AIG got into trouble in part because they were involved with “credit default swaps.” AIG was essentially insuring the people who bought financial instruments such as mortgages. They were supposed to step in after a default and make the investors whole. But AIG didn’t build any reserves to do so.

SO the bottom line is  this: The $165 million in bonuses is a speck of the $173 billion that went from taxpayers to AIG during their first bailout last summer. Where did the rest of the money go?

WE gave money BACK to the banks in the United States and EUROPE that bought high-risk loans.  So we bailed out European banks also.

Societe Generale got $11 billion; Goldman Sachs got $8 billion; Deutsche Bank got $5 billion; and Bank of America another $5 billion. Do you understand that…Bank of America got its own bailout, plus money from AIG?!

So while we’re all angry about the AIG bonuses, the real question is should we taxpayers absorb these banks’ losses at 100 cents on the dollar?!

 We should have required that the banks should only get back part of their money.  WHY do we bailout Banks for their bad decisions?President Obama wants the bonuses rescinded, and that’s all well and good, but there’s a much larger problem here.

http://online.wsj.com/article/SB123698751663025791.html

Here is an excerpt from the article:

The stimulus bill throws an unprecedented $100 billion at the nation’s 14,000 school districts, but it subsidizes the status quo and demands little from recipients in return. The Milwaukee school system is receiving millions of dollars for additional school construction though it has excess capacity and stagnant enrollment. Detroit Public Schools, according to a recent Detroit Free Press story, “stands to reap $530 million — $355 million with no strings attached — from the federal stimulus package that will hand Michigan nearly $7 billion over two or three years. . . . In all, the state and local school districts could have at least $2.5 billion to spend as they see fit.” (Our emphasis.)

Detroit graduates a mere 24% of its students and has a history of corruption. Audits in 2001 and 2004 found $2.5 million missing or misspent, and the city’s schools superintendent was fired in December for incompetence. How does shoveling hundreds of millions of dollars more into such a system advance Mr. Obama’s reform agenda?

The President said his Education Department “will use only one test when deciding what ideas to support with your precious tax dollars: It’s not whether an idea is liberal or conservative, but whether it works.” Voters should hold Mr. Obama to that pledge.

Please Mr President, look into these Billions of bad earmarks and don’t put all your time into only Millions of AIG Bonuses!

Everyone in Congress is talking tough to cameras, but still claim they can do nothing except embarrass the ones taking the Retention bonuses.

Enough Background info–here are the facts:

New York Attorney General Andrew Cuomo is actually DOING something. He says how can you call it a “retention bonus” for an AIG company that LOST THE MOST MONEY EVER, $60 BILLION in the last QUARTER. The Taxpayers have already given them over $160 BILLION in Bailout money and we now own 79% of the company!  He asks–How can you give retention bonuses for losses? Attorney General Cuomo want a list of names of those receiving BONUSES.  So far he discovered this in a letter sent to Barney Frank.

1. AIG had a deadline of 4PM yesterday to provide the Names, they did not respond.

2. 11 people received Retention Bonuses for 2008 and have already DEPARTED the company!

3. 73 People who received Bonuses are now Millionaires because of their Bonus.

4. Top 7 received more than a $4 Million Dollar Bonus.

5. Top 10 received Bonuses totalling over $42 Million.

6. Top 22 Each   over $2 Million each.

GREAT JOB AG Cuomo  —-  Now Barney Frank and Sen Chris Dodd, please DO something!  By the way, where is the US Attorney General, we taxpayers need your help also!

Now we have one that made it into Obama’s circle.

http://www.nydailynews.com/ny_local/bronx/2009/02/28/2009-02-28_buildings_sprang_up_as_donations_rained_.html

“The man who is President Obama’s newly minted urban czar pocketed thousands of dollars in campaign cash from city developers whose projects he approved or funded with taxpayers’ money, a Daily News probe found.

Bronx Borough President Adolfo Carrion often received contributions just before or after he sponsored money for projects or approved important zoning changes, records show.

Most donations were organized and well-timed.

In one case, a developer became a Carrion fund-raiser two months before the borough president signed off on his project, raising more than $6,000 in campaign cash.

In another, eight Boricua College officials came up with $8,000 on the same day for Carrion three weeks before the school filed plans to build a new tower. Carrion ultimately approved the project and sponsored millions in taxpayer funds for it.

Carrion resigned as borough president effective Sunday and begins his new job as director of the White House Office on Urban Policy Monday.

Saturday Carrion declined to answer written questions about his receipt of timely campaign contributions.

The following zip codes were chosen at random and reflect typical neighborhoods in both Ventura and Los Angeles Counties. We’re looking at condos and detached single-family residences that are active, pending sale, or contingent with bank-ups. The number of foreclosures below MLS totals include “pre-foreclosures” and “auction properties.”

:: Zip Code: 93033 :: South Oxnard, CA
# Active Listings = 213
# Pending/Cont. = 135
# Foreclosures = 910

:: Zip Codes: 91367, 91307, 91304 :: West Hills, CA
# Active Listings = 399
# Pending/Cont. = 170
# Foreclosures = 1,099

:: Zip Code: 91331 :: Pacoima/Arleta Area, CA
# Active Listings = 376
# Pending/Cont. = 206
# Foreclosures = 1,315

http://www.wsws.org/articles/2009/jan2009/econ-j17.shtml

“As bad as the statistics relating to the housing market are, they underestimate the full extent of the crisis, according to RealtyTrac. Banks are holding back from listing as much as 70 percent of their repossessed homes, in a likely bid to delay absorbing further losses on their balance sheets. “Either banks are overwhelmed and can’t get the houses [listed] quickly, or they’re deliberately slowing down so they don’t have to take markdowns to actual home values on their books,” Sharga said.

Banks have also delayed the speed with which they foreclose upon owners, in some cases due to new state laws that mandate longer periods of notification. Saccacio noted that in California, where such a law was passed, home foreclosures rebounded in December back to their level before the legislation was implemented. “The recent California law, much like its predecessors in Massachusetts and Maryland, appears to have done little more than delay the inevitable foreclosure proceedings for thousands of homeowners,” he said.

Such stalling tactics would only soften the economic disaster generated by the collapse of the housing market should home values suddenly reverse their downward spiral. However, all indications point in the opposite direction. Home prices have tumbled 21 percent from their peak, and it is anticipated that they will continue to fall through 2009 and the first part of 2010, according to David Wyss, chief economist at Standard & Poor’s.”

So what does this all mean? If we can’t trust headlines==without any good analysis, how are we supposed to solve the problem?  We will continue to throw money at problems that don’t exist and prolong the economic recovery through 2010 and maybe decades!

In turn, the downward pressure on pricing means even more homes will go into Foreclosure, further decimating prices down the road as a vicious cycle of deflation of durable asset prices sets in.

This is going to kill off many more banks. It will lead to further unemployment. This will place more pressure on the stock market to dive even further down.

Current Foreclosures will take 12.9 months to sell off at current prices. And we’re only talking Foreclosures, not all the homes listed on the MLS.

As these Foreclosures enter the market, be it slowly or all at one time, they will continue to place pressure on downward sustained prices for homes for many years to come.

We are in for a long Recession. Or something much worse…

Why is this even important—because we are spending Trillions of dollars and budgeting today on the ASSUMPTION that 2010 will have a 3% GDP GAIN. This week, the Democrats have put 9000 EARMARKS into a spending bill, just to get us through the next 9 Months. The Republicans have no power to stop the spending.(even though Republicans are just as corrupt) That means that all Americans (not the rich) will pay enormous taxes in the future—   now I’m depressed!

I am getting ready to have a throw all the lying, cheating, earmarking money for their own riches, Congressmen OUT. Most Americans do not even watch the news and have no idea how close we are to the cliff. Check out the “Tea Party” Americans that are marching all over the US to expose the hijinks of Congress to ordinary Americans.

http://www.americanthinker.com/blog/2009/03/the_st_louis_tea_party.html

Of course, no one has any idea what will happen, either politicians or economists, so the only thing to do is put together all the facts and make our own guess.

On Friday, Feb 27th, the government commerce dept surprised everyone when they reported that the economy DROPPED the most in the last quarter since 1982, at -6.2% , almost twice the predicted 3.8%.  The stock Market reacted again by dropping to 7,062 which is the lowest since May 1997 and now down 50.1% from its peak of 14,164  ,  Even the Wilshire 5000 stock average is down 52.7% ===  so now you know why the joke by the taxpayer is that every 401K is now a 201K, although many are not laughing.  And those that know about the “fake” Social Security Fund, that is empty, will not help us when retirement age comes.

Talking to friends in the car business, I learned that consumers are NOT buying the PRIUS now, but back to buying large cars and trucks again ===  there goes gas to $4 a gallon again by next year, if we do have a recovery predicted by the administration.  Even Pacific Ethanol is closing plants in Idaho and California and the Renewable Fuels Association reported this week that 23 of 171 plants are currently shut down. More Tax subsides will be required. The Government LOVES high gas prices to force GREEN technology. More tax dollars not accounted for in a Budget.

The world wide recession has caused many riots and demonstrations against globalization and increased calls to impose tarrifs—the same moves that caused the great depression. So now American greed has caused more discontent than the Iraq war. http://www.spiegel.de/international/europe/0,1518,610099,00.html

The auto industry: Last week General motors submitted their REORG plan to the Obama administration and they were happy with the “reforms”. However, others looked at the numbers and are tired of giving them another $30 Billion bailout after the bailout they just received. Auto sales are being revised downward from 10 million next year to now 9 million, and still no sign of recovery. Even 60,000  Opel car workers are protesting to breakaway from GM, because they say GM has screwed up their company. http://politiken.dk/newsinenglish/article658396.ece

I think GM needs to  go BK, reorganize, slim down  and come back smaller. One scary thing reported by GM is that they are staking their future on the VOLT electric car in 2010. It will cost a reported $40,000 (with Obama giving you about 7,000 taxpayer dollars rebate). However, they also predict the cost will drop to around $25,000 in a year due to more demand. Who would buy a car that will depreciate that much in one year—you guessed–rich movie stars. I read in 2001 that Gm will need to change or die. They did not die because American greed, stripping equity from homes, kept them alive.

The numbers in the new $4 trillion Obama budget are enormous and will cause a fight in Congress. Even the INTEREST on the debt forecast in a few years will cost every taxpayer over $52,000.  Still the administration is on the TV saying only the top 2% of the population will be paying the bill. Also many think it is a very DUMB move to limit tax deductions to CHARITY for Rich people. The administration predicts it will stop about $600 Billion in giving to Charity over 10 years. So now we are stopping the RICH from donating, so the taxpayer can pay this (we will not give up on the poor, homeless, etc). This dumb idea , I hope has no chance passing. I was actually giving up hope for America after my research this week.

But—did everyone give up hope for Congress after the past week, when Congress voted for the 1000+ page STIMULUS Bill without one person reading it? They received it at 11PM the night prior and had to vote on it because Nancy Pelosci and her friends had to take a  flight to Italy at 6PM the next day.

However, there is a little hope out there in the public. Even though no  major news outlets reported it, there was a movement yesterday called the “Tea Party” that had protests in 40  US cities against this Congress and massive spending.  http://www.freep.com/article/20090227/NEWS06/90227075/Lively+crowd+protests+Obama+in+Lansing

They are mad about Congress not reading bills, massive bailouts to GM and Chrysler, and Government bailing out homeowners that bought homes with ZERO down. Most of the homes are in only 4 areas of the US in a recent study.  Some argue that the government trying to artifically propping up home prices will prolong the recovery even longer–until home prices reach an affordable level. In fact, the Department of Housing and Urban Development proudly says that it is shoveling money out the door as fast as it can.

I AM EXTREMELY NERVOUS ABOUT THE ENORMOUS AMOUNT OF FHA STREAMLINE REFINACE LOANS THAT REQUIRE NO APPRAISAL.  I see another scandal in a couple years with the taxpayer on the hook this time.

Some on CNBC, the business channel, suggest that Obama’s new budget  is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds. http://www.cnbc.com/id/29434104  But as much as we hate rich people, we need them for future recoveries to create jobs.

Also, we found out yesterday that Obama’s pick for Commerce secretary(Senator Gregg) quit, not because of tax problems, but maybe because we would find out about how much money he and others make by earmarking money to projects in which they make profit. The newscaster even remarked that making money for themselves and family was not illegal and most Congressmen do it all the time. In this case, Pease AFB was closed, the Senator invested in the business park and then voted several earmarks  worth millions into the area. I think I am more upset with taxpayers continually voting in these corrupt leaders. Let’s see if the Republican party tries to clean this up or put it under the table like all the other joke nominations to Obama’s CHANGE administration.

I love Obama–but he needs to watch it—everyone cheered loudly when he said no more “no-bid contracts” in Iraq  and then passed a Stimulus bill with thousands of earmarks, money to certain companies (which are no-bid contracts). So watch it–the American public may wise up. Our country’s future will be in jeopardy if we don’t clean up our greed and get rid of politicians that use “public service” as a ruse to get rich.

Finally, we know that massive spending from WWII finally got us out of the great depression. We are doing the massive spending, but the only thing we don’t know if the puny 17% of the stimulus bill that went to infrastructure is enough and did we stimulate spending or create jobs? Even though we are not supposed to–it is time to pray!

Now the lenders and Bankers have looked at the details released so far have found more holes in the plan and wrote a letter to Treasury Secretary Tim Geithner and Housing Secretary Shaun Donovan.  Donovan was on Sunday TV and said over and over that they are not rewarding irresponsible people.

This plan limits your loan to 105% of the home’s value. Why is this a problem–because today it was released that home prices dropped a RECORD 18.5% in the last year.

 http://www.bizjournals.com/milwaukee/stories/2009/02/23/daily38.html

Right NOW –Use the FHA Streamline Refinance model for all loans to refi those folks who are underwater. No Appraisal (meaning no ltv/cltv restrictions), no income verification, no credit scores and a 12 on-time mortgage history. The new mortgage can not exceed the original mortgage balance after rolling in closing cost & prepaids. It is that simple for the refinances of people that are looking to improve their debt obligation.

This will take care of the self-employed that are now out of the market due to stated income loans being removed as an option.  So the government is ALREADY causing a potential future meltdown.

Consider this, You bought a home for ZERO down last year but now you home has dropped 18% in value. You bought the home for $200,000 and it now worth $164,000  You got a 7% loan because it was ZERO down and you got the loan at a 45% debt to income ratio(because that is normal). Obama’s plan says he wants you to have a 38% debt to income ratio to the lender, and then the government can take you down to a 31% debt to income ratio. So with no change to your debts—you can get a loan down to 2% and the loan amount forgiven by a bank or government.  This is what the Rick Santelli rage was about. When questioned about this, administration officials immediately say this program is not for “speculators or investment property” , which of course, is not the question.

So yes–this is a very good deal for anyone who bought a home in the last 2 years because you can get a super deal from the taxpayer(as a bribe to do the right thing and not walk away from your obligation).

Is there any doubt that we are not getting solutions from the entrepreneurial thinking minds of our country. The Obama Administration is using the incompetent regulator of Citibank implosion, incompetent co-author of TARP and incompetent tax payer as his Star Advisor to solving the economic challenge. . Big Business & Big Government are looking out for you mindless & incapable citizens. 

Want to get scared?  look at this  http://www.youtube.com/watch?v=8GQpuuvax_w&annotation_id=annotation_266676&feature=iv

It explains we have a long way to go because 70% of the foreclosures in the US are still on the Bank’s books. Banks don’t want to flood the market to further depress prices. Also, they are carried on the books at a higher value (toxic assets). Unfortunately, once bank books are opened and homes are dumped on the market we face another round of deeper recession……,

I sure hope I am wrong.

 See the video:  http://www.youtube.com/watch?v=LQ7_ZzW1jJ4

Then Today, on “FACE THE NATION”, Shaun Donovan, the new secretary of HUD ( who looks like he graduated from college last week) defends the new program, still with out any specifics, by saying over and over that we are NOT rewarding bad behavior by bailing out people that are underwater in their home loans.  I about lost it when Bob Schieffer(who must be close to SENILE) never once questioned or argued with the new kid. 

Shaun kept saying we are not helping people that lied on their loans about income. He also said over and over speculators and bad loan officers are not getting help. He was helping people that had a decrease in home value and victims of ARM loans.  If these people did not LIE about their income originally, it makes no difference what the home is worth, because the payment does not change. Also, if you got a 5 yr  LIBOR ARM, it would actually be adjusting to a 5% loan today because the LIBOR index is so low now.

But he missed the very simple point Rick Santelli pointed out —-  people that owe more than their home is worth will be rewarded with super low interest rates down to 2%, they will have their loan amounts reduced, and the government (you and I) will pay $1000 for every person helped.

What about the millions of people that had 401Ks and IRAs, saved their money, lived responsibly—who have now lost half of their savings(they will actually be paying for these new loans).

The new HUD guy said that people that owe $250,000 on their home, making their payments, but the house is worth $200,000, so they  will get their balance and interest rate  reduced.  Wait a minute—did the balance get to $250,000 because they stripped the equity through REFIs for new cars, appliances or swimming pool? If they are still making their payment on the $250,000 loan, I think they did.  What if they bought the home for $250,000 and are making payments on the loan today, but the home is worth only $200,000?  What is the difference between them and someone who just lost $200,000 on their 401K or IRA account? So some that lost their jobs will get help, but many who cheated will get helped also.

Rick Santelli point was very simple—if you reward bad behavior, you send the wrong signal to America. So here is where we go from here  === everyone trying to get a piece of the pie. Just think, if you got a loan just 6 months ago and FANNIE & FREDDIE let you have a 45% debt to income ratio–which was NORMAL. Now you have every 2 income family in America that has one person lose a job to be able to get their Debt to income ratio lowered to 31%===with the government lowering their loan amount and getting a 2% mortgage.  How many people will be tempted to quit their job to get a deal like this? Everyone that had a spouse lose a job could be entitled for this good deal.  That’s the bad behavior Rick Santelli was talking about.

I just wish Obama would have lowered the mortgage rates for everyone as he promised. I fear this program will grow from the 75 Billion today to  well over $250 Billion===there will be nothing left for the 92% of the Americans that lived within their means.

Another more chilling thought is that if the government succeeds in stopping the downturn in housing prices before it bottoms naturally, this  will will prolong the drop in housing prices for years to come(until the market can sustain the prices). see: http://www.financialsense.com/editorials/quinn/2009/0218.html

I think Rick Santelli was right and if government officials would tell the truth, we could trust government a little more.

The portion of the bill for a $15,000 tax credit for EVERY buyer of a home was taken out because it was a Republican that put it in the Bill. We were left with a increase to $8000 First time homebuyer only credit. So no stimulus to every homebuyer, which will not stimulate home buying.(Harldly any first time homebuyers qualify any longer)

The bill was put on the internet at 11PM last night—so many Congressmen have not even read the Bill.

The $790 billion economic stimulus plan is on track for vote today in the House, and the Senate will either vote later today or over the weekend. There will be $4 billion to repair and make more energy efficient public housing projects; $2 billion for the redevelop foreclosed and abandoned homes; $1.5 billion for homeless shelters and $2 billion to pay off loans on public housing accounts. $6.6 billion will be allocated to repeal a requirement that an $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Nov. 30, unless the home is sold within three years. The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit’s expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009. The full credit is available to those making $75,000 or less ($150,000 for joint filers).

If you want to read the whole bill (3 times the size of the Bible)  Go here:     http://thomas.loc.gov/home/h1/Recovery_JS_DivB.pdf

Last night Pelosi and Reid decided it was a good idea to spend $8 Billion for a faster train between Las Vegas and Los Angeles. They must think all the unemployed people in LA can now get to Vegas to gamble their new stimulus checks!

http://www.google.com/hostednews/ap/article/ALeqM5gdDrWnoMueqVFI-Uo1ClxVZur22AD969TIKG2

I feel bad for Obama because he told the nation that there was no PORK in the $789 TRILLION Stimulus Bill —-   but then behind closed doors, Pelosi (we can do whatever we want because we won the election) keeps adding projects. It will be funny (sad) to see all the long term Pork as people read the 800 pages of the bill eventually.

http://nymag.com:80/news/intelligencer/53858/

This is only bad because this tremendous spending could cause China, Japan and other countries from buying our debt —which would devalue the dollar and raise interest rates to double digits —  severly hurting home prices and sales in the future. This is starting to get scary–as the facts get revealed.