First first to be first

Goldman: Used the freebee govt loans to make it look like they were profitable. Now that they showed a “profit” (Gee, if I can borrow money for nothing and loan it out at 7%, how can I screw up?) they can spring their new stock issue trap, to draw in a few more hapless investors. Stinkus maximus.

LOL”Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can.How did it do that? One way was to hide a lot of losses in not-so-plain sight.Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.”http://norris.blogs.nytimes.com/2009/04/14/the-case-of-the-missing-month/

Today’s news items in my local paper certainly don’t look like the spring-green shoots of an economic recovery. Examples:· The number of new delinquent taxpayers, says the firm Nationwide Tax Relief, is running 300 percent higher than this time last year.· Bankruptcies last month, says the Associated Press, were 46 percent higher than March 2008 and 81 percent higher than March 2007.· Sunnyvale, California, Community Services, says it is having to save 50 percent more people with non-profit help such as food and rent than it did this time last year. Director Nancy Tivol says needs are “exploding.”· San Jose Mercury’s lead story, “Tech Job Cuts Pick Up Steam,” says “Tech accounted for 21 percent of all lost jobs in the valley in the first two months of the year, for instance, compared with 13.6 percent of all lost jobs since the start of the recession in December 2007.· The Mercury says 73 percent of Silicon Valley CEO’s believe job growth is going to be worse this year than last year.· Only 20 percent of retirees in a non-partisan Employee Benefit Institute survey released today say they are very confident they’ll be financially secure, compared with 40 percent a year earlier.· California’s Department of Finance said yesterday that state revenue is now $415 million below what was forecast in the tax-hike billion-dollar deal legislators made in mid-February. The shortfall comes as unemployment increases, new home construction falters and home prices continue to fall. And now, state officials are watching tax revenues closely with numbers below expectations.· A poll by The National Association of Colleges and Employers found that 22 percent of college recruiters do not plan to hire any fresh graduates this spring, and 43.6 percent say they’ll hire fewer graduates than they did last spring. And the report says prospects for the class of 2010 are heading in the same direction as prospects for 2009 graduates.

A “U” vs “L” shaped recession: IMHO, NR’s projections will prove correct if and only if, there are no BAD NEWS SURPRISES which seems highly unlikely in this crises considering the lack of transparency from Fudgington, D.C. and the Big Bad Banksters (BBBs) and that 99% of all bailouts (taxpayer’s money) is being directed to the corporate elite.

Sprott Asset Management has reached an agreement with First Nations in the Canadian prairies for a lease of around 1 million acres of land to produce wheat and other crops in partnership with these First Nations.

Oowoooo, yippy yi aa. Got a love them banksters, they do find ways to manipulate the numbers and doop the investors. Can you say, “big bonuses”? Hey world, we are not insolvent, hell, we are making billions of dollars. Now go out and buy our stock. Daddy wants another mansion. Yeehawww!

my general impression is that Roubini, in spite of everything, remains an economist. Therefore he relies on numbers, even if it’s with lots of salt, and implicit or explicit econometrics.But most numbers (and equations) used by economists are rather meaningless. Because prices may be objective data, but value is extremely subjective and varies all the time. Remember My Kingdom for a horse. Or a pound of flesh against your debt to the Merchant of Venice. That’s reality. Von Mises suggested to replace economics by “praxeology”, i.e. the study of human action. Keynes talked of the animal spirits and the barbarian relic. Economics is not a science and should be approached more like a part of political philosophy, with words instead of mathematical gibberish, and all the necessary arithmetics can be made on the back of an envelope. But the main problem is not economic activity, it’s what is called nowadays political economy. Economic agents are not individuals, but groups of individuals making loose alliances to advance their interests. None is motivated by public interest, governements no more than Wall Street.To sum, I think the animal spirits are going to be quite depressed for longer than you think (but much less in several “emerging” countries, as opposed to the immerging countries such as the US)

Read Gordon herehttp://www.longwavegroup.com/pdf/08_01_07_News.pdf

I don’t see how Mr. Roubini(or really anyone) can be positive. Aren’t aggregate demand and world trade still collapsing? Anyone care to make a bet that U.S. March job losses will almost certainly be within 50,000 of 500,000?The administration is completely fudging the banks, nothing is really being dealt with, there’s no welfare state here in the U.S., so when UI runs out, that’s it for millions of people.So the idea is that things aren’t collapsing as fast as they were Q4, 2008 or Q1, 2009?

http://www.youtube.com/watch?v=PlkBo26OM-Y

First for the goat cheese wrapped in smoked salmon, I’d say so, yep.

http://onlinejournal.com/artman/publish/article_4588.shtmlApr 14th, 2009 – 00:38:23The Warren report: ‘Liquidate the banks and fire the executives!’By Mike WhitneyOnline Journal Contributing WriterApr 14, 2009, 00:20Last Tuesday, a congressional panel headed by ex-Harvard law professor Elizabeth Warren released a report on Treasury Secretary Timothy Geithner’s handling of the Troubled Assets Relief Program (TARP). Warren was appointed to lead the five-member Congressional Oversight Panel (COP) in November by Senate majority leader Harry Reid. From the opening paragraph on, the Warren report makes clear that Congress is frustrated with Geithner’s so-called “Financial Rescue Plan” and doesn’t have the foggiest idea of what he is trying to do.Here are the first few lines of “Assessing Treasury’s Strategy: Six Months of TARP”: “With this report, the Congressional Oversight Panel examines Treasury’s current strategy and evaluates the progress it has achieved thus far. This report returns the Panel’s inquiry to a central question raised in its first report: What is Treasury’s strategy?”Six months and $1 trillion later, and Congress still cannot figure out what Geithner is up to. It’s a wonder the Treasury secretary hasn’t been fired already.From the report: “In addition to drawing on the $700 billion allocated to Treasury under the Emergency Economic Stabilization Act (EESA), economic stabilization efforts have depended heavily on the use of the Federal Reserve Board’s balance sheet. This approach has permitted Treasury to leverage TARP funds well beyond the funds appropriated by Congress. Thus, while Treasury has spent or committed $590.4 billion of TARP funds, according to Panel estimates, the Federal Reserve Board has expanded its balance sheet by more than $1.5 trillion in loans and purchases of government-sponsored enterprise (GSE) securities. The total value of all direct spending, loans and guarantees provided to date in conjunction with the federal government’s financial stability efforts (including those of the Federal Deposit Insurance Corporation (FDIC) as well as Treasury and the Federal Reserve Board) now exceeds $4 trillion.”So, while Congress approved a mere $700 billion in emergency funding for the TARP, Geithner and Bernanke deftly sidestepped the public opposition to more bailouts and shoveled another $3.3 trillion through the back door via loans and leverage for crappy mortgage paper that will never regain its value. Additionally, the Fed has made a deal with Treasury that when the financial crisis finally subsides, Treasury will assume the Fed’s obligations vis-a-vis the “lending facilities,” which means the taxpayer will then be responsible for unknown trillions in withering investments.From the report: “To deal with a troubled financial system, three fundamentally different policy alternatives are possible: liquidation, receivership, or subsidization. To place these alternatives in context, the report evaluates historical and contemporary efforts to confront financial crises and their relative success. The Panel focused on six historical experiences: (1) the U.S. Depression of the 1930s; (2) the bank run on and subsequent government seizure of Continental Illinois in 1984; (3) the savings and loan crisis of the late 1980s and establishment of the Resolution Trust Corporation; (4) the recapitalization of the FDIC bank insurance fund in 1991; (5) Sweden’s financial crisis of the early 1990s; and (6) what has become known as Japan’s “Lost Decade” of the 1990s. The report also surveys the approaches currently employed by Iceland, Ireland, the United Kingdom, and other European countries.”This statement shows that the congressional committee understands that Geithner’s lunatic plan has no historic precedent and no prospect of succeeding. Geithner’s circuitous Public-Private Investment Program (PPIP) — which is designed to remove toxic assets from bank balance sheets — is an end-run around “tried-and-true” methods for fixing the banking system. In the most restrained and diplomatic language, Warren is telling Geithner that she knows that he’s up to no good.From the report: “Liquidation avoids the uncertainty and open-ended commitment that accompany subsidization. It can restore market confidence in the surviving banks, and it can potentially accelerate recovery by offering decisive and clear statements about the government’s evaluation of financial conditions and institutions.”The committee agrees with the vast majority of reputable economists who think the banks should be taken over (liquidated) and the bad assets put up for auction. This is the committee’s number one recommendation.The committee also explores the pros and cons of conservatorship (which entails a reorganization in which bad assets are removed, failed managers are replaced, and parts of the business are spun off) and government subsidization, which involves capital infusions or the purchasing of troubled assets. Subsidization, however, carries the risk of distorting the market (by keeping assets artificially high) and creating a constant drain on government resources. Subsidization tends to create hobbled banks that continue to languish as wards of the state.Liquidation, conservatorship and government subsidization; these are the three ways to fix the banking system. There is no fourth way. Geithner’s plan is not a plan at all; it’s mumbo-jumbo dignified with an acronym, PPIP. The Treasury secretary is being as opaque as possible to stall for time while he diverts trillions in public revenue to his scamster friends at the big banks through capital injections and nutty-sounding money laundering programs like the PPIP.From the report: “Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth. The actions undertaken by Treasury, the Federal Reserve Board and the FDIC are unprecedented. But if the economic crisis is deeper than anticipated, it is possible that Treasury will need to take very different actions in order to restore financial stability.”This is a crucial point; the toxic assets are not going to regain their value because their current market price — 30 cents on the dollar for AAA mortgage-backed securities — accurately reflects the amount of risk they bear. The market is right and Geithner is wrong; it’s that simple. Many of these securities are comprised of loans that were issued to people without sufficient income to make the payments. These “liar’s loans” were bundled together with good loans into mortgage-backed securities. No one can say with any certainty what they are really worth. Naturally, there is a premium for uncertainty, which is why the assets are fetching a mere 30 cents on the dollar. This won’t change no matter how much Geithner tries to prop up the market. The well has been already poisoned.Also, according to this month’s Case-Schiller report, housing prices are falling at the fastest pace since their peak in 2006. That means that the market for mortgage-backed securities (MBS) will continue to plunge and the losses at the banks will continue to grow. The IMF recently increased its estimate of how much toxic mortgage-backed paper the banks are holding to $4 trillion.The banking system is underwater and needs to be resolved quickly before another Lehman-type crisis arises, sending the economy into a protracted Depression. Geithner is clearly the wrong man for the job. His PPIP is nothing more than a stealth rip-off of public funds which uses confusing rules and guidelines to conceal the true objective, which is to shift toxic garbage onto the public’s balance sheet while recapitalizing bankrupt financial institutions.So, why is Geithner being kept on at Treasury when his plan has already been thoroughly discredited and his only goal is to bail out the banks through underhanded means?That question was best answered by the former chief economist of the IMF, Simon Johnson, in an article which appeared in The Atlantic Monthly: “The crash has laid bare many unpleasant truths about the United States. One of the most alarming . . . is that the finance industry has effectively captured our government — a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation; recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression we’re running out of time.” (The Atlantic Monthly, May 2009, by Simon Johnson)The banks have a stranglehold on the political process. Many of their foot soldiers now occupy the highest offices in government. It’s up to people like Elizabeth Warren to draw attention to the silent coup that has taken place and do whatever needs to be done to purge the moneylenders from the seat of power and restore representative government. It’s a tall order and time is running out.Watch Elizabeth Warren’s 8 minute video summary of the COP report.Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com.Copyright © 1998-2007 Online Journal

Note: Economics is not a science.It is a body of theories, and NR subscribes clearly to the Keyenesian realm – the Neo Classicals. There are several others, but the Neo Classicals have it so wrong that it is scary. NR was absolutely correct in predicting the GFC- he is very wrong in predicting it’s outcomes.For more on the fundamental mathematical flaws of this school of economic ideology, go here;http://www.debtdeflation.com/blogs/2009/04/13/talk-to-the-fabian-forum-the-global-financial-crisis-how-bad-will-it-get/

In a letter to Geithner March 20. 2009, E. Warren (COP report) asks a number of probing questions regarding TALF.1. Please explain in detail why the Treasury and the Federal Reserve Boardbelieve it is wise to commit billions of dollars to rebuild the market for collateralized debt obligations and the redistribution and subdivision of interests in asset pools, in light of the risks posed for the financial system by these arrangements.”2. The thrust of the TALF appears to be to attract investors with large pools ofcapital, such as hedge funds, to the ABS market by allowing them to purchase ABS on a highly leveraged basis with risk of loss largely transferred to the taxpayer directly or ,through the Federal Reserve System, indirectly, in a manner that confers substantial benefits on these private investors who have little at stake. Please explain in detail the rationale for such a transfer of risk to the taxpayers with so much of the benefit transferred to private investors and please provide the facts and figures that support this rationale.And this, (referring to the European banksters to be bailed by US taxpayers…)11. What is the rationale for financing sale of securitized debt issued by U.S.subsidiaries of non-U.S. companies under the TALF?Apparently Geithner is too busy compounding his schemes to make any reasonable reply.

dois, secundo, deuxieme, zwei