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I have not owned LBWR in a long time as I have been patiently waiting for profit to catch up with the 140M O/S. I would have thought that LBWR would have had more revs by now but it's still slow going. My concern now is this paragraph from the Form 10 talking about raising 2M in capital via offering common stock or securities. LBWR has recently raised the A/S from 150M to 200M in preparation for this I assume. If shares are issued for acquisitions and other items that increase the bottom line, then that should be good. However, I'd be concerned if shares were either sold directly to raise capital or, offered to investors at a discount or to secure funding. If we can't secure more funding without further share issuance, I'd rather just see Dexter continue to try and grow our current relationships and any others he can without additional share issuance. Thoughts?
From the Form 10
The long-term success of our operations depends on our ability to (1) increase the deployment of our Labwire™ Platform, (2) significantly increase our services revenue through the deployment of the Labwire™ Platform, both through increases in drug and alcohol testing, and usage of employee training and online certification programs, and (3) increase our revenues from K-9 security services. We intend to raise additional capital through an offering of our Common Stock or other securities to provide additional working capital to fund the expansion of operations through acquisitions and the addition of new clients through marketing efforts and joint ventures with other service organizations. We intend to seek up to approximately $2.0 million in capital in the near future in this connection. The exact amount of funds raised, if any, will determine how aggressively we can grow and what additional projects we will be able to undertake. Assuming that we are able to raise the $2.0 million in new capital, we currently anticipate spending approximately $250,000 in marketing and sales in its efforts to sign new clients and seek additional alliances. No assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on terms acceptable to us. If adequate funds are not available on acceptable terms, our business, results of operations and financial condition could be materially adversely affected. In a worst-case scenario, we would have to scale back or cease operations, and we might not be able to remain a viable entity.
In addition common stock may also be issued for conversion or settlement of debt and/or payables for equity, future obligations which may be satisfied by the issuance of common shares, and other transactions and agreements which may in the future result in the issuance of additional common shares. The common shares that we may issue in the future could significantly increase the number of shares outstanding and could be extremely dilutive.
http://www.sec.gov/Archives/edgar/data/1426567/000134506708000042/form10.htm
Item 2
Thanks for all your hard work Creede!
The one flight per week is all they qualified for based on the money they raised in advance (they needed 1/4 of their first years expected revs plus start-up costs). Their 1-3-5 plan (based on management's figures) would yield 59M in revs and 14.6M in net profit. That's .047eps or .47 with a 10 multiple. Since they have to start with only one flight (expected 17.3M in revs and 2.8M in profit) does anyone know when they would be allowed to increase that and eventually get to their original 1-3-5 flight plan? I know they didn't have the funds to start that way so are they "stuck" with 1 flight for the first year or is there a point when they can increase their flights? Anyone know? Tks!
I sold this a long time ago at .13 because I always felt they wouldn't have the money for their 1-3-5 flight plan which was right. They are talking about 17.3M in revs which based on their business plan would be 2.8M in net profit for their first year of flight. That's less than a penny in eps (.009) with 310+M O/S. With a forward pe of 10 that's 9 cents.
And a very blessed Merry Christmas to you jrdig7!
For unto you is born this day in the city of David a Saviour, which is Christ the Lord. Luke 2:11
An in depth article about how oil may have come into being from a Creationist's standpoint. Long but very interesting.
http://www.answersingenesis.org/articles/arj/v1/n1/origin-of-oil
Two things:
If I thought the share price would still be 20 cents in 12-24 months, I'd probably try and make a better return elsewhere. Where that might be, I have no idea.
Second, I never invest more than I can afford to lose on anyone stock. DPDW is just one of many stocks I've owned and traded this year. We all need to be diversified so no one stock causes us to lose sleep.
I'm a numbers guy and the current financial picture of DPDW seems extremely solid right now. Regardless of what some may think of DR, we are sitting at a forward PE of less than 3 for 2009. Kind of ridiculous if you ask me for our overall growth. I'm buying not selling here.
Certainly the sp is not shareholder friendly right now but imo DPDW has done everything they promised and then some. Look what they've accomplished since they went public. They are quickly putting together one very impressive company to handle the deep sea environment. Look at our management team. Look at our reputation in the field. Other than the sp I see nothing to be disappointed about. I still feel strongly that we will be richly rewarded when the overall market turns. I'm counting on these 20 cent shares to bring quite a return over the next 12-24 months.
Another like Steve would be good imo. Where would you find one?
Actually that's not true. DPDW grew over 100% from 2006 to 2007. And if you look at the last couple years of Q's and K's, you'll see that the bottom line was seriously affected by the interest expense line item. Two-thirds of that interest expense was the way that the preferred shares had to be entered and the rest was mainly for interest from loans. More recently we've gotten rid of our preferred share expense and finally most of our loan interest expense. I'm sure you've noticed that our interest expense is minimal in this latest Q. 2009 will be the first year where we're finally going to see some real bottom line effect from all our acquisitions with 2010 being even better imo.
I'm still hanging around waiting to see what happens here. If LBWR can just lower their operating expenses and thus get their profit level up, you should see more interest over here. An uplist to the OTCBB would sure help also for those of us who generally avoid anything below the OTCBB.
Don't confuse us with the facts. We might actually think DPDW is a growing, vibrant, profitable company selling for a discount...lol! Thanks for a little reality or should I say facts! And I hate to disappoint anyone but all those companies are owned by DPDW. They are Deep Down Inc.!
Sometimes I wonder what stock people are talking about. Do they really see what DPDW is putting together here? Then I realize it's just I-hub and people love to play games for their own gain whether they work or not. In the end, they're just background noise. The facts speak for themselves. The growth of the company is undisputed. The management is top notch and the revs have grown 140% since last year at this time. 2009 is expected to be a much bigger year yet. Sounds like a great time to be in DPDW!
Actually the price has been fairly stable since Q3 came out. With a solid Q under our belt, we will likely rally as soon as the overall market stabilizes. Like others have pointed out the chart goes back to pre-DPDW so it's irrelevant. I've never been more bullish on DPDW especially after this latest Q and the latest contract. We've all seen that it takes very little volume to pop this. It will come.
Joel is right. We all need to remember this!
Hoping for a stumble
Nobody should want to destroy a presidency, but many do | Joel Belz
Nothing was uglier—bordering even on treasonous—during the recent presidential campaign than the way George Bush's opponents seemed so regularly to welcome bad news from Iraq. Included among his "opponents" in that sense were the Democratic campaigns, for sure. But displaying the same despicable habit were many in the mainstream media.
Nor was the tendency limited to bad news about the war. Who will ever know the extent to which Democratic connivance and media lopsidedness didn't just respond to, but actually helped bring about, the current economic disaster?
But I mention that here not to heap still more criticism on Bush's opponents. I cite these issues instead as examples of behavior that biblically directed conservatives should take care to avoid in their own opposition in the months and years ahead to the presidency of Barack Obama.
I am hearing regularly from WORLD readers who seem intent on only one goal: They are zealous, already, for the failure of the Obama presidency. Indeed, nothing would make them happier than for the Obama presidency to be stillborn.
So, instead of quietly thanking God for a peaceful election and an apparently tranquil transfer of power—and then getting on with the monumental tasks before us—some of these folks won't be satisfied until they can prove that the Obama presidency itself is illicit. "In what sense," one Indiana subscriber asks me in an email, "am I biblically responsible to be subject to a man who unconstitutionally calls himself my president?"
Which makes me wonder: Did Nero have to produce a Roman Empire birth certificate before there was binding force to Paul's instruction in Romans 13? He's pretty straightforward: "Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God. Therefore whoever resists the authorities resists what God has appointed, and those who resist will incur judgment."
But it's not just individual letter-writers. You get the impression that whole conservative watchdog organizations face extinction if you don't give generously—today!—to ensure their ability to maintain litigation that will finally expose our new president's Islamic faith and alien roots. To which I am inclined to say: Good riddance! Let them collapse of their own awkward weight. If there was once a time to explore such bizarre possibilities, that time almost certainly ended with the election.
It's not the risks to the direct mail operatives that should worry us. It's the risk to the republic if we set millions of folks over against each other debating such technicalities. Do folks have any sense at all how devastating to orderliness it might be for a challenge to the legitimacy of Obama's presidency to gain even minimal traction?
Here's the point: Never let it be legitimately said that our main goal is to destroy our opponent or his presidency. Always let it be said that our focus is on the issues themselves—and that, having debated those issues, we are content to leave in God's sovereign hands the political results.
Admittedly, such a distinction may not always be easy to maintain—and especially so with someone who has an agenda so unambiguously fastened to the liberal left. His support for abortion, for special privileges for homosexuals, for state-controlled education, for overweening government regulation, and a hundred other liberal causes is well established. And his calculated coolness in driving that agenda heightens the temptation to expose every conceivable weakness of the man instead of seeking, through the electoral and legislative process, to defeat the policy enactment of his program. It's time to prove it possible again to say: "We respect you, Mr. President—along with your office. And at the same time we think you are very wrong."
Unless we learn to do that, though—and not just in a trivial way—we demean the very office we want to uphold. Indeed, we demean the very Constitution some folks claim they are honoring in their efforts to prove an Obama presidency an illicit affair. We end up doing the very thing to our present opponent that we found so ugly and distasteful over the last few years when we were watching it in reverse.
And no more now than on the playgrounds of our youth will it count for much to say: "He hit me first!"
http://www.worldmag.com/articles/14734
all our opinions are just worth a grain of salt...period! I happen to disagree with most of what you post but that's just my grain of salt opinion. I've been here since .18 and going nowhere. GL down the road...see ya
OJ sentenced! May serve up to 33 years!
http://news.yahoo.com/s/ap/oj_simpson
And some of the best investors around (certainly big money investors took a big bite of DPDW at .70. I have no doubt that we'd be trading in dollars with a better market and a better exchange. I'll think we'll do it next year even on the OTCBB. Earnings will drive this when sanity returns soon and with our growth rate we'll earn an above average pe imo.
ERX was a great 20% trade today! Wahoo!
And Deep Down has a stellar reputation for the work we do. That is worth it's weight in gold...wait...make that OIL!
Excellent DD on the board again today! Tks!
Well said jdsgungho! Whatever we think of Dahlman Rose, I believe they have set a conservative target now for 2009 as to leave room for upside surprises. Even with their .06 eps forecast for 2009, we'll be in great shape. As long as oil rebounds in 2009, which I expect it will, we could see a monster contract at anytime. Let's see what everyone says when we get that $25M, $50M or even $100M contract!
If I felt this would continue for a few more years, I'd just sell and move on. I'm optimistic that we'll see a turnaround in the overall market during the first half of 2009 and DPDW will be a leader. If not, we should all be diversified and not own more of one stock than we can afford to lose. Q3 exceeded my expectations and I expect some stellar Q's in 2009.
Are we really sure this is the DPDW board anymore? Reading the posts the past few weeks, I'd think I was on the wrong board. Some pos penny stock. Good grief.
Q3 was excellent; we just signed a $11M contract and 2009 is set to be a tremendous year. It's almost time to just leave this board behind for a year or two and then come back and laugh at all the insanity. It does not good to complain. Either sell, hold or buy these ridiculously prices shares and see the return over the next couple years. Do you really think DPDW will be at 30 cents in the next year or two? We have a world class management team that is assembling a juggernaut. I think a lot of us can see that but others only see our depressed share price. Sorry to say but the share price is separated from the fundamentals. It won't be forever. GL down the road to all my fellow longs!
Thanks for all your DD and the latest update from Steve!
You could see the level 2 data (ask) dropping in the minutes before the open from around .29 down to .19. I threw a big order out but they were gone in a flash. I knew those .19s would be an instant 50-100% return.
DPDW is ready to fly once we get more overall interest in the market. The latest Q was excellent and our latest 11M+ contract for the Delba III was another feather in the hat of Deep Down. Who knows what might come next. There's a reason DPDW management believes we could be a billion dollar company within 5 years.
Typical light holiday trading. Best time to try and buy as strange things happen. Congrats on those .19s!
How many of us just tried to get those cheapies? Who succeeded???
O give thanks unto the LORD; for he is good: for his mercy endureth forever.
Psalm 136:1
Happy Thanksgiving All! We have much to give thanks for!!!
Thanks for bringing to light all the problems that occur when government gets involved with children.
I'm sure we all recall that Elian Gonzalez picture. Sad time...
Excellent 5 minute talk about our monetary system by Congressman Paul. Thanks for that NYBob!
I watched his 8 minute speech here also.
http://www.house.gov/paul/
huge...huge...huge!!!
This paragraph says it all...especially that last sentence!!!
"We chose Deep Down to satisfy our buoyancy requirements on the Delba III for two principle reasons. We believe the highly engineered CoreTec(TM) modules provide a superior and cost-effective solution with its demonstrated durability
and longevity at ultra high ocean depths. A second, and equally important consideration, is Deep Down's long-standing reputation for providing exemplary installation services of all types of equipment in offshore operations at any depth," commented Drilmar Monteiro, Delba Drilling International Cooperatie U.A.
"We anticipate continued use of this solution in our Brazilian operations, as we have a significant backlog of rigs all requiring an effective and durable buoyancy solution for deepwater operations."
Schools, media, cities
An evangelical call to strategic focus in these three areas | Marvin Olasky
The Israelites wandered in the wilderness for 40 years, and U.S. political parties sometimes do the same. If you examine the last three 40-year periods—from 2008 back to 1968, from 1968 back to 1928, from 1928 back to 1888—you'll find that in each period one party controlled the White House 70 percent of the time, and often Congress and the Supreme Court as well. Meanwhile, the other party toiled through sandstorms.
Republican dominance during those first 40 years took a hit when financial greed led to a stock market crash. Democratic rule during the next 40 ended when greed for power led Lyndon Johnson astray and a cultural earthquake shook America's foundations. The recent GOP era had shallow roots and no way to hold on as generalized greed led to crashing markets that stopped the McCain-Palin surge.
In the short run, under the Obama administration, Republicans will tend to counter political threats as they arise. That's probably not sufficient if the party wants to avoid 40 years of wandering in the political desert, but that's not our problem. As I wrote last time, evangelicals should emphasize prayer, peace, and perseverance. The next four years should see a renewed concentration on community, civil society, and compassion. But turning now to the long run, the next 40 years, I'd suggest a strategic emphasis on schools, media, and cities.
First, schools. The consequences of poor schooling became obvious when Barack Obama, his voice dripping with scorn, commented that he expected Republicans to be "accusing me of being a secret Communist because I shared my toys in kindergarten," or because he shared his peanut butter and jelly sandwich in the sixth grade.
Think about that for a minute. It's great for kids to decide to share—but when someone grabs a toy from a toddler, we don't expect a benign response. Similarly, if a sixth-grader backed up by a teacher grabs half of a PB&J from his deskmate, that child howls. The crowd reaction to Obama's statement, though, was howls of laughter. When voters don't know the difference between voluntary sharing and coercive redistribution, we're in trouble.
We need not just dozens of better schools but thousands. Somehow, someway, we need a school-choice breakthrough. Colleges also need reform, and evangelicals should not contribute to the general funds of their secular alma maters because of the football team or fond memories: Good Christian colleges need dollars to expand.
Second, big media make up the other major educator in America, and these days almost everyone sees their bias: Registered voters by an 8-to-1 margin this year thought major media favored the Democratic candidate. (The margin was 2-to-1 in 2000 and 2004.) But if we're knee-deep in the Atlantic or Pacific and brace ourselves against a strong wave coming, it can still knock us down, and this year the media wave for Obama was a tsunami. The good news is that big liberal media continue to lose audience, and that creates opportunities for evangelicals to make a difference by investing in alternative journalism (such as, ahem, WORLD). We won't fight propaganda with more propaganda; we'll do it with factual, accurate, and fair reporting.
Third, cities. You don't change a national culture without a strong base in cities. It's not accidental that the apostle Paul began his major ministry activities in Antioch, then the third-largest city in the Roman Empire. He sent epistles to residents of the empire's large cities: Rome, Corinth, Ephesus. The church grew fast in urban areas, while pagans dominated rural areas. (The word itself comes from the Latin paganus—an old country dweller, a hick.)
To sum up: We need to emphasize prayer, peace, and perseverance; community, civil society, and compassion; schools, media, and cities.
http://www.worldmag.com/articles/14696
From Michael Yon (long-time war correspondent in Iraq/Afghanistan).
Published: 19 November 2008
Between 2007 and 2008, I got to know a man in South Baghdad whose codename was “Bishop.” This is the short story of his life.
His parents were Kurdish Sunnis. They moved to Baghdad 34 years ago – recently married and excited to make a new life for themselves and create a family. Bishop’s real name was Bashar Akram Ameen; the name given to him when he was born on October 6, 1978 in the Abu Ghraib apartments in Baghdad. Bashar had three sisters and one brother. His schooling included graduating from a Baghdad high school in the class of ’96 and attending the Agriculture College of Baghdad University from 1997 until 2002 when he graduated. America had just set its sights on toppling Saddam.
Shortly after graduating, Bashar began service in the Iraqi Army Reserve, but that lasted only three months, because the U.S. crushed a great part of the Iraqi Army and then officially dissolved the rest. For three months, Bashar was one of those unemployed young men we worried about. He got a job in October of 2003 as a bodyguard for an Iraqi judge. His first job didn’t last long because insurgents assassinated the judge. Feeling lost and a bit frightened, Bashar decided to look for a “safer” job, and began interpreting for, as he called it, “the Sally Port Security Company” in al-Mansour, Baghdad. Insurgents in his neighborhood figured out that he was working for an American company, and on February 21, 2006, as he left his job at 6:00 pm, they started shooting at him in his car, “…but I miraculously survived,” Bashar explained to me, “and that was the reason to leave my job at that company.”
His own safety, and therefore that of his loved ones, was in jeopardy, and so, as Bashar recalled, “I quit visiting my family for over four months.” Though he had used caution, his family was forced to flee in order to avoid imminent suffering or death from the insurgents. Bashar explained, “They had killed our neighbor’s son, so their father gave the key of his house to my father to keep the house safe until maybe the situation getting better. Then, on the next day, the same killers of our neighbors came to my father and asked him about the key, so he refused to give it away and he said that he don’t have it and he don’t know anything about it.” The insurgents warned Bashar’s father that they would check the validity of his information, and if it was untrue, “they will teach my father and us a lesson.” His family, doing what they must to survive, reluctantly left their home. Bashar wrote to me, “My father packed some basic stuff and moved from our own house in Ameriya, Baghdad; Iraq.”
By now, the civil war was raging in Baghdad.
Not everything was so bleak. Even at the height of the civil war, life went on. Bashar met a woman named Alyaa, who worked in legal administration at the “Sally Port Security Company.” They courted for a year, and got married on September 14, 2006 – all the while, sectarian violence raged around Iraq. A year later their first son, Mustafa, was born. Around that time, however, the local Shia militia (called Jaish al-Mahdi, or JAM) figured out that Bashar, who is Sunni, had worked for the Americans at Forward Operating Base (FOB) Falcon (where he got the codename “Bishop”). “They began coming around to bother my wife while I was at work,” he recalls. “So we moved again to live in al-Mansour, Baghdad. And since then, I stopped making any type of relationships with the neighbors just because you can’t trust anybody. In al-Mansour, we had very quiet time….”
And so Bashar began working for the American Army as an interpreter, for various units, at the time of peak fighting. I first met Bishop when he worked for 1-4 Cav in South Baghdad. The 1-4 Cav soldiers kept Bishop busy, working him hard, and he became one of the team. As the months rolled by and I came back to 1-4 on several occasions, their area had become quieter and quieter until, really, there was nothing going on except progress. The younger infantrymen were proud of the progress, but wanted to get up to Mosul or out to Afghanistan, where the fighting was. But not Bishop. He’d seen the worst of it and did not want to see any more war. He was old beyond his years and wanted peace.
Bishop with General Petraeus (center) and LTC Crider (right)
Bishop with General Petraeus (center) and LTC Crider (right)
The two most dangerous jobs for Iraqis were probably journalist and interpreter. Bishop wanted to come to the United States. As a result, 1-4 Cav Commander, LTC James Crider, and some of the soldiers Bishop had worked with helped with the paperwork.
Just a small aside: LTC Crider and his battalion were serious contributors to success in Iraq. I got e-mails from LTC Crider about his struggles with Iraqi bureaucracy on behalf of Bishop, even after he went home to America. I’d seen this LTC Crider go to bat for Iraqis over and over again in Iraq. In just one example, Crider and his staff waded for months through the Iraqi legal labyrinth to try to free a man who had been wrongfully detained for a bombing he could not have committed; the bombing had never occurred. Crider and his battalion were welcome fixtures in that neighborhood, because he and his men had brought peace and serenity to a place that had previously been one of the most perilous places in Iraq. The last time I was there, I walked around with no body armor or helmet, and bought popcorn on the street. (I was just there again on about November 15; the progress continues without violence.)
I heard that many Iraqis cried when 1-4 redeployed to America. One captain had even been offered a home if he would come back to live in the neighborhood. The captain knew how to get things done, while still making the time to learn the names of every kid there. And he knew their mothers and fathers, too. But that was it; 1-4 went home and Bishop was left behind, with his family scattered by the war.
His father died in July 2007, his mother and two sisters still live in Baghdad, his brother in Kirkuk, and another sister in Syria.
LTC Crider and others struggled…and struggled…and finally succeeded. On November 6, 2008, Bishop emigrated to America, landing in [Nashville], Tennessee along with his wife, Alyaa (who is carrying their second child), and their son, Mustafa. And the amazing 1-4 Cav keeps winning battles, without firing a shot, long after leaving the war.
So now, Bashar is no longer “Bishop,” and he has begun an American life, with the many ups and downs we all have to face. His next fight is to find a job in our troubled economy and overcome a high-voltage dose of culture shock. He will come to understand that our culture is just as complicated as the one he left behind – but without the violence, threats and scars of war.
Many people have welcomed him to America. I think Bashar can be of particular value to America at this time, simply by getting on the radio stations and talking to reporters and telling his story – the story of Iraq – and showing people how it really is over here. (I write this from Iraq.) Perhaps he can explain why many of us think that it was all worth it. I asked Bashar if I could publish his e-mail address, and he agreed.
This is not just a happy ending, but a happy beginning. Please welcome this new family to America and pass this story to your local papers and radio stations. Ask them to talk with a real Iraqi who just got here. People need to know what happened in Iraq.
Bashar can be reached at: bash.amen@yahoo.com
http://www.michaelyon-online.com/
Are you kidding me? 7.7 TRILLION!!!
U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)
By Mark Pittman and Bob Ivry
Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
Too Big to Fail
Bloomberg News tabulated data from the Fed, Treasury and Federal Deposit Insurance Corp. and interviewed regulatory officials, economists and academic researchers to gauge the full extent of the government’s rescue effort.
The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.
William Poole, former president of the Federal Reserve Bank of St. Louis, said the two programs are unlikely to lose money. The bigger risk comes from rescuing companies perceived as “too big to fail,” he said.
‘Credit Risk’
The government committed $29 billion to help engineer the takeover in March of Bear Stearns Cos. by New York-based JPMorgan Chase & Co. and $122.8 billion in addition to TARP allocations to bail out New York-based American International Group Inc., once the world’s largest insurer.
Citigroup received $306 billion of government guarantees for troubled mortgages and toxic assets. The Treasury Department also will inject $20 billion into the bank after its stock fell 60 percent last week.
“No question there is some credit risk there,” Poole said.
Congressman Darrell Issa, a California Republican on the Oversight and Government Reform Committee, said risk is lurking in the programs that Poole thinks are safe.
“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”
The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.
Markets Down
The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.
Regulators hope the rescue will contain the damage and keep banks providing the credit that is the lifeblood of the U.S. economy.
Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.
‘They Got Snookered’
The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.
“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”
President Franklin D. Roosevelt’s New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government’s current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office, now called the Government Accountability Office.
‘Worst Crisis’
The 1979 U.S. government bailout of Chrysler consisted of bond guarantees, adjusted for inflation, of $4.2 billion, according to a Heritage Foundation report.
The commitment of public money is appropriate to the peril, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed. U.S. financial firms have taken writedowns and losses of $666.1 billion since the beginning of 2007, according to Bloomberg data.
“This is the worst capital markets crisis in modern history,” Harris said. “So you have the biggest intervention in modern history.”
Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.
Collateral is an asset pledged to a lender in the event a loan payment isn’t made.
‘That’s Counterproductive’
“Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting,” Bernanke said Nov. 18 to the House Financial Services Committee. “We think that’s counterproductive.”
The Fed should account for the collateral it takes in exchange for loans to banks, said Paul Kasriel, chief economist at Chicago-based Northern Trust Corp. and a former research economist at the Federal Reserve Bank of Chicago.
“There is a lack of transparency here and, given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency,” Kasriel said.
Bernanke’s Fed is responsible for $4.74 trillion of pledges, or 61 percent of the total commitment of $7.76 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.
“Too often the public is focused on the wrong piece of that number, the $700 billion that Congress approved,” said J.D. Foster, a former staff member of the Council of Economic Advisers who is now a senior fellow at the Heritage Foundation in Washington. “The other areas are quite a bit larger.”
Fed Rescue Efforts
The Fed’s rescue attempts began last December with the creation of the Term Auction Facility to allow lending to dealers for collateral. After Bear Stearns’s collapse in March, the central bank started making direct loans to securities firms at the same discount rate it charges commercial banks, which take customer deposits.
In the three years before the crisis, such average weekly borrowing by banks was $48 million, according to the central bank. Last week it was $91.5 billion.
The failure of a second securities firm, Lehman Brothers Holdings Inc., in September, led to the creation of the Commercial Paper Funding Facility and the Money Market Investor Funding Facility, or MMIFF. The two programs, which have pledged $2.3 trillion, are designed to restore calm in the money markets, which deal in certificates of deposit, commercial paper and Treasury bills.
Lehman Failure
“Money markets seized up after Lehman failed,” said Neal Soss, chief economist at Credit Suisse Group in New York and a former aide to Fed chief Paul Volcker. “Lehman failing made a lot of subsequent actions necessary.”
The FDIC, chaired by Sheila Bair, is contributing 20 percent of total rescue commitments. The FDIC’s $1.4 trillion in guarantees will amount to a bank subsidy of as much as $54 billion over three years, or $18 billion a year, because borrowers will pay a lower interest rate than they would on the open market, according to Raghu Sundurum and Viral Acharya of New York University and the London Business School.
Congress and the Treasury have ponied up $892 billion in TARP and other funding, or 11.5 percent.
The Federal Housing Administration, overseen by Department of Housing and Urban Development Secretary Steven Preston, was given the authority to guarantee $300 billion of mortgages, or about 4 percent of the total commitment, with its Hope for Homeowners program, designed to keep distressed borrowers from foreclosure.
Federal Guarantees
Most of the federal guarantees reduce interest rates on loans to banks and securities firms, which would create a subsidy of at least $6.6 billion annually for the financial industry, according to data compiled by Bloomberg comparing rates charged by the Fed against market interest currently paid by banks.
Not included in the calculation of pledged funds is an FDIC proposal to prevent foreclosures by guaranteeing modifications on $444 billion in mortgages at an expected cost of $24.4 billion to be paid from the TARP, according to FDIC spokesman David Barr. The Treasury Department hasn’t approved the program.
Bernanke and Paulson, former chief executive officer of Goldman Sachs, have also promised as much as $200 billion to shore up nationalized mortgage finance companies Fannie Mae and Freddie Mac, a pledge that hasn’t been allocated to any agency. The FDIC arranged for $139 billion in loan guarantees for General Electric Co.’s finance unit.
Automakers Struggle
The tally doesn’t include money to General Motors Corp., Ford Motor Co. and Chrysler LLC. Obama has said he favors financial assistance to keep them from collapse.
Paulson told the House Financial Services Committee Nov. 18 that the $250 billion already allocated to banks through the TARP is an investment, not an expenditure.
“I think it would be extraordinarily unusual if the government did not get that money back and more,” Paulson said.
In his Nov. 18 testimony, Bernanke told the House Financial Services Committee that the central bank wouldn’t lose money.
“We take collateral, we haircut it, it is a short-term loan, it is very safe, we have never lost a penny in these various lending programs,” he said.
A haircut refers to the practice of lending less money than the collateral’s current market value.
Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.
‘Mark to Market’
“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”
“Mark to market” means adjusting the value of an asset, such as a mortgage-backed security, to reflect current prices.
Some of the bailout assistance could come from tax breaks in the future. The Treasury Department changed the tax code on Sept. 30 to allow banks to expand the deductions on the losses banks they were buying, according to Robert Willens, a former Lehman Brothers tax and accounting analyst who teaches at Columbia University Business School in New York.
Wells Fargo & Co., which is buying Charlotte, North Carolina-based Wachovia Corp., will be able to deduct $22 billion, Willens said. Adding in other banks, the code change will cost $29 billion, he said.
“The rule is now popularly known among tax lawyers as the ‘Wells Fargo Notice,’” Willens said.
The regulation was changed to make it easier for healthy banks to buy troubled ones, said Treasury Department spokesman Andrew DeSouza.
House Financial Services Committee Chairman Barney Frank said he was angry that banks used the money for acquisitions.
“The only purpose for this money is to lend,” said Frank, a Massachusetts Democrat. “It’s not for dividends, it’s not for purchases of new banks, it’s not for bonuses. There better be a showing of increased lending roughly in the amount of the capital infusions” or Congress may not approve the second half of the TARP money.
http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk&refer=home
Does this sound familiar to some? Like the beginnings of Nazi Germany?
CHANGING OF THE GUARD
Web faux pas: Plan leaked for 'civilian security force'?
Before blogs caught it, Obama site told of requiring students to serve
Posted: November 08, 2008
The official website of President-Elect Barack Obama, Change.gov, originally announced that Obama would "require" all middle school through college students to participate in community service programs; but after a flurry of blogs protested children being drafted into Obama's proposed youth corps, the website's wording was softened.
Originally, under the tab "America Serves" Change.gov read, "President-Elect Obama will expand national service programs like AmeriCorps and Peace Corps and will create a new Classroom Corps to help teachers in under served schools, as well as a new Health Corps, Clean Energy Corps, and Veterans Corps.
"Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year," the site announced.
The language of requiring students to serve and the creation of a "Classroom Corps" sparked a surge of criticism from bloggers for bringing back memories of the much-publicized video of marching Obama youth and Obama's "civilian national security force," which the candidate said in July would be just as powerful and well-funded as the U.S. military.
Get the book that started it all, Jerome Corsi's "The Obama Nation," autographed for only $4.95 – that's $23 off the regular price!
Gateway Pundit called Obama's plan the "creation of his Marxist youth corps," and DBKP commented, "'Choosing' to serve should be approved by parents – not required by the government. No amount of good intentions can sugar-coat words like 'mandatory,' 'compulsory' or 'required.'"
Following the furor raised by bloggers, however, the website's wording was changed.
The word "require" was stricken from the website yesterday, replaced with the phrase "setting a goal" and now also listing tax credits toward college tuition.
The original wording is captured below:
The current website's content now reads:
The new wording is consistent with Obama's campaign website, which also described the college tuition tax credit and detailed "enabling" Americans to serve, rather than "requiring" them to serve.
Elsewhere on the Change.gov site, however, it still describes the plan under the heading, "Require 100 hours of service in college." (Editor's note: Since this article was posted, this reference on the Change.gov website was also deleted.)
J.D. Tuccille of the Civil Liberties Examiner also points out, "Most public schools depend on federal dollars. As Obama elaborated in a speech last December, 'At the middle and high school level, we'll make federal assistance conditional on school districts developing service programs, and give schools resources to offer new service opportunities'
"So, it won't be the nasty federal government forcing your kids to donate their time to government-approved service, it'll be the local schools – but that requirement will be among the strings attached to federal money," Tuccille writes.
Obama's selection of an advocate for mandatory civil service, Rahm Emanuel, as his chief of staff has further worried bloggers that Obama's plans may be more "requirement" than "encouragement."
In his book, "The Plan: Big Ideas for America," Emanuel writes: "It's time for a real Patriot Act that brings out the patriot in all of us. We propose universal civilian service for every young American. Under this plan, all Americans between the ages of 18 and 25 will be asked to serve their country by going through three months of basic training, civil defense preparation and community service."
Tuccille comments, "Emanuel and co-author Bruce Reed insist 'this is not a draft,' but go on to write of young men and women, 'the nation will enlist them for three months of civilian service.' They also warn, 'Some Republicans will squeal about individual freedom,' ruling out any likelihood that they would let people opt out of universal citizen service."
Obama has also yet to clarify what he meant during his July "Call to Service" speech in Colorado Springs, in which he insisted the U.S. "cannot continue to rely only on our military in order to achieve the national security objectives we've set" and needs a "civilian national security force."
A video of his comments is here: (check the link at the bottom)
Obama spokesmen have declined to return WND calls requesting an explanation of what this security force would be or whether this force would be "required" or "encouraged."
Joseph Farah, founder and editor of WND, used his daily column first to raise the issue and then to elevate it with a call to all reporters to start asking questions about it.
"If we're going to create some kind of national police force as big, powerful and well-funded as our combined U.S. military forces, isn't this rather a big deal?" Farah wrote. "I thought Democrats generally believed the U.S. spent too much on the military. How is it possible their candidate is seeking to create some kind of massive but secret national police force that will be even bigger than the Army, Navy, Marines and Air Force put together?
"Is Obama serious about creating some kind of domestic security force bigger and more expensive than that? If not, why did he say it? What did he mean?" Farah wrote.
His call generated intense Internet discussions.
The Blue Collar Muse blog commented, "The questions are legion and the implications of such an organization are staggering! What would it do? According to the title, it's a civilian force so how would it go about discharging 'national security' issues? What are the Constitutional implications for such a group? How is this to be paid. … The statement was made in the context of youth service. Is this an organization for just the youth or are adults going to participate? How does one get away from the specter of other such 'youth' organizations from Nazi Germany and the former Soviet Union when talking about it?"
Michael Kinsley also commented generally on plans for enlisting America's youth in voluntary versus required volunteerism on Time's website: "Problem number one with grand schemes for universal voluntary public service is that they can't be both universal and voluntary. If everybody has to do it, then it's not voluntary, is it? And if it's truly up to the individual, then it won't be universal."
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=80539
52% fell for it and we will all pay for it.
'Disgusting' Bias for Obama, Time Writer Admits
Sunday, November 23, 2008 5:40 PM
The mainstream media's support for Barack Obama's presidential campaign was so biased that even major insiders are now admitting they were shocked by its depth and depravity.
Last week, Time magazine's Mark Halperin called the media's performance during the campaign simply "disgusting."
Halperin told a panel of media analysts at the Politico/USC conference on the 2008 election, "It's the most disgusting failure of people in our business since the Iraq war."
He added, "It was extreme bias, extreme pro-Obama coverage."
According to the Web site Politico, Halperin, who edits Time's political site "The Page," zeroed in on two New York Times articles near the end of the campaign that profiled both Cindy McCain and Michelle Obama.
"The story about Cindy McCain was vicious," Halperin said. "It looked for every negative thing they could find about her and it cast her in an extraordinarily negative light. It didn't talk about her work, for instance, as a mother for her children, and they cherry-picked every negative thing that's ever been written about her."
But the Times gave Michelle Obama red carpet treatment, "like a front-page endorsement of what a great person Michelle Obama is."
Halperin, a former ABC News political director, allowed that some of the press coverage simply reflected the extreme efficiency of Obama's presidential campaign.
"You do have to take into account the fact that this was a remarkable candidacy," Halperin said. "There were a lot of good stories. He was new."
Obama also had a lot of money and outspent Republican John McCain by more than 2 to 1.
The press never bothered to hold Obama accountable for reneging on his promise to use public financing. McCain kept his promise to do so.
During the campaign, conservatives criticized the pro-Obama coverage, but it had little effect.
Columnist David Limbaugh noted: "Never has that been clearer than in the 2008 presidential election, during which they are covering up rather than covering Barack Obama's shady past and alliances, his knee-deep involvement in corrupt practices threatening the very core of our democratic system, and his many policy misrepresentations."
Limbaugh noted that the press went into a tizzy over Sarah Palin's wardrobe, but ignored extravagances like Obama's "obscenely idolatrous million-dollar Greek coliseum mirage."
Now that the election is over, Halperin is not alone in admitting the bias. The Washington Post's ombudsman recently conceded that the paper’s coverage was skewed strongly in favor of Obama and against the McCain-Palin ticket.
[Editor's Note: See "Washington Post Admits Bias for Obama, Against McCain, Palin."]
http://www.newsmax.com/insidecover/media_bias_halperin/2008/11/23/154417.html
So we get the worst of the Clinton gang plus the Obama gang. What a 4 years this is going to be.
Obama Pick of Craig Worries Cuban-Americans
Thursday, November 20, 2008 7:16 PM
By: Dave Eberhart
Cuban-Americans are worried about the appointment of Gregory Craig to the position of White House Counsel — owing, among other things, to his role in the infamous Elian Gonzalez case that resulted in the refugee youngster being forcibly returned to communist Cuba from Miami.
“It looks like there will be a clear change in policy towards Castro’s Cuba given that someone like Craig will be in the White House,” Miguel Perez, a journalism professor and former New York Daily News columnist, told the Wall Street Journal.
Gregory Craig worked for an Washington D.C.’s elite firm, Williams & Connolly, one of America’s priciest firms. That’s where he was “retained” by Elian’s father, Juan Miguel Gonzalez, a doorman at a Cuban hotel. Elian’s freedom-seeking mother drowned in the boat mishap that put Elian into the water off the Florida coast before he was rescued by U.S. authorities.
Craig’s fees were reportedly paid from a mysterious fund set up by the United Methodist Board of Church and Society and administered by the National Council of Churches, according to a report in The American Thinker.
In short order, Craig flew to Cuba for an exclusive meeting about the case with none other than “El Lider Maximo” — Dictator Fidel Castro. The lawyer made his point to Castro that he absolutely needed Juan Miguel in the U.S. if he were ever to have a fighting chance to get the boy released to his surviving parent.
According to American Thinker, Castro was cool to the idea of letting the father go since it was feared that he wanted to make his own escape to the U.S. to join his son.
The end result of the Craig-Castro negotiations was that the father was permitted to travel to the U.S. — but always in the company of Castro’s select escorts.
“Juan Miguel was never completely alone,” described one witness to Juan Miguel’s famous and highly scripted interview with CBS anchor Dan Rather at a studio in New York City.
“He never smiled,” the witness continued. “His eyes kept shifting back and forth. It was obvious to me that he was under coercion. He was always surrounded by security agents from the Cuban Interests Section, as they called it. When these agents left him alone for a few seconds, Gregory Craig himself would be hovering over Juan Miguel.”
Just days later, the Cuban-American population, and Americans generally, were horrified to see machine gun-wielding agents of the INS push into the Miami home of Lazaro Gonzalez, a relative. The crying 6-year-old was removed at gunpoint to be returned with his father to Cuba.
Score one in the major victory column for Craig.
But as The Wall Street Journal quotes from a Weekly Standard report, the Castro connection is not all there is of Craig’s involvement with Latin America — an involvement that may not sit well with moderate Hispanics in the U.S.
“He has represented foreign officials accused of war crimes such as former Bolivian Defense Minister Carlos Sánchez-Berzaín and Pedro Miguel González, the president of Panama’s legislature, who is under federal indictment for the murder of U.S. Army Sgt. Zak Hernández Laporte.”
Craig was an aide at the side of Sen. Ted Kennedy when the Massachusetts lawmaker probed alleged abuses committed by the Contra rebels fighting the Marxist Sandinista regime in Nicaragua.
As the Journal pointed out in its coverage, it was later discovered that the prime witnesses — three Miskito Indians — were participating in the hearing at the behest of the Sandinistas.
At that same forum in 1984, another hearing witness, an American priest working inside Nicaragua, was photographed by a U.S. newspaper with a Soviet-made rifle in his hand. The quote in the caption: “To me it was a day of grace the day the Sandinistas took over, and I really mean it.”
Craig, Bill Clinton’s impeachment lawyer, who has also served such clients as would-be Reagan assassinator John Hinckley and accused rapist William Kennedy Smith, is not marching to his desk near the Oval Office without protest.
Judicial Watch President Tom Fitton recently lashed out: “Not only did Greg Craig defend the worst of the worst of the Clinton scandals but he also defended the violent government raid that delivered Elian Gonzalez back to Castro’s Cuba. In fact, we believe that Greg was working with communist Cuban government during the Elian affair. Greg Craig is the wrong lawyer to serve as White House Counsel in the Obama White House.”
http://www.newsmax.com/headlines/craig_cuban_americans/2008/11/20/153605.html
I think I'm going to barf. Wake me up in 2012.
Daschle Choice Tests Obama’s ‘No Lobbyist’ Pledge
Thursday, November 20, 2008 12:03 PM
By: Jim Meyers
President-elect Barack Obama’s selection of former Senate Majority Leader Tom Daschle for Secretary of Health and Human Services raises questions about Obama honoring his vow not to employ lobbyists in his administration.
Newsmax reported earlier that in November 2007, candidate Obama said of lobbyists: “I don’t take a dime of their money, and when I am president, they won’t find a job in my White House.”
But since leaving the U.S. Senate following an election loss in 2004, Daschle has been a highly paid adviser to healthcare clients at the law and lobbying firm Alston & Bird.
Although Daschle is not a registered lobbyist, he “provides strategic advice to the firm’s clients about how to influence government policy or actions,” The New York Times reports.
Those clients include Abbott Laboratories and HealthSouth.
Daschle is also a board member of the Mayo Clinic, a major healthcare provider and recipient of grants from the National Institutes of Health.
Daschle’s selection raises questions on another score as well. Obama pledged on his campaign Web site that “no political appointees in an Obama administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years.”
That suggests Daschle might have to recuse himself from any matter related to the Mayo Clinic or some of the clients he advised at Alston & Bird — “a potentially broad swatch of the health secretary’s portfolio,” The Times observes.
Stephanie Cutter, a spokeswoman for the Obama transitional office, said: “If [Daschle] is asked to serve in the Obama administration, he will represent the interests of the president-elect and not his former clients.”
Footnote: The former senator’s wife, Linda Hall Daschle, is one of Washington’s top lobbyists, working mostly on behalf of airline-related companies.
http://www.newsmax.com/newsfront/obama_daschle_lobbying/2008/11/20/153406.html