Pro-Mexico By Angelo M. Codevilla from the June 2009 issue

For better, for worse, for richer, for poorer, in sickness and in health, whether anybody likes it or not, the United States and Mexico are joined at the Rio Grande until the stars fall from the sky. What Geography hath joined together, let no man even think of putting asunder. There is no comparison between living alongside neighbors and relatives who are friendly and helpful, and by folks who are troubled or who wish us ill. Canada’s position is analogous. But whereas Canada’s aging 30 million are comfortable in their identity, the national identity of Mexico’s 110 million largely young and vigorous people is up for grabs. The American Spectator : Pro-Mexico

Of the top 78 folks wanted for murder by the FBI fully 48 of them are of Mexican descent. Some of you are right now bellowing some crap about my being racist. Bullshit. There is absolutely nothing wrong with wondering why we must be forced to accept the entire Mexican population as citizens when the track record right this very moment SUCKS. Welfare in California is swamped by illegal aliens. The wanted lists in every state with a significant Mexican population is swamped with folks of Mexican descent. As it stands in the most recent statistics available from the Justice department 44% of state and federal inmates were Hispanic and 23% of all state and federal inmates were non-citizens. Admittedly we cannot break out exactly how many were Mexicans since Justice doesn’t keep track but Mexicans make up 64% of the Hispanic population and Mexicans make up 9% of the United States…

Illegal Immigrant Gangs Commit Most U.S. Crime

Last Updated: Fri, 01/30/2009 – 4:23pm

Criminal street gangs—mostly comprised of illegal immigrants—are responsible for the majority of violent crimes in the United States and are the primary distributors of most illicit drugs.

The alarming, but not surprising, information is revealed in a new report published by the Justice Department’s National Gang Intelligence Center (NGIC), an FBI task force created in 2005 to curb the growing threat of violent gangs in the U.S. The NGIC teams up with state and local law enforcement agencies throughout the nation to enforce, study and intercept gangs and has published several reports documenting their activities.

The agency’s latest publication has not been made public but a national newspaper revealed some of its findings this week. It says that up to 80% of crime in the U.S. is committed by gangs and that gang membership in this country has grown to 1 million, an increase of 200,000 in the last few years.

Additionally, gangs are the "primary retail-level distributors of most illicit drugs" in the U.S. and several are sophisticated enough to compete with major Mexican drug-trafficking cartels. Most of the country’s state and local enforcement agencies have reported gang activity in their jurisdiction and the problem will only get worse, according to the FBI.

In fact, a high-ranking FBI director said gangs have followed the migration paths of illegal alien laborers to avoid big-city police departments that have cracked down on their activities. An example is the notoriously violent Salvadoran gang known as Mara Salvatrucha or MS-13, which has spread throughout the U.S.—to at least 42 states—and continues expanding.

In 2008 alone MS-13 members, all illegal immigrants with previous criminal records, committed atrocious crimes that received ample media coverage. In San Francisco an MS-13 gang banger murdered a father and son with an assault weapon because their car blocked his from making a turn. In Los Angeles an MS-13 member just released from prison murdered a high school football star as the teen jock walked home from the mall. In Maryland a 14-year-old honors high school student was shot to death on a crowded public bus by a Salvadoran illegal alien who proudly revealed he belonged to the MS-13.

For more evidence we need only look at Mexico and it’s crime problem. It is nearly at the very top of everyone’s list of shitty countries. Heck it sits up there with Pakistan as one of two countries most likely to fail.

If we want to help Mexico how about we legalize drugs which would take away the power of the drug cartels that are right this second destroying what used to be a decent country? 

Cut your spending! Cut it a bunch or just cut it 10% but cut it. Imagine the signal that will send to the Government!

I am IN!

"Starve The Beast" – July 4th, 2009 – The Market Ticker

This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says.

The CBO’s new long-term forecast is considerably more pessimistic than the one it issued 18 months ago, mostly because of the recession, which has driven the budget deficit above 12 percent of GDP. But the report makes clear that the recent economic downturn did not cause the government’s predicament and that the situation will not necessarily improve once the economy does. The principal cause of long-term fiscal distress is the aging of the U.S. population, coupled with rising health-care costs — which, together, will drive spending on Medicare, Medicaid and Social Security to new heights. Unchecked, federal spending on Medicare and Medicaid combined will grow from almost 5 percent of GDP today to almost 10 percent by 2035 — and to more than 17 percent of GDP by 2080. The Debt Tsunami – washingtonpost.com

“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.”
— Cicero – 55 BC

That was a comment at the always interesting Fabius Maximus when Fabius asked how to fix what is broke in the United States.

Ironically here is the comment that was directly below.

Agenda as follows:
1. Get out of Afghanistan. There’s no threat there, and it’s too expensive.
2. Reform health care, and socialize all its costs. Lower payments to doctors, hospitals, and pharmaceutical companies.
3. Adopt diversified energy policy to provide a wide base of energy sources. Modernize electrical grid.
4. Establish 40 year plan to update and modernize rail freight and passenger services. Make work and make something at the same time.
5. Re-balance income equities through a combination of much higher taxes on the well-off and much higher wages for the less well-off.
6. Invest in highest quality educational infrastructure: schools as edifices. Increase teacher standards, teacher training, and teacher pay.
7. Get banking in line. After defense and space exploration, no sector is as dependent on government support as the financial sector. How the hell do those guys pay themselves so much money?
Write the White House, contact your congressmen, badger the media. Work, work, work.

That has to be Rahm Emanuel’s sock puppet since that list is right out of the Obama playbook and it is what will kill this country.

What is wrong with this country is us.

We have become corrupt, fat, lazy, scared, disgusting individuals who believe that somehow the greatness of our ancestors rubs off on us without our having to endure any of the privations that forged our ancestors. We are more interested in box scores than politicians, even when those politicians are engaged in a theft so massive that no one can believe it. We pay more attention to yards gained than we do to laws broken. We pay more attention to points scored than we do to freedoms lost. We get more upset by victory’s of sports teams than the losses at the hands of corrupt politicians of our pension funds.

Perhaps we should apply Stalin’s quote: “One death is a tragedy. A million deaths is a statistic.” it seems that our politicians are using this line of thinking regarding our money.

“Steal $500 from a taxpayer and it is a crime, steal a trillion and it is a statistic”.

Here is just a small sampling of what these dumb asses in our legislature bent the rules to allow. I won’t post all of the lyrics/spew because it is too vulgar…but it was sung in our legislature. Poetic isn’t it?

She fine den a bitch, ass and her tits
Thick in tha hips every nig want her
Call her Halle Berry, Halle berry
Halle Berry, Halle berry
She walkin like a model
Hands on your knees
Scrub the ground
She ain’t nothing but a tease
Halle Berry, Halle berry
Halle Berry, Halle berry

The Johnson Redbook Index is a sales-weighted year-over-year same-store sales growth in a sample of large US general merchandise retailers representing about 9,000 stores. Same-store sales are sales in stores continuously open for 12 months or longer. By dollar value, the index represents over 80% of the equivalent ‘official’ retail sales series collected and published by the US Department of Commerce. Redbook compiles the index by collecting and interpreting performance estimates from retailers. The index and its sub-groups are sales-weighted aggregates of these estimates.

HT: Zero Hedge

Commercial satellite-launch services provider Sea Launch, which is 40% owned by 787 on time manufacturer extraordinaire, Boeing, filed for bankruptcy last night in Delaware (09-12513). The Long Beach company which has used the Kazakhstan Baikonur Space Center for rocket launches in the past, has listed liabilities of over $1 billion. Zero Hedge: More Bad News For Boeing: Sea Launch Files For Bankruptcy

I am so totally sure that the wizards who have managed to create conditions terrible enough to kill all these banks know JUST what to do to fix this mess. Yea TOTALLY SURE all those assclown in our government both elected and the bureaucrats know JUST what to do! Hey how about those wild and crazy guys in our government take a break from saving us. If these assclowns were throwing you a life-preserver they would hit you on the head with it then run over you with the boat…then when they stopped to look for you they would drop the anchor on you.

Pretty soon this mess is going to start looking deliberate and that will get ugly fast.

1. First National Bank of Anthony, Anthony, KS June 19, 2009
2. Cooperative Bank, Wilmington, NC June 19, 2009
3. Southern Community Bank, Fayetteville, GA June 19, 2009
4. Bank of Lincolnwood, Lincolnwood, IL June 5, 2009
5. Citizens National Bank, Macomb, IL May 22, 2009
6. Strategic Capital Bank, Champaign, IL May 22, 2009
7. BankUnited, FSB, Coral Gables, FL May 21, 2009
8. Westsound Bank, Bremerton, WA May 8, 2009
9. America West Bank, Layton, UT May 1, 2009
10. Citizens Community Bank, Ridgewood, NJ May 1, 2009
11. Silverton Bank, N.A., Atlanta, GA May 1, 2009
12. First Bank of Idaho, Ketchum, ID April 24, 2009
13. First Bank of Beverly Hills, Calabasas, CA April 24, 2009
14. Michigan Heritage Bank, Farmington Hills, MI April 24, 2009
15. American Southern Bank, Kennesaw, GA April 24, 2009
16. Great Basin Bank of Nevada, Elko, NV April 17, 2009
17. American Sterling Bank, Sugar Creek, MO April 17, 2009
18. New Frontier Bank, Greeley, CO April 10, 2009
19. Cape Fear Bank, Wilmington, NC April 10, 2009
20. Omni National Bank, Atlanta, GA March 27, 2009
21. TeamBank, National Association, Paola, KS March 20, 2009
22. Colorado National Bank, Colorado Springs, CO March 20, 2009
23. FirstCity Bank, Stockbridge, GA March 20, 2009
24. Freedom Bank of Georgia, Commerce, GA March 6, 2009
25. Security Savings Bank, Henderson, NV February 27, 2009
26. Heritage Community Bank, Glenwood, IL February 27, 2009
27. Silver Falls Bank, Silverton, OR February 20, 2009
28. Pinnacle Bank of Oregon, Beaverton, OR February 13, 2009
29. Corn Belt Bank and Trust Company, Pittsfield, IL February 13, 2009
30. Riverside Bank of the Gulf Coast, Cape Coral, FL February 13, 2009
31. Sherman County Bank, Loup City, NE February 13, 2009
32. County Bank, Merced, CA February 6, 2009
33. Alliance Bank, Culver City, CA February 6, 2009
34. FirstBank Financial Services, McDonough, GA February 6, 2009
35. Ocala National Bank, Ocala, FL January 30, 2009
36. Suburban Federal Savings Bank, Crofton, MD January 30, 2009
37. MagnetBank, Salt Lake City, UT January 30, 2009
38. 1st Centennial Bank, Redlands, CA January 23, 2009
39. Bank of Clark County, Vancouver, WA January 16, 2009
40. National Bank of Commerce, Berkeley, IL January 16, 2009
41. Sanderson State Bank, Sanderson, TX December 12, 2008
42. Haven Trust Bank, Duluth, GA December 12, 2008
43. First Georgia Community Bank, Jackson, GA December 5, 2008
44. PFF Bank and Trust, Pomona, CA November 21, 2008
45. Downey Savings and Loan, Newport Beach, CA November 21, 2008
46. The Community Bank, Loganville, GA November 21, 2008
47. Security Pacific Bank, Los Angeles, CA November 7, 2008
48. Franklin Bank, SSB, Houston, TX November 7, 2008
49. Freedom Bank, Bradenton, FL October 31, 2008
50. Alpha Bank & Trust, Alpharetta, GA October 24, 2008
51. Meridian Bank, Eldred, IL October 10, 2008
52. Main Street Bank, Northville, MI October 10, 2008
53. Washington Mutual Bank, Henderson, NV and Washington Mutual Bank FSB, Park City, UT September 25, 2008
54. Ameribank, Northfork, WV September 19, 2008
55. Silver State Bank, Henderson, NV September 5, 2008
56. Integrity Bank, Alpharetta, GA August 29, 2008
57. The Columbian Bank and Trust, Topeka, KS August 22, 2008
58. First Priority Bank, Bradenton, FL August 1, 2008
59. First Heritage Bank, NA, Newport Beach, CA July 25, 2008
60. First National Bank of Nevada, Reno, NV July 25, 2008
61. IndyMac Bank, Pasadena, CA July 11, 2008
62. First Integrity Bank, NA, Staples, MN May 30, 2008
63. ANB Financial, NA, Bentonville, AR May 9, 2008
64. Hume Bank, Hume, MO March 7, 2008
65. Douglass National Bank, Kansas City, MO January 25, 2008
66. Miami Valley Bank, Lakeview, OH October 4, 2007
67. NetBank, Alpharetta, GA September 28, 2007
68. Metropolitan Savings Bank, Pittsburgh, PA February 2, 2007
69. Bank of Ephraim, Ephraim, UT June 25, 2004
70. Reliance Bank, White Plains, NY March 19, 2004
71. Guaranty National Bank of Tallahassee, Tallahassee, FL March 12, 2004
72. Dollar Savings Bank, Newark, NJ February 14, 2004
73. Pulaski Savings Bank, Philadelphia, PA November 14, 2003
74. The First National Bank of Blanchardville, Blanchardville, WI May 9, 2003
75. Southern Pacific Bank, Torrance, CA February 7, 2003
76. The Farmers Bank of Cheneyville, Cheneyville, LA December 17, 2002
77. The Bank of Alamo, Alamo, TN November 8, 2002
78. AmTrade International Bank of Georgia, Atlanta, GA September 30, 2002
79. Universal Federal Savings Bank, Chicago, IL June 27, 2002
80. Connecticut Bank of Commerce, Stamford, CT June 26, 2002
81. New Century Bank, Shelby Township, MI March 28, 2002
82. Net 1st National Bank, Boca Raton, FL March 1, 2002
83. NextBank, N.A., Phoenix, AZ February 7, 2002
84. Oakwood Deposit Bank Company, Oakwood, OH February 1, 2002
85. Bank of Sierra Blanca, Sierra Blanca, TX January 18, 2002
86. Hamilton Bank, N.A., Miami, FL January 11, 2002
87. Sinclair National Bank, Gravette, AR September 7, 2001
88. Superior Bank, FSB, Hinsdale, IL July 27, 2001
89. The Malta National Bank, Malta, OH May 3, 2001
90. First Alliance Bank & Trust Company, Manchester, NH February 2, 2001
91. National State Bank of Metropolis, Metropolis, IL December 14, 2000
92. Bank of Honolulu, Honolulu, HI October 13, 2000
    FDIC: Failed Bank List

Thank you FDIC for this terrific list…hey you know what? How much money does the FDIC have in the coffers, after all insuring all these failed banks has to cost some money.

WASHINGTON — Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures.

Well hell the Treasury has a bunch of money doesn’t it? How are those auctions going again? heh…Gosh I wish I would have thought of this scam. I sell bullshit to myself…only an expert would dream that shit up. And I am making a profit every time I gather up enough balls to pull this scam off. Madoff is going to jail for this crap but our government stands up and brags about it.

The Fed Buying What the Treasury’s Selling

Doh!!! Tomorrow is another Treasury auction and to prepare our fearless Fed is buying while our Treasury is selling. How does that work? Two separate sets of books. The former injects reserves into the system by buying Treasury debt and counts it as an (cough) asset. While the latter sells debt which is a responsibility of the taxpayer. It’s that credit/debit deal. Make sense to you? Tony Soprano knows how this works since he cooked the books and got the vig.

Gosh I feel those green shoots sprouting up all over the place!

US To Trade Gold Reserves For Cash Through Cash4Gold.com

8 states see record unemployment rates in May

WASHINGTON (AP) — The unemployment rates in eight states hit record-highs last month and only two — Nebraska and Vermont — did not report increases.

The Labor Department says 48 states and the District of Columbia saw employment conditions deteriorate last month. The fallout from the longest recession since World War II, was the worst in Michigan. Its unemployment rate rose to 14.1 percent. 8 states see record unemployment rates in May – Yahoo! Finance

Green Shoots? Sure take a look at these charts from Vox’s post a Tale of Two Depressions. (Hat tip Atlantic’s Derek Thompson) Let’s just ignore the silly idea that more debt will lead us out of this disaster and concentrate on the disaster in the making. We are well and truly screwed…

Industrial output, four big Europeans, then and now

Yea things are looking FABULOUS! Green Shoots popping up all over the place…

About the idea that spending money will fix this…err no. If you want to find out what is going to happen and if you really want to know how to fix this then you have to listen to those folks who called this disaster in the first place. Start with Peter Schiff then move to this which is an essential piece of the puzzle. Why listen to folks whose premises about the economy have been wrong all along? To predict the future in economics you have to at least prove that you were successful in the past. Why listen to economists who were predicting nonsense like this:

February 28, 2007 – Dow Jones @ 12,268

March 13th, 2007 – Henry Paulson: “the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."
March 28th, 2007 – Ben Bernanke: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,"

March 30, 2007 – Dow Jones @ 12,354

April 20th, 2007 – Paulson: "I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained." , "All the signs I look at" show "the housing market is at or near the bottom,"

April 30, 2007 – Dow Jones @ 13,063

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”

May 31, 2007 – Dow Jones @ 13,627

June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”
July 12th, 2007 – Paulson: "This is far and away the strongest global economy I’ve seen in my business lifetime."
August 1st, 2007 – Paulson: "I see the underlying economy as being very healthy,"
October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions."

December 31, 2007 – Dow Jones @ 13,265
January 31, 2008 – Dow Jones @ 12,650

February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."

Let’s jump ahead since my head will explode if I have to read too much of these clowns bullshit. Keep in mind that this was the consensus opinion of mainstream Keynesian economists.

Where did they end up?

August 10th, 2008 – Paulson: “We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)
September 8th, 2008 – Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated 1 – 1.5 trillion dollars. Over 5 trillion is added to the nation’s balance sheet.

September 16th, 2008 – $85 Billion AIG Bailout “Loan”

September 19th, 2008 – $700 Billion Bailout Plan Announced
September 19th, 2008 – Paulson: "We’re talking hundreds of billions of dollars – this needs to be big enough to make a real difference and get at the heart of the problem," he said. "This is the way we stabilize the system."
September 19th, 2008 – Bernanke: "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon."
September 21st, 2008 – Paulson: "The credit markets are still very fragile right now and frozen", "We need to deal with this and deal with it quickly.", "The financial security of all Americans … depends on our ability to restore our financial institutions to a sound footing."
September 23rd, 2008 – Paulson: "We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses, both small and large, and the very health of our economy,"
September 23rd, 2008 – Bernanke: "My interest is solely for the strength and recovery of the U.S. economy,"

October 31, 2008 – Dow Jones @ 9,337
March 31, 2009 – Dow Jones @ 7,609

Great Job Guys! Yea let’s listen to folks like these two clowns. Well Hope and Changey exchanged Tim Geitner for Paulson at the Treasury…so now we are being led by a person who not only has the same corrupt philosophy as Paulson but who is also a tax cheat. Yea that is a good idea. And yes both of them share the same statist philosophy.

Now explain to me how anyone believes that Obama is trying to do anything except SINK THIS COUNTRY!

Austrian Filter nails the lying hides of Paulson and Bernanke to the wall so you can study their bullshit up close and personal. Bastards should be in Jail!

February 28, 2007 – Dow Jones @ 12,268
March 13th, 2007 – Henry Paulson: “the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."
March 28th, 2007 – Ben Bernanke: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,"
March 30, 2007 – Dow Jones @ 12,354
April 20th, 2007 – Paulson: "I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained." , "All the signs I look at" show "the housing market is at or near the bottom,"
April 30, 2007 – Dow Jones @ 13,063
May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”
May 31, 2007 – Dow Jones @ 13,627
June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”
July 12th, 2007 – Paulson: "This is far and away the strongest global economy I’ve seen in my business lifetime."
August 1st, 2007 – Paulson: "I see the underlying economy as being very healthy,"
October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions."
December 31, 2007 – Dow Jones @ 13,265
January 31, 2008 – Dow Jones @ 12,650
February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."

Read the whole thing over at Austrian Filter. Hat Tip Zero Hedge.

Austrian Filter: Zero Credibility

Drought Creates Water And Food Shortages For 1.37 Million In China

by Eric deCarbonnel

China Daily reports that drought creates water and food shortages for 1.37 million in China.

Water, food shortages for 1.37m after drought (Xinhua)
YINCHUAN — Sustained drought over the past seven months has caused water and food shortages for more than 1.37 million people in northwest China’s Ningxia Hui Autonomous Region, the local government said Monday. Market Skeptics

If you are NOT reading Market Skeptics the following is the sort of analysis you are missing.

The world is facing a catastrophic fall in global food production in 2009, and these Chinese food shortages are evidence of this. It is only a matter of time before China starts importing more grains, driving up world food prices.

As I reported back in January, Hunger trumps unemployment. Chinese authorities, when faced with the choice of millions of unemployed workers and millions of hungry workers, will choose to sacrifice exporters and the dollar peg.

Not only will the Chinese entering the market for wheat drive up prices but all those dollars that have been safely locked away as Bernanke has hoped will be running around making havoc by too many dollars chasing too few goods. Here is Ron Paul discussing the problem with Bernanke�it gets ugly for dear old Ben.

Oliver is sick of this crap, We are long past sick of the delusions of the left.

UPDATED: It didn�t really sink in that Oliver Willis works for that paragon of Media Objectivity funded by that pillar of the community George Soros. This is the best that Media Matters can do? I have also added a comment that was left about this post to the post itself. I thought it was a terrific comment and want to encourage that sort of thing. Please find it attached to the bottom of this post. Thanks again Instapundit and Ace of Spades.

Not sure why I ended up at this site but I had to respond. Oliver in bold and block-quoted.

Well Oliver Willis let me assure you, those of us on the right are even more sick of delusional leftists who are so blinded by their hatred of President Bush that they are willing to make this stuff up as they go.
Sick of this Crap Oliver Willis Oliver is sick of this crap, We are long past sick of the delusions of the left. | Pierre Legrand’s Pink Flamingo Bar

My defense of the invasion of Iraq and Afghanistan is worth seeing again. Hell even I have forgotten some of the great reasons we went in an killed that old bastards government. Bravo George W. Bush!

Pierre Legrand’s Pink Flamingo Bar

Take a look at this article over at Atlantic�The Quiet Coup written by an IMF Economist. Don�t much like his solutions but his diagnosis sounds spot on. Now after you have done that take a look at this terrific article at Zero Hedge.

Zero Hedge Exclusive: Is State Street Trading For Federal Accounts?

Posted by Tyler Durden at 9:54 AM

Zero Hedge has always been fascinated by the behemoths of securities lending (or not so much lately) State Street and Bank Of New York: these firms, which allegedly had just marginal toxic exposure, were in the front lines for the TARP bailout and have traditionally been handled with velvet gloves by the administration. In fact, many would say the custodian firms are in a league of importance much higher than even Goldman or JP Morgan as with their repo activity, security lending and cash collateral reinvestment, they are the de facto center of the shadow banking system.
A Cliff notes version of the stock lenders’ Modus Operandi, sent in compliments of a reader:

• In the securities lending arb, stocks and bonds are lent out by custodians and investment managers. The loan is collateralized by the borrower with cash, the lender promises the borrower a return on that cash and then invests the cash in repo and short-term debt at a spread to that promised rate of return. The sec lending market is in the trillions. This market is basically rolling overnight repo right now as it tries to dig itself out of the MTM/liquidity hole.

• Many of the Fed/Treasury balance sheet efforts have been basically attempts to supplant securities lenders. Sec lending funds were the biggest buyers of 1-3yr FRNs (hence, TLGP). Lenders were also the biggest buyers of AAA cards and autos (read TALF 1.0). They were the second-biggest buyers of ABCP after 2a7 funds (ergo AMLF). Indirectly they were the largest funder of LT2 bank debt (via SIVs MTNs). They’re large repo counerparties, and did everything from short-dated CDS to liquidity put options on Canadian levered super-senior CDOs.

• Many stock lending funds, which have similar accrual accounting regimes to ‘40 Act money-market funds, have broken the buck but are still trading at $1. for example see the section beginning "We may be exposed to customer claims" on p.11. What does this mean? Not only are certain securities lending providers opening themselves up to significant litigation risk but, importantly, clients in stocks can’t reallocate to bonds (or vice-versa), since the sec lending funds aren’t letting them out (except in-kind). Finally, of course, as long as sec lenders remain hurt but unsupplanted, they stay short duration, which extracts hundreds of billions of $$ in term financing capacity out of the market. Fed won’t act as a lender of last resort since they’re still smarting from the AIG sec lending bail-out they didn’t see coming. Zero Hedge: Zero Hedge Exclusive: Is State Street Trading For Federal Accounts?

As U.S. stock markets plummeted last September, the Senate’s No. 2 Democrat, Dick Durbin, sold more than $115,000 worth of stocks and mutual-fund shares and used much of the money to invest in Warren Buffett’s Berkshire Hathaway Inc.

The Illinois senator’s 2008 financial disclosure statement shows he sold mutual-fund shares worth $42,696 on Sept. 19, the day after then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged congressional leaders in a closed meeting to craft legislation to help financially troubled banks. The same day, he bought $43,562 worth of Berkshire Hathaway’s Class B stock, the disclosure shows.

� Click to enlarge image

(AP)

Altogether, Durbin sold investments worth $116,000 in September. By Oct. 2, he had invested $98,046 in Omaha, Neb.-based Berkshire Hathaway, the form shows.

The Standard & Poor’s 500 index plunged 4.7 percent last Sept. 15 after the bankruptcy of Lehman Brothers Holdings Inc. and Bank of America Corp.’s government-engineered takeover of Merrill Lynch & Co. By the end of October, the index had fallen 22.6 percent.

"Durbin was doing what a lot of other people were doing, taking a look at their savings" and seeing it "start to tank and trying to preserve some level of wealth by getting out of the market," said his spokesman, Joe Shoemaker.

Shoemaker said Durbin didn’t capitalize on anything Paulson and Bernanke told congressional leaders at the Sept. 18 meeting.

Whatever information Paulson gave lawmakers wasn’t secret or classified and was disclosed publicly the next day, Shoemaker said. Durbin cashed out during big stock collapse :: CHICAGO SUN-TIMES :: News