Trick or Treat at Hank's Bank Bailout Window

Two weeks after Halloween, corporations dressed up as banks to get access to the $700 billion TARP program. American Express and their Travel Related division are now banks. The Fed approved the two firm's applications, citing "emergency conditions."

Insurance companies are experiencing urgent conditions. How soon before they become banks? Hedge funds have cratered, do any surviving ones want to become a bank? Who's next? GM, Ford or Chrysler?

How does a CEO turn his company into a bank? Does he walk around holding metal bars asking for deposits from the Fed? If approved, do they get one trip or many? Fannie Mae is close to burning through their first $100 billion and may be back for more. Where does the taxpayer frightmare end? How much corporafornication can American stand?

Carlyle Group Wins U.S. PEU of Year

The Carlyle Group sashayed down the runway with their award, Private Equity Underwriter of the Year-United States. They spent the last year dieting to look good for the bathing suit competition. A dark secret revealed the PEU resorted to gorging and purging to keep their weight down, and investor returns up.

It turns out Carlyle threw up acquired firms' value. Private Equity Analyst had the following headline, "Carlyle: 7 Of 32 U.S. LBO Portfolio Cos. Now Valued Below Cost." The ugly side of competition reared its head, yet again. Greed and leverage are amazingly resilient.

Big Money Boys Belly Up to the White House Bar, Yet Again

Treasury Chief Hank Paulson, our financial rescue czar, wiped out a potential $140 billion in taxes for banking companies. This is on top of the $700 billion big money boy bailout passed by Congress. Yet, Hank did it with a regulation change. No law provided the huge relief for financial firms.

AIG lined up more billions in taxpayer funds. The first $143 billion wasn't enough to save the company. In a confusing, financial magician move, AIG will get $40 billion for preferred stock, $52.5 billion in TARP money for junk assets, and their total debt to Uncle Sam shrinks by $25 billion. That sleight of hand brings the total for AIG to over $250 billion.

How's the Bush Bailout totalling up?

TARP $700 billion
AIG $250 billion
Fannie Mae & Freddie Mac up to $200 billion
Direct capital injections to banks of $900 billion
Buying corporate commercial paper -$1.3 trillion qualifies
Holding commercial paper in an off balance sheet vehicle
Fed funds rate cut to 1%
Bear Stearns $29 billion
Bank tax savings $140 billion

We're closing in on a potential $4 trillion and that's without any direct aid to Big Auto. That's serious Corporafornication. All the big money boys need for Christmas is for Obama to put off his tax increases for people making $250,000 or more per year.

Barack's new Chief of Staff Rahm Emanuel wouldn't clarify his boss' intent on this campaign promise. He dodged George Stephanopolis' inquires with the skill of a lipstick-less pit bull.

CNBC pundits saw the President elect open this door at last week's press conference. They posited tax increases for the rich could be on hold until the economy improves. Rahm didn't move it a millimeter.

It's Back! U.S. Chamber of Commerce Job Multiplier does Rip Van Winkle

In the late 21st Century a common economic development tool existed, the Job Multiplier. It projected the impact of new jobs on a community. Every new $1 of wages washed its way through the local economy, changing hands in boat lifting fashion. However, this measure tired from heavy use and needed to rest under a tree.

A young strapping "Dollar Extender" equation, took over for the exhausted Job Multiplier. The new formula calculated how much farther a $1 went, due to cheap items made in Asia. It assured people the job multiplier no longer applied. That old number was simply inert, asleep and harmless. A new century saw millions of U.S. jobs go to China, India, and Vietnam, to low wage environments. The dollar extender benefit and corresponding corporate profit boost meant all was well in America.

With Chinese apples crowding out our domestic version, an unharvested Red Delicious recently fell. It struck the Rip job multiplier equation square in the head, rousting it from a decade long sound sleep. The Van Winkle formula found job loss a huge concern for his country, as a recession deepened. He went right to work.

Adding machine tape flying, he calculated bankruptcy of a big three automaker would cause a projected 1.5 million job loss. Given the strengthening of the U.S. dollar, the Dollar Extender pumped his fists. His strength enabled people to buy more. An Olympic level competition seemed just around the corner. But the U.S. Chamber of Commerce benched the Dollar Extender.

Mr. Chamber said, "It's not your fight. The U.S. government needs to intervene to save good paying American jobs." Yes, jobs like the ones the Chamber previously watched disappear.

One intervention involves GM buying Chrysler, effectively bailing out Chrysler's private equity owner, Cerberus Capital Management. Cerberus Chairman John Snow is an ex-Treasury Chief. Hank Paulson replaced John two years ago. Is the plan intended to save workers or their high dollar, politically connected investors?

The race is on to influence the waning days of the Bush debacle, to position for the incoming Obama administration. But the Job Multiplier is now employed...

Banks Willing to Lend to Carlyle Group

Those billions Uncle Sam invested in big banks may circulate through the economy after all. The Financial Times reported The Carlyle Group can still obtain loans for its buyouts.

At our end of the market, deals are still happening, and interestingly we can still raise debt to fund transactions," offered David Fitzgerald, managing director of Carlyle Europe Technology Partners.

The infamous private equity underwriter (PEU) raised $673 million for a new fund aimed at small buy-outs of European technology companies.

The new fund is due to announce its first investment later on Monday, acquiring the Gardner Group, a small UK-based aerospace technology group that supplies top aircraft makers, such as Boeing Co.

Thank heaven Hank Paulson's money has a chance of going to work. I bet hundreds of thousands of Americans hope for the same opportunity. Carlyle's latest conference call reveals how the PEU may benefit in other ways from the TARP. Big writedowns on Freescale Semiconductor and HD Supply turns their debt to untradeable junk. Debt holders turn it into Hank Paulson's TARP window, where Reubenstein and Conway can buy it back for pennies on the dollar, courtesy of the taxpayer's wallet. Patience is required, but Carlyle gets a government sponsored win, yet again.

UBS American Clients with Swiss Bank Accounts: 95% are Tax Cheaters

UBS, a giant Swiss bank, serviced 20,000 Americans with $18 billion in foreign bank accounts. Only 5% reported income from those accounts to the IRS, leaving 19,000 as likely tax cheats. With an average of $900,000 per account, UBS made $200 million annually from this book of business.

How will the investigation play out? UBS Chairman Phil Gramm called Americans a nation of whiners. It turns out we have something legitimate to complain about.

We already had widespread stock option cheating amongst public traded CEO's. Executives backdated options to maximize their incentive compensation.

Extrinsic motivators deformed Wall Street to the extent, every huge investment bank disappeared almost overnight.

It seems the money addicted don't just destroy companies or shareholder value, they also cheat the government. The question is how many of these 19,000 tax cheats can be found at the top donorship levels to either major political party? And how might that impact justice or future government business? I'd really like to know...

Big Oil Profit Party Bybasses Bear

What a week it was for big oil! Their new theme should be "Party like it's 3rd quarter 2009!" Never mind the glum American citizen, who watched their IRA or 401(k) drop 30-40% during the same period. How much did the big boys make?

ExxonMobil $14.83 billion
BP $10 billion
Chevron $7.89 billion
Shell $10.9 billion
ConocoPhillips $5.18 billion

Just from the top five, big oil earned a $48,8 billion profit. One quarter's profits alone could have saved Bear Stearns with nearly $20 billion to spare. It also could fund hospital uncompensated care, amounting to $31 billion in 2006.

John McCain's tax plan would reduce resources to address our national crises. He plan would cut corporate taxes 10%, or $4.88 billion from the top five oil companies this past quarter. Rather than stepping up to the plate to fund our financial rescue, big oil would slip away.

If McCain pulls a Truman, ExxonMobil and company can pull out the stops. Maybe a huge soiree in the Cayman's? They can party it up in Caribbean luxury and claim a business trip. Surely big oil has offshore subsidiaries in the Ugland House. I feel another round of Corporafornication coming, courtesy of Uncle Sam.