THE FRAUD, THE FIX, THE FOOL

Andy Kessler of the WSJ has piped in with some good news in the works which should help ease the tensions of us little folks seared with doubts and fears over this Wall Street monstrosity. But then, why in the world should we believe the holy writ of the very folks who is supposed to scrutinize the swindlers who nuanced this mess?

IN 1992, HEDGE FUND MANAGER George Soros made $1 billion betting against the British pound. In 2007, John Paulson's Credit Opportunities fund correctly bet against subprime mortgages, clearing $15 billion for the year and $3.7 billion for him. Warren Buffett is now hoping to make big money on Goldman Sachs.

But these are small-time deals. My analysis suggests that Treasury Secretary Henry Paulson (a former investment banker, no less, not a trader) may pull off the mother of all trades, which could net a trillion dollars and maybe as much as $2.2 trillion—yes, with a "t"— for the United States Treasury.

Here's what's happened so far. New technology like electronic trading meant that Wall Street's bread-and-butter business of investment banking and trading stocks stopped making much money years ago. So investment banks took their enormous capital and at first packaged yield-enhanced, subprime mortgage loans into complex derivatives such as collateralized debt obligations (CDOs). Eventually and stupidly, these institutions owned them for themselves—lots of them, often at 30-to-1 leverage. The financial products were made "safe" by insurance products known as credit default swaps, a credit derivative from companies such as AIG. When housing turned down, the mortgages and derivatives were worth a lot less and no one would lend Wall Street money anymore.

Then the piling on started. Hedge funds could short financial stocks and then bid down the prices of CDOs stuck on Wall Street's balance sheets. This was pretty easy to do in an illiquid market. Because of the Federal Accounting Standards Board's mark-to-market 157 rule, Wall Street had to write off the lower value of these securities and raise more capital, diluting shareholders. So the stock prices would drop, which is what the shorts wanted in the first place. It was all legit.

There is a saying on Wall Street that goes, "The market can stay irrational longer than you can stay solvent." Long Term Capital Management learned this lesson 10 years ago when it got its portfolio picked off by Wall Street as its short-term financing dried up. I had thought the opposite—hedge funds picking off Wall Street—would happen today. But in a weird twist, it's the government that is set up to win the prize.

Read it all.

OBAMA'S RADICAL COMRADES

DESPITE HAVING AUTHORED two autobiographies, Barack Obama has never written about his most important executive experience. From 1995 to 1999, he led an education foundation called the Chicago Annenberg Challenge (CAC), and remained on the board until 2001. The group poured more than $100 million into the hands of community organizers and radical education activists.

This story of course, is very old news to anyone with a dial-up account or better except to the Rip van Winkles working three point five jobs just to keep a roof over theirs and their families' heads. But the Two-Fisted Quorum is relieved to see that someone, even if it is those same corporate longshank boys deeply rooted in the Obama stump that have ignored or whitewashed his campaign to date, have finally turned their duplicitous attention spans to this story.

Guess they just wanted to sell more papers, grab more viewers, burn more bridges, keeping the game rigged for yet another photo finish, regardless of the steep price to true democracy now debatedly in ruins thanks to the collusion of the media in this year's race. The American electorate deserves better. With continuing vapidness, Obama seems to be saying he is entitled to be POTUS, even though he has dismissed nearly every one of his early campaign promises. That leaves the dangling question, just whose surrogate is Barack Obama? So, please read on...

The CAC was the brainchild of Bill Ayers, a founder of the Weather Underground in the 1960s. Among other feats, Mr. Ayers and his cohorts bombed the Pentagon, and he has never expressed regret for his actions. Barack Obama's first run for the Illinois State Senate was launched at a 1995 gathering at Mr. Ayers's home.

The Obama campaign has struggled to downplay that association.

Last April, Sen. Obama dismissed Mr. Ayers as just "a guy who lives in my neighborhood," and "not somebody who I exchange ideas with on a regular basis." Yet documents in the CAC archives make clear that Mr. Ayers and Mr. Obama were partners in the CAC. Those archives are housed in the Richard J. Daley Library at the University of Illinois at Chicago and I've recently spent days looking through them.

This is false. The facts, however, will spotlight some things about Obama’s "community organizer" days. If you read the Stanley Kurtz article in the WSJ, he makes the Ayers link very clear. The record will show that William Ayers and Barack Obama funneled millions to ACORN and other groups, including teachers and parents who were willing to “educate” children in their radical philosophy. Groups that did not cooperate went unsubsidized. Mao anyone?

The Chicago Annenberg Challenge was created ostensibly to improve Chicago's public schools. The funding came from a national education initiative by Ambassador Walter Annenberg. In early 1995, Mr. Obama was appointed the first chairman of the board, which handled fiscal matters. Mr. Ayers co-chaired the foundation's other key body, the "Collaborative," which shaped education policy.

Read it all in the Wall Street Journal.

“First they ignore you, then they laugh at you, then they fight you, then you win.”
—Mahatma Gandhi