Perspectives on the global economic meltdown (Jan 26 2010)

SwamyG · Post by **SwamyG** » 23 Apr 2010 08:08

Yielding to Wall Street, Raters 'Drink the Kool-Aid' BRFites had long ago stopped believing these bunch of jokers. I wonder when bloggers will pick up the other schemers like IMF.

Neshant · Post by **Neshant** » 23 Apr 2010 08:10

Rating agencies have turned into a joke.

Neshant · Post by **Neshant** » 23 Apr 2010 08:12

Greece is on the ropes and, in my opinion, its just a matter of time before the nation defaults. The 2yr on Greece is at 10%-11%. There is no way Greece can make it with those types of interest payments.

A Greece Default could trigger a fall in the Euro and a likely rise in the US dollar as a life boat currency. That rise in the USD could cause a massive decline in equities and commodities, relative to the US Dollar.

Hari Seldon · Post by **Hari Seldon** » 23 Apr 2010 11:40

Another "he said what?!" moment

Its long entered surreal territory. Still there are moments, like that priceless "G-d's work" statement from GS, that take us into the bizarre world of the masters of the universe (MOTUs) and sorta jolt us awake for a moment before the fog of maya descends all over again....
Blankfein: Suit Against Goldman Will “Hurt America”

Lloyd Blankfein on Wednesday attacked the Securities & Exchange Commission’s fraud charges in telephone calls to clients as Goldman escalated its campaign to stem the damage to the bank’s reputation.

One person who received a call from the Goldman chief said he was told the regulator’s case against the bank was politically motivated and would ultimately “hurt America”….

“He was very aggressive,” said one person called by Mr Blankfein on Wednesday. “He feels that the government is out to kill them, that they are under attack and the whole thing is totally political.”

Wow. Yves says it best

The idea that an SEC’s enforcement action on a lone transaction is tantamount to a campaign to “kill” the firm is bizarre, and sounds an awful lot like Dick Fuld at his less than stellar moments. It suggests either hypersensitivity to bad press, or recognition of the possibility that the discovery in the SEC case will expose widespread predatory conduct...
...
While it is too early to tell, the SEC may have found Goldman’s underbelly.

Nah. Nothing'll happen to the mahaan MOTUs. This is just more bread and circuses, weapons of mass distraction. Only.

Hari Seldon · Post by **Hari Seldon** » 23 Apr 2010 12:22

[youtube]pIQFPkH3ILI&feature=player_embedded[/youtube]

Fast-paced trailer for a book promo. Looks more like a movie trailer though. Ensoi.

derkonig · Post by **derkonig** » 23 Apr 2010 15:45

http://www.bloomberg.com/apps/news?pid= ... sod9l4gmBE

Greece asks for EU bailout package, 45 billion EUR set to go down the drain. Gurus, why did Deutscheland ever agree to such a bailout? Given the size of this package and given that PIGS is nothing but a growing list, it is highly unlikely that there will be anymore bailouts. The EUR is sunk anyway.

Shivlal Vedhavani · Post by **Shivlal Vedhavani** » 23 Apr 2010 18:16

because germans dont want to kill euro.

shravan · Post by **shravan** » 23 Apr 2010 18:57

Budget crisis puts LA court system at risk

The Los Angeles court system has already closed 17 courtrooms and another 50 will be shut down come September unless something is done to find more money. The closures have disrupted everything from divorce and custody proceedings to traffic ticket disputes.
...

"It's unprecedented," said McCoy. "Even during the Great Depression we did not close down court operations. We kept the courts open."

Vikas · Post by **Vikas** » 23 Apr 2010 19:27

While Rome was burning, SEC employees were busy watching ***** stuff

A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading *****. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "*****." Yet he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense, and received a 14-day suspension.

Hari Seldon · Post by **Hari Seldon** » 23 Apr 2010 20:09

Bloomberg columnist Mike Lewis breaks into eloquence here. Infotaining read. Ensoi.

Bond Market Will Never Be the Same After Goldman

Soul-Changing

What begins as an effort to change your business may well end up as an attempt to change your soul.

Among the many likely consequences of the SEC’s decision to sue Goldman Sachs for fraud is a social upheaval in the bond markets.

Indeed, the social effects of the SEC’s action will almost certainly be greater than the narrow legal ones. Just as there was a time when people could smoke on airplanes, or drive drunk without guilt, there was a time when a Wall Street bond trader could work with a short seller to create a bond to fail, trick and bribe the ratings companies into blessing the bond, then sell the bond to a slow-witted German without having to worry if anyone would ever know, or care, what he’d just done.

That just changed.

If you happen to be sitting on the Goldman Sachs bond-trading floor life must feel horribly unfair.

You did nothing worse than live by the ethical assumptions of your market -- any money-making event short of obviously illegal is admirable -- and now your own grandfather thinks you’re some kind of monster. Your world feels upside down: What was right is now wrong; what was good is now bad...

You are probably wondering: What next? What will the angry rabble -- all those ordinary people who can never really understand your business -- now demand that you explain to them, so they can disapprove of you all over again?

Ritual Sacrifice

Sadly, it will not suffice to offer up Fabrice Tourre as a ritual sacrifice. No one is going to accept a then 27-year-old Frenchman, whose job was apparently to keep sweet the patsies on the other end of your trades, as the world’s authority on your trading positions.

His name isn’t even on the top of the list of Goldman traders listed on the $2 billion Abacus deal for which you are being sued. The name on top of that document is Jonathan Egol. Egol appears to have been the bond trader at the center of your Abacus program. The same Jonathan Egol who told fellow traders in 2006 -- a year before this transaction -- that the subprime market was doomed.

The public eventually will ask: Who is Jonathan Egol and what exactly was his game?{Oh, they will, will they? Order more bread and circuses to keep them distracted, docile and debt-laden please....}

A far better sense of why, and when, you ceased completely to concern yourself with the consequences of your actions.{karmanye vadhikaaraste....}

The masses will be curious to know, for instance, how you became blinded to the very simple difference between right and wrong. The more moralistic among them will ask the question mainly to fuel their own outrage; the more tactical will ask the question because they sense that the financial system doesn’t function unless you have the incentive to think in these terms - - and you clearly do not.

Entertaining read. Ensoi.

Singha · Post by **Singha** » 23 Apr 2010 21:28

since america loves to keep the maximum number of people in jail and make tv shows about it (even jailed abroad is a show),
I figure there's going to be cost cutting as the state cannot pay so much to jail operators anymore. ultimately vast tented shantytowns like the phoenix arizona tented jail is going to be common both in hot and cold environs.

the american gulag

Sanjay M · Post by **Sanjay M** » 24 Apr 2010 08:07

This is an area where devolution of powers to the state/municipal level is the best thing. If some local district wants to hike tax rates to ridiculous levels, then let them - and let them also witness the mass-flight that results. Other competing districts which keep their taxes lower may likewise see an influx of people.

I'm hoping that Tata Nanos and other boosts to Indian mobility will result in the same exercise of choice on where to live and whom to live among. Let birds of a feather flock together. Let those who wish to live with the trade-offs of welfare statism do so, and let those who with to live with the trade-offs of libertarianism do so. Maybe some people are more suited to one lifestyle over the other - at least in a particular phase of life.

Hari Seldon · Post by **Hari Seldon** » 24 Apr 2010 13:16

D&G high priest Sri AMbrose Evans Prichard (AEP) cranks up the sombre-ness of the incantations a tad, seems like.

As we've grown accustomed to expect of sri AEP, this piece too is a hoot. Kindly, read and ensoi.

Escalating Greek default fears rock Europe's debt markets

The maestro composes symphonies by formula. First, the breathless soprano....

Greece's debt crisis has reached a dramatic crescendo after the EU revealed that the country's debt and deficit figures are even worse than feared and leading banks began to talk openly of debt-restructuring. With contagion spreading across Southern Europe, spreads on 10-year Greek bonds exploded to almost 600 basis points over German Bunds in panic trading, pushing borrowing costs close to 9pc. Rates on two-year debt rose to 10.6pc in a market gone mad.
...
Credit default swaps (CDS) on Portuguese debt surged 50 basis points in a matter of hours to an all-time high of 270. Markit said the CDS on Spain reached a fresh record of 175, and Ireland jumped to 162, with jitters reaching Hungary, Bulgaria, Romania, Russia and even Argentina.

Just reading it makes one breathless only.

Then the majestic, 'understated' (for AEP anyway) contralto....

The Parthenon was closed to visitors, a symbol of the Greece’s paralysis as public employees carried out yet another general strike, this time as EU and IMF officials were holding their second day of tense talks in Athens.
...
The Greek media said the country may ask for a short-term EU loan before the full bail-out kicks in, though it is unclear how this could work. Nor is it clear what premier George Papandreou hopes to gain from delaying activation of the rescue mechanism, unless he is hoping to exploit fears of EMU-wide contagion to extract better terms. Athens is demanding a loan rate below the 5pc so far agreed. Any talk of Greek restructuring is potentially dangerous. “It would cause massive [bond] spread turmoil in other peripherals if a troubled EMU member was not even given the chance to put its consolidation plans into practice,” said Marcel Bross, of Commerzbank.

Then the quotationista sub-symphony....

“It is clear that the Greek situation is a very serious one,” said Dominique Strauss-Kahn, head of the International Monetary Fund. “There is no silver bullet to solve it in an easy manner.”

No shit, Dominique. Such insights are all too rare in a world gone mad.

“This is now a real test of EU leadership,” said Julian Callow, of Barclays Capital. “Europe needs to act very fast to ring-fence Greece to prevent contagion. There has never been a default in Western Europe since World War Two and the whole financial system is depending on the assumption that it cannot be allowed to happen. There may need to be some sort of 'Brady bonds’ or 'Barroso bonds’,” he said, referring to the solution for Latin American debt in the 1980s.

Some insight, for a change. The markets have all along been missing the the micro-competitiveness trees for the Bretton woods. How long before the first crack in the edifice brings the highwater crashing in?

Ilias Iliopoulos, head of the Adedy union, said the protest was a warning that calls for further cuts would meet resistance. “These bloodthirsty measures won’t help Greece exit the crisis. A tragic period begins,” he said. Greece is already squeezing fiscal policy by 6pc of GDP this year – cutting the deficit by 4pc – in the most draconian cuts ever imposed on a modern developed country.

I only the rest of the OECD had the quality and caliber of UKstan's sterling leadership.....tch tch. Is it possible perhaps to clone sri brown and sri miliband and dispatch them on this tag-team firefight the world over??

Goldman Sachs said it is expecting Greece to offer some sort of “voluntary debt-restructuring” to creditors over coming months. Erik Nielsen, the bank’s Europe economist, said the rescue formula may evolve into a mixture of loans and debt forgiveness in order to give Greece “a much longer breathing space”. Any move is likely to be friendly. “I don’t think we are going to cross into the territory of forced debt restructuring,” he said. It is understood that EU officials are exploring formulae that would avoid triggering CDS default contracts, which could cause big losses for European banks that issued the derivatives.

Debt-forgiveness? really? Aah, now you have my attn, GS. Speak on.....

Would've loved to opine more but duty calls. Read it all, janta. And have a nice day.

Hari Seldon · Post by **Hari Seldon** » 24 Apr 2010 16:11

Marc faber, a pleasure to listen to, as always. Ensoi.

[youtube]mLrFK1bBEm4&feature=player_embedded[/youtube]

Hari Seldon · Post by **Hari Seldon** » 24 Apr 2010 20:15

Hanson op-ed. Interesting stuff. Pakistaniyat has come to california or what?

The Remains of a California Day

Yesterday I think I understood why California is in deep trouble. Let me walk you through another day out here.

At 7AM I put a few letters in my armored, heavy-duty steel rural mailbox. Four thefts of mail in the last five years have meant my grandfather’s old light gauge unlocked box gave way to a quite impressive, smart-looking sort of locked safe — the armor is a tasteful forest green.

(Ah, you, say, “Well, what would they want with bills and such?” Answer: “they” take a check your wrote to the power company, copy its template, take the router and serial numbers, make new checks with their name on it, and start cashing them at rural groceries. You only learn this when the canceled checks appear on your online banking: perfect replicas except the name at the upper left is some one else’s, the numbers on the lower left unfortunately yours. This too has happened to me on occasion.)

Well, if unkil thought twas ok for TSP to fake yindian currency, with german supplied paper and inkl too, apparently, wasn't gonna be long before the packees exported their skills to use elsewhere, eh?

svinayak · Post by **svinayak** » 24 Apr 2010 21:49

Another excellent, comprehensive, analytical and informative summarizing the colossal, fraud and corruption in USA both in private and public institutions! It is beyond the word "SHOCKING!

http://www.nakedcapitalism.com/2010/04/ ... nanas.html

Neshant · Post by **Neshant** » 25 Apr 2010 03:09

Marc faber, a pleasure to listen to, as always. Ensoi

Marc Faber has lately been claiming Goldman Sachs is an honest company. Methinks he's got some commission related business with GS or perhaps getting some clients from them which is why he's singing their praises.

There is not one honest man among all these pretenders who claim to speak on behalf of society against corruption and fraud.

That's because they themselves have crossed over to part-take in the fraud.

Sanjay M · Post by **Sanjay M** » 25 Apr 2010 07:20

When that much money is at stake, I doubt that Wall Street fatcats will just meekly shrink away and go gently into that good night. They've got lawyers too, and can use them for more than defensive purposes. Also, one has to wonder how the Democrats will continue to raise funds from those whom they're publicly reviling and antagonizing.

Neshant · Post by **Neshant** » 25 Apr 2010 07:21

IMF eyes data mission to Argentina

Such a mission would be a small, but significant step for reestablishing ties between the IMF and Argentina, whose relations have been strained since the country's $100 billion debt default and currency crisis in 2001.

But Argentina's own statement to the IMF earlier, was scathing about the Fund and its advice, which it blames for the 2001 default. [nN24145179]

"If we had followed the recommendations traditionally made by (the IMF) -- which have favored opening our economies, foreign indebtedness, financial liberalization and 'unbeatable' market-oriented reforms -- the outcome would have been totally different and today we would have been embroiled in a fresh economic, social and political crisis," the statement said. "Therefore, we celebrate today our well-gained economic independence."

http://ca.news.finance.yahoo.com/s/2504 ... ntina.html

Neshant · Post by **Neshant** » 25 Apr 2010 08:38

Goldman sachs is playing both sides of the coin with insider knowledge of Greece's finances to the detriment of Greece. Greece was stupid enough to contract goldman sachs as its "financial advisor" to their country - basically giving them insider information on the country's finances so GS could bet against them.

India better be careful not to let so called "financial advisor" crooks from abroad advice the country how to run the country. The only advice they will give is how best to game the system in their favor and fill their own pockets.

Who are the idiots who gave Goldman Sachs a 20% stake in the National Stock market in India? We may well live to regret having those con men on board.

Engdahl on bailout way out
http://www.youtube.com/watch?v=vjx40ObNf3U

Sanjay M · Post by **Sanjay M** » 25 Apr 2010 09:38

So according to what Faber is saying, commodities are going to take a plunge as soon as China's real estate bubble bursts. Countries with heavy dependency on commodities export to China, including Australia and even Canada, will suffer the economic fallout.

But Russia is also a heavy commodities exporter, with its heavy oil and natural gas exports. The last time Russia suffered from the plunge in oil prices, they went and nailed India by hiking the price for the Gorshkov. So if another plunge is just around the corner for them, are we going to get screwed again?

Meanwhile, a drop in international commodities prices should be a welcome event for the Kaangress, since there'll be less of an inflationary pinch for the aam admi, and less of a subsidy/price-cap cost to the local suppliers.

Neshant · Post by **Neshant** » 25 Apr 2010 17:17

Good-night England
http://www.youtube.com/watch?v=gicreJPLCpk

Neshant · Post by **Neshant** » 25 Apr 2010 17:18

%'s of GDP made Interesting
http://www.youtube.com/watch?v=LiM_UTx1aPg

svinayak · Post by **svinayak** » 25 Apr 2010 23:30

Neshant wrote:%'s of GDP made Interesting
http://www.youtube.com/watch?v=LiM_UTx1aPg

The scary thing is, California is in much better shape than the United States. The federal government isn't in any better shape than the states. That is why President Obama doesn't want to bail out California. Washington is affaid that if it bails out one state, it will have to bail them all out.

svinayak · Post by **svinayak** » 26 Apr 2010 00:26

http://www.nakedcapitalism.com/2010/04/ ... -back.html
More Proof the Bubble is Back
A correspondent e-mailed me about his belief that credit market valuations are more than a big dubious. For instance, subordinated tranches of commercial real estate bonds, which at the lows of last year were trading at 30 cents on the dollar are now at 90 cents. He thinks (and this is a space he knows) that a lot of it will go to 5 cents on the dollar.

This is an extreme example of liquidity-charged valuations versus projected future fundamentals, aka the greater fool school of investing. But at a price of 90, how much upside is there, even on a greater fool thesis?

Carl_T · Post by **Carl_T** » 26 Apr 2010 00:58

Conversely rising valuations on subordinate tranches could also be seen as rising confidence in the housing market. Even if there is no rise in confidence, that is not a reason to raise interest rates. They should be kept low in order to keep costs of lending and borrowing low until there are some signs of sustainable economic growth.

Carl_T · Post by **Carl_T** » 26 Apr 2010 01:08

Sanjay M wrote:Absolute power corrupts absolutely. The concentration of power in one individual - the Fed chairman - has resulted in this failure. He led the rest of the whales onto the beach. Had responsibility been distributed in a more natural/organic way through market mechanisms, then it would have been much less likely to happen.

Proponents of the US Federal Reserve system refuse to put it under political control and accountability, claiming that this would compromise its independence. But as I've said, not having the responsibility monopolized by one person/institution, and instead distributing it across the marketplace is the ultimate form of independence.

How do you propose to distribute responsibility over monetary policy in an organic/market-mechanistic way? Rather I feel Greenspan's views were very much in line with what the market wanted in that time period.

Doing so will add political pressure by various interest groups which may well result in the exact same outcome happening as what happened. Basically how can you be sure that the outcome would have been better had the responsibility of the Fed been more distributed as you say? If we rewind say 5-6 years back do you see the financial industry pressuring the government to raise interest rates? I don't.

IMO the Fed chair needs to be totally independent and un-answerable to anyone, for him to to his job well.

svinayak · Post by **svinayak** » 26 Apr 2010 01:46

Carl_T wrote:Conversely rising valuations on subordinate tranches could also be seen as rising confidence in the housing market. Even if there is no rise in confidence, that is not a reason to raise interest rates. They should be kept low in order to keep costs of lending and borrowing low until there are some signs of sustainable economic growth.

Which economy are you talking about?

Sanjay M · Post by **Sanjay M** » 26 Apr 2010 01:50

Carl_T wrote:How do you propose to distribute responsibility over monetary policy in an organic/market-mechanistic way? Rather I feel Greenspan's views were very much in line with what the market wanted in that time period.

Supply and demand. As the market heats up, then this could create the potential for price distortions, and thus there would be a greater demand for inspectors/assessors/sleuths/etc who can sniff out or root out any potential scams.

When the market cools, then price competition/efficiencies are more favoured, and thus there is less of a demand for such agents, and there is instead conversely a demand for opportunity innovators who will come up with newer/better ways to make money (these innovators then being the people who might come up with CDS, scams, etc)

This approach works better to find distortions in specific sectors, as opposed to the Fed's blunt-instrument sledgehammer approach, which cannot deal with sector-specific bubbles. The Fed's blunt hammer tries to slow the economy as a whole, and is not designed to tackle bubbles in specific sectors (eg. real estate)

Look at those comments from Marc Faber above, where he feels that Beijing's response to the real estate bubble would not be effective, because he doesn't believe that command-economy responses work. Such blunt-force actions invariably lead to misapplication of efforts, misuse of resources, etc, as compared to more efficient market-based solutions. Greenspan himself was on record following the 2001 Dotcom bubble crash, saying that it would have been impossible to dampen this one sector by tightening rates on the entire economy -- it was a sector-specific distortion.

Doing so will add political pressure by various interest groups which may well result in the exact same outcome happening as what happened. Basically how can you be sure that the outcome would have been better had the responsibility of the Fed been more distributed as you say? If we rewind say 5-6 years back do you see the financial industry pressuring the government to raise interest rates? I don't.

IMO the Fed chair needs to be totally independent and un-answerable to anyone, for him to to his job well.

Again, bubbles don't necessarily or probabilistically happen in all parts of the economy at the same time. It is more likely that specific sectors experience bubbles more than the rest of the economy. Therefore a fluid market-based solution is what's required, rather than the across-the-board ham-fisted sledgehammer approach.

Why can't people make money from finding faults with financial products? Just like how people in the software industry make money by finding fault with software products, etc. Why can't there be QA for financial products? (ie. find ways to make it fail)

Carl_T · Post by **Carl_T** » 26 Apr 2010 02:24

Sanjay M wrote:Supply and demand. As the market heats up, then this could create the potential for price distortions, and thus there would be a greater demand for inspectors/assessors/sleuths/etc who can sniff out or root out any potential scams.

I see what you're saying - monetary policy should be cognizant of sector specific strengths and weaknesses rather than for example, looking to slow down the whole economy when housing bubbles appear. I am unsure of the benefits of that approach, I feel that the Fed should be most concerned with long term macroeconomic stability more than anything else.

IMO sector-specific actions should be left for the treasury departments etc. to deal with.

Sanjay M wrote:Again, bubbles don't necessarily or probabilistically happen in all parts of the economy at the same time. It is more likely that specific sectors experience bubbles more than the rest of the economy. Therefore a fluid market-based solution is what's required, rather than the across-the-board ham-fisted sledgehammer approach.

Market based solutions also bring a different set of problems to the Fed. For example, companies are most concerned with maximizing near term profits. If the economy is growing very fast, do you feel firms would pressure the regulators to use a tighter monetary policy? I don't. I think it introduces a particular bias towards the short term rather than the long term I think the Fed should be concerned with.

Sanjay M wrote:Why can't people make money from finding faults with financial products? Just like how people in the software industry make money by finding fault with software products, etc. Why can't there be QA for financial products? (ie. find ways to make it fail)

Could you clarify? If I understood your question correctly, people do find problems with financial products and profit from that. The Goldman case is an example. You need balls of steel to do it though.

Neshant · Post by **Neshant** » 26 Apr 2010 02:33

Cartel structure of the Fed Reserve
http://www.youtube.com/watch?v=xSKpE4Hk5Bs

Sanjay M · Post by **Sanjay M** » 26 Apr 2010 02:56

Carl_T wrote:I see what you're saying - monetary policy should be cognizant of sector specific strengths and weaknesses rather than for example, looking to slow down the whole economy when housing bubbles appear. I am unsure of the benefits of that approach, I feel that the Fed should be most concerned with long term macroeconomic stability more than anything else.

IMO sector-specific actions should be left for the treasury departments etc. to deal with.

The economy/market is heterogeneous, and therefore the propensity for bubbles is not uniform.

Market based solutions also bring a different set of problems to the Fed. For example, companies are most concerned with maximizing near term profits. If the economy is growing very fast, do you feel firms would pressure the regulators to use a tighter monetary policy? I don't. I think it introduces a particular bias towards the short term rather than the long term I think the Fed should be concerned with.

That's why regulation is not the answer to dealing with moment-to-moment changes in the economy. This is a command-economy approach which is inherently inefficient. Regulation should only deal with the overall broader framework within which the economy operates, and not in dealing with cyclical changes/conditions.

Let the market spawn the agents who would assess the risks amid to customers amid the prevailing economic conditions. The more active the market, the more such agents would be in demand.

Could you clarify? If I understood your question correctly, people do find problems with financial products and profit from that. The Goldman case is an example. You need balls of steel to do it though.

There needs to be a firewall between the innovators of financial products/solutions, and those who would assess them. Remember how there was no firewall between accounting firms like Arthur Andersen and those who sought to profit from stocks growth? That led to Sarbanes-Oxley, and new standards in accountability.

Likewise, Goldman was advising the Greek govt on their economic troubles, while also being able to profit from betting on those troubles. That's like the fox guarding the henhouse.

Balls of steel are only for those who are dabbling on both sides of the line, and who are somehow expected to maintain a partition between their conflicting interests through sheer force of ethics alone. That's no good - you need a formal partition between risk management and opportunity innovation.

Neshant · Post by **Neshant** » 26 Apr 2010 06:32

Now that the banking scammers have offloaded their losses onto the public, its time for the public to pay.

Politicians go along with this scam because they get compensated like CEOs. So they don't care if they don't win a second term. They get invited to do some 'consulting' for a bank after they leave office and retire wealthy. How much you want to bet Geithner will be doing 200 million in salary easy after he leaves office.

------------

"To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive."

http://www.washingtonpost.com/wp-dyn/co ... 05258.html

Sanjay M · Post by **Sanjay M** » 26 Apr 2010 06:54

Heh, let's see what kind of invitations they get after carrying out a witch-hunt against Goldman Sachs. The revolving door threatens to turn into a closed door. This is what will temper Geithner's actions.

abhishek_sharma · Post by **abhishek_sharma** » 26 Apr 2010 08:00

Our Giant Banking Crisis—What to Expect
by Robin Wells, Paul Krugman

http://www.nybooks.com/articles/archive ... ng-crisis/

Hari Seldon · Post by **Hari Seldon** » 26 Apr 2010 08:05

Politicians go along with this scam because they get compensated like CEOs. So they don't care if they don't win a second term. They get invited to do some 'consulting' for a bank after they leave office and retire wealthy. How much you want to bet Geithner will be doing 200 million in salary easy after he leaves office.

Interesting, but I'll go with whatIlargi @ TAE says here:

I think the undoing of Goldman will be that its execs, just like those at Morgan Stanley, or GE, or GM, have failed to understand that their own personal wealth can only last as long as the "lower classes" have at least a decent life. A chance to feed their kids and send them to a proper school, to get proper medical treatment for their families if and when required, and, when they age, to draw sufficient retirement funds not to suffer from hunger and cold.

The Blankfeins and Jamie Dimons of the planet have no idea who these people are, or what they think, what they're going through, many hundreds waiting in line for an entire day for a handful of low-paid jobs.

Interesting POV, IMHO. Time will tell who was right, of course.

Neshant · Post by **Neshant** » 26 Apr 2010 08:10

Basically, the author is saying income tax receipts are way down, corporations are not paying a lot of tax (the effective corporate income tax rate is 1.19%) and expenditures are still going up. We all know this, but he lays the actual numbers out and they are scary. He also says there will be "serious market reactions" (he doesn't specify, but seems to point to Greece-style bond yields) if the US doesn't get its ecomony up and running soon.

---------------

EXTEND & PRETEND: Is the US Facing a Cash Crunch?

The US Government is caught in a cash vise and is being squeezed between too slow a rebound in tax revenues and the limitations on how quickly it can realistically take its funding requirements to the US Treasury auction. The US Treasury was saved in March by what the government reports as “proprietary receipts”. Those receipts require an explanation that is not well publicized since it begs the question of what happens next month without the $117 BILLION journal entry.

http://home.comcast.net/~lcmgroupe/2010 ... Crunch.htm

Neshant · Post by **Neshant** » 26 Apr 2010 08:19

Sanjay M wrote:Heh, let's see what kind of invitations they get after carrying out a witch-hunt against Goldman Sachs. The revolving door threatens to turn into a closed door. This is what will temper Geithner's actions.

i believe the goldman sachs issue just a smoke screen.

no prosecutions will be made and in the end, only a small fine will be paid.

its just to show case that the govt is tough on GS and they are not being allowed to game the system (which of course they are). I think it works in GS interests as well as they can PRETEND they are being policed when in fact they have free reign.

Did any chairman of any rating agency go to jail ? The fraud is very blatant there yet the victims of the fraud cannot even get their case heard in court. It gets thrown out on grounds that the rating agency was practicing 'free speech' when they rated garbage securities AAA. Obviously the govt instructs the courts to throw the case out.

Likewise this GS issue is a road show setup in time for elections. One thing is guaranteed - nobody is going to jail. The fine paid will probably come from TARP itself.

Sanjay M · Post by **Sanjay M** » 26 Apr 2010 08:32

I think both sides will circle each other warily, and then later on GS will send in the lobbyists to broker a deal. Obama won't be eager to gut one of America's key financial powerhouses.

Neshant · Post by **Neshant** » 26 Apr 2010 09:04

Acharya wrote:
Neshant wrote:%'s of GDP made Interesting
http://www.youtube.com/watch?v=LiM_UTx1aPg
The scary thing is, California is in much better shape than the United States. The federal government isn't in any better shape than the states. That is why President Obama doesn't want to bail out California. Washington is affaid that if it bails out one state, it will have to bail them all out.

hell they are bailing out pakistan with billions, why not Calif