Hank Paulson - Alarmist, Scapegoating POS Thief

Paulson Says Russia Urged China to Dump Fannie, Freddie Bonds

Jan. 29 (Bloomberg) -- Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.

Paulson learned of the "disruptive scheme" while attending the Beijing Summer Olympics, according to his new memoir, "On The Brink."

The Russians made a "top-level approach" to the Chinese "that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies," Paulson said, referring to the acronym for government sponsored entities. The Chinese declined, he said.

"The report was deeply troubling -- heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets," Paulson wrote. "I waited till I was back home and in a secure environment to inform the president."

Russia sold all of its Fannie and Freddie debt in 2008, after holding $65.6 billion of the notes at the start of that year, according to central bank data. Fannie and Freddie were seized by regulators on Sept. 6, 2008, amid the worst U.S. housing slump since the Great Depression.

Paulson said he was surprised not to have been asked about the Fannie and Freddie bonds during a trip to Moscow in June. "I was soon to learn, though, that the Russians had been doing a lot of thinking about our GSE securities," he said of his meeting with Dmitry Medvedev, who succeeded Putin in the Kremlin the previous month.

So there, we've got them!

Russia is guilty of *thinking about our GSE securities*!!!

If I owned them, I'd certainly dump those bonds as well. Who with an iota of brains wouldn't?

This is just another pathetic, deflective ruse on the part of Goldman's secret-agent crook. Does Paulson really think people are going to read this and re-direct their blame to Russia - a Third World country?

First of all, the hypothetical *dumping* of Fannie and Freddie bonds by investors WOULD NOT force the U.S. to prop up any companies. Bond prices all over the world, for centuries, have fluctuated to find new market values. Nobody forced Congress, Bush, Obama, or the Fed to *monetize*, (i.e. print money) to artificially prop up the debt of the GSEs. If their extant bonds fell, that would only effect NEW FUNDING for GSE debt. It'd become harder for Fannie and Freddie (and FHA) to issue any more mortgages....AND THAT WOULD BE A WONDROUS THING!

Secondly, it's not the trading of Fannie and Freddie debt that got these *companies* in trouble. It was their ill-conceived mandate, their flouting of lending standards, and their typical unbusiness-like operation that did them in. For crying out loud, Freddie Mac wasn't even listing a loan as *delinquent* until the mortgage had been unpaid for 2 FREAKIN' YEARS!!!





Mr. Mortgage reports:

The approval process was for the underwriter to run the loan through DU/LP and if the system did not issue an approval (or an approval the borrower and the loan officer were happy with) to go back into the input file and edit the income, assets, retirement (or all three) until the system approved it. Some loans were edited 30 or 40 times until the system issued an approval.

I believe Big Government has already dumped a staggering $85 billion into these entities which should never have existed in the first place.

Only a Moron could possibly believe any of this is Russia's (or China's) fault!

Paulson's book is well-titled, "On The Brink"...

A lying thievery of this magnitude certainly put him on the *brink* - of going to hell!

Seriously, this is how wars break out. Paulson gets mad at Russia, and then threatens China, "If you dump our bonds, we'll tax your imports..." China gets pissed and threatens to monkey with their dollar peg....And who knows what one of our clueless Presidents ends up doing in the heat of this needless provocation - in the fog of this alarmist smokescreen designed so Paulson could funnel taxpayer monies to his Goldman cronies.

This isn't to make Paulson's case of Russia as an antagonist. If a country wants to float bonds to international buyers and perhaps make itself somewhat dependent on their funding....then that country can't or SHOULDN'T tell its investors what to do with the bonds THEY PURCHASED. Is our *capitalist* nation selling with strings attached or what?

See also - Wall Street Alarmism.

Forbes Finale

From March's Forbes - the last issue that I will ever pay for:

Twelve months ago Moscow overtook New York as the billionaire capital of the world, with 74 tycoons to New York's 71. Today there are 27 in Moscow and 55 in New York.

Pretty big drop, huh?

I just wanted to follow-up the post I wrote last year - Booming Moscow.



Also from that issue:

Our Germs, Ourselves

Why do some people stay effortlessly skinny while others get fat no matter how hard they diet and exercise? Bad genes are one likely culprit. But Cornell University microbiologist Ruth Ley has a more radical theory. She thinks that the trillions of bacteria swarming in your gut play a role.

Over the last four years Ley has found evidence that obese people have different mixes of microbes in their intestines than thin ones. In one study she put 12 obese people on a diet and found that as they lost weight the types of intestinal bacteria inside them changed dramatically.

She theorizes that the fatter you are, the more efficient your microbes are at converting food into fat. "Even though it says 200 calories on the box of Cheerios, it might be 200 for one person and 210 for someone else, depending on the microbes in the gut," says Ley.

Okay. Stomach bacteria as it correlates to weight loss?

Anyone who's ever drank the water in Mexico could have published that discovery.

We know someone who was recently pregnant and had the misfortune of getting *sick* for days in her third trimester. She was actually hospitalized for quite a bit.

Ignoring the scary reality that this illness probably jeopardized the fetus....all my wife could say was how lucky the *mom* was because she'd have so much less weight to lose post-birth!

BTW, I went to Cancun for Sprink Break in 1995. Out of the 12 of us who went, I was the only one who didn't get stricken Montezuma's revenge.

Seriously though. Anyone truly intent on losing weight should be locked in a Mexican jail cell with: salty snacks, jugs of local tap water, and Costco-sized package of Charmin.

Results are guaranteed!

My Crazy Parents - 3 - Russian Gangsters

Roy = My brother who lives in the Wild West of Ukraine and may or may not be juggling a few foreign girls. I really have no idea what he's up to.

MyFather - So we got some strange message left on our machine the other day....It was foreigners, Russians, or something.....they mentioned Marena or Lorena....Roy's girlfriend.....They were demanding money....It was very threatening....and very intimidating.

CaptiousNut - What!?!?!

MyFather - [Artlessly repeated the story, if you can call it that.]

CaptiousNut - WHAT!?!?!?

MyFather - [Repeated with another unintelligible version.]

CaptiousNut - Did you call Roy and ask him what it was about?

MyFather - No....that doesn't....we don't....[grunts, flails, head-shakes]

CaptiousNut - WHY NOT!?!?!?

MyFather - No....that doesn't....we don't....[grunts, flails, head-shakes]....well your mother listened to the message....we listened to it a bunch of times.....we ended up deleting it.

CaptiousNut - Let me get this straight. Your son lives in Russia (Ukraine, same sh*t), some Russian-sounding dude calls up mentioning his girlfriend BY NAME, DEMANDS MONEY, all in a threatening tone....AND, you don't even tell Roy about it, AND after a group analysis you and Mom DECIDE TO DELETE THE MESSAGE.

MyFather - Well, it was a private caller so....

CaptiousNut - WHAT?!?!? What is wrong with you people?!?!?! What is the one thing you should think of given RUSSIAN, A GIRL, A DEMAND FOR MONEY, AND A THREATENING TONE????

MyFather - Ah,....I don't know.

CaptiousNut - Are you kidding me? It starts with 'k' and ends with 'nap'. How about 'ransom', have you ever hear of that?

[Often, when teaching Prince C-Nut, I can actually see the gears in his head turn and the light click on. Here, with my father, despite my lucid lecture, it was still pretty dark in the room.]

So I went into the other room and emailed Roy; I told him to call me ASAP.

About an hour later or so I got him on the phone.



It turns out, he ordered flowers for his Natasha or whatever, paid with PayPal, but not soon after the payment was yanked back. Y'all will have to forgive Paypal if it's a little hesitant about sending money to those thievin' Ruskies. So the florist (foreign/Russian/?) probably sent out the flowers already and thought he was getting stiffed. Imagine the irony, right? He must have looked up my parents' phone number in Massachusetts and thought that was an appropriate place to leave a threatening message demanding the money.

Little did he know his pointed message was just going to get inexplicably deleted!

Another Real Estate "Investor"...

From the Palm Beach Post,

Real estate mogul Donald Trump closed the sale of a Palm Beach mansion to a Russian billionaire Tuesday for the blockbuster price of $95 million.

Now attention turns to the new owner, Rybolovlev, said to be one of Russia's wealthiest businessmen. The Forbes list of the world's billionaires places him at No. 59, with an estimated net worth of $12.8 billion.

In a statement released to The Wall Street Journal in June, Rybolovlev confirmed he was the buyer but characterized the purchase as an investment.

Sources say Rybolovlev is considering tearing down the house and building a new mansion - a move that could make the deal the most expensive teardown.



By the way, that ain't a lot of money for this buyer. He only shelled out ($100 million / $12.8 billon) or 1/128th of his net worth for this palace.

Most of the regular folk are technically bankrupt when they subtract their mortgage debt from their net worth. Or, even without a mortgage, most people have far more substantial percentage of their wealth tied up in shelter.

$95 million, $125 million, or even $200 million...what's the difference to a buyer like this?

There are always fortunes being made somewhere, somehow. Guys like Trump are certainly savvy to speculate in the high end of the real estate spectrum. Who better to cater to than those who, well let's just say, are impervious to the mortgage market?

Booming Moscow

Did you know that more billionaires call Moscow home than any other city on the planet?

Apparently, Moscow just passed New York City to claim this bragging right.

My brother just took a job hunting trip to Moscow and was blown away with the number of firms itching to hire him. (He's fluent in Russian and has a dozen years of startup telecom experience.)

He told me that the job market is so hot there right now, that "run-of-the-mill equity analysts can make $600,000 per year in Moscow."



The Russian boom is so furious, I also read that something ridiculous like 500 cars are being bought there EACH DAY. It's hard to imagine that pace keeping up. Though it would help explain the jam-packed trains.

There's always a bull market, somewhere.