Sunday, March 22, 2009

America goes Martingale


Today Treasury Secretary Timothy Geithner ("Heckuva Job, Timmy") is trotting out a new and opaque bank bailout plan that effectively makes the government a giant bank holding company for insolvent banks. One really good feature (if you are a criminally-inclined Wall St. financial type) about Brownie's... er Timmie's plan is that it completely circumvents Congress and still puts the taxpayer on the hook for losses. So there is no need to worry about representative government "will of the people" crapola.

The bad thing about this plan (if you are a criminally-inclined Wall St. financial type) is that people might notice that it looks just like the previous off-balance-sheet ideas that use smoke and mirrors so that we can pretend that bank are solvent. Lookie here: M-LEC

Unfortunately for America, the administration appears to have chosen the path of doubling-down on the banks gambling losses, rather than leaving the casino. Doubling-down is also known as the Martingale strategy, where a gambler continues to double his/her bet after each loss.

The strategy (in theory) pays off when the gambler finally wins a hand and comes out ahead of the house. In practice, since most gamblers don't have infinite cash, they frequently lose it all. Perhaps the Martingale strategy works more effectively for a country with the reserve currency and a printing press than for a deranged gambler. It's getting more and more difficult to tell the difference between the two.

What I really wanted to put up today is this priceless bit of junk mail that I have saved since 2006. Take a look at the blue box on the upper right with the monthly payment schedule and the little asterisk *. Then read the bit about you can get a loan "even if you are unemployed."

Read the answer on the second page to the question "What if I am self-employed. Do I have to provide any income documentation?". The answer is hysterical, in a Black Comedy sort of way.

We are in the process of bailing out banks that purchased mortgages from these originators. So that they "will lend to us again". God help us.

(click image to enlarge)



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