Capitalism American Style

This Bear Stearns thing has me upset because once again the people got screwed and the perps made colossal fortunes.

On March 12th, Bear Stearns' CEO scoffed at rumors of liquidity problems at the bank:

"Schwartz also denied rumors that the company's liquidity is under threat. Bear Stearns still has a $17 billion cushion against losses, he said.

"Our balance sheet has not weakened at all," he said. "We don't see any pressure on our liquidity."

The day before Mr. Schwarz's appearance on CNBC, somebody made an enormous purchase of put contracts on Bear Stearns stock. A put contract is a bet the stock price will fall. These put contracts were an extremely risky purchase as they would make money only if Bear Stearns stock lost HALF its value within TEN days. The size of this purchase was over 55,000 contracts at an average price of 15 cents a contract at $30 strike.

Of course, if the purchaser was an insider they knew what was going to happen and that there was no risk at all, and they won the lottery, because...

The following weekend on March 16th Sunday, a day when the stock market is closed and shareholders could do nothing but watch, JP Morgan announces they are buying Bear Stearns at pennies on the dollar. Not only that, there is very little risk to them as the deal is "guaranteed" by the Fed.

In just days Bear Stearns stock had fallen from $60 to $2.

Jim Rogers had this to say about the bailout:

You know the reason they did it this way was because, if Bear Stearns had to declare bankruptcy, you'd realize that Bear Stearns paid out billions of dollars in bonuses in January - six weeks ago. If he let them go into bankruptcy, they all would have had to send back their bonuses.

This is what they're doing, they're doing it so they don't have to give back their bonuses. That's why they didn't put them into bankruptcy. Jamie Dimon has gotten a great deal because the Federal Reserve is paying for it. The Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders' Mazeratis.

As if this weren't bad enough here's what one of the Bear Stearns executives demanded of his new boss, JP Morgan's Jamie Dimon:

"How will you make me whole?"

How about them apples? If this were the exception to an otherwise honest system that would be one thing, but it isn't. This is capitalism American style.

Illegal maneuverings of this type come to light all the time. For another example, remember the California power crises in early 2001, which it was later revealed were caused by Enron restricting power supplies to make colossal profits? Here is a transcript where an Enron employee asks a utility employee to do something "interesting" and cause a power outage.

POWER PLANT WORKER: Las Vegas Co-Gen, this is Rich.

ENRON EMPLOYEE: Hey, Rich, this is Bill up at Enron.
POWER PLANT WORKER: Bill.
ENRON EMPLOYEE: How you doin’, man?
POWER PLANT WORKER: Junior or Senior?
ENRON EMPLOYEE: Heh, heh, the Third.
POWER PLANT WORKER: The Third! What’s happening, Bill the Third?
ENRON EMPLOYEE: Not much, man. I’m giving you a call. We’ve got some issues for tomorrow.
POWER PLANT WORKER: Okay.
ENRON EMPLOYEE: Are you ready for some issues? You’re just about out of there, aren’t you?
POWER PLANT WORKER: I got a couple more hours, I ain’t going anywhere. All right, shoot. I’ve got pen and paper.
ENRON EMPLOYEE: All right man. I’m not—this is going to be a word-of-mouth kind of thing.
POWER PLANT WORKER: Okay.
ENRON EMPLOYEE: Tonight, when you finish your normal QF, so for hour ending 1, which will actually be tomorrow—
POWER PLANT WORKER: Right.
ENRON EMPLOYEE: We want you guys to get a little creative—
POWER PLANT WORKER: Okay.
ENRON EMPLOYEE:—and come up with a reason to go down.
POWER PLANT WORKER: Okay.
ENRON EMPLOYEE: Anything you want to do over there? Any cleaning, anything like that?
POWER PLANT WORKER: Yeah. Yeah. There’s some stuff that we could be doing tonight.
ENRON EMPLOYEE: That’s good.
POWER PLANT WORKER: Yeah, we need to do some—we need to come down and inspect this switch on the steam turbine, this one switch on this induction steam valve that’s been failing us, and we need to be down in order to pull the switch and adjust it.
ENRON EMPLOYEE: No sh-–?
POWER PLANT WORKER: Yeah.
ENRON EMPLOYEE: I like that. And, I don’t know, I guess around 11:00 for hour ending 11—
POWER PLANT WORKER: Right.
ENRON EMPLOYEE: You got to go back—we need you to go back down.
POWER PLANT WORKER: Okay, shut back down for hour ending 11?
ENRON EMPLOYEE: Yeah.
POWER PLANT WORKER: So, we’ll do our normal afternoon shutdown tomorrow.
ENRON EMPLOYEE: Yep.
POWER PLANT WORKER: Okay.
ENRON EMPLOYEE: But we’re not wanting to have it prescheduled.
POWER PLANT WORKER: Right.
ENRON EMPLOYEE: It’s supposed to be, you know, kinda one of those things.
POWER PLANT WORKER: Okay, so we’re just coming down for some maintenance, like a forced outage type thing.
ENRON EMPLOYEE: Right.
POWER PLANT WORKER: And that’s cool?
ENRON EMPLOYEE: Hopefully.
POWER PLANT WORKER: Because the schedule I just got over here, well, you know what it says.
ENRON EMPLOYEE: Yep, I’m looking right at it.
POWER PLANT WORKER: Okay, it’s the new schedule.
ENRON EMPLOYEE: You just got a new one?
POWER PLANT WORKER: It says “new schedule” on the bottom. It’s showing 52 all day.
ENRON EMPLOYEE: Oh, right, and so that’s the one you’re going to want to ignore.
POWER PLANT WORKER: Exactly.
ENRON EMPLOYEE: I knew I could count on you.
POWER PLANT WORKER: No problem. I’m sure I’ll have a good time.

Again, that’s an Enron employee asking a worker at a power plant in Las Vegas to take the plant offline. That same day energy supplies were so tight, Northern California experienced a stage three power emergency, and rolling blackouts hit as many as two million consumers.

It's too bad you can't listen to the conversation. Hearing these smirking chimps is something else. I have a recording, but this bloggin software won't let me upload it for you. Don't use Blogger. Google bad.

Endemic corruption like this might just cause a person to abandon the system and head for the hills, you know?

Early spring activities!

We've been busy this early spring. Here are some of the highlights:

We planted pine trees. Drier conditions are thinning out the Douglas Firs, so these little pine trees should do okay.







We have been building a cob oven. The foundation is shown first. This was one day's work filling bags with sand, filling the donut hole with rock and rubble. I'll post a detailed story on this oven later...so it will be a little hard to piece together what we did from just this.

A layer of bottles forms an insulation layer below the heating chamber. (burp!)







Next we built a sand dome and covered it with a "thermal layer" of clay and sand--no straw.










Once this thermal layer dries a little we cut the door opening and scoop out the sand.















Herb spiral

Just outside our kitchen I built an herb spiral so we can fetch a few fresh herbs for breakfast without getting our slippers wet!