i could claim first but i will not

A.I.G. to Pay $100 Million in Bonuses After Huge BailoutDespite being bailed out with more than $170 billion from the Treasury and Federal Reserve, the American International Group is preparing to pay about $100 million in bonuses to executives in the same business unit that brought the company to the brink of collapse last year.http://www.nytimes.com/?emc=na

If THIS isn’t proof that American lives by the motto of “survival of the fittest” I don’t know what COULD. I wish I was a smart as they were.

Dr. Roubini, thanks for a thorough analysis.There is one area that I would like you to elaborate on.Consumer deleveraging is contributing to deflation, but the upcoming US stimulus (building roads and bridges) should be inflationary.What is your opinion on the battle of the two opposing forces over the next 12-18 months? Also, as a corollary, what is your outlook on the value of the US dollar as meaured in (a) gold and (b) other major currencies.

It’s funny… how is it that we need comedians to reach the masses and reveal the true face of things? In the US you have Jon Stewart, that is clearly pissed off, finally calling Wall Streeters with the correct name, gamblers with our 401k. In Italy we have Beppe Grillo that got kicked out of TV for calling the then Prime Minister (Bettino Craxi) and his party: thieves. A few years later Craxi had to flee to Tunisia to avoid the sentence of 27 years of jail for his misbehave. How is it that comedians, the ones that really care, are the only ones to expose and call things with the correct names on TV? Now Grillo is trying to motivate normal citizens to get what they own (their country and institutions) back in their hands, by encouraging normal citizens, out of party affiliation, to run for local positions and take those out of party control. I’m awaiting for Jon Stewart’s movement now.

when i’m addressing the midly positive economic news, i’m not speaking in reference to the recent reports, rather the statistical anamolies that will result a-la gov’t intervention. nobody has thought to address this yet and i think that it does deserve attention.

from prior thread G20 Finance Ministers and Central Bank Governors Communiqué, March 14, 2009, South Lodge, United Kingdom (key excerpt)2. Our key priority now is to restore lending by tackling, where needed, problems in the financial system head on, through continued liquidity support, bank recapitalisation and dealing with impaired assets, through a common framework( attached **). We reaffirm our commitment to take all necessary actions to ensure the soundness of systemically important institutions.** Restoring Lending: A Framework for Financial Repair and Recovery

Our key priority now is to address the uncertainties around the value of assets held on banks’ balance sheets, which are significantly constraining banks’ lending. This uncertainty, and the extent to which banks are holding capital to protect themselves from further potential extreme losses, is preventing them from restoring lending to business and households, with damaging consequences to our economies.A cooperative and consistent approach by national authorities to programmes addressing impaired assets should be based on the following principles:International cooperation1. Given the interconnectedness of the global financial system, international cooperation is important to maximise the effectiveness of these measures and reject financial protectionism. Cooperation has the potential to further maximise the benefits of these actions and address spillovers, in particular by increasing confidence in financial stability, minimising distortions to the market and maintaining a level playing field, supporting developing countries and emerging market economies, while defending taxpayers’ interests.Programme Design2. Programmes should be appropriate to the characteristics of the banking, legislative and fiscal frameworks. International cooperation is critical in addressing negative spillovers. Programmes should be implemented quickly, comprehensively and have a limited enrolment period.Eligibility of assets and institutions3. The eligibility of assets for support should be kept flexible due to the difference in balance sheet compositions, the conditions in different countries and because the amount and type of impaired assets is likely to differ across financial sectors. There should be a specified cut-off date prior to announcement of the programme. Priority should be given to institutions which pose a significant risk to financial stability.Risk transfer and burden sharing4. If risk is to be transferred from the banking sector to governments, it should be at a fair price, including through fees, with appropriate risk sharing, to limit the cost to the government as well as prevent moral hazard, provide the right incentives to the participating institutions and maintain a level playing field across financial institutions, both nationally and internationally. Banks’ shareholders should be required to contribute to the maximum extent possible to loss or risk coverage prior to government intervention.Transparency and disclosure5. Consistent with prudential considerations, there should be a full and transparent disclosure of the impairment of banks’ balance sheets. Stress testing should include a rigorous and up to date assessment of their exposure to potential losses and of their future viability, including their capacity to continue lending and absorb potential losses in order to avoid international distortions.Governments should manage in a transparent way impaired asset resolution programmes. In order to build market confidence, governments should disclose the processes, standards and results of their impaired asset management programmes.Valuation6. While valuation methodologies may vary depending on the proposed asset resolution program, it is critical that those methodologies are applied transparently, objectively, consistently and in a cooperative way, in order to promote a level playing field across countries and financial institutions, and to advance prudential objectives while limiting the exposure of the state to potential losses. Supervisory authorities should have an important role in validating valuation processes. This will ensure that the risk is transferred from the banking sector to governments at a fair price, including through fees, with appropriate risk sharing, to limit the cost to the government, provide the right incentives to the participating institutions and minimise distortions.Management7. Firms receiving support should continue to be run according to business principles in order to prevent distortions of the effective allocation of credit to the private sector or to institutions not participating in the scheme. Conditions should be included, such as on pricing, compensation or restructuring, to limit any conflict of interests or moral hazard, with support designed to align the incentives for banks to participate and the conditions imposed on beneficiary banks with public policy objectives.Restructuring8. Restructurings should focus on maximising the effectiveness of any government support and the long-term viability of an institution and should depend on pricing relative to expected losses, the capacity of the bank to withstand residual exposures and the bank’s access to other support. Where sound restructuring is supported by merger or acquisition cross-border deals, close collaboration with the relevant foreign authorities is essential.Conditions9. Government support is a privilege and must come with strong conditions, such as a commitment to continue providing credit to appropriately meet demands according to commercial criteria, improving governance, dividend policy restrictions and executive remuneration caps. It may involve appropriate restructuring, including as necessary measures to limit competition distortions.Monitoring10. Taxpayer interest must be protected and banks participating in asset support programmes should be closely monitored.Timing11. Government support should be temporary and should include well-defined exit strategies and incentives.Public Finances12. Government support measures should be part of a sustainable medium-term fiscal strategy.

Now Grillo is trying to motivate normal citizens to get what they own (their country and institutions) back in their hands, by encouraging normal citizens, out of party affiliation, to run for local positions and take those out of party control. I’m awaiting for Jon Stewart’s movement now.>>This is a step towards the formation of soviets, or citizens’ councils to take power. Let’s hope it’s not the last.

The last paragraph is key…caution, icebergs in these waters. However, rational thinking portends only the Grey Swans.In the meantime, we have time for another party with 3.9T cash sitting in money market mutuals.

Is it just me, or does anyone else smell a rat behind the dead cat?Three “leaked memos” this week feels a bit too coincidental to be anything but an orchestrated attempt at justifying the manipulation we are seeing.Nothing has really changed – except that now millions of people have trillions less dollars……

Ok, ok, you are not so crazy as we could think… BUT… You are guilty! You cannot judge yourself or, worst, prejudge yourself! I am the supremme justice here!FINAL SENTENCE: You are the PRIMERO! Only this!dIn time: Professor Roubini has entire reason if he is saying that this crisis will become worst. I only could addend: much more worst!The scenary is for a global depression, not for a “Japanese” depression!Mis besos

AIG to still payout $165M in bonuses despite the Obama administration’s objection (NY Times).Let’s see Obama (we) own 80% + of AIG but Obama (we) can’t object on contractual grounds?Solution 1 = take the other 20% and nullify the contracts!Solution 2 = take back the $170B and return the 80% back to shareholders! Yeah, whatcha gonna pay that contractual obligation with now!Does anyone here think that Obama should do 1 or 2?Does anyone here believe that Obama will do 1 or 2?

Big Boys? Please name one or two ?

There IS A Pill To This Kind Of Depression.Everything has become too redundant in today’s society. You see the big difference between now and the great depression is technology. If this resilient economy continues down this death spiral path we are currently on then there will only be limited opportunities and only a small limited amount of time before the real wars erupt. We need to flip this country on its head. We desperately need something radical. I have been thinking about this and the only solution is a GIANT RESET BUTTON which literally releases everyone. Just move, allow every family to move. There are a lot of vacant homes out there and if we give these families, that are willing to take the risk, time from creditors (6-9 months) in order to settle down, readjust and find NEW jobs. The main change would be a jolt of passion to physically start a new life. If done big enough, around the entire U.S.A, I believe people will be inspired to work harder and live better lives. The goal is to create a new physical life which would in turn completely change the attitudes of the people, which should be our # 1 priority. We are a country that loves working and loves spending, there is absolutely nothing wrong with that. This is one of the most exciting times in all of our lives, as far as new tech goes. Desiring an object and creating a goal that induces incentive is great. This is the main reason our country is so liquid. The main goal of my plan is to create an ENORMOUS DEMAND FOR TRADE instantly, everywhere. China loves it and we provide a global trading hub for the rest of the world. Give $15,000 to every family, with no option to exchange for other currencies, which is willing to do this. If everyone moves there will instantly be a HUGE demand as well as a HUGE supply for and of people across this great nation of ours. This then in turn ignites the spark of the ultimate goal. Specialization would come back into the picture and GDP can continue to explode on its path to the upside. The main rule is to keep everything completely fair across the board. One problem that would arise is what to do with the current mortgages. The toxic credit of the families would be extended by the government, as well as payment history and different unilateral credit scores transferred and protected by them as well. It sounds completely crazy but I believe we need to reawaken the spirits of our fellow Americans. There is still time to turn things around but we need to remember the clock never stops ticking and we can’t stop bigger snowballs once they start. It is critical we hit the button.

Definitely. An orchestrated attempt to hide a very bad situation, with 2 of the nations top banks on the skids (Citi and BoA). I don’t blame the Fed/Treasury/Banks for trying. They’re sitting in a really deep hole. They’ve got to do their best to put on a brave face. Remember that Obama himself said that the nation was trying to avert a catastrophe.PeteCA

I don’t the traders were gullible, more than likely they were1) short covering2) buying on speculation that mark to market will be suspended2) momentum buying- ie buy now, sell higher days/weeks later

Is there any doubt now about who controls this country and its economy? When the lemmings vote, just who are they voting for? Everything you have ever been taught is a lie.

We all know that markets are self-regulating and efficient, if only governments would’t interfere. We have been told this repeatedly by economists for the last 20 years. So this talk about nationalization is unnecessary. Let the markets correct themselves.By the way, have you heard any economists say that the last 20 years of economic theory was bogus? Fire up the engines, full speed ahead.

The lesson to be learnt:The markets are tanking due to Government manipulations. The markets will continue to tank due to Government manipulations (includes the private company known as the Federal Reserve Bank).The lesson:Do not elect “leadership” from the incompetent and stupid.Next step:Design a new socio-economic management system built in technology which excludes the lowest the lowest common denominators of the human race and their relatives.Want to be King? No problem and you get, not only to be King and want for nothing for 10 years, but then after; then we gut you and stuff you and place you in a pyramid (which interestingly means an algorithm of fire) for all to see…It’s a mite old fashioned but it worked.Ho hum

Professor Roubini: Without global coordination and POLICY initiatives which cut off the ‘feeders’ to the zombies (who can only be killed by a swift blow to the head)-are we not merely allowing zombies to run wild in the street to eat healthy humans? To separate the zombies from the population, should not restoration of policies like Glass-Steagall and complete repeal of the 1999 CFMA help to isolate them and their toxic waste and stop the supply from workers wages? Without that quid-pro-quo in exchange for tax payer funds are we not putting the cart before the horse? This would allow for Main Street functioning while putting the zombies back in their own sandbox to play. They have their place in healthy economies, no doubt, just not EVERYPLACE! Is support of those smaller healthy community/commercial banks more imperative to daily life/economic recovery of Main Street rather than feeding those multi-headed zombies of Wall Street?Thank you for your detailed analysis and uncompromising realism.

Mr.Roubini. I will bring into discussion what is constantly missed in stock valuation, which is the capacity to pay dividends and not some ficticious thing called a PE. Standard and Poors is now projecting a 3.25% dividend to be paid on S&P 700. I don’t know if you know, but the low dividend rate in 1929 was 3%. The low dividend rate was 3% in 1966 and 3% in 1973 and 3% in 1987. Of course there were fractional dips below 3% in some of those years, like maybe 2.88% one month, but it was quickly corrected. The value of a stock over time is the discounted expected flow of dividends, not earnings. The terminal value of all stocks is zero. What has transpired over the past 30 to 40 years is the adoption of assets classes and valuations according to portfolio theory. Thus instead of reaping risky returns for diversified holdings, you reap risk free returns for holding diversified risky assets. From this action the market value of the securities on their own has gravitated to risk free from risky. This is the entire faulty concept behind Collateralized Debt Obligations as well and the idea behind the toxic waste that sunk so many firms, in that the mathmatics thought that you could hold 50000 handgernades all of which might blow up, but none likely and leverge it and make a fine return. A return to boom times depends on fiction being accepted as reality. The portfolio theory of holding stocks at risk free rates is being destroyed as we sit. The portfolio theory of CDO’s has taken down much of the financial system of the world. You are quite correct that we are headed for more losses. Where you are wrong is the world cannot bail itself out with amplified government spending and more debt. This only serves to make permanent the debt owed to the entities that are at this time bankrupt.

Paye attenzione:If you don’t comprehend the realities of making your wars, why would we expect you to understand the realities of economics?:”A similar renewed openness is taking place as the military and the Department of Veterans Affairs become more candid about suicide and PTSD, post-traumatic stress disorder.”"Alarmed by the increasing rate of suicide, the Army has begun releasing monthly numbers, in addition to the annual reports produced in the past. 2008 was a record high – 128 confirmed suicides and 15 under investigation. The rate has been increasing steadily since 2004.”"Last month there were 18 suspected suicides, up from 11 the previous year. In January there were 24, up from five in January 2008. According to The Associated Press, “Usually the vast majority of suspected suicides are eventually confirmed, and if that holds true it would mean that self-inflicted deaths surpassed the 16 combat deaths [in January] reported in all branches of the armed forces in Iraq, Afghanistan and other nations considered part of the global war on terror.”"The Army’s suicide rate is now exceeding the US civilian rate, for the first time since the military began keeping records in 1980.”"Why do the numbers keep going up?” Army Secretary Peter Geren asked rhetorically at a press conference last month. “We cannot tell you.”"Experts say PTSD is a big reason – the RAND Center for Military Health Policy Research estimates that 19 percent of all the troops who have served in Iraq or Afghanistan suffer from it – some 300,000 men and women.”"That’s the problem with the Defense Department – they study it to death.”"What’s more, according to an Army Medical Department’s 2008 report, 33 percent of the troops in Afghanistan and 21.8 percent in Iraq say when it comes to mental health, their **leaders** discourage them from seeking help.” (emphasis mine)http://www.truthout.org/031409ZWell, as the political maxim states: ‘the heroes we respect welcome are the dead’. (Others need not apply.)You see, each individual is of individual function (there are many functions, obviously), and not all are natural killers as not all are thiefs, charlatan’s, con-men, liars, incompetents, ponzi artists and other such-like of government preferred functional attributes, so when one is imposed into a functional milieux to which he has no similitude or resistance, the entity eventually breaks down. This is a basic in cellular biology!Hey, that sounds like the economy, Yes?Ho hum

It is a certainty

Of course it will! Those masters of the universe demand it, the delusions continue; therefore the false remedies will.

Well Stated. Personally, I have little confidence coordination and intervention will occur with enough force, insight and speed to stop the train wreck as competing interests, politics and the powerful wealthy jockey for positions both on national levels and international levels. The rest (meaning the taxpayer schmuck and worker) are just the necessary collateral damage to prop up the failed economic models of governments and corporations/diversified financial institutions to continue the massive imbalances on myopic visions of self-importance..

From above which appears rather relevant:” *… A return to boom times depends on fiction being accepted as reality. **emphasis mine*… continuing: The portfolio theory of holding stocks at risk free rates is being destroyed as we sit. The portfolio theory of CDO’s has taken down much of the financial system of the world. You are quite correct that we are headed for more losses. Where you are wrong is the world cannot bail itself out with amplified government spending and more debt. This only serves to make permanent the debt owed to the entities that are at this time bankrupt.@ mannfm11 on 2009-03-15 05:31:44The writer makes the point that to put the fix in, is far too late and to return to boom times and really far boomer boom times that prior to mid 2006 boom times, far greater boomer, boomer boom times will be necessary to put the fix in and kiss everything better or IOW status quo – as it was, before yet…Such a move would need a new vision and that would need, a priori, real “leadership” and some small dose of integrity and competence – something that is not visible on the horizon – anywhere.@ LB above”If there is a difference now, it is that I no longer attribute to “cock up” what is transparently a “conspiracy”.”Strong words which demand that you present your evidence in the Conspiracy Case of ‘Incompetence vs Conspiracy’. I certainly would be interested although I firmly believe in the Incompetence arguments, or, if you like, my position.Or, do you really believe that “they” know what it is that they are dealing with, and I don’t just mean the technicalities of buttons and switches and Moral Hazard, breaking Laws, manipulating public trusts and funds and scamming the public, I mean do they really comprehend the Physics (science) of economics? Because to cook the system, they must first know what they are doing.Ho hum

crgordon, do you really think the rest of us can’t see through the disingenuous nature of slamposts? Preceding a slampost with “with all due respect” doesn’t provide the cover you think it does. You’ve just attacked a person while pretending you refuted an idea. Any 4-year old can easily state that someone is cuckoo. It takes a rational adult to provide the reasoning that shows where an idea falls down.The point is, these type of disingenuous juvenile sniping posts that simply attack people instead of using sound reasoning to show the error in proposed ideas make the attack-cowboy look like all hat and no cattle.Please, board contributors: either show everyone the error in thinking you think you see – or leave the poster and post alone. Enough with all the no-substance no-think attacks on people in here. Ideas are fair game. Attack ideas or, as they say, STFU.

I can’t speak for LB, but personally I can find nothing to rationally convince me that it is just a repeated pattern of incompetence and stupidity that just happens to keep increasing the power and wealth of a handful of interconnected individulas at the expense of 99.99% of the world’s working people. I think there is little more obvious than that the wealthpower giants are first and foremost members of the uberrich club and that they most certainly do conspire and collude to advance their own interests which are diametrically opposed to the interests of working people. They have the means, motive, and capability to make advantage and take advantage wherever, whenever, however possible. We are not looking at serial coincidences. It is serial conspiring against us.

@ blind see-eryour savvy, savvy post couple days ago…your extraordinary kindness to me…like food…like medicine…gave me loveleaks in my eyes…made me fall in love with humanity all over again…i bow right down to your beautiful, soul-filled ability to love life without limit.

“I believe all of you are as open and willing to listen as anyone else in America. I believe you care about this country and the future we are leaving to the next generation. I believe your work to be a part of building a stronger, more vibrant, and more just America. I think the problem is that no one has asked you to play a part in the project of American renewal.”- Barack Obama, speaking to the masters of “American” finance capitalism at the headquarters of NASDAQ, Wall Street, New York City, September 17, 2007How’s that ASKing them to do the right thing working out for you, Mister Obama?

“so whatever has to happen short-term to keep the car out of the ditch and rubber side down (keep people eating and sheltered, etc) is great by me as it will be easier to move us along toward peace, justice, equitability safety in the long term, the less severe we can keep the contraction. The concern is the dissonance (is that the right word?) between what’s absolutely necessary short-term and what’s absolutely necessary long term.”I agree as I to don’t want people living on the streets either, however my concern with what you just stated will give TPTB another opportunity to steal under the guise of protecting us, for example suspending mark to market would save the bad guys even more than what’s been done even if it’s for the short term it potentially hides their theft in the long run too.

@London BankerIn the past you have had an optimistic streak but you sound so discouraged today. Most of my friends, family and acquaintances continue to be trusting – they are clueless. You and Roubini and other bloggers here help me realize I am not alone and my mistrust is not paranoia – it is reality.

@LBLooking at the dates of your original post I am indeed humbled by your ability to describe, with words, your observations and predicted outcomes.How sad that it is now many months later and yet the rules of the game haven’t changed. Pockets are being lined and untold number of people will not just have their wealth lost, but starve, literally at the hands of the incompetent and greedy.I regret that you have been unable to provide new commentary at your blog.The system is indeed rigged and morally bankrupt. Worse, it is a worldwide phenomena.

imo, organizing for protest = organizing to continue endlessly begging wealthpower giants for our rights – and that sends the wrong message to everyone. It sends the message that it is good and right and necessary to always be begging wealthpower giants and we must always do so. The unstoppable word of mouth educational campaign exposing how money really works, exposing the myriad legal thefts in the dystem and giving the rational proofs that pay justice is required for survival must precede organizing so we will STOP FOREVER having wealthpower giants to beg our rights from. A few big-picture thinkers have been doing this work for years – won’t you join us? To change the culture you have to first change people’s erroneous ideas, or all you get is history on repeat til the nukes finally fly.

AIG Bonuses – A Real Steal ???Several people have commentedhere about the new round of bonuses being paid to executives at AIG (in excess of $100 million). Yes, this is a complete outrage.But take a look at these comments about the subject from Bob Moriarty at http://www.321gold.com – for an interesting perspective about the whole affair.First, here’s the link …http://www.321gold.com/editorials/moriarty/moriarty031309.htmland a quote from Mr Moriarty …”I don’t know of many businessmen who believe you should get a bonus for destroying your own company … I think maybe those container loads of $100 bills came marked, “Steal Me” because that’s what the financial looters seem to be reading. This is the greatest period of looting a treasury in history. It’s going to be interesting to see how it plays out.”———-In fact, Mr Moriarty is right. What we are living through right now in America … is the biggest looting of the US Treasury in the history of the country. Of course companies like AIG have no qualms with awarding exorbitant bonuses to failed executives. They have figured out a way to steal free money from the US Government. So why should they care? Why not just steal as much as possible – because obviously the large Wall Street banks are doing the same thing.PeteCA

Why should Madoff be incarcerated and the nationally renowned tax shelter crusader Mike Hamersley, of the California Franchise Tax Board, remain free? Madoff merely engaged in a time tested simple transparent scam and unlike the current Treasury Secretary, Geithner and Mike Hamersley apparently did not cheat on his taxes. Hamersely continues to purvey a scam so diabolical and a scam which has destroyed so many families’ lives that he is allowed to hold a high level job in the Government confiscating earnings from honest citizens who unlike Mike Hamersley did not lie to the Senate or the IRS about taxes. Hamersely told the Senate tax fraud was hiding the true facts from the IRS and engaging in paper transactions. Emails show Hamersley purveyed tax shelters for KPMG which resulted in tens of millions of tax fraud based on Hamersely’s definition of tax fraud to the Senate which hit the trifecta, sham paper losses, lying to the IRS, use of sham foreign companies and back dating (according to Hamersley’s definition of backdating). Why shouldn’t Bernie be free if the government not only allows Hamersely to be free but continue his charade on behalf of the Government?Why should Bernie Madoff be in the pen while KPMG remains a going concern and not indicted for its part in the greatest ponzi scheme in history which has resulted in a $50 Trillion destruction of world wealth? KPMG audits many of financial institutions which were the purveyors of this ponzi scheme. KPMG received 100s of millions in fees from these institutions to sign off on the fraudulent financials (check out Citi’s level three assets and the 100s of billions of exposure it has to bad debts or Citi’s $32 Trillion of derivative ticking time bombs). Madoff is nothing compared to KPMG and at least apparently Madoff paid his taxes. KPMG engages in massive tax fraud with its fraudulent foreign Bermuda captive sham foreign insurance company, Park, where not only does KPMG cheat on its own taxes but cheats its partners through contrived reinsurance arrangements devised by the good KPMG soldier, Claudia Taft. Why does everyone hate Madoff but not KPMG, Madoff’s crimes are simple and a drop in the bucket compared to the malfeasance purveyed by KPMG.

Calculated Risk has posted the Roubini article with commenthttp://www.calculatedriskblog.com/2009/03/roubini-reflections-on-latest-suckers.html”As usual Professor Roubini makes some strong arguments. And I agree that economic activity is contracting in Q1 2009 at about the same pace as in Q4 2008. However, I think the composition of the contraction is different in Q1 (and following the normal business cycle). Most of the real GDP decline in Q1 will be from slumping investment and an inventory correction, whereas in Q4, declines in personal consumption (PCE) were an important contributor to the economic slump.Maybe PCE will start cliff diving again, but so far the recession (no matter how severe) is still following the normal temporal pattern. Note: Even the Great Depression followed the normal pattern – just more so! Although there are still severe economic problems ahead, I think the shift in the composition is a potential positive.”

You must be using one of them there new fangled computers to fig’r all that out.Here is the problem….your mathematical equations rely on historical data to forecast future results……we are in an unprecedented economic storm. Previous models and forecasting tools have limited validity in today’s environment of once-in-a-lifetime events (nationalization of banking system, nationalization of mortgage industry, nationalization of insurance industry, and the coming nationalization of the auto industry).You can push all the buttons you want on that computer, but it doesn’t have the ability to account for the scale of government intervention that has taken place in just 6 months.We live in very unstable times.

pjb,as was once eloquently described to me. verbe, noun.that’s it.one simply acts and then observes. call it incompetence, conspiracy or whatever.conspiracy i take as to “breath together”. con-spire. happens all the time, the root of the social.the similarity / analogy of the suicide dilemma and the economy says it. the “system” is constructed to demand and reward varying levels ofignorance and incompetence for the sake of systemic stability. but the system was designed to functionin an environment that never existed in reality, only in theory. we can’t change the reality of the environment as much as we would need to so the system is flawed however we have built in incompetence, ignorance and conspiracy at the base and throughout.so..to cook the system? vapor, pressure, puncture.everything gets leveled.?first remove the valuables and solids to a secure location.perform said bleve out in the desert, maybe nevada. maybe out over the ocean..does it ever cross your mind that this entiredilemma is purely psychological, really just one huge social con – spiracy.- job.. based on the pyramidof a form of logical yet irrational ignorance? codified in pigeon legalese. and chinees and the other eeses.of course it has to change. it doesn’t work, that is the first thing. it doesn’t make sense ..and now we aren’t even entrusted to know what ITis> everything is secret….shhhh.wow. we’ll see how long this phase lasts.hey, if i don’t see ya, i’ll see ya!thanks. you, sir, are REDUNDANT.sol, SOL.

can we nationalize AIG now? and cancel all kind of bonus?

http://www.marketwatch.com/news/story/story.aspx?guid={D69E1883-8A00-4F59-9DED-E701E15D9A59}&siteid=YAHOOBAmerican International Group is set to pay $450 million of bonuses to employees of the unit that was largely responsible for the New York insurer’s collapse last fall, The Wall Street Journal reported.

Click your heels three times and repeat: There’s no place like the United Nations of Goldman-Sachs liquidity.

This is the 3rd number I have seen on the total of the AIG bonuses – so which is it?

Obama appointed Geithner despite his evading tax issues were disclosed to public. Geithner has serious character issue. Geithner’s continue showering bonus money on AIG losers bring nothing but shame to USA people. can we nationalize AIG now? and stop showering bonus money to these criminals?

Interesting choices but imho they are all cowards at the foundation and would never have the balls to appear opposite Stewart or any person who that embodies searing, truthful intensity.I am not sure that there are any big boys. All of those involved in this massive fraud and looting – whether housed in the financial industry, govt., etc.- are cowardly, juvenile delinquents masquerading as “big boys.”

We have Switzerland cooperating in unveiling secrecy of account holders and the G20 announcing this weekend of a coordinated effort in regulating hedge funds.Consider this: Hedge funds have been accused of causing Iceland’s financial collapse via currency and stock market attacks. Immediately following, the SEC bans all short selling in most financial stocks.What’s really happening? Why unveil account secrecy NOW? We can certainly make an argument for tax evasion and governments’ inability to tax hidden income during a time when tax receipts are plunging. But is this the tail wagging the dog?My belief, as twisted as it may sound, is much more sinister. Did anonymous rogue hedge funds lead Iceland’s collapse as a small test of their ability to bring down the western economies? Something to consider.

My super secret continuum inversionizing oscillator predicts that we will soon reach a Z-4(87)9.Q inflection point.Thats right, folks, a Z-4(87)9.Q!!!! Do you know what this means?The oscillator will then zig zag into a perfect redundant ZZZZZZ pattern.The last time we had a Z-4(87)9.Q oscillation that led into a perfect redundant ZZZZZZ pattern, the bullshit meter went off the charts. I mean, there was bullshit everywhere! The local hardware stores quickly ran out of shovels and rubber boots, and the fishing supply stores ran out of hip waders. Thats how much bullshit there was.Not intended as investment advice.

Has the Economy Hit Bottom Yet? By VIKAS BAJAJNY Times Published: March 14, 2009″The economist John Kenneth Galbraith once said, “The only function of economic forecasting is to make astrology look respectable.” Still, we have to ask: was that the bottom we just hit?After months of punishing economic news, the gloom seemed to lift last week if only for a moment. The stock market shot up 12 percent in four days. Two of the nation’s biggest banks said they had returned to profitability. General Motors said it wouldn’t need another $2 billion in government help this month. And retail sales were better than expected…”http://www.nytimes.com/2009/03/15/weekinreview/15vikas.html?pagewanted=1&_r=1

The “retaining talent” argument is ridiculous. Look at all the people who had high-power financial jobs who are now unemployed. It’s a lot. Are we supposed to believe that these unemployed people are not qualified. Don’t think so. They’d take these jobs at AIG for quite reasonable salaries.What is clear … is that a bunch of overpaid scam artists (with degrees) in finance are running some of the major banks and financial companies in this country.PeteCA

Michelle: If someone wanted to create a major train wreck – it could have been the currency traders. People like George Soros – but Mr Soros became more respectable now that he operates a large fund. In the old days when he was a rogue and moved against the British pound … that was a different story.The real play that could have sunk the system was going LONG on the Japanese yen. But that was a while back – there was a window of opportunity back when this crisis started to really hit the markets. I don’t know if it would still work now. Probably not.PeteCA

Rep. Frank wants to see if AIG bonuses recoverablehttp://www.washingtonpost.com/wp-dyn/content/article/2009/03/15/AR2009031500525.htmlIs it possible that this AIG thing is a tempest in a tea pot designed to give the appearance that Congress and the WH are taking on the corruption of Wall Street and looking out for the best interest of the taxpayer?Hundreds of Billions have flowed into the likes of CITI, Goldman et al with virtually no transparency meanwhile the media is focused on some bonuses at AIG, which could be reversed in an instant (after all the Government owns them).This is a red herring if there ever was one.

That’s why I automatically discount Bloombergs (and some other sources) “news” and “analysis” in countless cases. For example often the stuff that has to do with ECB interest rates or Euro zone…politically biased stuff.News agencies like Bloomberg are not really that different from the rating agencies: their point is to funnel your money to the direction that will later be advertised as the one that has always been attracting more of investors because it so happens to follow the rules to capitalISM more completely (sort of like the Talibans believed that things are “better” when you follow Islamic FundamentalISM more completely).In fact that joke of a investment target known as the Anglo-American world power (US & UK) has not gained it’s status honestly. If it did had been honest about statistics such as the unemployment rate, productivity, and quantitative easing, no one would have invested in it. But the joke does not create its own wealth – it creates debt and thus needs a constant influx of new money from eg. Asia were many US banks have a presense to suck hard working people from their earnings.Take for example the piece of a belief that US is the worlds richest nation. If they are so rich why can they never seem to be able to afford benefits that everyone in EU has enjoyed for decades? Because they are not “rich” – they do not have wealth because the system that they insist of running does not create wealth. It only creates debt, it runs on debt and needs new money coming in from elsewhere.The main reason why banks in Eurozone are in trouble is only because they invested in the garbage on the other side of the pond.And yes, optimism in America is actually pathetic. People believe in politicians as well and thus vote every 4 years for a new person who in reality will not change things that much.

Obama Can Not Be POTUSMajor Premise: To be POTUS, the candidate’s eligibility must be publicly known.Minor Premise: Obama’s eligibility is not publicly known.This syllogism responds only to rules of deductive logic and cannot be overturned by any human action. If the premises are taken to be true, then the conclusion must be true. There is no law or statute that requires the rules of logic to be proven in a court of law for them to be enforceable. The laws of logic are compelled by nature, and cannot be challenged by any law of man.Therefore, the conclusion of this syllogism cannot be questioned by humans of any authority. No human is empowered to alter, rewrite, or adjudicate the laws of the universe.Conclusion: Therefore, Obama is not POTUS. Read this guy!http://canadafreepress.com/index.php/article/6254

Don’t misplace your sympathy for California’s schoolteachers. Its union muscle insures that “education” gets 50 percent of California’s budget. A study a few years back showed that Bay Area teachers made more per hour than physicians, lawyers, engineers, et cetera, in the area…second only to the area’s top hourly earners — university professors.Take a look at the architecture and beauty of the new schools California has built for its new Hispanic population — then take a look at the old and outdated gray, prison-like structures housing many of Oregon’s students.Then take a look at California’s class size. I have a relative who just began teaching in Bakersfield. Class size? Fifteen. I have another relative that just retired from teaching in California. Pension — 100% of salary.Latest BLS statistics for 2008 show that the median pay for public employees is $43,784; for workers and producers in the private sector, $36,088. You do realize, of course, that “teachers” are in the higher recompensed “public” sector?And you do recognize, I hope, the pink slips stuffed in the worn pockets of Silicon Valley’s technology employees — its voiceless tech workers, most of whom have no retirement, except their manipulated 401(k)s, and no union that can organize a tear-jerking, pink-slip protest such as the teachers did last Friday with photos plastered all over California’s newspapers?

the arrogance of the morally bankrupt elite to maintain the status quo even more so when the world is on the brink of economic collapse!

unfortunately, anger and outrage only seems to escalate when the MSM brow beats the consumer obsessed American public; however, it is always done for an ulterior motive!

its not the BS unions or lack of… its the point that education is a disaster in california and the country. no doubt there are bad teachers, but in general they are underpaid. legacy/tenured teachers with 20 years get the benfits you mention, not new ones. another point is trillions for the banks and rich and yet education which would require in my view about 200 Billion nationwide to fix once and for all is not even in PLAY. Big picture is what i look at, not nat ass union crap…

DARKNESS: the govt is going to continue to print until “kingdom comes” and the TBTFs are going to hold everyone hostage until most of their debt is paid off by us!LIGHT: unless enough of the public wakes up quicly to the greatest money heist in the history of the world and stops reckless borrowing and spending and demands full transparency and regulation, the amount of debt placed on the backs of the american taxpayer is unmanageable without leading to huge tax increases and inflation.

@MOGGreat summation. To attribute what is going on to “incompetence” just shows a complete lack of understanding of just who we are dealing with. The US ruling class is able to tap the intellectual resources of the world.The US doesn’t just import baseball players, scientists, etc… I think people need to understand, first and foremost, THAT VERY LITTLE HAPPENS BY ACCIDENT.

Agree; people must understand what is actually happening to them; the inequality, the control, the manipulation: then they can organize and protest with clear, specific demands.my mantra: full transparency, honest regulation, full accountability and an economic system that provide everyone with a LIVING WAGE!

a wise saying: “power corrupts and absolute power corrupts absolutely”!

millions of americans probably had insurance policies that benefited AIG. I wonder what bonus do the people who lost their home to foreclosure get?

absolutely; the MSM always misses the larger picture and has totally lost it’s ability to investigate and spotlight the truly significant acts of corruption which occur on a daily basis.If we only knew what really went on behind the scenes, we would be horrified; unfortunately, we always seem to find out too late; gee, I wonder if that was the plan all along?!

It’s you … be certain of it.

We want a fresh deal with new measures and new men — we want this Government taken to pieces and put together again on a better plan with a new horizon of opportunity for our youth.America has an educated youth, but no work place for them. Our mis-governors have created an academic proletariat by outsourcing their opportunities: it is distressed and bitter, as paraphrased from the “The House of the Four Winds” and Professor Nouriel Roubini.We stand for a world of common sense.We do not want a dictatorship whose actions destroy and obstruct, whose actions do not build. No. We will out this “old gang,” with its marionettes who move at the jerk of a string from the bankers. They are fatally compromised, our mis-governors. Out, we cry! And let the phoenix of liberty and justice rise once again from their ashes.

I believe that if they wanted to do something Jubilee-like, they would already have done it. The existing creditors won’t appreciate their debtors having other opportunities, causing them to dump their existing mortgages. That’s just one micro-support of the current macro situation.Americans are hard workers but we were too well off. Now we will continue to work hard, harder in fact with a healthy dose of fear and no bank account to retire on. We’ll pay the price for “overproducing” babies, having to compete young vs. old for the few jobs available.The financial crisis is one piece of the picture but not all of it. Another part is that US pay and living standards must adjust downward.I’m an American. I don’t like any of this, and I intend to avoid its negative effects on myself and my family because I am smarter than most. It’s a game they are trying to play against me, but I am a good game player. Still I cannot prevent the destruction of many lives by means of my meager level of assets which may or may not be enough for my own family, and I can only do my best to spread the word, so that possibly, just possibly, a non-financial force will evolve to upset this apple cart.

Agreed. MOG could also be curteous of board space here and limit the length of his/her posts and provide a link to the full text on his/her own site. It is annoying to have to scroll down through pages of MOG screed.

Speaking of opportunity in chaos:”The whistle-blower says the team has recently been hiring more people to take advantage of the credit crunch, although Barclays says it is cutting staff. The whistle-blower writes: “Where the world sees turmoil and destruction, the leaders of SCM see opportunities arising from tax exploitation and corporate restructurings throwing up all sorts new and juicy areas of the tax code that can be profitably exploited.“For the last 10 years the SCM team has generated a formidable amount of profits, peaking in the last few years at circa £1 billion per annum.” “http://www.timesonline.co.uk/tol/news/uk/article5908523.eceHo hum

Yikes. However, this could be a creative solution to starting unnecessary wars.

That won’t work:1. We are not presented with good candidates. That’s on purpose and no matter what we do within the system, that will continue.2. Anyway there’s no significant election for almost another two years.Frankly the idea of fighting this with voting is stupid. You should have known the two points I gave above.

TALENT =’s Selling Soul To The DevilOne signs in blood an allegiance to any and all unethical means.

The economic relationship between the USA and China is one of the really important keys to this economic downturn. It’s not the cause. But it’s a very good barometer that measures “where we are” in the global readjustment process.This downturn will not right itself until the fundamental balance between the two countries changes – and changes in a major way. China must correct is heavy reliance upon US consumer purchases and its manipulation of its currency (dollar/yuan peg). The USA must correct is heavy reliance upon financial leverage (in lieu of real economic competitiveness) and it’s enormous build-up of debt. Right now both countries are too busy finger-pointing at each other, and neither is yet on a real turnaround from “old failed policies”.When looking at China, I have noticed that most commentators tend to fall into one of two camps: the glass is half full, or the glass is half empty. It’s probably just too early yet to know which outcome is the real truth. The Chinese do have the enormous advantage of sitting on very healthy financial reserves. But they also appear to lack the real vision required to know how to get out of the current mess.Personally, I expect this struggle to downgrade into a “beggar thy neighbor” battle, just as Wolf in the Wilds has observed on this blog. That means trade wars and import duties. The result is likely to get pretty ugly for both the USA and China before things really turnaround. This outcome is not completely necessary … but it’s a likely consequence of too many politicians (on both sides) who don’t have the right answers.PeteCA

Pete – You seem to presuppose a turnaround. I am trying to find a reason for one.

Anonymous, thank you for that extract from the Stewart/Greenspan interview. That’s powerful substantiation of the Fed’s war against savers and the governments’ nefarious plans to drive one and all into the stock market for the ultimate big fleece. And then they use the gimmick that “Americans don’t save” to deflect the blame from themselves for this crisis.Not too long ago in America’s financial history, no pension fund could put more than 6% of its portfolio at risk in the stock market. Now look what’s happened, and what these shysters who move in and out of government as if they own it have done to the hapless holders of 401(k)s. And, of course, the New York Fed bankers write themselves 0% loans to loan out at usurious rates, while the man who earned his small savings gets a 2% rate on his savings as the Fed inflates and destroys its value at a 10% rate.

The tremendous influx of 401K money into the stock market is, IMO, like a neighborhood poker game that’s organized by the fast talking, cigar-chomping four flusher who lives on the corner.He’s invited everybody into the game and he’ll provide the pretzels and the beer and the nice tables in the card room. We are to bring the money. When it’s over, somehow the pretzels we ate and the beer we drank are small substitute for all the money the four flusher now has in his pockets.In other words, America’s workers who are being made to funnel their money into 401Ks are being snookered into stock roulette with the sharks — the brokerages, the giant institutional investors, and now, more than ever, the large investment bankers. These big guys will provide the lights and the girls and the drinks and the gambling location, oh yes, and all the hard working employees throughout America need provide is the money. And at the end of your long day’s journey into night, these big guys not only took a cut, they took your principal. They took it all.

A week ago I suggested that the market could see 2,000 pts on the Dow if M2M was suspended – I went long Monday but wimped out Tuesday prior to Barney’s uptick announcement – (should have trusted my instincts) – IMHO M2M, based on the hearings I watched Thursday and from what I have read, will be modified in such a way that the banksters will get the flexibility to ‘Mark to Make-Believe’ while the regulators and politicians will claim it has not been suspended, just improved (I don’t think that the market has fully discounted this). The G20 communiqué I posted above suggests that transparency will be the hallmark of any changes on the regulatory front – (ya right).My guess is that my 2,000 pt call for the Dow is still in the cards in the very near term (maybe more). The full force of the Obama propaganda machine (I intentionally selected that pejorative) has now been unleashed with Benny on 60 minutes tonight and the whole host of Obamanomic advisers making the Sunday talk show circuit. AIG bonuses have become the red herring allowing the Obama / Wall Street propagandists (e.g. Larry Summers) to express outrage; predictably the media has embraced the AIG story while the looting of Western economies continues unabated. Don’t underestimate the power of the Obama machine; they are reaching out to their immense support base ( Organizing for America website).The lifting of the curtain on CNBC (a la wizard of OZ) by Jon Stewart was welcome as CNBC are shameless shills for the banksters – but I suspect that Cramer’s regular bashing of Obama was the true motive. My guess is a shake up at CNBC with some pro-Obama shills replacing the likes of Santelli (one of the good guys) and Cramer. If you haven’t seen the clip of Cramer talking about Market Manipulation ,it is a must watch.The sudden change of the White House talking up the economy is risky if things don’t turn around – (his strategy of negativity seemed to make sense to me) – a bit of a rock and a hard place situation – talk it down and it becomes self fulfilling even though you can blame W – talk it up and if it still goes down you own it. I guess in the end Obama realizes that in due course this will be his problem so why not put the propaganda machine into full gear and see if you actually can raise the dead.

Unfortunately it never changes.Until the day comes when you change the work environment of the Elected Officials,nothing will change.TRANSLATION-It’s known technically what is required to have a solid balance between Private sector/Public sector ,but what is not clear is how you control the balance in the Senate and House.As long as the BANKS/FINANCE CO./INSURANCE co,s outbid the General Public at Election time and otherwise ,the legislation will continue to be abused /ignored by those with the most money/power.At the end of the day a Democracy is a joint venture between the private and public sectors.Both groups have responsibilities.The Constitution never considered Walmart or Computers when deciding on a “Balance of Power concept”.We are all sitting ducks at the moment.Hostage to our own obsolete Political System and dont want to modify it as it is our own HISTORY.We can only argue as to what is the”BEST”political party,which is totally irrevelant.,if no political/financial policy is changed.

CR (and Larry Summers)see stability at depressed levels as a positive. That is a fallacy; stability at depressed levels is at best neutral and for a prolonged period a serious negative.

Anyone seen this yet?http://dealbook.blogs.nytimes.com/2009/03/15/aig-discloses-counterparties-who-received-224-billion/index.html?hpThere’s some shocking news – GS was on the list.

Does anyone think that it would be helpful to have published somewhere public the names and addresses of those executives receiving those bonuses?

BURDEN SHARING? BURDEN SHARING? The billionaire investment gamblers get to keep their unburdensome profits, while we the taxpayers, individually “too unimportant to matter” but collectively “just right to fleece,” get to share their burden of gaming losses and pick up their risky time bombs. How fair is that? What is the definition of “sharing,” anyway? Patsy? And while we’re at it, what is the definition of “government”? Crime syndicate?

G-20 Turns Sights on Toxic Assets in United Call to Cleanse Balance SheetsM/b?http://www.bloomberg.com/apps/news?pid=20601087&sid=afknD4ouQ4LI&refer=home”balance sheet cleansing”… I suspect that headline will be modified (cleansed)to a more politically correct statement.

sorry for the bold an html coding error

60 Minutes – Ben Bernanke’s Greatest Challenge video link…you be the judge

example FASB157 code to create the above link<XaX href=”http://www.fasb.org/st/summary/stsum157.shtml”> FASB157 <X/XaX>the `X` is a placeholder when you write the html code do no include the letter `X`

g.my god, you are very discriminating.how about these folks..http://www.veteransforpeace.org/

It’s generally bad for a president to talk about something he knows nothing about. Everyone knows that Obama the Oracle knows zip about the stock market, and, therefore, he looks like a fool. And, now, he look as if he knows even less about the economy.As Barron’s Alan Abelson pointed out last week regarding payroll losses in January and December that could past the 1,000,000 mark if you “toss in the 161,000 jobs of the revised count for the previous two months, the 134,000 added last month by the delusional birth/death model and the relatively mild weather that…added 107,000 slots”:“David [Rosenberg of Merrill Lynch] explains that we’re currently in the grip of what practitioners of the dismal science refer to as a ‘negative-feedback loop,’ in which the slide in asset values takes a painfully big bite out of household net worth, consumer confidence, spending and, finally, employment. The vicious process then feeds right back into more asset and credit defaults.“Or, as he puts it, we’re caught in a trap—and, 18 months into the credit collapse, there’s no sign that we have adopted the policies that might stabilize things, much less turn them around.”Says Abelson, “David makes an impassioned plea that the nation turn its focus and its energy to the seriously ailing labor market” that took a whack in February to the tune of 651,000 jobs, a mounting joblessness that he sees driving down housing.“To be sure,” said Abelson, “Rahm Emanuel, Mr. Obama’s chief of staff, was in the investment business. Exactly what he did is hard to say, but, to be fair, he must have done something, or why in the world would anyone pay him $18 million for his two-year stint? In any case, he worked (or whatever) for a hedge fund, so he couldn’t have been much help in prepping his current boss on even the bare rudiments of investing.”

Wonderful post, crabs. Thank you.

Oh, Hayes, I watched this sorry excuse of an “exclusive interview” and am sorry to say the words “you blankety-blank” came out of my mouth more than once. It was just a joke. Bernanke’s responses to Pelle’s tepid questions were wooden. And he sidestepped every single one of them.And it was just pathetic to see how hard the producers were trying to make Ben seem as though he was one of “The People” by putting him in front of his now-foreclosed-upon childhood home in his now-seriously-economically-depressed-hometown, and practically daring him to emote. He failed miserably.Perhaps I’ve become a cynic, but when the piece was introduced as an exclusive (no one EVER interviews the head of the Fed), and Bernanke was introduced with the phrase (and I’m paraphrasing here) “if this man says one word, whole industries will fall down,” it made my skin crawl. No one on the planet should have that kind of power. Did anyone else catch that?This simply cannot be the United States of America.

g,since you asked. there is no tunnel. and there is no train. just you, under a clear sky with the warmsun and the sound of water , perhaps running downyour leg, perhaps not. either way, it is a time torejoice as at least you know there is water somewherein the immediate environment. hopefully, the wateris of a reasonable quality to sustain human life.one persons catastrophe is another’s opportunity, orcatastrophe also?try not to give in to the pessimism, it fouls the digestion and circulation.peas.ps. sorry if i was a bit careless but it is oneof my own personal character flaws.

Don’t you love those G-20s?G-20 Turns Sights on Toxic Assets in United Call to Cleanse Balance SheetsMarch 16 (Bloomberg) — Finance chiefs from the Group of 20 vowed to work together to clean up the toxic assets that helped trigger the financial crisis and led banks to rack up more than $1 trillion in losses.Officials meeting near London this weekend outlined guidelines on how governments should rid banks of distressed securities that have devastated companies from Citigroup Inc. to Royal Bank of Scotland Group Plc. With the G-20 calling the fight its “key priority,” Treasury Secretary Timothy Geithner vowed in an interview to “move quickly…”http://www.bloomberg.com/apps/news?pid=20601087&sid=afknD4ouQ4LI&refer=ho

Thanks octavio, challenging article by JG, glad to have read it. Have long appreciated your comments and links. I got out early (just on the basis of the fed rate going over 5–i was hyper-sensitized by the tech episode. But not sure i’ll try to succeed in being in “too early.” I’d rather take a few tiny feet-wetting steps too early–so far they’ve scratced my feet. Still have half of my bear funds. I have a lot of confidence in Nouriel–filled in the blanks when i felt alone to be out just because over 5 per cent–wasn’t aware of something called subprime–though several acquaintances, young couples, sadly–had just amazingly bought houses with their low incomes. They’ve lost them now.In terms of moves now–i’m tempted to short the s&p if it goes up without underlying or some fundamental lightening-up, some “second derivative.” Wouldn’t be much. I am almost all in cash. So thanks Octavio, you seem like a very balanced and pleasant person, i’ll bet that helps the investing even. And thanks Nouriel Roubini, following your evolving understanding has been an intellectual pleasure, and kept me from doing much of anything! Tom, in Maine

So … one giant global Bad Bank that swallows up every bad asset. Maybe we’ll call it …The Toxic Black HolePeteCA

Why don’t we call it The Perverted Toxic Bank, or TPTB for short

aaahh i see a dinosaur is trying to evolve…sorry maan hahaha

Why would a Fed chairman who was doing an honest job and had the confidence of his staff, the banks and the investment community, ever need to go on 60 Minutes to defend his ill-transparent bailouts of political cronies? He wouldn’t, because he wouldn’t be doing ill-transparent bailouts of political cronies at the expense of the American taxpayer and every investor in the world holding US dollar debt and US dollar-denominated assets.“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” – John Maynard KeynesOf course, the quote needs a bit of updating: By issuance of massive debt and secret Federal Reserve liquidity facilities, government can confiscate (and allocate to its cronies) an important part of the wealth of the entire world.

When we put those financial ‘engineers’ back in their own sandbox to play with themselves and with THEIR skin in the game and let everyone else decide the level of RISK they wish to take with their earnings and savings. The only way out of this is debt forgiveness by NATIONS. They only way that’s happened in the past to my knowledge (besides smaller developing nations) is through wars.Even with changes in Mark to market accounting rules, its clear the massive interdependencies and debt that include real estate, bonds, etc. won’t go away, much is still off the books of the ‘diversified financials’ and wont’ even begin to come due until next year and the next. These newly minted bank holding companies are doing the Geithner’stress test’ on themselves-regulators will only check the bottom lines. YEAH, RIGHT….I can’t believe how manipulated this is and the opportunity for LIARS to continue to LIE, the bravado is breathtaking.No matter how much glue in thrown on the tracks, this runaway train isn’t going stop, the gigantic mountain is approaching fast. The different attempts by governments merely are making the deleveraging, asset destruction and repositioning of pensions managers and others with billions to reposition themselves. Its ‘orderly’ thus far. But as populations are stressed particularly in the UK, EU and Asian nations (China not included), civil unrest and nations attempts to keep that at bay may produce more protectionist policies that will water down that glue.

LOL!! I’ve always maintained the only place chaos truly exists is between the ears of man.

Analysts and journalists freak out as Q4 earnings turn negative.Wrong so many times, what do they make of last week’s stock market rally?from Generational DynamicsLast week on Bloomberg TV (or was it CNBC?) I heard a discussion of the latest corporate earnings reports for Q4 of 2008. The analyst said, “Those figures can’t be right. That would mean that the S&P index should be around 300.” (That’s roughly equivalent to a Dow Industrials index of 3000.)Welcome to the new world of financial journalism and analysis. The folks at CNBC and Bloomberg TV and the Wall Street Journal and other financial media have been using fudged figures for years to justify the bloated stock market bubble, and now they completely believe their own lies.There’s a feeling of total chaos in these media outlets these days, because no one knows what to say about the price/earnings ratios (also called “valuations”), as Q4 earnings have turned negative.I’ve complained many times on this web site about the out and out lies of analysts, advisors and journalists. Even today, you still hear about “valuations being at historic lows,” which is total crap.These analysts, who make 6 and 7 digit salaries by collecting fat commissions from their clients, use a variety of techniques to lie about valuations.The most common is to use “forward earnings” to compute the P/E ratio. That means you divide the stock price by the bloated estimates for earnings in the following year. By making earnings as high as possible, the P/E ratio becomes lower.But something has happened in the last few weeks. After several quarters where actual earnings turned out to be far lower than earlier estimates, investors don’t automatically believe the bloated “forward earnings” estimates any more.As we wrote last month, fourth quarter reported earnings are crashing. The actual reported earnings are far below the analyst estimates of only a few weeks earlier. This means that people who use “forward earnings” to compute P/E ratios now have to face the reality that “forward earnings” estimates are crashing along with reported earnings.The same is happening with another form of dishonesty – the use of “operating earnings.” Once again, the objective is to bloat the earnings estimates up as much as possible, so that the P/E ratio is as low as possible.”Operating earnings” came into fashion during the dot-com bubble of the late 1990s. Analysts and brokers and financial advisers needed a way to justify recommendations to buy stock during the dot-com bubble, even though valuations were extremely high. And so they invented a form of earnings that doesn’t count “one-time expenses” and whatever else they felt they could get away with excluding. This boosted the earnings figures, and lowered the P/E ratios.But now analysts are confounded again, because even “operating earnings are crashing, along with reported earnings.Since I posted my article last month on the crash in reported earnings, several web site readers have written to me, asking where they could get price/earnings ratio figures. This question has been heavily discussed in the Financial Topics thread of the Generational Dynamics forum, where a number of suggestions have been posted.Here are several places that regularly provide price/earnings ratios:At the bottom of the home page of this web site is a chart from DataView, LLC, that’s updated weekly. This is an EXCELLENT chart — the best around, in fact. It shows both current and historical data at a glance.The Wall Street Journal P/Es & Yields on Major Indexes page can be accessed without a subscription. It gives the P/E ratios based on both “reported earnings” and bloated “forward earnings.” It currently lists 15.44 as the S&P 500 P/E ratio, which is apparently computed based on “operating earnings.”The Decision Point Earnings Summary is updated every week. They report both “reported earnings” and “operating earnings.” Their latest report is discussed further below.The Comstock Funds page, Boom times were a mirage, describes the difference between reported earnings and operating earnings. The data files are updated roughly once a month, giving current and historical earnings and P/E indexes. Click on “S&P 500 Earnings Estimates (Reported and Operating)–past year” and “NDR Chart of historical P/Es of Reported Earnings.”The Standard & Poors earnings and P/E computations can be found in this XLS spreadsheet, update every week or two.Let’s take a look at the last item, because it contains some shocking news. If you download the spreadsheet and load it into your spreadsheet program, you’ll see the following:——————————————————————————–Earnings and price/earnings ratios for past and future quarters (Source: Standard & Poors)——————————————————————————–The data shown on this spreadsheet is as of 2-March-2009. The S&P500 index on that day was 700.82. Please note the following points, indicated by the balloons in the above graphic:Column A gives the ending date for each quarter. The data for quarters up to Q3 of last year (ending date: 09/30/2008) are “ACTUALS,” while the data since then are “ESTIMATES.” The data for Q4 (ending date: 12/31/2008) is 98% complete.Column B shows the S&P 500 index as of the end of the quarter. Columns C and D show operating earnings and reported earnings, respectively, and columns G and H show the corresponding P/E computations.As actual earnings come in for Q4, they’re turning negative (see cells C36 and D36). I’m not even sure how you compute a P/E ratio when earnings go zero or negative.If you look at columns G and H in the “ACTUALS” portion, you can see that the P/Es based on operating earnings are consistently lower.If you look the the “ESTIMATES” portion, the results are eye-popping. The estimates based on operating earnings are around 15 for this year, and drop as low as 10 for Q4 of 2009. But the estimates based on reported earnings spike up to 181 (!!!!!!) in Q3, based on the current S&P index of 700.Your eyes are not deceiving you. The earnings crash that we’ve been discussing indicates an astronomical P/E later this year, assuming that the S&P index remains at 700.The Decision Point Earnings Summary that I described above is updated every week. Here are their summaries in their 13-March-2009 report:|———————————————————-|| | Price/Earnings Ratios based on || Quarter | Reported Earnings |Operating Earnings||——————-|——————-|——————||Q4 2008 | 43.5 | 15.4 ||Q1 2009 (Estimated)| 74.0 | 16.5 ||Q2 2009 (Estimated)| 134.9 | 17.0 ||Q3 2009 (Estimated)| 296.0 | 16.5 ||Q4 2009 (Estimated)| 23.3 | 11.8 ||———————————————————-|Here is the graphic accompanying Friday’s report showing historical data from 1926 to the present:——————————————————————————–Earnings, price/earnings ratios, yields and prices — 1926 to the present (Source: Decision Point)——————————————————————————–Notice the sharp spike in P/E ratios in the third graph, thanks to the crash in reported corporate earnings.In practical terms, what all this means is the following: The S&P 500 index is going to have to fall much further, to the 300 range or lower. This means that the Dow Industrials index will fall to the 3000 range or lower.That’s why journalists and analysts are freaking out. They’re looking desperately at any way to avoid talking about those figures. Instead, they point to last week’s market rally, and say, “Let’s hope and pray that it continues.”I guess a P/E ratio of 181 isn’t good enough for them. Perhaps they’d prefer to see it go up to 1000.(To understand why it can’t continue, see “The outlook for 2009″ and “How to compute the ‘real value’ of the stock market.”)The Obama administration is evidently feeling exactly the same kind of desperation. On Sunday morning on Meet the Press, Dr. Christina Romer, head of Obama’s Council of Economic Advisers, was asked “What is the responsible thing for consumers to do at the height of this global crisis?” Here’s her response:——————————————————————————–Dr. Christina Romer, head of President Obama’s Council of Economic Advisers (Source: NBC’s Meet the Press)——————————————————————————–”The truth is that consumers have not done a lot of spending for the last 14 months. So I would predict that would be a perfectly reasonable thing is that you go out and you buy that car that you’ve been thinking about for the last 14 months, and you do some of the spending, and over the long haul I’m hoping we’ll come back to probably a higher savings rate, cause we know we’re at kind of a historic low before this all happened.”Regular readers of this web site, who understand my sense of humor, will not be surprised to know that I couldn’t stop laughing when I heard this moronically stupid statement. But this is what passes for common sense among the politicians, analysts, journalists, winners of the Nobel Prize in Economics, and others in Washington.Several web site readers have asked me recently whether last week’s modest Wall Street rally means that things have turned around — or will the market fall again below the levels of two weeks ago?You won’t get a straight answer to this question from any of the financial blogs or from the mainstream financial media, and certainly not from the politicians. They’ll all hem and haw, and argue about “U-shaped” and “L-shaped” recessions, and make sanctimonious statements blaming everyone but themselves for not seeing what was coming.So let me make this as clear as possible to readers of this web site: If you’ve been staying in the market because you continue to believe the crap that you continue to hear from the financial media and the Obama administration, and from ideologues like Paul Krugman (on the left) at the New York Times, and Larry Kudlow (on the right) at CNBC, then you’re going to face further financial disaster.The economy has been in a sharp deflationary spiral for over a year. The market WILL fall well below Dow 3000 with 100% certainty. and almost certainly within the next few months, and will not recover for many years

Great, I was just about to post this information fromhttp://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLSbecause it really shows the basics. As the P/E Reported earnings is calculated as the SP500(700,82) divided by the four last quarters of earnings per share(15,54, 12,86, 9,73 and – 20,73) equals 40,28.Well, what are the odds that Q109 earnings per share will be 8,36 or the operating earning per share will be 13,46$. Not very likely, right!The actions taken in all companies are reducings cost, such as inventory and staff, however it does not make up for the lower sales figures and I do not understand how the earnings per share will be above 0 in Q109 or Q209 with the current DOW 500 index level. It must adjust downwards, there is no doubt about that.More comments?

Then add this updated chart given to us before by PeteCAhttp://dshort.com/charts/bears/four-bears-large.gif

Hayes,RE: Possible 2,000 pt. run-up; attributed to1. China’s concern for their US Treasury investment (yield protection)2. M2M and Treasury/Fed revamped TALF (create a market for the toxic assets).

Jim Rogers is a tool

http://www.veteransforpeace.org/.TO THE PENTAGON AND WALL STREET, WE MUST MARCHThe next 5 weeks are very important to the anti-war and peace movements. March 19th, the 6th Commemoration of the U.S. invasion of Iraq is less than four weeks away. On March 21st, two days later comes the March on the Pentagon mobilization and then April 4th, two weeks later is the Beyond War; A New Economy is Possible mobilization on Wall Street in New York City. This is a lot of action in a short period of time. It is as it should be. There is much to protest and much to change. ……

PBS NOW Show Interviews Ken RogoffI found Ken to be honest and forthcoming. Good Interview.

David Brancaccio interviews Kenneth Rogoff, Harvard economics professor and former chief economist of the International Monetary Fund, about how high we should raise our hopes and what’s at stake for America and the world.

Ken Rogoff Interview

Obama to appear on Jay Leno to speak about the economy — tell me that the Axelrod propaganda machine is not in high gear. They’re going to do their level best to talk this economy up.

SNS: Don’t commit yourself too fast. If Israel bombs Iran, do you think the Dow is going to move up or down? By how much? There are many possible scenarios. Unlikely, yes, But not impossible.PeteCA

Remember the new “rule of thumb”. Who came up with that, anyway? Any time Obama appears on TV the market goes down PeteCA

Hayes,I agree.There is no “silver” bullet known that will slay this monster that has been unleashed. So the best defense is a good offense. Can’t let the value of equities, assets, etc. continue to slide because that only makes the settlement of the criminal CDS crap at AIG more expensive. I am surprised the counterparties are willing to be brought out at this point – you would think they must know this puppy is going down further.It seems Ben has put all his eggs in one basket – bail, bail, bail – until HELL freezes over it seems. Then once the rest of the world owns our National Treasure he can stop bailing. Then we are left to pay the tab. Something like this it seems. All this to reflate the credit bubble and get the economy going again and not to repeat 1929. Well, 1929 may look like a cake walk by the time this flawed thinking is fleshed out. It’s like Marc Faber said recently, “It’s Zimbabwe economics – expect 200% inflation per year in USA.”

March 19th and the 21st will remind the nation that the United States of America is still conducting an immoral war: that Iraqis’ and U.S. service members’ minds are being torn apart and bodies maimed; that the sons and daughters of mothers and fathers are dying.It is good that we will be in D.C. President Obama must know that we hold him accountable for his promise to bring the troops home from Iraq. He is now the Commander and Chief of the Armed Forces. Their use is up to his discretion.We will not stop there. We will also tell the President and Congress – because they seem not to know – that Afghanistan is not the “Right War.” Democrats used anti-war agitation and mass sentiment as a stepping stone to gain a wider majority in Congress and win the White House. We will not let them turn now to use war as a means to forward their agendas. We will not allow them to go uncontested as they attempt to justify these morally deprived policies. More troops in Afghanistan equal more war in Afghanistan. We will not stand for that. We will be in Washington to make sure that both Congress and the President understand that our demand to Bring Them Home Now! includes Afghanistan.Two weeks later we will show up on Wall Street. The economic crisis is real and war is the greatest single drain on world resources. War is the ultimate use of aggression for the sake of greed. It is the vilest instrument of power brokers and financiers to wring profit from the blood and bones of the least of us. We must confront them at their seat of power.On April 4th forty-two years ago, Dr. Martin Luther King Jr. spoke at Riverside Church giving his prophetic Beyond Vietnam: Breaking the Silence speech. He warned us that, “A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.” King challenged us to begin a revolution of values to free our nation from the giant triplets of racism, extreme materialism and militarism. He urged us to reorder “our priorities so that the pursuit of peace will take precedence over the pursuit of war.” He called for, “a worldwide fellowship that lifts neighborly concern beyond one’s tribe, race, class, and nation.”

In defense of the commonwealth, our fearless leaders have put the fear of God into Wall Street’s investment gangsters. Their brave fight is documented in Bloomberg’s coverage of the ongoing public war against AIG and Goldman Sachs and other Street felons. Notice the “outrage,” the shock, the “sour taste,” the “distaste for the arrangements,” the “scolding” given by our heroic leaders.Fearless Ben – “angrier than any other incident”…“slammed the phone more than a few times”…“absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets”!!!! YET failing to rescue the company would “risk enormous impact, not just in the financial system, but on the whole U.S. economy.” (Oh, darn!)AND THE OUTRAGE: Summers called the AIG bonus payments “outrageous” and vowed “every legal step possible to limit those bonuses is being taken”… AND fearless Barney Frank –“AIG is “abusing the system.” Ooooohhhh. AND “the Treasury MAY TRY to recoup some of the payments.” OOOooohhhh.!But, ALAS! even so, “The government cannot just abrogate contracts…” Ohhhhh! “Names would drive business away from AIG and worsen turmoil”… Nooooo! “We need AIG to be stable and to continue” and “treasury didn’t try to halt yesterday’s payments after determining that AIG was legally bound to make them.” Sigh…AND SO: AIG went on “to award $148 million to top executives, and about $470 million for three other subsidiaries” and “an AIG filing…confirmed…employee retention plans might cost $1 billion.”And “the Fed thanked AIG ‘for finding a balance between its concerns with confidentiality and the concerns of the public interest that may be served through the release of this information.’”THE ENDFeel better?REFERENCE: AIG Says $105 Billion Flowed to Goldman, SocGen, U.S. Stateshttp://www.bloomberg.com/apps/news?pid=20601087&sid=awiPvRbKoabA&refer=home

no kidding. I almost lost my lunch when I read that. I’ve begun to wonder if there will be any kind of scenario in which the government will “force” us to spend. Perhaps by confiscating our 401K’s as some have implied above?Of course, they could just tax away all our income – that’s forced spending, I suppose.<sigh>

That’s true, but are you willing to take the ride not knowing if it’s going to last 2 weeks and yield +15% or 10 weeks and yield 50% ?What limit do you set yourself ? What if you don’t get out on time ?In view of the total uncertainty, IMHO not worth the risk.

NR has it exactly right it: the market could go up as short-selling cover “leads to a more pronounced bear market rally; but at some point in the future the capitulation of investors trying to sell their equities at the peak of the latest bear market rally will make the next round of the bear market bust faster and more pronounced,” and the market will fall of its own weight because companies don’t have the profits.AIG owes Goldman huge money and Goldman owes others huge money – the crisis is deep and wide. Bonuses are being used as a huge distraction, while it’s the job of Summers and Bernanke and Geithner and Obama to try to make it look like the Obama Administration is looking out after the taxpayers. Why? Because they are getting hammered and pillared: read the letters to the editor, look at the political cartoons, listen to talk radio, peruse the internet…Don’t listen to what they’re saying. Listen for the reason behind it.

Is this America … when Vikram Pandit (CEO Citibank) is getting paid over $10 million, while his insolvent bank is propped up with taxpayer dollars ???PeteCA

It seems to me that the way to analyze the Obama Administration’s “furious” attack on AIG is to look behind the overriding reason for it. And that would be the public’s overwhelming outrage, not just at AIG’s bonuses but at all bailouts, bank thievery and Congressional big time lying.But notice how the Obama team is fanning out over the talk shows and Obama, himself lending his golden voice to propping up the banks by a mixture of optimism and outrage, zeroes in on the little “m’s” (millions)” and not the big “b’s” (billions). The disputed bonus contracts involve about $165 million but in AIG’s surprising revelation yesterday, walking hand in hand with its partner– the Federal Reserve System, it revealed that it had paid more than $75 BILLION in the final months of 2008 to numerous domestic and foreign banks as well as to municipalities and states, including California.Big surprise! Right? The banks included Goldman, Merrill, Morgan, Barclays, BofA, Deutsche, and Societe Generale. More than $34 BILLION went to trading partners of AIG financial products, the small subsidiary whose derivatives brought AIG to the edge of collapse.Notice that the Obama team attacks the little m’s and protects (and the word is really “protects”) the big b’s. In other words, “Who’s your daddy”?

London Banker writes: “[I]t doesn’t really matter much what the central banks do because at base the problem is one of corruption in accounting standards, government expenditure on unprofitable military adventures, skewed taxation which has reduced taxes on corporations and the wealthy while massively increasing government revenues from the middle class and poor (from taxes and stealth taxes like fees, fines and excise duties), executive incentives which reward destroying jobs, and other excesses of the past 25 years of Anglo-Saxon corporatist thinking.”Partly true, but if you are afraid, as many people are, to reveal the complete truth, then it’s time somebody did.Enough of the anti-Anglo-Saxonism. It is well documented in “The Politics of Anti-Semitism” edited by Alexander Cockburn and Jeffrey St. Clair of Counterpunch that “Since the 1960s, Jews have come to wield considerable influence in American economic, cultural, intellectual and political life. Jews played a central role in American finance during the 1980s, and they were among the chief beneficiaries of that decade’s corporate mergers and reorganizations. Today, though barely 2% of the nation’s population is Jewish, close to half the billionaires are Jews. The chief executive officers of the three major television networks and the four largest film studios are Jews, as are the owners of the nation’s largest newspaper chain and the most influential single newspaper, the New York Times.“That was written in 1993. Today, ten years later, ardently pro-Israel American Jews are in positions of unprecedented influence and have assumed or been given decision making positions over virtually every segment of our culture and body politic…” (Jeffrey Blankfort, The Israel Lobby and the Left, p 100)

This is such an inappropriate posting.

The recession is almost over, says Green Shoots Bernanke.http://www.bloomberg.com/apps/news?pid=20601087&sid=a_MU7GJ2KRpM&refer=homeRecession EndBernanke reiterated in the interview that, should the government succeed in calming financial markets, the recession will probably end this year and the economy will expand in 2010. “Green shoots” are appearing in some markets aided by the Fed, and there has been “some improvement” in banks, he said.

plus great depression.

i’m committed. so please don’t make the commitment decision for me thank you very much. would you like to get in on this bet PeteCA?this BS 100% soothsaying speculating business here in the threads is a joke. put your money where your presumptuous fingers are.so i have JasonB and PeteCA putting down a grand each? yes?

and furthermore i’ve been reading here about Israel bombing someone since the inception of Roubini’s blog.more speculation again. i don’t want to read anymore of this anti-Israel crap irrespective of what my position on the region may be.

Jon Stewart’s Epiphany“Has a Comedian Just Saved America?”By PAM MARTENSMarch 16, 2009 — As testimony to how Orwellian life has become under the outrages of Wall Street hubris, last week saw a comedian, who poses as an anchor on a fake news show, grab the reins of the Wall Street investigation from the actual investigators in Congress.Either Jon Stewart is the smartest man in America or he has incredible instincts. In a week’s time, he has zeroed in, like a heat-seeking missile, on the core of Wall Street’s malady. How insightful of Stewart, host of Comedy Central’s “The Daily Show,” to rationalize that the core of Wall Street’s corruption might well be the same core that it has drawn the darkest curtain around: trading.Stewart is the son of an educational consultant mother (Marion Leibowitz), physicist father (Donald Leibowitz) and trading technology guru brother (Larry Leibowitz) an executive at the New York Stock Exchange. He’s got a smart family and he’s equally smart, advancing the national debate on a comedy channel.After a week of explosive commentary and video clips of questionable reporting at the cable business network, CNBC, Stewart interviewed Jim Cramer on Thursday, March 12. Cramer hosts CNBC’s “Mad Money” show which promotes itself as an advocate for the small investor while, at the same time, suggesting lots of buying and selling of specific stocks. Stewart used the highly anticipated interview to show a devastating clip revealing Cramer to be the embodiment of the market manipulators that he rails against on his show. Acknowledging on the clip that he would never say something like this on TV, Cramer states:“You know, a lot of times when I was short at my hedge fund and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money.”Allow me to translate:You know, a lot of times when I was making a large bet that prices would decline in a specific stock or bond or derivative when I worked in the largely unregulated world of private money called hedge funds, and I needed to give that decline a little unseen assistance to make my bets profitable, I would go into the futures market to trade. That’s because I could put down as little as 4 to 10 percent of the money I needed for the trade and borrow the balance in what is called a margin account.The academics and economists (none of whom ever worked a day on Wall Street) have been telling us in OpEds and speeches and testimony before Congress that the crumbling Wall Street structure results from bundled subprime mortgages, collateralized debt obligations, credit default swaps, and asset backed securities.Trillions of dollars of taxpayers’ funds have been spent on the premise that these toxic assets are the problem. The fate of a nation has been staked on that analysis: that if we get these assets off the balance sheets of the major firms, the credit spigots will begin to flow once again, the banks will once again trust each other and lend to each other, and investors will resume buying stocks and bonds with their confidence in the system restored.Stewart’s weeklong commentary and clips helped to dramatically expose this logic as bogus. None of the toxic instruments would have grown to a problem capable of collapsing the country’s financial system if their trading had been regulated, transparent and fairly reported on by mainstream media. The security instruments were never the problem; how they were traded was the problem. For example, the mortgage and debt securities were, in reality, junk bonds but they were tradedas triple A. They were not traded on an exchange where price discovery would have shown them to be junk bonds, they were traded in an opaque over the counter market. In the case of credit default swaps, they were traded in a market created by the very firms who needed to hide for as long as possible (while executives reaped windfall compensation and bonuses) the dubious pricing of the securities and gargantuan amounts being issued. (See CounterPunch column “How Wall Street Blew Itself Up.”)Wall Street is supposed to have an early warning system that if something is amiss it will self correct in time to avoid a collapse of the system. That early warning system is known as price action. In other words, the trading price of Citigroup, Merrill Lynch, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae and AIG should have begun a downward trajectory years ago as these firms loaded up on leveraged junk. There is only one possible scenario, in my opinion, to explain why this did not happen: trading in the market was rigged. Thanks to Jim Cramer, the public now knows how easy it is to get stock prices to move up or down. (As one more example, see “Wall Street Powerhouses Invested Alongside Madoff.”)To be a fair marketplace, the trading price of stocks and bonds must represent the composite wisdom of all market participants who have the same opportunity to ferret out information from public sources. When trading is internalized at the big Wall Street firms (meaning they are allowed to match customer stock orders in-house), when they are able to create and clandestinely operate their own trading venues off the radar screens of the regulators, when they are able to create offshore vehicles like Structured Investment Vehicles to hide bets gone bad, there is no longer any composite wisdom. There is only dumbed down information which the public possesses from CNBC and the superior information available to those operating inside the clandestine system. (See Maria Bartiromo and the Co-Branding of CNBC and Citigroup.)The big Wall Street firms that taxpayers are bailing out even gobbled up some of the largest specialist firms. Those are the folks who are required to maintain fair and orderly markets on the regulated stock exchanges. But here’s what the specialists are really doing, according to charges disclosed on March 4, 2009 by the Securities and Exchange Commission (SEC):“…from 1999 through 2005, the firms violated their basic obligation as specialists to serve public customer orders over their own proprietary interests. As specialist member firms on one or more of the regional and options exchanges, the firms had a duty to match executable public customer or ‘agency’ buy and sell orders and not to fill customer orders through trades from the firm’s own accounts when those customer orders could be matched with other customer orders. However, the firms violated this obligation by filling orders through proprietary trades rather than through other customer orders, thereby causing millions of dollars of customer harm.”The $70 million in disgorgement and penalties the SEC charged 14 specialist firms (some of which are owned by Wall Street powerhouses like Goldman Sachs and Citigroup) is now effectively coming out of the taxpayers’ pocket since these are two firms enrolled in the taxpayer cash for toxic asset trash bailout bonanza. In other words, the public investor is now paying back the money that was stolen from the public investor in the continuing Wall Street saga of heads I win, tails you lose. Is it any wonder it takes a comedian to deal with this stuff.The speed at which Congress begins daily sessions investigating trading of both toxic and non toxic securities will determine the speed at which this country begins to rebuild from the ashes.After the 1929 crash and as the nation entered the Great Depression in the early 1930s, the Senate convened hearings by the Committee on Banking and Currency that peeled back month after month from 1932 to 1934 previously impenetrable layers of trading fraud. Each layer of fraud opened a window into the next layer. The hearings did not focus on assets, toxic or otherwise, it focused on the trading of assets: how Wall Street created dark pool operators (today’s hedge funds) to trade on inside information and manipulate prices; how some of the most respected men on Wall Street had participated in trading frauds; how some of the largest firms were secretly manipulating stock prices; how respected business columnists were taking bribes from Wall Street players to move trading prices.I’ve often pondered just how it was that every large brokerage firm had the same idea at almost the same time in the early 1990s: to put a TV set airing CNBC in every stockbroker’s office. The managers came around and offered the broker a deal they couldn’t refuse: a deeply discounted price on the TV and the firm would install it hanging from the edge of the ceiling so it wouldn’t take up precious desk space. Out of 55 brokers in my office at the time, only myself and one other broker declined. Can you think of any other industry that wants its workers sitting around watching TV instead of working? Unless, of course, what CNBC is telling brokers to buy and sell is actually considered part of the work day by the Wall Street masters.As you ponder that, consider this excerpt from testimony given at the Friday, June 3, 1932 Senate hearings:William A. Gray, Counsel to the Committee: So that the committee may understand the matter which I am now going to present, permit me to say that I am going to show by Mr. Lion himself that he is a publicity man, and that for a period of three years he was acting for numerous brokerage houses in the city of New York, that he furnished through various journals, including radio speeches, publicity for certain stocks, pools which were then being operated by the brokerage houses, he being paid for such by cash and by being given calls on the particular stocks in questions, at prices that he could sell them to his advantage, the brokerage house of course giving him credit for same in an account which he carried and settling with him the same as they would settle with any other person who had actually bought and sold, he not being required to put up any cash at all. Now, Mr. Lion, please give us your full name.Mr. Lion: David M. Lion…Mr. Gray: What is your business?Mr. Lion: Financial publicity.Mr. Gray: How long have you been engaged in that business?Mr. Lion: Five years or more.Mr. Gray: Prior to engaging in that business and for the past five years have you at any time conducted a paper of your own?Mr. Lion: Yes.Mr. Gray: What was the name of that paper?Mr. Lion: The Stock and Bond Reporter…Mr. Gray: How long did you continue the use of the radio for the purpose of disseminating information about stocks?Mr. Lion: I used it all of 1929…Mr. Gray: Now, you did not do your own radio talking, did you?Mr. Lion: No, sir.Mr. Gray: What was the name of the man you employed to do your radio talking?Mr. Lion: I employed William J. McMahon…Mr. Gray: Who is he?Mr. Lion: He was an economist…Mr. Gray: Each of his talks was devoted to a particular stock, wasn’t it?Mr. Lion: No.Mr. Gray: Sometimes only one stock?Mr. Lion: Yes, sir…Mr. Gray: But when he ended up his talk as a usual thing he referred to a particular stock and boosted it. That is true, isn’t it?Mr. Lion: Yes, sir.Mr. Gray: And he was a salaried man on your staff for that purpose, wasn’t he?Mr. Lion. Yes, sir.Jon Stewart has opened the floodgates. Let the hearings begin.Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article. She writes on public interest issues from New Hampshire. She can be reached at pamk741@aol.comhttp://www.counterpunch.org/

history both rhymes and repeats and is the nightmare we all have to wake up from….scientist are producing the wrong pills- antidepressants should be replaced with anti- greed pills.

To add to this:Main Entry: pru·dencePronunciation: ˈprü-dən(t)sFunction: nounEtymology: Middle English, from Anglo-French, from Latin prudentia, alteration of providentia — more at providenceDate: 14th century1 : the ability to govern and discipline oneself by the use of reason2 : sagacity or shrewdness in the management of affairs3 : skill and good judgment in the use of resources4 : caution or circumspection as to danger or riskIt seems to me the banks that are hurting are the ones who weren’t prudent and cautious.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_MU7GJ2KRpM&

“The financial meltdown and accompanying depression scenario has been taken off the table,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $60 billion. “The heart of the problem is the banking system, and news coming out of that sector suggests that we may have turned a corner.”

What a bunch of hoo-hah. Absolutely nothing has changed in the health of the baking systems except a week-long PR blitz and unsupported optimism among those who desperately want to believe it was just a bad dream and we’ve now woken up.

The Treasury this week intends to provide more information about a $1 trillion plan to remove distressed mortgage assets from banks’ balance sheets. The Fed also is scheduled this week to start the first phase of a $1 trillion program to revive the market for securities backed by consumer and business loans.‘Mind Boggling’Combining those two initiatives with the $787 billion fiscal stimulus, the magnitude of U.S. monetary and fiscal actions and their likely effects as they ripple through the economy are “mind-boggling,” said Gabriel Borenstein, managing director of global fixed income in New York at Jesup & Lamont Securities, a brokerage and investment banking firm.The efforts “will not fail,” predicted Borenstein, who in June 2005 correctly forecast a “serious recession” ahead. “If that doesn’t work we’re going to turn into the Gobi Desert,” Borenstein said today.

There is nothing in these measures that addresses the core issue of changes in consumer behavior and associated deleveraging — in other words emergent sensible behavior among the driver of 70% of economic activity. Also ahead for 2010 is another significant round of ARM re-sets. Not to mention the insolvency of major banks and truly mind boggling toxic CDO sludge.Until something material changes in this picture I’m packing for the Gobi, not Palm Springs.

I think you misunderstood the source of the post, although I placed a link to it at the beginning. The post was brought over from generationaldynamics.com. I thought it was good analysis, so I cut and pasted it hereThat begs the question – what do I think? I wouldn’t be suprised if the market dips below 3000 by August or September. Do I want to bet with you? I don’t even know you.

I suggest that Mr Geithner is painting over – in glorious and radiant colours a much tainted and repugnant Banking system and therefore suggest the words he should have said were something like:”When banks individually panic and suddenly pull back out of a sense of horror, guilt and fear… ‘Or, stemming from the realization that they have all been caught in a trap which ends in bankruptcy which raises the imaginative visions of being socially disgraced and perhaps even incarcerated (a mite like Mr Madoff)…then… the whole of Mr Geithner’s statement rings of sound hard and harsh truth.Too late she screamed…Ho hum

Jason B I’ll bet that crackpot John J. Xenakis from whom you quote this gibberish. Set it up. Let’s have this forecaster step up to plate. I’ll take on anyone who predicts such extreme swings with 100%. Any serious man who makes these statements will have no issue betting a measly $1,000, right?Thank you

But this is a Debt driven economy, so that is the only way it makes since, remember what’s right is now wrong; up is now down and so on. So in this debt driven economy it should read like this. The inability to govern and discipline oneself by the use of reason, just insert the lack of in front of the rest of your sentences then it makes perfect sense. Truth and in this case Ignorance will set you free.

OK, then can some of you intellectuals put something together that summarizes what is happening and what the people need to know in order to understand in a concise, eloquent way so that we can start distributing it?

Yes, great idea!

I bet a lot of them would refuse them if that was the case! Especially the people with the notably high bonuses.

Set it up yourself.

here’s the response straight from the FOS AUTHOR of JasonB’s above link/commentary:”Very dramatic. Actually, that was a typo [sns: how convenient] — I’ve corrected the textonline.As I frequently say, Generational Dynamics tells you your finaldestination, but doesn’t tell you how you’ll get there or how long itwill take. The Generational Dynamics forecasting methodologyprovides tools for narrowing the time window, and still maintain aprobability in the 80-90% range.Thus, it’s highly probable that the markets will fall sharply fromtheir current levels within the next few months, but not necessarilyfall below Dow 3000. On the other hand, I’ll be very surprised(assuming I’m still alive) if the Dow is above 3000 or even 2000 bythe end of 2012.And of course we can only assume 100% certainty if we assume thatsomething like the sun exploding won’t occur. But barring that kindof catastrophe, the Dow will fall well below 3000 before “too muchlonger.”Thanks for pointing out my error.Sincerely,John”Perhaps John, Generational Dynamics JasonB et al. should set up their voodoo dolls and better position their crystals balls w/ Mercury in Retrograde. What a sham. Forecasts as hollow as the conviction to back up the 100% “claims”.Well here’s my 100% infallible prediction: i challenge any and all doomsday soothsayers to step up to the plate w/ a cash wager upon posting this 100% gibberish. Yes? Okay? Good then.

It has become a common term that the ECB is ‘behind the curve’ and should ease monetary policy with more rigor. However, for me it seems that the FED and BoE might already be ‘out the curve’ and will find it hard to return back to the track after the curve.

WORSE THAN BEFOREYes, we have seen on various recent occasions the stock market rally on hot air and forlorn hopes. What we haven’t seen before (at least to the current extent) is direct, energetic, deliberate, and very costly actions by government officials to hide the economic truth. They are treating the symptoms and not the disease, and they are putting expensive cosmetic band-aids on very deep and serious wounds. They also lie a lot and have propaganda and secrecy (“security”) programs to mislead and keep in the dark the American public. To change the metaphore, they are very busy sweeping the s*** under the carpet (or should I say “under the TARP”?).All these “feel good” measures are going to have multi-demensional catastrophic consequences in the middle and long terms.Speaking of hot air, the Fed’s Judas Goat (Ben Bernarke) is singing a new turn–”HAPPY DAYS ARE HERE AGAIN!”. Yes this is the same Ben Bernarke that in October of 2005 told the US congress that it didn’t have to worry about the housing bubble bursting because the increases in housing prices was based on “very strong economic fundamentals”. What bothers me isn’t that the man is consistantly wrong (we can’t all be Dr. Roubinis), but his out-of-control spending (or should I say “wasting”?) of trillions and trillions of our dollars may well destroy the US monetary system. I think that th only hope for the country is that we nationalize the Fed.

That’s all a distraction, intentional of course.I think his father is not Mr. Obama . I think his father is Malcolm Little, aka Malcolm X.

Judas Goat, hah hah. Yes, he’s been wrong, but he’s wrong with such conviction.

“Dead Cat Bounce or Bear Market Sucker’s Rally”? Same thing, no? And doesn’t a sucker’s rally occur only in a bear market? As always, one must take Roubini’s thinking very seriously. But reading this torrent of unedited argument, grammatical error, misspelling and redundancy robs that thinking of the force it should have.

Very good arguments. But its very simple – household CF is becoming nearly non-existant (job losses, mkt taking a dive, no value on homes, etc); consumer spending will remain limited no matter how much banks will AGAIN lend to consumers (consumers are likely, hoepfully, smart enough to save much much much more); capacity available has become a ‘ten bagger’ due to lower demand and as usual, lower and the ‘normal’ export of additional manufacturing production to Asian economies; and govt spending spending and spending. At least in the past, consumer spending would not be impacted so severly as even without jobs, consumers could borrow from these dumb banks and could use their over-priced homes as equity for accumulating additional debt. All of this is literally crazy.Emerging markets are more attractive. When China doesn’t see much demand in the US, it must push its products on its own people. What a mkt it has literally in its own back yard! With high margins out there, Chinese companies can lower prices to meet the lower income that their people have as compared with the US. This will also, in the long run, lower dependency on the US. Although as China now basically owns the US, it would like to see some recovery in consumer sending here. What may drive such recovery would be further foreign investment in our economy, not govt, but private. With a cheaper dollar (too many reasons as to why it’ll get cheap) and stronger economy, we could even more Chinese here in the US. And unlike in the past, they will likely maintain most of their cash back home, but use it to invest in the US economy (consumer spending, M&A of the dying US companies, buying homes and reducing inventory without having debt up to their eye-balls, etc). Basically what we saw with the Japanes in the 80s. After all of this, our economy might recover.Lastly, don’t get fooled by the latest permit and home construction data. Many projects are already financed and need to get going asap to get those decling in value assets off the books asap. And if you looked at the details, most of it was increase of muli-dwelling units which once completed, a higher % of them will likely be for rent. And if for sale, that’s certainly not positive as it just increase inventory, the inventory that we and the govt would like to banish. Higher inventory will lower prices … even more than before as on the other side we’ve got more people out of jobs with cash-less and highly leveraged household balance sheets. Its a vicious cycle until the housing market adjusts … which won’t happen as long as the govt meddles in it. Helping to refi or get out of foreclosures will only be temporary … again, household CF continues to decline. Many of the refi’d people are now in foreclosure and many of the initially rescued foreclosures are and will be showing their ugly faces. And those ugly faces certainly won’t help improve the image of this so-called great economic power.

Dear “Guest” and “JUDGE” and “pacman”, please spare us the puerile “First”, “Second” fandance after every post.IT’S BORING

WHO CARES?? Several trillion dollars have been misallocated by the slipshod American financial system and all anybody can focus on is $100 million of bonuses!!! BORE ME: I DON’T GIVE A RAT’S ASS WHAT THE AIG BONUSES WERE AND EVERYONE WHO’S FIXATED ON THEM IS A MORON.What a stupid electorate, what a stupid, pathetic regulatory mechanism, what a stupid media, what a stupid, stupid body politic. If the electorate were a general in a war, the electorate would be annihilated within the forst ten minutes of conflict for being unable to prioritize the threats.

Please tell us something about the price of gold?

OK, “Guest”,I get it:but how about punching it up next time, like, throw in a foreign language or something.Premier? Primeiro? Erste? Secundo? Deuxieme?Your routine needs a kick in the pants.

um brasileiro!! Why didn’t you say so in the first place?/a primeira vez?what’s wrong with you, using ingles, when you cound be posting in portugues? I lived in Rio for a year……..

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stellar almanac you’ve chalk up

LOL at how wrong this entire prediction proved to be.