The Grapes of Graft

There seems to be a rush to help those who take a shower in the morning before going to work,
and not those who take a shower in the evening after a day's work.

The Grapes of Wrath

Bloomberg
California May Pay With IOUs for Second Time Since Depression
By Michael B. Marois and William Selway

Dec. 5 (Bloomberg) -- California, the world’s eighth largest economy, may pay vendors with IOUs for only the second time since the Great Depression, State Finance Director Mike Genest said.

In a letter to legislative leaders Dec. 2, Genest said the state “will begin delaying payments or paying in registered warrants in March” unless an $11.2 billion deficit is closed or reduced. California, which approved its budget less than three months ago, may run out of cash by March, state officials say.

Governor Arnold Schwarzenegger warned that he may issue the warrants, which are a promise to pay with interest, to suppliers and contractors as the seizure in credit markets may make it too costly to borrow.

“It’s getting worse very quickly,” Schwarzenegger, a 61- year-old Republican, told reporters Dec. 1 after declaring a fiscal emergency and ordering the Legislature into a special session to find ways to close the deficit. “It’s like an avalanche in that it gains momentum. And that’s what we’re in right now, so it’s a real crisis.”

California is reeling more than any other state from budget woes that pushed the nation’s governors to seek help from Congress. States say federal money is needed to ease the pain from spending cuts and tax increases that would be a further blow to an economy in the throes of a recession.

The warrants would be given to landscapers, carpet cleaners, construction firms, food services companies and other state vendors. They would pay an interest rate of as much as 5 percent, based on state law. California last issued the IOUs in 1992 when lawmakers and then-Governor Pete Wilson deadlocked on a budget for 61 days past the start of the fiscal year...

The Baited Banker Thus Desponds: Citadel Loses 47%

Bloomberg
Citadel Funds Lose 13% in November, 47% This Year
By Saijel Kishan and Katherine Burton

Dec. 4 (Bloomberg) -- Citadel Investment Group LLC, the Chicago-based hedge-fund firm run by Kenneth Griffin, lost 13 percent in November, bringing the decline for the year to 47 percent, according to two people familiar with the matter.

Losses at the Citadel’s two biggest funds came from investments in convertible bonds, high-yield bonds and bank loans, and investment-grade bonds, which were hedged with credit default swaps that protect the buyer in the event of a default. These same wagers started the funds’ tumble in mid-September.

“Digging out of this hole may be tough for them,” given the lack of trading in the credit markets, said Michael Rosen, principal at Santa Monica, California-based Angeles Investment Advisors LLC, which advises clients on hedge-fund investments....


"A baited banker thus desponds,
From his own hand foresees his fall,
They have his soul, who have his bonds;
'Tis like the writing on the wall. "

THE RUN UPON THE BANKERS
Jonathan Swift

The bold encroachers on the deep
Gain by degrees huge tracts of land,
Till Neptune, with one general sweep,
Turns all again to barren strand.

The multitude's capricious pranks
Are said to represent the seas,
Breaking the bankers and the banks,
Resume their own whene'er they please.

Money, the life-blood of the nation,
Corrupts and stagnates in the veins,
Unless a proper circulation
Its motion and its heat maintains.

Because 'tis lordly not to pay,
Quakers and aldermen in state,
Like peers, have levees every day
Of duns attending at their gate.

We want our money on the nail;
The banker's ruin'd if he pays:
They seem to act an ancient tale;
The birds are met to strip the jays.

"Riches," the wisest monarch sings,
"Make pinions for themselves to fly;" [1]
They fly like bats on parchment wings,
And geese their silver plumes supply.

No money left for squandering heirs!
Bills turn the lenders into debtors:
The wish of Nero now is theirs, [2]
"That they had never known their letters.

"Conceive the works of midnight hags,
Tormenting fools behind their backs:
Thus bankers, o'er their bills and bags,
Sit squeezing images of wax.

Conceive the whole enchantment broke;
The witches left in open air,
With power no more than other folk,
Exposed with all their magic ware.

So powerful are a banker's bills,
Where creditors demand their due;
They break up counters, doors, and tills,
And leave the empty chests in view.

Thus when an earthquake lets in light
Upon the god of gold and hell,
Unable to endure the sight,
He hides within his darkest cell.

As when a conjurer takes a lease
From Satan for a term of years,
The tenant's in a dismal case,
Whene'er the bloody bond appears.

A baited banker thus desponds,
From his own hand foresees his fall,
They have his soul, who have his bonds;
'Tis like the writing on the wall. [3]

How will the caitiff wretch be scared,
When first he finds himself awake
At the last trumpet, unprepared,
And all his grand account to make!

For in that universal call,
Few bankers will to heaven be mounters;
They'll cry, "Ye shops, upon us fall!
Conceal and cover us, ye counters!

"When other hands the scales shall hold,
And they, in men's and angels' sight
Produced with all their bills and gold,
"Weigh'd in the balance and found light!"

1. Proverbs 23:5

2. Nero, signing the death sentence of a condemned criminal, exclaimed:
"Quam vellem nescire litteras!" ("How I wish I'd never learned to write!") Suetonius, 10;

3. Daniel 5:25 מנא ,מנא, תקל, ופרסין (Mene, Mene, Tekel u'Pharsin)

A Fair and Reasonable Proposal for Federal Bailouts

Senator Chris Dodd made an interesting proposal this afternoon, and on thinking further it seems to be one of the most reasonable and practical suggestions that we've heard during this crisis.

The Senator proposed that whatever givebacks, restrictions, haircuts, penalties, oversight, pay cuts and equity arrangements that are written into the bridge loans and funds to the automakers be applied in principle to all recipients of Federal bailout money including the Wall Street banks, and financials institutions like AIG and GE. This would include requiring written proposals for the restructuring and the use of this money and the adoption of a set of business reforms of the financial industry without exception.

This should include any funds provided by the Federal Reserve and Treasury. The Fed does not have any independent funds, all of them being provided and sustained by the US taxpayers through their debt and tax obligations. Oversight for this program would be conducted by an independent board set up by the GAO, and not the Fed or Treasury to avoid a conflict of interest.

It is a superb idea, and deserves the support of other Senators and congressmen.

We suggest that you write to your Senators about this today and express your support for a more even treatment of all businesses and people including the Wall Street banks. We sent the above wording to ours. Whatever is done must be fair and equitable.

Write to Your Senator