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Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Friends,

The richest 400 Americans -- that's right, just four hundred people -- own MORE than the bottom 150 million Americans combined. 400 rich Americans have got more stashed away than half the entire country! Their combined net worth is $1.6 trillion. During the eight years of the Bush Administration, their wealth has increased by nearly $700 billion -- the same amount that they are now demanding we give to them for the "bailout." Why don't they just spend the money they made under Bush to bail themselves out? They'd still have nearly a trillion dollars left over to spread amongst themselves!

http://www.michaelmoore.com/words/message/index.php?id=237

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Bobo - Well, you certainly did say " I told you so" and you were so very right. So, looks like we will get this crap bill shoved up our.... well shoved where the sun does not shine. Even after the overwhelming public outcry of "NO BAILOUT" we will still get screwed. I don't care one way or another as they already stole everything and I'm broke anyway.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Bobo - one more comment. I just got through reading the entire new revised version of the bill. Is there no shame in the Congress ? okay dumb question. Everything from page 112 on is just plain pork barrell gourging. What the hell does Sec. 104." Energy credit for small wind property", have to do with the financial market bailout ? What the hell does Sec. 211. "Transportation fringe benefit to bicycle commuters", have to do with the financial market bailout ? What I can not figure out is why I should give a shit at this point. This is the most shameless bunch of crooks I have ever witnessed in my entire life. Why is it that I just can not let this go ? The level of "just plain wrong" overwhelms me. Where do these people come from ? Have they always been there and I just did not see ? I watch some of these "representatives" and wonder how in the world did they ever get elected to office. Their partisan bias is so obvious there can be no doubt that their interests is not the good of America but the good of those that voted them into office. So much spin so much just plain crap. Am I just being stupid to care at this point. And to think that I put my life on the line for this.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

captdale--No, you're not being "stupid." You are experiencing the results of the Red Pill, seeing the US Empire for what it is, and becoming radicalized by it all. At this point you have 3 choices: Fight the system, run, or just acquiese. The latter you'll find almost impossible; you took an oath which makes the second a nogo, which leaves the first--Fight The System, as it's the only way to maintain your sanity and morality.

Marion Polk posted a short compilation about how the crisis was started at the DeepCapture site, but I don't think it sufficient. Has anybody put together a short referenced article depicting the sequence of events to this criminally generated crisis?

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

This is just a question.

Since many major bokerages have either gone bankrupt or were absorbed and were thought to have been involved keeping naked shorts in limbo through x-clearing where are those naked shares now?

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Hey Dale it's O.K. to feel bad about the whole lie you have been fed all your life.
Lie's hurt.
But to give up because you are hurt lets them , the liars win.
Don't do it.
We will continue and we will tell others no matter how crazy some people think we are because some people will listen and know we are right.
The majority of the people will never believe the way things really are because it is painful to believe this deep down betrayal is real.
Like a abused child they would rather believe they did this to themselfs or that the powerful people in our lives are only doing this for our own good ,rather than admit this is wrong, the people who are hurting us don't need to do this but they do it because they can and because they don't care about us at all and they are evil.
That is very hard for most people to accept.
So to accept this and not give up, there are just too few people capable of both and every one of them is needed.
Ignore the people who claim you must be a loony, they aren't strong enough or brave enough to face reality, keep telling the truth to any who will listen and maybe some day the abuse will get to be too much for even the most fearful to bear and there will be action taken.
The abused Do out number the abusers.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

I think The U.K. Investors and the regulatory heads might be a little upset when they realize that they have been goosed by the likes of Gary Weiss and the DTCC. What say you all on this??? There is "no Honor amongst thieves". This only gets better with time.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Did anyone notice that the first bill convienantly did not pass - and was timed with Market open on a monday - causing the 777 point slide? I should put on my tinfoil hat right now - but give me a naked short seller and I will bet you 700 billion dollars that they had a GREAT day on Monday. I will dig deeper into a conspiracy theory - didn't a few of the HoR republicans pull a no show on the Sunday night voting bill? What better way to tank a market then to vote down the biggest funding bail out bill in history - knowing that the people who needed to cover and deliver shares would have an opportunity? Then coincidentally the masters of the universe were seen patting themselves on the back for the bipartisan senate vote on national tv - and talking about this is how "government is supposed to work". I call BullSh!t.

Something smells Bobo. I feel like even in the mess we are in - the richer are getting richer stepping on my back. Hey I got some news - I have never even seen 100,000 dollars. Now I get a benefit that will allow me to put 250,000 in the bank. Yippee! All those a-holes stood in their nice suits and silk ties congratulating each other - but I say - let it burn. I am sorry for Main Street because most of Main street has no idea the wool that has been pulled over their eyes. There is lack of oversight, lack of punishment, and a lack of leadership. Well I guess the ass-clowns are going to get away with it - and they knew they would.

To hell with the devil right? Wrong. He is standing on Main Street laughing.

~MS

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Ron Paul explains the crisis as government intervention in the free market. Why did FNM and FRE increase the number of bad loans that were bound to happen? They did it because they paid legislators to allow them this absurdity. So... instead of letting these toxic behaviors and toxic products die a natural death, more government intervention with a transfer of wealth from the middle class to those who profitted from their toxic behaviors.

No responsibility... propping up the economy with unrealisticly low interest rates creates the incentive for people to leverage investments and take greater risks. Meanwhile, people on fixed incomes suffer from not being able to get a fair return on their safe investments.

Then there is the Bush Plan of deficit spending to support a war that he lied about. And now the pressure to pass this bill is full throttle as there is considerable shorting in the market. Banks that are protected from shorting are in the mid level of 4% down while those shares in the other sectors are down by as much as 12%. Those sectors that are a must buy for the consumer, consumer staples, utilities , telecommunications and healthcare are down much less. If this isn't depression thinking... I don't know what it is.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

karlof1 - Thanks. Ah, it just seems like too much sometimes. No, I can't quit. Crap. I just want to go fishing. I did read the article by Polk which was excellent. There was another good article this morning by Glenn Beck (America's chilling future), cnn.com. He basically says that the root cause is a two party government destined to place party above the people in every case. I find that certainly is the case now. In the "new" bailout proposal, everything after about page 114 is the "new" bill. There is what, 400 odd pages. It's just plain embarassing and shameful to read. And this is supposed to be a bill to address a NATIONAL financial problem. Pul leeze. And it is of such grave world wide consequences that they took a couple of days off to observe a GD religious holiday ? Give me a break. I never thought that I would be radical about anything but looky here if it ain't so. -
----------------------------
This is how I see whats coming down. Its the Golden Rule. Those that have the Gold make the rules. Thats the way its going to be so this "bill" will get passed in some form or other and retain almost all of the bailouts for the big guys. Now we know that is going to happen so we have to figure out how they are going to game this. They will for sure game it as there is now not just a few , but a GAZILLION dollars to be had from the stupid taxpayer. And they will have them no matter what it takes. So, how are they going to do it this time around Bobo ? Its a matter of "know thy enemy". So much money to steal, so little time.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Recs: 2 HEDGE FUNDS: THE NEXT SHOE TO DROP
FYI, hedge fund operators Paulson (John, not Hank), James Simons, George Soros et. al.
have been invited for afternoon tea (er Committee on Oversight and Government Reform
hearings) on Oct. 16:

http://www.speaker.gov/blog/

Take a look at the sample invitation letters, e.g.

http://oversight.house.gov/documents/20081002120615.pdf

to see which documents are "voluntarily" requested. I've already called my local house rep,
who is on the subcommittee, to determine that these will likely *not* be made public.

They are just interested in little things like whether each billionaire's unregulated fund might pose
any "systemic risk" to what's left of John Q. Public's retirement fund, etc. Well, at least
the YouTube exposure might be educational...

Wiccan Peidia....

WIKIPEDIA IS PART OF AN NSA DISCREDITING OPERATION
As previously reported, the Editor' attention was drawn, in the second half of November 2007, to a pack of old lies, diversionary claptrap and disinformation posted on Wikipedia under Leo Wanta

Although this posting appeared FOR THE FIRST TIME on 12th November 2007, it consisted almost entirely of ancient lies, including disinformation dredged out of Thieves World, a hatchet job published in 1994 by Simon and Schuster by the late Claire Sterling, a CIA operative.

Mrs Sterling died suddenly after being summoned for her second meeting with the Federal Bureau of Investigation, under Clinton.

ANCIENT DISCREDITED LIES POSTED IN NOVEMBER 2007
The fact that the OLD Wikipedia lies appeared for the first time as late as 12th November 2007, and consisted almost totally of old, discredited lies, omitting the Master Lie that the CIA retailed after the Ambassador had been taken down, namely that he was DEAD, indicated quite clearly to the Editor and his advisers that this latest evil display of regurgitated disinformation represented a deliberate operation by the US intelligence community' disinformation and lie machine, to begin, all over again, the process of discrediting Ambassador Leo Wanta so that they can relieve him of his funds by some false pretext or other after a gag orde has been signed.

The definitive up-to-date information on the Ambassador' affairs has been published on this website, and in several issues of International Currency Review, Economic Intelligence Review, Soviet Analyst and Arab-Asian Affairs, all published by World Reports Limited, for several years. Copies of these publications are in official, institutional and library hands all over the world. Therefore, any posting about Ambassador Wanta that relies upon ancient lies and fails to take account of the accurate information that we have published, can easily be demonstrated to represent yet another US intelligence community and NSA discrediting operation.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Subject: We need a progressive alternative to the Bush Bailout.

Dear Friend,

Members of the House of Representatives did the right thing on September 29th when they voted down the Emergency Economic Stabilization Act of 2008. That bill was a sham of a compromise that handed the Bush Administration all kinds of victories. Now it's time for a new bill, and a better bill.

Unfortunately, the Senate just passed a slightly modified of that same bill. Since only a third of them are up for reelection this year, they have the political cover to hand the Bush Administration a blank check and wash their hands of it. By passing this near-clone of the bill the House defeated on Monday, the Senate is taking a strong stand for the Bush Administration and daring the House to vote down the bill and look like petty contrarians for doing so.

But there is another option: the No Bailout Act. Reps. Peter DeFazio, Donna Edwards and Marcy Kaptur, among others, have proposed this bill as a progressive alternative to the Paulson plan. The bill isn't perfect, but it's better than what we've seen so far. The House deserves a chance to vote on it.

I just signed a petition telling Rep. DeFazio that I support his fight for a progressive alternative to the Bush Bailout -- I hope you will too.

Please have a look and take action.

http://act.credoaction.com/campaign/better_bailout/?r_by=1014-963092-exhmnNx&rc=paste

Thanks!

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

I think the torpedo has hit the ship and it is taking on water. All the hands will be going for the lifeboats and you can make book that Capt. gw isn't going down with the ship. I think the tooth paste is out of the tube and it is only a question of time before everything unravels. Bad part of this story is that probably none of these scum bags will see time or will get out early on a technicality. If there is justice in this world gw has a cholesterol problem. I am sure we would have no problem finding people to send him triple quarter pounders and gals. of Ben and Jerry with lots of Oreos for snacks.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

bobo, in regards to the need for this government financial support plan, you and I are apparently on different sides of the stree. I truly believe that this will work and that it will not cost Americans a dime. Others whom I respect, Warren Buffet, Wharton Professor Jeremy Siegel, etc. feel that this is "a good step" in the right direction. I don't think these people are part of any kind of a conspiracy. I predict that pricing of these now unpriceable securities via the government auctions to soon start, will create a market. Once that market is created, $Billions of private investment money will start to show up to buy up MBSs and MBO's at 40-50 cents on the dollar while they are still cheap. Soon greed will replace fear. Realize, that as of this moment only 15% of the subprime ARMs are actually not being paid on time. The MBOs rapped around those ARMs at even 70 cents on the dollar are a good investment. I have listened to other solutions and I believe that some of these alternative plans would have also worked. However, I have not heard any solutions proposed which were certain to work or which would ulitmatelly cost less than this approach will cost, which I believe will be far less than $700 B. In fact, I am quite certain that this approach will ultimately provide American tax payers with a gain. Just 2 days ago, Warren Buffet said that he would buy a 1% share of this - $7B - if there was a way that he could do so.

I do hope that this debacle ultimately serves to bring some sanity to the SEC. Cox must go. At the worst, he'll be gone in Jan., and I hope he goes sooner than that. I am convinced that he and much of the senior staff at the SEC are in the pockets of some major market manipulators. In the past two weeks I have heard dozens of congressman state that they feel iit is necessary to eliminate "naked short selling" and bring back the "uptick rule".... so some good may come from this.

We should consider what we can do to take advantage of the new awareness that the SEC is not working properly. IMHO, the right long term solution would be to make the SEC directly subbordinant to the Justice Department. It is afterall, primarily a law enforcement agency. For the SEC to work properly the curren environment must change within the SEC so that the primary high level employees are hired because of their skills and interest in enforcing the law. Now we are hiring attorneys who feel that a job at the SEC is what is needed on their resumes for them to land the $1M/year jobw with hedge funds and Wall Street legal firms.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

here's my take...the whole thing is a sham. i think the companies that went under are in on it. with all the financial gurus that work at all these companies, they all suddenly realize out of the blue that they are all at the exact same point of failure...it doesn't jive with me. let's say they in on it with someone like bank of america...the shorts (boa and the companies going down in on the funding too) pile on and help drive the price down and scare investors in to flocking. the media talks up the chaos in to a full blown stampede. the stocks dive, shorts make out rich and the company is then bought at a severe discount to the investor by the people that are in on the dump. at the same time, they are going to receive federal monies. i wouldn't be surprised to see some of the same people buying up all the failed properties to pump the pricesup in the next decade to generate another bubble in the hope to make a few more billion in the next man made failure. now that i throw that loony idea out there, i do recall one client (that's one company) in the recent months that had $$$1/2 billion+ in free cash to buy up properties around town just to wait until the next expansion...and who says there's no one buying...hmmm...maybe it's not as loony as i first thought when i began typing. i'm not sure who's behind the money though.
either way, i think it's the perfect storm planned around the election since the candidates can't turn it down...there's too many people that would interpret that as not saving them. and there's so much catastrophe broadcasted on tv that congress can now blame all their constituents for their voting for it if the deal were to ever go south.

btw, where is all the press on the whole shorting topic associated with the failures?

Re: feckless financial journalists

feckless
financial journalists
whose job used to be
speaking truth to power.
still
fiddle
with piddle
while investors are fleeced.
by a system that preaches integrity
and piety to the rule of law
but
practices fraud almighty
unchallanged and unpunished
because it has captured
and bent
the process
and the law
to its own entirely venal benefit

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Off issue. Bail out plan.

Isn't anyone worried that with the Bail Out Plan that the Government could own a controling interest in all of our Banking Institutions?

Something dire about that. Will the Government have all of the voting rights in the Banks?

Think about it the Government took over FRE & FNM, AIG. FRE, FNM own 50% of all mortgages in the United States and the Government now has control of thoes Institutions, at least 79.9%. AIG is the largest insurer world wide and the Government now has control of all of the assets and 79.9% of the Company.

With the Bail out plan it gives the Government the ability to get warrants to control all most all of the Banks with the same plan with Warrants for most of the stock in the Banks that sell assets to them.

Will the Government fund itself from the backward take over of American Companies? Why does the Govenment want to have Ownership interest and control of the Banks in the United States?

Something is not right and I cannot put my finger on it. Although, I am very concerned . Naked Short selling got us here, was it for the United States to take control of most of the assets of the Banks, Insurance Companies, Mortgage lenders.

What is next Energy stocks and Companies. That would be my guess. It would round out the Governments portfolio.

If the Government is in a round about way seizing Companies, wiping out shareholders for its own benifit, I think they are working toward a Socialistic Government at the expense of anyone that owns stocks.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Listen to this from NPR.
http://audio.thisamericanlife.org/player/CPRadio_player.php?podcast=http://www.thisamericanlife.org

While the brokers were writing more and more bad loans, it seems that the WS marvels were using old models to anticipate defaults, old models where people had their assets and incomes checked. They were looking at historic data. Start listening at 26 minutes. With the subprime written in the last three years, the defaults could reach 50%.

Example used. Guy goes to get loan.. and is talked into more house and exotic loan. Then when he can't make the payments, he takes out LOC to make payments.

What they aren't telling us is how bad the loans really are. Historical data was 2% and that was with sound customers. It looks like the mark to market might be a little high on these subprimes. Then you get places like Orange County where every other person became a broker, got huge commissions.. and no doubt thought it would go on... and then that whole place came tumbling down.

Bartender offered job as broker.. now he's in default, too. Some brokers were spending it as fast as it came in...

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

As far as where did the fails go?

They're still there. Bear's got absorbed and now JP Morgan is liable - maybe they can handle it for a while. Perversely, as the market tanks, the liabilities become less and less.

In the case of Lehman, hundreds of billions in customer assets are not being delivered on withdrawal requests - and never will be. That is because their assets on Lehman statements do not exist. That's what carrying fails foes to your balance sheet - it creates liabilities, now so great, there will not be enough to cover all of the assets that are owed to customers.

Talk about liar loans in the mortgage crisis - we should instead be talking about liar account statements by broker-dealers to their customers. Wall Street is so crooked it is beyond repair from within or through Washington. We have to go via the states.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Bobo,

S. Trimbath wrote the following. I find some disconnects between CDS and CMO's in her explanation.. except CAF also found more insurance on bonds than bonds at HUD.

Can you make out what she is saying concerning CMO's and 9x the amount of insurance?
Street’s False Utopia
by Susanne Trimbath 10/03/2008
In the popular media much of the blame for the current crisis lies with sub-prime mortgages. Yet the main culprit was not the gullible homebuyer in Stockton or the seedy mortgage company. The real problem lay on Wall Street, and it’s addiction to ever more arcane financial innovation. As we try to understand the current crisis, and figure ways out of it, we need to understand precisely what, in the main, went wrong.

I have studied financial innovation for years and worked with some of the best minds in that business. In 2003, I wrote in Beyond Junk Bonds that financial innovation is the “engine driving the financial system toward improved performance in the real economy”. Innovative debt securities, like collateralized mortgage obligations (CMOs), I had hoped, would add value to the economy by reallocating risk, increasing liquidity, and reducing agency costs. Like the broken promises of communism, it turned out to be a utopia that was not achieved.

CMOs( this should read CDS) were designed to diversify risk by shifting risk to larger, better capitalized and diverse institutions. Traditionally, a bank in Riverside, California would write and hold the mortgages for homes in the area. Then, if some negative shock impacted jobs and income in the area, that bank would have to absorb all of the resulting defaults. This would put the local bank at an inordinate risk. With CMOs, the risk would be spread out across banks and investors in a broader geographic area. Since CMOs could be held internationally, even a nationwide economic downturn might have little impact on any single mortgage holder.

Unfortunately, the dealmakers sold the riskiest pieces to a few hedge funds, thereby consolidating the risk rather than allocating it broadly. The result was the spectacular crash of Bear Stearns and the incendiary damage done to a slew of US and international financial institutions.

CMOs were supposed to produce more money available for lending to homeowners than would otherwise have been the case. Instead it produced more paper, more heavily leveraged and less secure. Securitized mortgages were misused to the extent that $45 trillion in bonds were issued on $5 trillion in assets; it's as if someone bought insurance for 9 times the value of the house.(This is the disconnect. It wouldn't be insurance if she is talking about CMOs..it would be counterfeiting.) By 2007, the market was over-sold: more bonds had been sold than could be delivered, possibly even more than had been issued. On average, nearly 20% of CMO trades have failed to settle since 2001, driving down the price of the bonds.

CMOs should have been used to protect against conflicts of interest between managers, stockholders and bond holders (agency costs). Instead, the same companies that issued the CMO were buying large positions in the securities. Most CMOs are typically initiated by banks seeking to remove credit risk from their balance sheets while keeping the assets themselves. Normally, these securities are issued from a specially created company so that the payments from the riskiest borrowers, i.e. the sub-prime mortgages, can be separated from the more credit-worthy payees. A trustee and a portfolio manager receive fees from the newly created company.

While CMOs reduced some of the risk to the local banks, it also led some of those banks to lend imprudently. With the cash flowing easily back to the banks after the CMOs were sold, some lenders became increasingly risk-seeking – the opposite of the intended purpose of CMOs. Companies like Bear Stearns, who acted as trustee and portfolio manager for the CMOs, also purchased the CMO securities (usually through a subsidiary hedge fund).

Critically missing from the market for CMOs was the lack of a standard for the issuance. In more than one case, when a CMO investor attempted to foreclose on a property for mortgage delinquency, courts found insufficient documentation to support the CMO’s lien on the property. Without legally binding “receipts” of ownership, CMOs
have had insufficient real backing --- producing results we are still trying to cope with.

Sure, sub-prime mortgage defaults were the straw that broke the camel’s back. But Bear Stearns was in financial difficulty three to six months before the sub-prime mortgage default rate spiked. The real fundamental problem lay in the multiple sales of mortgages through CMOs – the result of too much faith in financial innovation. Experts believe that, for every $1 of mortgage that defaulted, the investment banks fell behind as much as $15 in payments on the CMOs. These, not the actual mortgages of homeowners, represent the bulk of the securities that Treasury Secretary Paulson wants $700 billion to buy.

Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs. Dr. Trimbath is a Technical Advisor to the California Economic Strategy Panel and Associate Professor of Finance and Business Economics at USC’s Marshall School of Business. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute and Senior Advisor on the Russian capital markets project for KPMG.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

In some cases, they cancel out.

Let's say Bear Stearns owed JP Morgan many more fails than JP Morgan owed Bear Stearns. Then that obligation nets off the books and is no longer shown as an obligation after the purchase.

If they all glommed into one mega brokerage monopoly, then all fails would fail from view as all obligations would net. Because the naked seller is at the same brokerage as the buyer, there is no net movement of shares and no problem. It's like the trade didn't take place and everything is "desked".

The more mergers there are, the more they can hide this problem.

This is not a naked shorting problem. It's a fractionally backed custody problem. If the SEC required retail brokerages to disclose their customer positions (not names, just positions) to companies, then it would instantly become clear exactly what the domestic phantom share problem is. Foreign fails would be on top of that.

Currently, brokerages are not required to disclose objecting beneficial owner positions, so they just make the claim that many of their clients object.

Politicians could really open the curtain if they demanded that retail brokerages disclose aggregate positions in each share they hold (no netting) so that grand total could be compared to the float. This is concrete change you could ask for in your letters to politicians.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

As for assets in Lehman accounts, won't SIPC cover them (up to whatever their limit is)?

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Bobo, following is an explanation of why I like the Paulson plan. After acquiring $500B worth of mortgages, the Paulson Plan will work something like what BofA is now doing with the $8.4B worth of subprime debt that BofA inherited when it bought Countrywide.

http://pacific.bizjournals.com/pacific/stories/2008/10/06/daily7.html?ana=yfcpc

“”BofA says the mortgage program will provide up to $8.4 billion in interest rate and principal reductions for nearly 400,000 Countrywide customers nationwide. It is designed to achieve affordable mortgage payments for Countrywide borrowers who financed their homes with subprime loans or pay-option, adjustable-rate mortgages before Dec.””

B of A will likely actually profit from this because BAC paid less than 50 cents on the dollar for those mortgages when it acquired countrywide for a very low price.

Once the We the People via the Paulson Plan acquire up $400 to $500 Billion worth of these troubled assets for 50 cents on the dollar, we will be able to restructure these mortgages to reduce the amount owed on the mortgage to the point that a new fixed rate mortgage payment is the same as the original 3-5 year rate which was paid when the mortgage was originated. To be clear,here's an example. Assume a home owner originally had taken out a $200,000 mortgage on a home, fixed at say 4% for the first 3 years. If that mortgage were to now adjust to 7%, his monthly payments would sky rocket. And since there is probably zero equity in the house, he really has a good reason to walk away from this house. So that is what we are now looking at for 3-5 million houses.

However, if “WE the people” were to purchase that mortgage for $100,0000 we could restructure it so that is became a $150K mortgage at a fixed rate of 5.4%. Doing that fixes the new P&I payment for 30 years at about the same as the original P&I payment. In addition, since the home now has significant equity in it, the homeowner will likely work very hard to keep up with the payment. Doing this would help millions of people and keep millions of homes from going into foreclosure. Don't forget, WE paid only $100K for that mortgage so WE are not losing any money by doing this.


If WE were to than insure those mortgages (via purchase of a **private mortgage** insurance policy which might cost $5,000/home) against default losses for 10 years, these mortgages would become very marketable prime mortgages which could be easily sold to third parties for something close to $150,000 each. At that point, we will get our money back plus something. To offset the angst that this would cause millions of homeowners angered because we chose to bail out these home buyers while they got nothing, we could simply require anyone accepting this deal to agree to give us a percent of any gain once the home is sold. For example, 10 years down the road this home sells for $250K (a $100K gain over the $150K mortgage), we might get 1/3 of that. That money could be used to fund something for the common good of all such as social security or health care.

None of these good things can happen until we first buy these mortgages. That is why I favor this approach.

Re: Wikipedia and 'lilGW flat out busted and caught red-handed

Bobo, your point is well taken. Wall Street really has been invaded by hoodlums over the past 10 years and Cox is almost certainly the new Boss Tweed of NYC.

But lets set that issue aside for a moment so as to not lose sight of the key point of my previous post. After the government (we) buys us these sub prime mortgages for 50 cents on the dollar, we will transform them into prime risk to any mortgages. These will not be prime just in name. They will really be prime mortgages with very little risk for to any investor who is buying them. Each mortgage will have a significant equity position and each will have a fixed rate mortgage payment which has been fixed at a rate that the owner can afford. And, of greatest significance, each will be insured for 10 years against a loss do to foreclosure. Income investments of this quality are very attractive for many “legit” entities such as pension funds and insurance companies. In fact, it is likely that new REITS will form to take advantage of these mortgages. For an example of how this would work, check out a newly formed company, American Capital Agency Corp (AGNC).

http://www.agnc.com/investor_relations/agnc_IR_factsheet.pdf

As I have researched this rescue plan, I have become more confident that it is the best solution and that it is a plan which will work.

Following is a link to a very interesting article written by a former hedge fund manager named Andy Kessler. In this article, Kessler makes the argument that the Paulson Plan could ultimately net the US government a profit of >>>> drum role >>>>> $2 trillion dollars. I don't believe that but I do believe we will see a handsome profit from this. I found this to be an interesting and thought provoking article.

“The Paulson Plan Will Make Money For Taxpayers” by Andy Kessler
http://online.wsj.com/article/SB122230704116773989.html?mod=article-outset-box