Well, the Germans have a bailout plan, one they developed after stiffing the rest of the Euro zone, and now they have been browbeaten into softening pay limitations of their bailout package by bank executives making noises about not accepting state aid.
It was to be a hard pay limit of €500,000 ($666,000), but that was too much for the upper failed management at the failed banks to accept.
Where is my revolver.
It appears taht Lloyds Staff ‘Will Still Get Bonuses’, even after the government injected £5.5 billion into the institution.
And it’s a rather long list.
The Fed is done here…their quiver is empty.
James Saft notes that what we are seeing, “The market’s reaction to the new superbailout follows a familiar pattern: relief, disappointment and the need for a higher dose of the same medicine, is distressingly similar to the behavior of an addict.
I agree….I think we should start arresting and imprisoning bank executives, like we do junkies.
In any case, it’s a good read.
Andrew Lahde managed a hedge fund that returned 866% by shorting the subprime collapse.
Well, he just quit and shut down his fund, and his letter of resignation is a doozy:
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.
Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don’t worry about my employees, they were always employed by Mr. Springer’s company and only one (who has been well-rewarded) will lose his job.
I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life — where I had to compete for spaces in universities and graduate schools, jobs and assets under management — with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government. Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man’s interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft’s near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won’t see it included in BP’s, “Feel good. We are working on sustainable solutions,” television commercials, nor is it mentioned in ADM’s similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant — marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let’s stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde
Someone needs to give this guy Hank Paulson’s job.
I approve of the bit about hemp too.
Turn on, tune in, drop out.
High Desert Federal Credit Union, taken over yesterday.
FOR IMMEDIATE RELEASE
High Desert Federal Credit Union Placed Into Conservatorship
High Desert Federal Credit Union is Open and Operating, Member Accounts are Safe and Federally InsuredOctober 16, 2008, Alexandria, Va. — The National Credit Union Administration (NCUA) has assumed control of the operations of High Desert Federal Credit Union headquartered in Apple Valley, California. The Federal Credit Union Act authorizes the NCUA Board to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, protect members’ interests or protect the National Credit Union Share Insurance Fund.
Service continues uninterrupted at High Desert Federal Credit Union and members are free to make deposits, access funds, make loan payments and use share drafts. While the credit union was placed into conservatorship because of a declining financial condition, the decision to conserve a credit union enables the institution to continue normal operations with expert management in place.
Member accounts are insured to at least $250,000 while IRA and KEOGH retirement accounts are separately insured up to $250,000 under coverage provided by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. Government. Members with questions about their insurance coverage can contact NCUA’s Consumer Assistance Center at 800-755-1030 Monday through Friday between 8:00 a.m. and 6:00 p.m. (EDT).
High Desert Federal Credit Union was originally chartered in 1951 and today serves those who live, work, or worship in San Bernardino County, California. The credit union has $149 million in assets and serves over 13,000 members.
The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund, insuring the deposits of 89 million account holders in all federal credit unions and the vast majority of state-chartered credit unions. NCUA is funded by credit unions, not tax dollars.
The following links to a document for members being posted on the High Desert Federal Credit Union website concerning the conservatorship, http://www.hdfcu.org.
-NCUA-
*I ripped off this term from Atrios.
We now have a report that the European Central Bank, the entity that serves in the role held by the Federal Reserve in the Euro Zone, has decided to set aside all inflation concerns for the moment:
The European Central Bank’s main task is to keep inflation down. But over the past month, it has thrown caution to the wind in trying to prevent financial system and integrated economy of Europe from falling apart.
When you consider the fact that the charter of the ECB was only to deal with inflation, because of German experiences with hyperinflation in the 1920s (wheelbarrows of cash for a loaf of bread).
Unlike the Fed, the ECB has no mandate to maintain stable employment….It’s only role is to keep inflation low, and they are freaking out.
So, I read that J.P. Morgan bonuses are to be slashed by 30-50%.
They are getting public money, and they are still getting bonuses?
I’m not sure whether to laugh or to cry.
Bush is determined to push through rule changes to allow dishonest companies to kill and injure ordinary citizens:
Bush administration officials, in their last weeks in office, are pushing to rewrite a wide array of federal rules with changes or additions that could block product-safety lawsuits by consumers and states.
The administration has written language aimed at pre-empting product-liability litigation into 50 rules governing everything from motorcycle brakes to pain medicine. The latest changes cap a multiyear effort that could be one of the administration’s lasting legacies, depending in part on how the underlying principle of pre-emption fares in a case the Supreme Court will hear next month.
Because they know, just like investment banks, nothing untoward will be done by companies, because the holy market place would punish them for maiming children.
Only to go.
Alan “Bubbles” Greenspan said that it was impossible, so all that could be done was to clean up afterwards, though it’s clear that Ben Bernanke is s looking at ways for the Federal Reserve to intervene before bubbles get too frothy.
He’s also looking at how excessive consolidation in banks made the current troubles worse.
This is a clear repudiation of Greenspan’s policies and philosophies.
Kevin Drum nails the problem clearly, at least with respect to housing, when he asks when do asset bubbles become inflationary.
While it is hard to claim that the Dot Com boom was inflationary, it’s clear that the housing bubble was. These were not abstract financial assets, they were essentials of life that people pay for, but the Fed, and the BLS, specifically gamed the inflation data so as not to have to count double digit increases in the cost of shelter as inflation.
Of course Alan “Bubbles” Greenspan, who hates wages, but loves unearned income, would never subscribe to the idea that this was inflationary, but he’s a complete wanker.
Or, more accurately, they are looking at returning to New Deal style regulations of the financial market.
The more I hear about the current state of finance, the more I am amazed at the degree to which FDR got everything right on regulation of banks and finance.
Because his suggestion that a banking plan must involve restraining executive pay does not also call for fierce criminal prosecution of wrong doing.
There are thousands of people involved in this who should be in jail for a very, very long time.
It appears that former AIG CEO Hank Greenberg is less than satisfied with the deal he got when the US Government bailed out the insurance company, and he has written a letter to current CEO demanding more money.
In related news, Greenberg has invoked the Fifth Amendment with regards to inquiries from the New York State Attorney General.
The FCC Office of Engineering Technology just finished its tests on “white space devices”, which operate in the space between television channels, and they have determined that they work without interfering with licensed TV channels in the spectrum.
Basically, these devices are supposed to detect which channels are in use by broadcast TV, and avoid those specific frequencies, which will open massive amounts of spectrum to small relatively low power devices.
It should be noted that there are strong forces opposed to such an application:
Opponents to the Google’s white spaces plan have included not just T-Mobile, but also the National Association of Broadcasters (NAB) and the wireless microphone industry. These two groups contend that interference will be caused to HDTV and other digital TV signals if mobile devices start operating in currently unused white spaces next to spectrum allocated by the FCC for TV broadcasting.
And this opposition occurs without regard to whether there is interference, they object to the possibility of interference from infringing devices.
The fact is that the broadcasters and T-Mobile want to find a way to make money off of unused spectrum, and the wireless microphone industry has been a laboratory for interference problem, since they have been operating illegally in this spectrum for well over a decade, despite complaints from the public safety community (see here and here for some of Harold Feld’s marvelous takes on the hypocrisy of the Wireless mike industry).
I’m not sure where this is all going to go, though the fact that FCC chairman Martin is optimistic on open use of the spectrum is encouraging.
Note though that he is a short timer, and we don’t know who his successor will be after Bush and His Evil Minions™ leave office.
The SEC prematurely folded an investigation of Bear Stearns involvement in collateralized debt obligations:
In the report, obtained by CNBC, SEC Inspector General David Kotz says the agency inexplicably dropped the case in 2007, even after Bear Stearns had offered to pay a monetary settlement.
The report says the director of the SEC’s Miami office, David Nelson, had an “ongoing personal relationship” with the Bear Stearns attorney in the case. In dropping the case, Nelson allegedly told his friend, “Christmas is coming early this year,” adding Bear Stearns “can keep their money.”
More importantly, the SEC’s Inspector General notes that this investigation would likely have uncovered the problems that led to the demise of the investment bank.
In noting that many media outlets are swallowing the Republithug “It’s the n*gg*rs’ fault,” spin, Baker notes that, “USA Today Thinks It’s Possible That Elvis Caused the Financial Meltdown.”
I wish that I wrote that well.
Well, I just overheard on the radio that the Baltic Dry Index, a measure of the cost of shipping, just fell to a more than 5 year low.
Ships are sitting idle as manufacturers try to reduce inventory.
We are also seeing this at the other end of the manufacturer to market equation, with retail sales falling 1.2% in September…And remember, this was before Lehman imploded.
The Federal Reserve’s Beige Book, a report of the state of the economy, is pointing down too, as is the New York Fed’s Empire State Manufacturing Survey.
In energy, crude oil ended at less than $75/bbl today…..One note, when I predicted some time back that we would never see the south side of $100/bbl, I was wrong.
Interestingly enough we are also seeing reports that Paulson can give money to banks, but he can’t make them lend it out, which would seem to imply that we need someone more interventionist at the helm.
Total lending by the Federal Reserve:
I think that my inflation solution is going to happen whether we want it or not.
H/T The Big Picture