The Occupiers’ World Awaits

The Occupiers’ World Awaits

By David
P. McGinley

My most heartfelt wish for the mindless minions
currently “Occupy[ing] Wall Street” is that someday, hopefully soon, they get to
live in a world based upon their dim-witted delusions.  Actually, though, if
these collectivist cretins are indeed serious, that world is already


It’s called the Democratic People’s Republic of Korea
(aka communist North Korea).  In North Korea, there are no evil corporations or
banks to ruin Occupiers’ lives, because another pair of collectivist cretins,
Kim Il-sung and his creepy son Kim Jung-il, got rid of them long ago.  In fact,
along with ridding North Korea of everything other than the glorious state, the
Kim Klan has either already met most of the Occupier’s nattering
or simply made them superfluous.


For demands one (that is not a typo — there are a lot
of demands in demand one), “the restoration of the living wage,” North Korea has
followed the Occupiers’ proposed playbook and ended “Freetrade [sic]” by
creating a trade-free society.  Additionally, in North Korea, there is no need
to slap “trade tariffs” on imports of “cheap products” to “level the playing
field” because the Kims have created an import-free society as well.  As for the
“twenty dollar an hour minimum wage” demand,  life is just too short (literally)
in the Kimdom to worry about something so inconsequential when one is privileged
to live under the cradle-to-(early-)grave care of the “Dear


Demand two, “a universal single payer healthcare
system,” was instituted way back in 1948.  For more than sixty years now, all of
North Korea’s lucky citizens have received the same horrendous level of medical
treatment.  The Occupiers will be heartened to know that everyone does his or
her “fair share” of suffering.  And fear not, dear Occupiers — because the
government is in charge, greedy private insurers cannot take money away from
doctors, nurses, and hospitals…because there is no money.  But the biggest
benefit is that there are no big pharmaceutical companies to stick it to the
average North Korean by producing life-saving drugs (or any drugs, for that
matter) and selfishly expecting payment for them.


There is really good news when it comes to demand
three, a “[g]uaranteed living wage income regardless of employment.”  The cost
of living (i.e., barely surviving) is real cheap in North Korea, with the
average North Korean living (i.e., barely surviving) on one dollar per month.
Additionally, there are almost no jobs, so employment is not a


The good news just keeps coming as the benevolent Kims
have already met demand four: “free college education.”  But there are a few
strings attached, such as that you do not get to go to the college of your
choice, if you get to go at all; that would be up to the state.  Also, sometimes
the benevolent North Korean government might decide to send you to a
re-education institution instead (maybe for publicly demonstrating, or just
because it feels like it).  But, on the bright side, there are no student loans
to pay off — only the continued payment of a lifelong servitude to the

Demand five is one the Kim Klan has made unnecessary:
“begin a fast track process to bring the fossil fuel economy to an end while at
the same bringing the alternative energy economy up to energy demand.”  There is
no economy in North Korea, so there is no need to fuel it.  However, on the
bright side, the North Koreans do use an alternative energy — burning feces —
to heat their homes during the winter.


Demand six is another superfluous petition: “One
trillion dollars in infrastructure (Water, Sewer, Rail, Roads and Bridges and
Electrical Grid) spending now.”  The Kims have made it so North Korea does not
need roads and bridges because no one can afford a car anyway, and an electrical
grid is just a wasted expense in a country with barely any electricity.  Anyway,
the Dear Leader already makes sure everyone gets his “fair share” of
electricity, and he has been quite generous and innovative with North Korea’s
water and sewer systems; both openly run together through the


The Occupier’s seventh demand of “[o]ne trillion
dollars in ecological restoration planting forests, reestablishing wetlands and
the natural flow of river systems and decommissioning of all of America’s
nuclear power plants” maybe one demand too far even for the little miracle
worker Kim Jung Il.  First off, North Korea is a Democratic People’s Republic
and, as in all Democratic Peoples’ Republics, ecology is always the state’s
official number one concern so any restoration is simply not needed.  Second,
there is very little the Dear Leader can do to personally shut down America’s
nuclear power plants but maybe he can get the Obama Administration to do so as a
concession the next time he throws a fit and threatens to blow up the


Demand eight for a “[r]acial and gender equal rights
amendment” is not necessary because all North Koreans are the same race and
regardless of gender all are treated like prisoners.  Of course, all the
Occupiers are not of the same race (though 99% are white) but, rest assured, the
Dear Leader would be more than glad to treat them like prisoners


Though not specifically meeting demand nine for
“[o]pen borders migration. anyone [sic] can travel anywhere to work and live,”
at least the Kim Klan does not discriminate (like the evil U.S.) in its border
policies.  Simply put, no one is allowed in or out of North Korea, and if you do
leave, your family will be imprisoned and/or killed.  The policy is a bit
brutal, but it is equally implemented, so at least it is


Demand number ten is something about “fair elections,”
which is moot because there are no elections in North Korea.  Thus, everyone
fairly and equally has the right not to vote, so there is no chance that Wall
Street money will corrupt the political process.  And not having elections
provides the extra benefit of doing away with the necessity for racist policies
like requiring photo ID at the polling places.


Demand eleven, “[i]mmediate across the board debt
forgiveness for all,” has been met in spades.  The North Korean government
unilaterally forgives all of its debts by simply refusing to pay (not that it
could).  And of course there is no consumer debt, because there is nothing to


Demand twelve, to “[o]utlaw all credit reporting
agencies,” like universal health care, was taken care of in 1948.  Regrettably,
some shooting was involved.


And finally, demand thirteen is about the right of the
worker to easily unionize.  Everyone already knows that there is no need for
unions in a worker’s paradise like North Korea.  All citizens voluntarily work
for the good of the state because failing to do so will get them shot.  Also,
there are barely any jobs in North Korea, so that is another reason why
unionizing is not an issue.


Maybe in the next “lies for food and oil” swindle Kim
Jong-il perpetrates on the morons in the U.S. State Department, we could at
least throw in a few thousand Occupiers as part of the deal.  Everyone would
win: 99.999% of Americans would be rid of these fools, and the Occupiers would
get to live in the world they demand.


David P. McGinley, an
attorney from McLean, VA, is a visiting professor at Handong International Law
School in South Korea.

Occupy Wall Street

Hedge Funds’ Alpha Led To Boom’s Omega

Hedge Funds’ Alpha Led To Boom’s Omega

By DAVID IGNATIUS | Posted Tuesday, October 28, 2008 4:30 PM PT

The hedge fund industry coined a term several years ago for the idea that special people (i.e., hedge fund managers) could achieve above-average returns without taking commensurate risk. They called this investment nirvana “alpha,” to distinguish it from the “beta” of average market returns available to ordinary investors who tracked, say, the S&P 500.

It was the ultimate elitist investment philosophy. The premise was that alpha managers were more clever than other people, and could therefore outperform the market. They could do the things that normal investors were cautioned against — time the markets’ ups and downs, engage in speculative short selling, borrow heavily to increase their returns.

These smarter-than-average managers offered their services to richer-than-average investors who could afford the hedge funds’ hefty fees.

This idea of special investment opportunities for the very rich created a kind of cult. Institutional Investor in 2003 began publishing Alpha magazine for the hedge fund mavens. In a taunt to the poor clods of the beta world, the magazine compiled an annual survey of what the leading fund managers were making.

The average compensation for the top 25 managers last year was a jaw-dropping $892 million, up from $532 million in 2006. Five managers “earned” (if that’s the right word) more than $1 billion each.

As the bubble economy expanded, the alpha managers became ever more confident of their ability to defy the fundamentals of the beta marketplace. They began speaking of “portable alpha,” which purported to remove market risk entirely from a portfolio by using futures, swaps, options and short selling. They were claiming, in effect, to have discovered the equivalent of a gravity-free world, an eternal banquet of free lunches.

The idea that you could use financial engineering to achieve high returns on capital with low risk became contagious. It wasn’t enough to grow with the underlying economy and prosper along with everyone else.

Banks and other financial institutions began seeking their own versions of alpha through strategies that sought to beat the averages. A favorite method was pooling traditional, plain-vanilla assets, such as mortgage loans, and turning them into tradable securities.

The players wanted their own slices of alpha: Smarter-than-average bankers could make big fees on securitization; smarter-than-average executives at Fannie Mae could harvest big bonuses.

The seduction was the idea that the risk inherent in individual loans — that pesky beta — would somehow drop out of the equation if the pool was big enough and the paper sold widely enough. Bankers began to talk as if market risk was a dial you could calibrate up or down, to fit your desired level of return.

That make-believe world began to crash in August 2007. Suddenly, there was no market for the paper assets that had been created out of pools of mortgages — because in a falling market, nobody knew what they were worth.

All the smarter-than-average people who had been chasing better-than-average returns began to be frightened. And over the past year, that fear became toxic. It sucked the trust and confidence out of markets; it was like trying to breathe on a planet with no oxygen.

And then the panic: That has been the most unattractive part of this story. The greed side of the alpha world was bad enough, with its $100 million homes and private art galleries. But the fear side has been more destructive. What’s driving the severe financial downturn now is the quest for “alpha security” among the richest and most powerful.

Having made their loot, the very rich are desperate to protect it. So “smart money” has been sitting on its cash — shunning any institution that might be contaminated, even a mighty Lehman Bros. — and refusing to lend for longer than 24 hours.

“Not since the beginning of the First World War has our banking system been so close to collapse,” warned Mervyn King, the governor of the Bank of England, in a recent speech. King, who helped devise the plan for recapitalization of banks that has now been embraced globally, is one of the few heroes in this crisis.

It’s not a pretty sight: People in the financial world tell me about friends who are buying safes in which to store their cash at home; about withdrawals of millions of dollars in currency to prepare for the ultimate meltdown. Now the alpha spirit comes back as hoarding, but with the same premise: I’m special. The rest of the world be damned.

© 2008 Washington Post Writers Group

Strange Economic News

Strange Economic News

Randall Hoven
Every breaking story about the economy is just chock full of bad news.  Or should I say bad speculations?  When it comes to real data, the bad news would rather play hide and seek.

The last quarter we have real data for was the second quarter — the one that ended in June.  And GDP growth then was 2.8%.  In fact, it was positive for the first two quarters this year (January through June), and the only two quarters we have real data on so far.  That, my friend, is not a recession — yet.


And the latest unemployment report?  Unchanged in September .  At 6.1%, not great, but it could be worse and at least it didn’t go up.  Also, oil prices are falling, almost like a bubble popping.


And now what do we hear?  The latest leading economic indicators went up when they were expected to go down.  The AP reported that the Conference Board’s monthly forecast of future economic activity rose 0.3 percent, a better reading than the 0.2 percent drop expected by Wall Street economists surveyed by Thomson/IF.


It sure seems like every time a stock index goes up it is attributed to something the government did — bail somebody out, buy some private assets, ease some rate, etc.  But every time it goes down it is attributed to something in the real economy — the unemployment report, for example.


But funny thing, after the big $850 billion bailout was signed into law, the S&P 500 index fell every single day for five days straight, for a cumulative loss of 18% in just one week.  But news reports didn’t blame it on the bailout.  The losses were attributed to this or that piece of economic data, like unemployment holding steady.  Huh?  Talk about an elephant in the room.


On this Monday, the market was up 4.8% in one day.  The reasons given were the prospect of another government stimulus package, that the bailout was reviving credit markets, or that the Federal Reserve was fixing to do some more good stuff.


But something else happened on Monday: the latest economic indicators were released, showing positive and better than expected numbers.


I’m beginning to suspect something:  there ain’t no damn recession.


I could be wrong, of course. But now, after the government has signed onto $1.8 trillion worth of bailouts, announces some new government goodie almost every day, and all but ushered Barack Obama into the White House, it’s no longer the same ball game.


If I didn’t know better, I’d say we just handed a trillion bucks of fun-money to Hank Paulson and his successor for no good reason.


Once upon a time a man appeared in a village and announced to the villagers that he would buy monkeys for $10 each.

The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at $10 and, as supply started to diminish, the villagers stopped their effort. He next announced that he would now buy monkeys at $20 each. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so scarce it was an effort to even find a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50 each! However, since he had to go to the city on some business, his assistant would buy on his behalf.  In the absence of the man, the assistant told the villagers:
“Look at all these monkeys in the big cage that the man has already collected.

I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.”

The villagers rounded up all their savings and bought all the monkeys for 700 billion dollars.

They never saw the man or his assistant again, only lots and lots of monkeys!

Now you have a better understanding of how the



Here is a quick look into 3 former Fannie Mae executives who have Brought down Wall Street.

Here is a quick look into 3 former Fannie Mae executives who have
Brought down Wall Street.

Franklin Raines was a Chairman and Chief Executive Officer at Fannie
Mae. Raines was forced to retire from his position with Fannie Mae
When auditing discovered severe irregularities in Fannie Mae’s
Accounting activities. At the time of his departure The Wall Street
Journal noted, ” Raines, who long defended the company’s accounting
Despite mounting evidence that it wasn’t proper, issued a statement late
Tuesday conceding that “mistakes were made” and saying he would assume
Responsibility as he had earlier promised. News reports indicate the
Company was under growing pressure from regulators to shake up its
Management in the wake of findings that the company’s books ran afoul of
Generally accepted accounting principles for four years.” Fannie Mae had
To reduce its surplus by $9 billion.

Raines left with a “golden parachute valued at $240 Million in benefits.
The Government filed suit against Raines when the depth of the
Accounting scandal became clear. . The Government
Noted, “The 101 charges reveal how the individuals improperly
Manipulated earnings to maximize their bonuses, while knowingly
Neglecting accounting systems and internal controls, misapplying over
Twenty accounting principles and misleading the regulator and the
Public. The Notice explains how they submitted six years of misleading
And inaccurate accounting statements and inaccurate capital reports that
Enabled them to grow Fannie Mae in an unsafe and unsound manner.” These
Ch arges were made in 2006. The Court ordered Raines to return $50
Million Dollars he received in bonuses based on the miss-stated Fannie
Mae profits.

Tim Howard – Was the Chief Financial Officer of Fannie Mae. Howard “was
A strong internal proponent of using accounting strategies that would
Ensure a “stable pattern of earnings” at Fannie. In everyday English –
He was cooking the books . The Government Investigation determined
That, “Chief Financial Officer, Tim Howard, failed to provide adequate
Oversight to key control and reporting funct ions within Fannie Mae,”

On June 16, 2006, Rep. Richard Baker, R-La., asked the Justice
Department to investigate his allegations that two former Fannie Mae
Executives lied to Congress in October 2004 when they denied
Manipulating the mortgage-finance giant’s income statement to achieve
Management pay bonuses. Investigations by federal regulators and the
company’s board of directors is nce concluded that management did
Manipulate 1998 earnings to trigger bonuses. Raines and Howard resigned
Under pressure in late 2004.

Howard’s Golden Parachute was estimated at $20 Million!

Jim Johnson – A former executive at Lehman Brothers and who was later
Forced from his position as Fannie Mae CEO. A look at the Office of
Federal Housing Enterprise Oversight’s May 2006 report
On mismanagement
And corruption inside Fannie Mae, and you’ll see some interesting things
About Johnson. Investigators found that Fannie Mae had hidden a
Substantial amount of Johnson’s 1998 compensation fr om the public,
Reporting that it was between $6 million and $7 million when it fact it
Was $21 million.” Johnson is currently under investigation for taking
Illegal loans from Countrywide while serving as CEO of Fannie Mae.

Johnson’s Golden Parachute was estimated at $28 Million.


FRANKLIN RAINES? Raines works for the Obama Campaign as Chief Economic

TIM HOWARD? Howard is also a Chief Economic Advisor to Obama

JIM JOHNSON? Johnson hired as a Senior Obama Finance Advisor and was
Selected to run Obama’s Vice Presidential Search Committee

Bailout Saga Proves that Elites Don’t Care What We Think

Bailout Saga Proves that Elites Don’t Care What We Think

October 4, 2008 – by Tom Blumer

In mid-September, when it became clear to Hank Paulson, Ben Bernanke, and George Bush that extraordinary measures were needed to address the mess that had built up in the financial markets during the past decade or so, their first instincts should have been to say:

  • “We need to have a complete plan to deal with this.”
  • “We need to make a case to Congress and the American people that our plan will work.”

They did neither of these things; nor did they even seem to consider whether what they wanted was even constitutional.

Instead, they in essence demanded that Congress and the American people give them a blank check, saying, “Do this, or else.” Last Sunday, I [1] called it blackmail. I stand by that.

Of course, a large plurality of Congressmen and Senators, along with a majority of the American people, were repulsed. The wonder is that everyone wasn’t.

Among the repulsed were well over 150 economists from across the political spectrum, including three Nobel laureates, [2] who signed a letter of protest (also [3] carried here; bolds are mine):

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayersÕ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

The monstrosity that became law yesterday (PDF-formatted first 250 pages [4] here) does not begin to adequately address the group’s three key concerns.

Fairness? Let’s talk about fairness to taxpayers and future generations. What assurances do we have, if any, that monies recovered when purchased assets are resold will go towards reducing the just-increased national debt? I fear it will instead be diverted to Uncle Sam’s day-to-day operations, enabling Congress and future presidents to further cover up an already over-the-top annual structural deficit. If you don’t think this can happen, just remember how Social Security has been [5] stripped bare for four decades.

Ambiguity? You can’t get much more ambiguous than what a Treasury official [6] told Forbes Magazine on September 23 (bolds are mine):

….. some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

“It’s not based on any particular data point,” a Treasury spokeswoman told Tuesday. “We just wanted to choose a really large number.”

Again: Blackmail.

Oh, and do you think that even the made-up $700 billion now enshrined into law is any kind of real limit? Think again.

The supposedly limiting language in Section 115 of the bill has to do with “the authority of the Secretary to purchase troubled assets” to certain amounts “outstanding at any one time.” Treasury’s authority starts at $250 billion; Congress can increase that authorization to as much as $700 billion.

With this language, under its “Troubled Assets Relief Program” (TARP) authorization, Treasury can initially purchase $250 billion in “troubled” loans. If it auctions off $50 billion of that amount, there will then be only $200 billion “outstanding.” Treasury can then go out and purchase another $50 billion. This can go on and on and on.

As far as I can tell, there is nothing that would prevent Treasury from continually buying, reselling, and replacing loans, thereby busting the supposed “limits” by hundreds of billions, if not trillions.

Given the billions that financial firms [7] appear poised to make in managing the largely outsourced program, Wall Street has the ability, and every incentive, to turn TARP into a fee-generating perpetual-motion machine while it is in place (theoretically, until the end of 2009).

Long-term effects? Heck, we’re already seeing proof of the long-term effects in the short-term. California’s Arnold Schwarzenegger, whose state has a welfare dependency rate that [8] is 2-1/2 times that of the rest of the nation, is making noises about getting [9] his own $7 billion bailout. The auto industry [10] is getting what was unthinkable even two years ago: $25 billion in loan guarantees, and with barely a whimper of objection.

[11] As I wrote yesterday:

….. what possible response, other than “okey-dokey,” is there to anyone who says, “Well, if you could handle $700 billion for the financial-services industry, how can you not provide $_____ (fill in the blank) for _________ (fill in the blank)?”

When the problem became clear, a mature Washington political culture would have done something close to the following:

  • Bush, Bernanke, and Paulson would have consulted with some of the aforementioned economists to craft a plan that would meet the three concerns they were forced to raise after the fact.
  • Bush would have called a joint session of the Senate and House to give Bernanke, Paulson and economists the chance to make their case to Congress and the nation.
  • Bush would have insisted that any changes to what they proposed would have to be germane to the plan (i.e., no pork, and nothing else extraneous).

Instead, what was three pages turned into 451. What was a bill with a made-up $700 billion price tag became a pork-laden bill with a made-up $850 billion price tag chock full of unrelated and dangerous provisions too numerous to mention here.

The just-enacted legislation will likely haunt the economy, and the nation, for years.

That we have a nearly incorrigible and immature Washington political culture has never been more clear.

Article printed from Pajamas Media:

Why and How the financial crisis happened

don’t fail to view its ten (10) minutes long video.  You won’t be sorry.
After you view it……pass it along to everyone you know.

Dear Congress: Put the gun down now

Senate package would bail out major foreign investors, including China