HERE’S A PERFECT ESCAPE ROUTE FOR JOCJOC BOLANTE

The artist should bear the blame if  the Rotarian Jocjoc Bolante picks this up and indeed borrows the idea.

Image borrowed from the artist Edwin Terima and  The Daily Tribune without permission. Thanks.

A DAY IN THE LIFE OF JOCJOC BOLANTE

Jocjoc Bolante’s foray into the world of acting was met by very bad reviews.  But the fault is not his alone.  Whoever the director is, his sense of realism is terrible.    It was bad enough that Bolante’s acting was limited to a right hand placed on his left breast, as in flag ceremonies, and an unaffecting grimace that is not quite a grimace, the props are for someone who tripped on a pavement, fell badly and broke a rib.  Hence, the long episode meant to be a tearjerker about a besieged fellow with a failing heart condition near the peripheries of death drew giggles and guffaws instead.

Original image from Philippine Star, borrowed without permission. Thanks.

PRAY, GMA, PRAY!

A very prayerful President praying…

DEATH DANCE OF THE DOLLAR?

US DOLLAR DEATH DANCE

The USDollar rally in the last several weeks has been remarkable. At closer examination, it highly resembles a spurt prior to death. Imagine an old man who just had a heart attack, lost feeling in certain body parts, his mind not working right, plenty of nonsense gibberish coming from his mouth, and now he is dancing hard on some last gasps. The vast liquidation movement is akin to the old man going through an embalming process while dancing atop the tables at the funeral parlor, as bidding proceeds for his cadaver. Are Americans last to realize the financial structure destruction means the USEconomy does not enter a recession, but rather a bizarre unprecedented disintegration? It seems so. The liquidation of speculative positions, the massive de-leveraging, the payouts of defaulted bonds, these events are the opposite of developments toward revival or resuscitation, like business investment!! Liquidation is the exact opposite of investment, and precedes job cuts, not job creation.

Here’s an analogy:

Bankruptcy receivership is next, where creditors will be left with few options. They will be compelled to run management committees, and dissolve many functions of government. Creditors will probably await the G8 initiative, then summarily reject it. They will next propose their own new global financial structure. The teenager’s credit card is about to be taken away, when the irresponsible kid proposes a new repayment system, new promises, new chores done even. The kid has burned down half the neighborhood, yet thinks he can call the shots! Sadly, the parents will probably ground him and force a tutor to direct his studies, and force a strict drill sergeant to direct his work activities. His friends will not be permitted to form new teams that include him. A ‘Post-US World’ is being planned, and Americans are the last to know.

Read more. 

Via Die Hard III.

TAUNTING THE ROTARIANS

Bravo, all Rotarians out there!!!

“WELCOME BACK, JOCJOC!”

THE AMAZING TRANSFORMATON OF DUBAI

Dubai in 1990.

Thirteen years later…

Construction craze in the desert city...

… and the plan to build here the world’s tallest building, one kilometer high!

Will it survive the global financial meltdown?

LIARS

On the Senate investigation on the Russian scandal today, I caught Senator Miriam Defensor Santiago who is chair of the investigating panel indignantly mouthing interesting lines directed to the DILG chief Ricardo Puno: “I am angered when I am lied to with a straight face!” and ” an innocent man must be brave as a lion!”  I thought I also caught there a fleeting moment of unease.   Remember that some years back, she was famous for this quote: “I lied, I lied!” followed by a loud guffaw when reminded about a promise she made to jump from a helicopter  (in what circumstance she made those I could not now recall), a promise Puno probably laments now for not having been fulfilled.  Of course, she made a joke of herself then as we all do from time to time.  But if it were me in her shoes today, I would have choked a little.  It is one thing to make fun of oneself once in a while but when you make such public pronouncements about principles to establish moral high ground, it’s a another thing altogether, though comical still in a different sense.  After all, her most favorite President is known for lying through her teeth with a straight face and was never as brave as a lion about the very serious allegations against her.  Yet in all those times did we see any hint of anger in Senator Santiago.  Nah, she was happily part of the defensive wall who mocked all GMA accusers.

An advice we make to the Euro-generals (ah, what a shameful tag to acquire in exchange for a bounty that went for naught): review the recent past.  There are ample lessons to learn from there.  Look for an equivalent of or something close to the President’s executive privilege.  Accuse Senator Santiago and company of political grandstanding.  Remind them of grander scandals that would make the P10M look like loose change.   Hide, or better yet, burn documents and scare away or buy witnesses then taunt your accusers:”where’s your evidence?” as you insist that the courts are the proper forum not the legislature. Let this matter simmer down for months then when things are cooler, you declaim the famous line “let’s move on!” because this pettiness is diverting us from the real problems.  Most important, bury all shame, gentlemen.

In short, use GMAs tried-and-tested strategy before she applies for patent.  It worked for her so well.  It should work for you too.

Ah, but the life is not fair.

GET THOSE WILLING SCAPEGOATS

DJB of Philippine Commentary thinks that the Supreme Court ruling declaring the MOA-AD as unconstitutional also absolved the President.

Note well how the final paragraphs of the Majority Decision dispose of the case as one of disobeying the Wise Orders of the President: IN SUM, the Presidential Adviser on the Peace Process committed grave abuse of discretion when he failed to carry out the pertinent consultation process, as mandated by E.O. No. 3, Republic Act No. 7160, and Republic Act No. 8371. The furtive process by which the MOA-AD was designed and crafted runs contrary to and in excess of the legal authority, and amounts to a whimsical, capricious, oppressive, arbitrary and despotic exercise thereof. It illustrates a gross evasion of positive duty and a virtual refusal to perform the duty enjoined.

I agree.  General Hermogenes Esperon and company do not seem to know it yet but their goose is cooked.

When GMA started distancing herself from the MOA-AD, her advisers telling she never even read the document, or she was unaware of the details, or that she was only providing general guidelines, it was clear as day she was escaping responsibility.   Who would believe such a bull, if not some idiot, that a President famous for meticulosity and micromanaging would ever be clueless about an agreement bearing such serious consequences to the nation?  As the PDI editorial belabors to explain:

Poor President Gloria Macapagal-Arroyo. If Ermita is to be believed, this most detail-oriented of chief executives was a victim of incompetent or dangerously ambitious appointees, who managed to put together an agreement on the highly contentious issue of ancestral domain with the Moro Islamic Liberation Front, complete with a high-profile signing ceremony scheduled in Kuala Lumpur, with international diplomatic dignitaries in attendance, without the President’s knowledge

Some idiots, indeed (and you admire PDI for exerting effort to point out the obvious).  But when did GMA ever manifest any sign of bother with logical implications or even illogic. Perhaps, if you have too much experience with scandals like “Hello, Garci!”, Jose Pidal, Jocjoc Bolante fertilizer scam, NBN-ZTE, and a host of others where  abrasive use of political power not cold compelling reason made you survive, you too might lose appetite to invest on reason.  Who cares about reason, if you have power?

The common denominator in those scandals, if Esperon and company only paid attention in between moments of power tripping, is how to get off the hook, by hook or by crook; in fact, in many cases, they even helped dig for escape routes.  For this particular scandal, the thing to do is to establish early on that if anything is ever wrong, if a punishable crime was ever committed, she’s got nothing to do with it!  “Don’t look at me!  Look at Esperon!”  Hahaha!  Your turn at the furnace, gentlemen.

Scapegoat:  “… a person or group made to bear the blame for others or to suffer in their place”.  Goats are meek animals which generally resist little when offered as sacrifice.

I say, get those government negotiators to answer for the bloody mess in Mindanao— for those hundred lives lost, for those tens of thousands displaced from their homes, for those precious government resources now being redirected to war effort, rescue and settlement.  If some goats are willing to take the butchering in her place, by all means, let GMA off.  They want to let their principal go, so be it, but let the full blow fall on them without mercy. You offer yourself willingly,  take the butcher’s knife in full measure.

ONE BIG MESS AT THE NATIONAL POLICE

Looks like we have one messy scandal unraveling at the PNP.  First, a retired police general acting as disbursement officer of a delegation of top police officers to an Interpol conference  held in Russia is now being held there for carrying too much cash.  Why a retired/retiring police general would still be chosen to be part of the delegation to this conference is puzzling as his being assigned to be the group’s disbursement officer.  The cash caught by Russian authorities for breaching the limit was supposedly a contingency fund as per official explanation but you could easily sense that things are being rashly put together just to satisfy curious inquiries.  Then news comes out that still another group of top cops are on an official trip to Europe, the nature of which is unclear, with stupendous allowances to boot! This is getting curiouser and curiouser.

Now tell us why amidst all this Junior police officers would be in high spirits!

As in most times when I get really curious, I surf for answers and found this one by Tongue-twisted from ellentordesillas.com, which I quote in here (some names deleted):

Sa wakas nakita ko na uli yung suki kong tinapa vendor! Tinanong ko kung may alam siya tungkol sa mga pulis na nahulidap sa Russia, nagkwento yung mama.

Si xxxxxxxxx ay binigyan ng despedida ng isang supplier ng PNP kaya inisponsor yung biyahe nila. Sigurado nga namang kukwestiyunin ng COA yung gastos ni xxxxxxxxxx dahil aabutan na siya ng retirement sa kalagitnaan ng Interpol Conference. Kaya naman nagpa-approve ng P2.4M na cash advance para sa gastusin nila. Huling junket na niya iyon.

E bakit sinama yung mga asawa?

Ganun naman talaga pag nanunuhol ka ng mga opisyal, e. Hangga’t maaari marami kang isasabit para hawak mo sila sa leeg. Kaya kasama silang inisponsoran.

Bakit kasama yung asawa ni xxxxxxxx?

Kasi nga imbitado yung mga asawa nung iba, alangan namang sila lang ang makikinabang sa shopping money. Isa pa, buking na ng mga asawa ng mga parak na napakamura ng mga babae sa Russia na mas magaganda pa sa mga artista sa Hollwood o mga supermodels, sa US$400 mo, makakadale ka na ng mala-Angelina Jolie o Giselle Bundchen. Kaya Jaworski-style ang man-to-man ng mga esmi. Isa pa, kung maraming perang dala, pwedeng hatiin sa dalawa at hindi magmumukhang malaki, diba?

Saan naman nanggaling yung 7.5M Euros?

Napakadali namang mag-wire transfer mula sa Europa hanggang Russia, e. Di natunugan agad ng Russian Anti-Money Laundering dahil si xxxxxxxx siguro mismo ang kumuha ng pera sa bangko. Kalokohan lang yung sinasabing hindi naideklara kaya nahuli, finance ang expertise niya, alam na niyang kailangang ideklara iyon at di lang naman ito ang unang biyahe niya, ‘no. Papano naman niya ili-liquidate yung P7.5M samantalang P2.4M lang ang cash advance? Hello? Kaya lumakas ang loob niyang ilabas iyon ng Russia dahil nakalusot na iyong ibang Heneral na may dala rin na nagpunta sa Europe at US, hindi nakwestiyon sa airport dahil hindi naman sila nakatimbre na may dala, maliban lang kay xxxxxxxxxx dahil siya nga ang kumuha sa bangko.

Ibig mong sabihin, yung 120,000 euros kay xxxxxxxxxx lang lahat iyon dahil nakuha na nung iba yung kanila?

Hindi, kasama yung kay xxxxxxxxxx doon pero maliit lang yon. Kaya nga hindi maiwan ni xxxxxxxxxx kahit pa inabot ng expiration yung passport niya. Pero yung ibang nasa Europe at nagpunta sa America pwede ring nasa tig-$10,000 lang, $20,000 kung kasama ang asawa ang equivalent nun kaya lusot sa anti-money laundering limit. Bakit naman kasi sa Hong Kong pa gustong mag-shopping ni misis, e napahiwalay tuloy sila a grupo.

Bakit naman pinag-iinitan yung mga pulis natin, ang dami namang pulis na um-attend sa conference?

Iyan ang tanong, bakit yung mga pulis ng ibang bansa, yung mayayamang bansa pa ha, maliliit lang ang baong pera, samantalang yung pulubing bansang Pilipinas, sandamukal ang kwarta. Ang nakakahiya niyan, puro matataas na opisyal ng mga kapulisan ng mga bansa ang nasa conference, pati na ang top brass ng Interpol at sa ngayon, pinagtatawanan na nila ang mga pulis patola natin.

Di kaya isinumbong ng kapwa nila pulis na nakatunog na may masamang balak ang grupong ito?

Pwede rin. Alam mo naman si Sen. Ping, maraming kaibigan sa Interpol. Pwede ring yung mga heneral na hindi nakasama, nainggit at itinimbre sa kapwa nila pulis sa Russia. Alam mo bang meron pang ibang grupo ng mga parak ay paalis pa lang o naroon na sa Germany, mga labing-isa sila, na karamihan e mga Metro Manila commanders, kasama pa yata si Gerry Barias na bagong promote at yung chief security officer ng Batasan? Marami ng opisyal ang halos sabay-sabay na nag-alisan papuntang ibang bansa sa kung anu-anong lakad, may kinalaman siguro sa bagong impeachment sa isang binabalak ng gobyerno. Diba yung Sec. Gen. ng Batasan nasa Switzerland, magwi-withdraw rin kaya, pati yata si Villar at Pia Cayetano nandun din. Partida, bro, may krisis pa sa pananalapi, laking ginagastos ng gobyerno sa mga biyahe at parang hindi na uso ang pera kung gastusin.

Saan mo nalaman iyang mga iyan?

Kakadeliver ko pa lang ng daing at tuyo sa Crame kaya sariwa ang nasagap ko. Papunta akong Malakanyang para magdeliver nitong danggit at pusit.

MEXICAN PRESIDENT WANTS TO LEGALIZE DRUGS

Mexican President Felipe Calderon is mulling on legalizing drugs.

Wise and brave decision to make but will he survive it?

He will be up against a very formidable alliance of the most unlikely kind— of drug lords and anti-drug movements themselves— for two contrasting reasons.  Drug lords, because drug trade is more profitable and firmly under their control in an atmosphere of prohibition.  Anti-drug groups, for the old noble reason of shielding society from evil.

My previous related entry: An argument for the legalization of drugs

NUKE POWER, MARCOS, AND THE PHILIPPINES

Research chief wants us to take another look at nuclear power and even Senator Miriam Santiago wants reopening of the Bataan Nuclear Power Plant.

There are many obstacles but the major one I believe would be coming from the remnants of the anti-Marcos movement which remain strong to this day.

It is all about pride.  You reopen the BNPP and you acknowledge that Ferdinand Marcos, the evil one, was right all along about going nuclear.  You reopen BNPP and you admit that the decision to mothball the plant was wrong and that the taxpayers who paid for the facility were unjustly denied of its benefits all this time.  Add the fact that the present high prices of power burdening every household and rendering our industries uncompetitive find its origin in that decision.

Related entry: Why we should go nuclear

OBSCENITIES AND MANOLING MORATO

Manoling Morato was once this nation’s chief censor who saw obscenities in exposed nipples and pubic hair.  This one time moral guardian of our society wants us to believe that whistle-blower Rodolfo Lozada and the nuns made up all the stories.

Even the lowly poor souls from the remote areas of the islands knew that the whole thing was a sting. As a matter of fact, Lozada was treated well and protected from those in the opposition who wished to silence him. (itals mine)

Hahaha, that obscene shriveled bastard!

GMA LOSES ON THE MOA-ANCESTRAL DOMAIN CONTROVERSY

Palace loses on MOA-AD

In a display of independence, the Supreme Court has struck down the scuttled ancestral domain agreement with the Moro Islamic Liberation Front that would have opened the country to dismemberment.

Voting 8-7, the Tribunal ruled on the merits of the petition questioning the constitutionality of the Memorandum of Agreement on Ancestral Domain that would have expanded the coverage of the Autonomous Region in Muslim Mindanao under the BangsaMoro Juridical Entity.

The clincher was provided by Senior Justice Leonardo Quisumbing who was the last one to submit his vote. Quisumbing is the only magistrate in the 15-man body who is not an appointee of President Arroyo, having been named to the Court by then President Ramos before he stepped down in 1998. He retires as member of the High Court next year.

The minority’s position was to declare the anti-MOA petitions as moot since the Palace has already decided not to pursue the signing of the agreement following a public backlash. This would have given the Palace a graceful exit, if not, defeat.

Expect suits to hound the proponents.

UPDATE:  Transcript of the Supreme Court Decision via DJB

THE LOPEZES IN DIRE STRAITS

Malaya banners this story in its business section: Trapped

The Lopez Group once again is in a bind after aggressively buying government assets.

For the third time, the group are letting go of assets bought from the government. Will Manuel V. Pangilinan again come to their rescue?

Pangilinan bought Maynilad Water Services Inc. after the Lopez Group surrendered the concession to the government.

A couple of months back, Pangilinan bought the tollway operations of the group for over P12 billion.

This time, the Lopez Group, is selling the Panta-bangan-Masiway plants to pay off debts maturing in less than a month.

First Gen needs to pay banks close to $442 million by November 20. In 2001, a bank came close to declaring the group in default at the height of the Maynilad problem. A study done by the central bank in 2002 showed that the group accounted for 20 percent of past due loans in the system.

First Gen’s funding problems could not have come at a worse time considering the current global turmoil.

“It will be a lot more difficult to raise financing right now”, an industry leader said, “so they are at risk. With default and cross defaults their problem might affect banks, “he added.

Looks like a replay of the 70s when the old patriarch ran for rescue to Marcos.  Then the story changed to that of Marcos holding a son hostage to force the Lopezes to sell Meralco for a song.

TEEHANKEE, THE KILLER

I don’t know but when I saw a picture of Teehankee on the Internet just as the news of his release broke out, I felt a tingle.  He reminds me of Hanninal Lecter, cold and composed and dapper, and it’s kinda scary.   There’s something about the gruesome murder that suggests a criminal, malevolent mind.  How old was he then? mid 40’s? to blame youthful rage?  And what was that petty quarrel all about?    Figure out what kind of man could shoot in cold-blooded fashion such helpless, harmless victims begging for their lives.   This man is insane and dangerous!  And when you learn that he is leaving jail not a changed man at all showing “no indication that he was remorseful for the killing of Maureen Hultman and Roland John Hapman and the near fatal attack on Jussi Leno”, there’s even more reason to get scared.

I have a relative who spent time in prison for illegal possession of firearms.  He was out after appeal in about four years.  Before his prison time, he was his family’s big bad wolf.  One time, he almost killed his brother with a bayonet after a spat one Good Friday.  The family was expecting a changed man.  In prison, he was well-behaved.  He played the part for a few weeks even drawing pity for the inconsideration of those who won’t give him a chance.  It became apparent later on that one thing he learned in prison was acting: acting pitiful, acting underdog, acting innocent.  The family was dejected.   In a few months, he was back to his old evil ways in full measure.  The family that was all quiet all the time he was in prison is back in mayhem.  A year or two after his release, he figured in a gunfight, him against three. The story was he walked away from the scene of the fight bloodied, took a tricycle and headed to another relative a few kilometers away as his fallen adversaries were rushed to the hospital.  As he sat on a bench waiting for an ambulance and his mother for rescue, he swallowed a grain of shabu and joked around with the relative while blood flowed on the floor.  He survived, to his doctor’s amazement, to tell his Wild West experience.  To this day the family is wondering whether it was a good idea he ever left prison.

Some it seems are born really bad.

DAILY TRIBUNE IS FOR VILLAR

It is clear by now that The Daily Tribune has cast its lot with Senate President Manny Villar on the C5 insertion controversy.  No problem with that for as long as it sticks to issues and stays consistent with principles as it championed in the past without favor.  You plaster up front such a slogan as “without fear or favor,” you better live by it and live with it.    But the opposition paper is now sounding more the rabid guard dogs that Ermita or Bunye or Dureza are on President GMA.  The lines ring familiar, if phrased differently: where’s the proof of any wrongdoing? this is purely politics! this is old hat! How ironic because Tribune would routinely sneer at such a repartee when coming from the direction of the Palace.

The issue about the alleged budgetary “insertion” needs explaining from no less than Speaker Villar himself as the proponent of the budget “amendment”.  To this day, it is not clear even to me, and my IQ is not low, whether in fact it was an error, a backhanded insertion, a legit allocation or what.   This is a case of too much ado over nothing?!  If anything at all,  the paper should at least ask Villar to get out and come clean, if oh so gently, as it was wont to do on Malacañang in the past, with fists raised in righteous indignation.  Up to now,  Villar has yet to come out openly to answer the charges point by point except for denials couched in the most general terms.   That Tribune does not seem to mind this uncharacteristic dodging by one supposedly being falsely accused only betrays motivation.  Oh, try this: were it the First Gentlemen the person involved in a similar controversy, would it be as defensive and dismissive?  Even Joker Arroyo whom its publisher often refer to as Honorable Shit now gets to be quoted so often to buttress its defense of the Speaker.  Funny shit!

As I was saying, in friends, what are harmless defects, in enemies, they are a despicable abomination.  For people we despise,  we allow them the eye of a needle; for our friends and allies, the whole wide mouth of the Mississippi River.

Human nature.

Now, will Tribune ever even read this: a case for plunder?

Villar as presidential candidate is damaged goods and so is Tribune’s credibility.

WARREN BUFFETT ON THE AMERICAN FINANCIAL CRISIS

Warren Buffett, the world’s richest man, talks about the financial crisis: “this is economic Pearl Harbor!”

ON BAILING OUT AMERICA

An excellent essay on the Bailout Plan:

When the Gamblers Bailout the Casino

Why should American taxpayers give US Treasury Secretary “Hank” Paulson a blank check to bail out the shareholders of busted banks? Why should the Treasury turn itself into a toxic waste dump for their bad loans? Why not let other banks join the unlamented Brothers Lehman in bankruptcy court, and start a new bank with taxpayers’ money? Or have the Treasury pay interest on delinquent mortgages, and make them whole? Even better, why not let the Chinese, or the Saudis or other foreign investors take control of failed American banks? They’ve got the money, and they gladly would pay a premium for an inside seat at the American table.

None of the above will occur. America will give between US$700-$800 billion to the Treasury to buy any bank assets it wants, on any terms, with no possible legal recourse. It is an invitation to abuse of power unparalleled in American history, in which ill-paid civil servants will set prices on the portfolios of the banking system with no oversight and no threat of legal penalty.

Why are the voices raised in protest so shrill and few? Why will Americans fall on their fountain-pens for their bankers? If America is to adopt socialism, why not have socialism for the poor, rather than for the rich? Why should American households that earn $50,000 a year subsidize Goldman Sachs partners who earn $5 million a year?

Believe it or not, there is a rational explanation, and quite in keeping with America’s national motto, E pluribus hokum. Part of the problem is that Wall Street, like the ethnic godfather in the old joke, has made America an offer it can’t understand. The collapsing the mortgage-backed securities market embodies a degree of complexity that mystifies the average policy wonk. But that is a lesser, superficial side of the story.

Paulson’s dreadful scheme will become law, because Americans love their bankers. The bankers enable their collective gambling habit. Think of America as a town with one casino, in which the only economic activity is gambling. Most people lose, but the casino keeps lending them more money to play. Eventually, of course, the casino must go bankrupt. At this point, the townspeople people vote to tax themselves in order to bail out the casino. Collectively, the gamblers cannot help but lose; individually they nonetheless hope to win their way out of the hole.
Americans are so deep in the hole that they might as well keep putting borrowed quarters into the one-armed bandit. They have hardly saved anything for the past 10 years. Instead, they counted on capital gains to replace the retirement savings they never put aside, first in tech stocks, then in houses. That hasn’t worked out. The S&P 500 Index of American equities today is worth what it was in 1997, after adjusting for inflation (and a pensioner who sells stock purchased in 1997 will pay a 20% capital gains tax on an illusory inflationary gain of 40%). Home prices doubled between 1997 and 2007 before falling by more than 20%, with no floor in sight.

As it is, many of the baby boomers now on the verge of retirement will spend their declining years working at Wal-Mart or McDonalds rather than cruising the Caribbean. Some of them still have time to tighten their belts and save 10% of their income (by consuming 10% less), plus a good deal more to compensate for the missing savings of the 1990s.

Altogether, they’d rather gamble, and if that requires a bailout of the house, they gladly will chip in to pay for it. After all, today’s baby boomers won’t pay for the bailout. The next generation of taxpayers will pay for Paulson’s $700-$800 billion. If that enables the present generation to keep borrowing rather than saving, it is no skin off their back. If home prices continue to collapse, the baby boomers will die in debt anyway, working at low-paying jobs until the day before their funerals.

The homeowners of America hope against hope that somehow, sometime, the price of their one only asset will bounce back. The character of Mortimer Duke in the 1983 film Trading Places comes to mind. After losing his fortune in the frozen orange juice futures market, Duke screams, “I want trading reopened right now. Get those brokers back in here! Turn those machines back on! Turn those machines back on!” If a reverse takeover of the US government by Goldman Sachs is what it takes to turn the machines back on, the American public will support it. Sadly, there is no reason to expect the bailout of bank shareholders to have any effect at all on American home prices, which will continue to sink into the sand.

Contrary to what the Bush administration says, it is not the case that banks’ troubled mortgage assets cannot be sold in the private market. Those are the so-called “Level III” assets that banks say they cannot value. But that is only a dodge that the banks use to postpone taking losses. There is a ready bid for these assets from hedge funds, in multi-hundred-billion-dollar size. The trouble is that the market bid is 25% to 30% below the prices that banks carry these assets on their books. Traders at Wall Street boutiques who specialize in distressed securities say that US regional banks regularly make discreet offers to sell private mortgage-backed securities (not guaranteed by a federal agency) at prices, for example, of 75 to 80 cents on the dollar. Hedge funds bid, for example, 55 to 60 cents in return.

On rare occasions, the bank seller and the hedge fund buyer will meet in the middle, although very few transactions occur. Although many banks are desperate to sell, they cannot accept the offered price without taking losses over the threshold of mortality, for write-downs of this magnitude would destroy their shareholders’ capital. Investment banks typically hold about $30 of securities for every $1 of capital, so a 3% write-down would leave them insolvent. Lehman Brothers classified 14% of its assets as Level III at the end of the first quarter; Goldman Sachs was at 13%. Why is Lehman bankrupt, and Goldman Sachs still in business? If Secretary Paulson, the former head of Goldman Sachs, had not proposed a general bailout last week, we might already have had the answer to that question.

For the Paulson bailout to be helpful to the banks, it must buy their securities at much higher prices than the private market is willing to pay. Otherwise it makes no sense at all, for the banks could sell at any moment to the hedge funds. But that is a subsidy to private banks, administered at the whim of the Treasury Secretary, without oversight and without the possibility of legal recourse.

Some Democrats in Congress are asking for some form of oversight, but it is hard to imagine how they might use it, for a Treasury with $800 billion to spend would constitute the whole market bid for low-quality mortgage assets, and would set whatever prices it wished. Professionals with years of experience set prices on these securities with great uncertainty. How would an overseer determine if it had set the correct price? And if the Treasury decided to bail out one bank (say, Goldman Sachs) rather than another, how would the overseer judge whether that decision was judicious, politically motivated, venal, or arbitrary?

Opposition to the Treasury plan is disturbingly thing. Bloomberg News on June 21 quoted the Democratic chairman of the Senate Banking Committee, Christopher Dodd, saying, “I know of nobody who is arguing over the amount of money or even about that the secretary ought to have the authority to purchase these toxic instruments, these bad debts.”

Why the taxpayers of America would allow their pockets to be picked in this fashion requires a different sort of explanation than one finds in economics textbooks. My analogy of gamblers taxing themselves to bail out the casino is inspired, in part, by a remarkable new book by the Canadian economists Reuven and Gabrielle Brenner (with Aaron Brown), A World of Chance. In effect, the Brenners re-interpret economic theory in terms of gambling, showing how profoundly gambling figures into human behavior, especially in such matters as so-called life-cycle investing. The 50-ish householder who has not made enough to retire may take outsized chances, considering that as matters stand, he will work until he drops dead in any case. The Brenners write:

If people reach the age of fifty or fifty-five and have not “made it,” what are their financial options to still live the good life? Except for allocating a few bucks to buy lottery tickets, it is hard to think of any other option. If people find themselves down on their luck and see no immediate opportunities to get rich, what can they do to sustain their hopes and dreams? Allocating a fraction of their portfolios with a chance to win a large prize is among the options. And when people are leapfrogged – that is, when some “Joneses” who were “below” them jump ahead – how can they catch up? They will tend to challenge their luck for a while, taking risks that they might have contemplated before in business, financial markets, and other areas but did not follow up with action.

A World of Chance undermines our usual view of “economic man” and substitutes the angst-ridden, uncertain denizen of a world that offers no certainties and requires risk-taking as a matter of survival. I hope to offer a proper review of the work in the near future. As my marker, though, permit me to leave the thought that for providing a theoretical foundation for the counter-intuitive behavior of American taxpayers, the Brenners deserve the Nobel Prize in economics.

Alas for the gamblers of America: they will tax themselves to keep the casino in operation, but it will not profit them. Where, oh where, is America’s Vladimir Putin, who will drive out the oligarchs who have stolen the country’s treasure and debased its currency

BONGBONG MARCOS FOR PRESIDENT?

Imelda Marcos, wife of the late dictator, is making it known she wants the son and namesake of her husband to run for President in the next presidential election.

This looks like a trial balloon.

The Marcoses have been slowly making a comeback since their forced eviction from the Palace in 1986 by a widely popular uprising called People Power.  Twenty two years since and a hundred or so suits, they remain out of the jail where the former enemies of the dictator would happily want them to be.  To the chagrin of these anti-Marcos forces, in a survey that pitted the former president with all his successors as to who was the best president, the president dubbed as the most hated easily topped them all.

Bongbong Marcos does not have the eloquence and brilliance of the father but the son appears to have inherited the combined charisma of the former strongman and the mother.  As a legislator, he remains unimpressive.  But his stint in Ilocos Norte as provincial governor was capped by the completion and switch-on of the windmill power plant that was his pet project.  The first in the Philippines and Southeast Asia, this big project is a voucher for his executive ability.   In a country where undertakings so much smaller could easily get stuck in a bureaucratic quagmire for years on end, he’s got something big and solid to show that is hard to match.  And as humanity teeters at the edge of a potential climatic disaster and energy crises, he comes off as a leader possessing foresight, with these wind turbines.

But the anti-Marcos forces remain strong and powerful, if dwindled by age and dismay.  The core groups would presumably fight tooth and nail to prevent a Marcos becoming President again.

THIS MADE ME LAUGH

A store that sells husbands has just opened in New York City , where a woman may go to choose a husband.  Among the instructions at the entrance is a description of how the store operates.  You may visit the store ONLY ONCE!  There are six floors and the attributes of the men increase as the shopper ascends the flights.  There is, however, a catch…… You may choose any man from a particular floor, or you may choose to go up a floor, but you cannot go back down except to exit the building! So, a woman goes to the Husband Store to find a husband.

On the first floor the sign on the door reads:
Floor 1 – These men have jobs and love the Lord.

The second floor sign reads:
Floor 2 – These men have jobs, love the Lord, and love kids.

The third floor sign reads:
Floor 3 – These men have jobs, love the Lord, love kids, and are extremely good looking.

“Wow,” she thinks, but feels compelled to keep going.

She goes to the fourth floor and sign reads:

Floor 4 – These men have jobs, love the Lord, love kids, are drop-dead good looking and help with the housework.

“Oh, mercy me!” she exclaims, “I can hardly stand it!”

Still, she goes to the fifth floor and sign reads:

Floor 5 – These men have jobs, love the Lord, love kids, are drop-dead gorgeous, help with the housework, and have a strong romantic streak.

She is so tempted to stay, but she goes to the sixth floor and the sign reads:

Floor 6 – You are visitor 4,363,012 to this floor.  There are no men on this floor.  This floor exists solely as proof that women are impossible to please.  Thank you for shopping at the Husband Store.  Watch your step as you exit the building, and have a nice day!

from superkamote.com