10.23.2008

Greenspan: "once-in-a-century credit tsunami"

Greenspan Concedes to `Flaw' in His Market Ideology

Excerpt:

Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.

Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.

``Greenspan is finally taking some responsibility for his actions,'' said Paul Kasriel, director of economic research at Northern Trust Co. in Chicago and a former Fed official. ``The damage has been done. His reputation has definitely been tarnished.''

Greenspan, responding to questions, said only ``onerous'' regulation would have prevented the financial crisis. Stifling rules would have suppressed growth and hurt Americans' standards of living, he said.


Comment: Goes on to say he is not infallible or omniscient. That's good to know!

Roomba



Comment: Surprise gift for my wife (she doesn't read my blog!). I'm pretty sure she will like this more than the circular saw I bought her one year!

Won't read this in the Washington Post!

Would the Last Honest Reporter Please Turn On the Lights?

Excerpt:

These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was ... the Democratic Party. The party that tried to prevent it was ... the Republican Party.

Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie. Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout!

What? It's not the liar, but the victims of the lie who are to blame?

Now let's follow the money ... right to the presidential candidate who is the number-two recipient of campaign contributions from Fannie Mae.

And after Freddie Raines, the CEO of Fannie Mae who made $90 million while running it into the ground, was fired for his incompetence, one presidential candidate's campaign actually consulted him for advice on housing.

If that presidential candidate had been John McCain, you would have called it a major scandal and we would be getting stories in your paper every day about how incompetent and corrupt he was.

But instead, that candidate was Barack Obama, and so you have buried this story, and when the McCain campaign dared to call Raines an "adviser" to the Obama campaign — because that campaign had sought his advice — you actually let Obama's people get away with accusing McCain of lying, merely because Raines wasn't listed as an official adviser to the Obama campaign.

...

a Congress-caused crisis, beginning during the Clinton administration


Comment: What the paper that broke Watergate won't tell you! Nor will the NYTimes, the Star Tribune ... etc.

10.22.2008

Followup: Here's the reason why!

Wachovia Reports $23.9 Billion Loss for Third Quarter

Excerpt:

The loss totaled $11.18 per share, and stemmed mostly from an $18.7 billion write-down of good will because asset values declined, as well as a big increase in reservesfor soured loans. Wachovia has lost $33 billion in the last two quarters.

Excluding items, Wachovia said the loss was $4.76 billion, or $2.23 per share. Analysts on average expected a loss of 27 cents per share, according to Reuters Estimates.


Comment: Followup to Wells Fargo didn't pay anything for Wachovia

10.21.2008

Wells Fargo didn't pay anything for Wachovia

Why Wells Fargo Really Wanted Wachovia

Excerpt:

Why was Wells Fargo so eager to ante up a deal that was leaps and bounds sweeter than Citi was willing to pay? After all, Wells Fargo has a stellar reputation of keeping underwriting standards in check, so why would it want anything to do with a shoddy bank drowning in subprime mortgages?

Taxes. It was all about the taxes.

The day after Citigroup made its bid, the Treasury changed a tax rule that lets banks accelerate the losses and writedowns on banks they acquire against their own net income, offsetting the charges as tax write-offs.

Wells plans on writing off some $74 billion of Wachovia's $498 billion loan portfolio -- an insanely large amount that reflects just how poisoned Wachovia's books really were. With the new tax rules, it gets to use all of that $74 billion as a charge against its own net income, which means one thing: Wells Fargo's going to be a tax-write-off machine for years to come.

Just how much will it save? The Wall Street Journal, citing an independent tax analyst, estimates Wells Fargo could reap a tax savings of about $19.4 billion. To put that in perspective, the 0.1991 shares of its own stock Wells Fargo is offering Wachovia comes out to around $6.24 per share, or roughly $13.8 billion. Yes, Wells Fargo gets a $19.4 billion tax break for a company it'll pay just under $14 billion for (if the deal closed today).

In other words, Wells Fargo didn't pay anything for Wachovia: The IRS paid it more than $5 billion to take it. Who ever said you have to fear the taxman?

A couple implications of this: One, it's a good thing that at least some benefits are granted to companies willing to buy failed banks. After all, had Wells Fargo not stepped up to the plate, the existing deal with Citigroup could have stuck taxpayers with tens of billions of dollars in losses.


Comment: Interesting Perspective

"Danger Zone" Yaris



Toyota Yaris flies into the danger zone, drives off aircraft carrier

Excerpt:

Toyota is hitting the boob tube hard to advertise its sub-compact Yaris, and the Japanese automaker has found its funny bone in these newest spots. The overall theme of the new campaign is that the Yaris is clever enough to do "almost anything" by demonstrating the few things this little three-door can't. One commercial ... puts the Yaris on the deck of an aircraft carrier where it attempts to take off after getting the OK from flight control. As you might have guessed, the Yaris can't fly, so the Little hatch goes overbooard into the drink


Comment: My Mother has a 4 door Yaris. It is a cute, reliable car. I wouldn't want to drive it hundreds of miles, but around town (when we visited her in Dallas) it is functional and gets great gasoline mileage.

Barney Frank: Plenty of rich people that we can tax



Comment: I personally am not opposed to taxes. I pay them. My little part helps fund government. I get that. What pains me is that neither party is concerned about paring down government ... making it more efficient ... less wasteful.

Botnets


Beware the Digital Zombies

Excerpt:

Botnets remain an Internet scourge. Active zombie networks created by a growing criminal underground peaked last month at more than half a million computers, according to shadowserver.org, an organization that tracks botnets. Even though security experts have diminished the botnets to about 300,000 computers, that is still twice the number detected a year ago.

The actual numbers may be far larger; Microsoft investigators, who say they are tracking about 1,000 botnets at any given time, say the largest network still controls several million PCs.

“The mean time to infection is less than five minutes,” said Richie Lai, who is part of Microsoft’s Internet Safety Enforcement Team, a group of about 20 researchers and investigators. The team is tackling a menace that in the last five years has grown from a computer hacker pastime to a dark business that is threatening the commercial viability of the Internet.

Any computer connected to the Internet can be vulnerable. Computer security executives recommend that PC owners run a variety of commercial malware detection programs, like Microsoft’s Malicious Software Removal Tool, to find infections of their computers. They should also protect the PCs behind a firewall and install security patches for operating systems and applications.

Even these steps are not a sure thing. Last week Secunia, a computer security firm, said it had tested a dozen leading PC security suites and found that the best one detected only 64 out of 300 software vulnerabilities that make it possible to install malware on a computer.

Botnet attacks now come with their own antivirus software, permitting the programs to take over a computer and then effectively remove other malware competitors. Mr. Campana said the Microsoft investigators were amazed recently to find a botnet that turned on the Microsoft Windows Update feature after taking over a computer, to defend its host from an invasion of competing infections.


Comment: Image (which I think is very cool) is from Advanced Productivity Computing. Notice how Macs, Unix, and Linux are not mentioned! Only Microsoft! That should tell you something!

10.20.2008

The sham of airport security

MSP OKs passenger with fake pass, Bin Laden shirt

Excerpt:

A first-class Twin Cities traveler was allowed to board a Northwest Airlines flight to the nation's capital this summer with a fake boarding pass, no photo identification and wearing an Osama bin Laden T-shirt under his coat as part of a test of airport security in this post-9/11 world.

The breach of security, assisted by longtime airport security critic Bruce Schneier, is outlined in a first-person account in the November issue of Atlantic magazine. The article was written to illustrate that the federal Transportation Security Administration "represents an egregious waste of tax dollars," author Jeffrey Goldberg wrote.


The Things He Carried

Excerpts:

He had made these boarding passes in his sophisticated underground forgery works, which consists of a Sony Vaio laptop and an HP LaserJet printer, in order to prove that the Transportation Security Administration, which is meant to protect American aviation from al-Qaeda, represents an egregious waste of tax dollars, dollars that could otherwise be used to catch terrorists before they arrive at the Minneapolis–St. Paul International Airport, by which time it is, generally speaking, too late.

...

As we stood at an airport Starbucks, Schnei­er spread before me a batch of fabricated boarding passes for Northwest Airlines flight 1714, scheduled to depart at 2:20 p.m. and arrive at Reagan National at 5:47 p.m. He had taken the liberty of upgrading us to first class, and had even granted me “Platinum/Elite Plus” status, which was gracious of him. This status would allow us to skip the ranks of hoi-polloi flyers and join the expedited line, which is my preference, because those knotty, teeming security lines are the most dangerous places in airports: terrorists could paralyze U.S. aviation merely by detonating a bomb at any security checkpoint, all of which are, of course, entirely unsecured. (I once asked Michael Chertoff, the secretary of Homeland Security, about this. “We actually ultimately do have a vision of trying to move the security checkpoint away from the gate, deeper into the airport itself, but there’s always going to be some place that people congregate. So if you’re asking me, is there any way to protect against a person taking a bomb into a crowded location and blowing it up, the answer is no.”)

Schnei­er and I walked to the security checkpoint. “Counter­terrorism in the airport is a show designed to make people feel better,” he said. “Only two things have made flying safer: the reinforcement of cockpit doors, and the fact that passengers know now to resist hijackers.” This assumes, of course, that al-Qaeda will target airplanes for hijacking, or target aviation at all. “We defend against what the terrorists did last week,” Schnei­er said. He believes that the country would be just as safe as it is today if airport security were rolled back to pre-9/11 levels. “Spend the rest of your money on intelligence, investigations, and emergency response.”

Schnei­er and I joined the line with our ersatz boarding passes. “Technically we could get arrested for this,” he said, but we judged the risk to be acceptable. We handed our boarding passes and IDs to the security officer, who inspected our driver’s licenses through a loupe, one of those magnifying-glass devices jewelers use for minute examinations of fine detail. This was the moment of maximum peril, not because the boarding passes were flawed, but because the TSA now trains its officers in the science of behavior detection. The SPOT program—“Screening of Passengers by Observation Techniques”—was based in part on the work of a psychologist who believes that involuntary facial-muscle movements, including the most fleeting “micro-expressions,” can betray lying or criminality. The training program for behavior-detection officers is one week long. Our facial muscles did not cooperate with the SPOT program, apparently, because the officer chicken-scratched onto our boarding passes what might have been his signature, or the number 4, or the letter y. We took our shoes off and placed our laptops in bins. Schnei­er took from his bag a 12-ounce container labeled “saline solution.”

...

As I stood in the bathroom, ripping up boarding passes, waiting for the social network of male bathroom users to report my suspicious behavior, I decided to make myself as nervous as possible. I would try to pass through security with no ID, a fake boarding pass, and an Osama bin Laden T-shirt under my coat. I splashed water on my face to mimic sweat, put on a coat (it was a summer day), hid my driver’s license, and approached security with a bogus boarding pass that Schnei­er had made for me. I told the document checker at security that I had lost my identification but was hoping I would still be able to make my flight. He said I’d have to speak to a supervisor. The supervisor arrived; he looked smart, unfortunately. I was starting to get genuinely nervous, which I hoped would generate incriminating micro-expressions. “I can’t find my driver’s license,” I said. I showed him my fake boarding pass. “I need to get to Washington quickly,” I added. He asked me if I had any other identification. I showed him a credit card with my name on it, a library card, and a health-insurance card. “Nothing else?” he asked.

“No,” I said.

“You should really travel with a second picture ID, you know.”

“Yes, sir,” I said.

“All right, you can go,” he said, pointing me to the X-ray line. “But let this be a lesson for you.”


Comment: View 2nd article for pictures of "what he carried on". Article is just in time for my next flying experience - to Hartford this Friday.

Cusp of harsh recession?

US faces worst recession in 26 years

Excerpts:

The US economy appears to be plunging into what many experts believe will be its worst recession since 1982.

Senior officials at the Treasury and Federal Reserve are confident that the rescue plan for US banks will succeed in preventing a financial system meltdown and ensure there will not be a repeat of the Great Depression. But they know that a sharp economic downturn is already baked in the cake. They do not,however, know how deep or protracted it will be.

...

“The actual deterioration in the data in the last few weeks has been much more severe than anyone was expecting,” said Frederic Mishkin, a professor at Columbia university and former Fed governor.

Consumers, who account for 72 per cent of the US economy, are pulling back amid a brutal tightening of credit conditions on everything from car loans to credit cards and home equity lines. Meanwhile, foreign demand is also weakening.

Alan Blinder, a professor at Princeton and former Fed vice-chairman, said: “It looks to me like the economy has fallen off a cliff.”

He said it was all but certain the US would face a recession worse than in 2001 or 1990-1991.

“The game is now about making sure this recession is less deep and less long than the 1982 recession.”

Many experts expect unemployment will soar from its current level of 6.1 per cent and worry it could go above 8 per cent.

The Fed now thinks that unemployment will rise above 7 per cent and is likely to peak at about 7.5 per cent – a level last seen in 1992.

“We may be talking about one of the most severe recessions in the post-war period,” said Larry Meyer, chairman of Macroeconomic Advisers and a former Fed governor.


Comment: Wiki article on The early 1980s recession

A combination of deficit spending and the lowering of interest rates slowly led to economic recovery. From a high of 10.8% in December 1982, unemployment gradually improved until it fell to 7.2% on Election Day in 1984


Comment: The problem is ... how much more deficit spending can the Federal government do? And that debt clock keeps a clicking!

10.19.2008

Warren Buffett: BUY!

Buy American. I Am

Excerpts:

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

...

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.


Comment: We continue to invest in our 401K's as well as Sharebuilder.com. I like the DIA EFT (Diamond Trust)

Tech Terms to Avoid

Tech Terms to Avoid

Excerpt:

There are two industries that refer to their customers as "users" –technology and illegal drugs.


Comment: I'm guilty of many of these.

Cisneros (Clnton administration) loosened HUD rules

Building Flawed American Dreams

Excerpt:

the National Homeownership Strategy, which promoted ownership as patriotic and an easy win for all. “We were trying to be creative,” Mr. Cisneros recalls.

Under Mr. Cisneros, there were small and big changes at HUD, an agency that greased the mortgage wheel for first-time buyers by insuring billions of dollars in loans. Families no longer had to prove they had five years of stable income; three years sufficed.

And in another change championed by the mortgage industry, lenders were allowed to hire their own appraisers rather than rely on a government-selected panel. This saved borrowers money but opened the door for inflated appraisals. (A later HUD inquiry uncovered appraisal fraud that imperiled the federal mortgage insurance fund.)

“Henry did everything he could for home builders while he was at HUD,” says Janet Ahmad, president of Homeowners for Better Building, an advocacy group in San Antonio, who has known Mr. Cisneros since he was a city councilor. “That laid the groundwork for where we are now.”

Mr. Cisneros, who says he has no recollection that appraisal rules were relaxed when he ran HUD, disputes that notion. “I look back at HUD and feel my hands were clean,” he says.

Lenders applauded two more changes HUD made on Mr. Cisneros’s watch: they no longer had to interview most government-insured borrowers face to face or maintain physical branch offices. The industry changed, too. Lenders sprang up to serve those whose poor credit history made them ineligible for lower-interest “prime” loans.

...
In 2000, Mr. Cisneros returned to San Antonio, where he formed American CityVista, a developer, in partnership with KB, and became a KB director. KB’s board also included James A. Johnson, a prominent Democrat and the former chief executive of Fannie Mae, the mortgage giant now being run by the government. Mr. Johnson did not return a phone call seeking comment.

It made for a cozy network. Fannie bought or backed many mortgages received by home buyers in the KB Home/American CityVista partnership. And Fannie’s biggest mortgage client was Countrywide, whose board Mr. Cisneros had joined in 2001.


Comment: Interesting read. I continue to contend that the current housing (mortgage) crisis has more than one parent. There is much blame to go around!

NYTimes Interactive economics graphic

Can a President Tame the Business Cycle?


Comment: Mouse-over each bar for greater detail. Select "see chart" for another view

10.18.2008

Churches teaching financial literacy

Churches seek to offer more firm footing

Excerpt:

He wasn't the only churchgoer who has been hearing messages about the economy lately. With the financial world in free fall, increasing numbers of people are turning to their faith communities for moral and practical support.

Granted, the latter sometimes seems a bit ironic to the clergy. The Rev. Dave Sheldon of St. David's Episcopal Church in Minnetonka was in a meeting with five other people when they asked if the church could start offering financial advice.

"And I'm thinking, 'What's the deal?'" he said. "I'm the minister in the group. I make less than all of them."

Nonetheless, the churches are scrambling to offer help. Centennial United Methodist Church in Roseville has launched a financial management class taught by an economics teacher who is part of the congregation. With more resources available, Living Word Christian Center in Brooklyn Park has brought in professional advisers to start their Financial University.



Comment: The church, in my mind, should teach financial literacy (because the Scriptures have so much to say about finances!)

Joey the upside down homeowner


Comment: More from the Star Tribune article cited in the previous post.

Millions owe more on their homes than homes are worth

Excerpt:

Joey Goldner always approached real estate with a gardener’s zeal. He’d plant his money in a building, patiently care for it and watch its worth grow. For 30 years, it was a brilliant avocation — right up until the heavy thud of the housing market helped flip Goldner’s mortgage upside down.

Facing debilitating health problems, Goldner refinanced his Chicago-area home repeatedly, only to wind up with a $729,000 mortgage on a house that eventually sold for $450,000.

In real estate circles that’s called being underwater — owing more than the value of a home. Goldner is just now coming up for air.

“I kept refinancing it to pay the mortgage,” he said. “I kept hoping the market would level off. I never imagined this would happen.”



Comment: From the comments - "I think most people agree that this nation is financially illiterate". That's it!

Credit crisis: the pain is unlikely to end soon!

Banks Are Likely to Hold Tight to Bailout Money

Excerpt:

Since mid-2007, when the credit crisis erupted, the country’s nine largest banks have written down the value of their troubled assets by a combined $323 billion. With a recession looming, the pain is unlikely to end there. The problems that began with home mortgages, analysts say, are migrating to auto, credit card and commercial real estate loans.

...
Every corner of the economy goes through cyclical ups and downs. But the banking downturn has acted with ferocious speed to erase past profits.

In the case of the nine-largest commercial banks — Citigroup, Merrill Lynch, Bank of America, Morgan Stanley, JPMorgan Chase, Goldman Sachs, Wells Fargo, Washington Mutual and Wachovia — profits from early 2004 until the middle of 2007 were a combined $305 billion. But since July 2007, those banks have marked down their valuations on loans and other assets by just over that amount.


More:

Millions owe more on their homes than homes are worth

Excerpt:

... an estimated 12 million American mortgage holders now owe the bank more than their homes are worth. And with housing prices still sliding and the credit crunch worsening, the number of so-called upside-down mortgages is expected to rise to record levels.

Within a year, Moody’s Analytics predicts, a whopping 30 percent of all U.S. mortgage holders will owe more on their homes than they are worth. In some California communities, according to real estate service firm Zillow.com, negative equity already is the norm.

The effects of this are many.

The risk of default rises — and it’s good to recall that it was people defaulting on their home loans last year that set much of the current economic crisis in motion. Home equity lines of credit — even for people who pay their mortgages faithfully — will be harder to come by. And woe to those who lose a job or get sick.

“If you have some kind of disruption to your income and you can’t make your mortgage payment, it’s going to be very hard for you to refinance or anything like that,” said Mark Zandi, chief economist for Moody’s. “This was the bedrock of most people’s savings, their home.”


Comment: I saw something on an investment TV show yesterday ... the commentator said something to this effect: "credit to the economy is like alcohol at a party". In essence, if you want to have a fun party you need booze (I dispute this but let's go with this analogy for a minute) ... in the same way the US economy has been pumped up (high if you will) on credit. The after effect of a drunken binge is a terrible hangover ... well the after effect of this credit binge is a recession. Our economy is "hung over". I just hope someone does not vomit on me!

10.17.2008

New windows for the house

Back on May 31st, our home experienced hail damage. Since then we have been repairing. Today about a dozen windows were replaced. This window is a new garage window.










Next up: Siding replacement (2 sides) and gutters and downspouts

10.15.2008

Housing Crisis: Not out of the woods yet



The Next Housing Catastrophe Waiting to Strike

Excerpt:

It seems that the majority of investors, economists, and governmental leaders are overlooking a very important right hand side of this mortgage rate reset graph. The subprime loan reset period (represented by the green bars) may be nearing the end, but the lightly-shaded yellow bars represent $500 billion worth of option-ARM loans expected to reset from mid 2009 through 2012.

In other words, the subprime mess was the earthquake and the next wave of option-ARM resets will be the aftershock no one saw coming.

So what's an option-ARM?
Everyone was entitled a home during the housing boom, right? No one could be turned away if they wanted to become a "homeowner." Alas, shady lending practices of our savvy mortgage brokers didn't stop at subprime lending. Borrowers who wanted to purchase a home but couldn't even afford the already low teaser rates of conventional ARM loans needed a way to finance their dream piece of real estate. The option-ARM fulfilled that need perfectly. It offered borrowers the chance to pay a minimum payment on the balance, which in many cases didn't add up to the full amount of the interest owed, let alone any portion of the mortgage balance.

When borrowers pay the minimum payment on their mortgage balance, the difference between the minimum payment and the full obligation is tacked on to the total mortgage balance. And while option-ARM loans aren't actually set to reset for five years following the origination of the loan, the structure of the loan only allows borrowers to drown in a specified amount of negative equity – to the tune of 110% to 125% of the original balance – until a surprise reset rate is triggered. To make a long story short, option-ARM borrowers will face significantly higher monthly payment increases in comparison to their conventional counterparts because the mortgage balance is now greater than the initial loan.


Comment: Article has full sized graph. Worth pondering. The economy will not recover until this housing crisis passes - and it looks to be several years out!

‘Wires and Lights in a Box,’ Fifty Years Later

‘Wires and Lights in a Box,’ Fifty Years Later

Excerpt:

Today is the 50th anniversary of Edward R. Murrow’s seminal address about radio and television. Now known as the “wires and lights in a box” speech, Mr. Murrow implored the attendees at the Radio and Television News Directors Association convention to make the most of the two electronic media, rather than allowing them to insulate Americans “from the realities of the world in which we live.”


Edward R. Murrow Speech

Excerpt:

I have no technical advice or counsel to offer those of you who labor in this vineyard that produces words and pictures. You will forgive me for not telling you that instruments with which you work are miraculous, that your responsibility is unprecedented or that your aspirations are frequently frustrated. It is not necessary to remind you that the fact that your voice is amplified to the degree where it reaches from one end of the country to the other does not confer upon you greater wisdom or understanding than you possessed when your voice reached only from one end of the bar to the other. All of these things you know.



Comment: Worth reading because 50 years later for all the channel selections, TV is a vast wasteland.

Latest on Wells Fargo / Wachovia

Wells Fargo CEO urges calm on Wachovia jobs

Excerpt:

The CEO of Wells Fargo told several hundred Wachovia employees this morning that the merged banking operation will make every effort to retain employees.

John Stumpf also told a crowd that packed the Wachovia Atrium in uptown that the bank will continue to play a strong volunteer role in the community.

"My goal is to keep all of you with the company," Stumpf said in the first of two employee meetings scheduled today in Charlotte.


CEO Steel will bow out after merger

Excerpt:

Wachovia chief executive Bob Steel said at a news conference today that he will have no “operating role” after his bank and Wells Fargo merge later this year.

In the meantime, Steel, who took the helm in July, said his job will be to make sure Wachovia stays focused on its customers and to ensure the merger with Wells goes smoothly. He said other Wachovia executives will have an opportunity to be part of the combined company but did not give specifics.

In earlier remarks to employees in the company's headquarters complex, Steel said he had mixed emotions about selling the company to Wells, saying “a lot of us envisioned an independent Wachovia” emerging from its troubles. But he said Wells was the best alternative once the bank decided to do a merger.

In addition to turbulent times in the financial industry, Wachovia's particular problem with bad loans “made the situation more dangerous for Wachovia,” Steel said.

In perhaps the most telling sign of the times, Steel received a standing ovation from the crowd of employees and public officials, despite selling one of the city's most important local companies to an out-of-town rival.



Comment: I feel for these employees. Kathee was with United Bank (Colorado) that was acquired by Norwest. When Norwest closed our data center in Denver, all there were nervous.

Prosper goes "quiet"

Comment: From Prosper.com website. Additional filing to enable "secondary lending".

Excerpt:

Prosper Filing Registration Statement; Enters Quiet Period

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.


Comment: Hopefully this process will move quickly! I think they are trying to implement their "resale platform". See SEC filing: the Resale Platform

Excerpt:

Resale of the Notes – The Resale Platform


Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default. As soon as practicable after the date of this prospectus, Prosper intends to establish a Resale Platform on which the Notes may be resold to other Lenders after three months following the date that the initial Lender acquired the Note from Prosper. After the three-month holding period, if a Lender desires to resell a Note prior to the end of the Note’s term, the selling Lender may post the Note on the Resale Platform for resale in a similar auction format as a Borrower listing. If another Lender purchases the Note, the Note will be transferred through the Resale Platform to the purchasing Lender. Unlike the origination of Loans and the sale of Notes to Lenders through the Platform, a Note sold through the Resale Platform must be purchased in its entirety by a single Lender. Once a Note has been resold through the Resale Platform to a subsequent Lender, the Note may again be resold through the Resale Platform without any required holding period. Except for sales of Notes on the Resale Platform, the Notes will continue to be non-transferable except by assignment to a collection agency upon default.

Notes outstanding prior to the date of this prospectus will become transferable through the Resale Platform as a result of the amendment to the Lender Registration Agreement, effective as of the date of this prospectus. Previously, the Notes were non-transferable except by assignment to a collection agency upon default.


Explanation of "secondary market" here:

The idea is that a lender can sell his investment in a loan to another lender who buys it. It could work similar to trading bonds.

Suppose a lender have invested $100 in a AA loan at 12% interest, it is current and has still 18 month to run. Depending on the assessment of the buyers it could sell for a premium, that means the buyer pays the lender a price above $100 e.g. $102 or it could sell at a discount below $100 e.g. $97.

A premium would occur if buyer demand is strong, assessing that the 12% (and the other loan specifics) are an above average market deal. A discount could occur if the loan is assessed by the buyers as below average (on interest rate or other loan specifics) or if the risk for default is impacting (e.g. the loan is already late).

Don't want it ... no you must take it!

Drama Behind a $250 Billion Banking Deal

Excerpt:

The chairman of Wells Fargo, Richard M. Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout, according to people briefed on the meeting.

...
“It was a take it or take it offer,” said one person who was briefed on the meeting, speaking on condition of anonymity because the discussions were private. “Everyone knew there was only one answer.”

Getting to that point, however, necessitated sometimes tense exchanges between Mr. Paulson, a onetime chairman of Goldman Sachs, and his former colleagues and competitors, who sat across a dark wood table from him, sipping coffee and Cokes under a soaring rose and sage green ceiling.


Comment: An offer they couldn't refuse! I guess that the Treasury is committed to "Coke" products! No "Pepsi" there!

Obama's "trickle-up theory of economics"



OBAMA FIRES A 'ROBIN HOOD' WARNING SHOT

Excerpt:

"It's not that I want to punish your success," Obama told him. "I want to make sure that everybody who is behind you, that they've got a chance for success, too.

...

"My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. I think when you spread the wealth around, it's good for everybody."


McCain: "an income-tax cut for millions who aren't even paying income taxes right now".

10.14.2008

Silver lining: "a fundamental shift from living on borrowed money"

American debt nightmare ends easy credit era

Excerpt:

xperts say that even when the current credit crunch eases, the nation may finally have maxed out its reliance on borrowed cash. Today's crisis is a warning sign, they say, that consumers could be facing long-term adjustments in the way they finance their everyday lives.

"I think we're undergoing a fundamental shift from living on borrowed money to one where living within your means, saving and investing for the future, comes back into vogue," said Greg McBride, senior analyst at Bankrate.com. "This entire credit crunch is a wakeup call to anybody who was attempting to borrow their way to prosperity."



Comment: Article tells of a man who couldn't buy a new car because he could not come up with a $ 1,000 down payment! Simple plan ... save up for it!

Pornography and the Pastorate

N.Y. Baptist group says to defrock pastor facing child-porn charge

Excerpt:

Leaders of First Baptist Church in the Upstate New York town of Oswegatchie demanded and received the resignation of Pastor Merton Parks after local media reported their pastor was part of a federal investigation. Parks, 60, was arraigned Oct. 9 and charged with possessing child pornography, a felony punishable by up to two years in prison.

Craig Golden, state representative for the Empire State Fellowship of Regular Baptist Churches, said his group’s polity means it would be up to the local church that ordained Parks to withdraw its ordination.


Comment: Sad news. Suggest that folk discipline themselves to use an Internet filter to prohibit such site visits. Had his wife viewed his CC statements he could not have done this! Sad for him, for his church, for his community, for the cause of Christ.

"A check in the mail"



Comment: 44% of filers will pay no Federal tax at all

Welcome to the Republican Party

I was talking to the 8 year-old daughter of a friend of mine, and she said she wanted to be President some day. Both of her parents, liberal Democrats, were standing there, so I asked her, 'If you were President what's the first thing you would do?'

She replied, 'I'd give food and houses to all the homeless people.'

'Wow - what a worthy goal,' I told her. 'But you don't have to wait until you're President to do that. You can come over to my house and mow the grass, pull weeds, and rake my yard, and I'll pay you $50. Then I'll take you over to the grocery store where the homeless guy hangs out, and you can give him the $50 to use toward food or a new house.'

She thought that over for a few seconds, 'cause after all she's only 8. And while her Mom glared at me, she looked me straight in the eye and asked, 'Why doesn't the homeless guy come over and do the work himself, and you can just pay him the $50?'

And I said, 'Welcome to the Republican Party.'

Her folks still aren't talking to me.


Comment: Sadly (in my own view), the Republican party has lost its voice and message. Hopefully new leadership will help the party regain its message! Sent to me by my daughter!

Boy River trip

Kathee and I had a good trip to Boy River MN this weekend. We drove up on Saturday and checked into the Longville Inn in Longville. After unpacking, we drove up to Boy River and met Pastor and Mrs. Gonczy at their home. We drove together to Grand Rapids and had dinner at the Forest Inn.

Dennis and Kathy Gonczy were taking Sunday off to visit friends further North. I preached as his substitute at "The Log Chapel" in Boy River. My morning message was from Matthew 14 - the feeding of the 5000. My Sunday School message was from Colossians 3:5. My Brother (Roger) and his wife (Kathy) were up North this weekend too and met us at the Log Chapel.

After church, Kathy and Roger joined us for dinner at Patrick's on Long Lake.

Kathee and I drove back home to Plymouth yesterday. We stopped in Crosby for breakfast at a little Mom and Pop place (run by Maureen and Jim).

Altogether a nice weekend.

Lessons from '73 - 1873

New York and the Panic of 1873

Excerpt:

Prosperity was written all over the face of things. Manufacturers were busy workmen in demand. Streets and shops were crowded and everywhere new buildings going up. Prices of commodities were in high, demand pretty good. Everybody seemed to be making money.


Comment: Well referenced read!

10.13.2008

How the Wachovia - Citi deal unraveled

Filings outline demise of Citi-Wachovia deal

Excerpt:

The gone-sour deal to sell Wachovia Corp.’s banking operations to Citigroup Inc. began with a 5 a.m. phone call Wachovia’s Bob Steel made to Citigroup’s Vikram Pandit on Sept. 26.

The deal was sealed 71 hours later at 4 a.m. Sept. 29 when federal regulators told Citigroup its $2.16 billion offer had been accepted.

It was dead 92 hours later when Steel called Pandit at 2:15 a.m. Oct. 3 to say he was taking a $15.1 billion offer from Wells Fargo & Co.


Comment: Interesting stuff

10.11.2008

One Nation, Under Debt

In Civil Court, One Nation, Under Debt

Excerpt:

How did he run up $1,400 in debt?

“I heard about this 800 number you could call to get a card,” he said. “I was working as a security guard in Herald Square. It was several years ago.”

What did you buy?

“I bought some shoes,” he said. “My son was young, we got Pampers, things like that.”

At the time, he was making about $11 an hour. How much had he spent?

The shoes, he guessed, were $40. The other stuff was $400 or less.

“They gave me a $500 spending limit,” he said. “So it was less than that. The rest to get it to $1,400 was interest, fees.”


Comment: I'm amazed how ignorant most are about debt, savings, and investments.

"What am I going to tell my wife?"

Ministers, nonprofits among the latest investors to sue Petters

Excerpts:

More than 100 pastors, ministers and nonprofit organizations have joined together in a federal racketeering lawsuit filed Friday in Minneapolis against Tom Petters and some of his associates .

"We've had a whole line of people going through our office the past 10 days," said Carolyn Glass Anderson, an attorney with the Minneapolis law firm Zimmerman Reed, which filed the case.

"Their lives really have been devastated," Anderson said. "Several of them are selling their homes and moving into their kids' basements."

Some clients are "pastors who've been making $40,000 a year for 40 years, and they don't have Social Security, and they had all of their life's savings in this," Anderson added. "And one guy was in tears and he said, 'What am I going to tell my wife?'"



Comment: I feel very sorry for those who lost $$ with Petters. But it is important to invest wisely and to use reputable investment advisors. See earlier post Suckered by Petters

Doll utters Islamic message





Comment: Just in time for Christmas!

10.10.2008

Farrakhan: "The Messiah is absolutely speaking"



Farrakhan on Obama: 'The Messiah is absolutely speaking'

Excerpt:

Farrakhan proclaims:

"You are the instruments that God is going to use to bring about universal change, and that is why Barack has captured the youth. And he has involved young people in a political process that they didn't care anything about. That's a sign. When the Messiah speaks, the youth will hear, and the Messiah is absolutely speaking."


Comment: Scary stuff!

Wells Fargo videos



3 Wells Fargo videos

Excerpt:

Heres the story of Wells Fargo & Company where we came from, who we are today, and what we stand for. Our President and CEO John Stumpf tells our story in three segments: Our history Stagecoach to Internet Our Vision What We Believe Our Values A Culture of Collaboration Welcome to Wells Fargo!


Comment: For those interested.

Merger to go forward



Wells Fargo wins Wachovia - Combined bank to rival giants BofA and Chase

Excerpts:

The combined company will create a major rival for Charlotte's Bank of America and for New York's JPMorgan Chase.

...

The merger pairs East Coast and West Coast giants that have long been seen as potential partners. It also matches struggling Wachovia with a bank that has survived turbulent times better than most.

...

In the Wells merger, Wachovia shareholders, who need to approve the deal, would receive about a fifth of a Wells share for each Wachovia share. That was equal to $5.43 per share based on Thursday's close. In the takeover, the Wells name would prevail and San Francisco would remain the corporate headquarters of the combined company. Wells has said Charlotte would serve as the company's base for East Coast retail and corporate banking businesses.

...

Wells Fargo said it is seeking expedited Fed approval of the deal as well as a share exchange agreement that would give Wells 39.9 percent of Wachovia's voting power. The Fed said it will immediately begin considering filings submitted by Wells Fargo seeking approval to acquire Wachovia.

In a statement, Wells Chairman Dick Kovacevich reiterated that the two companies have a firm, binding merger agreement, and that he is confident the merger will be completed. The deal is “simply an incredible fit that will result in an immensely strong, stable financial services company that will carry on Wachovia's proud tradition of being one of the very best financial institutions in the world,” Kovacevich said.

...

Nancy Bush of NAB Research said Wells was a better partner for Wachovia. “You guys should be breaking out bottles of champagne,” Bush said. “They will be so much more careful of the corporate culture, of Charlotte, of the customers. They have more retail experience than Citigroup does.”

The fact that Citi backed down indicated that criticism from customers and shareholders had grown too much, she said. Of the legal dispute, “I'm sure (Citi) will ask for a bazillion dollars, and Wells Fargo will give them something,” she said. “There will be some kind of out-of-court settlement.”

James Early of the Motley Fool investment guide said it was “sporting” of Citi to step aside.

“Sounds like they're not going to chop the baby up in pieces,” he said. “Now is not the time to be parceling out a company 18 different ways and fighting over this, that and the other.”

...

Although either deal would certainly result in job cuts in Charlotte, Wachovia executives and employees have favored the Wells purchase. Analysts said blending the Wells and Wachovia cultures, both traditionally known as conservative retail banks, would be easier than meshing the Citi and Wachovia cultures. Splitting the company was also complicated and created ongoing uncertainty.


Comment: Image from the Charlotte Observer. Click on image for Charlotte Observer site.

10.09.2008

Derivatives: "financial weapons of mass destruction" or "an extraordinarily useful vehicle"

Taking Hard New Look at a Greenspan Legacy

Excerpt:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”

And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.


Comment: Derivatives. I don't understand them!

(Citi) will ask for a bazillion dollars, and Wells Fargo will give them something

Citi ends negotiations, won’t stop Wells-Wachovia merger

Excerpt:

Analyst Nancy Bush of NAB Research said the decision was a “good deal” for Charlotte.

“You guys should be breaking out bottles of champagne,” Bush said. “They will be so much more careful of the corporate culture, of Charlotte, of the customers. They have more retail experience than Citigroup does.”

The fact that Citi backed down indicated that criticism from customers and shareholders had grown too much, she said. Of the legal dispute, “I’m sure (Citi) will ask for a bazillion dollars, and Wells Fargo will give them something,” she said. “There will be some kind of out-of-court settlement.”


Comment: Great coverage this week by the "Charlotte Observer". For the "something" ... see the Norwest coffee cup in my previous post!

Citi backs out

Citi ends negotiations, won’t stop Wells-Wachovia merger

Excerpts:

Citigroup said this afternoon that it had stopped negotiating with Wells Fargo & Co. over a possible splitting up of Wachovia Corp.’s operations, citing “dramatic differences” in possible transaction structures.

In a statement, Citi said the New York bank will continue to pursue legal claims against Wachovia and Wells Fargo but will not seek to stop a Wachovia-Wells merger. All three banks have been under a legal ceasefire until 8 a.m. Friday.

Citi agreed on Sept. 29 to buy most of Wachovia for $1 per share with assistance from the Federal Deposit Insurance Corp. That deal left behind Wachovia’s asset management and brokerage businesses. Wells, however, swooped in four days later with a deal to buy all of the Charlotte bank for $7 per share.

Citi said in a statement: "We are proud to have been part of an historic transaction that was supported by all of the federal banking agencies and the Secretary of the Treasury, after consultation with the President, and that we carefully designed to avoid systemic stress and to advance the interests of our shareholders."


Comment: Just off the wire so not sure how complete this news is. Updated below: Citi wants damages:

Citi Withdraws From Wells Fargo Talks

Excerpts:

Citigroup said in a statement that it is no longer seeking to block the Wells Fargo-Wachovia merger, but it will seek compensatory and punitive damages.


Comment: A Norwest mug is in the mail!

Wachovia wrangling - snag?

Wells Fargo, Citigroup, Wachovia negotiations continue

Excerpt:

However, The Wall Street Journal, is reporting that the negotiations have hit a snag. The newspaper cites unnamed sources familiar with the negotiations as saying both New York-based Citi (NYSE:C) and San Francisco-based Wells (NYSE:WFC) are worried that Wachovia’s bad mortgage loans could lead to steeper losses than initially expected.

...

In some ways, it is interesting to note which parties aren’t involved. Wachovia, which on Friday accepted a $15.1 billion offer from Wells, is not at the table. Nor is the Federal Deposit Insurance Corp. directly involved at this time.



Citi, walk away from Wachovia!

Excerpt:

Call me crazy. But isn't the solution simple?

Citigroup should walk away -- even if it has to be paid to do so -- and go find something else to buy.

Wells Fargo (WFC, Fortune 500) wants to buy all of Wachovia for about $15.7 billion, or $7 a share. Citigroup (C, Fortune 500) announced four days before Wells swooped in with its bid that it planned to buy just the banking assets of Wachovia for about $2.2 billion, or $1 a share.

Do the math. $7 or $1? Which is the better deal for Wachovia shareholders? Hmm.


Comment: Maybe they both should walk away?

Micro V-12



Mini V12 RC car engine produces not-mini power

Excerpt:

The lilliputian engine displaces just 87-cubic centimeters, but produces between 6 and 8 horsepower running on a mixture of methanol and nitro methane.


Comment: Something totally different. Very cool.

10.08.2008

The resurgence of Latin

A Dead Language That’s Very Much Alive

Excerpt:

The resurgence of a language once rejected as outdated and irrelevant is reflected across the country as Latin is embraced by a new generation of students like Xavier who seek to increase SAT scores or stand out from their friends, or simply harbor a fascination for the ancient language after reading Harry Potter’s Latin-based chanting spells.

The number of students in the United States taking the National Latin Exam has risen steadily to more than 134,000 students in each of the past two years, from 124,000 in 2003 and 101,000 in 1998, with large increases in remote parts of the country like New Mexico, Alaska and Vermont. The number of students taking the Advanced Placement test in Latin, meanwhile, has nearly doubled over the past 10 years, to 8,654 in 2007. While Spanish and French still dominate student schedules — and Chinese and Arabic are trendier choices — Latin has quietly flourished in many high-performing suburbs, like New Rochelle, where Latin’s virtues are sung by superintendents and principals who took it in their day. In neighboring Pelham, the 2,750-student district just hired a second full-time Latin teacher after a four-year search, learning that scarce Latin teachers have become more sought-after than ever.


Comment: Of interest to me because I took 2 years of Latin in H.S.

"moral hazard", unwise risks, spiralling deficits

Ignoring Reality Has a Price

Excerpts:

... today’s ever-expanding bailouts do create some dangers. You’ve probably heard the term moral hazard, which is shorthand for the idea that government rescues may lead investors to take new, unwise risks — and ultimately require yet more rescues.

The Fed is also setting itself up for tough decisions about when to end its various emergency programs. If it waits too long, it could leave so much money sloshing around the economy that inflation will take off. Fed officials have suggested they understand that they made precisely this mistake after the 2001 recession, when they kept interest rates low and added to the mania in the housing market.

Finally, there is the net cost of the bailouts, which may well be bigger than Mr. Bernanke has acknowledged. Under the new program announced Tuesday, the Fed will own the commercial paper that serves as short-term loans for companies. If some of those companies go bankrupt, the Fed could suffer some losses.

The Treasury’s $700 billion bailout fund, meanwhile, is based on the premise that investors are collectively undervaluing assets and that the government can pay above current market prices without losing much money. “One has to be at least a bit skeptical,” the economist Greg Mankiw says, “about the idea that government policy makers gambling with other people’s money are better at judging the value of complex financial instruments than are private investors gambling with their own.”

After talking with budget analysts, I think it’s reasonable to assume that the bailouts will end up costing several hundred billion dollars, spread over several years. Perhaps $100 billion of that cost may come next year. Add in another $100 billion or so for the weakening economy — specifically the fall in tax revenue, increases in spending on social programs and the possibility of another stimulus package.

Even before the crisis, the Bush administration was set to bequeath a $550 billion deficit to its successor. Now, a better estimate appears to be $750 billion — or 5 percent of gross domestic product. The only years since the 1960s that the deficit has been nearly so large were the early 1990s (almost 4.5 percent of G.D.P.) and the mid-1980s (with a peak of 6 percent in 1983).

Obviously, next year’s deficit is a problem. And if you assume the credit crisis isn’t about to lift — which seems smart at this point — the ultimate cost of the bailouts could conceivably go higher. Whatever the final figure, it should still be put in some context.

Despite everything, the biggest fiscal problem remains, far and away, health care. Based on the rate that medical spending has been rising, the Congressional Budget Office forecasts that Medicare and Medicaid will take up 10 percent of G.D.P. within two decades, up from about 4 percent now. In today’s terms, that would be the equivalent of adding at least $900 billion to the deficit every single year, in perpetuity. It makes the cost of the bailouts look like a rounding error.


Comment: I talked to my 88 year old Mother last night. I asked her about "the depression". Her Mother was a schoolteacher and worked without pay. Her Dad ran a Standard Oil rural distribution route (HQ in Alto Michigan). His customers bought on credit and were persistently behind in payments. They survived and we will too!

But politicians have over-promised and we must not rely upon government for every need!

Missionary forms Prosper lending group

Local Baptist Church Missionary Resource

Excerpt:

Local Baptist Church Missionary Resource

This group is designed to help Local Baptist Church Missionaries and Baptist families to obtain loans for personal needs that they don't want to burden their supporters with. Many times, a missionary family has personal needs that would be helped by a short term loan to cover the costs or to meet an emergency. Or in the case of many on Prosper, remedying bad credit or budgeting and needing help to do that. Most of a missionary’s needs are met by the faithful support of other local churches. Special requests for mission projects are often found in the prayer letters of missionaries. However, for family or personal needs, a short term loan that can be paid back via regular support would be helpful. Because of their lower salary levels and ministering outside the US, missionaries can not obtain loans.


Other details:

  1. Started by Ken & Vicki Mansell (Missionaries to Japan)
  2. Ken is a graduate of Pillsbury Baptist Bible College
  3. Ken Mansell blog


If interested in joining this group or getting a loan from this group, select the appropriate button below:

Join my group on Prosper, people-to-people lending


Financing available on Prosper, people-to-people lending

10.07.2008

Wachovia ad on Star Trib site




Comment: I just visited the Star Tribune site to see how badly the Vikes lost last night (I fell asleep when they were down 27-20!) ... and I was surprised by 2 things. The Vikings won! And Wachovia had an advertisement on the Sports page. Notice the smaller TCF ad in the upper right.

The King Solomon solution

Angry Feds May Force Citi and Wells to Share Wachovia

Excerpt:

Worried about a protracted legal battle further wrecking the credit markets, banking system, and economy, the Feds have stepped into the fight for Wachovia. The solution? Citi and Wells Fargo may have to share it:


Comment: My solution: Let the stockholders decide! The King Solomon solution refers to 1 Kings 3:25-27.

10.06.2008

Wachovia - behind the scenes

FDIC says Wachovia deal in the 'public interest' may come today

Excerpts:

... legal filings show dire concerns about the Charlotte bank’s health.

Following the failure of Washington Mutual on Thursday Sept. 25 and the House of Representatives initial rejection of a government bailout, Wachovia’s stock faced significant pressure, Wachovia chief executive Bob Steel said in an affidavit filed over the weekend.

In response to these concerns, the bank began negotiating on Saturday with Citi and Wells Fargo about a possible merger, Steel said. Wells chairman Dick Kovacevich indicated he was interested in buying all of Wachovia, but by 6 p.m. Sunday stepped aside. Steel then received a call from FDIC chairwoman Sheila Bair, who said the situation posed “systemic risk” and directed Steel to talk to Citi.

At a Wachovia board meeting at 6:30 a.m. on Monday Sept. 29, Steel told directors that the bank had two choices: file for bankruptcy or negotiate with Citi and the FDIC, which provided assistance in the transaction. The deal was announced late that morning.

At the time, Wachovia “was on the verge of collapse, burdened by bad loans and caught up in a liquidity crisis that threatened its very survival,” Citi said in the complaint it filed today. “Had Citigroup not stepped up in this way, Wachovia would have failed the following day and the debt issued by its holding company would have collapsed, with potentially devastating implications for the stability and security of the financial markets.”

Negotiations on the final merger agreement with Citi, however, proved “extremely complicated and difficult,” Steel said, adding that Wachovia was under “tremendous” pressure from regulators and Citi to reach an agreement before today. Wachovia suggested a transaction that would buy all of the company, but Citi refused, Steel said.

At 7:15 p.m. on Thursday, Steel said he received an unexpected call from FDIC chairwoman Sheila Bair telling him to be on the lookout for an offer from Wells. He was preparing to board a flight from New York to North Carolina so he told her to call the bank’s general counsel Jane Sherburne. When he landed, he talked with Bair again before receiving a 9 p.m. call from Wells Fargo chairman Dick Kovacevich. A few minutes later, Kovacevich e-mailed Steel a signed merger agreement.

Early Friday morning, Wachovia chief executive Bob Steel said that he and the bank’s advisers told the Wachovia board that it faced being put into FDIC receivership unless it completed a deal with either Citi or Wells Fargo. The board then approved the Wells deal.


Meanwhile ...

Citigroup in 'standstill agreement' on litigation

Wachovia, Citigroup and Wells Fargo said this afternoon that they have reached an agreement to standstill on all litigation activity effective immediately.

The agreement will terminate at noon on Wednesday, unless extended.

"We are pleased to participate with the Federal Reserve Board in a fair-minded, good faith process to achieve a prompt and successful outcome,” Citi said in a statement.

...

New York-based Citi said it remains “very excited” about its plan to buy the bulk of Wachovia, and that the Citi-Wachovia deal would have been finalized last Friday “if it had not been subverted by the unlawful conduct of Wachovia, Wells Fargo, and their officers and directors and outside advisors.”

The $60 billion figure stirred ridicule from the Web site wachoviavote.com, which was organized by shareholders who oppose the Citi deal. Citi's offer last week to buy Wachovia for $2.1 billion essentially valued the Charlotte bank at $1 per share. The $60 billion demand “is a pretty twisted way of saying Wachovia is worth $28 a share…,” the Web site said in a post today.


Comment: Visit the wachoviavote.com site for information from a Wachovia shareholder perspective.

We oppose this transaction [Citigroup transaction] for several reasons.
To begin with, any deal should be structured as an exchange of Wachovia stock for shares of the acquiring entity so that the deal involves not just the bank but the entire Wachovia, which is worth a lot more as an entire company.
The way this deal is structured Wachovia is selling its biggest asset, the bank, for practically nothing. The shareholders of Wachovia get nothing in return, and we are left holding shares of a much, much smaller Wachovia without its biggest asset.
It's hard to imagine that the fourth largest bank in the nation, with $800 billion in assets, $450 billion in deposits, 3300 branches in 21 states, 15 million household and business customers; 15.4 million online product and service enrollments and 5.1 million active online customers is only worth an amount equal to $1.00 per share of Wachovia stock.

Wachovia Calls Order Blocking Sale 'invalid'




Comment: This kind of makes me think of a maid with 2 suitors. Daddy (the FDIC) arranges the marriage to suitor # 1 (C) who offers a measly 1/3 carat diamond. Meanwhile suitor # 2(WFC) for which the maid pined away comes in the night (Thursday) and asks for the maid's hand proffering a 2 1/3 carat diamond (Wells' offer is 7X the Citi offer).

Barrons on Wells Fargo

Rethinking Wells Fargo's Stock Price

Excerpt:

WE STRONGLY SUPPORT the Wells Fargo acquisition of Wachovia (ticker: WB) as the combined company becomes a national banking power house. However, we continue to question the current valuation of Wells Fargo stock price and reiterate our Underperform rating. We are adjusting our 12-month price target to $25 (from $20).

Deal by end of day?

Citigroup Lays Out Wachovia Claims

Excerpts:

“I think we will have one today” that is in accord with the public interest, the F.D.I.C. chairman, Sheila Bair, said at a conference in Washington, according to The Associated Press. She did not elaborate.

...
A showdown between two of the nation’s largest banks over Wachovia has grown into a widening battle involving two courts and a cast including the Federal Reserve chairman, Ben S. Bernanke, and an army of bankers, lawyers and other regulators. With financial markets already unnerved by the crisis in the global economy, Mr. Bernanke and Timothy F. Geithner, the president of the Federal Reserve Bank of New York, have sought to spur the parties toward a resolution over the weekend. One option is to split Wachovia’s banking operations into two regions.

Mr. Bernanke had several telephone calls with Citigroup’s chief, Vikram S. Pandit, and Wells Fargo’s chairman, Richard M. Kovacevich, to try to resolve the dispute, according to two people briefed on the calls. The two banking executives never spoke directly to each other, one of those people said. Mr. Bernanke also briefed Treasury Secretary Henry M. Paulson Jr. on the discussions.

Getting frugal

Full of Doubts, U.S. Shoppers Cut Spending

Excerpt:

In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Even with the government beginning a giant bailout of the financial system, their confidence may have been too shaken for them to resume their free-spending ways any time soon.

Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores.


Comment: "Frugal" is a good word! "Savings" is another!

Latest Wachovia news

The Mad Legal Dash for Wachovia

Excerpt:

Federal Lawsuit: Wachovia has sued Citi in federal court in the Southern District of New York. Wachovia is claiming that the exclusivity agreement between it and Citi is void because of the same Section 126(c) of the bailout law, and furthermore is invalid because it prevents Wachovia from accepting the $15.1 billion bid by Wells Fargo – 7 times higher than Citi’s own bid.

So, the big issue is what exactly does this Section 126(c) require? The provision states:

(c) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)) is amended by adding at the end the following new paragraph:

(11) UNENFORCEABILITYOFCERTAINAGREEMENTS.—No provision contained in any existing or future standstill, confidentiality, or other agreement that, directly or indirectly—

(A) affects, restricts, or limits the ability of any person to offer to acquire or acquire,

(B) prohibits any person from offering to acquire or acquiring, or

(C) prohibits any person from using any previously disclosed information in connection with any such offer to acquire or acquisition of, all or part of any insured depository institution, including any liabilities, assets, or interest therein, in connection with any transaction in which the [FDIC] exercises its authority under section 11 or 13, shall be enforceable against or impose any liability on such person, as such enforcement or liability shall be contrary to public policy.

The FDIC action with respect to Wachovia on Monday was an action under section 13, and so under this section’s plain terms this language would seem to invalidate Citi’s exclusivity agreement.


Boies brings legal star power to Wachovia case

Excerpt:

He's been called the Tiger Woods of the courtroom.

He represented the federal government in its attempt to break up Microsoft, Napster in its battle with the recording industry, and Al Gore in his failed bid to force a vote recount in Florida after the 2000 presidential election.

Now, 67-year-old David Boies is representing Wachovia in what is sure to be a blockbuster legal battle between Citigroup and Wells Fargo over which bank will ultimately buy the Charlotte-based company. Boies' firm – Armonk, N.Y.-based Boies, Schiller & Flexner – was active in court hearings this weekend on Wachovia's behalf, and more hearings are expected this week.

In Boies, Wachovia has hired a lawyer able to quickly weed through an array of complicated facts and construct a compelling argument.

“He's quite simply one of the smartest lawyers I've ever known,” longtime friend Walter Dellinger of Chapel Hill, a Duke law professor, said Sunday. The two were classmates at Yale Law School.


Wachovia to be split?

Excerpt:

After a weekend of legal wrangling in New York over Wachovia’s fate, Citigroup and Wells Fargo were negotiating Sunday night, under pressure from regulators, on a compromise that could essentially carve up the Charlotte bank among the two feuding buyers, the Wall Street Journal reported.

Under the leading plan, Citigroup would get Wachovia branches in the Northeast and mid-Atlantic regions and Wells Fargo would get branches in the Southeast and California, as well as Wachovia’s asset management and brokerage businesses, the Journal reported. The Federal Reserve was pushing the discussions, the Journal reported, as it worried about the reaction of jittery investors today.



Comment: I predict this will be resolved by this time next week - probably before.

10.05.2008

Fed court trumps state court

Court tilts Wachovia fight toward Wells Fargo

Excerpt:

U.S. District Judge John Koeltl late Sunday blocked an order by New York State Supreme Court Justice Charles Ramos issued late Saturday at the request of Citigroup Inc.

...
It was clear from documents filed in federal court Sunday that Wachovia was in considerable trouble when it agreed to the deal. Wachovia disclosed that it agreed to the deal "with the understanding that a seizure of its banking assets later that day by the Federal Deposit Insurance Corp. would occur" unless it accepted Citigroup's proposal.
...
It was quite possible that litigation among the three banks could go on for some time; any ruling by either judge was likely to be appealed. A protracted court fight raised the possibility that Wachovia, already hurt by billions of dollars in losses from failed mortgages, will further weaken. However, the government, which has closed and then seized failing banks including Washington Mutual Inc., the nation's largest thrift, would likely step in if the bank were in jeopardy.


Comment: I'm sure my readers think I am obsessed with this drama. I'm not, but I am fascinated!

Citigroup: Breakup fee, forced merger, or nothing?

Can Citi stop Wells Fargo's bid for Wachovia?

Excerpt:

Citigroup (NYSE: C) looks like it's trying to get a breakup fee in exchange for giving up on its deal for Wachovia (NYSE: WB). Citi persuaded a New York judge to extend an exclusivity agreement between Citi and Wachovia -- which prohibited Wachovia from talking to other suitors -- through at least October 10th when the parties are scheduled to meet with the judge. Citi can either offer a higher price than its rival, Wells Fargo (NYSE: WFC), or it can negotiate a breakup fee to soothe its hurt feelings.

...

Citi -- whose stock lost 18% of its value on Friday -- is seeking $60 billion in damages from Wells. I would not be surprised if Citi received less than that in a settlement. But I would be rather shocked if Citi -- which did not have a formal merger agreement with Wachovia -- comes back with a bid that offers more to Wachovia shareholders and to the FDIC than the Wells proposal.


Comment: My take is: Citi can't match the Wells Fargo offer. The courts will recognize the fiduciary responsibility of the board and the benefit to stockholders. Citi may get a breakup fee but it won't be much

What Citi wants

Citi Examines Its Carrots and Sticks

Excerpts:

Citi's also going to try to persuade the Wachovia board that they're underestimating the value of the stub Wachovia, which they'll continue to be in charge of if the Citi deal goes through. Maybe Citi's investment bankers are trying to find another buyer for what's left of Wachovia, to prove just how much it's worth. In any case, they're going to try very hard to demonstrate that the total value for Wachovia's shareholders from the Citi deal is significantly higher than just the amount that Citi is paying for the bank.

Then there's the more personal/emotional stuff. Citi will rake Wachovia's executives over the public coals if they get those golden parachutes as a result of accepting the Wells Fargo offer. At the same time, they'll promise to move the retail banking headquarters of a combined Citi-Wachovia to Charlotte, and to keep more Wachovia jobs, especially in Charlotte, than Wells Fargo might be inclined to do.

At the same time, Wells Fargo might be willing to pay some amount of money to Citi to make them go away, especially if it has a deal pretty much sewn up.


Comment: They want a break-up fee. 1 Billion should do it.

Wells Fargo Acquisition of Wachovia Conference Call Transcript

Excerpt:

Jason Goldberg - Barclays Capital

A couple of headlines flowing across I would hope you could react to; the first thing, Citi Believes It Has Exclusive Rights to the Wachovia Branch Operations and secondly, Fed Cautious About Wells Fargo Bid for Wachovia. If you could just talk to conversations with Citi and how that deal was structured with respect to this transaction? Why you think believe this deal supersedes that and any rights Citi may have, any breakup fees, etc.? And secondly, any comments you’ve had with the regulators with respect to this transaction?

Richard M. Kovacevich

We think that this deal is solid. We’re not aware of any merger agreements that had been consummated at the time. And as far as other issues, I haven’t seen anything in terms of issues that Citi has or doesn’t have. We feel very confident that this transaction has been done appropriately and we’ll continue and be consummated and we’ll go forward with it.