« Winter in New York | Main | Please Don’t Come, Just Send Your Money to Us »
A Politician Lies, Foreigners Go on a Shopping Spree, and $556 Billion in Debt is Thrown Into Doubt
By Jay | January 20, 2008
Rhea over at The Boomer Chronicles wrote a post about a confrontation between a reporter and presidential candidate Mitt Romney. Romney stated during a question and answer session with reporters that “I don’t have lobbyists running my campaign, I don’t have lobbyists that are tied to my campaign.”
Well, a reporter named Glen Johnson didn’t like what he was hearing and brought up the fact that a lobbyist named Ron Kaufman is very closely associated with Romney’s campaign. Then the two got into an argument, with Romney trying to defend his point and Johnson bringing up the fact that Kaufman rides on Romney’s campaign jet and sits in on strategy meetings.
Romney finishes up by saying “my campaign is not based on Washington lobbyists. I haven’t been in Washington. I don’t have lobbyists at my elbows that are arguing for one industry or another industry. And I do not have favors I have to repay…..I’m not going to Washington to do favors for lobbyists, I am going to Washington to help the American people.” …. Barf.
Afterward Romney’s press secretary, Eric Fehrnstrom, took Johnson aside and reprimanded him for “being argumentative with the candidate.” I mean, excuse my French here, but God fucking forbid that a reporter would have the nerve to call a candidate on a blatant lie. Such things are just shouldn’t be done. Right? Fehrnstrom went on to tell Johnson to “save your opinions and act professional.” I loved Johnson’s response: “It’s not an opinion, it’s a documentable fact.”
Here’s video of the incident.
And I couldn’t believe the woman at the end who reprimands Johnson for “being rude.” I mean, Romney just lied to your face and you’re calling the person who called him on it rude? This is exactly the problem today: everyone is running around putting on this fake “happy face” and wanting to believe the lies they are fed by the politicians and the media. No one wants to think about the difficult questions we face. No one wants their comfortable little bubbles to be burst. There was a time when good journalists were supposed to prod the politicians & call them on lies. Look what happened to Nixon. If they were still doing that today, maybe our politicians wouldn’t have been able to do so much damage over the past few years. If we all were thinking more, maybe our country would be in better shape.
But no. The country’s financial system is falling to pieces, and we’re being bought out by the rest of the world. Piggybank Blues links to this article in today’s New York Times.
For much of the world, the United States is now on sale at discount prices. With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing. Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads to the world’s largest market.
She then adds some very good commentary, ending with the point that
Given the state of our economy, this level of foreign investment will only rise. The fact is, we need the money, and it’s a prudent long term investment for them. They’re buying blue chip companies in a blue chip market at a seriously steep discount. And honestly, it doesn’t bother me. What does bother me are the economic and political forces that tanked our economy to begin with. And for that, the US has nobody to blame but itself…..
….I’m no economist, but I have to say this recession in particular is pissing me off. Fancy pants with MBAs and bonuses the size of a small nation’s GDP found a way to make a $hitload of money off of, frankly, moronic number crunching, and the banks and rating agencies all went along with the scheme. So now we get to ride out the storm slowly plugging along, and they get bailouts from Asia and the Middle East to the tune of 59 billion. Sigh.
Which brings me to the next wonderful piece of news I read today.
There is a type of company called a monoline insurer. Monoline insuers insure credit, especially bonds. When your town or city needs money, they go to through a Wall Street bank to issue bonds, and these bonds are insured against default by a monoline bond issuer. Your town, like yourself, has a credit rating. But rather than a FICO score, its rating is issued by one of the three big New York rating companies: Moody’s, S&P or Fitch. What this insurance effectively does is to give your municipality’s bond a triple A rating from the rating agencies. It’s kind of like having a company that you could pay to ensure your debt in order to get a higher FICO score.
You may have never heard of monoline insurers before, but you will hear more about them in the future. Believe me, you will. Unfortunately, they have been ensuring a lot of mortgages and securitizations, including some that they had no business insuring. The two biggest Monoline insurers are MBIA and Ambac. Ambac had its rating lowered a notch by Fitch on Friday. Doesn’t sound like a big deal, does it? Well, think again. What this means is that not only is Ambac’s rating lowered, but now every single bond that they insured — and there are thousands of them — has lost its triple A rating as well. Ambac insures $556 billion in municipal and structured finance. This is very bad news. Many government agencies and municipalities will find it more expensive to borrow money. And many others will find it impossible to borrow at all.
But worse yet, a lot of these bonds are owned by pension funds and other types of investment entities that are mandated to own only triple A debt. Now that the bonds insured by Ambac are no longer rated triple A, these pension funds and other investment entities will be forced to sell all of their bonds, and fast. This is not going to be pretty.
“Everyone thinks they’re looking at the cliff over Armageddon,” said Ed Rombach, senior derivatives analyst at Thomson Financial. “If you think the write-downs have been bad so far, the next write-downs could be twice as big.”
Ambac is the second biggest monoline insurer. MBIA is the biggest. Note that MBIA’s rating is also on credit watch by Moody’s.
As I said yesterday, batten down the hatches.
Popularity: 27% [?]
Stumble it!
Topics: Business, Finance, Politics |