AYFKM?: Soros Thinks We Need More Stimulus

AYFKM?: Soros Thinks We Need More Stimulus

There aren’t very many people I detest more than George Soros (though Mishy does come immediately to mind), and his ability to write op-eds and have them published drives me bananas. His latest hogwash from the Financial Times, for example, writing about how more stimulus is necessary when we are close to $14 Trillion in debt.  Yeah, just keep digging would be Georgie’s advice.

America needs stimulus not virtue

But the crash of 2008 was primarily a failure of the private sector. US (and other) regulators should be faulted for failing to regulate. Without a bail-out, the financial system would have remained paralysed, making the subsequent recession much deeper and longer. Similarly, the US stimulus package was a necessary measure. The fact that most of it was spent to sustain consumption rather than on correcting the underlying imbalances was unavoidable due to time pressure.

Let’s remind folks, shall we?

‘Burning Down The House’

The op-ed continues:

Where the Obama administration went wrong was in how it bailed out the banking system: it helped the banks earn their way out of a hole by purchasing some of their bad assets and supplying them with cheap money. This, too, was guided by political considerations: it would have been more efficient to inject new equity into the banks but the president feared accusations of nationalisation and socialism.

Oh really?  If you aren’t reading Market-Ticker every single day, you aren’t aware of what is really going on.

Bernanke: I Am An Ass And A Looter

Worse, you can count the number of people who went to prison on the fingers of one hand, AND NOT ONE GOT NAILED FOR KNOWINGLY FALSE – MALICIOUSLY SO – SECURITIES SALES.

So they did it again.

This time in houses.

You know what happened.  You could have a mortgage to buy a house as long as you were breathing. No income, no job, no assets.  They even gave the loan a name – “NINJA.”  Bernanke knew this.  He was the supervisor of the banks.  He didn’t give a ****.  He knew damn well this crap was being securitized and sold off to people and that there was no way, on a long-term basis, these loans could be paid off.  These loans were given ONLY on the back of rising prices – nothing more.

Prices that had to rise 12% or more a year to cover a once-a-year flip costs – 6% for the buy, 6% for the sell, by the Realtards.  Maybe you’re good and negotiate 1% off per side.  Ok, the other 2% went to fees – fees that the banks got to keep, even if the paper was utter and complete CRAP.

Again, Bernanke didn’t give a ****.

Again, the bubble inflated.  This time in houses.  Bernanke claimed in sworn testimony as late as 2006 that there was no bubble and that housing prices reflected “strong fundamentals.”

BULL****!

Again the bubble popped.  You know what happened.  Millions of Americans lost their houses, millions lost jobs.

AGAIN, TRILLIONS IN WEALTH WERE VAPORIZED AND AGAIN THE BANKS KEPT ALL THE ILL-GOTTEN LOOT!

But this time, when the bubble popped, it popped a bit too early.  The banks got stuck with some of their own crap.  So Paulson and Bernanke went to Congress and threatened “Tanks in the streets” unless they got $700 billion.  They rolled Congress to save their friends who not only should have gone bankrupt, many of them should have gone to prison!

But even that wasn’t enough.  We still had a problem, and the market and economy was still falling apart.  So Geithner and Bernanke, really the same guy with two faces, went to Congress again and got them to force FASB to make accounting fraud legal.  That’s right – “make up a price for this asset and its ok on your balance sheet.”  They did it, and heh, the banks were saved (well, not really, but it looks like it.)

So again nobody goes to prison, the same people steal all the money, and Bernanke claims – again – that he couldn’t see it coming – even though he was the guy supervising it all!

What’s worse is that all the crap that was shoved in the box – trillions of it – is still out there, much of it off balance sheet!  Essentially every major bank has hundreds of billions of dollars of who-knows-what stashed where nobody can see or value it, exactly as ENRON did, and a couple of them have over one trillion in off-sheet exposure – more than enough to blow their capital to hell several times over if the valuations are not accurate.  Yet we can’t see, we can’t examine, and we can’t know.

If I can see this without having a PhD from Princeton, either Bernanke is a ****ing idiot who bought his degree and has an IQ smaller than my kid’s soccer shoe size or he’s a damned liar and has been intentionally misleading the American Public along with Congress for more than a decade.

Pick one!

Ok, so there’s history.  None of which Bernanke claims he could “see” with his much-vaunted “models”, remember?

What do you think the banks are doing now, having gotten away with all-but-murder (and maybe some of that too) with not one but two full sets of scams in the last decade?

Want to know the latest about Fannie Mae?  You ain’t gonna believe it; they are back to sub-prime lending games.

Fannie Mae to Sell Foreclosed Homes With Subprime Lending Terms

Thought those great low down-payment deals were gone? Think again. If you’re willing to buy a home foreclosed by Fannie Mae through the new HomePath program, you may be able to purchase one with as little as 3 percent down. Even better, that 3 percent can be a gift from a family member or other third party, or a loan from a nonprofit, or a state or local government.

Sound a lot like those subprime loans that started this housing mess?

The terms are similar, but the big difference now is that to qualify for those favorable terms in the HomePath program, you must choose one of Fannie Mae’s foreclosed homes, and you must buy it “as is.”

Here are the terms you can expect:

  • Low down-payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only).
  • You may qualify even if your credit is less than perfect, as low as 660, when most lenders want a minimum of 700.
  • You can qualify as an investor or owner-occupant.
  • Down payment must be at least 3 percent for an owner-occupant, but it must be funded by your own savings or by a gift, a grant or a loan from an employer, a nonprofit organization, or a state or local government. Investors must come up with 10 percent down.
  • No appraisal is required.
  • No mortgage insurance is required, but the terms of the loan may not be as favorable. You need to look at the options with your lender.

To get these very favorable terms, you’ll need to buy the home “as is.” But if you find the perfect home and it needs some renovation, you’ll be able to quality for the HomePath Renovation Mortgage. This type of mortgage will fund both the purchase of the home and some light renovation.

So the Dodd-Frank FinReg bill is tracking every financial transaction inside the country, but “omitted both an adequate down payment and a good credit history from the list of criteria indicating a lower risk of default as regulators sought to define a qualified residential mortgage.”

Subprime 2.0 Is Coming Soon to a Suburb Near You: Edward Pinto

‘Prudent Underwriting’

This was no oversight. Republican Senator Robert Corker and others proposed an amendment that would have added both a minimum down-payment requirement and consideration of credit history along with the establishment by regulators of a “prudent underwriting” standard. This amendment was defeated.

In early September 2010, Fannie and Freddie’s regulator, the Federal Housing Finance Agency, following requirements set out in 2008 by Congress, finalized affordable housing mandates that are likely to prove more risky than those that led to Fannie and Freddie’s taxpayer bailout. As required by Congress, these new goals almost exclusively relate to very low- and low- income borrowers. Meeting these goals will necessitate a return to dangerous minimal down-payment lending, along with other imprudent lending standards.

Then add in ForeclosureGate from Market Ticker:

Kudlow Gets Into Foreclosuregate

Oh BILL! BILL GROSS! Calling You Out Dude

Different? No, Just A Search For A Bagholder

MERS/MBS/Foreclosure Goes RICO

See, I Told You So (Mass-Document Forgery?)

Foreclosure Fraud Update: Weekend Condensed Edition

Here Comes The Spin! (Foreclosure Fraud)

…and one of my current fav articles from Karl:

Some Inconvenient Questions For Our President

Since I’m in a particularly malevolent mood when it comes to politics today….

  • GMAC/Ally is owned by the US Federal Government. You, President Obama, indirectly through your Treasury Secretary Tim Geithner, took it over as part of GM.  This happened on your watch and you cannot blame it on Bush.
  • We now appear to know that GMAC, along with other firms in the MBS marketplace, including Fannie and Freddie, have been using a series of “foreclosure mills” that are emitting tens of thousands of fraudulent affidavits that have been used to dispossess Americans of their homes.  (See Tickers here, here and here.)  There is plenty of question as to whether those foreclosures are proper or whether the original securitizations were valid in the first place.

Question #1: Mr. President, are you going to call a full-stop to all such foreclosures, reverse all that have occurred as a consequence of what appears to be massive and pervasive document fraud, and take personal responsibility for the mess in firms you took over as President of The United States?

Question #2: When will you be directing Eric Holder, your Attorney General, to investigate and file indictments against the officers, directors, and actors in these apparent foreclosure-mill scams?

Question #3: If it is proved that (1) the securitizations were not proper in the first place, and (2) not only were they improper but they were knowingly put together with either actual knowledge or reckless disregard for this fact, will you force the banks that were involved in constructing these intentionally-defective instruments to eat them?

Question #4: Yes, I know that if you do what is asked in Question #3 the banks will all blow up.  Every one of them.  There is some $1 trillion of this bogus non-agency MBS trash out there.  I don’t care.  Yes, I meant it when I asked if you would allow The American People some justice – just this once – from all the scams, frauds and schemes – even if it sinks your best friends on Wall Street!

That’ll do for starters.

Well folks, you get the idea; we are totally screwed and because the economy didn’t completely collapse, they are back to their old games with relish.  Flipping this Congress and then this White House to CONSTITUTIONAL CONSERVATIVES will alleviate many of these problems.

I Have A Better Idea: Get Rid Of The IRS, The Fed, and Vampyre Obama To Save The Dollar

I Have A Better Idea: Get Rid Of The IRS, The Fed, and Vampyre Obama To Save The Dollar

REMEMBER THIS?

The American Taxpayer

Here are a few  stories that got lost in the tidal wave of crap coming out of Washington, D.C. recently, and something new today concerning the death of the dollar.

While everybody on the MSM is talking about the $17 Billion (that’s 1/5th of 1%) that bambi’s minions were able to shave from the $3.7 TRILLION BUDGET, (I can’t wait for QUADRILLION to become the norm), he is actually talking about sucking the taxpayers of even more their lifeforce for guess who?…the IRS; another vampyre organization that needs to go bye-bye along with other outdated fads like the singing bass, the pet rock, shag haircuts, platform shoes, and bell bottoms.

Earlier this month, the usurper-in-chief announced his proposal to close tax loopholes “…for companies and individuals with operations or bank accounts overseas.”

WASHINGTON (AP) — President Barack Obama is proposing to close tax loopholes for companies and individuals with operations or bank accounts overseas.

Obama said Monday he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign companies rather than recording them at home. He also called for more transparency in bank accounts held by Americans in tax havens such as the Cayman Islands.

Obama said that his plan would generate $210 billion in new taxes over 10 years and “make it easier” for companies to create jobs at home. Congress may resist portions of the plan.

Yes Sir, closing all those loopholes is going to keep American companies and American jobs here in the states….only if you are a complete dipsh*t, would you believe that.  How about we dump the Federal Reserve System, especially since they appear to be covering the transfer of $9 Trillion Dollars to whomever is their current flavor of the month, get rid of the Internal Revenue Service, (as you will soon see), and send the fascist in charge packing, (impeachment anyone?)

A few days later, it got even better.

Obama seeks to double tax law enforcement budget

WASHINGTON (Reuters) – President Barack Obama proposed on Thursday nearly doubling funds to enforce U.S. tax laws next year, with an aim of more than quadrupling funding for tax compliance to $2.1 billion within five years.

The budget plan seeks $12.1 billion for the Internal Revenue Service, responsible for collecting and enforcing individual and corporate tax laws, for fiscal 2010, which begins October 1. That amounts to a roughly 5.2 percent increase over the IRS budget for 2009, which was $11.5 billion.

The budget proposal, which must be approved by Congress, includes a $890 million request to boost tax enforcement, including in the international arena, an increase of $400 million from 2009.

Underreporting of income by individuals and businesses led to a “tax gap” of $345 billion in 2001, the most recent year available, according to the government. Of that, corporate income tax and employment tax underreporting made up about $84 billion, according to a report by the Government Accountability Office.

The Obama administration said it would use the funds to further expand its efforts to boost compliance outside the U.S., “placing greater scrutiny on cross-border transactions and tax issues.”

Now most of us industrious little monsters know that the tax code is some 70,000 pages and that TurboTax Cheating Timmie cannot even do his own taxes.  We also know that our taxes are going to be going up next year, and that the 8 or so dollars that we are receiving in our paychecks is tax money we already paid and now we get to pay taxes on it again.  How can we be so frakkin’ blessed to have such a patriotic opportunity to pay taxes on the same money twice?  How?…It’s.Like.A.Dream.Come.True.  Joe Biden and the rest of the left wing liberal democrats are having wet dreams about this ponzi scheme.

Meanwhile, in the rest of realityville known as the world, most of you may already know that Brazil and China are in negotiations to replace the American Dollar as their currency of choice for trade deals between their two countries.

Brazil and China eye plan to axe dollar

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.

The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

An official at Brazil’s central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil.

“Currency swaps are not necessarily trade related,” the official said. “The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi.”

Henrique Meirelles and Zhou Xiaochuan, governors of the two countries’ central banks, were expected to meet soon to discuss the matter, the official said.

Mr Zhou recently proposed replacing the US dollar as the world’s leading currency with a new international reserve currency, possibly in the form of special drawing rights (SDRs), a unit of account used by the International Monetary Fund.

In September, Brazil and Argentina signed an agreement under which importers and exporters in the two countries may make and receive payments in pesos and reals, although they may also continue to use the US dollar if they prefer.

Now add this to the tsunami of crap overwhelming the average American.

Day of reckoning looms for the U.S. dollar

The U.S. dollar slid against most major currencies Wednesday, hitting a five-month low of US$1.3775 against the euro and pushing the Canadian dollar up US1.21¢ to a seven-month high of US87.69¢.

“By many measures, the U.S. appears just a few short steps away from losing its coveted triple-A status, unless the recovery turns out to be considerably stronger than expected and the fiscal repair is faster than commonly expected,” said Douglas Porter, deputy chief economist at BMO Capital Markets. “A downgrade could boost the cost of funding U.S. debt at the margin, but underlying inflation and fiscal fundamentals will ultimately be the primary driver.”

Despite the risk, Paul Ashworth, chief economist at Capital Economics, said the United States was unlikely to lose its rating. But, in the event of a downgrade, he said it would probably not have a lasting impact on the U.S. dollar.

However, he said a big threat lurked in the country’s expanded monetary base, which now stands at about US$1.8-trillion. While the expanded monetary base was needed to feed economic growth and ward off deflation under the Fed’s quantitative easing plan, Mr. Ashworth said such high levels could fuel rampant inflation once broader monetary conditions improved.

And then we have Greenspan weighing in on the little banks capital problems.

Greenspan Says Banks Still Have a ‘Large’ Capital Requirement

May 21 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise “large” amounts of money.

“There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded,” Greenspan said in an interview yesterday in Washington. He also said that “until the price of homes flattens out we still have a very serious potential mortgage crisis.”

Greenspan’s comments suggest he sees a bigger capital shortfall in the banking system than reflected in regulators’ stress tests on the 19 biggest U.S. lenders. Treasury Secretary Timothy Geithner told lawmakers yesterday that banks have issued more than $56 billion in new stock or debt since the tests found 10 firms needed to raise about $75 billion.

A lack of capital at banks may inhibit lending to consumers and businesses, tempering any economic recovery. The former Fed chief, who left the central bank in 2006, said that the continued slump in home prices is putting at risk millions of borrowers.

“We’re on the edge and if this thing doesn’t get resolved quickly I’m worried,” he said before a meeting with House of Representatives members on financial regulation that was organized by the Washington-based Bipartisan Policy Center.

Home prices will only start to stabilize once the “liquidation” rate of single-family homes has peaked, he said. “I don’t think we’re there yet.”

This is what Alan Greenspan is talking about.

Small Banks Need Capital, Too, But Could Face Harder Time

Big banks aren’t the only ones under stress-their smaller competitors also need to raise billions in capital to meet tighter government standards but may have trouble doing so, some analysts believe.

While investors have focused mostly on the nation’s largest 19 banks that were the subject of the government stress tests, shares of some smaller banks have been getting pummeled since last week’s rollout of the test results.

One of the reasons: the stricter capital requirements for all banks-not just the 19 biggest-may prove too onerous for some of the regional and community institutions, causing some of them to fail.

“Most of these little banks won’t be able to do it,” said Richard Bove, banking analyst at Rochdale Securities. “We’re headed to a situation where the focus is going to be on small banks. The small banks are going to fail in, I think, pretty large numbers. I’m guessing 150.”

Now pay attention to this next section kids.

Many of the banks will have trouble raising capital due to a variety of factors, among them a “crowding out” factor in which the larger banks will scoop up the lion’s share of the investment money available, and the big banks’ diversity of business that contrasts to many smaller institutions’ stock-in-trade of basic retail lending.

“The ones that can’t access capital are going to have to basically get on their knees and go to a larger bank to take them over,” said Michael Cohn, chief investment strategist at Atlantis Asset Management in New York. “Over the next six months there’s going to be some consolidation with the banks that can’t raise capital, that are OK now but don’t meet the stress-test guidelines. Basically the government’s going to force them to consolidate.”

An additional factor, Bove suggests, is a fundamental desire by the government to knock out the weaker community banks and concentrate financial power in the hands of larger institutions.

That would fit into a philosophy that the comparatve lack of mega US banks and the capital to which they have access makes domestic corporations less competitive with their foreign counterparts, he said.

“The policy of the US government from the mid-1980s on has been to try to eliminate as many small banks as possible, although I doubt any government would admit that’s what they are doing,” he said.

Implementing the stress tests and putting the large banks into position where they would become over-capitalized is consistent with a strategy the government has been implementing since the administration of President George H.W. Bush.

If your head has not exploded yet, here are a few more links to help that process along.

Feds to inject $7.5B more into GMAC

Fed Open to Buying More Securities

Fed Officials Unconvinced Economy’s ‘Stabilization’ to Persist

Senate to Approve Obama’s $91B War Fund Request

Tracking Stimulus Spending May Not Be as Easy as Promised

I am not going to lay the whole economic meltdown situation at Bambi and Timmie’s feet, the responsibility for that could be spread over numerous government agencies, congressmen, senators, presidents, and banking officials, but Bambi and Timmie are NOT making the situation any better even though Timmie, (who cannot even do his own taxes), is saying the economy is stabilizing – wishful thinking if one were to ask me.

I’m still waiting to see what happens with the commercial real estate bubble.

If you have not figured out yet that the whole purpose of this economic meltdown was to completely drain the average American of every last penny, better get on board because after they print all this money and bail out all these companies, inflation is going to be gearing up to finish us off.

Rumor: Smith & Wesson Too Big To Fail…You Know What That Means

UPDATE: 5/5/09

This post is creating quite a stir among patriots and obots alike, so if the site is slow – deal.   I still have not been able to reach anyone at S&W to confirm or deny any of what was posted on JumpingInPools as “satire”.  I wanted to be thorough, (and my readers know I am that), and check and make sure it was just satire, BUT THE WHOLE POINT OF THE POST was NOT Smith & Wesson, BUT Cerberus and Remington and what would happen if the government takes control of Cerberus or their holdings, (including gun manufacturers), because Cerberus received TARP MONEY…just like the banks…is any of this ringing anybody’s bell?

…end update…go about your business….

********

There is another rumor floating around the internet right now and I have calls and emails into Smith & Wesson to get the real story.  I was going to wait until I was actually able to confirm this story one way or another, but ended up going down a completely different path while investigating, and felt that the information revealed required immediate dispersal to the roundtable.  I will let you know as soon as I get more information about the rumor.  In the meantime, some of you may already know about the second part of this post; most will not.

Here is the rumor…

From Jumping In Pools:

Gov’t Attempting to Seize Smith & Wesson

Marie Llosander
4/29/2009

Seemingly in line with other corporate seizures, the United States government appears to be attempting to gain a majority stake in prominent firearms company Smith & Wesson.

Smith & Wesson, one of the oldest weapons company in the United States, is currently on sound economic footing. However, a clause in the 2009 Stimulus Bill calls for the federal government to seize industries and companies that are essential to the economy or ‘government function.’

The Treasury Department contacted the company in March 2009, asking to buy shares at $10 above market price. However, this offer was sharply rebuffed. Similar offers have been made to Remington.

After this rejection, the Treasury Department has declared that it will use mechanisms in the Stimulus Bill in order to override the corporate decision. Smith & Wesson’s board of executives have also been informed that this decision by the Treasury Department could not be appealed to any superior court.

Which brings us to the very interesting part of this story while I wait for confirmation from Smith & Wesson.

“Similar offers have been made to Remington.”

That statement is very interesting since Cerberus owns Remington and bought the gun manufacturer on April 5, 2007.  Who is Cerberus you ask, and what else do they own?

From Wikipedia:

Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by 49-year-old financier Steve Feinberg. Former U.S. Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.

History

Founded in 1992, Cerberus is named for the mythological three-headed dog that guarded the gates of Hades. Feinberg has stated to his employees that while the Cerberus name seemed like a good idea at the time, he later regretted naming the company after the mythological dog.[1]

The company has been a very active acquirer of businesses over the past several years and now has sizable investments in automotive, sportswear, paper products, military services, real estate, energy, retail, glassmaking, transportation, and building products. In 2006, its holdings amounted to $24 billion.

On October 19, 2006, John W. Snow, President George W. Bush‘s second United States Secretary of the Treasury, was named chairman of Cerberus.

J. Ezra Merkin is a partner in Cerberus. Merkin invested his funds into Cerberus and its portfolio companies. His Gabriel fund invested $79 million in Chrysler, $66 million in GMAC and $67 million in Cerberus partnerships, according to year-end statements.[2] The Gabriel Fund was a feeder fund for Bernard L. Madoff Investment Securities LLC.[3]

Japanese bank, Aozora, a Cerberus company lost $137 million to Bernard L. Madoff Investment Securities LLC. Aozora was part of the investment group that acquired 51 percent of GMAC from General Motors. [4]

Chrysler

In 2007, Cerberus and about 100 other investors purchased an 80% stake in Chrysler for $7.4 billion,[5] promising to bolster the auto maker’s performance by operating as an independent company. In 2008, the plan collapsed due to an unprecedented slowdown in the U.S. auto industry and a lack of capital.[6] In response to questioning at a hearing before the House committee on December 5, 2008 by Rep. Ginny Brown-Waite, Chrysler President and CEO Robert Nardelli said that Cerberus’ fiduciary obligations to its other investors and investments prohibited it from injecting capital.[6]

On March 30, 2009, it was announced that Cerberus Capital Management will lose its equity stake and ownership in Chrysler as a condition of the Treasury Department’s bailout deal, but Cerberus will maintain a controlling stake in Chrysler’s financing arm, Chrysler Financial. Cerberus will utilize the first $2 billion in proceeds from its Chrysler Financial holding to backstop a $4 billion December 2008 Treasury Department loan given to Chrysler. In exchange for obtaining that loan, it promised many concessions including surrendering equity, foregoing profits, and giving up board seats:

“In order to achieve that goal Cerberus has advised the Treasury that it would contribute its equity in Chrysler automotive to labor and creditors as currency to facilitate the accommodations necessary to affect [sic] the restructuring.”[7]

Chrysler Financial refused to take $750 million in TARP government bailout aid because executives didn’t want to abide by executive-pay limits, and because the firm doesn’t necessarily need the money.[8]

On April 30, 2009, Chrysler declared bankruptcy protection and announced that GMAC will become the financing source for new wholesale and retail Chrysler cars.[9]

GMAC

Cerberus acquired 51 percent of GMAC, General Motors‘ finance arm, in 2006 for $7.4 billion.[10] It appointed Merkin as nonexecutive Chairman.[11]

As of October 15, 2008, GMAC had $173 billion of debt against $140 billion of income-producing assets (loans and leases), some which are almost worthless, in addition to GMAC Bank’s $17 billion in deposits (a liability). Even if GMAC liquidated the loans and leases, it could not pay back all of its debt.[12]

On December 10, 2008, GMAC said, “GMAC LLC, the auto and home lender seeking federal aid, hasn’t obtained enough capital to become a bank holding company and may abandon the effort, casting new doubt on the firm’s ability to survive. A $38 billion debt exchange by GMAC and its Residential Capital LLC mortgage unit to reduce the company’s outstanding debt and raise capital hasn’t attracted enough participation.” This was due in part because Cerberus had raised the credit requirements for car loans so high, virtually eliminating leasing, that they have been responsible for a sizable chunk of lost sales at GM due to customers inability to secure financing, in order to pressure GM into selling or trading their remaining stake in GMAC.[13] GM stands to write-off over a billion dollars in lost residuals – which they paid up front to GMAC. GMAC’s exposure to the gap in residual values is around $3.5 billion.[14]

In December 2008, Cerberus subsequently informed GMAC’s bondholders that the financial services company may have to file for bankruptcy if a bond-exchange plan is not approved. The company had previously said it may fail in its quest to become a bank holding company because it lacks adequate capital.[15]

In January 2009, Merkin resigned from his chairmanship as a condition by the U.S. government.[16] Five days earlier, the Federal Reserve granted GMAC bank holding company status, so it could get access to the bailout money.[17] On December 29, 2008, the U.S. Treasury gave GMAC $5 billion from its $700 billion Troubled Asset Relief Program (TARP).

Cerberus’s investments in Chrysler and GMAC totaled about 7 percent of its assets under management.[5]

Broken deal for United Rentals

In the summer of 2007, Cerberus agreed to buy 100% of United Rentals, the world’s largest equipment rental company and traded on the NYSE. After the credit markets began to tighten in August, Cerberus attempted to reduce the deal price. United Rentals refused to reprice the deal, and in November sued in the Delaware Court of Chancery for specific performance (i.e., a court mandate that Cerberus complete the deal). Cerberus took the position that the deal agreements capped its liability for walking away from the deal at $100 million. After a two-day trial, Delaware Chancellor William B. Chandler, III ruled for Cerberus in a closely watched decision, allowing it to pay United Rentals the agreed-upon $100 million “reverse termination fee” and terminate the merger agreement.[18]

Notable acquisitions

  • Pharmaceuticals – In December 2004, the company announced the acquisition of Bayer‘s plasma products business and renamed it Talecris Biotherapeutics.
  • Real Estate – Through investment affiliate Cerberus Real Estate, the company has been making direct equity, mezzanine, first mortgage, distressed and special situation investments in all asset types. It also controls Miami Beach-based LNR Property, a large real estate development and investment firm through subsidiary Riley Property. Cerberus also controls Kyo-ya, a Japan based group of entities that owns several Starwood managed assets in California, Hawaii and Florida.
  • Retail – Cerberus purchased 655 of the 2,500 Albertson’s, Inc., grocery stores, forming Albertsons LLC of Boise, Idaho, in June 2006. They also had an ownership stake in the now-bankrupt Mervyn’s department stores, which was acquired from Target Corp. In June 2007, Cerberus acquired Torex Retail Plc., a retail solutions provider in troubled waters, for approximately 400 million US dollars.[19]
  • Financial Services – General Motors sold a 51% stake in its GMAC finance unit to an investor group led by Cerberus Capital Management in November 2006. GM expected to receive $14 billion over the next three years from the sale of General Motors Acceptance Corp. In December 2006, Cerberus acquired the Austrian bank BAWAG P.S.K. for a reported EUR3.2 billion. In August 2007, Cerberus announced that it was closing one of their mortgage companies, Aegis Mortgage. It owns half of a 9.9 % share (5%) with the Gabriel Group in Bank Leumi, purchased in 2005,[20] but as of April 19, 2009, it was decided to sell in order to boost capital.[21]
  • In 2007 Cerberus took over Corvest a promotional products company based out of Largo, FL with arms based in Simi Vally, Ca & Thorfare, NJ.

From ModernHistoryProject:

Life RemingtonArms Division CerberusCapital Division DuPontCo DuPontCo Owner USWarInd Client PryorSF Officer RockefellerPA Director

^ Remington Arms Company (1816 to present) | Google | SrcWatch | NNDB | NamBase | SchRoot
Weapons and ammunition manufacturer (See: Remington company history)
History of the Remington family (See: Rootsweb history)
^ Cerberus Capital Management (Division of, 2007 to present) | Google
2007-06 : Cerberus acquires Remington (See: Article)
^ E.I. du Pont de Nemours and Company (Division of, 1980 to 1993) | Google
1980 : DuPont acquires remaining shares of Remington Arms
1993 : DuPont sells Remington Arms
^ E.I. du Pont de Nemours and Company (Owner of, 1933 to 1980) | Google
1933 : DuPont acquires controlling interest in Remington Arms. (See: DuPont history)
^ U.S. War Industries Board (Client of, 1917 to 1919) | Google
Remington was a major supplier of arms and ammunition during WW1.
^ Pryor, Samuel F. (Officer of, dates uncertain) | Google
Chief Executive
^ Rockefeller, Percy A. (Director of, dates uncertain) | Google
(click to view)

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Here is the link to the list of executives of Cerberus Capital.  Take a moment, go over, and click on the links to each executive and see how they are connected to other interesting businesses.

I also ran across this interesting tidbit from the New York Observer:

Cerberus Capital Management: You Cannot Be Serious

For reasons that defy both logic and recent history, Cerberus Capital Management, a New York–based private equity firm, has purchased a controlling interest in Chrysler for nothing, while taking the German automaker Daimler off the hook for almost $20 billion in pensions and health-care benefits. The sale comes about nine years after Daimler bought Chrysler for $36 billion in hopes of restoring the company to its former glory. (The biggest joke of all is that Kirk Kerkorian, Chrysler’s then-biggest shareholder, thought Chrysler had made a bad deal, and went on to sue DaimlerChrysler. Now he’s taking a big stake in General Motors—maybe a good short sale.)

This latest sale—if you can call it that—is being hailed as a milestone in the storied history of American automaking. Chrysler, once an icon of mid-century American economic power, will become the first privately owned U.S. car company. The question for Chrysler’s new owners is simple: Why do they think they can rescue the company when Daimler, one of the world’s smartest automakers, clearly could not?

This is not just a question about Chrysler’s future; it’s a question about the entire U.S. auto industry. Chrysler was in bad shape when Daimler bought it, and has only gone south since. Meanwhile, it seems only a matter of time before the Ford Motor Company goes broke, thanks in part to William Clay Ford Jr., the great-grandson of Henry Ford, and his family counterparts, who have managed to fritter away their ancestor’s legacy.

If you are still interested in a thorough bio of Steve Feinberg and Cerberus after all that, go here.  I found it fascinating and more names that we have heard over and over before came up.

So I guess the question would be, “what does Cerberus know that we don’t know when it comes to Chrysler and Remington?”  Hopefully, I will have some sort of confirmation on the Smith and Wesson rumor soon.  Please keep in mind that if Texas passes their firearms freedom act, there will be ground-floor investment opportunities for the brand new gun companies springing up in Montana, Texas, and any other state that wants to shelter them from the feds and big business.

The Treasury Helps GM Slap Ford (AND US) In The Face: UPDATED

The Treasury Helps GM Slap Ford (AND US) In The Face: UPDATED

UPDATE: The Today’s Are You Freakin’ Kidding Me Award WAS going to go to the Federal Commission that thinks raising the gas tax on Americans by 10 cents per gallon is a really good idea, but it has been pre-empted by GMAC!!! (IMAGINE THAT!!!!)

GMAC is sponsoring the GMACBOWL using our tax dollars and even worse:

GMAC FInancial Services and Team focus partner to coach children on money management (BWAAAAAHHHHHHHHHH!!!!!!!!!!!!!!!!!)

DETROIT (June 16, 2008) – GMAC Financial Services today announced that it will partner with Team Focus to give boys and girls the smart edge when it comes to money management. Team Focus, a community outreach program that provides inspirational, community, social and academic guidance to children without father figures, will have a GMAC SmartEdge financial literacy education session at its 2008 Camp Focus.

Team Focus has been affiliated with the GMAC Bowl and “is excited to bring our association with GMAC to a higher level through the addition of the GMAC SmartEdge financial education session at Camp Focus,” said Mike Gottfried, CEO and founder of Team Focus. “SmartEdge will provide us with another way to positively influence the lives of the children that come to camp.”

GMAC is committed to providing financial literacy opportunities through its GMAC SmartEdge program. “It is important to mentor youth and help children prepare for their future,” said Sharon Sayles Belton, director of community relations at GMAC. “Now more than ever, young adults need to understand money management so they are ready to make smart financial decisions when they enter adulthood.” (This coming from the morons that drove their company into the ground and now has to have us bailing them out?)

“It’s never too early to start learning appropriate money management skills,” adds Don Ferguson, director of GMAC SmartEdge. “The SmartEdge education sessions are designed to engage young people to make better financial decisions, plan their spending habits and save for their future.” (And in the words of Dennis Hopper, “Nothing Like A Smoke When You Miss Your Mom and You Are Never Too Young Too Start”.)

Camp Focus will have its first leadership camp of the year in Mobile, Ala., with 10 other camps throughout Alabama, California, Nevada, Ohio, Tennessee and Washington, D.C., with approximately 75-80 children at each camp. This year Team Focus is expanding its program by having its first girls’ camp.

GMAC SmartEdge hosts financial literacy seminars around the country and provides money management tutorials and tips on its Web site, www.smartedgebygmac.com, which is designed to educate consumers in the areas of credit, budget, vehicle and home financing, banking, and insurance.

********

I am currently hard at work on the third article in the Economic Collapse series but I just could not let this perfect example of government screwing private companies over go by because it makes me growl, and with my expanded education about the US Treasury, The Federal Reserve and Hank Paulson, events are getting curiouser and curiouser…

Treasury To Ford: Drop Dead

The GMAC rescue plays favorites.

When the Bush Treasury decided to bail out Detroit, GM and Chrysler quickly said yes to the taxpayer cash, but Ford Motor Co. said it didn’t need the money and declined. Ford’s reward for this show of self-reliance? Treasury is now helping GM again by giving it a credit pricing advantage against Ford in the marketplace.

That’s one little-noted result of Treasury’s action earlier this week to rescue GMAC, the GM credit arm that, as it happens, is 51% owned by the Cerberus private-equity shop that also owns Chrysler. With $5 billion in taxpayer cash in its pocket, GMAC quickly decided to offer 0% financing on several of its models. “I think it would be fair to say that without this change . . . we would not be able to do this today,” explained GM Vice President Mark LaNeve in a conference call with reporters this week.

The messy little policy issue is that these GM products compete with those sold by Ford, Toyota, Honda and numerous other car makers that won’t benefit from GMAC’s cash infusion. And with the cost of financing often crucial to buyer decisions, the feds have now put the muscle of the state behind one company’s products.

Ford in particular must wonder what it did to deserve this slap. CEO Alan Mulally joined the GM and Chrysler chiefs in testifying for the bailout even while insisting his company didn’t want the funds. And once the bailout was announced, Mr. Mulally said that “All of us at Ford appreciate the prudent step the Administration has taken to address the near-term liquidity issues of GM and Chrysler.” So much for gratitude.

….

This is always what happens when politicians decide to muck around in private industry. Even when made with the best intentions, their policy decisions have unintended consequences that help some companies at the expense of others. Meanwhile, your neighbor who buys a GM SUV this weekend with 0% financing should thank you when he pulls into the driveway. He did it with your money.

Would you agree with me that Hank Paulson needs to be fired for following what appears to be an agenda that is in exact opposition to the will and benefit of the American People?

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