (maybe when the underlying collateral reaches maturity :-)

I'm now convinced the drop on Monday was contrived.

263-171 ???

I'm not surprised: The rescue bill passed, and the market immediately starts DROPPING.

it was the wooden arrow tax break that put it over the edge I think.

oooo, it's dropping like a rock.

They're not even going to give American people 4 hours before they let them know they were tricked.

OK Guys

Just what "regulations" do you think either party will support?

20% min down payment on a home? No more than 20 year mortgage? These rules would put downward pressure on home prices, and politicos seem to be saying that lowering house prices is bad. Besides, for Paulson's bailout plan to allow for the recoup of tax payers money, home prices would have to increase.

Change the bankruptcy laws to allow anyone to walk away while still keeping house and car? That would cause a shutoff of loans and credit cards to the low end monthly payment crowd. Forcing people to spend only as they earn would hurt a system they believe runs on credit.

Even so, we may see some laws passed that will limit people's ability to screw themselves by taking on too much credit. Those laws, however, would soon be overturned. The laws would be written "to protect from predatory lenders" and later overturned "to allow the lower class equal access to credit." After all, what lawmaker can resist his constituents appetite for unearned riches.

I hope there is so much pork in that bill that Wall Street gets nothing more than a $1.98 ( total ) and car fare. Better yet, make 'em walk.

Wow. 263-171.

We are so screwed!