Monday, September 29, 2008

Can Someone Bail the Mets Out, Please?

Oy vey. Where to begin after a weekend like this. The stock market is tanking early on Monday once again after a weekend full of poiltical wrangling and negotiating on the largest intervention in U.S. financial markets since the great depression. It looks like the Reps and the Dems in charge have agreed on a package which is at least marginally better than the bailout plan originally presented to Congress last week that would have essentially anointed Treasury Secretary Henry Paulson the King of America, with all the money and all the power in the country. The new plan, which will be voted on in the House of Representatives this week, has I think three distinct advantages over last week's flavor of this bill.

First, the new bailout plan diminshes the unchecked nature of Paulson's power with the bailout. As much as I am very much not in favor of increased government involvement and increased bureaucracy in this country, I have to admit a certain sense of relief that the Congress has instituted in this new bill several oversight committees and other checks and balances to ensure that Treasury is not spending our money frivolously, helping some people or companies more than others or some who do not deserve the help, and just generally making sure there is someone watching over what Paulson is doing with the hundreds of billions of dollars that are being printed and thrown at his doorstep. Compared to the plan as presented by Paulson, Bernanke and Bush last week, where Paulson would have had completely unfettered discretion to do whatever the hell he wanted with $700 billion of our money, this new plan is a significant improvement, and one that we all can be thankful for. Absolute power corrupts absolutely, we've all seen that time and time again over the past several years, and the last thing this country needs right now is the former CEO of Goldman Sachs being given $700 billion cash money to spend on whatever he wants, with no executive, legislative or even judicial review of his actions. So that's a very good thing.

The second thing about the new bill that I am a huge fan of is that it in fact breaks down the $700 billion into three tranches, which may or may not end up needing to be spent. Given that this money is going to come directly from the taxpayers, I am a big fan of this change in addition to the first one mentioned above. As I understand it, under the new proposal this week, Treasury would be given a "mere" $300 billion in cash right away to spend buying up idiot banks' distressed mortgage portfolios, instead of straight-up $700 billion right up front. Now there will be an additional $100 billion to be authorized by the President himself at his discretion, which of course with the current President or with Barack Obama will be an absolutely foregone conclusion, but just breaking it up like this at all is at least a sign that some people with some fiscal responsibility were able to prevail in this weekend's negotiations. And lastly, Congress is permitted to authorize up to another $300 billion -- or, more accurately, the new bill has Congress already authorizing this amount, but Congress can act to un-authorize that amount before it is spent if they see fit. This also is probably a somewhat unlikely outcome, but the simple fact is, right now as between the monkey President and the monkey Congress, it seems clear that Congress's interests are more aligned with my own as far as this bailout goes. So to me giving the President control over $100 billion and Congress control over $300 billion of the total $700 billion bailout package is a huge win for us, as taxpayers who are to foot the bill for this emergency measure intended to save the U.S. financial system from collapse. Like I said, even if all $700 billion ends up being authorized and spent helping save the banks from their own greed and short-sightedness, just the fact that they're not just throwing $700 bil of cash at Treasury's feet is a big improvement in my eyes.

Lastly but not least, I am also overjoyed to find that the Democrats in Congress did not prevail on one of their big suggestions for this bill from last week -- namely, that bankruptcy judges should be given broad discretion to rewrite mortgages of homeowners who are unable to meet their mortgage payments. Now, do I feel this way because I am a cold, heartless bastard? No, not at all. But I'll tell you a quick story of exactly why I feel this is a highly inappropriate action to take.

For those of you who have experienced pregnancy yourselves or through your significant others in life, one of the key changes that happens to women early in their term is what the books refer to as the "nesting instinct". Basically, this is when the newly-pregnant female of our species becomes psychologically obsessed with creating a "nest" for her coming newborn. In Hammer Wife's case, this has translated to dragging me up to Westchester or the other suburbs of New York City to look into buying a home in the suburbs five years ago when she was pregnant with M, and again three years ago when she was pregnant with K. Most recently when this happened, three years ago, we were smack in the midst of the greed and excess and short-sightedness of this whole mortgage mess, and thus Hammer Wife went ahead and got us pre-approved for a mortgage in advance of what we then though would be us purchasing a home in the 'burbs. Now let me tell you, this bank had never heard of us before, and was not even asking for proof of any of our income, our assets, our liabilities, anything. Nothing at all. Apparently Hammer Wife just filled out some online forms, allowed a credit check to be run, and poof! Hundreds of thousands of dollars, preapproved to be loaned to us, no questions asked.

First off, right then and there I knew there was a problem with the system. Nowadays these are the "liar loans" you hear referenced in the news if you've been following the mortgage crisis at all, where borrowers basically had the ability to lie through their teeth on mortgage applications, and banks would just loan the money because interest rates were so low, real estate prices were jumping 25% a year, and defaults were simply not being considered for anyone at the time, regardless of the credit worthiness of the borrowers. Credit risk? What credit risk? So anyways, Hammer Wife was all gung ho about us buying a mansion in the NYC suburbs, but then I had to break the sad news to her: we could not possibly afford the mortgage we had been pre-approved for, no questions asked. "What do you mean?" she replied, "They already approved us!" To which I had to explain that, just because a bank was willing to lend us this obscene amount of money to buy a home, that did not absolve us from having to actually come up with the actual money to pay those monthly payments. Nesting as she was, Hammer Wife was unconvinced until I sat down with her, pulling up our family budget on Excel, and went over how much money comes in every month and how much money we were spending on things other than our home. By the time that conversation was finished, a dejected Hammer Wife was incredulous. "But how could the bank possibly be willing to lend us that kind of money?" To this I had no response, other than to point out that something was clearly wrong and that surely many of these banks were in for a rude awakening at some point. How little we realized at the time how right we were.

Anwyays, so there we went on renting a tiny apartment in Manhattan for the next several years, and in fact to this day even in the suburbs we are renting a house, because in a nutshell, especially given the uncertain nature of the economy right now, we still don't really see ourselves as wanting to take on the obligation to be forced to afford the monthly payments on a house we would actually want to buy. All this while, we had several friends who went ahead and took out ridiculous mortgages on houses they really could not afford. Balloon payments, pick-a-payment plans, two-year ARMs -- I mean, by hundreds of thousands of dollars, these people could not truly afford the mortgages they were taking on if things turned even the slightest bit south. And yet, the banks were willing to lend, so they went ahead and did it anyways, getting all the wonderful benefits of home ownership, most of all including getting to watch their investments increase by a good 25-50% over the past few years up until sometime in 2006-2007. All meanwhile my family has continued renting a small apartment in the city, not getting the benefit of seeing our investment gain so much value, all because we were the ones not willing to buy something we couldn't actually afford over time.

So then the Democrats in Congress were talking last week about having bankruptcy judges let these very people out of their mortgage troubles by simply adjusting the terms, to make their shit easier for them to pay for. No fucking way. If that were going to be available, I would have bought me a house five years ago. Shit, forget five years ago, I should have just bought a house straight out of law school. Give me some kind of ten-year interest-only plan or something with a ginormous payment due at the end, and I could have made do until now. But allowing these irresponsible people -- literally millions of them in this country -- to continue to own their homes while I rent, rewarding them for their irresponsibility and lack of foresight and poor judgment and poor financial understanding, that is simply unacceptable to me on the most basic of levels. So I am absolutely thrilled that this sort of action was not included in the plan. Even though I am well aware that not directly helping troubled homeowners will hurt many people that I know, personally. But what's right is right, and what's sick and wrong is sick and wrong. So once again I am shocked to hear myself saying it, but I am thankful for the Republicans in Congress. Write it down, you won't hear me saying that again ever I would think.

Meanwhile, not sure if you noticed, but last Friday, WaMu, the largest savings back in the country, failed and was seized by federal regulators, and a sale was orchestrated to J.P. Morgan Chase for under $2 billion. Talk about a bank that has picked up huge businesses at firesale prices this year, dayummmm. That is Bear Stearns and now WaMu, both folded into JPM this year, all for a grand total of just over $2 billion. These probably would have cost $150 billion together if purchased a year ago. That's the strength of being one of the few long-term surviving banks right now. And then not to be outdone, Monday morning saw Wachovia essentially fail as well, although the FDIC doesn't want to admit it was a failure. But both WaMu and Wachovia stocks dropped 90+% on the day of their takeovers, with Wachovia plummetting to under a dollar in pre-market action on Monday from a close around $10 a share on Friday afternoon, with this time Citigroup stepping in and picking up the pieces for what can only be described as firesale prices. And once again, there is the government backstopping Citi's losses beyond some $42 billion that it has agreed to take on.

God, remember the days $42 billion seemed like a big number? All this bailout mess this year kinda makes A-Rod's ludicrously overpriced contract seem a lot more in line, doesn't it? Actually, no. He's still overpaid for the uselessness that he brings to the Yankees, even for all his statistics.

Which brings me once again to the highlight of the weekend for me. The New York Mets completed a second straight season of futility, this year giving up a 3.5 game lead on September 7 over the Phillies, after last year losing a 7-game lead on September 7 to my same Phils. It is sick (and highlarious) what the Mets have done, and it is worth repeating here. In 2007, the team was up by 7 games on the Phillies with 17 games remaining, and they blew it on the last day of the season when Tom Glavine came out for them and gave up seven runs in the first inning to the Florida Marlins. This year, the team once again lost two of three to end the season against the hated Marlins, who openly and obviously rejoiced in the chance to ruin the Mets' playoff chances for the second consecutive year. I had been out to dinner with my family during the latter part of the Mets game, leaving when the Mets had just tied it up 2-2 in the bottom of the sixth, and when I got to the ice cream shop in town with the kids for dessert, on the tv was the post-game tribute to Shea Stadium as this was the final game to be played in the storied arena before giving way to the new Citi Field starting in 2009. And there they are, happily announcing all the old-time Mets players who contributed to the history of Shea Stadium, and the fans are cheering loudly for all these guys, and I just knew then and there that the Mets must have won. Little did I know until checking my phone a few minutes later that not only had the Mets bullpen blew yet another game for them in the 8th, but that the Brewers had come back to beat the Cubs and the Mets were officially eliminated from the playoffs.

See, that's the difference right there between Phillies and Mets fans. If that were Philly, if the Phillies had just completed blowing that 3.5 game lead int he division with 17 games to play, one year after blowing a 7-game lead with 17 games to play against the exact same team, there wouldn't have been anyone left in the stands. No one. And what few people were still there, I can assure you would not have been cheering. Throwing batteries, spitting and tossing garbage onto the field, maybe. But not fucking cheering. What a sickening performance by the Mets over the past two seasons. At least you figure someone will be answering for these back to back meltdowns, right?

Wrong. GM Omar Minaya, who brought and/or has fostered players like Beltran, Glavine, Reyes, Wright, Pedro, and the list goes on and on, reportedly has reached agreement to be extended for another four fucking years just last week, in the midst of this year's version of meltdown being completed. And then this morning I see this story as well on ESPN, dealing with the future of interim Mets manager Jerry Manuel. "'Jerry did a very good job coming into a very difficult situation,' general manager Omar Minaya said. 'I was very pleased.' Before the game, Mets owner Fred Wilpon praised Manuel and Minaya."

Oh. My. God. Mets fans, you get what you deserve, that's all I have to say. I can only hope you keep this same management in place for the foreseeable future. What a pleasure to play in the same division with this bunch of abject losers, led by the biggest losers of them all in Manuel/Randolph, Minaya, and of course Mets ownership. What a raging joke.

Can someone please bail out the New York Mets?

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14 Comments:

Blogger OhCaptain said...

We bought our house a little over 3 years ago. Holy crap was it hard to get a traditional mortgage then. Each time we'd sit down with a bank, they just whipped out the ARM and say "Here, I think this is what you are looking for." The whole process took months longer then we'd expect because so many of the banks just automatically started with an ARM and had to go back a redo when we refused sign for the first loan.

11:06 PM  
Blogger Hammer Player a.k.a Hoyazo said...

I hear that, OhCaptain. And don't get me wrong, I don't mean to be putting down people who did take out those kind of mortgages at all. I just don't want those people to now get bailed out of those poor financial decisions that they made, which comes directly at the expense of the people who invested wisely and declined to take on obligations they were not going to be able to pay. You just can't penalize the (minority of) people in this country who made wise financial decisions.

11:11 PM  
Blogger Mike Maloney said...

Philly fans calling other teams losers, oh what is this world coming to.

11:17 PM  
Blogger Hammer Player a.k.a Hoyazo said...

Ha hahahahaha. That's how bad the Mets have become, Mike. Believe me, I recognize that is a high standard.

11:19 PM  
Blogger 1Queens Up1 said...

First the good news: Congratulations to the 2008 National League Eastern Division Champion: Philadelphia Phillies!

The funny thing is Hoy, you say that about a mortgage 5 years ago, heck I just got a mortgage in February and they were tossing insane amounts of money at us. ARMs were still abundant. Just as you did, my better half did the math and figured what the max mortgage we could get and still live the way we want would be.

Long and short of it is I agree, the gov't shouldn't bail out Joe Blow who didnt realize his 1k payment balloons to 4k in year 5 or whatever. No excuse and "i didnt understand the terms" doesnt cut it. While I still blame the majority on those scheisters, we need to hold Joe Blow accountable for leaving beyond their means.

11:25 PM  
Blogger Julius_Goat said...

I ran really bad at a blogger cash game last week and dropped 3 buyins.

Where's my bailout?

12:48 AM  
Blogger Hammer Player a.k.a Hoyazo said...

Goat, I can transfer you back the 15 cents on full tilt if it will help.

WOW the stock market just tanked sickly all of a sudden here at 1:50pm ET. Holy shipe.

12:52 AM  
Blogger 1Queens Up1 said...

Hoy I was sitting at a buffalo wild wings with a co-worker and they had Bloomberg on.

It went from -250 to -775 in the span of 3 minutes.

I swear I was watching the market crash.... Scary scary times.

Can you believe this thing didn't pass? Makes you wonder how many people were involved in the decision making...

1:19 AM  
Blogger Hammer Player a.k.a Hoyazo said...

I absolutely can believe it didn't pass. It's a crap bill and little to no understanding is really out there about the why, or the how related to it.

I still think something clearly needs to be done quickly to stabilize the financial system in this country, and I can only assume that cooler heads will prevail in short order and get something done. It got so close here, they will figure something out that needs to change with the bill and then reconvene to vote quickly to pass it. But yes, I absolutely do believe the bill did not pass.

1:36 AM  
Blogger APOSEC72 said...

Well, it's gained back about 250 of those points....so we can call of the panic.

Me, I'm thrilled. There was still way too much bullshit on such a plan.

2:09 AM  
Blogger 1Queens Up1 said...

I think im more incredulous at the fact they worked on the bill all week/weekend, backed by the leadership of both parties, and was STILL voted down. I would say that part is a win for Americans, that at least not all politicians follow the leader (although im sure job-security of supporting an unpopular bill played no role in that judgement).

Now comes the name-calling, finger-pointing, and grandstanding BS. Does Vegas have a line on when a deal will get done and passed? Take the over. :)

2:23 AM  
Blogger 4dbirds said...

I kiss my 5.5 30 year fixed VA mortgage every night!!!

Bad news, i bank with Wachovia stratch that, Citibank.

3:29 AM  
Blogger Irongirl01 said...

being a finance/accounting person (even though I dont use my degrees Im still savvy) i bought a condo i could afford. 30 year fixed rate mortgage. My mortgage and taxes are less then my rentwas. I have a homeowners assn fee monthly but thats for expenses i would have as a homeowner. Water, sewer, lawn maintance garbage snow removal etc etc. Plus it paid for new roofs on the three blgs in my assn. I was approved for about 50k more then i bought my condo for. I couldnt afford that with a car payment and other expenses.

But... I am not the average american either. Its no wonder our country is in the state its in. most Americans are mindless little lemmings doing as told so to speak.

7:31 AM  
Blogger Miami Don said...

I can't believe the most important part of your post has gone totally ignored.

Minaya signed to a four year extention. HaHaHaHa. I can't believe this guy doesn't take any heat for being a shitty GM.

The Mets won't even be in position to blow September leads anymore.

10:43 PM  

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