How Much Would It Cost To Buy Congress Back From Special Interests?
Here’s a thought: let’s buy our Congress back from the special interests who now own it.
We all know special interests own the U.S. Congress and the Federal machinery of governance (i.e. regulatory capture). How much would it cost the American citizenry to buy back their Congress? The goal in buying our Congress back from the banking cartel et al. would not be to compete with the special interests for congressional favors--it would be to elect a Congress which would eradicate their power and influence altogether.
A tall order, perhaps, but certainly not impossible, if we’re willing to spend the money to not just match special interest contributions to campaigns but steamroll them.
A seat in the U.S. Senate is a pricey little lever of power, so we better be ready to spend $50 million per seat. Seats in smaller states will be less, but seats in the big states will cost more, but this is a pretty good average.
That’s $5 billion to buy the Senate.
A seat in the House of Representatives is a lot cheaper to buy: $10 million is still considered a lot of money in this playground of power. But the special interests-- you know the usual suspects, the banks, Wall Street, Big Pharma, Big Insurance, Big Tobacco, the military-industrial complex, Big Ag, public unions, the educrat complex, trial lawyers, foreign governments, and so on--will fight tooth and nail to maintain their control of the Federal machinery, so we better double that to $20 million per seat. Let’s see, $20 million times 435….
That’s $8.7 billion to buy the House of Representatives.
It seems we’re stuck with the corporate toadies on the Supreme Court, but the President could scotch the people’s plans to regain control of their government, so we better buy the office of the President, too.
It seems Obama’s purchase price was about $100 million, but the special interests will be desperate to have “their man or woman” with the veto power, so we better triple this to $300 million.
Add these up and it looks like we could buy back our government for the paltry sum of $14 billion. This is roughly .0037% of the Federal budget of $3.8 trillion, i.e. one-third of one…
But as far as the credibility of at least one $30+ billion (?) hedge fund, he sure as hell is.
Courtesy of Bloomberg TV:
Block on whether he’s as certain today as he was on June 2nd that Sino-Forest is a fraud:
“Yes. Let me say two things. Number one, it is Sino-Forest’s management that participated in the fraud that has cost Paulson and investors all that money. No. 2, yes, I’m just as certain today that the company is a fraud and the stock is zero as was on the day that we published.”
On whether he’s discovered anything else about Sino-Forest that supports his allegations:
“We have continued to do work on it. We have looked at it closely from an accounting perspective. Some of the company’s additional disclosures, in its attempt to defend itself against charges of fraud, some of those have actually been helpful in furthering our analysis. I am not sure to what extent we will make this public. We certainly do intend to communicate with both PwC, which is advising the special committee, and Ernst & Young and the regulators.”
On whether he is still short the stock:
“Yes…We do not comment in specifics on the revenue model, but my personal money is on the short side of this, and has been with every short call that we have made.”
On S&P downgrading Sino-Forest bonds because of Muddy Waters’ research:
“I’d think that it’s a bit of a cop out on the part of S&P. We published this almost a month ago. The company has had a microphone and a platform to respond. When it has opened its mouth, the company, the stocks and bonds have gone lower. Rather than having anything confidence inspiring to say, they have continued to spook investors. S&P may want to hang this on us, but I have a feeling that is really a cover for, at least in part, their own assessment that there are significant risks that are company specific not related to market perception and Muddy Waters.”
On his Spreadtrum call and criticism he’s received:
“I am getting uncomfortable, actually, with this idea that we are ninja assassins that are going to take this stock price down a huge percentage within minutes or days. What I would like to do to protect…
When you socialize the losses and privatize the gains for a powerful few, when you reward the perpetrators and punish the innocent and unsophisticated victims of fraud, when you idolize greed, selfishness and deception and vilify simple hard work and honest decency, how can one really expect a healthy, vibrant economy? You are birthing a monster.
Austerity will not improve this picture, and will inflict intense misery on the growing number of unfortunates. They know this, but they don’t care. When the oppressed react, there will be calls to put them down, to subdue them, savagely. Provoke and react. Never waste a crisis, and if you need it, create one.
This is the road to hell.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.
According to CNBC’s Kate Kelly, Paulson has given up on his $30 price target on Bank of America by the end of 2011, and instead has dumped a “substantial stake” in its holdings of the bank’s stock. And so, the claims that the hedge fund which has now become the butt of all due diligence jokes, is about to eat more crow, especially as other objective skeptics have long been warning that the bank is massively underreserved for what is about to become a legal fee freeforall following the just announced non-settlement with the BlackRock, Pimco, New York Fed group, and thus a ticking timebomb. But no, Paulson is in it, so it must be a Buy, Buy, Buy. Idiots. Incidentally the market is only slowly getting to realize that the “settlement” announced a few days ago is actually horrendous news for the bank (but confirms that monkey throwing feces move the marginal money) as we said first upon hearing the news.
Investors on Wednesday welcomed Bank of America’s $8.5 billion settlement with disgruntled mortgage-securities holders, sending its shares up 3 percent.
But at least one major shareholder had already taken some of its chips off the table, according to people familiar with its position: Paulson & Co., the $38 billion hedge-fund behemoth.
During the course of the past two months, Paulson sold a substantial portion of its 124 million-share stake in BofA, according to these people. In light of yesterday’s news, firm founder John Paulson may now, in fact, be regretting his decision, these people say, and looking to upsize his holdings in the bank yet again.
The apparent selldown is significant because of Paulson’s outsized influence both in the hedge-fund world and at BofA, where he is the eighth-largest shareholder of record, according to first-quarter securities filings
And as a reminder here is what could go next if redemption notices accelerate as the realization of the obvious dawns on the firm’s LPs:
As U.S. deficit talks enter their final stage, the consensus expectation is for a last-minute deal that combines a few modest cuts with a barnyard of gimmicks to produce a “reduction” number big enough to placate the financial markets. But even if Washington were to come up with real, substantive (draconian! cruel! irresponsible!) cuts, it won’t be enough.
Former Fed Governor Lawrence Lindsey wrote an opinion piece for Tuesday’s Wall Street Journal that explains why:
Washington is struggling to make a deal that will couple an increase in the debt ceiling with a long-term reduction in spending. There is no reason for the players to make their task seem even more Herculean than it already is. But we should be prepared for upward revisions in official deficit projections in the years ahead—even if a deal is struck. There are at least three major reasons for concern.
First, a normalization of interest rates would upend any budgetary deal if and when one should occur. At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020.
The 10-year rise in interest expense would be $4.9 trillion higher under “normalized” rates than under the current cost of borrowing. Compare that to the $2 trillion estimate of what the current talks about long-term deficit reduction may produce, and it becomes obvious that the gains from the current deficit-reduction efforts could be wiped out by normalization in the bond market.
To some extent this is a controllable risk. The Federal Reserve could act aggressively by purchasing even more bonds, or targeting rates further out on the yield curve, to slow any rise in the cost of Treasury borrowing. Of course, this carries its own set of risks, not the least among them an adverse reaction by our lenders. Suffice it to say, though, that given all that is at stake, Fed interest-rate policy will increasingly have to factor in the effects of any rate hike on the fiscal position of the Treasury.
The second reason for concern is that official growth forecasts are much higher than what the academic consensus believes we should expect after a financial crisis. That
This guy’s a crook and he’s going away for a very long time. His sentence will be announced tomorrow. He’s looking at 50 years. This is Lee Farkas. He was the boss at Taylor Bean & Whitaker (“TBW”). Farkas and some of his pals at TBW have been convicted of $3b in mortgage fraud.
This is a very nutty story. For me, the Farkas conviction is a sideshow. What I want to know/understand is how some of the biggest players in D.C. were involved in this mess.
Bloomberg has a detailed recap of the story. (Link). My take and some of their cuts:
This all started way back in 2002. TBW was doing big mortgage business with Fannie Mae. And guess what?Fannie determined that TBW was selling phony loans. Fannie accused TBW of fraud. They looked at specific mortgages and concluded:
A public records check revealed that the named borrowers didn’t hold title to the real estate and that the mortgages sold to Fannie Mae had never been recorded, according to the Fannie Mae document.
In 2008 a Fannie Exec said this about the events of 2002:
“Our conclusion was that fraud, if I can use that word, had been perpetrated on Fannie Mae, and we considered that to be a very, very serious matter.”
As a result of the fraud Fannie stopped doing business with TBW. But they had a side deal to keep that quiet.Why?Because the disclosure would hurt the mortgage pool. Unbelievable!! From a court document:
Fannie Mae wanted to preserve the value of the servicing portfolio, which would plummet if it reported that Taylor Bean was selling bogus loans.
So after Fannie sneaks out of this dirty deal, who steps into the trap? None other than those idiots at Freddie Mac: (from the Bloomberg story)
At Freddie Mac, the decision to boost purchases from Taylor Bean was made by David H. Stevens, then a senior vice president of mortgage sourcing.
This insanity led to the $3b ultimate fraud. How could this have happened?Fannie knew that
Back when the market experienced its first liquidity induced bubble, a rather discombobulated gentleman coined the term “irrational exuberance” to describe what was happening in the market (little did he know that that was just the appetizer to a far bigger bubble 7 years later). Well, frequent readers know our fascination with following such largely unfollowed by the mainstream media factoids as margin leverage, which recently has been near all time highs. Below we present a chart courtesy of Diapason’s Sean Corrigan which proves that when adding mutual fund cash into the equation, the market is currently more “exuberant” than it was during the dot com bubble, as a near record low amount of cash is used to support a near record high amount of investment leverage. The silver lining: we have a little more ways to go before we hit an all time leverage peak. And since it is sufficiently obvious, there is no need to highlight how the market eventually responded after every single past net margin debt peak.
I could not help noticing that China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc. The strong yen strikes again: Honda decides to build a high-performance hybrid Acura in Ohio – instead of its home nation of Japan. The firm’s continued shift in p...
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In an effort to reach the angry mob, CNBC's Rick Santelli goes all Sesame Street on the numbers behind the US Debt Ceiling Rise. Focusing for two minutes on what this practically means for every man, woman, child, and politician, the shouting Chicagoan points out that when the US breaches this new limit then the world's entire population will be on the hook for $2,346 each (and $52,409 per US person).
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted -6.5 in its latest reading, data through January 20. The latest public data point is a reduced contraction from last week's -7.6 (a slight downward revision from -7.5). This is the highest level (i.e., least negative) since early September. However, the underlying WLI declined fractionally from an adjusted 123.3 to 122.8 (see the third chart below).
Early last December Lakshman Achuthan, the Co-founder of ECRI, spoke with Tom Keene on Bloomberg Television's Surveillance Midday. You can watch the video on the ECRI website here, with bold heading Recession Update. The eight-minute video is well worth watching in its...
Some combination of better made cars, and less Americans able to pay new car prices has conspired to push up the average age of U.S. vehicles to a new record high. Reflecting this sea change, one of the best investment g...
Shares of battered tech company Research in Motion (NASDAQ: RIMM) are seeing much strength during Friday's trading session.
Fairfax Financial Holdings released a 13G filing with the SEC this morning, in which they disclosed a 5.12% stake in Research in Motion.
Currently, shares of Research in motion are up over 4% at $16.85. Over the last year, Research in Motion is down over 72%.
Research In Motion Limited is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. RIM provides platforms and solutions for access to information, including e-mail, voice, instant messaging, short message service.
Top 5 RisersStockRatingAnalysisASBCBUYMany analysts are expecting higher than previously expected long term growth from Associated Bancorp, and its near-term earnings outlook is also improving.CZZSTRONGBUYThe recent earnings history for Cosan Ltd shows significant improvement while projected valuation continues to rise.STLDBUYProjected value continues to rise for Steel Dynamics while long term increases in earnings growth are also becoming more widely expected.PSESTRONGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a fe...
Major markets and major index ETFs corrected slightly today after the stock market’s euphoric party yesterday
Major markets suffered a slight hangover today, as the S&P 500 dropped .57%, the Dow Jones Industrial Average dropped .18%, the NASDAQ dropped .46% and the Russell 2000 Index dropped .34%, after yesterday’s crazy Fed and Tech Sector induced Wall Street Party. The NASDAQ, in particular, partied very hard, so hard in fact that the NASDAQ reached its 11 year record high.
The major market index ETFs were hungover too as the SPDR S&P 500 ETF lowered .51%, the SPDR Dow Jones Industrial ...
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This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
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Here is the virtual portfolio weekend update. Basically a recap of the positions and some notes about the trades. As usual, I'll post the previous week's P&L for comparison. Not the greatest of week in general!
AA Money
Only transaction last week as we bought back the AA Feb 9 puts on Tuesday for close to a 70% profit. The idea is to sell another set of put as soon as we get a chance.
Previous week P&L - $400.00
We lost some ground this week, but we'll keep on selling premium!
FAS Money
We also lost some ground in this virtual portfolio, but we have sold plenty of premium for the coming week. A little correction would go a long way to help! On Wednesday we sold the FAS Feb 72 puts (already good for 50%), on Thursday we added the Jan4 78 calls and on Friday we had to roll the Jan 78 puts to the Jan 80 puts. We were hoping for these ones to expire worthless on Friday, but a late stick killed that hope.
Previous week P&L - $4372.00...
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Here's the latest Stock World Weekly. We discuss the Fed's next move, and it's new policy for more QE-cating. Brief review of Sabrient's trade ideas for 2012 (already doing well) and a few new buy-writes from Phil and Pharmboy. Enjoy! (Feedback appreciated - give some life to the comment section below.)
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Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(