Just read what he has to say.
Category: Good Writing
Matt Taibbi is This Generation’s Hunter S. Thompson and Seymour Hersh
Rolling Stone does not have it online, but you can find a copy of his latest, The Great American Bubble Machine in the Something Awful forums.
Basically, it’s a history of Goldman Sachs, and the intro says it all, “From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression – and they’re about to do it again.”
I don’t think that we will fix the banking system until we take those MoFo’s down.
The Rude Pundit is a F&^%ing Genius
I can’t add anything to his, very profane, coverage of Barack Obama’s press conference.
Go read.
Here is the embedded video.
Visit msnbc.com for Breaking News, World News, and News about the Economy
The Shrill One on Health Care Reform
I agree with Paul Krugman completely as to the first two rules of health care reform:
- Don’t trust the insurance industry.
- Don’t trust the insurance industry.
Makes sense to me.
Quote of the Day
I can only conclude that in order to run for governor in Texas, there is some sort of an IQ test involved — if you pass it, you become ineligible for state office . . .
On the fact that Texas Governor Rick Perry, who had said that he would decline stimulus funds, and had actually talked secession, was in fact spending stimulus funds on remodeling the governor’s mansion.
Reading Between the Lines: FDIC Assessment
Props to Margaret Chadbourn at Bloomberg, who sees a change in policy and recognizes its significance.
Specifically, she notes that the FDIC will be assessing an emergency assesment on banks in order to shore up their insurance fund, and she sees a real change in policy:
U.S. banks will pay an emergency fee based on their assets to rebuild the Federal Deposit Insurance Corp.’s reserves, putting a greater burden on large banks to replenish the fund amid the fastest pace of failures since 1994.
The FDIC voted 4-1 today to impose a fee of 5 cents per $100 of assets, excluding Tier 1 capital, backing away from a proposal of 20 cents per $100 of insured deposits. Local bankers said the fee on deposits could erase more than half their 2009 earnings. The fee will rebuild the fund that started the year at $18.9 billion, the lowest since 1994’s first quarter.
(emphasis mine)
Fees have traditionally been assessed on deposits, not assets, but the problems with bank failures, particularly among the giant banks are dodgy asset problems, so it serves to hit the big banks harder, who are less well capitalized on the basis of deposits.
It adds cost to risk, and it is a significant, and I hope permanent, change.
This Article Makes Me Feeling Queasy
A New York Times financial reporter describes how he got tied up in the foreclosure crisis.
I guess the article is a good description of the mania that gripped the nation,* but it makes me feel like a peeping Tom, so I let it percolate in my mind for a while.
It’s informative, but it made me feel like I was intruding to read it.
*Well, not so much me, I bought a house in 2004 with a 30 year fixed rate mortgage and 20% down, at only about a 15% greater payment than the half a duplex I was renting, I had to move, and so I bought, even though I though houses were overpriced.
What Josh Said
I don’t have much to say on Obama’s speech, I’ve only read the transcript, and Obama needs to be watch, but Josh Marshal finds the reality on Richard Bruce Cheney when suggests that Cheney is at best a figure of mockery and derision:
This is someone who not only organized and seemingly directed a policy of state-sponsored torture. He did it in large part to get people to admit to crankish conspiracy theories he got taken in by by a crew of think-tank jockeys in DC whose theories most even half way sensible people treated as punch lines of jokes. So it’s Torquemada or 1984 but only after getting rescripted by Mel Brooks.
This is an extremely gullible man who has just come off being the driving ideological force in an administration that most people can already see produced more fiascos and titanic, self-inflicted goofs than possibly any in our entire history. By any standard the guy is a monumental failure — and not one whose mistakes stem in some Lyndon Johnson fashion from tragic overreach, but just a fool who damaged his country through his own gullibility, paranoia and bad judgment. Whatever else you can say about the Cheney story it ain’t Shakespearean.
Indeed.
Where Are the Slime Going to Flow?
One of the arguments about the obscene compensation on Wall Street is that they have to pay in order to keep their “talent” from jumping ship.
Brendan Coffey looks at this, and notes that these folks really have no where to go:
- Hedge funds: They are shutting down, and now that they aren’t making double digit returns people are not interested in 2% of assets and 20% of gains any more.
- Private Equity: It’s dependent on cheap credit, there isn’t that much any more, and it likely won’t be in the near term.
- Foreign banks: Compensation for CEOs, except for the UK’s “The Street”, which is sicker than Wall Street, their CEOs make less than a lot of junior traders get for bonuses.
If these whiners are so sick of this, and threatening to jump ship, let’s not throw them a life raft when they land in the water.
The Fall of the House of Hank Greenberg
The Times of London has a very good account of what took down AIG, and it predates Joseph Cassano, the head of its Financial Products Unit, and it makes it clear that the insurance giant was on shaky ground, with the active participation of its founder Hank Greenberg, for at least a decade previous.
It also notes how Brooksley Born, who was purged by Fed Chairman Alan “Bubbles” Greenspan and Treasury Secretary Robert “Why am I not Under Indictment for Insider Trading” Rubin, knew about the problem, and that it was systemic, and tried to do something about it.
It’s a good read, and highly recommended.
When the Rude Pundit Isn’t
He isn’t rude, that is, at least after the first paragraph, where he compares Republicans to fattie amputee midget S&M fetishists who draw a line when someone sends them links to child porn:
Some conservatives have actually gotten queasy with the release of the torture memos and the Senate Armed Services Committee report on the same. Maggie Gallagher, who has lived for years now off the lucre she makes from her hatred of gay marriage, once praised the illegal data mining that Bush’s NSA did: “When exposed to information about efforts like this by President Bush, I am not outraged. I’m deeply grateful. And worried now about who might die now that The New York Times has published this information.” Now, in the National Review Online (motto: “Is anyone still reading this sh$# beyond bloggers who need something to argue with?”), Gallagher writes, “I personally believe torture is wrong. We shouldn’t do it. Even if it means me, my husband, and my two sons get blown up. Seriously, if I had to choose I’d say: Death is common to us all; torture is a choice.” It’s as impassioned an anti-torture statement as anyone on the Left has made.
($#@ of swear words mine, as is the emphasis)
He’s right. Maggie Gallagher gets it.
Go read the rest.
Good Read on Swine Flu, By an Expert
John M. Barry, who literally wrote the book on the Spanish Influenza Pandemic, has an article on the Swine Flue outbreak that is a must read.
I also need to read his book.
I had not previously realized that the initial Spring outbreak was very mild, and it was the Autumn outbreak that had the virulence that we now remember the disease for.
Money quote is at the end:
In all four instances [Influenza Pandemics], the gap between the time the virus was first recognized and a second, more dangerous wave swelled was about six months. It will take a minimum of four months to produce vaccine in any volume, possibly longer, and much longer than that to produce enough vaccine to protect most Americans. The race has begun.
Go read.
Evolution Disproved!
I just hurt myself laughing:
In a severe blow to the credibility of evolutionary science, biologist Richard Dawkins admitted today that Darwin’s theory of evolution could offer no rational explanation for the continued existence of creationists. The process of natural selection sees genes which provide an advantage in the battle for survival being preserved across generations, but scientists can find no useful purpose for the gene which leads people to believe that the earth was created in only six days about 10,000 years ago.
Solipsism as proof of Genesis.
Breaking News: Wall Street Salary Caps Drive Away Assholes!
From the ever reliable Andy Borowitz:
As the federal government moves to institute salary caps for Wall Street executives, an increasing number of assholes are seeking employment elsewhere, a study confirmed today.
According to the report commissioned by the University of Minnesota’s School of Business, at a time when the economy needs experienced hands at the tiller, some of the financial world’s best-trained dickwads are fleeing the ship.
….
I need a screen wipe.
Roubini: Stress Test Too Lienient
And 100% correct. The numbers now are already worse than the “worst case” scenario that the Treasury is using.
The Money quote is, “Conclusion: Actual macro data for 2009 are already worse than the more adverse scenario in the stress tests. These are not stress tests but rather fudge tests.” (emphasis original)
I agree.
Nobel Laureate Stiglitz and Black Swan Author Blast Obama and Geithner
Joseph Stiglitz calls the plan, “Obama’s Ersatz Capitalism,” in a New York Times OP/ED, where he runs the numbers and shows that the plan is at least a 50% subsidy to the private buyers, and Black Swan author Nassim Taleb says Geithner’s bank recovery plan will fail, and simply socialize losses and privatize gains.
They are both good reads.
Quote of the Day
ROTFLMAO!!!
There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged.
One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world.
The other, of course, involves orcs.
Too true.
Not sure of the source, it’s been floating around the innertubes.
Reality Sets In
It appears that the economic Calvanism* of the past 3 decades is on the wane.
Michael Hiltzik notes that one of the characteristics of the AIG scandal is the reemergence of the concept of the “undeserving rich” in the public discourse:
That the point is even open for discussion suggests that a sea change is taking place on the American political scene. For decades, the wealthy have been held up as people to be admired, victors in the Darwinian economic struggle by virtue of their personal ingenuity and hard work.
Americans consistently supported fiscal policies that undermined middle- and working-class interests partially because they saw themselves as rich-people-in-waiting: Given time, toil and the magic of compound interest, anyone could retire a millionaire.
That mind-set has all but been eradicated by the damage sustained by the average worker’s nest egg, combined with the spectacle of bankers and financial engineers maintaining their lifestyles with multimillion-dollar bonuses while the submerged 99% struggle for oxygen.
Here’s hoping that this is a generational change, and not a 15 minute fad.
*Traditional Calvanism sees profit, and wealth, as a sign of God’s grace.
The Cemeteries of the World are Full of Indispensable Men*
The former chief economist of the IMF has an Op-Ed in the New York Times, and he makes the point that removing the “geniuses” who created the problem has to be the first step of fixing the problem:
A.I.G. can hardly claim that its generous bonuses attract the best and the brightest. So instead, it defends the payments by arguing they’re needed to retain employees who are crucial for winding down transactions that are “difficult to understand and manage.” In other words, only the people who stuck the knife into the American International Group can neatly extract it for a decent burial.
There is no reason to believe this.
Similar arguments made during the 1997 Asian financial crisis, when currencies and stock markets collapsed in much of Southeast Asia, turned out to be a smokescreen to protect the executives who were partly responsible for the mess. Recovery from that crisis required Indonesia, South Korea and Thailand to close or consolidate banks. In all three countries, bankers protested, claiming that their connections with borrowers were critical to recovery.
…
The lesson of all this is that when insiders have broken a financial institution, the most direct remedy is to kick them out. Traders are hardly in short supply, and you don’t need to rely on the ones who made the toxic trades in the first place. Companies must always plan around the potential departure of even their star traders, or they are certain to fail. A.I.G. does not need to keep all of its traders, especially since it takes far fewer people to unwind a portfolio than to build it up.
The longer that we put this off, the worse it will be.
*Charles de Gaulle, a man not known for his own sense of personal dispensablity, coined this bon mot.
I’d Say It’s Self-Evident, Only Not
Nemo at Self Evident makes a convincing case that Bernanke and Geithner are not doing anything but trying to protect the incumbent banking giants.
I agree. While we need a functioning credit system, there is no need for the current banks to continue to exist in their current form, and the Fed and Treasury’s frantic effort to keep these banks on life support is a detriment to the rest of the economy:
If I were in charge and I wanted to prevent banks from failing at all costs, what might I do?
I might relax mark-to-market accounting. This would allow assets to be carried at inflated valuations, both for purposes of regulatory capital requirements and for purposes of getting loans from the Fed.
I might provide non-recourse loans to private equity to create inflated marks where mark-to-market still applies.
I might try to convince the FDIC to exercise forbearance in seizing banks. Of course, the primary day-to-day mission of the folks at FDIC is to preserve the integrity of their insurance fund. So they might object to my suggestion. I might have to give them assurances that they will have the necessary resources should my great plan fail. A $500 billion credit line from the Treasury, say.
If the FDIC agreed, they might suddenly go from 3-4 bank seizures per week to 0-1 per week.
Once my plan leaked to certain troubled banks, they might suddenly halt their attempts to raise capital at $0.20/share.
And of course, once Wall Street got wind of it, shares in financial companies would rocket higher.
Let me know if you notice anything like this happening.
Good point, and good snark.