Global Economic December Thread

Talk about the global and national economy to your heart’s content, as much as it takes to get it out of your system so the rest of the site can stick to real estate and housing.

As of 09/07/2010, global economic comments that do not directly relate to Seattle-area real estate go only in threads designated for this specific subject.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

365 comments:

  1. 251
    Ben says:

    RE: Kary L. Krismer @ 249 – I’m referring to the bigger picture, Kary. If there’s a constant theme in my posts, it’s our crony capitalist system, regulatory capture, continued implementation of failed and discredited Keynesianism. Nothing has been changed. They will fight to maintain the status quo until it crashes down.

    Have you seen Janet Tavakoli’s presentation?

    Federal Housing Finance Agency Supervision SummitWashington, D.C

    Fraud as a Business Model
    http://www.scribd.com/doc/44915502/FHFA1282010

  2. 252
    pfft says:

    By Ben @ 1:

    RE: Kary L. Krismer @ 249 – I’m referring to the bigger picture, Kary. If there’s a constant theme in my posts, it’s our crony capitalist system, regulatory capture, continued implementation of failed and discredited Keynesianism. Nothing has been changed. They will fight to maintain the status quo until it crashes down.

    Have you seen Janet Tavakoli’s presentation?

    Federal Housing Finance Agency Supervision SummitWashington, D.C

    Fraud as a Business Model
    http://www.scribd.com/doc/44915502/FHFA1282010

    keynes has been validated all over the world. how has it failed?

  3. 253
    pfft says:

    we do know that austerity has failed.

    Thursday, March 25, 2010 – 07:16
    ECB Trichet: Ireland Is Role Model For Greece On Deficit Plan
    http://imarketnews.com/node/10852

    They Have Made a Desert
    And called it successful adjustment.
    http://krugman.blogs.nytimes.com/2010/05/14/they-have-made-a-desert/

    Research Desk responds: How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    CBO: Up to 3.3 Million People Owe Their Jobs to the Recovery Act
    http://www.offthechartsblog.org/cbo-up-to-3-3-million-people-owe-their-jobs-to-the-recovery-act/

  4. 254

    By David Losh @ 112:

    If your point is that we, the tax payers, should pay the executives who crashed our economy, while taking junkets to Las Vegas, more to attract more of the same kind of talent, then yes we have a lot to discuss in the Global Economic Thread.

    Guilt by association. The executives who caused the problems are largely out of the companies they caused the problems for. If every executive in the US is incompetent, than it’s irrelevant. But if you make the logical assumption that some people make money for companies, and that being unable to bid for their services hurts companies, then what President Obama is doing is counterproductive.

    But what makes you think President Obama is in any way qualified to make any business decisions for any company? He’s a politician. Politicians know how to spend money, and how to take money (reference the House Dems wanting to take dead peoples’ assets) not how to make money.

  5. 255
    Ben says:

    RE: pfft @ 2 – Let me count the ways:

    http://www.google.com/search?hl=en&source=hp&q=keynesianism+has+failed&aq=o&aqi=&aql=&oq=&gs_rfai=

    There’s enough reading material out there to keep you occupied for months, if not years.

  6. 256
    doug says:

    Re: Kary

    You make good points re: GM executive compensation. However, we were discussing unemployment and supply-side vs. demand-side, and this has nothing to do with that.

    Nor have I seen anyone on this board arguing that tax policy is the root cause of the economic downturn. I DO see people arguing that the deficit is a looming problem that must be dealt with, and the tax breaks sure don’t help the deficit.

    It’s the lack of middle and lower class buying power that is killing any chance of recovery. This seems pretty clear to me due to sales being down in just about every market I’ve seen, right down to the electricity and gas you use. That is not the cause of the financial crisis, but it’s the biggest problem in the economy right now.

    Your explanation for this is that Obama is mean, and keeping all the companies down. And while that may make sense to you in a common-sense sort of way, I don’t see any significant trending following announcements by Obama. Where is your evidence for this?

  7. 257
    doug says:

    By Ben @ 5:

    RE: pfft @ 2 – Let me count the ways:

    http://www.google.com/search?hl=en&source=hp&q=keynesianism+has+failed&aq=o&aqi=&aql=&oq=&gs_rfai=

    There’s enough reading material out there to keep you occupied for months, if not years.

    Man, if that’s not a case of
    http://en.wikipedia.org/wiki/Begging_the_question
    I don’t know WHAT is.

    You can look up “Reaganomics have failed” and get a ton of hits, too, you know.

  8. 258
    Blake says:

    Ben and others…
    I think that we have a lot of agreement, but differences on terminology. “Crony capitalism” is what we have, but when the corporations capture the regulators and regulate themselves, it is the same as having no regulations – – in fact worse! (I recall back in the 1970s when the cops in a town next to mine were raiding the homes of people that called them to let them know they would be out of twon and wanted their houses watched!)

    You all should take a few minutes to read a bit about this new book including the brief interview with the author Michael Hirsch at the beginning:
    http://www.amazon.com/exec/obidos/ASIN/0470520671/thebigpictu09-20

    Ben: Take a look at the review by Aaron Brown that concludes: “None of this detracts from the book, as long as you substitute “crony capitalism” every time you see “free market capitalism” and “financial-regulatory complex” every time you see “Wall Street.” This is an excellent account, chilling and damning in the best muckraker tradition, with the best evidence coming from the mouths of the cronies. It also gives some clear ideas for how to make things better in the future.”
    end quote

    … Oh look! “Former Obama administration budget director Peter Orszag is joining Citigroup’s global banking division… Orszag will hold the title of vice chairman, and has been tapped to serve in the bank’s Senior Strategic Advisory Group… After leaving the White House in July, Orszag was named a distinguished visiting fellow at the Council on Foreign Relations.”

    US Government Citigroup CFR… That’s Change we can believe in!

  9. 259
    David Losh says:

    RE: Kary L. Krismer @ 4

    It’s not about making money. The economy of a country isn’t about making money. Making money is a useless endeavor that produces nothing, and contributes nothing. We are seeing it is very easy to make money, and that is what today’s business model does. It makes money, and nothing else.

    Business is so adept at making money that they no longer need governments. Credit is the new currency. Your debit, or credit card is the new currency. It doesn’t need to be backed by anything more than a promise to pay.

    The politicians need to step in and stop the cycle. Rather than play along, politicians need to reign in these out of control business interests to focus on the Public Welfare, and Common Defence.

    We need, the tax payers need, protection from today’s business model.

    Paying more salaries will only attract the under belly of the business world. The best and the brightest set goals based on an end result. If the end result is to make money, if that’s the goal, then it is a very narrow focus of activity.

    We would never have the computer if money was the goal. A space shot, or space program, either public, or private is for the thrill, the ability. We would only have one efficient, cost effective auto monopoly. We would have one kind of house, no solar panels, no hover craft, windshield wipers, hybrid roses, or triage bandage.

    Advancement is what we need. We need innovation. We want the best and the brightest to find a way to work without having to subsidize an existence.

    Oh yeah, taking dead people’s money, is for sure a way to fund future development. Generational wealth is a problem. If you have a better solution, great.

  10. 260
    pfft says:

    By doug @ 7:

    By Ben @ 5:

    RE: pfft @ 2 – Let me count the ways:

    http://www.google.com/search?hl=en&source=hp&q=keynesianism+has+failed&aq=o&aqi=&aql=&oq=&gs_rfai=

    There’s enough reading material out there to keep you occupied for months, if not years.

    Man, if that’s not a case of
    http://en.wikipedia.org/wiki/Begging_the_question
    I don’t know WHAT is.

    You can look up “Reaganomics have failed” and get a ton of hits, too, you know.

    austerity failed gets 1 million hits.

  11. 261
  12. 262
    Ben says:

    RE: doug @ 7 – I’m sure they make a good cases too. Interesting example – I believe Reagonomics DID fail. I agree with you.

  13. 263
    pfft says:

    By Scotsman @ 171:

    Iceland chooses austerity, takes it’s medicine, lets private banks fail, and is now on the road to recovery!

    wrong of course.

    Iceland agrees to repay £2.3bn owed to UK after Icesave failure
    Iceland has agreed to start repaying the £2.3bn of debt it owes Britain from 2016 following the failure of its Icesave bank two years ago.
    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8192496/Iceland-agrees-to-repay-2.3bn-owed-to-UK-after-Icesave-failure.html

  14. 264
    WestSideBilly says:

    By Kary L. Krismer @ 106:

    RE: WestSideBilly @ 104 – I think his first thing was being critical of companies taking retreats in Las Vegas. That really helped their local economy! Then there were threats of extra taxes on bonuses and changes to government bailout programs after the loans were made. And he wasn’t exactly nice to the leaders of BP over the oil spill, even though there was little or no evidence in at the time and many entities possibly at fault (with the most recent reports being Haliburton might have been the most negligent actor).

    First, Obama was 100% right about the Las Vegas junkets. The companies he was criticizing took taxpayer money, then turned around and went partying in Las Vegas, ostensibly to promote their business? Vegas people (notably Wynn) were pissed, but I don’t really want my taxpayer dollars being used to wine and dine bankers making 7 figure salaries. If they want to go to Vegas on *their* dime, fine, Vegas is awesome. People are critical of government officials wasting taxpayer money, why is it OK for bailed out businesses to waste taxpayer money?

    Second, the discussion of bonus taxes and changing the terms of TARP was directly in response to the TARP recipients flaunting (abusing) the largess of Uncle Sam. Again, people are critical of welfare recipients abusing programs meant to aid them, but it’s OK if companies abuse programs meant to keep the companies afloat?

    Regardless of who was to blame for the oil rig incident, BP is ultimately responsible. It’s their logo on the end product, they’re the ones contracting the various companies involved. What was Obama supposed to do, tell BP not to worry about it?

    Again, if this is anti-business, our ideals are completely f***ed.

  15. 265

    By doug @ 6:

    Re: Kary

    You make good points re: GM executive compensation. However, we were discussing unemployment and supply-side vs. demand-side, and this has nothing to do with that. . . .

    It’s the lack of middle and lower class buying power that is killing any chance of recovery. This seems pretty clear to me due to sales being down in just about every market I’ve seen, right down to the electricity and gas you use. That is not the cause of the financial crisis, but it’s the biggest problem in the economy right now.

    Your explanation for this is that Obama is mean, and keeping all the companies down. And while that may make sense to you in a common-sense sort of way, I don’t see any significant trending following announcements by Obama. Where is your evidence for this?

    The material I quoted from Losh was from another thread that Tim asked us to bring here.

    I’m a big believer in confidence. Consumer confidence and business confidence. I would agree with your comments about middle class buying power, but buying power is irrelevant if even those able to spend don’t think they should.

  16. 266

    By David Losh @ 9:

    Oh yeah, taking dead people’s money, is for sure a way to fund future development. Generational wealth is a problem. If you have a better solution, great.

    The death tax is probably stimulative–the wealthy give so much money to attorneys and accountants to set up estates and then to prepare multiple tax returns yearly.

    Stated differently, it results in a lot of completely non-productive efforts that go on for years and years and years. It also unnecessarily ties up assets in bizarre ownership entities, not to mention destroys viable businesses.

    I really don’t understand what the logic is behind the tax, other than dead people don’t complain and don’t vote. If someone made their wealth off of S-Corps, they would have been taxed at the corporate level, then the individual level, then the dead level, all on the same income.

  17. 267

    By WestSideBilly @ 14:

    By Kary L. Krismer @ 106:

    RE: WestSideBilly @ 104 – I think his first thing was being critical of companies taking retreats in Las Vegas. That really helped their local economy! Then there were threats of extra taxes on bonuses and changes to government bailout programs after the loans were made. And he wasn’t exactly nice to the leaders of BP over the oil spill, even though there was little or no evidence in at the time and many entities possibly at fault (with the most recent reports being Haliburton might have been the most negligent actor).

    First, Obama was 100% right about the Las Vegas junkets. The companies he was criticizing took taxpayer money, then turned around and went partying in Las Vegas, ostensibly to promote their business? Vegas people (notably Wynn) were pissed, but I don’t really want my taxpayer dollars being used to wine and dine bankers making 7 figure salaries.

    That’s how they make money. As I recall the junkets complained of were primarily for sales people who had made a lot of sales for the companies involved, and who could easily go to other companies.

    As to your bonus argument, again the people getting the bonuses almost certainly didn’t cause their company’s problems, and could go elsewhere to a company not having taken government money. It harms the companies all due to some nonsense complaints about how some industries compensate their employees.

  18. 268

    By WestSideBilly @ 14:

    Regardless of who was to blame for the oil rig incident, BP is ultimately responsible. It’s their logo on the end product, they’re the ones contracting the various companies involved. What was Obama supposed to do, tell BP not to worry about it?

    Well first, I don’t know that BP is ultimately responsible just because they owned the oil rights. Depending on how the facts turn out it could be that BP can successfully sue Haliburton for all of the damages. President Obama should have focused just on efforts to get the oil shut off and minimizing damages. Did he really think that BP didn’t share those goals?

    More than anything, President Obama just needs to pick his fights better. He unnecessarily stepped into it with the college professor that had a run in with the police. He unnecessarily stepped into it with the Ground Zero Mosque.

  19. 269
    WestSideBilly says:

    By Kary L. Krismer @ 16:

    By David Losh @ 9:

    Oh yeah, taking dead people’s money, is for sure a way to fund future development. Generational wealth is a problem. If you have a better solution, great.

    I really don’t understand what the logic is behind the tax, other than dead people don’t complain and don’t vote. If someone made their wealth off of S-Corps, they would have been taxed at the corporate level, then the individual level, then the dead level, all on the same income.

    Estate taxes have a very specific purpose – to prevent generational accumulation of wealth with no associated productivity. Inherited wealth is usually less productive than earned wealth, and the massive accumulations such as we saw in the 1880s and 1920s do more harm than good.

    The estate tax also has a side benefit of encouraging significant late-life charity.

  20. 270
    WestSideBilly says:

    RE: Kary L. Krismer @ 17 – Actually many of the bankers getting huge bonuses were exactly the people who did the damage. Maybe not all of them, but enough of them. Their employers remained in business only because of taxpayer funding. That hardly seems like a situation where large bonuses are deserved.

    And given the state of the industry in 2008/2009, Wall Street wasn’t exactly on a hiring binge. I seriously doubt that every upset banker at AIG could have up and left for a better offer.

  21. 271

    By WestSideBilly @ 20:

    RE: Kary L. Krismer @ 17 – Actually many of the bankers getting huge bonuses were exactly the people who did the damage. Maybe not all of them, but enough of them. .

    Do you have anything to back that claim up, or are you just making it up? I find it hard to believe that a person who brought a company to its knees would be able to remain with the company. The ones who brought down AIG, for example, not there any more.

  22. 272
    pfft says:

    By Kary L. Krismer @ 16:

    By David Losh @ 9:

    Oh yeah, taking dead people’s money, is for sure a way to fund future development. Generational wealth is a problem. If you have a better solution, great.

    If someone made their wealth off of S-Corps, they would have been taxed at the corporate level, then the individual level, then the dead level, all on the same income.

    people who are dead don’t pay taxes. whoever inherits the estate does.

    I never understood why people who make 30 grand being a janitor should get taxed but if someone makes 30 million from an inheritance shouldn’t get taxed. if you do something you get taxed but if you do nothing you don’t? makes no sense.

  23. 273
    blurtman says:

    RE: Kary L. Krismer @ 21 You are kidding, right Kary? The heads of JP Morgan, Goldman Sachs, Wells Fargo, are still on board. All these institutions were insolvent. The head of Moody’s is till on board even though the reputation of his firm is in the toilet and the stock has lost value.

    And there is no accountability, nor clawback of monies derived through fraud. mDeval Patrick who was a board member at Ameriquest, the largest issuer of fraudulent mortgages in the US, even worse than Countrywide, left with his winnings, no harm to his character apparently.

    “While raking in a $360,000 salary as an Ameriquest board member, Deval Patrick wrote a letter supporting an ambassadorship for the embattled mortgage lender’s top executive, a move that was strongly fought by Illinois Sen. Barack Obama.”

    And the AIG goons who ran the company into the ground not only were not fired (AIG apparently needed their “talents” to make things right), they got to keep their bonuses for bankrupting the entire AIG organization. And that sack of crap Tim Geithner claimed he first learned of the bonuses in March 2008 even though anyone with internet access knew about them in late 2007.

    Kary, it is you who should back up your statements.

  24. 274

    By pfft @ 22:

    By Kary L. Krismer @ 16:

    By David Losh @ 9:

    Oh yeah, taking dead people’s money, is for sure a way to fund future development. Generational wealth is a problem. If you have a better solution, great.

    If someone made their wealth off of S-Corps, they would have been taxed at the corporate level, then the individual level, then the dead level, all on the same income.

    people who are dead don’t pay taxes. whoever inherits the estate does.

    I never understood why people who make 30 grand being a janitor should get taxed but if someone makes 30 million from an inheritance shouldn’t get taxed. if you do something you get taxed but if you do nothing you don’t? makes no sense.

    The estate gets taxed, not the recipient. Works the same way on the gift tax, which answers your second question about why they don’t get taxed. Do you think you should pay a tax on something you receive from family members for Xmas?

  25. 275

    RE: blurtman @ 23 – I think it’s you who needs to back up your statements. I don’t think Wells Fargo was ever insolvent, and I question the other companies you mentioned too. You’re probably using some different definition of insolvent, like valuing at zero illiquid assets on which they’ve since made billions.

    As to AIG you’re wrong there too. The guy who was primarily responsible for the trading that took them under has been out for some time, but AIG was require to pay him bonuses.

    http://en.wikipedia.org/wiki/Joseph_Cassano

    BTW, looking that up reminded me of another way President Obama is anti-business–going after the bonuses paid retroactively.

  26. 276
    Egregor says:

    I think the world would be a better place if the bloggers and the blog commentators took all their energies and created an organization devoted to generating a tulpa (egregor, or thought form) to destroy the wealth and power of the international central bankers, starting with David Rockefeller.

  27. 277
    WestSideBilly says:

    They were technically insolvent because the true value of their assets was smaller than the true value of their liabilities. That’s why we had TARP in the first place; all the involved banks were insolvent and they couldn’t pay their liabilities, so they couldn’t get credit to pay their counterparties. And while Wells Fargo was in better shape than Citigroup or BoA, they still had liabilities they couldn’t pay if fair valuations were placed on the underlying assets. The banks involved with all the CDS/CDO swapping were overvaluing their assets (the houses) and undervaluing their liabilities, and TARP gave them time to make themselves solvent. You can easily argue who was and wasn’t insolvent because hard numbers aren’t readily available, and most of the asset values were made up numbers anyway.

    The bonuses were paid out to a lot of people. AIG paid out over $100M in bonuses to its executives for 2009, at least 100 different people. So 1 person got canned (with golden parachute intact)? Ouch, that’s harsh. BoA paid out $4B in bonuses to roughly 10,000 investment bankers and traders – the EXACT group of people who were responsible for getting BoA in a mess. Citigroup lost money in 2009 (partially due to paying back its TARP money) and still paid out bonuses to executives and traders, including a $9M bonus to the head of the investment bank (you know, the part of Citigroup that was doing all the CDS/CDO trading). $9M for tanking the company, WELL DONE SIR!

    Going after the bonuses retroactively isn’t anti-business. You can call it political maneuvering, populism, whatever. But it would have exactly 0 affect on the ability of those companies to operate and generate revenue. 10,000 BoA traders wouldn’t have all quit if they didn’t get bonuses, because the other banks weren’t hiring. The whole “we need to pay bonuses in order to stay competitive” story was total bull.

  28. 278
    David Losh says:

    RE: WestSideBilly @ 27

    Thank you, that seems like a reasonable assessment.

    It does seem to me that very few people were blamed for how massive the problem is.

  29. 279
    David Losh says:

    RE: Egregor @ 26RE: Kary L. Krismer @ 24

    The gifting of wealth is a non taxable event within certain limits, like $10K per year. Families should use that. Families should do a lot of things that they do not.

    The estate tax isn’t a great money maker. I think it’s a 1%, or 2% of tax revenue. It gets a lot of play because of the family farm. Small businesses that want to pass down from generation to generation don’t want to be taxed for that purpose. As you pointed out there are many things that can be done.

    The problem with this idea is that it concentrates the estate into one focus. Maybe not all the heirs want to be farmers. Those accumulating wealth usually have a legacy in mind. They want what they have done to go on into the future. They don’t want to “dilute” the estate.

    That’s a problem. In the case of the family farm the owner can put in covenants that only allow for the farm to be a farm. No one likes that. Some future heir may want to put in an air field.

    The ultimate solution is to divide the estate before death. Each heir either agreeing or going off to do something else.

    The estate tax is a tool. It’s a good tool that prevent a Rockefeller disaster from ever happening again.

  30. 280

    RE: WestSideBilly @ 27 – I think the person responsible for getting BOA in trouble was the CEO who caved and took on Countrywide and possibly one other entity I don’t recall.

    And no, Wells Fargo was never to the point where it couldn’t pay it’s debts unless you’re talking about sudden termination of business and liquidation, in which case there are a lot of companies all the time that couldn’t pay their debts. TARP was done to make banks more willing to loan.

  31. 281

    By WestSideBilly @ 27:

    Going after the bonuses retroactively isn’t anti-business. You can call it political maneuvering, populism, whatever.

    I’d call it unconstitutional and incredibly stupid. It created a situation where the banks terminated early the system that the government wanted to continue.

    The one thing President Obama has in common with President Bush (besides having virtually all the same policies) is really bad advisers.

  32. 282

    RE: David Losh @ 29 – Are the Rockefellers now poor?

  33. 283
    doug says:

    RE: Kary L. Krismer @ 15

    I’m a believer in confidence as well, since I’m a demand-sider.
    Consumer confidence won’t rise until unemployment goes down.

    If you’re not unempoyed yourself, then you know someone who’s unemployed, and are likely helping them out. We’ve definitely helped a few friends out of jams.

  34. 284
    WestSideBilly says:

    By Kary L. Krismer @ 31:

    By WestSideBilly @ 27:

    Going after the bonuses retroactively isn’t anti-business. You can call it political maneuvering, populism, whatever.

    I’d call it unconstitutional and incredibly stupid. It created a situation where the banks terminated early the system that the government wanted to continue.

    The one thing President Obama has in common with President Bush (besides having virtually all the same policies) is really bad advisers.

    Both reasonable arguments. Still not anti-business. The one thing about TARP (and I could say this about most politicians and most legislation) is that it really lacked any foresight into how the banks would use it. Prohibiting bonuses should have been part of the package from day 1. If the bankers wanted their bonuses, they needed to be creative and not use Uncle Sam to cover their ass. Going after them after the fact seemed a bit like admitting “oh, we didn’t think you’d continue to behave the same way you’ve behaved for 20+ years”. In other words, that the politicians were (again) hoodwinked by Wall Street.

    BoA had a lot more issues than just buying Countrywide for a ridiculous price. They made a lot of loans that lost them money, too. It wasn’t just Countrywide (which they didn’t buy until 2008). The guy who okayed that purchase should have been canned, no golden parachute, no passing Go, no collecting $200.

    The one thing I agree with you completely is that Obama is absolutely terrible at choosing his fights. Whether that’s poor advisers or his own doing, I don’t know.

  35. 285

    By WestSideBilly @ 34:

    The one thing I agree with you completely is that Obama is absolutely terrible at choosing his fights. Whether that’s poor advisers or his own doing, I don’t know.

    I can’t come up with examples right now, but I think it’s a bit of both. Some of his mis-steps were in prepared statements and some were off the cuff remarks. Also, I think his hands off approach in steering health care through was clearly bad, and presumably driven by both bad advice and bad decision making.

    I’m not as anti-Obama as I sound in these threads here. My main complaint about him is that he makes his own policies less effective than what they could be through statements. His statements should make things better, not worse.

  36. 286

    By doug @ 33:

    RE: Kary L. Krismer @ 15

    I’m a believer in confidence as well, since I’m a demand-sider.
    Consumer confidence won’t rise until unemployment goes down.

    If you’re not unempoyed yourself, then you know someone who’s unemployed, and are likely helping them out. We’ve definitely helped a few friends out of jams.

    I would agree with that for consumer confidence. I think business looks further out and probably often isn’t even looking at unemployment numbers.

  37. 287
    blurtman says:

    Wells Fargo is Insolvent

    http://georgewashington2.blogspot.com/2009/02/wells-fargo-is-effectively-insolvent.html

    Thursday, February 12, 2009
    Wells Fargo Is Effectively Insolvent

    Two smart and meticulous financial analysts – Reggie Middleton and Mish – argue that Wells Fargo is insolvent.

    In yesterday’s update to his June 11, 2008 analysis, Reggie shows that the lion’s share of Wells Fargo’s assets are in mortgages in the California, Florida and Arizona markets, which are all tanking. He concludes:

    Wells Fargo has an impaired balance sheet. Marking mortgage assets ANYWHERE near what they are worth results in insolvency.

    Mish, who has also been covering Wells for a long time, wrote on February 2nd that Wells is drowning in loan defaults, and has hidden staggering amounts of toxic losses off of its balance sheets, just like Citigroup:

    [Despite its claim that it is saving mortgages by reworking their terms,] 30% of Wells Fargo’s reworked mortgage loans are 90 days past due or longer, one year after loan modification. ***
    Fargo claims it is “well capitalized”. Is it? By what measure? What is hidden off its balance sheet that we do not know enough about? Can anyone believe what any financial institution says when it is perfectly clear all these games are being played?

    It’s not just Citigroup and Bank of America that are in trouble . . . other big banks like Wells Fargo are also on the ropes.

  38. 288
    blurtman says:

    Banks are insolvent, i.e., bankrupt part 2:

    http://www.washingtonsblog.com/2010/12/head-of-bank-of-england-said-in-march.html

    Wednesday, December 15, 2010
    Head of Bank of England Said In March 2008 That We Have a SOLVENCY – Not a Liquidity – Crisis

    On Monday, the Guardian reproduced a Wikileaks cable dated March 17, 2008, stating:

    SUBJECT: BANKING CRISIS NOW ONE OF SOLVENCY NOT LIQUIDITY
    SAYS BANK OF ENGLAND GOVERNOR

    ***
    Since last summer, the nature of the crisis in financial markets has changed. The problem is now not liquidity in the system but rather a question of systemic solvency, Bank of England (BOE) Governor Mervyn King said at a lunch meeting with Treasury Deputy Secretary Robert Kimmitt and Ambassador Tuttle.
    ***
    Systemic Insolvency Is Now The Problem

    King said that liquidity is necessary but not sufficient in the current market crisis because the global banking system is undercapitalized due to being over leveraged.

    Top economists such as Anna Schwartz, James Galbraith, Nouriel Roubini and others have pointed out since 2008 that the Federal Reserve, U.S. government, and virtually all of the central banks and governments of the world are approaching the financial crisis completely wrong, as they are treating it as a liquidity crisis, when it is really a solvency crisis. See this, this and this.

    The fact that the head of the one of the world’s most powerful central banks told the Deputy Treasury Secretary and American Ambassador to England that the economic crisis was a solvency – not liquidity – crisis, shows that this was hardly a renegade visionary insight.

    You restructure insolvent institutions. You don’t prop them up with temporary liquidity.

    As many top experts have said for years, we must let insolvent banks fail; if we don’t, the insolvent banks will drag down the economies of their host countries and put them into sovereign debt crises.

  39. 289
    pfft says:

    By blurtman @ 37:

    Wells Fargo is Insolvent

    http://georgewashington2.blogspot.com/2009/02/wells-fargo-is-effectively-insolvent.html

    Thursday, February 12, 2009
    Wells Fargo Is Effectively Insolvent

    Two smart and meticulous financial analysts – Reggie Middleton and Mish – argue that Wells Fargo is insolvent.

    In yesterday’s update to his June 11, 2008 analysis, Reggie shows that the lion’s share of Wells Fargo’s assets are in mortgages in the California, Florida and Arizona markets, which are all tanking. He concludes:

    Wells Fargo has an impaired balance sheet. Marking mortgage assets ANYWHERE near what they are worth results in insolvency.

    Mish, who has also been covering Wells for a long time, wrote on February 2nd that Wells is drowning in loan defaults, and has hidden staggering amounts of toxic losses off of its balance sheets, just like Citigroup:

    [Despite its claim that it is saving mortgages by reworking their terms,] 30% of Wells Fargo’s reworked mortgage loans are 90 days past due or longer, one year after loan modification. ***
    Fargo claims it is “well capitalized”. Is it? By what measure? What is hidden off its balance sheet that we do not know enough about? Can anyone believe what any financial institution says when it is perfectly clear all these games are being played?

    It’s not just Citigroup and Bank of America that are in trouble . . . other big banks like Wells Fargo are also on the ropes.

    water under the bridge. it’s nearly two years later. the market doesn’t care so we should care. it’s not a problem.

  40. 290
    blurtman says:

    RE: pfft @ 39 – That is the most uninformed thing you have said so far, and that is saying a lot. You seem to indicate that the market knows everything, like they did before the Dow plunged to 6,666. The same market that is driven by firms that have committed massive fraud. The same market that valued dot bomb companies with no revenue at fantastic multiples. That ever seeing intelligent market??? OK, since you indicate that the market doesn’t mind, I guess we can all sleep easier.

  41. 291
    blurtman says:

    Failing to Prosecute Wall Street Fraud Is Extending Our Economic Problems

    “Things were being done which were certainly illegal and in clearly criminal in certain cases.” – Alan Greenspan

    http://www.youtube.com/watch?v=731G71Sahok&feature=player_embedded#!

    Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud:

    “The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.”

    “I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That’s the point. There were victims all over the world.”

    Economics professor James Galbraith says:

    There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that’s a process which needs to get underway.

    No wonder Galbraith says that economists should move into the background, and “criminologists to the forefront”.

    “Failure to Stop Fraud and Prosecute Criminals Causes a Loss of Trust in Government, Which Makes Government Less Effective.”

    As Shiller stated in the quote above, the failure of government officials to stop fraud and prosecute the financial fraudsters has caused a lack of trust in government itself.

    http://www.washingtonsblog.com/2010/12/letting-fraud-continue-will-not-restart.html

  42. 292
    pfft says:

    By blurtman @ 40:

    RE: pfft @ 39 – That is the most uninformed thing you have said so far, and that is saying a lot. You seem to indicate that the market knows everything, like they did before the Dow plunged to 6,666. The same market that is driven by firms that have committed massive fraud. The same market that valued dot bomb companies with no revenue at fantastic multiples. That ever seeing intelligent market??? OK, since you indicate that the market doesn’t mind, I guess we can all sleep easier.

    every big investor knows exactly what you talked about. it’s not new news. it’s old news. it’s been two years. it doesn’t matter. it was accounted for in the price. the market believes it’s not a problem. it’s worked through those concerns.

  43. 293
    pfft says:

    By blurtman @ 41:

    Failing to Prosecute Wall Street Fraud Is Extending Our Economic Problems

    “Things were being done which were certainly illegal and in clearly criminal in certain cases.” – Alan Greenspan

    http://www.youtube.com/watch?v=731G71Sahok&feature=player_embedded#!

    Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud:

    “The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.”

    “I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That’s the point. There were victims all over the world.”

    Economics professor James Galbraith says:

    There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that’s a process which needs to get underway.

    No wonder Galbraith says that economists should move into the background, and “criminologists to the forefront”.

    “Failure to Stop Fraud and Prosecute Criminals Causes a Loss of Trust in Government, Which Makes Government Less Effective.”

    As Shiller stated in the quote above, the failure of government officials to stop fraud and prosecute the financial fraudsters has caused a lack of trust in government itself.

    http://www.washingtonsblog.com/2010/12/letting-fraud-continue-will-not-restart.html

    I know what you’re saying but are you going to charge them with thinking home prices wouldn’t fall?

  44. 294
    blurtman says:

    RE: pfft @ 42 – Research “financial bubble.”

  45. 295
    blurtman says:

    RE: pfft @ 43 – That’s a red herring comment, designed to deflect from what the fraud accusations are about, as I believe you know.

  46. 296
    pfft says:

    By blurtman @ 44:

    RE: pfft @ 42 – Research “financial bubble.”

    I have researched them a lot. everything was priced into the stock. it fell 75%. from a high of 40 to a low of 10. your argument is more for early 2008 not almost early 2011. investors obsessed over it and sold the stock big time.

  47. 297
    pfft says:

    By blurtman @ 45:

    RE: pfft @ 43 – That’s a red herring comment, designed to deflect from what the fraud accusations are about, as I believe you know.

    it’s the truth. people didn’t think home prices could fall. even the really smart people. read The Big Short. should we put all the regular citizens who took out those mortgages that the big banks held because they didn’t think housing would fall in jail too?

    they didn’t know. that’s why their companies fell en masse. the only one that didn’t fall for it was goldman.. all the rest got caught up just like the people who took out the mortgages did. how else do you lose nearly a trillion dollars?

  48. 298
    blurtman says:

    RE: pfft @ 47 – Nonsense. That is a big lie. I provided a link to Janet Tavakoli’s comments indicating that no credible analyst would ever make that assumption. Some gullible homeowners might have believed that but even then, most folks knew that in the very recent past (late ’80’s) home prices took quite a tumble and never made it back to the peak until the late ’90’s. And please dont equate homeowners with investment banks that sold fraudulent securities.

    And if you want a credible reference that describes how banks that committed fraud still lost money, check our Bill Black’s The Best Way to Rob a Bank Is To Own One. Same old story.

    Here is Bill Black. Learn and grow wise. 4:33 describes how you can grow wealthy by destroying your firm.

    http://www.youtube.com/watch?v=sA_MkJB84VA

    I am beginning to suspect that you were part of this fraud, perhaps part of the criminal WAMU gang?

  49. 299
    pfft says:

    By blurtman @ 48:

    RE: pfft @ 47 – Nonsense. That is a big lie. I provided a link to Janet Tavakoli’s comments indicating that no credible analyst would ever make that assumption. Some gullible homeowners might have believed that but even then, most folks knew that in the very recent past (late ’80’s) home prices took quite a tumble and never made it back to the peak until the late ’90’s. And please dont equate homeowners with investment banks that sold fraudulent securities.

    And if you want a credible reference that describes how banks that committed fraud still lost money, check our Bill Black’s The Best Way to Rob a Bank Is To Own One. Same old story.

    Here is Bill Black. Learn and grow wise. 4:33 describes how you can grow wealthy by destroying your firm.

    http://www.youtube.com/watch?v=sA_MkJB84VA

    I am beginning to suspect that you were part of this fraud, perhaps part of the criminal WAMU gang?

    I love the conspiracy theories if you don’t toe the line of the commenters of seattle bubble. sorry comrade, what was I supposed to believe again?

    remember at the height of the bubble a survey in california said that people thought home prices would grow by double digits for awhile? the math was almost impossible but that’s what people believed.

    “And please dont equate homeowners with investment banks that sold fraudulent securities.”

    who do you think those IBs made the loans too? the guy with 5 condos who thought housing would never fall. the guy who lied on his liar loan to get a house. the person who thought housing would never fall. I am not saying there was no fraud, just that sometimes we want a villain. it was just a mania. should we prosecute wall street or silicon valley for the 2000-2002 crash? it was the same thing. how could any analyst recommend pets.com?

  50. 300
    blurtman says:

    Again you seem to throw out comments that are irrelevant and have nothing to do with what I have said. Conspiracy theories? What are you referring to? Greenspan and Stiglitz describing the fraud that occurred? Sorry, but they are eminently more qualified than you.

    And again the issue is not what home buyers thought in some survey that you cannot seem to provide the link to. The issue is the failure of invstment banks to disclose the true known risk of the securities that were fraudulently rated and sold, Moody’s analysts are on record in stating that thier superiors forbade them from examining the quality of the underlying mortgages in the securities that they were rating. Why would that be, pray tell? And what about the testimony of Citibank chief underwriter Richard Bowen that he notified Citi execs that up to 80% of the mortgagse they were selling were fraudulent? Rubin should be in jail

    Pfft, you are disingenuous, certainly biased, and not very bright as you continually deny reality with strawman and red herring statements. Flame off, Johnny, you are done.

    “Citigroup Inc. executives were warned as early as 2006 that the bank routinely bought mortgages that violated its own standards, the former chief underwriter for Citigroup’s consumer-lending group testified.

    Richard Bowen determined in mid-2006 that more than 60 percent of mortgages bought from other firms and sold to investors such as Fannie Mae and Freddie Mac were “defective,” according to his prepared remarks today before the Financial Crisis Inquiry Commission. The panel is probing causes of the 2007 mortgage-market collapse and ensuing bank bailouts.

    “I started issuing warnings in June 2006 and attempted to get management to address these critical risk issues,” said Bowen, who was chief underwriter for correspondent lending in Citigroup’s consumer-lending group. “These warnings continued through 2007 and went to all levels of the consumer-lending group.”

  51. 301
    Ben says:

    RE: blurtman @ 50 -“Pfft, you are disingenuous, certainly biased, and not very bright as you continually deny reality with strawman and red herring statements. Flame off, Johnny, you are done.”

    Absofrickenlutely!

  52. 302
    Scotsman says:

    Arguing with idiots only proves you’re an idiot too.

  53. 303
    Blake says:

    RE: pfft @ 49
    Re; “conspiracy theories”…??
    What have you or haven’t you been reading for the last 20+ years!? It’s all frickin’ conspiracies… the definition of conspiracy: “Agreement between two or more parties to commission and carryout an offense, such as to commit murder or inflict injury, or to defraud, rob, or steal.”
    Maybe they didn’t murder many (?), but they sure did a lot fraud, robbing and stealing. Did’ja miss it? Perhaps you should start by reading about the Savings & Loan conspiracies? Then up to Enron? Next Madoff, the liars loans, Moody’s AAA ratings… etc etc.

    William Black was a bank examiner and investigator into the S&L conspiracies and has described “control fraud”, in which a business or national executive uses the entity he or she controls as a “weapon” to commit fraud. Read a bit about the latest and greatest swindles from an ’09 interview: http://www.pbs.org/moyers/journal/04032009/transcript3.html

    You start throwing up smoke and crying “conspiracy” – – your da*#ed right it’s a conspiracy!

    Read James Galbraith’s The Predator State… Bill Black’s The Best Way to Rob a Bank Is to Own One… or better Robert Hare’s Snakes in Suits. These people are sociopaths… predators. The reason we need to spend all this money on regulations and policing is not because we can trust people, but because there are bad people out there willing to do almost anything for money – – and some do it not just for money but for power and the thrill of it. Yes, conspiracy… that’s what they live and breathe for. And they are out there, still… undaunted.

  54. 304
    EconE says:

    RE: Scotsman @ 52

    I’m surprised people actually take the time to write well thought out arguments to pfffts tripe.

    She’s hardly worthy of my one liners, but I do like making her read and answer. It’s like throwning cheetos to a cocker spaniel. They’ll jump for them all day long.

  55. 305
    pfft says:

    By Blake @ 53:

    RE: pfft @ 49
    Re; “conspiracy theories”…??

    I am talking about the fact that people think I couldn’t possibly believe what I write and that I must be working for some bank or think tank.

  56. 306
    pfft says:

    By Ben @ 51:

    RE: blurtman @ 50 -“Pfft, you are disingenuous, certainly biased, and not very bright as you continually deny reality with strawman and red herring statements. Flame off, Johnny, you are done.”

    Absofrickenlutely!

    I am not disingenious and certainly not biased. the only thing I am biased about is being right. I was very bearish for years. last summer I actually got tired of being bearish. I say indicators that said we were recovering as was the stock market. I was right. I am not biased.

  57. 307
    pfft says:

    By Scotsman @ 52:

    Arguing with idiots only proves you’re an idiot too.

    only a few more days left on your economic armageddon prediction.

  58. 308
    Ben says:

    RE: pfft @ 56 – Speaking of bias and truthiness, how’s that housing bottom working for you in your world of delusion? My goodness gracious someone’s pants are on fire.

  59. 309
    Blurtman says:

    An American Xmas Tale

    And yes, the man aparently was armed. But he was not confronted by police because he was armed, but because they suspected that he was attempting to scam $10 out of passersby.

    Why don’t the NYC police confront investment bankers who are scamming billions? A few may be armed, and could be shot dead as well. Even if they aren’t armed, what the heck.
    ——
    On Thursday morning, the sergeant noticed two men who he believed had been responsible for a fraud scheme to intimidate visitors: They would first approach the tourists, then ask them their names, write their names on the CDs and then demand payment of $10.

    The sergeant confronted the men outside of 1515 Broadway, south of 45th Street, asking them for a tax stamp that would demonstrate that they had the right to sell CDs.

    One of the men ran north, then west on 45th Street and onto the driveway of the Marriott, toward 46th Street. The sergeant gave chase, ordered the man to stop. Instead, the man pulled out a gun. Shots were exchanged: the man fired two rounds, while sergeant fired four.

    http://cityroom.blogs.nytimes.com/2009/12/10/police-shoot-man-at-hotel-in-times-square/

  60. 310
    Blurtman says:

    >10% unemployment, record numbers of Americans on food stamps, record numbers living in poverty, and the Fed plays shell games to enable Goldman Sachs to pay millions to their execs.

    http://www.economicpolicyjournal.com/2010/12/totally-busted-truth-about-goldmans.html

    On June 17, 2009, Goldman finally got its wish, thanks to some timely, undisclosed assistance from the Federal Reserve. Goldman repaid its $10 billion TARP loan. But just six days before this announcement, Goldman sold $11 billion of MBS to the Fed. In other words, Goldman “repaid” the Treasury by secretly selling illiquid assets to the Fed.

    One month later, Goldman’s CEO Lloyd Blankfein beamed, “We are grateful for the government efforts and are pleased that [the monies we repaid] can be used by the government to revitalize the economy, a priority in which we all have a common stake.”

    As it turns out, the government continued to “revitalize” that small sliver of the economy known as Goldman Sachs. During the three months following Goldman’s re-payment of its $10 billion TARP loan, the Fed purchased $27 billion of MBS from Goldman. In all, the Fed would purchase more than $100 billion of MBS from Goldman during the 12 months that followed Goldman’s TARP re-payment.

    Did private investors not have the right to know that the Federal Reserve was secretly recapitalizing Goldman’s balance sheet during this period? Did they not deserve to know that the Fed’s MBS buying was producing Goldman’s “perfect” trading record during this timeframe?

  61. 311
    pfft says:

    By Ben @ 58:

    RE: pfft @ 56 – Speaking of bias and truthiness, how’s that housing bottom working for you in your world of delusion? My goodness gracious someone’s pants are on fire.

    housing nationally bottomed spring of 2009 and is up around 7%. remember that chart I kept posting?

  62. 312
    Ben says:

    RE: pfft @ 61 – Like the Altos chart here?

    http://www.altosresearch.com/research/WA/seattle-real-estate-market

    denial is not just a river ….

  63. 313
    pfft says:

    By Ben @ 62:

    RE: pfft @ 61 – Like the Altos chart here?

    http://www.altosresearch.com/research/WA/seattle-real-estate-market

    denial is not just a river ….

    I didn’t say seattle. I said nationally.

  64. 314
    pfft says:

    here is the data.

    Case-Shiller: Broad-based Declines in Home Prices in Q3
    http://www.calculatedriskblog.com/2010/11/case-shiller-broad-based-declines-in.html

  65. 315
    Ben says:

    RE: pfft @ 64 – You just love to be hoisted by your own petard, don’t you? From the text of commentary you cited: “Prices are now falling – and falling just about everywhere. And it appears there are more price declines coming (based on inventory levels and anecdotal reports).”

    You are in denial and you won’t admit it because….wait for it….YOU ARE IN DENIAL.

  66. 316
    pfft says:

    By Ben @ 65:

    RE: pfft @ 64 – You just love to be hoisted by your own petard, don’t you? From the text of commentary you cited: “Prices are now falling – and falling just about everywhere. And it appears there are more price declines coming (based on inventory levels and anecdotal reports).”

    You are in denial and you won’t admit it because….wait for it….YOU ARE IN DENIAL.

    home prices are up since the spring of 2009. that is an undeniable fact. why do you quote something I didn’t not talk about again? see #62 above.

    home prices have fallen the last few month’s YOY data but prices are still above spring 2009 levels. there is no debate about that.

    the trend also is mostly up. we went from 20% YOY depreciation to appeciation to the current dip.

    “Prices are now falling – and falling just about everywhere. And it appears there are more price declines coming (based on inventory levels and anecdotal reports).”

    you could have said the same in the spring of 2009 yet prices went up from there.

    the rate of change is moving towards appreciation.

  67. 317
    Blake says:

    RE: Blurtman @ 60
    Blurtman: great post…. incredible isn’t it?

    The Fed and the GSEs (Fanny and Freddie) have been used to take all that bad paper off the books of those private section “geniuses”… AND now all the attacks from the right are on the GSEs and the govt!
    http://www.ritholtz.com/blog/2010/12/why-you-should-really-be-angry-about-fanniefreddie/

    TARP was all mis-direction anyways… it wasn’t needed because the Fed was doing it all behind closed doors and secretly. They just wanted to get Congress to share the blame and draw the media’s attention away from the Fed.
    http://www.tinyrevolution.com/mt/archives/003414.html
    -snip- This was an opportunity to get everyone else on the hook with them: both parties in congress, and both presidential candidates, each of whom would be under enormous pressure not to look “irresponsible.” Even better, getting some TARP money from congress would create a huge distraction from the gigantic amounts of non-TARP money the Fed was shoveling out the door.

  68. 318
    WestSideBilly says:

    http://dealbook.nytimes.com/2010/12/20/after-ernst-young-who-may-be-next/?hp

    Ernst & Young (one of the Big 4 – along with KPMG, Deloitte Touche, and PriceWaterHouse Cooper) are likely to face charges for their role in Lehman’s collapse.

    I wonder if the various agencies will go after the heads of the banks. They seem to be at least equally liable as the auditors in this case.

  69. 319
    Ben says:

    RE: pfft @ 66 – Your denial of reality is now legendary on this board. I applaud you, sir for your ability to keep your head in the sand for so long.

    I will have to take my leave of you until you come to your senses, if that ever happens.

    Happy Holidays

  70. 320
    Blurtman says:

    RE: Blake @ 67 – What a f**ked up country. What should anyone obey the law?

  71. 321
    pfft says:

    By Ben @ 68:

    RE: pfft @ 66 – Your denial of reality is now legendary on this board. I applaud you, sir for your ability to keep your head in the sand for so long.

    I will have to take my leave of you until you come to your senses, if that ever happens.

    Happy Holidays

    home prices are higher now than in the spring of 2009. that is just a fact. I don’t know what you’re talking about.

  72. 322
    pfft says:

    By Blake @ 67:

    RE: Blurtman @ 60
    Blurtman: great post…. incredible isn’t it?

    The Fed and the GSEs (Fanny and Freddie) have been used to take all that bad paper off the books of those private section “geniuses”… AND now all the attacks from the right are on the GSEs and the govt!
    http://www.ritholtz.com/blog/2010/12/why-you-should-really-be-angry-about-fanniefreddie/

    TARP was all mis-direction anyways… it wasn’t needed because the Fed was doing it all behind closed doors and secretly. They just wanted to get Congress to share the blame and draw the media’s attention away from the Fed.
    http://www.tinyrevolution.com/mt/archives/003414.html
    -snip- This was an opportunity to get everyone else on the hook with them: both parties in congress, and both presidential candidates, each of whom would be under enormous pressure not to look “irresponsible.” Even better, getting some TARP money from congress would create a huge distraction from the gigantic amounts of non-TARP money the Fed was shoveling out the door.

    you know what is worse? economic collapse hadn’t they done all that.

    that so-called “bad paper” has rallied with the stock market so hopefully we won’t lose too much money. we would have definately lost it if the economy had collapsed.

    we can agree it was handled badly but it was needed.

  73. 323
    Blake says:

    OMG…
    “When Zombies Win”
    -snip- “When historians look back at 2008-10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever. How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says “I don’t think we need regulators,” about to take over a key House panel overseeing the Fed?

    A policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics.

    we’re still — perhaps more than ever — ruled by “zombie economics.” Why?”
    http://www.nytimes.com/2010/12/20/opinion/20krugman.html?_r=1

    >> Because stupidity reigns and corruption is the rule in America!! As Kevin Phillips remarked almost two years ago: Obama assembled an economic team that caused the crisis… it’s like the arsonists showing up at the scene of the fire and putting on fireman’s hats and saying “we’re here to help!”

  74. 324
    pfft says:

    By Blake @ 72:

    OMG…
    “When Zombies Win”
    -snip- “When historians look back at 2008-10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything â�� yet they now dominate the political scene more thoroughly than ever. How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says â��I donâ��t think we need regulators,â�� about to take over a key House panel overseeing the Fed?

    A policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics.

    weâ��re still â�� perhaps more than ever â�� ruled by â��zombie economics.â�� Why?”
    http://www.nytimes.com/2010/12/20/opinion/20krugman.html?_r=1

    >> Because stupidity reigns and corruption is the rule in America!! As Kevin Phillips remarked almost two years ago: Obama assembled an economic team that caused the crisis… it’s like the arsonists showing up at the scene of the fire and putting on fireman’s hats and saying “we’re here to help!”

    obama did enact financial reform though.

  75. 325
    pfft says:

    CRE prices seemed to have stabilized.

    Moody’s: Commercial Real Estate Prices increase in October
    http://www.calculatedriskblog.com/2010/12/moodys-commercial-real-estate-prices.html

  76. 326
    Blurtman says:

    RE: pfft @ 74 – Moody’s?!!? Moody’s!!?? You must be kidding.

  77. 327
    Blurtman says:

    Food stamp use spikes: One in seven rely on them

    The use of food stamps has increased dramatically in the U.S., as the federal government ramps up basic assistance to meet the demands of an increasingly desperate population.

    http://finance.yahoo.com/news/Food-stamp-use-spikes-One-in-cnnm-2280036884.html?x=0&sec=topStories&pos=8&asset=&ccode=

    Things will only get worse if we do not continue to kiss Wall Street’s arse.

  78. 328
    pfft says:

    By Blurtman @ 76:

    RE: pfft @ 74 – Moody’s?!!? Moody’s!!?? You must be kidding.

    I’m stumped.

  79. 329
    pfft says:

    By Blurtman @ 77:

    Things will only get worse if we do not continue to kiss Wall Street’s arse.

    yes.

  80. 330
    Blurtman says:

    RE: pfft @ 78 – So is Moody’s. They are not a credible source of information at all.

    Before the crisis, Moody’s Investors Service, a unit of Moody’s Corp., had given AAA ratings to 42,625 mortgage- backed securities, the same seal of approval U.S. Treasury bonds get. Of those rated in 2006, 83 percent have been downgraded, Financial Crisis Inquiry Commission Chairman Phil Angelides says.

    “The ratings provided little or no value,” he says.

  81. 331
    pfft says:

    By Blurtman @ 80:

    RE: pfft @ 78 – So is Moody’s. They are not a credible source of information at all.

    Before the crisis, Moody�s Investors Service, a unit of Moody�s Corp., had given AAA ratings to 42,625 mortgage- backed securities, the same seal of approval U.S. Treasury bonds get. Of those rated in 2006, 83 percent have been downgraded, Financial Crisis Inquiry Commission Chairman Phil Angelides says.

    �The ratings provided little or no value,� he says.

    that doesn’t have anything to do with their CRE index. is it just because they are saying something that is in conflict with your bearish beliefs? possibly?

  82. 332
    pfft says:

    the stock market is back to where it was during Lehman Brothers.

    LEH: Its All Good Now!
    http://www.ritholtz.com/blog/2010/12/leh-its-all-good-now/

    what say you zombie bears?

  83. 333
    Blake says:

    RE: pfft @ 74
    Re: “obama did enact financial reform though.”

    Oh please… “reform?”
    http://www.marketwatch.com/story/story/print?guid=2C6987B0-0C7B-11E0-8617-00212804637C
    -snip- Consider the Dodd-Frank reform act — all 2,300 pages of it. Sure, it fills in a few regulatory gaps, ends a couple of the more gratuitous abuses. You have to throw a few scraps to the masses. But most of the reforms are meaningless. New rule books and committees. Bah. They’re like half-built fences. Anyone can just walk around them.

    As for the new consumer finance watchdog? The agency that’s supposed to stand up to the banks will be housed… within the Federal Reserve. Literally, it will be a tenant of the banking system.

    Champions of the “reforms” say this won’t really matter. But if that’s the case, why did Wall Street fight so hard to make sure it happened?

    There are no coincidences in Washington.

    Meanwhile, missing from this giant “reform” bill was any actual, serious reform like threatening crooked bankers with real jail time. Or ending the “other people’s money” racket of securitization, or smashing “too big to fail” megabanks into smaller firms that can never again threaten the republic.

    Instead we’ve enshrined “too big to fail” as national policy. A standing taxpayer guarantee to the biggest banks. What a deal!

    It’s amazing when you think about it.

    Look at the chaos and catastrophe these guys have left in their wake. One middle-aged man in five is out of work. Tens of millions of families have been financially wiped out. The national debt has nearly doubled.

    If inner-city gangs had done this to America, we’d have martial law. If Arabs had done it, we’d have launched another war.

    Wall Street bankers? They’ve walked away scot free. And they’re actually being rewarded.

    (the whole article is worth reading…)

  84. 334
    Blake says:

    RE: pfft @ 82
    Stock market back to ’08 levels…

    Just read this in the SeaTimes:
    http://seattletimes.nwsource.com/html/businesstechnology/2013726095_buybacks21.html
    “Companies are using extra cash built up during the recession to repurchase stock, moves that are likely to please investors who see the value of their shares rise. But the buyback surge may not please President Obama, who is urging companies to instead use surplus cash to hire more workers, hoping to generate jobs to sustain the economic recovery.

    Standard & Poor’s reported Monday that stock repurchases by S&P 500 companies more than doubled to $79.6 billion in the July-to-September period from $34.9 billion in last year’s third quarter. Stock buybacks indicate companies have enough cash to take their shares off the market, which increases the value of investors’ remaining shares, and boosts per-share earnings results.”

    … it’s like magic! Just don’t look behind the curtain…

  85. 335
    pfft says:

    By Blake @ 83:

    RE: pfft @ 74
    Re: “obama did enact financial reform though.”

    Oh please… “reform?”
    http://www.marketwatch.com/story/story/print?guid=2C6987B0-0C7B-11E0-8617-00212804637C
    -snip- Consider the Dodd-Frank reform act � all 2,300 pages of it. Sure, it fills in a few regulatory gaps, ends a couple of the more gratuitous abuses. You have to throw a few scraps to the masses. But most of the reforms are meaningless. New rule books and committees. Bah. They�re like half-built fences. Anyone can just walk around them.

    As for the new consumer finance watchdog? The agency that�s supposed to stand up to the banks will be housed� within the Federal Reserve. Literally, it will be a tenant of the banking system.

    Champions of the �reforms� say this won�t really matter. But if that�s the case, why did Wall Street fight so hard to make sure it happened?

    There are no coincidences in Washington.

    Meanwhile, missing from this giant �reform� bill was any actual, serious reform like threatening crooked bankers with real jail time. Or ending the �other people�s money� racket of securitization, or smashing �too big to fail� megabanks into smaller firms that can never again threaten the republic.

    Instead we�ve enshrined �too big to fail� as national policy. A standing taxpayer guarantee to the biggest banks. What a deal!

    It�s amazing when you think about it.

    Look at the chaos and catastrophe these guys have left in their wake. One middle-aged man in five is out of work. Tens of millions of families have been financially wiped out. The national debt has nearly doubled.

    If inner-city gangs had done this to America, we�d have martial law. If Arabs had done it, we�d have launched another war.

    Wall Street bankers? They�ve walked away scot free. And they�re actually being rewarded.

    (the whole article is worth reading…)

    banks are too big to fail. that’s the truth. it doesn’t matter if they are small or big. if there are losses there are losses. if there are a trillion dollars of losses it makes no difference if there are 1,000 banks or 1. they’ll get bailed out. last time it was small banks that needed a bailout. this time it was large ones. small banks are still failing. more failed this year than last year.

    “As for the new consumer finance watchdog? The agency thatâ��s supposed to stand up to the banks will be housedâ�¦ within the Federal Reserve. Literally, it will be a tenant of the banking system.”

    I disagree. that’s headed by whats her name. there are a lot of consumer reforms put into law too.

    “Meanwhile, missing from this giant â��reformâ�� bill was any actual, serious reform like threatening crooked bankers with real jail time.”

    too vague. you want to put people in jail for losing money?

  86. 336
    pfft says:

    By Blake @ 84:

    RE: pfft @ 82

    … it’s like magic! Just don’t look behind the curtain…

    it’s just the boom and bust cycle. let’s just all relax and enjoy the ride up.

  87. 337
    Blurtman says:

    RE: pfft @ 85 – No, as Stglitz and Greenspan have stated, for committing fraud.

  88. 338
    pfft says:

    By Blurtman @ 87:

    RE: pfft @ 85 – No, as Stglitz and Greenspan have stated, for committing fraud.

    by making bad investments? it’s criminal to lose money? yes there were some abuses. we all know that. if they knew these mortgages were so bad why did they keep them on the books and need to be bailed out? the mostly likely and simplest answer for most is that like the people who bought 5 condos they didn’t think prices would go down. they were more afraid of the upside than the downside.

    who should be charged and what should they be charged with?

  89. 339
    Blake says:

    RE: pfft @ 85
    Re: ““As for the new consumer finance watchdog? The agency thatâ��s supposed to stand up to the banks will be housedâ�¦ within the Federal Reserve. Literally, it will be a tenant of the banking system.”
    pft wrote: I disagree. that’s headed by whats her name. there are a lot of consumer reforms put into law too.”

    … Her name is Elizabeth Warren, a person I have been following for over a decade… she is truly a great person and a hero in my eyes. But, as with so much else, Obama delayed and only appointed her “interim” head fo the new agency and she has little power:
    Marcy Wheeler has been following this tragedy intensively…
    http://emptywheel.firedoglake.com/2010/10/03/the-warren-commission-and-financial-reform/
    “Therein lies the truth the Obama Administration has carefully obscured. They not only denied Elizabeth Warren the post she deserved and the power the country needed in her hands, they co-opted her as cover for frustrating the very purpose of the CFPA. There is no real power for the CFPA, and the true “rule writing” cannot occur, until there is a formal head and because of the bait and switch, Obama and Geithner have indefinitely strung out the time when there will be such a formal head of CFPB.
    and…
    “Under questioning from senators on Thursday, the deputy Treasury secretary, Neal S. Wolin, acknowledged that regulators would not have substantive power to write rules governing a vast array of consumer loans until a permanent director of the bureau is in place and until July 21, 2011, when responsibilities from seven other federal agencies are transferred to the new bureau.
    …..
    At the hearing, Senator Richard C. Shelby of Alabama, the top Republican on the Banking Committee, said that the Treasury Department had emphasized the need to move quickly on writing new rules governing consumer loans, and questioned whether the department could do that “without a confirmed director.”

    Mr. Wolin replied that “there is limited rule-writing authority, but it is constrained until such time as there is a confirmed director.
    ….
    Finally, Mr. Wolin acknowledged to the senators that “the authority to actually issue a rule that would bind private parties, for example, in the mortgage area is a tough one until such time as there is a confirmed director.”

    Marcy concludes: “What the Warren co-option by Obama and Geithner has done is not just to score political points from gullible Democrats desperate for a hint of intelligent financial policy from a moribund Administration, but more importantly to provide cover for the hollowing out of what could have been, and should have been, awesome power of a CFPB in competent and motivated hands of somebody actually interested in real consumer and citizen protection. Someone like Elizabeth Warren. It is a craven bait and switch and you, the consumer and citizen, are on the losing end.”

  90. 340
    Blurtman says:

    RE: pfft @ 88 – You seem to disbelieve that employees of investment banks could profit greatly while at the same time destroying the very institutions that employ them. I refer you to ECONNED by Yves Smith where this is discussed at length. Until then, here is a recent quote from her blog: “We discussed at some length in ECONNED how the so-called “negative basis trade” allowed traders at Eurobanks to reap multi-million dollar bonuses on profits not yet earned, and never to be earned, by buying and partially hedging AAA-rated CDOs. Those CDO exposures were not simply the reason so many banks nearly keeled over; this trader-driven demand for AAA CDOs helped keep the subprime market going well beyond its sell-by date, thus worsening the severity of the US housing bubble and aftermath.” Yves discusses here how banks would buy toxic securities to their detriment, the rationale – because employees that did made lots of money.

    Earlier in this chain, banks and worse mortgage brokers that underwrote mortgages were incentivized to sell these to the investment banks who would securitize them. And Moody’s and S&P would fraudulently rate them. Without the demand from the securitizers, and/or with non-fraudulent ratings, things would not have gotten as out of control as they did.

    As was stated, there was lots of money to be made as long as the music played. Fraud pays.

    I think when you are at odds with folks like Stiglitz, Greenspan, Janet Tavakoli and other experts, you should admit you are wrong and try to learn from that. Admitting that you do not know, or that what you think you know is in fact wrong, is the path to wisdom.

  91. 341
    pfft says:

    By Blurtman @ 90:

    RE: pfft @ 88
    I think when you are at odds with folks like Stiglitz, Greenspan, Janet Tavakoli and other experts, you should admit you are wrong and try to learn from that. Admitting that you do not know, or that what you think you know is in fact wrong, is the path to wisdom.

    alan greenspan? really? don’t you criticize me when I agree or post something from krugman? stiglitz is just as accomplished as Krugman. experts can also be wrong. roubini called the rally off the bottom a bear market rally, called jim cramer a buffoon and said green shoots were green weeds. everyone makes mistakes.

    again, what you described, while there are some excpetions, is the result of a housing boom. there are reforms that still need to happen but every boom produces losses. should people who brought IPOs to market who had no earnings go to jail? they had to have known that those stocks would burn out right?

  92. 342
    One Eyed Man says:

    RE: Blake @ 89

    In response to Pfft you said:

    ” Her name is Elizabeth Warren, a person I have been following for over a decade… ”

    I’m curious as I’d never seen or heard of her before 2008. I assume you’re either: (A) somebody who reads rather dry non-fiction on bankruptcy and consumer credit issues; (B) a Harvard Law grad circa 2000; or, (C) a very patient and persistent stalker of attractive middle aged intellectual women.

    I was somewhat vicariously excited hoping you might be an “C”, but I think that’s probably just a projection resulting from my own internal dialogue. My guess is your interest in her is purely Platonic and you’re most likely either an “A” or a “B.”

  93. 343
    Blurtman says:

    RE: pfft @ 91 – The boom was fueled by fraud as described previously. As many people besides Greenspan, Stiglitz and Tavakoli have stated, large scale fraud occurred and needs to be prosecuted. Your losing money question is inane, irrelevant and a sign of blocked cerebral arteries, or at least serious denial. It has nothing to do with anything we are discussing.

    Here is but one example of on the record fraud. Rubin needs to go to jail.

    Citigroup Inc. executives were warned as early as 2006 that the bank routinely bought mortgages that violated its own standards, the former chief underwriter for Citigroup’s consumer-lending group testified.

    Richard Bowen determined in mid-2006 that more than 60 percent of mortgages bought from other firms and sold to investors such as Fannie Mae and Freddie Mac were “defective,” according to his prepared remarks today before the Financial Crisis Inquiry Commission. The panel is probing causes of the 2007 mortgage-market collapse and ensuing bank bailouts.

    “I started issuing warnings in June 2006 and attempted to get management to address these critical risk issues,” said Bowen, who was chief underwriter for correspondent lending in Citigroup’s consumer-lending group. “These warnings continued through 2007 and went to all levels of the consumer-lending group.”

    In a November 2007 e-mail headlined, “URGENT-READ IMMEDIATELY-FINANCIAL ISSUES,” Bowen said he warned top managers including then Executive-Committee Chairman Robert Rubin of “possibly unrecognized financial losses” among other risks.

    “I know that this will prompt an investigation of the above circumstances which will hopefully be conducted by officers of the company outside of the consumer-lending group,” Bowen wrote in the e-mail, a copy of which he included in the prepared remarks. The missive was copied to then-Chief Financial Officer Gary Crittenden and David Bushnell, Citigroup’s chief risk officer.

  94. 344
    Blake says:

    RE: One Eyed Man @ 92
    … funny… yes (A)… I read a lot of very dry non-fiction (insomniac)
    Elizabeth Warren published terrific work back in the late 90s and early 00s about bankruptcy reform and the decline of the middle class. I had friends at Harvard that co-authored some work with her and her colleagues and it was exciting to see her rise to such national prominence… if not true Power She is sharp and quite inspiring… but no (C) I have not been “following” her! ;-) …just “following” her work. (I think Bill Moyers had a crush on her tho…)

    Likewise I came across Joe Stiglitz’s writings in the late 80s – his papers stood out from the otherwise “dismal science”/economic papers I was reading – and I have “followed” him closely for years as well. It was great to watch him rise to the top of his field – Nobel prize and all… and then become a bit of a radical! Go Joe!!
    http://www.project-syndicate.org/commentary/stiglitz131/English

    (So… If in the land of the blind the one-eyed man is King. Are you among the blind??)

  95. 345
    Blurtman says:

    Moody’s Destroys Reputation for Short Term Gains, Yet Again

    And yet that buffoon Bernanke uses this firm to rate the toxic dung that he buys from the banksters.

    Moody’s bungled ratings on community bank bonds, too

    NEW YORK — Billions of dollars in top-rated bonds backed by community banks have gone bust, debunking the defense offered by credit-rating agencies that wildly inaccurate ratings were limited to risky mortgage bonds that imploded and then triggered the U.S. financial crisis.

    Government regulators and lawyers across the country are examining how credit-rating agencies came to bless as “investment grade” the now-toxic bonds made up of special securities issued by community bank holding companies.

    During the go-go years preceding the December 2007 start of the worst modern recession, more than $50 billion of these special securities were floated by community banks and pooled into complex instruments called collateralized debt obligations, or CDOs.

    From 2000 to 2008, Moody’s Investors Service rated at least 103 of them, valued at $55 billion, issued by banks, insurance companies and real estate investment trusts.

    Today, many of these securities are virtually worthless.

    Questioned by the Financial Crisis Inquiry Commission on June 2 in New York, Moody’s Chief Executive Raymond McDaniel insisted that “the poor performance of ratings from the 2006-2007 period in residential mortgage-backed securities and other related securities, housing-related securities, has not at all been replicated elsewhere in the business.”

    Wrong.

    Of the 324 U.S. banks that have failed since 2008, 136 of them defaulted on a total of $5 billion in trust-preferred securities — called TRuPS in industry parlance — that they’d issued to raise capital.

    These securities were popular because their issuance didn’t dilute an issuer’s share price, unlike preferred stock. And the dividends paid on the securities were tax deductible for the issuer.

    Through the Freedom of Information Act, McClatchy learned that at least 36 failed banks have transferred more than $1 billion in bonds backed by trust-preferred securities to the Federal Deposit Insurance Corp.

    And with small 860 banks on the FDIC’s “watch list” as of Sept. 30, indicating risk of failure, it’s clear that even more of these toxic assets may flow to the FDIC, which is unable to find other institutions willing to take them.

    One of the failed banks, Riverside National Bank of Fort Pierce, Fla., brought a suit against Moody’s and its two competitors, alleging that Moody’s as a result of “undisclosed conflicts of interest fraudulently and/or negligently assigned inflated ‘investment grade’ ratings to the CDOs” that are worthless today.

    Riverside eventually failed and its toxic assets fell to the Federal Deposit Insurance Corp., which in an unusual move took over as the plaintiff and continued the suit.

    Moody’s declined to comment.

    Previous reporting this year by McClatchy revealed how the Moody’s board of directors asked little about the business division that drove profits and eventually destroyed the company’s reputation. A McClatchy report in late 2009 revealed how executives in charge of rating structured finance products — those involving sliced up, pools of loans, bonds or securities — took control of Moody’s executive suite.

    During several public hearings this year, former analysts at Moody’s, which dominated the business of rating complex bonds, testified that they were pressured by superiors to maximize their revenues, even if it meant providing dubious ratings.

    It’s why McDaniel’s testimony is so damning in its assertion that ratings problems were limited to mortgage bonds, and brought by outside factors.

    “This (collapse in trust-preferred CDOs) has nothing to do with mortgages at all, and yet you still have had this massive impact and this massive failure,” said a former Moody’s senior analyst who alleges he was pressured to provide inaccurate ratings.

    The analyst, who insisted on anonymity for fear of litigation, said there’s a fundamental flaw in the way these securities were rated. Moody’s provided what were called “shadow ratings,” one-time ratings issued about the health of the bank that weren’t continually monitored and instead represented a snapshot in time.

    Armed with these “shadow ratings,” investment banks then pooled the securities into different layers of risk, offering investors slices of the pooled securities broken down into differing risk levels. Hedge funds and big pension funds often took the portions rated highest and thus perceived to be of least risk.

    Less sophisticated buyers took out the riskier portions, which offered the higher returns.

    “There are small banks who are buying some of the most sophisticated and difficult to analyze securities. Many of our clients didn’t seem to have clear appreciation for the risks they were assuming,” said Gene Phillips, the director of PF2 Securities Evaluations Inc., a New York firm that provides independent valuation of complex financial instruments. “And yes, the only thing they’re relying on is the rating and perhaps the promises made to them by the” investment bank salesperson.

    A former high-level Moody’s executive involved in the “shadow ratings” process, who requested anonymity to protect his new job outside Moody’s, acknowledged that the “shadow ratings” enabled Wall Street to aggressively market the securities as safe bets.

    Community banks began issuing trust-preferred securities in earnest in 2002, but there wasn’t much of a track record. To guard against risk, rating agencies, which worked side by side with Wall Street banks to develop the pool of securities, insisted on geographic diversity.

    The thinking was that if pools contained securities issued from a mix of banks across the country, there’d be less risk involved.

    It proved to be a fatally flawed logic, since so many of the community banks made poor lending decisions or overextended themselves on construction loans that eventually blew up their banks.

    “I have no idea how the rating agencies were ever able to get comfortable not only putting a rating on it, but calling it AAA,” said a former top executive at a now defunct Wall Street investment bank that was a big promoter of these complex CDOs.

    Speaking to McClatchy on condition of anonymity to protect his reputation, this executive said that investment banks and raters were both chasing profits.

    “Moody’s was like every other business. They were put under tremendous pressure to do this business because it was by far their highest margin business,” the executive said.

    The investment-grade rating provided by Moody’s and its smaller competitors was an essential element in the boom, and later bust, of trust-preferred securities.

    One former chief financial officer of a failed Midwest community bank sunk more than $50 million of his bank’s investment portfolio into CDOs backed by the special securities.

    Demanding anonymity for fear of litigation, this official told McClatchy the ratings were a key reason he bet so heavily on a product that seemed safe because they involved securities issued by community banks like his.

    “We relied on a lot of the stuff that they were providing us in terms of who the issuers are, their analysis in terms of loss rates. I wasn’t cranking cash flows but was relying on their information,” said the former finance chief, adding there was a limited amount of due diligence he himself could do on a complex bond.

    Investors in the bonds didn’t know who else bought into these complex securities or how big a slice they took.

    “It was heavily weighted on the rating agencies,” said the official, who bought into securities with an investment-grade A rating though that turned out to be junk, bringing down his small bank. The rating “definitely helped. That was definitely one of the facts that made us comfortable with the (securities) that we had.”

    The finance chief of a South Carolina community bank also got burned by CDOs containing pools of trust-preferred securities. Around 2005, he invested in the securities as a way to raise capital for future lending, and he’s lost about $7 million on the bets.

    “They were perceived to be very safe instruments, and it was a way to diversify your investment portfolio,” said the executive, who asked that his name not be used because he didn’t want to attract negative attention to his healthy bank.

    In hindsight, he now thinks the ratings provided a false comfort level.

    “I think once you started digging down into the banks, I think that’s where it was the eye opener. For your investment portfolio, it was just too complex,” the banker said.

    And that’s why the battle is now in the courtroom.

    Moody’s and its competitors have traditionally escaped liability for failed ratings on the grounds that they enjoy First Amendment rights that protect free speech. They provide an opinion to investors, thus it amounts to exercising protected speech.

    On Dec. 11, a California state judge reaffirmed those rights in a case brought by the California Public Employees Retirement System involving a different complex financial product.

    But in a move that heartened other potential litigants, the judge left the door open for CALPERS, the largest U.S. pension fund, to continue portions of the suit alleging illegal behavior. It allows CALPERS attorneys to seek some potentially key documents and information from Moody’s.

    The scope of lawsuits is likely to only widen because buyers of complex securities aren’t taking their losses lightly.

    For example, insurance giant Allstate is reviewing all of its purchases of complex financial instruments with an eye toward litigation. From 2001 to 2005, it bought eight trust-preferred CDOs — a fraction of Allstate Investment’s total portfolio — that have gone bad despite being given AAA or AA investment-grade ratings.

    “There are people lining up to start suing,” said Tom Wilson, Allstate’s chief executive, told McClatchy. “I don’t think we’re alone.”

    Read more: http://www.mcclatchydc.com/2010/12/22/105707/how-rating-agencies-set-stage.html#ixzz18uITuDUs

  96. 346
    One Eyed Man says:

    RE: Blake @ 94

    Do I consider my self among “the blind.” Unfortunately in terms of the general population the answer is yes. It pains me to say that because I’m embarassed to acknowledge that level of arrogance and probably elitism. Until middle age I always considered myself a Jeffersonian democrat who believed in the collective political wisdom of the common man. I would contrast that to the Hamiltonian’s who felt the common man didn’t have the political acumen to directly elect the president and therefore gave us the “electoral college”.

    As a practical matter, I probably stub my toes often enough to temper my arrogance. But I’d still like to think that I run into less furniture than the average Joe six-pack.

  97. 347
    Blurtman says:

    The ‘Subsidy’: How a Handful of Merrill Lynch Bankers Helped Blow Up Their Own Firm

    Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank’s own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating.

    Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank’s money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them. The division creating the securities passed portions of their bonuses to the new group, according to two former Merrill executives with detailed knowledge of the arrangement.

    The executives said this group, which earned millions in bonuses, played a crucial role in keeping the money machine moving long after it should have ground to a halt.

    “It was uneconomic for the traders” — that is, buyers at Merrill — “to take these things,” says one former Merrill executive with knowledge of how it worked.

    Within Merrill Lynch, some traders called it a “million for a billion” — meaning a million dollars in bonus money for every billion taken on in Merrill mortgage securities. Others referred to it as “the subsidy.” One former executive called it bribery. The group was being compensated for how much it took, not whether it made money.

    The group, created in 2006, accepted tens of billions of dollars of Merrill’s Triple A-rated mortgage-backed assets, with disastrous results. The value of the securities fell to pennies on the dollar and helped to sink the iconic firm. Merrill was sold to Bank of America, which was in turn bailed out by taxpayers.

    What became of the bankers who created this arrangement and the traders who took the now-toxic assets? They walked away with millions. Some still hold senior positions at prominent financial firms.

    http://www.propublica.org/article/the-subsidy-how-merrill-lynch-traders-helped-blow-up-their-own-firm

  98. 348
    pfft says:

    it’s a start.

    New York AG Sues Ernst And Young
    http://www.npr.org/2010/12/22/132265858/New-York-AG-Sues-Ernst-And-Young

    the financial reform bill has clawback provisions. I have no earthly idea who good they are but they are there.

    Making Sense of Clawbacks and Holdbacks
    http://www.businessweek.com/managing/content/aug2010/ca20100813_666706.htm

  99. 349
    pfft says:

    By Blurtman @ 90:

    RE: pfft @ 88
    Earlier in this chain, banks and worse mortgage brokers that underwrote mortgages were incentivized to sell these to the investment banks who would securitize them. And Moody’s and S&P would fraudulently rate them. Without the demand from the securitizers, and/or with non-fraudulent ratings, things would not have gotten as out of control as they did.

    As was stated, there was lots of money to be made as long as the music played. Fraud pays.

    again you are calling people criminals who made bad investments. the ratings agencies are certainly to blame more than anyone. the trouble is nobody believes ratings agencies. they are a joke on wall street. how about the people who bought the bonds? aren’t they do blame. they reached for yield. guess what? with higher yield comes greater risk. you may or may not be compensated for that risk. they weren’t with many investments you could pick your tranche and set exactly how much risk you wanted to take.

    “As was stated, there was lots of money to be made as long as the music played. Fraud pays.”

    should we prosecute those that brought worthless dotcoms to market? they knew those companies would never make money and the stock would tank.

    all of the above applies to bringing criminal actions. morally I think what a lot of these people did I couldn’t do myself.

    my last point is this. if it was so obvious what was going to happen why did the best and brightest get caught up in it? you can lose money even if you are the smart money and know the risks.

    Fund manager’s fun sailing away
    Hedge fund manager John Devaney looking to sell 142-foot yacht for $23.5 million after bad bet on subprime mortgage assets.
    http://money.cnn.com/2007/07/30/news/newsmakers/yacht_sale/index.htm

    “The consumer has to be an idiot to take on those loans,” he said. “But it has been one of our best-performing investments.”

    that sums it up. he was considered one of the best too.

  100. 350
    pfft says:

    should we prosecute people who sold MBS at the top?

    should we prosecute people who sold their house at the top because they knew large losses were coming?

  101. 351
    pfft says:

    if you bought a home at the bottom because you knew prices were too low and would go up should you be charged with fraud? should everyone who bought stocks in march of 2009 be charged with fraud?

  102. 352
    pfft says:

    stock market is up 86% since it bottomed almost 22 months ago. looks like it will close above 10,000. we should report that stock market poll.

    http://dshort.com/articles/current-market-snapshot.html

  103. 353
    Trigger says:

    Scotsman – Look at the stats on buying spree. People returned to the shops. People are buyin all over. Everybody is enjoying the good times. The Fed did its job in printing the money to make thins easier for people to buy new stuff. It is just good times. The Dow is going up and people are trying to cash in on this new trend and maybe retire in Hawaii.

    Are you taking advantage of this renewed energy around us?

  104. 354
    Blurtman says:

    Reader’s comment from Mish Blog below.

    “Many Arrows,

    Excellent analysis. The bankers knew it would end in disaster. They started down this path in the early 1990’s and many (including myself) attended B.E.S.T training given by the former Chairman of Bankers Trust. But then we were talking about only one level of securitization. It was obvious that if you packaged 1,000 car loans at 10% that the package could be sold as a security with a yield of 8%. A single car loan is risky, but a package of car loans is predictable. The issuer thus got a nice 2% fee from the sale. Of course the next step was to package loans underwritten by others (who did not care if the borrower lied). Then to slice and dice. Then to create the Credit Default Swap unregulated over-the-counter market, etc. By 2006 when you saw securitization, it was known by all as unsupportable. There was no way that everyone could be paid honestly. {That is why Karl Denninger started his blog as he also saw that.}

    “What did they think was generating the abundant fees at all levels? A pot of gold? tooth fairy?”

    No, they ALL knew that fraud was going on, but the bonus pools were huge! When the end came they would all retire to the Hamptons and reflect on how much they had earned. Most are worth hundreds of millions of dollars and there are even a few billionaires. They cared not that the stockholders would get wiped out. They cared not that pension plans would fold. They were playing with “other people’s money”. Many small banks were frozen out of the game and others choose not to play, but everyone on Wall Street and the mortgage originators in California played until the music stopped. Now 2006 is significant in that was the year that they started to run out of buyers. The market was dead by the 4th quarter of 2006, but they hid it well.

    “WHY ON EARTH did folks with 30 years of banking experience NOT know??????”

    Many Arrows, they knew, but the money was just too good to pass up.

    They all belong in jail.”

    Link: http://js-kit.com/api/static/pop_comments?ref=http%3A%2F%2Fglobaleconomicanalysis.blogspot.com%2F%2F&path=%2F2010%2F12%2F98-tarp-recipients-close-to-failure.html&permalink=http%3A%2F%2Fglobaleconomicanalysis.blogspot.com%2F&label=Add%20New%20Comment&title=Mish's%20Global%20Economic%20Trend%20Analysis&adminBgColor=%23DDDDDD

  105. 355
    Ben says:

    RE: Blurtman @ 104 – Yep. The free market was not allowed to regulate while existing government regulators looked the other way by design.

    The “triumph?” of crony capitalism over the free market. BTW, fraud is illegal in a free market versus legalized as it is with crony capitalism.

  106. 356
    Scotsman says:

    Blatant propaganda from the Obama administration, or perhaps some other planet. This is unreal in the boldness of its lies- check the comments:

    http://thehill.com/blogs/on-the-money/801-economy/135143-analysis-job-creation-happening-at-faster-rate-than-previous-recessions

    I guess they missed this: http://economix.blogs.nytimes.com/2010/12/03/comparing-recessions-job-changes/

  107. 357
  108. 358
    softwarengineer says:

    RE: Scotsman @ 107

    It Seems to Be Chronic

    The real unemployment rate minus the give-ups and the other “not counted” army [another 5-10% that can be added to the U6 number]; is the U6 rate and it’s been stuck at about 17% for the entire year.

    The globalist MSM can put lipstick on this pig, but it still stinks like hogwash.

    http://www.bls.gov/news.release/empsit.t15.htm

  109. 359
    Blurtman says:

    Foreclose on the Foreclosure Fraudsters, Part 1
    By William K. Black and L. Randall Wray

    William K. Black is an Associate Professor of Economics and Law at the University of Missouri-Kansas City. He is a white-collar criminologist and was a senior financial regulator. He is the author of The Best Way to Rob a Bank is to Own One. He warns that the Fed’s failed leadership on regulation could lead us over another financial cliff–more catastrophic than the last.

    L. Randall Wray is a Professor of Economics at the University of Missouri-Kansas City and Research Director with the Center for Full Employment and Price Stability as well as a Senior Research Scholar at The Levy Economics Institute and author of Understanding Modern Money.

    After a quick review of its procedures, Bank of America this week announced that it will resume its foreclosures in 23 lucky states next Monday. While the evidence is overwhelming that the entire foreclosure process is riddled with fraud, President Obama refuses to support a national moratorium. Indeed, his spokesmen on the issue told reporters three key things. As the Los Angeles Times reported:

    A government review of botched foreclosure paperwork so far has found that the problems do not pose a “systemic” threat to the financial system, a top Obama administration official said Wednesday.

    Yes, that’s right. HUD reviewed the “paperwork” problem to see whether it threatened the banks — not the homeowners who were the victims of foreclosure fraud. But it got worse, for the second point was how the government would respond to the epidemic of foreclosure fraud.

    The Justice Department is leading an investigation of possible crimes involving mortgage fraud.

    That language was carefully chosen to sound reassuring. But the fact is that despite our pleas the FBI has continued its “partnership” with the Mortgage Bankers Association (MBA). The MBA is the trade association of the “perps.” It created a ridiculous on its face definition of “mortgage fraud.” Under that definition the lenders — who led the mortgage frauds — are the victims. The FBI still parrots this long discredited “definition.” That is one of the primary reasons why — in complete contrast to prior financial crises — the Justice Department has not convicted a single senior officer of the large nonprime lenders who directed, committed, and profited enormously from the frauds.

    Note that the Justice Department is not investigating foreclosure fraud. HUD Secretary Donovan’s statement shows why:

    “We will not tolerate business as usual in the mortgage market,” he said. “Where there have been mistakes made or errors, we will hold those entities, those institutions, accountable to stop those processes, review them and fix them as quickly as possible.”

    Note the language: “mistakes”, “errors”, “processes” (following the initial use of “paperwork”). No mention of “fraud”, “felony”, “criminal investigations”, or “prosecutions” for the tens of thousands of felonies that representatives of the entities foreclosing on homes have admitted that they committed. Note that Donovan does not even demand that the felons remedy the harm caused by their past fraudulent foreclosures. Donovan wants them to “fix” “processes” — not repair the harm their frauds caused to their victims.

    The fraudulent CEOs looted with impunity, were left in power, and were granted their fondest wish when Congress, at the behest of the Chamber of Commerce, Chairman Bernanke, and the bankers’ trade associations, successfully extorted the professional Financial Accounting Standards Board (FASB) to turn the accounting rules into a farce. The FASB’s new rules allowed the banks (and the Fed, which has taken over a trillion dollars in toxic mortgages as wholly inadequate collateral) to refuse to recognize hundreds of billions of dollars of losses. This accounting scam produces enormous fictional “income” and “capital” at the banks. The fictional income produces real bonuses to the CEOs that make them even wealthier. The fictional bank capital allows the regulators to evade their statutory duties under the Prompt Corrective Action (PCA) law to close the insolvent and failing banks.

    The inflated asset values allow the Fed and the administration to ignore the Fed’s massive loss exposure and allow Treasury to spread propaganda claiming that TARP resolved all the problems — at virtually no cost. Donovan claims that we have held the elite frauds accountable — but we have done the opposite. We have made the CEOs of the largest financial firms — typically already among the 500 wealthiest Americans — even wealthier. We have rewarded fraud, incompetence, and venality by our most powerful elites.

    If the government does not hold the fraudulent CEOs responsible, who is supposed to stop the epidemic of elite financial fraud? The Obama administration’s answer is the fraudulent CEOs themselves, at a time of their choosing. You can’t make this stuff up.

    But ultimately resolving the problems is not the government’s responsibility, said Michael Barr, assistant Treasury secretary for financial institutions.

    “Fundamentally, this is up to the banks and the servicers to fix,” he said. “They can fix it as fast as they feel like.”

    So who is Michael Barr and why is saying things on behalf of the Obama administration that make it appear to be a wholly-owned subsidiary of the fraudulent lenders and servicers? He’s a Robert Rubin protégé and he’s the senior Treasury official for banking policy.

    We have a different policy view. We believe that only the government can stop fraud from growing to catastrophic levels and that among the government’s highest responsibilities is to provide the regulatory “cops on the beat” with the competence, resources, courage, and integrity to take on our most elite frauds. We believe that anything less is a travesty that causes tens of millions of Americans to be defrauded and poses a grave threat to our economy and democracy.

    Prompt Corrective Action

    First, it is time to stop the foreclosures until the banks and servicers adopt corrective steps, certified as adequate by FDIC, that will prevent all future foreclosure fraud. They must also adopt plans to remedy the injuries their foreclosure frauds have already caused, and assist the FBI, Department of Justice, and legal ethics officials investigations of their officers’ and attorneys’ frauds and ethical violations.

    Second, it is time to place the financial institutions that committed widespread fraud in receivership. We should remove the senior leadership of the banks and replace them with experienced bankers with a reputation for integrity and competence, i.e., the honest officers that quit or were fired because they refused to engage in fraud. We should prioritize the receiverships to deal with the worst known “control frauds” among the “systemically dangerous institutions” (SDIs). The SDIs’ frauds and fraudulent leaders endanger the global economy.

    We propose Bank of America for the first receivership. In the last few weeks, the SEC has obtained a large (albeit grossly inadequate) settlement of its civil fraud charges against the former senior leaders of Countrywide. (Bank of America acquired Countrywide and is responsible for its frauds.) Fannie and Freddie’s investigations — with their findings reviewed by their regulator, the Federal Housing Finance Agency (FHFA) — have identified many billions of dollars of fraudulent loans originated by Countrywide that were sold fraudulently to Fannie and Freddie through false representations and warranties. The Fed, BlackRock, and Pimco’s investigations have identified many billions of dollars of fraudulent loans provided by Countrywide under false reps and warranties. Ambac’s investigation found that 97% of the Countrywide loans reviewed by Ambac were had false reps and warranties. Countrywide also engaged in widespread foreclosure fraud. This is not surprising, for every aspect of Countrywide’s nonprime mortgage operations that has been examined by a truly independent body has found widespread fraud — in loan origination, loan sales, appraisals, and foreclosures. Fraud begets fraud. Lenders that are control frauds create criminogenic environments that produce “echo” epidemics of control fraud in other professions and industries.

    We have been amazed that, as one financially sophisticated entity after another found widespread fraud by Countrywide in the entire gamut of its operations, the administration, the industry, and the financial media act as if this is acceptable. Countrywide made hundreds of thousands of fraudulent loans. It fraudulently sold hundreds of thousands of loans through false reps and warranties. It fraudulently foreclosed on large numbers of loans. It victimized hundreds of thousands of people and hundreds of financial institutions, causing hundreds of billions of dollars of losses. It has defrauded more people, at a greater cost, than any entity in history.

    Bank of America chose to purchase Countrywide at a point when it — and its senior leaders — were infamous. Bank of America made some of these Countrywide leaders its senior leaders. Yet, Bank of America is not treated as a criminal entity. President Obama, Attorney General Eric Holder, Donovan, and Barr cannot even bring themselves to use the “f” word — fraud. They substitute euphemisms designed to trivialize elite criminality. The administration officials do not call for Bank of America to be the subject of a criminal investigation. They do not demand that Fannie, Freddie, Ambac, the FHFA, and Pimco file criminal referrals about Countrywide’s frauds. They do not demand that Fannie, Freddie, and the Fed refuse to purchase or take as collateral any mortgage instrument from Bank of America. No one at the Harvard Club in New York moves to kick Bank of America’s officers out of their club! The financial media treats Bank of America as if it were a legitimate bank rather than a “vector” spreading the mortgage fraud epidemic throughout much of the Western world.

    For the sake of our (and the global) economy, our democracy, and our souls this willingness to allow elite control frauds to loot with impunity must end immediately. The control frauds must be taken down and their officers removed promptly. Receivership is the way to begin to reclaim our souls, our economy, and our democracy and Bank of America has the track record that makes it a good place to start. It is sufficiently large and powerful that its receivership will send the credible signal that America is restoring the rule of law and that even the most elite frauds will be held accountable.

    Next we need to remove the rest of the “too big to fail” institutions — we call them systemically dangerous institutions, or SDIs — to reduce the global systemic risks that they pose. We are rolling the dice with disaster every day. The SDIs are inefficient, so shrinking them will reduce risk and increase efficiency. We need to follow three types of policies with respect to SDIs.

    They cannot grow larger and compound the systemic risk they pose.
    They must create an enforceable plan to shrink to a level and functions such that they no longer pose a systemic risk within five years.
    Until they shrink to the point that they no longer pose systemic risks they must be regulated with far greater intensity than other banks. In particular, control fraud poses so severe a risk of triggering another global financial crisis that there must be no regulatory tolerance for control frauds at the SDIs. One of the best ways to reduce their risks is to mandate that high levels of executive compensation be paid only after sustained and superior performance (at least five years), and with “claw back” provisions if compensation was obtained by fraudulent reported income or seriously inadequate loss reserves.
    Appointing a receiver for an SDI will be a major undertaking for the FDIC, but it is also well within its capabilities. Contrary to the scare mongering about “nationalizing” banks, receivers are used to returning failed banks to private ownership. Receiverships are managed by experienced bankers with records of competence and integrity rather than the dread “bureaucrats.” We appointed roughly a thousand receivers during the S&L and banking crises of the 1980s and early 1990s under Presidents Reagan and Bush.

    Here is how it works. A receiver is appointed on Friday. The bank opens for business as normal (from the bank’s customers’ perspective) on Monday. The checks clear, the ATMs work, and the branches all open. The receiver’s managers direct the business operations, find the true facts about the bank’s operations, senior managers, and financial condition, recognize the real losses, and make the appropriate referrals to the FBI and the SEC so that the frauds can be investigated and prosecuted.

    The receiver is also a well-proven device for splitting up banks that are too large and incoherent by selling units of the business to different bidders who most value the operations.

    Dealing with the “Dirty Dozen” Control Frauds

    Simultaneously, we should put in place a system to replace the existing cover up of the condition of other banks with vigorous investigations and honest accounting. The priority for these investigations should be the “Dirty Dozen” — the twelve largest banks. The Fed cannot conduct a credible investigation. It has taken so many fraudulent nonprime loans and securities as collateral that it is the leading proponent of covering up these losses.

    The FDIC should lead the investigations (it has “backup” regulatory authority over all banks), but it should hire investigative experts to add expertise to its Dirty Dozen examination teams. The priorities of the teams will be identifying existing losses and requiring their immediate recognition (the regulatory authorities have the authority to “classify” assets that can trump the accounting scams that Congress extorted from FASB). The FDIC should prioritize the order of its examinations of the largest SDIs on the basis of known indicia of fraud. For example, Citi’s senior credit manager for mortgages testified under oath that 80% of the loans it sold to Fannie and Freddie were made under false reps and warranties. The Senate investigation has documented endemic fraud at WaMu (acquired by Wells Fargo). The FDIC should sample nonprime loans and securities held by Fannie, Freddie, the Federal Home Loan Banks, and the Fed to determine which nonprime mortgage players originated and sold the most fraudulent loans. This will allow the FDIC to prioritize which SDIs it examines first.

    We should also create a strong incentive for financial entities to voluntarily disclose to the regulators, the SEC, and the FBI their frauds, their unrecognized losses, and the officers that led the frauds — and to fire any officer (VP level and above) who committed (or knew about and did not report) financial fraud. Any SDI that originated or sold more than $2 billion in fraudulent nonprime loans or securities should be placed in receivership unless it has conducted a thorough investigation and made the voluntary disclosures discussed above prior to the commencement of the FDIC examination, and developed a plan that will promptly recompense fully all victims that suffered losses from mortgages that were fraudulently originated, sold, or serviced.

    We make three propositions concerning what we believe to be institutions that are run as “control frauds”. To date, this situation has been ignored in the policy debates about how to respond to the crisis. The propositions rest on a firm (but ignored) empirical and theoretical foundation developed and confirmed by white-collar criminologists, economists, and effective financial regulators. The key facts are that there was massive fraud by nonprime lenders and packagers of fraudulent nonprime loans at the direction of their controlling officers. By “massive” we mean that lenders made millions of fraudulent loans annually and that packagers turned most of these fraudulent loans into fraudulent securities. These fraudulent loans and securities made the senior officers (and corrupted professionals that blessed their frauds) rich, hyper-inflated the bubble, devastated millions of working class borrowers and middle class home owners, and contributed significantly to the Great Recession — by far the worst economic collapse since the 1930s.

    Our first proposition is this: The entities that made and securitized large numbers of fraudulent loans must be sanctioned before they produce the next, larger crisis. Second: The officers and professionals that directed, participated in, and profited from the frauds should be sanctioned before they cause the next crisis. Third: The lenders, officers, and professional that directed, participated in, and profited from the fraudulent loans and securities should be prevented from causing further damage to the victims of their frauds, e.g., through fraudulent foreclosures. Foreclosure fraud is an inevitable consequence of the underlying “epidemic” of mortgage fraud by nonprime lenders, not a new, unrelated epidemic of fraud by mortgage servicers with flawed processes. We propose a policy response designed to achieve these propositions.

    S&L regulators, criminologists, and economists recognize that the same recipe that produced guaranteed, record (fictional) accounting income (and executive compensation) until 2007 produced another guarantee: massive (real) losses, particularly if the frauds hyper-inflated a bubble. CEOs who loot “their” banks do so by perverting the bank into a wealth destroying monster — a control fraud. What could be worse than deliberately growing massively by making loans likely to default, converting large amounts of bank assets to the personal benefit of the senior officers looting the bank and to those the CEO suborns to assist his looting (appraisers, auditors, attorneys, economists, rating agencies, and politicians), while simultaneously providing minimal capital (extreme leverage) and only grossly inadequate loss reserves, and causing bubbles to hyper-inflate?

    This nation’s most elite bankers originated and packaged fraudulent nonprime loans that destroyed wealth — and working class families’ savings — at a prodigious rate never seen before in the history of white-collar crime. They created the worst bubble in financial history, echo epidemics of fraud among elite professionals, loan brokers, and loan servicers, and would (if left to their own devices) have caused the Second Great Depression.

    Nothing short of removing all senior officers who directed, committed, or acquiesced in fraud can be effective against control fraud. We repeat: Foreclosure fraud is the necessary outcome of the epidemic of mortgage fraud that began early this decade. The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents and have committed “fraud in the inducement.” Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents. If the original documents do not exist the securities might be ruled no good. If the original docs do exist they will demonstrate that proper underwriting was not done — so the securities might be no good. Foreclosure fraud is the only thing standing between the banks and Armageddon.

    We will deal with objections to our proposal in the next piece.

    http://foreclosureblues.wordpress.com/2010/10/23/foreclose-on-the-foreclosure-fraudsters-part-1/

  110. 360
  111. 361
    pfft says:

    By softwarengineer @ 108:

    RE: Scotsman @ 107

    It Seems to Be Chronic

    The real unemployment rate minus the give-ups and the other “not counted” army [another 5-10% that can be added to the U6 number]; is the U6 rate and it’s been stuck at about 17% for the entire year.

    The globalist MSM can put lipstick on this pig, but it still stinks like hogwash.

    http://www.bls.gov/news.release/empsit.t15.htm

    are we back to this?

  112. 362
    pfft says:

    meanwhile back in the real world the repression continues.

    Holiday Sales Return to Level Before Recession
    http://www.nytimes.com/2010/12/28/business/28shop.html?_r=2&src=twr

  113. 363
    pfft says:

    By Blurtman @ 104:

    No, they ALL knew that fraud was going on, but the bonus pools were huge!

    then why did their firms lose hundreds of billions? many of those same people got wiped out when their stock tanked and they lost their job and prestige. the answer is complicated.

  114. 364
    Scotsman says:

    RE: Blurtman @ 109

    I’m one one the most traditional, conservative, level-headed guys in my circle of friends. And yet I sound like some ’60’s fanatic protesting against “the man.” But it’s true- the common man has lost his country and future when the rule of law no longer seems to matter. Just having a law on the books doesn’t mean anything now when the ends justify any means. Time to reset and start over.

  115. 365
    pfft says:

    By Scotsman @ 114:

    RE: Blurtman @ 109Time to reset and start over.

    historically that works out pretty well doesn’t it? did you notice my link above about christmas spending? no comments? that doesn’t foreshadow your dire economic scenario.

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