John R. Brandt's Blog

$20 billion @ 8%

The Citigroup deal has been finalized and the government has proudly announced that while Uncle Sam is, in fact, bailing Citi out, it's being strict with taxpayer money: Citi will have to pay a higher interest rate — 8%! — than other bailout recipients.

When I call the Fed tomorrow, I'm going to offer to pay 9% on the $20 billion that I'm asking for. And I'm going to bid for Citi's $20 billion, too, at the same 9%. I mean, come on: I can easily put together as bad a portfolio as Citi did, in probably half the time, at probably one-tenth the cost.  Where do you think your money will be safer?

I want one of these!

Now comes word that the U.S. Government may allow Citigroup to set up a "bad bank" which would hold all of Citi's toxic, stupid, and underperforming assets, while Citi goes on its merry way, unaffected. I'm calling the Federal Reserve tomorrow to see if I can get one of these "bad bank" deals for some of my lousy investments and maybe a couple of credit cards I shouldn't have run up for that golf trip to Biloxi. I would love to tell creditors: Sorry, not my problem. Those assets are in John Brandt's "bad bank," which means I'm not really responsible for them anymore. My Uncle - yeah, that's him over there in the striped pants and funny hat - said he'd take care of it. Thanks for calling, though!

The more things change...

BusinessWeek is reporting that all those brave, ethical mortgage brokers — whose rigorous lending standards helped create our current financial quagmire — haven't slunk back under the rocks from whence they crawled. No, these bold chameleons are now FHA-guaranteed mortgage loan Experts (with a capital "E"), giving the same used-car-salesman treatment to the government that they used to give to once-solvent banks: Book the loan regardless of credit-worthiness, then get the hell out of Dodge before it goes belly up. The only upside, I suppose, is that this time taxpayers will feel the loss directly, instead of having to send money to clueless bankers and investment houses.

Lost in Space

Astronaut Heidemarie Stefanyshyn-Piper (what a name!) was doin' a little fixin' outside the International Space Station when the darn grease gun went off inside her tool bag, spraying slime everywhere. Bam! Before she knew it, the whole slippery thing had floated "irretrievably" off into space.

Hmm... Spend my next Space-Break cleaning grease out of a tool bag in a weightless atmosphere, where everything I scrub off the damn thing flies in blobs up my nostrils...  Or — Oops! — accidentally let the bag of goo head toward Mars.

"Uh, Mission Control... You're not going to believe this, but..."

Did you get your $100 million out in time?

The Wall Street Journal Journal reported today that 15 CEOs of big home-builders or financial services firms managed to sock away more than $100 million apiece in comp during the five years before the current global meltdown. Yet smart as these CEOs were — after all, they got their money out while the getting was good — none of them saw what as coming for their firms (four of which are now bankrupt). The good news about that, of course, is that none of the 15 is in any way to blame for their firm's current woes, which are completely unrelated to making crazy loans for McMansions to people who could never in a million years pay them back.

Don't you wish you were a CEO?

At least we got that cleared up...

You might have thought that making fuel-slurping cars that nobody wants was a problem for U.S. automakers. Or you might have thought that expensive, inflexible labor contracts that make domestic cars pricier to manufacture than those of global competitors might have at least contributed to the sector's troubles. But in both cases you'd be wrong, at least according to United Auto Workers (UAW) President Ron Gettelfinger. On a conference call with reporters, Gettelfinger pointed to Wall Street's ongoing crisis and the housing downturn as the real culprits in Detroit's undoing, as opposed to management mistakes, labor contracts, or the Big Three of Greed, Stupidity and Ossified Thinking.

"We’re here not because of what the auto industry has done," he said. "We’re here because of what has happened to the economy."

In other comments, Gettelfinger blamed Christopher Columbus for the persistent rumor that the Earth is round, blasted Copernicus for his rogue theory that the Earth orbits the sun instead of vice versa, and — when asked if the UAW had done all it could to make the U.S. auto industry globally competitive  — flashed a thumbs-up sign under a banner that read Mission Accomplished.

You know there's too much financial doom and gloom...

...When your 11-year-old son walks into the kitchen and says: "Mom... Dad... I need to talk to you."

"Yes?" (Momentary concern in their voices).

"Well," 11 says, "It's like this... I need a bailout."

"What?"

""I spent all my allowance," he says, "And I really need some stuff for my drum kit. So I need a bailout. Can I have $750 billion?"

"Very funny."

"No, wait - I meant $850 billion."

What do I do with this? One friend suggested that I go ahead and approve the bailout, but change the terms next week. And then again the week after. And then start offering part of 11's bailout to other kids in the neighborhood who also frittered away their allowances.

"That's a stupid plan," I said. "How will he and his friends ever learn to manage themselves if I'm constantly bailing them out?"

Then again, maybe they can just work on Wall Street. Or in Detroit.