Ref: 09-036A of 25-Dec-2009 (Merry Christmas Day) now revised and updated on 1 Jan, 2010

Steven Spielberg is considered one of the most gifted and visionary director in the world. He could
not only visualize but also gave concrete shapes to the characters that became life size symbols
later. Unfortunately, he never handled a political, financial or economic theme for simple reason
that he could not visualize the complexities of current financial crisis engulfing his own nation –
United States of America.
President Obama, one of the rarest breed of
gifted speakers, has turned into a con man. He
is a successful diversionist not revisionist
lawyer, Senator or President but to borrow
the phrase from Jim Carrey’s dictionary - Liar
and Liar.

I thought the uneducated Indians in the

villages or woo doo tribes in sub-terrain
landscape in African continent were the only
bunch of superstitious religious zealots. Never
before I thought that the educated mass of
Americans could rival them in the practice of
superstitions. If the Hindus, Muslims and
Africans could follow their religious leaders
blindly, the Americans too follow their
political leaders with same zest and vigor.
They also believe blindly or superstitiously
that their King or President could do no
wrong. They do not realize that USA is following a pattern of USSR and its days are now numbered

A good leader should be a good orator, but a good orator need not be a good leader. Sen. Obama, a
distinguished orator, won his presidency not because of his strength but due to the weakness of
GOP – or Republican Party badly bruised by erstwhile President George W Bush. He could use his
oratory skills to whip up the anti-GOP sentiment to win the democratic nomination defeating the
Hillary Clinton and then defeating John McCain to win the Presidency. In short, he won due to the
default of the other.

Yes, he inherited the bad legacy of burning nation from the President Bush. Nothing new. Almost
every President inherits some or the other bad legacy from predecessor. Even President Bush
inherited the regime of artificial low interest rate from President Clinton, Rupert Rubin (then
Treasury Secretary) and Alan Greenspan (Fed Chairman for 18 years by now) that sow the seeds
of the massive derivative contagion.

President Obama forgot that he was appointed President for 4 years – up to January 2013 latest.
Having seen his inadequacy to address the immediate financial problems, he set upon himself a
convenient mode to divert the attention of the American people by any means. He adopted the
following diversionary tactics successfully:
1. He started showing moon to the American people. Having seen the oil prices zooming to $
145 per gallon, he found convenient tool to exhort the American car manufacturers to “go
green” and invest into green technology that would reduce oil consumption, pollution and
carbon emission.
a. Such cars to be commissioned by 2014 to 2016 when he will no longer be around.
b. What is the point of talking such non-sense when the immediate need was to set the
financial house in order, stop the mortgage hemorrhaging, foreclosures and create
the jobs and help the local Auto manufacturers to dispose off the existing car
inventory in the ware house and on assembly lines?
2. He then became champion of another green technology – Solar Energy – which will take
years and billions of dollars before that technology became available at reasonable cost on
mass scale. Again, he was showing moon to the American people by showing distant
calendar of 2016 to 2020.
3. He became then the champion of “climate change” by spearheading campaign for actions
for control of carbon emission and reserving and doling out hundreds of billions of dollars
of unproven and non-focused technology or even concept.
a. He was trying to interfere in the automatic self balancing system of the nature.
b. He went all the way to Copenhagen in “freezing cold” to talk about “global warming”.
Back home in all 4 North Eastern states from Washington DC and New York were
engulfed in 5 to 8 feet deep snow or ice in freezing cold when he was devoting
almost half the time of his presidency on global warming.
c. Hey, Mr. President, there is snow and ice all around – where is the evidence of global
warming?
d. In Afghanistan and Iraq his US army was exploding disastrous bombs that were
emitting more Carbon dioxide than one small plant in China. Did he end the war
with immediate effect
e. Osama and Al Qaida were blasting human and real bombs everywhere killing
thousand of innocents and causing tons of carbon smokes from the bombing sites.
Could he get the cooperation of Bin Laden for carbon emission control?
f. In short, he was rushing into “abstract” and “non verifiable” concepts just to divert
the attention of the American people.
4. He planned and created hundreds of billions of package called “TARP Trillions” to resurrect
the financial system.
a. He was trying to kill the wealthy and efficient by chasing them all the way down to
UBS, Switzerland by calling for names of 52,000 wealthy Americans who were
reported to be tax dodgers.
b. He was using hundreds of billions of new money thrown after bad money by lending
support to bankrupt Citigroup, AIG, Fannie/Freddie Mae, Bank of America, Wells
Fargo, Goldman Sachs, General Electric and host of other bad borrowers.
c. In short he was trying to extract billions from efficient wealthy and passing on
nearly 100 times more to inefficient banks, brokers and insurers.
5. When he could not create jobs, he invented new slogans – by equaling Saving of Jobs as
Creation of New jobs.
 6. When he found his plans were no longer working, he invented a new weapon. “Health Care
Reform” which at the moment of this writing has almost become a law, spending over $ 1.3
trillions extra.
a. Here again, he was showing moon again. He said that 33 millions of Americans
would be insured immediately by taxing healthy Americans to pay for health
insurance they no longer wanted.
b. In short, he was hurting efficient wealth earners and healthy Americans. He did not
like “efficiency” in earning income or wealth and building health.
c. If you earn more, pay more to the state. If you are healthy, pay the tax or compulsory
insurance or pay the fine ranging from $ 750 per person to $ 3000 per family of four.
In other words, he became a “blood sucker” draining out the blood or pompous
health from the healthy Americans.
d. He showed the moon again by showing distant calendar. He said that American
people will save $ 1.3 trillions over 10 years. Hey, Mr. President, you are elected to
do job to have immediate benefit during your Presidency – that is – for 4 years
lasting up to January 2013. Why do you indulge into actions that go beyond 10 years
when you will no longer be around?
7. He started chasing fat bonuses to Wall Street bankers which would affect at the most $ 5 to
10 billions. But he embarked upon a journey to guarantee the worthless debt of $ 306
billions of Citigroup. $ 306 billions amount to entire Corporate America’s tax collection for
full fiscal year. Was Citigroup as single big entity that important to demand the resources of
entire corporate world of America?
8. He was clamoring about the deepest financial crisis over last 70 years. Hello President.
Have you seen the Dow Jones index on this Christmas Eve? It is at 10,554. During the 1987
crash, the Dow dropped to less than 3000 which is about 22 years ago. If the financial crisis
is of epic proportion, worst in 70 years, how come Dow Jones is still trading at 10,554 ( Up
7554 points or up by 251%?) Does it mean that the Dow is artificially supported at higher
level by printing more and more money and giving to affiliated banks, brokers and funds to
support the market by “artificial respiration”?
9. It is evident that President Obama has been using his oratory skills to divert the attention
of the American people from core issues. He ignores the hard realities and pushing up the
abstract subjects which can not be verified or justified by proper rational.

In short, the entire country of United States has gone to the dogs. There are no care takers. The
educated Americans have become docile and weakened mass who are loathe to seeing the hard
realities.

They bother more about tiny Afghanistan than 3 time’s larger states at home. What is Afghanistan?
No one heard its name in last 50 years until George Bush went into those rugged mountains to
search the rats nicknamed Al Qaida. Afghanistan is a non entity – just piss it off. And get out of it in
one week. When Afghans do not care about themselves, why should Americans or other NATO
forces do? It is none of their business to be out there anyway.

In short the ordinary Americans have been blinded by their loyalty to their political leaders or
Presidents, Senators and Congressmen. They are equally superstitious as the mumbo jumbo
Africans, religious Muslim populace loyal to white or black robed Mullahs or Ayatollahs or
ignorant Hindus in villages loyal to the saffron robed politicians or priests.

The situation in the country is worsening in almost every sphere. The economy is still sliding, jobs
are being lost, interest rates are convulsing with upward bias, frustrations among the populace is
growing, town hall meetings are getting restive, the TV media finally gave the thumbs down and
started talking against the administration, the deficits are bulging into trillions, the foreclosures
are now expanding canvas to high end properties, commercial properties are sinking further,

Freddie & Fannie Mae need no more bail outs but need blank checks from the government.
The Citigroup is still oozing purple blood with additional hundreds of billions getting sour, no one
wants to take the helm of Bank of America and the Fed is devising new ways of raising rates by
resorting to Term Deposit lending, instead of normal Fed Fund and Discount windows. AIG is still
basking under microwave heat and wilting further and further. Financial frauds are coming to
light with greater intensity.

The troubled banks are getting deeper and deeper in the mud. The FDIC is running out of funds,
and almost all states find their finances stretched beyond sustenance. Nevertheless, the Fed and
Treasury go on printing and also guaranteeing hundreds of billions of dollars as if there is no
tomorrow.

Even new IPO are being withdrawn at increasing ferocity. A leading company like National Beef, a
profitable company employing thousands, was unable to raise just $ 250 millions from the market,
whereas bankrupt banks have been reported to be raising over hundreds of billions within 2 days.
 List of Failed, Withdrawn & Postponed IPOs 2009 in USA
Company Name Action Date Action File Date Underwriter

National Beef 12/17/2009 Postponed 10/13/2009 BofA Merrill Lynch

Ellington Financial LLC 12/10/2009 Postponed 7/14/2009 Credit Suisse
Trony Solar Holdings 12/9/2009 Postponed 10/30/2009 J.P. Morgan
Chesapeake Lodging Trust 12/8/2009 Postponed 9/28/2009 J.P. Morgan
Edgen Murray Limited 12/8/2009 Withdrawn 9/24/2008 Jefferies
Aviv REIT 12/7/2009 Withdrawn 6/30/2008 Morgan Stanley
Birds Eye Foods 11/20/2009 Withdrawn 10/8/2009 J.P. Morgan
HealthPort 11/19/2009 Postponed 8/17/2009 Deutsche Bank
Gomez 11/9/2009 Withdrawn 5/7/2008 Credit Suisse
PlainsCapital 11/4/2009 Postponed 8/26/2009 J.P. Morgan
AEI 10/29/2009 Postponed 8/18/2009 Goldman Sachs
Rexnord Holdings 10/16/2009 Withdrawn 7/18/2008 Goldman Sachs
Ladder Capital Realty Finance 9/29/2009 Postponed 7/17/2009 J.P. Morgan
Mistral Acquisition Company 9/25/2009 Withdrawn 1/18/2008 BofA Merrill Lynch
Foursquare Capital 9/24/2009 Postponed 7/9/2009 BofA Merrill Lynch
China Growth Alliance 9/16/2009 Withdrawn 3/18/2008 Jesup & Lamont
Orbit Acquisition 9/8/2009 Withdrawn 2/27/2008 J.P. Morgan
Open Link Financial 8/31/2009 Withdrawn 5/12/2008 Credit Suisse
UBS Investment
Sutherland Asset Management 8/7/2009 Postponed 5/21/2009 Bank
Vought Aircraft Holdings, Inc. 7/24/2009 Withdrawn 5/16/2008 Lehman Brothers
GCL Silicon Technology 7/17/2009 Withdrawn 7/18/2008 Morgan Stanley
Galiot Capital 7/7/2009 Withdrawn 3/12/2008 Deutsche Bank
Rhino Resources 6/17/2009 Withdrawn 4/16/2008 Morgan Stanley
GF Acquisition 6/17/2009 Withdrawn 4/21/2008 Pali Capital
UBS Investment
ASM Acquisition Company Ltd. 6/4/2009 Withdrawn 1/9/2008 Bank
Noble Environmental Power 6/3/2009 Withdrawn 5/8/2008 J.P. Morgan
NextG Networks 5/22/2009 Withdrawn 6/5/2008 Merrill Lynch
Source Photonics 4/15/2009 Withdrawn 12/26/2007 Cowen & Company
Current Media 4/13/2009 Withdrawn 1/28/2008 J.P. Morgan
Alimera Sciences--old 4/9/2009 Withdrawn 7/1/2008 Credit Suisse
RAI Acquisition Corp. 3/26/2009 Withdrawn 1/7/2008 J.P. Morgan
Valor Computerized Systems 3/24/2009 Withdrawn 1/11/2008 Thomas Weisel
McJunkin Red Man 3/16/2009 Withdrawn 8/20/2008 Goldman Sachs
Madison Square Capital 3/13/2009 Postponed 4/25/2008 FBR Capital Markets
SMG Indium Resources 2/27/2009 Withdrawn 2/27/2008 Maxim Group LLC
O'Gara Group 2/17/2009 Postponed 8/22/2008 Morgan Keegan
Changing World Technologies 2/13/2009 Withdrawn 8/12/2008 WR Hambrecht

Are derivatives dead? I do not think so – the Fed and Treasury appear to have been using
derivatives with increasing ferocity through JP Morgan Chase and HSBC to short the gold/silver
and buying $ index to retain the foreigner’s interest in the country. Attempts are now being made
to weaken the United Kingdom by arranging downgrade, so that the Asian reserves do not get
diverted to British Pound. Further, British pound is having less weightage ( %), so the risk in
physical delivery is relatively less than Euro ($ Index Weight %)

The above summaries are derived from the detailed analysis of the following specific
developments in every sector/company.

1. Citigroup:
Ever since losing billions of dollars in Latin American countries around 1992, this bank with
Chase (now JP Morgan Chase) has been refining its balance sheets by using exotic derivatives
in US and mostly offshore centers. It really has no core business. It is one of the larges assets
shufflers in the world. Its balance sheet size, about $ 92 billions in 1992 – pre take over of
 Travelers group, Citigroup’s balance sheet has grown 22 times to $ 2.1 trillions before current
meltdown.

a. The official lending was $ 45 billions in TARP funds; its worthless bonds were
guaranteed $306 billions by US administration under great Hank Paulson (ex- Goldman
Sachs) and Ben Bernanke, making it investment grade AAA securities overnight. That
could be the main reason for Goldman Sachs massive surge in profits. They probably
knew earlier what was to come.
b. US-A (= US Administration) reported that Citi paid back $ 25 billions of TARP money.
Did Citi have cash to repay? No, so how did they pay back? They converted $25 billions
of TARP Debt into equity shares. That is, they repaid by book entry – one pocket to
another.
c. US-A further reported that Citi would pay back $ 20 billions from new capital raised.
How did they raise the capital in such worse financial scenario? The identities of new
investors were not known who paid such humongous sum, who are those idiots or
White Knights willing to invest billions into this bankrupt bank? Why their names are
not disclosed when they have taken substantial stake into this group. This is mandatory
disclosure.
d. Even Abu Dhabi Investment Fund (Sovereign funds) served notice on Citigroup to
cancel their financial arrangement or refund them damages of over $ 4 billions.
e. A New York Times article recently said that the bank’s “moves will result in a $10.1
billion hit to Citigroup’s fourth-quarter results... (Source: American Banking News)
f. So, the Citi is losing in billions and has no public profile to raise $ 20 billions. Why does
it want to repay the TARP billions even on paper? Because they want to avoid
answering Senate and need permission to pay millions of dollars of pay packages. In
India, there is a popular saying – Behti ganga me haath dho lo – that is rechristen
yourself by taking a dip in flowing holy Ganges even if it is dirty and polluted.
g. There are further reports that Citi has sold almost all saleable business. Its only
remaining subsidiary is reported to have billions of dollars of worthless assets.
2. AIG
a. Steel bleeding to death. No one now knows its true liability or assets. Even after
consuming $ 200 billions of state funds, this Insurer could not insure itself from other
losses. It needs re-insurer in the form of Fed and Treasury. Geithner is very kind to this
institution.
3. Bank of America
a. It is reported on last day of 2009 that the bank is expected to report massive loan losses
in 2010 stemming from its aggressive lending in credit cards, mortgages and other
business lines. At one point, BofA was offering credit lines of up to $100,000 to startups
backed by nothing more than the entrepreneur’s signature. And mortgage requests
turned down by the bank as too risky during the credit bubble were eagerly made by
Countrywide Financial Corp., which BofA acquired in 2008.
b. It is reported to have repaid $45 billions of TARP money. What is the source? It is
making that much money? No one knows. Who financed them? No one knows.
c. No one wants to become CEO of this company. Finally, they found one from inside the
company.
d. A recent move by John McCain in the Senate on line similar to Glass Steagall Act in the
past will force BofA to sell off Merrill Lynch. No one really knows what is happening in
the boardroom of such banks. One day they acquire, use up hundreds of billions of
dollars under TARP or some other names, and then in less than 12 months, they will be
sold off. What happens to state aids? - “Confuse if you can not convince anyone.”
4. Fannie Mae/Freddie Mae:
a. They are acutely distressed. They are not beneficiary of direct state guarantees, but it
seems that they are. Between them, they own or guarantee almost 31 million home
loans worth about $5.5 trillion, or about half of all mortgages. Considering about 20% to
27% default rates, the bad loans may be running into $ 1.1 trillions.
b. These two companies have already received over $ 110 billions of state aid so far. Call it
TARP or otherwise. Instead of approaching Senates for bail out time and again, the
Treasury on Thursday gave a blank check to these institutions to sidestep the Senate
authority required for bail out. The upper cap of $ 400 billions is now removed. In
other words, they can borrow even $ 1 trillion without approaching Senate or Congress.
(That makes both stocks good buy. They will never be in trouble).

In other words, the Senate or Congress no longer counts. The President Obama, Ben Bernanke and
Timothy Geithner (last two are bureaucrat not appointed by the American people). In short, in
world’s largest democracy, two appointed bureaucrat, NOT elected representatives (100 Senators
or 500 Congressmen) will rule America and the World Financial System. The whole world will be
hostage to this trio – one elected, two appointed.

The other banks like Wells Fargo, JP Morgan Chase, General Electric, General Motors and Airlines
are so vulnerable the economy and entire financial system in the United States is pushed down
several fathoms deep. The derivatives in Forex trades, oil, gas and precious metals like gold and
silver is bulging at alarming rate.

And yet, Dow and Nasdaq are rising to record value. They talk about recession almost comparable
to 1930 or 79 years ago, but the Dow is still trading at 10,500+, about 7500 points higher than in
1987 when the massive crash took place 22 years ago. Free money is ruling the entire world
today. Here is something interesting I could pluck out from the internet (these are not my views)

The level of risk the U.S. government is taking on with many of the FHA loans is insane. The
U.S. government is taking miniscule down-payments on these mortgages, over 90% of the
time less then 4% down payment is out down and with the other hand the U.S government
is handing out an $8,000 check, paid for by the U.S taxpayers.

The net effect is that for virtually every new mortgage which these government entities are
initiating of $250,000 or less there is zero (net) down-payment. Given that a large majority
of current sales in the U.S. are below this level, this means that most of the home-buyers in
the U.S. this year are putting up zero down-payments.

The Federal Reserve also allows the banks to "borrow" money at 0%. The banks then
"deposit" this money with the Federal Reserve as a "savings account" for which they collect
interest, while paying no interest on the "loan". In other words the Federal Reserve is
simply giving the banks free money. But the money doesn't actually sit there; the Fed uses
that money to buy U.S. mortgage bonds to keep the U.S. mortgage rates artificially lower

We are therefore heading towards massive fall. We have never been so close to the death than
anytime before. This time around the pain will be much severe than 1930 because the stakes and
money supply is almost 50 to 100 times higher. The Gold and Silver derivatives will explode soon.
Fannie/Freddie Mae will outperform due to unlimited guarantee from the state.
Would USA Collapse on its own default? Shouldn’t the World rush to its defense?
The current indications are that US will fail on its own. Its supremacy in practically every
field is seriously challenged and will be at stake. Some nations are happy to see the United
States fall due to its years of military adventurism, hegemony and arrogance. Its shattered
economy will have delayed effects all around the world. After years of supremacy, US is at
the receiving end today.

There is a saying that those who are unbeatable abroad are finally defeated on their own turf
by their own people. The next war will begin in US itself when the disappointed people try
to vent their anger against US administration for not being able to create enough jobs or
turn around the economy.

The efforts by US-A so far are totally in wrong direction. If they read my book “Sub Prime
Resolved” they will know how to address each problem with convincing solutions. The
present problem in USA is lack of demand, not supply. Instead of promoting $ value by
paper trading in dollar index, the US-A has to gear up the efforts to jack up physical demand
everywhere. That is what makes money and creates jobs.

Should the world remain silent spectator and let the United States flatten before everyone’s
eye? I do not think so.

I often hear from many quarters in Asia that “they (Americans) deserve it (collapsing
economy and virtual defeat in Iraq and Afghanistan).” May be the actions of recent
Presidents were egoistic and smacked of arrogance. But that should not take away all the
credits and good will built since the World War II. The whole world became prosperous
and democratic only because of United States of America aided actively by Britain.

It was US who saved us from the clutches of Hitler and the tyranny of Japanese imperialism.
It was the single biggest contribution to the world. It was again US who saved the world
from Communists and Authoritarian regime all around the world, gave the world the
computers, internet, free trade, and new inventions. It was US who espoused the cause of
democracy everywhere. The surfeit of knowledge that the world finds today owe its origin
to United States. We have to be thankful and equally grateful to this wonderful nation. The
Knowledge has migrated across the world from the soil of United States.

It is therefore payback time. However, US-A lead by Obama have to be receptive to the
newly emerging wealthy countries in Asia. One can not clap with a single hand, says an old
adage. When two hands come together, then only we get the sweet sound of clapping.

Instead of encouraging manipulation in the value of dollar by paper trading, US should ask
the sovereign funds to invest into US property markets and import wealthy businessmen
who can create jobs for the Americans. To buy the property in USA, they have to
necessarily buy the dollar which may enforce real demand. My book “Sub Prime Resolved”
precisely addresses to these core issues which continues to be ignored by US-A. Let us hope
that the wiser counsel prevails from the beginning of Year 2010.

Kalidas (Anil Selarka)

Hong Kong, 25 Dec, 2009 - Revised and updated on 3 Jan, 2010

Blog: http://www.anilselarka.com
Book Web: http://www.subprimeresolved.com
The author has also published a book “SUB
PRIME RESOLVED” which offers total
solutions to the entire gamut of the
financial problems facing the United States.
Take any problem facing the country, you
will find the precise solution in the book.

The book has met with rave reviews from

the readers. Please visit the Author’s blog
or Book Web site to read the reviews.

Please visit the above sites and buy the

book on line.

If you wish to check the Chapter Contents,

please visit Author’s blog, side bar, and
click the image “Chapter Index”. You will
be taken to website to display chapter by
chapter contents with Author’s comments.

You may also check the contents in text

form on book web site as above.

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