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New York, 2:24 AM
Tue Dec 1
59 posts in the last 24 hours
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02/24/09
02/24/09
Has ugly reality slipped out past the mesmerizing, anesthetizing media curtain so blatantly now that it can't be tucked back in?
Doubtful. Most of the sheep will still stare at the television, waiting for Mad Dog Cramer to make sense of it all for them.
But ever since the unconstitutional Federal Reserve Act, this country has been fully owned and operated by private banking interests. They print our money and answer to no one. End of story. Congress watches impotently from the sidelines, begging for information, for the appearance of some control. Control the cash, you control the game. Period. (Politicians are a relatively minor line item. You get back so much more than what you "donate" to them. If one gets out of line, not that hard to make them lose/go away.)
So what's wrong with that system? If you're at the top, nothing! It's wonderful. You can drive 80% of the wealth to less than 5% of the population. And once you reach a certain threshold of wealth, it basically never goes away!
If you're not at the top, or deep on the inside... oh, well. No matter how blatant the crime becomes, no matter how flagrantly outrageous, there will be no meaningful punitive consequences. (Not even for Bernie, which is so, well, awkward for maintaining appearances in this egalitarian "democracy.")
After all, what are you going to do about it? Admit that America is less than perfect?! How dare you, terrorist! This casino is the pride of the world that we now cover with military bases--you know, for security. Hey, you might not have a home anymore, but the Russians won't come and bother you under that bridge, we can promise that.
Because, of course, the largest part of our co-equal three branches of government is the part most directly owned by the private, unconstitutional, unelected, independent Federal Reserve: the Pentagon.
And when you control the money and the guns... well, enough said.
So onto Afghanistan we go! After all, the multinationals who own this country have business to tend to in that natural resource-rich corner of the world.
And if you're out of a job and home, guess who is always hiring! Be all that you can be, slave. Make Uncle Sam proud.
02/24/09
Bra-fucking-VO!
02/24/09
It's quite a foxhole to be in, let me tell you. The public hates you, your leadership seems about as PR-savvy as Octomom, you have no day-to-day job security, and most of your spare time is spent arguing with your coworkers about whether or not your employer is solvent. At this point I'm completely comfortable with being speared and set on fire by the masses - trying to deal with/explain the fallout of the crisis to a crowd of disinterested maniacs seems inferior by comparison.
02/24/09
--Hyman Roth
02/24/09
It's the ultimate job for the suicidally ambitious - anyone else burns out or gives up. I'm starting to think I may be part of that whole "gives up" crowd; academia seems compelling. I'll have to work on my stone-throwing fastballs and wheedling to newspapers, core traits for learned economists.
02/24/09
02/24/09
I guess my point is that bankers are pretty bad, but realtors are possibly worse. Lay off the bankers for a bit and tell a realtor that he/she is a scumbag.
02/24/09
Realtors have minute incentive to increase the value of homes. A 10K price difference - a lot in the entry-level space, where a lot of this crap was happening - is a tiny difference in the rip for a realtor. Freakonomics actually had a good incentive analysis of the concept.
The real thieves were loan originators. "Selling" a subprime loan brought beaucoup profits to shell banks like World Savings, who then sold the pieces of crap to investment banks. The problem is that risk isn't born by the originator - because if it was, interest rates would be much higher and loans would be much harder to come by. Mirroring today, where there is almost no secondary market for debt and millions of mortgages get rejected - even for creditworthy borrowers. The absence of liquidity is due to a lack of faith in originator documents.
02/24/09
02/24/09
the banks and the banking system would be fine - F I N E - if individuals had not willingly borrowed (and subsequently started to default on) more than they could repay.
in very simplified terms, the bet that "bankers" were making was that the lendees would repay their debts on time.
but the lendees did not.
and now, uncomfortable as it is for each and every one of us, those debts have to be repaid. its uncomfortable and, to be honest, a little scary that it is having to be done the way it is but there's no other way to fix it.
so rather than vilify banking and those who do it, ask yourself if you have, in any shape, taken on more debt than you can afford.
02/24/09
Several large companies went belly up in the 00's (starting with Enron) and they affected the market. Risk folks at the banks were talking 2004-5 about how the world economy would get hit hard if one really big bank went south. So bankers share blame in turning a deaf ear to their own common sense.
What will happen, if we don't get freaky with bank compensation, is that the ya-yas who got us into this mess will be ousted by the good banks, and the risk guys will take over. They were always the true brains of these operations anyway.
02/24/09
02/24/09
02/24/09
I think a good chunk - half, maybe more - is people not taking personal responsibility.
But bankers took on excess risk, and while they kept the spoils, they are making others pay for their losses. They paid the rating-agencies for high ratings and then foisted the stuff on formerly-healthy asset managers - infecting them.
02/24/09
And you're ignoring what these geniuses of finance did after securing this debt - leveraging it beyond all recognition and, in the process, securing hideous amounts of quick profit that we're all paying for now.
02/24/09
02/24/09
Less than 10% of mortgages are in default, even now - my last number was around 7.5%. Ultimately, the reason why defaults were so destructive was because banks levered in both conventional and unconventional ways, with both borrowing and derivatives. There was an irrational assumption of safety and irrational trust in hedging based on stochastic risk models that don't adequately capture the irrational relationship between defaults across risk levels. No economist, banking CEO, or risk manager believed that underlying defaults would rise this quickly; even heretics like Roubini and Faber didn't anticipate the rapidity of the collapse in valuations creating a unified, corellated risk of credit defaults.
Were bankers at fault for looking to history to form assumptions? Dunno. You tell me. You're the one pointing fingers and throwing stones.
02/24/09
Oh, yes, Quite right.
Meanwhile, did they ever figure out what happened to the $2 trillion Rumsfeld announced at press conference that the Pentagon could not account for--at all?
I mean, what's $2 trillion, right?
You do remember that press conference, yes? September 10, 2001. No? Doesn't ring a bell?
Nevermind.
02/24/09
02/24/09
02/24/09
How about Standard & Poor's and Moody's, who gave AAA credit ratings to pools of lousy mortgages - ratings paid for by the people issuing the pools - thereby allowing pension funds and banks to buy these pools (many have a requirement to buy AAA or better only) and then saying "oops, not our fault"?
How about fast mortgage brokers, who glossed over the fine print and told you not to worry, you could always sell the house and make money if anything happened? And then pocketed their commission and ran?
How about advertising, which encouraged you to SPEND SPEND SPEND, and if you don't have it in the bank - just charge it!
How about - and this is a shocker - people taking SOME personal responsibility for reading how much their adjustable-rate mortgage is going to re-adjust to after the first year or two?
There are winners and losers in every economy. I loathe Dick Fuld (and I know him from work, this isn't just idle) and can name several others I'd like to get my hands on (Jim Cayne at Bear Stearns, who played bridge while his company collapsed; Stan O'Neal, who fired the conservative bankers at Merrill to plunge into high-risk bonds; Dick Grasso, who got half-a-bil for just warming at seat at the NYSE; the AIG guy who wrote the CDO business; and several in the hedge fund community - you know who you are, though I'm happy to name names - who ran up oil to $147/barrel this summer).
There is always a "Off with their heads!" search for the guilty, and these people are hardly likable. But they are products of a crooked political/economic system that privatizes profits and socializes losses.
02/24/09
As much as it sucks, we have to keep paying. The alternative is too ghastly to imagine.
02/24/09
I don't want a bunch of civil servant types running the joint either, but there may be better choices out there....young, hungry types who are open to looking at the situation differently.
If I screw up an assignment, I don't get rehired. And my screw-ups don't involve other people's life savings. We need people who are going to fix this mess and I'm afraid that the current crop of bankers, though probably smart, are too entrenched in the old way of doing things.
That said, I don't want anyone executed.
02/24/09
Mind you, I think this problem has been as much one of education as anything else. We have universities that are simply churning out graduates with absolutely no real education behind them. Then these kids get jobs that they simply don't have the chops for, and now here we are. Sure, its easy to blame the old men at the top (and they bear a lot of responsibility for sure), but lets not loose sight of who's actually involved with the nuts and bolts. Lowering the overall pay scale isn't the long-term fix... reforming the education and hiring systems will do more to fix this problem than all the bailouts combined.
02/24/09
Couldn't do it.
The more creative/intelligent people populated the engineer and design departments (and journalism, but we couldn't be trusted with our own checkbooks, let alone a bank). Maybe a more global-type education is required?
02/24/09
I wonder how many people became i-bankers because they loved it, and not because they loved money. The money lovers are just mercenaries anyway, so there's no reason to try to offer them more to stay -- they'll be gone as soon as something pays more. And then you've got the fall of Rome all over again.
Wow, that sounded really crazy. Well, it sounded deeper in my head. ^_^
02/24/09
02/24/09
Why don't we turn everyone into zombies to cure diseases?
If I have appendicitis and I am lacking a surgeon, I am not going to let a friend drive golf balls into my stomach because I don't have a better solution.
02/24/09
02/24/09
02/24/09
I will defer to others who give a convincing show of knowing more, but my belief is that every bank employed some risk managers who intelligently saw the dangers of certain types of leverage and advised against them...and yet those folks were ignored, and in some cases I'm sure they were sent packing. Because the bank's managers didn't believe such analyses served the shareholders' interests.
If anything, I blame the directors on the board for transmitting to managers a distorted idea of what shareholders wanted. But -- and this is crucial -- many shareholders actually liked the returns from jacked-up leverage and exotic securitized obligations. So the directors actually were representing them accurately.
So I'm afraid that if we're really looking to place blame, we have to cast the net much wider than just each bank's executive suite.
Anyway, Kinsley said something similar (though much more elegantly) after the last bubble crashed, in 2001. It wouldn't hurt to look back there for lessons.
02/24/09
02/24/09
02/24/09
Nevermind Sumer --
Winter is icumen in,
Lhude sing Goddamm,
Raineth drop and staineth slop,
And how the wind doth ramm!
Sing: Goddamm.
Skiddeth bus and sloppeth us,
An ague hath my ham.
Freezeth river, turneth liver,
Damm you; Sing: Goddamm.
Goddamm, Goddamm, 'tis why I am, Goddamm,
So 'gainst the winter's balm.
Sing goddamm, damm, sing goddamm,
Sing goddamm, sing goddamm, DAMM.
02/24/09
You've given me an excellent idea for a/how to deal with the bankers and b/stimulate the economy at the same time.
02/24/09
Make them listen to olde poetry?
02/24/09
02/24/09
02/24/09
Oooooh. I getcha. Worth seeing the movie?
02/24/09