For me to poop on!

I guess I’m third huh?

from end of prior threadDimon Says System Can Be Saved If ‘Vilification’ EndsBy Elizabeth HesterMarch 11 (Bloomberg) — Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said the U.S. can rescue its banking system by the end of the year if officials start cooperating and stop the “vilification” of corporate America.“If we act like a dysfunctional family and we don’t finish these things and we’re forever debating them, I think this will go on for several years,” Dimon, 52, said at a conference hosted by the U.S. Chamber of Commerce in Washington. “It’s completely up to us at this point.”http://www.bloomberg.com/apps/news?pid=20601087&sid=awlx29_M0qz4&refer=homeso what Dimon Jim is saying is that criticizing the perpetrators of the greatest theft in history is dysfunctional with the implication that those who challenge the Wall Street thieves will be responsible for prolonging this crisis.Could it be that he is trying to cast the American public in the role of a victim of abuse where the victim is blamed while the abuser is absolved.

Yes, well, like some dysfunctional families, problems are often caused by one or two toxic family members. Once you cut off the toxic members, the rest of the family can usually recover from the dysfunctionality. As I see it, the problem isn’t the vilifying. The problem is the debating. We’ll get nowhere debating with those who refuse to accept responsibility for their role in the dysfunction.

… bankers are not conservative at all. They are just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug… – Nassim Taleb

If the shoe fits ….Also, I just added one more reply to what you started on the Uptick Rule in the previous thread:@ Hayes on 2009-03-10 11:00:42if you are interested …Not sure whether the dialogue yielded anything or whether there is more to be gleaned by discussing it here.

Profesor:Well, what can I say? Wow! You are now standing the ground of the courageous. Have you thrown political correctitude to the wind?What can we expect next? Hard, cold unemotional and unbiased facts?I hope so and good luck as this all needs to be said!Well done!Ho diddly hum

The Looting of America’s Coffers NY Times By DAVID LEONHARDTPublished: March 10, 2009

Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.”The economists were George Akerlof, who would later win a Nobel Prize, and Paul Romer, the renowned expert on economic growth. In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.The investors “acted as if future losses were somebody else’s problem,” the economists wrote. “They were right.”On Tuesday morning in Washington, Ben Bernanke, the Federal Reserve chairman, gave a speech that read like a sad coda to the “Looting” paper. Because the government is unwilling to let big, interconnected financial firms fail — and because people at those firms knew it — they engaged in what Mr. Bernanke called “excessive risk-taking.” To prevent such problems in the future, he called for tougher regulation.Now, it would have been nice if the Fed had shown some of this regulatory zeal before the worst financial crisis since the Great Depression. But that day has passed. So people are rightly starting to think about building a new, less vulnerable financial system.And “Looting” provides a really useful framework. The paper’s message is that the promise of government bailouts isn’t merely one aspect of the problem. It is the core problem.Promised bailouts mean that anyone lending money to Wall Street — ranging from small-time savers like you and me to the Chinese government — doesn’t have to worry about losing that money. The United States Treasury (which, in the end, is also you and me) will cover the losses. In fact, it has to cover the losses, to prevent a cascade of worldwide losses and panic that would make today’s crisis look tame.But the knowledge among lenders that their money will ultimately be returned, no matter what, clearly brings a terrible downside. It keeps the lenders from asking tough questions about how their money is being used. Looters — savings and loans and Texas developers in the 1980s; the American International Group, Citigroup, Fannie Mae and the rest in this decade — can then act as if their future losses are indeed somebody else’s problem.Do you remember the mea culpa that Alan Greenspan, Mr. Bernanke’s predecessor, delivered on Capitol Hill last fall? He said that he was “in a state of shocked disbelief” that “the self-interest” of Wall Street bankers hadn’t prevented this mess.He shouldn’t have been. The looting theory explains why his laissez-faire theory didn’t hold up. The bankers were acting in their self-interest, after all.•The term that’s used to describe this general problem, of course, is moral hazard. When people are protected from the consequences of risky behavior, they behave in a pretty risky fashion. Bankers can make long-shot investments, knowing that they will keep the profits if they succeed, while the taxpayers will cover the losses.This form of moral hazard — when profits are privatized and losses are socialized — certainly played a role in creating the current mess. But when I spoke with Mr. Romer on Tuesday, he was careful to make a distinction between classic moral hazard and looting. It’s an important distinction.With moral hazard, bankers are making real wagers. If those wagers pay off, the government has no role in the transaction. With looting, the government’s involvement is crucial to the whole enterprise.Think about the so-called liars’ loans from recent years: like those Texas real estate loans from the 1980s, they never had a chance of paying off. Sure, they would deliver big profits for a while, so long as the bubble kept inflating. But when they inevitably imploded, the losses would overwhelm the gains. As Gretchen Morgenson has reported, Merrill Lynch’s losses from the last two years wiped out its profits from the previous decade.What happened? Banks borrowed money from lenders around the world. The bankers then kept a big chunk of that money for themselves, calling it “management fees” or “performance bonuses.” Once the investments were exposed as hopeless, the lenders — ordinary savers, foreign countries, other banks, you name it — were repaid with government bailouts.In effect, the bankers had siphoned off this bailout money in advance, years before the government had spent it.I understand this chain of events sounds a bit like a conspiracy. And in some cases, it surely was. Some A.I.G. employees, to take one example, had to have understood what their credit derivative division in London was doing. But more innocent optimism probably played a role, too. The human mind has a tremendous ability to rationalize, and the possibility of making millions of dollars invites some hard-core rationalization.Either way, the bottom line is the same: given an incentive to loot, Wall Street did so. “If you think of the financial system as a whole,” Mr. Romer said, “it actually has an incentive to trigger the rare occasions in which tens or hundreds of billions of dollars come flowing out of the Treasury.”Unfortunately, we can’t very well stop the flow of that money now. The bankers have already walked away with their profits (though many more of them deserve a subpoena to a Congressional hearing room). Allowing A.I.G. to collapse, out of spite, could cause a financial shock bigger than the one that followed the collapse of Lehman Brothers. Modern economies can’t function without credit, which means the financial system needs to be bailed out.But the future also requires the kind of overhaul that Mr. Bernanke has begun to sketch out. Firms will have to be monitored much more seriously than they were during the Greenspan era. They can’t be allowed to shop around for the regulatory agency that least understands what they’re doing. The biggest Wall Street paydays should be held in escrow until it’s clear they weren’t based on fictional profits.Above all, as Mr. Romer says, the federal government needs the power and the will to take over a firm as soon as its potential losses exceed its assets. Anything short of that is an invitation to loot.Mr. Bernanke actually took a step in this direction on Tuesday. He said the government “needs improved tools to allow the orderly resolution of a systemically important nonbank financial firm.” In layman’s terms, he was asking for a clearer legal path to nationalization.At a time like this, when trust in financial markets is so scant, it may be hard to imagine that looting will ever be a problem again. But it will be. If we don’t get rid of the incentive to loot, the only question is what form the next round of looting will take.Mr. Akerlof and Mr. Romer finished writing their paper in the early 1990s, when the economy was still suffering a hangover from the excesses of the 1980s. But Mr. Akerlof told Mr. Romer — a skeptical Mr. Romer, as he acknowledged with a laugh on Tuesday — that the next candidate for looting already seemed to be taking shape.It was an obscure little market called credit derivatives.

http://www.nytimes.com/2009/03/11/business/economy/11leonhardt.html?_r=4&adxnnl=1&ref=business&adxnnlx=1236776413-jwYbCsymsSunlApzS4FWGg

No, you’re second. The first one doesn’t count.

Like the rest of us, the richest people in the world have endured a financial disaster over the past year. Today there are 793 people on our list of the World’s Billionaires, a 30% decline from a year ago.Of the 1,125 billionaires who made last year’s ranking, 373 fell off the list–355 from declining fortunes and 18 who died. There are 38 newcomers, plus three moguls who returned to the list after regaining their 10-figure fortunes. It is the first time since 2003 that the world has had a net loss in the number of billionaires.The world’s richest are also a lot poorer. Their collective net worth is $2.4 trillion, down $2 trillion from a year ago. Their average net worth fell 23% to $3 billion. The last time the average was that low was in 2003.http://finance.yahoo.com/banking-budgeting/article/106712/World's-Billionaires-2009

second on that

If you don’t want to me vilified, then don’t be a villain.

from prior threadDunno if people are still reading this thread, but, there are those in the financial industry who claim that their firms (i.e. BSC) would never have collapsed had the Uptick Rule not been removed the previous July.I personally find that tortured logic to be deplorable and an indictment of the heavy duty denial that persists to this day.It seems that all this talk about bringing back the Uptick Rule ignores the rationale as to why it was removed in the first place, and now, I am asking, what is the rationale for potentially bringing it back.It seems just more distraction from focusing on the real problem.By PhilT on 2009-03-11 17:21:15________agree: total denial with a bit of market manipulation thrown in

Even the last cnbc interview he looked and sounded real again. Real talk. it feels good

Oh, shucks. And here I was so looking forward to hearing who was going to be the first Trillionaire. (I can remember Back In The Day when the idea of a billionaire was too mindboggling to comprehend. Times have changed, no?)

I hope you all recognize how bad things are, and how bad they willcontinue to be. Libor is going up, bank losses are increasing, unemployment is increasing, option arms are beginning to reset, consumer spending is falling off a cliff, dragging down retail sales and commercial mortgages. The shadow banking system is dead, banking systems are insolvent, and the economies of many countries are circling the drain. There is nothing to bring us out of this; we have an overhang of housing, hollowed out manufacturing, baby boomers retiring with unfunded entitlements, and we are bogged down in 2 wars. The dollar’s days as the world reserve currency are numbered, and we will soon have a massively devalued, almost worthless currency. We have been resting on the laurels of our dominant postition coming out of WWII for too long.When you are on top, there is only one way to go.

Growing up in a house where my father never missed a day’s work, I am sickened by the lack of personal pride in the workplace. I see men with kids who can’t go a month without calling out sick.

Is the shadow banking system dead? How can one tell?

I don’t know that he meant it as insight. Frankly, I think he did a fair job of summing nearly everything up in a single paragraph. Or maybe I’m just mellow and easily impressed..

It’s alive and well in the form aof the Federal reserve and all the Fereal reserve banks that exist… the more i think about it, the more i get pissed off… Who said the FED shoudl be in charge. Congress, President, companies have no control over them… Just who exactly are they and why are they so stealth on their inner workings and why do they exist?

Welcome, MOG

What I’m afraid of, Pete, is while we’re holding hands and singing “Kumbaya” in the dark, shylock’s minions will be stealing the wallets out of our back pockets.You might want to put up some campfire signs beforehand. Something like: Leave all valuables at home when attending a Jamie Dimon picnic.

Can we live without fleas? You betchum.

Ross Says Restoring Uptick Rule Would Reduce Volatility(nice man as Billionaires go but is he a shill for the banksters??)http://www.bloomberg.com/avp/avp.htm?N=av&T=Ross%20Says%20Restoring%20Uptick%20Rule%20Would%20Reduce%20Volatility&clipSRC=mms://media2.bloomberg.com/cache/vrPNoe87.Ecg.asf

Economic SceneThe Looting of America’s Cofferscomments (58) E-MailPrint Reprints ShareCloseLinkedinDiggFacebookMixxMy SpaceYahoo! BuzzPermalinkBy DAVID LEONHARDTPublished: March 10, 2009Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.”Skip to next paragraphExplaining the Science of Everyday LifeGo to Economix » Readers’ CommentsReaders shared their thoughts on this article.Read All Comments (58) »The economists were George Akerlof, who would later win a Nobel Prize, and Paul Romer, the renowned expert on economic growth. In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.The investors “acted as if future losses were somebody else’s problem,” the economists wrote. “They were right.”On Tuesday morning in Washington, Ben Bernanke, the Federal Reserve chairman, gave a speech that read like a sad coda to the “Looting” paper. Because the government is unwilling to let big, interconnected financial firms fail — and because people at those firms knew it — they engaged in what Mr. Bernanke called “excessive risk-taking.” To prevent such problems in the future, he called for tougher regulation.Now, it would have been nice if the Fed had shown some of this regulatory zeal before the worst financial crisis since the Great Depression. But that day has passed. So people are rightly starting to think about building a new, less vulnerable financial system.And “Looting” provides a really useful framework. The paper’s message is that the promise of government bailouts isn’t merely one aspect of the problem. It is the core problem.Promised bailouts mean that anyone lending money to Wall Street — ranging from small-time savers like you and me to the Chinese government — doesn’t have to worry about losing that money. The United States Treasury (which, in the end, is also you and me) will cover the losses. In fact, it has to cover the losses, to prevent a cascade of worldwide losses and panic that would make today’s crisis look tame.But the knowledge among lenders that their money will ultimately be returned, no matter what, clearly brings a terrible downside. It keeps the lenders from asking tough questions about how their money is being used. Looters — savings and loans and Texas developers in the 1980s; the American International Group, Citigroup, Fannie Mae and the rest in this decade — can then act as if their future losses are indeed somebody else’s problem.Do you remember the mea culpa that Alan Greenspan, Mr. Bernanke’s predecessor, delivered on Capitol Hill last fall? He said that he was “in a state of shocked disbelief” that “the self-interest” of Wall Street bankers hadn’t prevented this mess.He shouldn’t have been. The looting theory explains why his laissez-faire theory didn’t hold up. The bankers were acting in their self-interest, after all.•The term that’s used to describe this general problem, of course, is moral hazard. When people are protected from the consequences of risky behavior, they behave in a pretty risky fashion. Bankers can make long-shot investments, knowing that they will keep the profits if they succeed, while the taxpayers will cover the losses.This form of moral hazard — when profits are privatized and losses are socialized — certainly played a role in creating the current mess. But when I spoke with Mr. Romer on Tuesday, he was careful to make a distinction between classic moral hazard and looting. It’s an important distinction.With moral hazard, bankers are making real wagers. If those wagers pay off, the government has no role in the transaction. With looting, the government’s involvement is crucial to the whole enterprise.Think about the so-called liars’ loans from recent years: like those Texas real estate loans from the 1980s, they never had a chance of paying off. Sure, they would deliver big profits for a while, so long as the bubble kept inflating. But when they inevitably imploded, the losses would overwhelm the gains. As Gretchen Morgenson has reported, Merrill Lynch’s losses from the last two years wiped out its profits from the previous decade.What happened? Banks borrowed money from lenders around the world. The bankers then kept a big chunk of that money for themselves, calling it “management fees” or “performance bonuses.” Once the investments were exposed as hopeless, the lenders — ordinary savers, foreign countries, other banks, you name it — were repaid with government bailouts.In effect, the bankers had siphoned off this bailout money in advance, years before the government had spent it.I understand this chain of events sounds a bit like a conspiracy. And in some cases, it surely was. Some A.I.G. employees, to take one example, had to have understood what their credit derivative division in London was doing. But more innocent optimism probably played a role, too. The human mind has a tremendous ability to rationalize, and the possibility of making millions of dollars invites some hard-core rationalization.Either way, the bottom line is the same: given an incentive to loot, Wall Street did so. “If you think of the financial system as a whole,” Mr. Romer said, “it actually has an incentive to trigger the rare occasions in which tens or hundreds of billions of dollars come flowing out of the Treasury.”Unfortunately, we can’t very well stop the flow of that money now. The bankers have already walked away with their profits (though many more of them deserve a subpoena to a Congressional hearing room). Allowing A.I.G. to collapse, out of spite, could cause a financial shock bigger than the one that followed the collapse of Lehman Brothers. Modern economies can’t function without credit, which means the financial system needs to be bailed out.But the future also requires the kind of overhaul that Mr. Bernanke has begun to sketch out. Firms will have to be monitored much more seriously than they were during the Greenspan era. They can’t be allowed to shop around for the regulatory agency that least understands what they’re doing. The biggest Wall Street paydays should be held in escrow until it’s clear they weren’t based on fictional profits.Above all, as Mr. Romer says, the federal government needs the power and the will to take over a firm as soon as its potential losses exceed its assets. Anything short of that is an invitation to loot.Mr. Bernanke actually took a step in this direction on Tuesday. He said the government “needs improved tools to allow the orderly resolution of a systemically important nonbank financial firm.” In layman’s terms, he was asking for a clearer legal path to nationalization.At a time like this, when trust in financial markets is so scant, it may be hard to imagine that looting will ever be a problem again. But it will be. If we don’t get rid of the incentive to loot, the only question is what form the next round of looting will take.Mr. Akerlof and Mr. Romer finished writing their paper in the early 1990s, when the economy was still suffering a hangover from the excesses of the 1980s. But Mr. Akerlof told Mr. Romer — a skeptical Mr. Romer, as he acknowledged with a laugh on Tuesday — that the next candidate for looting already seemed to be taking shape.It was an obscure little market called credit derivatives.

AMEN to that!

My best guess on M2M is that there will be a “stealth” suspension of M2M on toxic assets whilst the pundits, politicians, banksters and even the great Buffett herald the “continuation” of M2M for transparency reasons. Listening to Dimon Jim today along with the SEC’s Schapiro et al., it is interesting that their comments on M2M are similar, supporting it on hard / liquid assets with a view towards modifying its application on less liquid assets such as the toxic waste that populates the banks’ balance sheets.So the headline will be M2M to continue and then very quietly in the coming weeks subtle yet significant rule changes will be introduced that for the banks will have the same effect as a suspension of M2M -just hunch but I think that’s how it will play out – (the question: how does one trade that theory?)

Aw, c’mon, Jason, cheap shot on MoG. And you wrote your summation so beautifully as you do many of your posts. I don’t know why Guest took a shot at you, but s/he’s entitled to an opinion and you clearly have enough smarts to either ignore such criticisms or accept them gracefully.

How Does One Trade That Theory?The only pay-off you can expect from that theory is to,

Bend over and kiss you know what goodbye.

Made-off made the best trade – plead guilty and insure his sorry ass to room and board for the rest of his life.

I third that!This is the BEST blog that I’ve yet seen from Roubini. It’s not the most expansive or technical, but rather, he now seems to be leaning toward the sustainability issue. There’s a glimmer of it starting to sink in!If only he could come out and say that growth is NOT sustainable. We need to have folks starting to move us forward based on this fundamentally true position.Mark

No, it couldn’t have ANYTHING to do with the corrupt practices of US institutions now could it?HSBC is being battered because it swallowed up a stinking piece of US crap (Household Finance). But, it’s not running to any governments for bailouts, like US banks are! And because the US banks are running for handouts this presents an additional whammy on HSBC: it’s paying for it’s own mistakes (in investing in US-based companies) AND it’s paying for the mistakes of US financial institutions.Yeah, the nerve of Germany and China to actually produce stuff!Mirror, you…Mark

Bernie already confessed. He knows no “truth” that is of any value. Ok, maybe he could give us the names of the people who were in the know. His helpers. I figure the prosecutors know who those people are already. The money is gone. Just cleanup is left. Sorry its not a better story.

I was greatly disappointed by NR’s recent call for a command and control economy. I for some time was surprised that he also actually believed that after a couple of years of big deficits, the government would voluntarily tighten up its finances.Nouriel is now banging the drum loudly and clearly on a topic that the public can understand and enthusiastically support. It is basically a resurrection of the Perot movement.Now if Professor would only give up the loony idea that this government can really take in $2 Trillion in revenues in the next fiscal year and expend $4 Trillion as projected by the President ($1.25 T primary deficit plus $750 B “placeholder” for giveaways to large financial firms) and really expect this to “stimulate” anything worthwhile. As a physician, I know that the “hair of the dog that bit you” strategy didn’t work against rabies, doesn’t work for alcoholics, and won’t work now.

Nouriel, this is one of the most succinct and to the heart of the matter diatribes I’ve seen from you. Bravo!My question after reading your made-off, Ponzi, over indebted private and public sector summary is this. How does the system survive if much of the wealth was made-off with, the financial system is but a Ponzi scheme with sub-Ponzi’s throughout. Furthermore, the private sector is in debt 3.5 times the GDP and the current public debt is nominally equal to GDP and the combined future obligations of the public debt are another 4-5 times GDP!Can time and inflation really neutralize 9 times GDP of debt? What level of inflation and what amount of time would allow us to continue to have a viable economy yet marginally reduce the debt? How far could that be pushed without complete debasement? (Save the system on paper while actually killing the individual)What kind of middle road can neutralize the same debt? How deep and for how long would the private sector need to reduce spending in order to apply the ’savings’ against that debt? Also, how deep and for how long would government need to cut back in order to be ‘fiscally responsible’ enough to apply the ‘savings’ against the debt? (Turn the screws everywhere until someone screams, pause then repeat)Certainly, increased taxes could go towards paying down the public debt, but at the expense of the economy as a whole and especially at the expense of private debts. It seems the current administration is doing just that. Seemingly converting private debts to public debts which in the end just leads to more unpayable private debts. (Save government while killing everything else)Finally, an acknowledgment that the debts need to be completely or partially repudiated or they and will never be repaid. (Dissolution of the current system with pain and screams from everyone but acknowledgement that we’re starting anew)

excellent post Roubini. truly. if you follow the logic of your perspective you may deduce that we shall indeed sink into a depression. i say this because the shake up will ensue if we are Mr. Ponzi which you say we are. sooner or later Mr. Ponzi hits rock bottom. this may be a tautology but it is nevertheless a valid logical position. i say mid-term we appear to have corrected our course only to sink shortly thereafter into a certifiable depression (debt relative to income + credit crisis [the credit cards which the American homeowner used to leverage monthly expenses against a ballooning mortgage]). Hello Mr. Ponzi. Hi Bernie. Would you like an afternoon drink? I sure. Good. Because I’m already drunk. Well so am I. Hahahahahahaaa.

Folsom firm sued over alleged $40 million Ponzi schemeShareThisBy Dale Kaslerdkasler@sacbee.comPublished: Wednesday, Mar. 11, 2009 – 2:48 pmFederal officials said today they’ve uncovered a $40 million Ponzi scheme that victimized investors mostly from the Sacramento area.The Securities and Exchange Commission sued a Folsom investment company, Equity Investment Management and Trading Inc., and its principals Anthony Vassallo and Kenneth Kenitzer, saying they defrauded around 150 investors.SEC attorney Jennifer Scafe said the firm essentially stopped trading securities in November 2007 but continued to send clients glowing statements about investment returns. But a year later, “investors suddenly couldn’t get their money,” Scafe said.

So, I am inside Jason B’s head,but this is my only post in this thread.Moderators can verify.

It’s the 18 who have died that I feel the most sorry for.

Lou Dobbs is a racist. That’s why I don’t listen to him.Mark

last!

When Madoff’s misdeeds first came out, my immediate reaction was that he wasn’t that different from most people I know (other than perhaps being off the continuum); I wasn’t that angry, because one sees that kind of root behavior daily. I thought about how most people I know, myself included, cut a corner — whether it’s expediency at work, home, time w/ the kids, picking the short term gain at the expense of our mid to long term and so forth. Madoff apparently has no conscience, but other than that, Roubini and others have it right; he is most if not all of us.

One must also remember that Madoff was not clever as he cheated those that trusted him.It is easy and simple to cheat and steal from those that trust you. And it’s the default state of “leadership” as defined across the board.Madoff is NOT me!Ho hum

Buffet is just in denial. He couldn’t be wrong, could he?The thing is, Professor Roubini wrote 10-15 step article and everything came out precisely. It wasn’t just a prediction, but a ste-by-step outline of what would happen. Many people would have predicted that the housing market would collapse, but Roubini’s argument was logically constructed, with all the steps and the way it would unfold.I am afreaid an investor who opportunisticly invests in Goldman Sachs knowing that the govt would bail it out anyway and not let it fail versus a scholar who comes up with a step-by-step outline as though a magician knowing how the cards would unfold in a neat and precise way…I don’t think there is a comparison. As long as people like Buffet who have money know that X,Y, and Z won’t be abllowed to fail by the govt, all they have to do is get the right return (with certainty and without any risk). Where is the judgment and insight in that compared to what Roubini predicted?

The gamble is that the current stance could change in light of further deterioration of the economy. I think the professor is saying eventually the losses are going to get so bad the government will be forced to do nationalization.

They’re taking us to Armageddon rather than forgiving the debt, one way or another the debt will be forgiven though once all our jobs are gone.

http://economicrot.blogspot.com/Supplier's response to GM’s request for bailout supportWOW! As a supplier for the Big 3, Gregory J. Knox, President of Knox Machinery, Inc. received a letter from the President of GM North America requesting his support for the Gvt bail out program. Mr. Knox’s seems to have strong principles and his reply absolutely hit the nail on the proverbial head! An excellent read that gives one a glimmering hope for America’s future!Letter Verified by SnopesFirst, this is the letter he got from GM to which his subsequent response is directed:Dear Employees and Suppliers,Congress and the current Administration will soon determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis.As an employee or supplier, you have a lot at stake and continue to be one of our most effective and passionate voices.. I know GM can count on you to have your voice heard. Thank you for your urgent action and ongoing support.Troy Clarke – PresidentGeneral Motors North AmericaResponse from:Gregory Knox, Pres.Knox Machinery CompanyFranklin, OhioGentlemen:In response to your request to contact legislators and ask for a bailout for the Big Three automakers please consider the following, and please pass my thoughts on to Troy Clark, President of General Motors North America.Politicians and Management of the Big 3 are both infected with the same entitlement mentality that has spread like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping this nation, awaiting our new “messiah”, Pres-elect Obama, to wave his magic wand and make all our problems go away, while at the same time allowing our once great nation to keep “living the dream”. Believe me folks, The dream is over!This dream where we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded “laborers” without paying the price for these atrocities. This dream where you still think the masses will line up to buy our products for ever and ever.Don’t even think about telling me I’m wrong. Don’t accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle and countless other automotive OEM’s throughout the Midwest during the past 30 years and what I’ve seen over those years in these union shops can only be described as disgusting.Troy Clarke, President of General Motors North America, states: “There is widespread sentiment throughout this country, and our government, and especially via the news media, that the current crisis is completely the result of bad management which it certainly is not.”You’re right Mr. Clarke, it’s not JUST management.How about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass so they can come in on the weekend and make double and triple time for a job they easily could have done within their normal 40 hour work week?How about the line workers who threaten newbies with all kinds of scare tactics for putting out too many parts on a shift and for being too productive? (We certainly must not expose those lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?!?)Do you folks really not know about this stuff?!? How about this great sentiment abridged from Mr. Clarke’s sad plea: “over the last few years, we have closed the quality and efficiency gaps with our competitors.” What the hell has Detroit been doing for the last 40 years?!? Did we really JUST wake up to the gaps in quality and efficiency between us and them?- The K-car vs. the Accord?- The Pinto vs. the Civic?!?Do I need to go on? What a joke!We are living through the inevitable outcome of the actions of the United States auto industry for decades. It’s time to pay for your sins, Detroit .I attended an economic summit last week where brilliant economist, Alan Beaulieu, from the Institute of Trend Research , surprised the crowd when he said he would not have given the banks a penny of “bailout money”.”Yes, he said, this would cause short term problems,” but despite what people like politicians and corporate magnates would have us believe, the sun would in fact rise the next day and the following very important thing would happen… where there had been greedy and sloppy banks, new efficient ones would pop up. That is how a free market system works. It does work if we would only let it work.”But for some nondescript reason we are now deciding that the rest of the world is right and that capitalism doesn’t work – that we need the government to step in and “save us”.Save us my ass, Hell – we’re nationalizing, and unfortunately too many of our once fine nation’s citizens don’t even have a clue that this is what is really happening. But, they sure can tell you the stats on their favorite sports teams. Yeah – THAT’S really important, isn’t it.Does it ever occur to ANYONE that the “competition” has been producing vehicles, EXTREMELY PROFITABLY, for decades in this country? How can that be??? Let’s see.. Fuel efficient. Listening to customers. Investing in the proper tooling and automation for the long haul.Not being too complacent or arrogant to listen to Dr. W. Edwards Deming four decades ago when he taught that by adopting appropriate principles of management, organizations could increase quality and simultaneously reduce costs. Ever increased productivity through quality and intelligent planning. Treating vendors like strategic partners, rather than like “the enemy”. Efficient front and back offices. Non union environment.Again, I could go on and on, but I really wouldn’t be telling anyone anything they really don’t already know down deep in their hearts.I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into – my children do this on a weekly, if not daily basis, as I did when I was their age. I do for them what my parents did for me (one of their greatest gifts, by the way) – I make them stand on their own two feet and accept the consequences of their actions and work through it. Radical concept, huh?Am I there for them in the wings? Of course – but only until such time as they need to be fully on their own as adults.I don’t want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government. Detroit and the United States need to pay for their sins. Bad news, people – it’s coming whether we like it or not. The newly elected Messiah really doesn’t have a magic wand big enough to “make it all go away.”I laughed as I heard Obama “reeling it back in” almost immediately after the final vote count was tallied. “we really might not do it in a year or in four.” Where the Hell was that kind of talk when he was RUNNING for office?Stop trying to put off the inevitable folks. That house in Florida really isn’t worth $750,000. People who jump across a border really don’t deserve free health care benefits. That job driving that forklift for the Big 3 really isn’t worth $85,000 a year. We really shouldn’t allow Wal-Mart to stock their shelves with products acquired from a country that unfairly manipulates their currency and has the most atrocious human rights infractions on the face of the globe.That couple whose combined income is less than $50,000 really shouldn’t be living in that $485,000 home. Let the market correct itself folks – it will.Yes it will be painful, but it’s gonna’ be painful either way, and the bright side of my proposal is that on the other side of it all, is a nation that appreciates what it has, doesn’t live beyond its means, gets back to basics and redevelops the patriotic work ethic that made it the greatest nation in the history of the world. A return to Christian principles, common sense and decency would also be beneficial!Sorry – don’t cut my head off, I’m just the messenger sharing with you the “bad news”. I hope you take it to heart.Gregory J. Knox, PresidentKnox Machinery, Inc. Franklin , Ohio 45005

It’s unrealistic to expect other countries populations to support you eventually the system crashes.

Oh, that is so funny! I was just talking about him yesterday.

I always thought a Ponzi scheme was the same as a pyramid scheme. I guess it is different. From dictionary.com:Pon⋅zi   /ˈpɒnzi/ Show Spelled Pronunciation [pon-zee] Show IPA–nouna swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks.Also called Ponzi game, Ponzi scheme.Origin:after Charles Ponzi (died 1949), the organizer of such a scheme in the U.S., 1919–20

The professor has now come to raw terms….we (may) have a ‘Ponzi government’ and a ‘Ponzi country.’Why not face the monster and say with so many ‘cabdrivers’ on this post that we have a Ponzi FED?Perhaps that is beyond the scope of the numerologists, because it invokes the reality that subterfuge and looting are indeed systemic and not outliers. It would extrapolate further that Berni et. al. are possibly Madoffs in masks tho they might not recognize themselves in the mirror. What other narrative to explain such surreal behavior?And yes, the 350% dept to GDP is indeed a pot hole but what is it next to the gravity hole in front of the CDS Ponzi Mall? Nobody wants to step close to the hole to take a look tho we see a lot of shoveling going on. That’s why the 3.6T number mystifies me and so does any attempt to forecast the Big Opening at the New Ponzi Scheme Park. But, that’s what makes the professor’s work so intriguing.

RE: “Americans, let us look at ourselves in the mirror: Madoff is us and Mr. Ponzi is us!”I respectfully disagree. The American consumer certainly acted foolishly when we lived far above our means and when we tapped into our home equity in order to do it. But in all fairness, it should be noted that our country’s leaders and our main stream media encouraged us all the way. Homeownership and consumerism was held out to be the great American way . Why wouldn’t we want to be a part of it and why wouldn’t we want to do our part to keep our economy strong… especially when it was said that our homes would not lose their value (and, when that value had been confirmed by the bank’s appraiser).Madoff’s actions, however, have been observed to have been those of a sociopath and a thief. There is no real connection between the two, except that the two behaviors occurred within the same time frame ( however, it could be certainly be said that those who sliced, diced, and sold questionable financial products may have something in common with Madoff ). GF

Senator Corker of the Banking Committee”We don’t want to get rid of Mark to Market but we need to allow the banks some flexibility in establishing the marks.

In 2003 I was at a cross roads having just lost my job and quite frankly there weren’t any jobs out there unless I was willing to make $10 dollars/per hour (not enough for food) so I borrowed money out of my home.Point is a majority of the people taking out home equity loans would have much preferred taking a good paying job, home equity lines became a method of survival for a lot of people and it’s hard to call that irresponsibility. The irresponsible homeowner thing is way over done. Most people I know who took money out of their homes either paid for college, paid off a car/credit cards, or reinvested back into their homes.

Nothing new, “fractional reserve banking” has always been an undeniable Ponzi scheme. Banks are the biggest companies in the world for a reason.

True there are a few union workers who play games I’ve witnessed it myself. The guys you refer to are the lowliest scum on earth people who would have barely graduated high school who get drunk every night and act cocky and wild on the job site, I would say about 5% of the union work force but enough to cause a problem, and then you’ve got some guys who are just over weight and unhealthy who drag all day. But what’s ridiculous is if you went to the white collar workers 50% of them hide in their cubicles surfing the internet, I have white collar friends and engineers that joke about how the actually do 2 hrs of work a week the rest of the time their job is pretending they’re doing something. So this goes on on both sides of the fence in fact more so on the white collar side as they’re given more liberty to hide.

An economy that is reliant upon unsustainable models of growth, consumption and leverage, unsustainable by the sum total of the capacity of those within that system to support it will naturally fail in time. This kind of failure is not a recession, near depression or depression. It can best be referred to as a regression to a level that can be sustained by those that populate the system.Given the inability of those that are governed by the previous system to support it, any attempts to prop up the failed system using the failed model as a means to either sustain the failed “Ponzi” system or cushion the effects of its departure is problematical at best. However, several trillions of dollars have been devoted to doing precisely this while some with extraordinary access work to shield bond holders from loss.Regardless of what ones viewpoint is, I am sure that there are few who would advance the idea that capitalism as an economic system can survive if significant portions of those participating are shielded from loss. This effort to shield loss is a prime indicator that the great Ponzi economy unraveling is reaching a mass and momentum that makes the unwinding process irresistible.

We love our billionaires, we feel terrible when they have to suffer JUST LIKE US POOR SUCKERS from the womb to the grave. I propose to established The Suckers Food Bank For Former Billionaires. I can contribute a few cans of sweet potatoes left from the last Thanksgiving.Basically, Suckers are look and act alike all around the world. Still U.S. suckers are better suckers because they are proud of being ones.

Live Feed Mark to Market hearings

third time the charm? Live Feed Mark to Market hearings

Quote from Martin Armstrong. formerly from the Princeton Economics team …”I cannot stress enough that the level of volatility that we are experiencing during this financial crisis is just well beyond even that experienced during the early stages of the Great Depression and is more akin to the collapse of Rome. That is a stark comparison that tells me this is nothing to fool around with and try to gather political power and install the life-long dreams of socialization. “The collapse of Rome, no less.PeteCA

repost from an earlier thread (background links on M2M) FASB 157 (the Mark to Market rule) Emergency Economic Stabilization Act of 2008 note Section 132 and 133, which give SEC the authority to suspend M to M SEC rejects M to M in 12/30/08 press release full SEC report On page 7 is the rationale for not suspending Mark to Market:

- Fair value and mark-to-market accounting hasbeen in place for years and abruptly removing itwould erode investor confidence in financialstatements.-Fair value and mark-to-market accounting donot appear to be the “cause” of bank and otherfinancial institution failures.- Mark-to-market accounting is generally limitedto investments held for trading purposes and forcertain derivative instruments; for manyfinancial institutions, these represent a minorityof their total investment portfolio.-Over 90% of investments marked-to-market arevalued based on observable inputs, such asmarket quotes obtained from active markets.-Investors generally agree that fair valueaccounting provides meaningful and transparentfinancial information, though improvements aredesirable.

LOL – this reads as if the looting is over. HAHAHAHAHAHA. Going down!

What state are you in that pays $500 per week for a year in unemployment insurance dispersements?

The real problem is that you have ‘small businesses’. If you have a large business you can ‘layoff’ employees anytime your bonus isn’t big enough.

Mike Shedlock has a nice posting of Chinese exports and imports in chart form. As usual, a chart is worth a 1,000 words. See the following link “In Search of Common Sense” and scroll down that particular article.http://globaleconomicanalysis.blogspot.com/PeteCA

Do you mean the way the U.S. population supported the productive overcapacity in China and other countries?

This one’s going up on the wall…For those who think that Roubini was prescient, go read the book “Standing for Something” by Gordon B. Hinckley. Published in 2000, the book has a chapter on thrift and industry, and it reads pretty much like this post.Good stuff.

This is a great RA RA post. One could even suspect this is posted by a plant. Guest, please feel free to avail yourself of as many of AIG’s CDS’ as you like. Good luck!

I think the key mistake in the quote, Zoost, is the word “minority”.

…Sooner or later the system breaks down, and the ones who designed it, standing close enough to the door when everybody rushes out, are able to make good financial profits, while the poor countries themselves are the losers…

Very insightful and timely – perhaps TPTB should sentence Madoff to life in the most severe region affected by this blight …

Legal newsFrom the Contra Costa County Bar Association journal”One way to cut costs… is to make use of contract attorneys [ie no salary, paid by the hour, no benefits]… I recently met a Vanderbilt law graduate accepting a contract job for $25 an hour… when a client steps through your doors s/he will have no idea that the lawyer sitting in the conference room is not a full time employee… there is no obligation to reveal to the client that you are only paying the contract lawyer $50 an hour even though you are billing them out at $100…”btw the median lawyer does not make a lot of money and never has.

News alert: Big Bird and Cookie Monster apply for unemployment compensation.

“GOLDMAN SACHS has offices in all financial centers. The firm acts as a financial advisor and money manager for corporations, governments, and wealthy families around the world.”This is an introduction to one of the most fascinating and frigntening accounts of money ownership and money power ever written. It’s Wikipedia’s detailed history of Goldman Sachs:Goldman offers its clients mergers & acquisitions advice, underwriting services, asset management, and engages in proprietary trading, and private equity deals. It is a primary dealer in the U.S. Treasury securities market.Goldman was the second largest donor to the Barack Obama campaign and the fourth largest to the John McCain campaign in the 2008 presidential election. Former Goldman Sachs employees such as Hank Paulson and Robert Rubin have held high positions in the federal government, regardless of which party was in the White House.HistoryGoldman Sachs was founded in 1869 by German Jewish immigrant Marcus Goldman.[2] In 1882, Goldman’s son-in-law Samuel Sachs joined the firm which prompted the name change to Goldman Sachs. The company made a name for itself pioneering the use of commercial paper for entrepreneurs and was invited to join the New York Stock Exchange in 1896.In the early 20th century, Goldman was a player in establishing the initial public offering market. It managed one of the largest IPOs to date, that of Sears, Roebuck and Company in 1906. It also became one of the first companies to heavily recruit those with MBA degrees from leading business schools, a practice that still continues today.[citation needed]On December 4, 1928, it launched the Goldman Sachs Trading Corp., a closed-end fund with characteristics similar to that of a Ponzi scheme. The fund failed as a result of the Stock Market Crash of 1929, hurting the firm’s reputation for several years afterward.[3]In 1930, Sidney Weinberg assumed the role of senior partner and shifted Goldman’s focus away from trading and towards investment banking. It was Weinberg’s actions that helped to restore some of Goldman’s tarnished reputation. On the back of Weinberg, Goldman was lead advisor on the Ford Motor Company’s IPO in 1956, which at the time was a major coup on Wall Street. Under Weinberg’s reign the firm also started an investment research division and a municipal bond department. It also was at this time that the firm became an early innovator in risk arbitrage.Gus Levy joined the firm in the 1950s as a securities trader, which started a trend at Goldman where there would be two powers generally vying for supremacy, one from investment banking and one from securities trading. For most of the 1950s and 1960′s, this would be Weinberg and Levy. Levy was a pioneer in block trading and the firm established this trend under his guidance. Due to Weinberg’s heavy influence at the firm, it formed an investment banking division in 1956 in an attempt to spread around influence and not focus it all on Weinberg.In 1969, Levy took over as Senior Partner from Weinberg, and built Goldman’s trading franchise once again. It is Levy who is credited with Goldman’s famous philosophy of being “long-term greedy,” which implies that as long as money is made over the long term, trading losses in the short term are not to be worried about. That same year, Weinberg retired from the firm.Another financial crisis for the firm occurred in 1970, when the Penn Central Railroad Company went bankrupt with over $80 million in commercial paper outstanding, most of it issued by Goldman Sachs. The bankruptcy was large, and the resulting lawsuits threatened the partnership capital and life of the firm. It was this bankruptcy that resulted in credit ratings being created for every issuer of commercial paper today by several credit rating services.[4]During the 1970s, the firm also expanded in several ways. Under the direction of Senior Partner Stanley R. Miller, it opened its first international office in London in 1970, and created a private wealth division along with a fixed income division in 1972. It also pioneered the “white knight” strategy in 1974 during its attempts to defend Electric Storage Battery against a hostile takeover bid from International Nickel and Goldman’s rival Morgan Stanley.[5] This action would boost the firm’s reputation as an investment advisor because it pledged to no longer participate in hostile takeovers.John Weinberg (the son of Sidney Weinberg), and John C. Whitehead assumed roles of co-senior partners in 1976, once again emphasizing the co-leadership at the firm. One of their initiatives was the establishment of the 14 business principles[6] that are still used to this day.In the 1980s, the firm made a move by acquiring J. Aron & Company, a commodities trading firm which merged with the Fixed Income division to become known as Fixed Income, Currencies, and Commodities. J. Aron was a player in the coffee and gold markets, and the current CEO of Goldman, Lloyd Blankfein, joined the firm as a result of this merger. In 1985 it underwrote the public offering of the Real Estate Investment Trust that owned Rockefeller Center, then the largest REIT offering in history. In accordance with the beginning of the collapse of the Soviet Union, the firm also became involved in facilitating the global privatization movement by advising companies that were spinning off from their parent governments.In 1986, the firm formed Goldman Sachs Asset Management, which manages the majority of its mutual funds and hedge funds today. In the same year, the firm also underwrote the IPO of Microsoft, advised General Electric on its acquisition of RCA and joined the London and Tokyo stock exchanges. 1986 also was the year when Goldman became the first United States bank to rank in the top 10 of mergers and acquisitions in the United Kingdom. During the 1980s the firm became the first bank to distribute its investment research electronically and created the first public offering of original issue deep-discount bond.Robert Rubin and Stephen Friedman assumed the Co-Senior Partnership in 1990 and pledged to focus on globalization of the firm and strengthening the Merger & Acquisition and Trading business lines. During their reign, the firm introduced paperless trading to the New York Stock exchange and lead-managed the first-ever global debt offering by a U.S. corporation. It also launched the Goldman Sachs Commodity Index (GSCI) and opened a Beijing office in 1994. It was this same year that Jon Corzine assumed leadership of the firm following the departure of Rubin and Friedman. The firm joined David Rockefeller and partners in a 50-50 join ownership of Rockefeller Center during 1994, but later sold the shares to Tishman Speyer in 2000. In 1996, Goldman was lead underwriter of the Yahoo! IPO and in 1998 it was global coordinator of the NTT DoCoMo IPO. In 1999, Henry Paulson took over as Senior Partner.One of the largest events in the firm’s history was its own IPO in 1999. The decision to go public was one that the partners debated for decades. In the end, Goldman decided to offer only a small portion of the company to the public, with some 48% still held by the partnership pool.[7] 22% of the company is held by non-partner employees, and 18% is held by retired Goldman partners and two longtime investors, Sumitomo Bank Ltd. and Hawaii’s Kamehameha Activities Assn (the investing arm of Kamehameha Schools). This leaves approximately 12% of the company as being held by the public. With the firm’s 1999 IPO, Henry Paulson became Chairman and Chief Executive Officer of the firm.In 1999 Goldman acquired Hull Trading Company, one of the world’s premier market-making firms, for $531 million. More recently, the firm has been busy both in investment banking and in trading activities. It purchased Spear, Leeds, & Kellogg, one of the largest specialist firms on the New York Stock Exchange, for $6.3 billion in September 2000. It also advised on a debt offering for the Government of China and the first electronic offering for the World Bank. It merged with JBWere, the Australian investment bank and opened a full-service broker-dealer in Brazil. It expanded its investments in companies to include Burger King, McJunkin Corporation, and in January 2007, Alliance Atlantis alongside CanWest Global Communications to own sole broadcast rights to the CSI franchise. The firm is also heavily involved in energy trading, including the oil speculation market, on both a principal and agent basis.[8]Its sizable profits made during the 2007 Subprime mortgage financial crisis led the New York Times to proclaim that Goldman Sachs is without peer in the world of finance.[9] The firm’s viability was later called into question as the crisis intensified in September 2008.In May 2006, Henry Paulson left the firm to serve as U.S. Treasury Secretary, and Lloyd Blankfein was promoted to Chairman and Chief Executive Officer. Former Goldman employees head the New York Stock Exchange, the World Bank, the U.S. Treasury Department, the White House staff, and firms such as Citigroup and Merrill Lynch.On September 21, 2008, Goldman Sachs received Federal Reserve approval to transition from an investment bank to a bank holding company. [10]On September 22, 2008, the last two major investment banks in the United States, Morgan Stanley and Goldman Sachs, both confirmed that they would become traditional bank holding companies, bringing an end to the era of investment banking on Wall Street. [11] The Federal Reserve’s approval of their bid to become banks ended the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and capped weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.Alumni· Henry H. Fowler – 58th United States Secretary of the Treasury (1965-1969)· Robert Rubin – Former United States Treasury Secretary, ex-Chairman of Citigroup.· Henry Paulson – Former United States Treasury Secretary.· Edward Lampert- Hedge Fund Manager of ESL Investments. Brought K-Mart out of Bankruptcy in 2003.· Joshua Bolten – former White House Chief of Staff· Erin Burnett – CNBC Host· Jon Corzine – Governor of the State of New Jersey.· Michael Cohrs – Head of Global Banking at Deutsche Bank· Emanuel Derman – Author of My Life as a Quant and co-developer of the Black-Derman-Toy model.· Jim Cramer – founder of TheStreet.com, best selling author, and host of Mad Money on CNBC· Ashwin Navin – President and co-founder of BitTorrent, Inc.· Abby Joseph Cohen – Perma-bull market forecaster formerly of Drexel Burnham Lambert· George Herbert Walker IV – member of the Bush family and current managing director at Neuberger Berman· Robert Zoellick – United States Trade Representative (2001-2005), Deputy Secretary of State (2005-2006), World Bank President.· Mark Carney – Current Governor of the Bank of Canada [34][35]· Michael D. Fascitelli- President & Trustee of Vornado Realty Trust.· Neel Kashkari – Assistant Secretary of the Treasury for Financial Stability· Charlie Haas – Wrestler, who is working for World Wrestling Entertainment.· Malcolm Turnbull – Australian politician, currently the federal leader of the Liberal Party of Australia.· John Thain – former Chairman and CEO, Merrill Lynch, and former chairman of the NYSE.· Robert Steel – Chairman and President, Wachovia.· Reuben Jeffery III, Under Secretary of State for Economic, Business, and Agricultural Affairs (2007-)http://en.wikipedia.org/wiki/Goldman_Sachs

Yeah, you’re right.You may have read this before, but do you understand it? If you dont have a well, a woodstove and a stockpile of food, I dont think you do.

No one complained about mark to market until it didn’t favor their position. I don’t trust any of them.

You DO realize that you get the COBRA subsidy back on your 941 right?

AIG’s Small London Office May Have Lost $500BFeds, Brits Probe AIG’s London Office on $500B LossesGround zero for AIG’s spectacular implosion, which has soaked up more federal bailout money than any other entity, appears to have been a small London branch office that may have lost nearly half a trillion dollars in bad deals.The disastrous deals were built up in a decade and, when the crisis hit, the man who ran the unit for the last eight years retired after making $280 million for himself and leaving with a $1 million-a-month consulting contract.The struggling New York-based insurance giant has avoided collapse with the massive infusion of $160 billion in taxpayer money. The U.S. government has agreed to prop up AIG because it fears that AIG has such extensive financial involvement around the world that its failure would be far more costly.Britain’s serious fraud office and U.S. regulators are combing through the records of AIG’s Financial Products Group, formerly located on the fifth floor of an office building in London’s Mayfair section.The unit’s small group of traders risked nearly half a trillion dollars to insure U.S. mortgages and other debt using complex financial products called credit default swaps, according to recent congressional testimony.”AIG financial products was the core, the hottest point of the global financial crisis,” freelance investigative reporter Peter Koenig told “Good Morning America” today. “It was the epicenter.”The group’s traders “found a crack in the system that was unregulated,” Koenig told “GMA.”Joseph Cassano, an American who ran the group for eight years, declined through his lawyer to talk with ABC News. But ABC News obtained a tape of Cassano from August 2007 telling investors just how confident he was.”It is hard for us with, and without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions,” Cassano bragged.Koenig said Cassano “had total confidence in his judgment. And he put no money against the fact that he might be wrong.”For years, the system worked fine for Cassano and, during his eight-year reign as head of the Financial Products Group, Cassano pocketed $280 million in salary and bonus. But about one year after Cassano boasted that he wasn’t worried about losing a single dollar, AIG began bleeding billions.”For about a decade it went OK,” Koenig said. “And then, when the U.S. housing market fell out instead, they suddenly realized they had to come up with a half a trillion dollars and all they had was a couple of million in the bank.”The collapse became so severe that AIG warned the U.S. Treasury Department last month that if it wasn’t given more federal aid, its failure “could potentially bankrupt or bring down the entire system.”AIG admits that Cassano’s unit nearly destroyed the insurance giant.”It was clear that this small unit engaged in trades that nearly brought down the company and it’s still sound insurance business,” AIG told ABC News in a statement.AIG said it is in the process of winding down the group.Cassano, who has homes in London and Connecticut, was forced to retire from AIG on March 31. Critics say despite the fact that the company is hemorrhaging money and being kept alive with taxpayer cash, Cassano has been allowed to keep his windfall.In addition, according to Cassano’s signed retirement agreement obtained by ABC News, he was to be paid $1 million a month by AIG for “consulting services” through the end of last year.The insurance arm of AIG is believed to be in good shape, but the fallout from AIG’s financial products arm is still rippling through the U.S. economy and around the world.In a 21-page memo marked “strictly confidential” and obtained by ABC News, AIG pleaded for an additional $30 billion in federal aid last month by warning the Treasury Department that the “failure of AIG would cause turmoil in the U.S. economy and global markets and have multiple and potentially catastrophic unforeseen consequences.”Sir Alan Sugar, often referred to as Britain’s Donald Trump, told “GMA” that you can’t blame London for the AIG problems.”It may have started here, but it’s an American company,” Sugar said. “It just happened to be their place where plots were threaded.”Sugar said that British Prime Minister Gordon Brown — a “good friend of mine,” he said — “secretly blames the American businesses, banks that Europe looks up to.”Sugar described the American fiscal atmosphere before the crisis as “over enthusiasms in business, greed. You maxed out over there, as you say.”"You went mad, financial Disney World, slot machine in Vegas and every time you pulled a lever someone won, and it usually was a bank executive.”http://abcnews.go.com/Business/Story?id=7045889&page=1The real Ponzi.AIG

Getting back to Madoff, I believe he is being buried too furiously and too fastAfter all who sold his products to the individual investors? Well, in the end, hundreds of investment and account relationship managers did. But who, within respectable financial brand names, were so eager to distribute those products and pumped them to the clients, without complying with basic diligence duties related to the protection of their clients? Gentlemen, where are those names? What kind of fees were involved? There is something missing in this puzzle.Moreover, how could Madoff even think he could get away with a scheme like his in this world full of bright analysts, consultants, lawyers, accountants, and of financial information? Who pushed his products through the distribution channels? What happened to those, withing the mentioned respected financial brands, responsible for directly and indirectly fooling the final investors? Were they banned from the financial institutions for ever? Where are they?Now, let’s think a little bit. Suppose Madoff could get away with some billions. But where was he thinking to hide with those billions? In the mountains of Afghanistan with Bin Laden? If so, what kind of life would he have despite having those billions? A Bin Laden’s life? Why would he want those billions if he would have to live hidden for the rest of his life? It doesn’t make sense, does it?Gentlemen, I don’t buy this story, period.

The essential part of this story …”Cassano pocketed $280 million in salary and bonuses”… and the eventual losses were soneone else’s responsibility.PeteCA

Robert Shiller gives Turbo a grade of “B” on his performance, Obama and “A” and Bernanke a B+.I wonder if Shiller is on a short list for a Government position.

Perfect comeback!

is this a type – anyone can confirm 500B?

Good response. I hope it was used in full. I cannot tell you how much of a relief it is to be debt-free in this life. Americans need to adjust to the new reality, and realize credit cards are a should be a convenience and not a way of life.

Exactly. I don’t trust them either – what’s to trust?!The sheer gall is amazing. This is making my blood boil.

Should these grades be inflation-adjusted or something like that?

After having had my morning coffee, now I can see that they seem to be the same.

With A TAF Party for Good Measure

YES PETE, I AGREE WITH YOUIts got to be one of Dr Roubini’s best blog articles I’ve read in weeks. Thank you Dr Roubini for pinning the tail on the donkey [the greed in America].How do we turn the greed banking machine off now, without giving the greediest in America, rewards for ruining America?I miss old fashion liberal America, when we had a Dr. Martin Luther King Jr and John F Kennedy [even Nixon, LOL]….I’m sure they’d have some great ideas to turn this turmoil in the right longterm direction for the American kids and grandkids getting stuck with the bill.I feel sorry for the American youth the most, they were totally innocent.

The question is,It this $500 billion the compressed value of these criminal derivatives or is it the notional value?Either way, I suspect there are others beyond what has just been reported.Also, I have been wondering – if Made-off was laundering Russian mafia money – it’s hard to believe Made-off is still alive having given it all away.

probably a long time….actually never… thats the problem it takes years to effect any meaningful change… and by then anyone DECENT that is elected is corrupted by those still there

You should just sell your business to a big company and sign on in upper management. Then you can F*CK with the employees all you desire.

Market Up Over 200 Today…The fertilizing frenzy of the ObamaNation of Desolation is wreaking its “rewards.”All Hail To The Chief!

Why does the SEC see the speck in Folsom’s eye, but does not notice the log in Goldman Sach’s eye. How can it say to Folsom, “Let me take the million dollar specks out of your eye,” while there are trillion dollar logs in Bernanke’s and Blankfein’s eyes? “You hypocrite, first take the log out of your own eye, and then you will see clearly to take the speck out of your neighbor’s eye.”

Here’s an interesting viewpoint about why they are reluctant to nationalize. It would seem to similar logic would apply to all multinationals not just banks.Does Obama have the legal authority to take over CitiGiven this line of reasoning it seems that the Multinationals present a real conundrum to any reasonable regulation.

No kidding let’s move there, and if he is paying 298. as his part of her cobra, when BF was on Cobra it was 400.00 or 500.00 a MONTH.

I just found that out this afternoon. Thanks.

I’m sorry – it’s actually $479 + $30 stimulus bump = $509 per week. It was 30 weeks, but recent stimulus action increased it to 50 weeks. My business is in MA.

How about asking this simple question (first, and above all)?:Is it sustainable?Mark

There was a book written in the 1960s entitled “The Limits to Growth” by a group calling itself The Club of Rome.We’ve bumped up against those limits in this country. It seems many people believe in the idea of “unlimited growth” when in fact the only thing that can grow infinitely (if the astronomers are correct) is the universe.

I’d prefer to sit in a cube, bitch about management, and have the company pay me my salary to run my side business selling company office supplies on eBay and Craigslist. When the boss is out of the office, I’ll take 3 hour lunches. When he’s on vacation, I’ll come in late and leave early. I’ll schedule 2pm appointments on Friday afternoon and 11 am appointments on Monday morning in the town 60 miles away where my Significant Other lives and then submit expense reports for roundtrip mielage on Firday and a round trip mileage on Monday (with “business lunches on both sides). I ask, you respond “I didn’t get back into the office until after you left on Friday” or “I left from the office before you got it on Monday – I must have just missed you.Here’s an idea – I’ll just add you to the payroll and pay you to do nothing. That’s fair because you would be an employee and I would be the management.

You’re right, Madoff was legitimately investing the money in an effort to get the best returns possible for his investors. He acted 100% ethically, and his confession was bogus. The only reason his sons turned him in to the authorities was because they harbored resentment over the 10 PM curfiew that he gave them in high school. That makes a lot more sense.

@Hawaiian GuestMadoff is NOT like most of us. Roubini has been rubbing elbows with similar personalities far too long. He thinks these clinical sociopaths are normal. This guy is not remorseful; and neither are the other swindlers who walked away with millions. You and Roubini should read a book on the sociopathic personality. Washington and Wall Street are full of them.

But Buffet ASSUMES that this is a normal down cycle. If he’s right, then he’ll be right later. But… this isn’t your father’s down cycle. It is HIGHLY likely that this is the start of a permanent contraction (wages decreasing, resources depleting, environment being pushed to its limits). No, with this blog article by Nouriel it is now clear that Roubini is thinking far more deeply about what’s going on than Buffett.I suspect that Buffett thinks that he can influence the government. Yes, he can, just like he always has, but in today’s world governments seem to have little control. And, Buffett is looking to profit off of his prognostications whereas Roubini is not: sure, one could argue that one is more sincere if one puts one’s money where one’s mouth is, but…Mark

Money launderers get what, 20% for making otherwise un-spendable money legit? When you think that illegal narcotic and arms trafficking are two of the more lucrative industries in the world (not to mention other black market activities) and we could be talking about enormous sums of money. You would need an enormous amount of legitimate cash flow with which to intermingle funds from illegitimate sources. Is it possible that Madoff could have used the massive profits from the money laundering to paper over the returns of his “legitimate” customers. Now if the source of those illegitimate funds were cut off for one reason or other… game over. It’s possible they were the only ones who didn’t loose money.Either that or maybe he just made sure he sent checks to the right people before the whole thing fell apart. He turned himself in, so he was in control of the timing.

Have to wonder what records were lost on 9/11…Mark

AMEN!

Ha ha, office supplies and expense reports!Must have been awhile since you were an employee of’Fortune’ 500 business.

What your missing commenced with the official line that “Madoff’s sons turned him in to officials when he revealed to them that he had been running a $50 billion financial Ponzi scheme.” His sons, his brother, his wife, and many others were part of his operations – which stopped actually trading years ago and has been sending out fake statements ever since. They all knew about and benefitted from his illegal operations for years, though only Bernie may have known all the details as a whole. It is public info that he attempted to send millions to relatives, friends, and employees just before he “revealed” his crimes to his sons, who “turned him in.” Madoff has now pled guilty w/o a plea bargain – meaning he has shared exactly nothing with law enforcement about where he has hidden money stashed, which relatives and employees knew of and participated in his crimes. His motive for “confessing” to his sons and pleading guilty without bargaining? He pays his dues, but his sons, wife, and other relatives and friends get to keep all they’ve acquired so far and any he’s set aside for them out of sight. No mystery here.

From de Amazon jungle, the indians are suggesting a required reading that you can find in:http://www.monthlyreview.org/090302foster.php

Well ,Yes the American Companies that invested all those Billions of dollars in China got to export the products back to this country at a significant profit without having to hire American workers.American’s were left to shop at Walmart with their minimum wage jobs.Nothing new here !!!!

This really was a wonderful piece by Nouriel.The US can not live within its means because there are to many people dependent upon someone else’s labor to get by. People have ranted about the welfare moms for years but there is a huge retirement culture that lives way beyond the means of this country to support while this country is supporting a huge government and a huge warfare machine all at the same time.Our entire cultural set up is unsustainable and was only possible while debt was expanding and everyone was able to refinance over and over. Now that we have run to table and can not make increased payments, well, the game is coming to the end.

Because whenever a new subject is made available by the Professor the discussion then moves onto that “thread.”

What’s the new subject? Morbid. And twenty minutes before the close of markets? Looks like the weekend roundup to me — and this is Thursday! Did the Professor go home early? We can’t have that!

Only the few will survive this greatest debacle in economic history. The vast majority of us will go down together. This cannot be compared to the 1930′s. This is a GLOBAL SIMULTANEOUS MELTDOWN of the capitalistic system.

it IS an accurate generalization. remember many victims allowed themselves to be victimized (borrowing NINJA style). and if it’s too good to be true, then, well, Madoff’s #’s were beyond to good to be true. many of his victims were deluded getting returns that just never made sense, yet GREED forced them to turn a blind eye GREED twisted their arms into investing — you’re right they are victims and they never had a choice in the matter and the SEC didn’t either.

Wasn’t 911 the sacking of the capital by the Barbarians?

Who cares what the public chatters?Love’s the only thing that matters!Who caresIf the sky cares to fall in the sea?Who cares what banks fail in YonkersLong as you’ve got a kiss that conquers?Why should I care?Life is one long jubilee,So long as I care for youAnd You care for me!words of wisdom from teh last depression by Ira Gerswhin. (It’s better with the tune too.)

Now that’s the kind of post I’m looking for from you, my good professor. This is you yourself! Beat the drum, tell the truth, don’t be influenced by Larry, Tim and your other previous buddies, you are better than them!Go professor, go!

You bring up an interesting point I have reflected on for a few years: rapidly growing income inequality between the regulated and regulators contributed to the rapidly expanding forbearance by regulators.When I was a regulator, most of the bank executives I dealt with made about 10 times more than me, some more some less. By last year, the difference would be 1000x more for a Wall Street banker compared to a Fed or SEC or FSA regulator.I was never shy about laying down the law to a banker in my day, and holding him to his responsibilities. If he had made 1000x more than me, and I wanted to work for him in future to earn similar amounts, I might well have behaved very differently. That, I think, will turn out to be the root of the problem we have created systemically over the past 25 years.Defending increasing income inequality as “the free market at work” and promoting deregulation and regulatory forbearance as “letting the free market do its job” have ultimately meant that immediacy of greed became the sole driving force in the financial sector and regulation was increasingly disapplied and ineffective.Despite the harsh rhetoric that unions and progressive taxation receive on this blog, for many decades they served to ensure that regulation and financial discipline were effective by creating a more level, more equal basis in the economy between regulated and regulators. This was particulaly so in the banking sector, forcing bankers to prove a service to the economy rather than promoting their interests as fatal parasites.

A response to the upward direction of the stock markets: The White Star line is pleased to announce that the Titanic almost made it across the Atlantic. The next time you want an adventure — sail and swim with White Star.

The process of “spreading risk” was merely a means of selling “assets” that weren’t whole, marketable assets, but small pieces of hard assets often purchased through a process of borrowing against the long term income flow from a hard asset like a hydroelectric plant, sport stadium or mine. So not only are the “assets” that were “purchased” compromised, but so are the long term income streams many of these major purchasers. Many of them in small developed nations and the emerging world can no longer be relied upon to grow their way out of this regression environment with many of their future income streams under question. Especially with the efforts underway to shield major players form loss.In essence what was accomplished was not only the demise of the system predicated upon unsustainable growth, consumption & leverage, but also the long term compromising of the capacity of many key players in the long term redevelopment of the global economic system and the real assets now encumbered to the failed system.Interesting times indeed for this old knuckle dragger.

Let’s say the government runs an ad encouraging you to take your big SUV and drive it off a cliff with you in it. Will you do it? It IS the American Way you know. Disagree? Just turn on the TV and watch all manner of violent destruction, murders, drugs, human suffering all turned into everyday entertainment. Very American. After you have reached the bottom with your busted up SUV, you can blame the government.

As far as I know, pumping Madoff’s products down through the distribution channels within huge financial brand names, implies that people from the top management pushed for it, even against the opposition of internal analysts and compliance officers. The question is: why did those top runners pressed those products on the sidelines of their bank’s filters? Again, I don’t buy the “official” story.

And isn’t this insider trading? Or is it a stock market manipulation?http://www.bloomberg.com/apps/news?pid=20601109&sid=awCfRZC6DSDA&refer=home

o Massive layoffs good for productivity remaining workers

interesting…

o US consumer rapidly increasing savings rate

sort of hard to believe when people can increasingly not even afford basic necessities…

o Annual housing take up rate = 1.2m units per year

who are “taking up” the houses? the banks?

o Housing more affordable than ever

that is true…together with the massive layoffs I guess this represents a “good” point…

Allessandro…. Welcome back!If the bloggers here did not see it, I highly recommend checking out March 12th’s Jon Stewart’s Daily Show.HE IS MY F’ING HERO!!!!He had Jim Cramer (whom I do find entertaining, but know is complicity connected to the financial mess) on his show last night to address their “feud”.I was shocked… Instead of it being the back down love affair these things usually turn into on air, Jon Stewart came out firing!!! He absolutely shredded him. I actually got the chills at one point!!!AWESOME AWESOME AWESOME!!!Miss Americap.s. back in the day (early 90’s) I used to party frequently with Mr Stewart. I doubt he remembers me, but I have always tracked his career due to my prior acquaintance with him. (he hadn’t really hit on TV yet) I wish I still knew him today so that I could buy him a drink!!!

JP, did you try to get a loan from the bank for your business?Do you think you will ever recop the $150 you loaned to your own business and if so, how long do you think it will take?

Wouldn’t it be kind of hard to cheat someone who doesn’t trust you? Hmmmm

Self-deception is not limited to Americans – it’s universal.

If the U.S. were France the barricades would have been in the streets long before now.

Unfortunately Mr Dimon and his fellow bankers have won the political battle and we the people will have to pay for it.

Posted by WilliamBanzai7 on NYT DealbookMADOFF MIRROR ON THE WALL…Who’s the next biggest culprit of them all?Not we, said the Madoff family.Not we, said the Chairmen of the Fed that fostered the public fixation on bubbly returns and pumped the economy full of the exuberance of cheap leverage.Not we, said the Chairmen of the SEC, who turned a blind eye to Wall Street excess and a deaf ear to a lone whistle blower.Not I, said Uncle Sam, the one who collected inflated taxes from duped investors but let the regulatory system wither into a shriveled rag.Not we, said the Congressman who wrote laws emasculating the finest regulatory system in the world.Not we. said the NASDAQ shareholders who gave Madoff street cred by electing him Chairman of the Board.Not we, said the bankers and fund of fund managers who blindly sent their client’s monies to a common thief without any effort resembling prudent due diligence.Not we, said the accountants yet again.Not we, said the financial media that spent more time pumping the bubbles than investigating the markets.Not we, said the country clubbers and wealthy idiots who told all their cronies that being a Madoff investor was the most exclusive club of all.Not we, said the charitable fiduciaries that allowed their precious endowments to be managed by a scoundrel.Not we, said the pseudo-sophisticated investors who allowed themselves to be duped into thinking that monthly and annual absolute returns are the norm and not the exception, let alone a fantasy.