Chris Whalen: United States Risks Credit Rating Downgrade With Continued Support Of AIG And Citigroup

AIG is a dead duck.

As most of you know, embattled AIG interim CEO Frank Liddy resigned last week.  Likely having realized AIG would need to ask for billions more in taxpayer subsidies, Liddy made the intelligent personal decision to step away quietly.  He was unqualified for the position from the outset (he ran Allstate, a quiet domestic insurer) and was already heavily conflicted with his service on the board of Goldman Sachs, the largest recipient of AIG counterparty payouts.

Site favorite, Chris Whalen of Institutional Risk Analytics, weighed in recently on AIG, Liddy, Citigroup and the entire sordid mess of government-sponsored zombie corporations.  The most interesting observation from the short clip is Whalen's contention that Treasury risks a sovereign debt ratings downgrade with continued support of the aforementioned failing GSEs. 

Tip to James for finding this video; an outstanding clip from Bloomberg is after the loop.

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Mocked By Pravda

Can we agree it's a low point when Pravda calls you a Marxist?

I have never before read Pravda, so perhaps the vitriol is normal.  But the Russians really don't care much for us anymore.  I was a teenager in the 80s, and saw the whole track: from Star Wars geo-political tension (the defense shield fantasy that fooled Gorbachev) leading to fears of nuclear armageddon, all the way to the night of the orgasmic crumbling of the Berlin Wall.  It was a hell of a decade for a Cold War education, though I imagine it was a picnic compared to the era of Kruschev's famous shoe and " We will bury you.  We do not have to invade you.  We will destroy you from within."

Here's an excerpt from a recent Pravda editorial about the United States, our bailout culture and descent into Marxism (ouch for honesty):

"First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish."

And that's some of the mild stuff. We have the entire painful (yet mostly true) ass-chewing from Pravda after the loop.  This one is not to be missed.

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Dean Baker Kicks Ass While Calling For Bernanke's Head (Bravo!!!)

I have no time now but wanted to post this immediately.  Here's the link.

Fat And Happy: California Flexes It's Muscles

The Governator as a young boy in Austria.  More reasons NOT to bail out California.

We covered this topic in more detail late last week.  More evidence has emerged to illustrate the level of fiscal insanity that can be found in municipalities across California.  The abuse of the public purse is rampant.  It is absolutely vital to taxpayer fairness and integrity that bloated states be forced to pare back and cut their egregious spending during the recession.  Pension corruption (what else do you call legal theft?) is commonplace and, sadly, almost the norm.  The taxpayer is getting screwed left and right, and not in a good way.  

Read about the City Manager from tiny Vernon (in LA County) making 600k per year after the jump.  And that's just the start.  Warning: unlike jr. Scharzenegger above, it's not so pretty.

Word to the wise for those who attack me for criticizing police and fire pensions.  Neither occupation is even in the top 10 of most dangerous careers, so back off.

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Chinese Students (And Siddhartha) Openly Mock Tim Geithner

Aw...tax-cheat Timmy is welcomed by his former teacher from his days as an expat teenager in Asia.

You should admit that this story makes you happier than anything we have ever printed.  And you should also grasp the reality that this admission reveals that you are depraved, saddened creatures reduced to pettiness after months of following the greatest heist in the history of our Republic.  It's okay. We've been there for awhile.

At a minimum, it is unnerving to speak to a foreign audience.  When that audience follows US economic policy very keenly and happens to be the principal foreign funding source for our staggering national debt, it starts to get dicey.  Then add Treasury Secretary Tim Geithner's penchant for spewing bullshit whenever the sun is out and you have a recipe for well...The Best Story Ever.

Simple is good.  Geithner is in China trying to sell a few trillion in U.S. Treasuries (translation: he's kissing Wen Jiabao's Totalitarian Ass <anyone remember Tibet?> so we can remain fat and happy in our slothdom of spending and generational rape).   He was speaking yesterday to a group of students from Peking University and said: "Chinese [US Dollar] assets are very safe."   The room then erupted into "loud laughter in response" according to journalists following the Treas head.

Karma is a bitch, especially in China.  Well played, Siddhartha, well played indeed.

See also:

China Warns U.S. On Debt Monetization

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CNBC Congressional Bonus Debate: The Sherminator Kicks Some Wall Street Ass

The debate with Mark Haynes and Erin Banking Apologista Burnett is focused on Capitol Hill efforts to impose special taxes on bonus payments made by firms who have received taxpayer bailout cash.

Guess who wins this contest of wit and intelligence.  If you thought brunette bimbette, then you are asked to leave the site.

I have been trying to restrain myself in descriptions, but this video is terrific.  You will enjoy it.

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China Warns U.S. About Debt Monetization

Seemingly everywhere he went on a recent tour of China, Dallas Fed President Richard Fisher was asked to deliver a message to Federal Reserve Chairman Ben Bernanke: 'stop creating credit out of thin air to purchase U.S. Treasuries.'  The Chinese are rightfully worried that B-52's plan for all the newly-created U.S. sovereign debt is monetization through Treasury purchases, otherwise known as quantitative easing (which is failing by the way).

China is talking more cautiously, yet still is long schizophrenia as the newest evidence shows they remain buyers of US government debt at a steady clip, though they have shifted their risk appetite to shorter-maturity paper.  Is that a fear of U.S. hyper-inflation a few years hence?

The most important story of the long weekend and short week is the WSJ account and interview with Dallas Fed President Richard Fisher (call him Mr. $99 trillion in unfunded liabilities, if you will).  He's the inflation hawk on the Fed board and claims to see none percolating yet. 

He also reveals that he voted against the plan for quantitative easing (using money <credit> created from nothing in order to purchase U.S. government debt and thereby move interest rates lower).  It is the only monetary option remaining to governments who have already pushed interest rates to zero.  And as B-52 will tell you, it doesn't always work, at least for longer than 60 days.  Not when the market sees $10 trillion in new debt issuance coming down the pike. 

Outstanding WSJ piece (free link) is after the jump.

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I left My Heart (And Fat Public-Employee Paycheck) In San Francisco

And you thought you were so smart to go to work in the private sector.  Take a look at this.  When applicable, some of the figures include overtime.  For nurse #1, her salary was in the $110k range and then added about $240k in overtime.  There are prison dentists making $300k per year from San Diego to Santa Cruz.  It's a racket.  Become a police officer, boost your overtime in the 5 years leading to retirement and retire at 42 with a pension worth $2 million.  Taxpayer suckas.

We must not have a bailout of California and other spoiled, bloated states.  Their public-sector employee unions need a stringent dose of recession reality.  The heyday is over.  And taxpayers from states more in touch with fiscal sanity should not be asked to fund the largesse of the grossly irresponsible.  At its core it's an issue of fairness and accountability.  Jefferson made it clear in the Constitution that the citizenry of one state should not bear the burden of another's misdeeds and miscalculations.  We can only hope Barney Frank (and his bill to back all municipal and state debt) and Tim Geithner (a sucker for any bailout plea) do not end up supporting the wrong actors again.

A chart that will have you foaming is after the jump.

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Student Loan Forgiveness: Shrinking Along With State Budgets

Here come the caveats.  In a general sense, as long as we're in the mood to reward certain groups, we have a question.  Who deserves a bailout? 

I'll take a stab at an answer: a select group of student-loan debtors and an equally select group with staggering health-care debt.  Social workers, non-profit employees, teachers, nurses and home-health care employees (and others?) would all qualify.  Wipe it away and watch them spend.  Individual health care debt is another daunting problem for millions of families.  The Feds can make it disappear with a few checks.  Problem solved and millions are unleashed anew to consume mightily.

Sure, it's simplistic.  And we understand the inherent injustice in bailing out anyone at the exclusion of others.  But we would rather help these folks than the over-leveraged, bonus-chasing bastards of Wall Street.  And so it was with interest that I read yesterday that while the Money Store remains open to inglorious banksters and failed automotive asshats, it is shutting down quickly for teachers and social workers.  Nice.  Our various governments are an embarrassment.

Here's the piece from Jonathon Glater of the New York Times.

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A Twitter Challenge: Spread Bailout Awareness & Help 'The Daily Bail' Get 5,000 Followers

The Daily Bail has had a Twitter account for months strictly to publish our stories.  I'm not even very disciplined at updating that simple feature.  Not sure why I can't get excited about Twitter, unless it's the sickening narcissism of the constant personal updates from some.  I guess it could be that.  I'm probably not winning points with dedicated users with the criticism, but I've always been stupid like that.  Insult you and then ask for your help.

So help the cause of bailout awareness and education by helping us get to 5,000 followers.  We have maybe 25 now so the journey might suck.  Or maybe 1 of you Twitter geniuses can figure out how to make it smooth and easy for us to reach a larger audience.  We like our website traffic numbers very much already (I'll post them soon) but we know that there are hundreds of thousands of young people who need to be made aware that our generation's bailout heist is literally stealing their future.  We're just trying to do our part while avoiding insanity, and now we need you to do your part. 

So do your Twitter thing and help us spread the word.  Lots of 'please-s' and many, many 'thank you-s' from us here at headquarters.

Our Twitter Account

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Simon Johnson: "The United States Is A Banana Republic" (Video)

Former chief economist for the IMF, Simon Johnson was a guest Friday night on Real Time With Bill Maher.  Jon Meachem and Muhammad Yunus also appeared.  Johnson touched briefly on why he famously called the United States a 'banana republic' 2 months ago.  Something vague about deficits and debt and future unfunded obligations.

Bill points out that Obama is still supporting Wall Street bankers over taxpayers.  Bravo, Bill.  The audience agreed.  Decent clip after the loop.

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Suspension Of Reality 101: Meet RecessionBlocker.com

I can't tell if this is beautiful satire or more likely the painful reality of twisted souls who prefer 'the homogenized positive' over 'the gut-wrenchingly real'.  Here's an example of a financial website (CNN) sanitized for your protection by recesssionblocker.com.

The following words and phrases are blocked by this Orwellian tool of brainscaping:

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Charlie Rose: A Conversation With Naomi Klein And William Greider

My closest friend from my years in Charlottesville grew up with Katherine Greider.  She is Bill's daughter and is herself an author. 

I heard a story twenty-five years ago and still haven't forgotten it.  Apparently, the Greider family took a writing sabbatical to France for 2 years in the 1970s.  Bill labored and wrote some kind of Tolstoi-esque masterpiece for the entire 24 months.  Upon completion, the family prepared to relocate back to their home in the Washington DC area.  At the airport or in transit thereto, William Greider lost the one and only copy of his manuscript.  It was never found.  The more I think about this story, the more interesting it becomes. 

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Charlie Rose: A Conversation With Elizabeth Warren (PBS Video)

This clip runs 22 minutes and was originally broadcast on May 11th.  If you want more from Warren, just search our archives.  She is quite popular here.

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