Thursday, April 29, 2010

Obama Favors Climate Over Illegal Aliens ... This Year

Immigration reform/illegal alien amnesty was removed from the political agenda by Obama opting for the climate change con. Speaking to reporters aboard Air Force One Wednesday night, Obama said legislators may lack the "appetite" for an immigration fight in a mid-term election year.

"I don't want us to do something just for the sake of politics that doesn't solve the problem," Obama told reporters Wednesday night aboard Air Force One.

Immigration reform was an issue Obama promised Latino groups that he would take up in his first year in office. But several hard realities — a tanked economy, a crowded agenda, election-year politics and lack of political will — led to so much foot-dragging in Congress that, ultimately, Obama decided to set the issue aside.

With that move, the president calculated that an immigration bill would not prove as costly to his party two years from now, when he seeks re-election, than it would today, even though some immigration reformers warned that a delay could so discourage Democratic-leaning Latino voters that they would stay home from the polls in November.

Some Democrats thought pushing a bill through now might help their party, or at least their own re-election prospects.

Senate Majority Leader Harry Reid, whose campaign is struggling in heavily Hispanic Nevada, unveiled an outline — not legislation — on Thursday for an immigration bill at a packed news conference. Asked when it might advance, he declined to set an "arbitrary deadline."

If immigration goes nowhere this year, Democrats can blame Republican resistance, though in reality many Democrats didn't want to deal with an immigration bill this year either.

The Democrats' draft proposal, obtained by The Associated Press on Tuesday, called for, among other things, meeting border security benchmarks before anyone in the country illegally can become a legal permanent U.S. resident.

Obama praised the outline and said the next step is ironing out a bill. He said his administration will "play an active role" trying to get bipartisan supporters.
Good decision. Even more voters of every stripe disagree with the climate change fraud than illegal alien amnesty.






The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.

Tuesday, April 27, 2010

Goldman Sachs Scandal Sh*t Hits the Fan

Remember when Lorena Bobbitt hacked off husband John's penis back in '93? All the talking heads on the TV news were using 'penis' as often as they could in the newscast because it was one of those words that couldn't be said on television. The hearings in Congress today remind me of that time. Congress guys and gals just couldn't say 'shitty' enough. And just because they could, they threw in 'crap', too, but mostly because that's what Congress folk do.


You Tube

Now, just exactly what was the crime or even the problem? Essentially, GS packaged up a bunch of the bad home mortgages bankers were forced by the government to issue to people who plainly couldn't repay the loans with good loans to spread the risk and then sold the instruments, called derivatives, to investors who actually thought the borrowers would meet their financial obligations. Goldman Sachs didn't think they would and hedged their bet. The investors lost the bet and Goldman Sachs won.

The Financial Edge explains -
The Scoop
Goldman Sachs is being charged by the Securities and Exchange Commission (SEC) with fraud for allegedly making misleading statements and omissions regarding a mortgage based investment.

Why It Matters
Goldman Sachs is a a major player in financial services. When the SEC goes after such a large corporation with as much influence as it has, it is a big deal. Goldman Sachs is a company based on trust in its stellar reputation. Any legal suit brought against them could tarnish this image. It could also reduce the trust placed in firms all across the financial industry. At the same time, the SEC is demonstrating that they have the power to find improper behavior and police it. After the subprime mess we saw in 2008 and 2009, there has been an outcry for government agencies to do something just like this.
(...)

What was the Mortgage Investment?
It was a bet on whether a group of borrowers would pay or not.

The product, known as ABACUS 2007-AC1, was basically a bet on whether a group of mortgages would make their payments. One person bets that they will (the long) and one bets that they won't (the short) - and Goldman Sachs doesn't care either way because they take their fee, $15 million in this case. This is called a synthetic collateralized debt obligation or "synthetic CDO." If it were a regular CDO, it would just be an investment in a group of debt payers; as the debtors pay, the investor gets money. This synthetic CDO was derived from a bet on the ability of the group of borrowers to pay - and everyone knows about derivatives! For this synthetic CDO, as with any bet, there needed to be two sides betting on opposite outcomes. Otherwise, the deal doesn't exist.

Why did the SEC Jump on Them?
This type of derivative bet is a common investment. It requires someone to pick the mortgages, then it needs another party to evaluate them. The SEC didn't like the fact that the same person that helped picked the mortgages also bet that they would fail. This is legal as long as it's disclosed, but apparently it wasn't in the marketing information. This is why Goldman Sachs is being charged with omissions and misleading information.

Who picked the mortgages? Allegedly Paulson & Co. Inc. influenced the selection process - thus gaining inside knowledge of the bet - and then entered into another contract to profit if it failed. This other contract is called a credit default swap. These are normally used to protect an investor just in case borrowers default. Well, the short was correct, and the group of borrowers defaulted. The long was wrong and lost $1 billion. Almost two years later, the SEC is doing something. Who was long? Well one of them was IKB Deutsche Industriebank and it quickly felt the effects of the subprime meltdown in the summer of 2007. Just a week before declaring financial trouble, the bank had stated that earnings expectations would be met.

Bottom Line
New regulations will take years, but they will attempt to increase disclosure and keep larger institutions a little more honest. It might not affect your bank account, but maybe your pension fund will have a little more insight into what they are buying when they put money into hedge funds.

It's just that simple and Goldman Sachs will slip the surly bonds of regulation because they will say everybody was doing it circumventing the governments assertion this was a unique occurrence.





The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.

A Sailor Objects



h/t: Indigo Rose




The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.