Weekend Economists' Unbirthday Party September 16-18, 2011

[Demeter]

As a White Rabbit once said: 'Oh dear! Oh dear! I shall be late!'

And so it is, and I am late....I have just made 2 gallons of borszcz, in a vain attempt to reduce far too many vegetables to a manageable size. My neighbor, who bought into a community-supported farm, has dragged me into trying to process enough vegetables for 10 people every single week through December 9th. It wasn't too bad in the beginning, because we had a cold wet spring...but now, it's just impossible.

The neighbor doesn't really cook, you see, and how many vegetables can 3 people, one of whom doesn't like hardly any, eat? And a bunny rabbit can't possibly do more than nibble around the edges. But its ORGANIC, doncha know?

Since I am a complete food atheist, I am unimpressed. But I do feel like the Red Queen:

"Well, in out country," said Alice, still panting a little, "you'd generally get to somewhere else -- if you ran very fast for a long time, as we've been doing."

"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
(Through the Looking Glass, Chapter 2)



Yes, we have fallen into the world once dreamed by Lewis Carroll, as he styled himself. "Charles Lutwidge Dodgson, better known by the pseudonym Lewis Carroll, was an English author, mathematician, logician, Anglican deacon and photographer. His most famous writings are Alice's Adventures in Wonderland and its sequel Through the Looking-Glass, as well as the poems "The Hunting of the Snark" and "Jabberwocky", all examples of the genre of literary nonsense. He is noted for his facility at word play, logic, and fantasy, and there are societies dedicated to the enjoyment and promotion of his works and the investigation of his life in many parts of the world, including the United Kingdom, Japan, the United States, and New Zealand..."

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

It just doesn't add up, the world that is, these days. Better to chart one's course by the nonsense of a logician, than the economics of a crook.

We will explore the nonsense this weekend. Enjoy!

[Demeter]

1. NO BANKS FELL TONIGHT

I wonder if that means something big is going to blow...the suspense is killing us all and the economy.

[Demeter]

2. Leaked Documents Reveal Major Speculators Behind 2008 Oil Price Shock: Hedge Funds, Koch, Big Banks,

Leaked Documents Reveal Major Speculators Behind 2008 Oil Price Shock: Hedge Funds, Koch, Big Banks, Oil Companies

http://thinkprogress.org/green/2011/09/15/317330/leaked-cftc-oil-speculation-data/

Last month, Sen. Bernie Sanders (I-VT) leaked confidential data about oil speculation to a number of media outlets, including the Wall Street Journal. Ordinarily, the Commodity Futures Trading Commission, the regulatory body that oversees futures trading, does not provide identities of speculators to the public. However, the data leaked by Sanders provides a rare snapshot into the trading volumes by major speculators right before the oil price spike in the summer of 2008.

As experts from Stanford University, Rice University, the University of Massachusetts, and authorities have concluded, rampant oil speculation was the prime driver of the record high prices for crude oil three years ago...

SURPRISE!

http://www.slideshare.net/lee_fang/energy-holdingswticrudeoil

https://docs.google.com/spreadsheet/pub?hl=en_US&key=0AqLBaNIZ8Pc6dFk3MFlvRW5rYVktVDJOSFpTVG5ZQ1E&hl=en_US&gid=3

[Hugin]

36. This post should really have it's own thread.

THIS is what is driving all of the madness.... :grr:

[Demeter]

38. Be my guest--Good morning, Hugin!

There's more below, too.

[Tansy_Gold]

3. First Rec! First Rec! First Rec!

:crickets:

[Demeter]

5. Congrats, Tansy!

Do you want to be the Red Queen, the White Queen, or the Queen of Hearts? Or maybe Alice?

[burf]

8. Right behind ya!

Good weekend to you and Demeter.

[Demeter]

4. Advice on Debt? Europe Suggests U.S. Can Keep It

http://www.nytimes.com/2011/09/17/business/global/europeans-struggle-to-clear-hurdles-to-latest-euro-rescue-plan.html

WROCLAW, Poland — The United States has long been considered a financial adviser to the rest of the world. But these days, American officials come carrying baggage.

Financial officials from the United States, once called “the committee to save the world” after the Asian crisis in the 1990s, now find themselves uttering apologies for the harm caused to the world by the 2008 financial crisis and coating their advice to European countries with the knowing nod of the battle-hardened.

The change in tone was on display here on Friday when Treasury Secretary Timothy F. Geithner made an unusual appearance at a meeting of euro zone finance ministries. Mr. Geithner had been invited to offer some advice on fixing Europe’s sovereign debt and banking problems.

European leaders, who have been slow to react to the root causes of the problem, emerged from the meeting dismissive of Mr. Geithner’s ideas and, in some cases, even the idea that the United States was in a position to give out such pointers....

RUB THE PUPPY'S NOSE IN HIS "ACCIDENT"

TIMMY DIDN'T FALL INTO THIS WELL, HE JUMPED IN.

[Demeter]

54. European finance ministers ignore US Treasury Secretary Tim Geithner's warning of 'catastrophic risk

http://www.telegraph.co.uk/finance/financialcrisis/8769794/European-finance-ministers-ignore-US-Treasury-Secretary-Tim-Geithners-warning-of-catastrophic-risk-over-debt-crisis.html

European leaders ignored a dressing down from US Treasury Secretary Tim Geithner over the "catastrophic risk" of not taking decisive action to tackle the sovereign debt crisis by choosing to delay until October a decision on the Greek bail-out. Mr Geithner, who had made an unprecedented trip to Poland to speed up resolution plans, was the first American to attend a meeting of European finance ministers. He said: "Politicians and central banks need to take out the catastrophic risk to markets...they have to definitively remove the threat of…cascading defaults loose talk about dismantling the institutions of the euro." Later he told reporters: "What is very damaging from the outside is to see not just the divisiveness in the broader debate about strategy, but the ongoing conflict between the governments and the central bank. You need both to work together to do what is essential for the resolution of any crisis."

Separately, the Institute for International Finance, which a represents 440 of the world's largest banks, said it had formed a plan whereby the BRIC emerging economies – Brazil, Russia, India and China – could help boost a bond buy-back programme to reduce Greek debt. The proposals, which will be discussed at a meeting alongside the International Monetary Fund (IMF) next week, is designed to double existing international proposals for a €20bn bond buy-back.

In Poland, Mr Geithner's tone grated with some of the European delegates. The US Treasury Secretary, whose presence was the clearest indication yet of Washington's concerns over the debt crisis, said: "One of the starkest ways to emphasise the importance of Europe getting on top of this is that you don't want the future of Europe to rest in the hands of those who provide financing to the IMF." ...Didier Reynders, the Belgian finance minister, told Reuters: "I'd like to hear how the US will reduce its deficits ... and its debts."

MUCH MORE AT LINK

[Demeter]

6. Hot spots of the Great Recession

http://www.salon.com/technology/how_the_world_works/2011/09/16/hot_spots_of_the_great_recession/index.html

States with high jobless rates are populous and politically important. States with low rates are neither...What can we learn about the Great Recession from Friday's release of state unemployment numbers? Overall, not a whole lot changed in August from July: 26 states reported unemployment rate increases, 12 states recorded rate decreases, and 12 states reported no change at all.

But a look inside the numbers, at the five worst and five best states, is unhappily revealing. The states with the five highest unemployment rates are Nevada (13.4 percent), California (12.1 percent), Michigan (11.2 percent), South Carolina (11.1 percent) and Florida (10.7 percent.) Nevada, California, Michigan and South Carolina all registered unemployment increases in August, compared to July. Florida held even.

The states with the lowest unemployment rates are North Dakota (3.5 percent), Nebraska (4.2 percent), South Dakota (4.7 percent), New Hampshire (5.3 percent) and Oklahoma (5.6 percent.)

The combined population of the five worst states: 73,864,261.

The combined population of the five best states: 8,380,933.

The unavoidable conclusion: Unemployment is bad and getting worse in some of the most highly populated regions of the United States.

MORE AT LINK

[Demeter]

7. Market Update FROM CNBC

http://finance.yahoo.com/marketupdate/overview

Quadruple Witching options expiration made for choppy action on Friday, but stocks still scored their fifth straight gain. That string of advances resulted in a weekly gain of 5.4%, which is the best weekly performance since late June, but only the second weekly gain in eight weeks.

Trade this week started on a negative note as participants reacted to speculation that some of France's primary financial institutions would have their debt downgraded. Such speculation would eventually prove prescient later in the week, when analysts at Moody's cut ratings on Societe Generale and Credit Agricole, but on Monday the attention turned to rumors that a sovereign wealth fund from China was talking with Italy about a bond purchase. That news helped stocks stage a rally, which gained traction as short sellers were squeezed out of their positions.

A similar scenario played out on Tuesday, when stocks benefited from headlines that suggested BRIC countries -- that is, Brazil, Russia, India, and China -- began talks to purchase eurozone debt. The headlines supported the notion that some now see value in Europe, which has been a source of weakness for several weeks because of its precarious fiscal and financial conditions.

That said, participants gained further confidence that the dealings in Europe are headed in the right direction because of news that the European Central Bank has coordinated with other central banks, including the Fed, to make dollar loans available to European banks. By the end of the week, sentiment had improved to the extent that many traders were compelled to make bids for no better reason than to chase gains. In doing so, many shrugged off underwhelming data.

[Demeter]

9. ECB fires salvo at German critics

Trichet defends swift co-ordinated action to calm market nerves, overshadowing Stark’s call for ‘consequences’ for Greece

Read more >>
http://link.ft.com/r/R5WAEE/WT8FTN/WH2F8/YBTJ44/YB6ILT/4O/t?a1=2011&a2=9&a3=16

[Demeter]

10. Goldman to close Global Alpha Fund

Bank to close its once $12bn-strong ‘quant’ after portfolio drops sharply and investors head for the exits

Read more >>
http://link.ft.com/r/R5WAEE/WT8FTN/WH2F8/YBTJ44/HYQ6X9/4O/t?a1=2011&a2=9&a3=16

SIC SEMPER TYRANNIS!

[Demeter]

11. OMG! THEY DIDN'T! Libyans welcome Cameron and Sarkozy

Crowds of Libyans give rapturous welcome to Nicolas Sarkozy and David Cameron on first trip to country by foreign leaders since uprising

Read more >>
http://link.ft.com/r/FG6LAA/PFUYGH/87I64/HYK2LN/YB6ILJ/QR/t?a1=2011&a2=9&a3=16

CAESAR AND ANTHONY, SURVEYING THEIR NEWLY-CONQUERED PROVINCE...I MAY VOMIT

[Demeter]

22. UN resolution would create UN mission in Libya

http://old.news.yahoo.com/s/ap/20110914/ap_on_re_us/un_un_libya

IT READS LIKE AN INTERNATIONAL GANG RAPE....

[Demeter]

23. Libya becoming a 'Nato protectorate

http://www.morningstaronline.co.uk/index.php/news/content/view/full/109563

[Demeter]

25. IS A PUZZLEMENT

Shall I join with other nations in alliance?
If allies are weak, am I not best alone?
If allies are strong with power to protect me,
Might they not protect me out of all I own?

King of Siam, "The King and I"

Gaddafi should have built or bought nukes, like Iran.

[Demeter]

12. Ireland asks EU to amend treaties

Dublin has asked the European Union to amend its treaties to ensure that Ireland can keep control of its own low corporate tax rate

Read more >>
http://link.ft.com/r/FG6LAA/PFUYGH/87I64/HYK2LN/SPL4F0/QR/t?a1=2011&a2=9&a3=16

[Demeter]

13. Republicans push for tax deal with Obama

Republicans are pushing the Obama administration to agree to a deal that would reduce tax rates in exchange for co-operation to close special tax loopholes

Read more >>
http://link.ft.com/r/FG6LAA/PFUYGH/87I64/HYK2LN/MSF2EB/QR/t?a1=2011&a2=9&a3=16

WHAT FRESH HELL IS THIS?

[Demeter]

14. Stranger than fiction: Should Faking a Name on Facebook Be a Felony?

http://online.wsj.com/article/SB10001424053111903285704576562294116160896.html

I REST MY CASE FOR THIS WEEKEND'S THEME.

[Demeter]

16. an exerpt:

Imagine that President Obama could order the arrest of anyone who broke a promise on the Internet. So you could be jailed for lying about your age or weight on an Internet dating site. Or you could be sent to federal prison if your boss told you to work but you used the company's computer to check sports scores online. Imagine that Eric Holder's Justice Department urged Congress to raise penalties for violations, making them felonies allowing three years in jail for each broken promise. Fanciful, right?

Think again. Congress is now poised to grant the Obama administration's wishes in the name of "cybersecurity."

The little-known law at issue is called the Computer Fraud and Abuse Act. It was enacted in 1986 to punish computer hacking. But Congress has broadened the law every few years, and today it extends far beyond hacking. The law now criminalizes computer use that "exceeds authorized access" to any computer. Today that violation is a misdemeanor, but the Senate Judiciary Committee is set to meet this morning to vote on making it a felony.

The problem is that a lot of routine computer use can exceed "authorized access." Courts are still struggling to interpret this language. But the Justice Department believes that it applies incredibly broadly to include "terms of use" violations and breaches of workplace computer-use policies.

[Demeter]

17. A followup: Group urges U.S. to adopt electronic ID cards for citizens

http://www.nextgov.com/nextgov/ng_20110915_9324.php

In the United States, opposition to national ID cards has long prevented the government from assigning citizens electronic credentials for online authentication purposes. But, certain aspects of e-credentials may protect personal information better than the passwords and PIN numbers people currently use for online transactions, according to some privacy groups, including the Center for Technology and Democracy....Most Americans do not have a way to prove they are who they say they are online. This spring, the administration took a step toward developing voluntary digital IDs, with a venture called the National Strategy for Trusted Identities in Cyberspace. The public-private initiative, headed by the National Institute of Standards and Technology, is aimed at allowing Americans to transact with any secure website using one ID, without the need to repeatedly submit personal information.

As the Obama administration works on a set of voluntary online credentials for American Web surfers, some technologists say the government should examine Estonia's mandatory electronic identification cards as a model. A study on international e-identification efforts released Thursday by the nonprofit Information Technology and Innovation Foundation, noted that, "As of 2011, over 90 percent of the population in Estonia had an e-ID. . . In contrast, as of 2011, the United States does not have a national e-ID system. Most individuals still use a collection of poorly secured usernames and passwords to access online services." Estonia began issuing mandatory e-IDs in 2002 as a means of improving government services, as well as commercial services. Some cities use the cards as fare passes for public transportation. Estonian citizens have been able to elect government officials online since 2005 with their cards. Estonian President Toomas Hendrik Ilves estimates 98 percent of banking transactions take place on the Internet.

This is all made possible, however, by additional technology -- particularly, card readers -- that costs money and can be tricky to install. To use a smartcard for online services, a person must insert the card into a separate piece of hardware connected to a computer and then enter a PIN or password to authorize the transaction, the report explained. "To use a smartcard at home, users need to have card readers on their PCs and the correct software installed on their PCs," it stated. "To meet the needs of all users, the software must also be available for multiple operating systems." One reason for slow adoption of e-IDs in Belgium, according to the study, is that many users did not have readers, and those that did found the accompanying software difficult to load.

Estonia was more proactive with its e-ID program. Early on the government sold a card reader "starter package" for twenty euros and led by example, requiring government computers to have card readers. Some Estonian officials say the design of their card has been key to overcoming privacy objections.

[Demeter]

15. Free to Die By Paul Krugman

http://www.nytimes.com/2011/09/16/opinion/krugman-free-to-die.html

what happened during Monday’s G.O.P. presidential debate. CNN’s Wolf Blitzer asked Representative Ron Paul what we should do if a 30-year-old man who chose not to purchase health insurance suddenly found himself in need of six months of intensive care. Mr. Paul replied, “That’s what freedom is all about — taking your own risks.” Mr. Blitzer pressed him again, asking whether “society should just let him die.”

And the crowd erupted with cheers and shouts of “Yeah!”

The incident highlighted something that I don’t think most political commentators have fully absorbed: at this point, American politics is fundamentally about different moral visions.

Now, there are two things you should know about the Blitzer-Paul exchange. The first is that after the crowd weighed in, Mr. Paul basically tried to evade the question, asserting that warm-hearted doctors and charitable individuals would always make sure that people received the care they needed — or at least they would if they hadn’t been corrupted by the welfare state. Sorry, but that’s a fantasy. People who can’t afford essential medical care often fail to get it, and always have — and sometimes they die as a result.

The second is that very few of those who die from lack of medical care look like Mr. Blitzer’s hypothetical individual who could and should have bought insurance. In reality, most uninsured Americans either have low incomes and cannot afford insurance, or are rejected by insurers because they have chronic conditions.

So would people on the right be willing to let those who are uninsured through no fault of their own die from lack of care? The answer, based on recent history, is a resounding “Yeah!”

Think, in particular, of the children....MORE

[Demeter]

18. Is China Ready To Pull The Plug?

http://www.alt-market.com/articles/266-is-china-ready-to-pull-the-plug

There are two mainstream market assumptions that, in my mind, prevail over all others. The continuing function of the Dow, the sustained flow of capital into and out of the banking sector, and the full force spending of the federal government are ALL entirely dependent on the lifespan of these dual illusions; one, that the U.S. Dollar is a legitimate safe haven investment and will remain so indefinitely, and two, that China, like many other developing nations, will continue to prop up the strength of the dollar indefinitely because it is “in their best interest”. In the dimly lit bowels of Wall Street such ideas are so entrenched and pervasive, to question their validity is almost sacrilegious. Only after the recent S&P downgrade of America’s AAA credit rating did the impossible become thinkable to some MSM analysts, though a considerable portion of the day-trading herd continue to roll onward, while the time bomb strapped to the ass end of their financial house is ticking away.

The debate over the health and longevity of the dollar comes down to one very simple and undeniable root pillar of economics; supply and demand. The supply of dollars throughout the financial systems of numerous countries is undoubtedly overwhelming. In fact, the private Federal Reserve has been quite careful in maintaining a veil of secrecy over the full extent of dollar saturation in foreign markets in order to hide the sheer volume of greenback devaluation and inflation they have created. If for some reason the reserves of dollars held overseas by investors and creditors were to come flooding back into the U.S., we would see a hyperinflationary spiral more destructive than any in recorded history. As the supply of dollars around the globe increases exponentially, so too must foreign demand, otherwise, the debt machine short-circuits, and newly impoverished Americans will be using Ben Franklins for sod in their adobe huts. As I will show, demand for dollars is not increasing to match supply, but is indeed stalled, ready to crumble... China, being the second largest holder of U.S. debt next to the Fed, and the number one holder of dollars within their forex reserves, has always been the key to gauging the progression of the global economic collapse now in progress. If you want to know what’s going to happen tomorrow, watch what China does today.

Back in 2005, China began a low profile program to issue government debt denominated in the Yuan, called Yuan bonds, or “Panda Bonds”. This move was almost entirely ignored by establishment economists. They should have realized then that China was moving to strengthen the Yuan, expand its use in other markets, and recondition their economic structure away from export dependency and towards consumerism (as they have done with the establishment of the ASEAN trading bloc). Of course, in the MSM at that time, there was no derivatives bubble, no credit crisis, no debt implosion. America was on cloud nine. China, through inside knowledge, or perhaps a crystal ball, knew exactly what was about to happen, and insulated itself accordingly by generating distance between its system and the soon to derail retail based society of the U.S. This dynamic has not changed since the 2008 bubble burst, and Chinese activity is still the ultimate litmus test for economic volatility.

Today, there is widespread confusion in markets over the direction of America’s financial future. In the wake of the credit downgrade, most investors unaware of the bigger picture are desperately clinging to any and every piece of news no matter how trivial, every rumor from the Fed, and every announcement from the government no matter how empty. China’s economic news feeds have been tightly regulated and filtered, even more so than usual (which is cause for concern, in my opinion), while distractions in Europe abound. Let’s take a step by step journey through these issues, and see if we can’t produce some clarity…

[Demeter]

19. But Wait, there's more!

The theatrical seesaw between the U.S. and Europe is not only becoming obvious to the most narrow of economic analysts, it is also becoming kind of boring. The entire ordeal has been subversively exploited as a false example of systemic “contagion”, and with purpose; global banks need to convince average Americans and average Europeans that destabilization in one portion of the world will automatically lead to destabilization everywhere. This concept is true only so far as forced globalization and centralization have made it true. That said, the charade has been somewhat effective in conditioning the populace with ideas of collectivist survival. In other words, we are being trained to take fiscal responsibility for countries outside of our sovereign national boundaries as if we are morally tied to every penny they have or do not have (global socialism/feudalism - here we come!). This process is culminating in worldwide harmonization through fear as well as guilt.

What we are witnessing is NOT contagion. Instead, we are seeing multiple and mostly separate collapses activated simultaneously. Each nation suffering dire straights in Europe is doing so because of its own particular financial problems, not the problems of other countries nearby, and certainly not those of countries on the other side of the world. Contagion arguments are only applicable to those economies overly dependent on exports, yet, China has already shown (at least in the case of the U.S.) that such dangers can be controlled by minimizing exposure to the poisoned portions of the system and reverting to more internalized wealth creation.

Treasury Secretary Timothy Geithner and the heads of World Bank and IMF have perpetuated the lie of contagion between the U.S. and the EU primarily to service the progress of globalization, but also to hide the inflationary effects of dollar devaluation. While the greatest threats are stacked squarely against America’s economy and the dollar, somehow we have been led to focus on the comparatively less explosive drama in the EU. U.S. dollars, as well as Chinese funds, are flooding into Europe to support the region, while investment in the U.S. and its debt weakens and disappears. In the meantime, a weaker Euro makes the dollar look more attractive (at least on paper), but in reality, both currencies are on the path to bloody hari-kari.

How much longer can this game of hot potato go on? Again, China decides. Eventually, China is going to have to choose which currency to support; the dollar or the euro. Supporting both is simply not an option, especially when the chance of collapse in both currencies is so high. So far, the most logical path has been the euro. While the EU may suffer an astonishing breakdown, we must take into account that our own Treasury and central bank have seen fit to throw trillions of dollars into propping up Europe (with even more on the way)...AND STILL MORE

[Demeter]

20. Mortgage industry whistleblower wins case against Bank of America

http://www.iwatchnews.org/2011/09/14/6467/mortgage-industry-whistleblower-wins-case-against-bank-america

A high-level executive who reported corrupt lending practices at Countrywide Financial Corp. was improperly fired for leading internal investigations that “revealed widespread and pervasive wire, mail and bank fraud” at the lender, a federal agency ruled Wednesday. The Labor Department ordered Bank of America Corp., which bought Countrywide, to pay the former executive roughly $930,000 and reinstate her.

Eileen Foster, who worked as a vice president at Countrywide and then at Bank of America after it acquired Countrywide in 2008, claimed that high-level executives at Countrywide covered up fraud within the company. She said whistleblowers who tried to report forged documents, faked data and other questionable activity inside the nation’s largest mortgage lender were fired. Foster ran Countrywide’s mortgage fraud investigation unit at the time of the merger. In a series of interviews with iWatch News , Foster said Countrywide’s management protected sales staffers who inflated borrowers’ incomes on loan applications and falsified paperwork in order to push through a high volume of risky mortgages. “The organization built its business to take advantage of the fraud,” Foster said. “It benefitted from the fraud. And it protected the fraud.” Asked Wednesday about the labor agency’s decision, Foster said, “I don’t want to comment at this time, considering that I may be returning to Bank of America as an employee.”

Bank of America said it plans to appeal the ruling. “This is an old matter dating from 2008,” bank spokeswoman Shirley Norton said. “We are disappointed with the ruling and plan to exercise our option to challenge the order.” Under whistleblower-protection provisions of the 2002 Sarbanes-Oxley corporate reform law, Bank of America has 30 days to file an appeal with a Labor Department administrative law judge.

.......................................

Foster, who has 25 years’ experience in banking, was hired by Countrywide as a first vice president in September 2005. She was later promoted to senior vice president and then, in March 2007, was elevated to executive vice president in charge of fraud risk management. Foster's investigations in 2007 and early 2008 turned up numerous examples of fraud within the mortgage lender. In mid-2007, for example, an investigation of Countrywide’s subprime mortgage branches in and around Boston “revealed multiple incidents of egregious fraud spread throughout the entire region,” according a preliminary Labor Department ruling in her case this past June. These frauds included “loan document forgery or alteration” and “destruction of valid client documents,” the preliminary ruling said. The investigation also turned up “evidence that blank templates from several different financial institutions were emailed back and forth among loan officers in various branches for use in forging proof of borrower income and assets,” the ruling said. As a result of the investigation, the ruling said, six of eight Boston-area branches were shut down and roughly 44 employees were fired. In interviews with iWatch, Foster said that by early 2008 she became concerned that fraud was being allowed the flourish because honest employees who tried to report wrongdoing were being targeted and fired. She claimed that after she reported her concerns up the corporate ladder, the company’s employee relations department began an investigation of her. The investigation continued as Bank of America prepared to complete its purchase of Countrywide, which had faltered in the wake of widespread mortgage defaults. As the merger was completed in July 2008, Foster was hired by Bank of America to run its new consolidated mortgage fraud investigation unit. The investigation against her hadn’t ended, however. In September 2008, Bank of America informed Foster that she was being fired for “inappropriate and unprofessional conduct” and “poor judgment as a leader.” Foster filed a Sarbanes-Oxley claim against Countrywide and Bank of America, claiming that the investigation had been trumped up in an effort to silence her. The complaint sparked an almost three-year legal battle with Bank of America.

The bank steadfastly denied throughout that it had done anything wrong.

[Demeter]

21. The $2 Billion UBS Incident: 'Rogue Trader' My Ass By Matt Taibbi

http://www.rollingstone.com/politics/blogs/taibblog/the-2-billion-ubs-incident-rogue-trader-my-ass-20110915

The news that a "rogue trader" (I hate that term – more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading. Here’s how the WSJ put it: "The Swiss banking giant has been struggling to rebuild trust after running up vast losses in the original financial crisis. Under Chief Executive Oswald Grubel, the bank claimed to have put in place new risk management practices, pulled back from proprietary trading and focused on a low-risk client-driven model."

All the troubled banks, remember, made similar promises in the wake of the financial crisis. In fact, some of them used the exact same language. Some will recall Goldman’s executive summary from earlier this year in which the bank pledged to respond to a "challenging period" in its history by making changes: "We reviewed the governance, standards and practices of certain of our firmwide operating committees," the bank wrote, "to ensure their focus on client service, business standards and practices and reputational risk management." But the reality is, the brains of investment bankers by nature are not wired for "client-based" thinking. This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts. Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking – historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there – turns them on.

In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street. Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on. These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money.

They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling. The only thing that differentiates a "rogue" trader like Barings villain Nick Leeson from a Lloyd Blankfein, Dick Fuld, John Thain, or someone like AIG’s Joe Cassano, is that those other guys are more senior and their lunatic, catastrophic decisions were authorized (and yes, I know that Cassano wasn’t an investment banker, technically – but he was in financial services). In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.

In other words, "rogue traders" are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by dergulatory legislation giving them access to our bank accounts.

[Demeter]

45. Matt Stoller: Authorized Losses – The Lehman Lesson UBS’s Rogue Trader Missed

http://www.nakedcapitalism.com/2011/09/matt-stoller-authorized-losses-%E2%80%93-the-lehman-lesson-ubss-rogue-trader-missed.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller

I read this headline in Bloomberg: UBS Has $2B Loss; Man Arrested in London. Apparently, a rogue trader lost $2 billion, and is now sitting in jail because the trade was unauthorized by senior management. Since it’s the 3rd anniversary of the Lehman Brothers bankruptcy, I figure it’s a good time to be nostalgic about who is authorized to lose what. Here’s bankruptcy trustee Anton Valukas, talking about Lehman Brothers and the losses that led to its bankruptcy.

We found that Lehman was significantly and persistently in excess of its own risk limits. Lehman management decided to disregard the guidance provided by Lehman’s risk management systems. Rather than adjust business decisions to adapt to risk limit excesses, management decided to adjust the risk limits to adapt to business goals. We found that the SEC was aware of these excesses and simply acquiesced.

The SEC knew. So did Lehman management.

So an appropriate governance plan was in place to set risk limits. But management did not observe the limits. For example, Lehman committed to what was its largest single investment – Archstone – in May 2007, with closing to occur later. It was clear prior to the commitment that the Archstone transaction would put Lehman over its then existing risk limits, but the deal was committed anyway. With the inclusion of Archstone, Lehman was clearly in excess of its established risk limits. But in the face of exceeding its risk limits, Lehman did not take steps to reduce risk; rather, it simply raised the risk limits.

Losses were authorized.

Senior management made the conscious decisions to exceed risk limits and complete the Archstone and other deals because they believed, erroneously, that those deals would be profitable.

Well it was a decision. And they thought it would be fine. Losses were authorized.

Archstone was the largest, but not the only instance in which risk management’s view was overruled or disregarded. Lehman was in breach of its established risk appetite limits on a persistent basis during the second half of 2007. Lehman ultimately cured the breaches at the end of the year, not by reducing risk, but by raising risk appetite limits again.

Once again, losses were authorized.

Lehman also had in place a “single transaction limit” framework to limit the size of individual transactions as a risk control. But in late 2006, Lehman management made the affirmative decision to disregard the single transaction limit because it had cost Lehman significant profit-making opportunities. As a result, Lehman committed to and closed dozens of transactions that were vastly in excess of that business unit’s risk limits.

Authorized losses, again.

At that time, a senior Lehman officer, Ian Lowitt, observed: “In case we ever forget; this is why one has concentration limits and overall portfolio limits. Markets do seize up.”

They do seize up. Here’s the thing, though. A UBS trader is now in jail for losing a few billion dollars. That’s probably reasonable. In Lehman’s case, no one went to jail, and Dick Fuld if a multi-millionaire, even though the losses run into the trillions.

Moral of the story: Make sure your losses are authorized.

[Demeter]

55. 'Rogue' Trading Lasted 3 Years

http://online.wsj.com/article/SB10001424053111903927204576574130471400852.html?mod=WSJ_hp_LEFTTopStories

An alleged trading scheme at UBS AG went undetected for three years before it was finally discovered, triggering a $2 billion loss, U.K. authorities indicated Friday as they charged a 31-year-old trader at the Swiss bank with fraud.

Flanked by a newly hired lawyer from a top London firm, Kweku Adoboli briefly gaped at reporters at his court hearing and said little beyond providing his birth date and address. Mr. Adoboli, who didn't enter a plea, dabbed his eyes with a tissue during a roughly 30-minute hearing at the City of London Magistrates' Court in London's financial district.

The charges came as an early picture began to emerge of lapses inside one of the world's largest banks that allegedly allowed a young trader on a small stock desk to cause huge losses over three years, a much longer period than initially suspected.

The alleged scheme dated to 2008, according to people familiar with the situation and court filings....

[Demeter]

61. Rogue traders and stated-income borrowers

http://www.interfluidity.com/v2/2192.html

You’d think the whole “rogue trader” problem would have been solved by giant, sophisticated investment banks. After all, it was way back in 1995 that Nick Leeson brought down a 233 year-old global institution. Since then we’ve had John Rusnak at my hometown bank, Jérôme Kerviel at Société Générale, and others.

Kid Dynamite, a former trader himself, notes that “losing $2B without anyone knowing about it is much harder than you think“. To generate a $2 billion dollar loss in a short period, a trading position has to be gargantuan. Some dude on a trading desk can’t just put on that kind of trade. He’d have to get buy-in from superiors and risk managers, which probably means making up justifications or falsifying hedged positions. Derivatives trades require collateral posting, and securities trades settle in cash. You’d think the bean counters would take note when large sums come and go through the accounts. Perhaps these “rogue traders” are supergeniuses who reroute the accounting ledgers through the lavatory plumbing at the exact critical moment. Otherwise you’d think that detecting unauthorized positions of $10B-ish would be the sort of thing that masters of the universe would be capable of doing.

[bread_and_roses]

24. "reality itself no longer has a place in the U.S. political system"

from Robert Parry's article on the Cheney book.

http://www.commondreams.org/view/2011/09/16-11

... Preserved Delusions

What’s also striking about Cheney’s memoir is how it preserves the full flower of delusion from the Bush-43 era.

In Cheney World, President George W. Bush is one of the greatest presidents ever; the U.S. achieved “victory” in Iraq because of Bush’s courageous “surge”; Bush’s tax cuts and deregulation were massively successful; the United States is a flourishing society, except that once Bush handed this gem over to Barack Obama, the new president promptly crushed it.

One might think that a leading architect of the international and economic strategies, which have left behind two open-ended wars grinding inexorably toward American defeats as well as the worst financial disaster since the Great Depression and the largest federal deficits ever, would show some remorse for serious mistakes made.

But that may be the ultimate message from Cheney’s book, that reality itself no longer has a place in the U.S. political system, that politics is simply a matter of strong-willed people asserting a “reality” and then relying on powerful media allies to enforce that “reality.”

got the 9th Rec in.

[Demeter]

26. Yeah

How much longer can the delusion last?

Alice's nightmares only occupied one golden afternoon...we have been trapped in other people's nightmares for 40+ years, all my adult life...

[DemReadingDU]

48. and the people younger than 40, have always lived in delusion

Many think that way of life is 'normal', when in reality it's been an aberration

[Demeter]

51. Aberration?

It is what it is...an abomination and totally unAmerican.

To be an aberration, there would have to be some force of Nature that is being opposed by co-ordinated effort of superior manpower.

...well, I'm not convinced that democracy is a force of nature. It takes committed effort to overcome greed, ignorance, self-interest, and laziness, and to insist on the greater good of the community and the equality of all its citizens.

Too many Americans just can't be bothered, nowadays. And the fear of Hell in the Afterlife no longer motivates the Obscenely Wealthy. That's the downside of atheism.

[DemReadingDU]

56. it was the closest word I could think of

And you have expressed it much more profoundly.

All I was trying to say, was that the past 40 years have been an excessive blip compared with how most people have lived thru the centuries.

For the past 40 years people have had lots of techie gadgets, fast food restaurants, bigger houses, dozens and dozens of t-shirts, shoes, clothes, etc. But when one goes back throughout history, people did not have all that, they barely were able to survive day-by-day.

Edit
So people younger than 40 think the way we have been living is 'normal' with all this excessive stuff, but it isn't reality. When the bubble implodes, these young people are going to wake up to an entirely different world of much less and getting by or doing without...the real normal.

[Demeter]

59. Now THAT'S Profound!

Yes, it's never been like this before, and if things continue the way the ELITES want them to, it never will be again...

BUT it DOESN'T have to end this way. And People won't want it to end that way. People are going to have to get off their butts and fight for their way of life with tenacity--and then their numbers will overwhelm the Overlords at last.

But we aren't there, yet. Closer every day, but not there yet. Those with the least to lose: Africa, Souther Europe, are the first to turn to revolution...but they aren't strong enough to overcome the Anglo-European overlords. It will have to be an inside job.

[Demeter]

27. The Fall of the United States By John Atcheson RIGHTEOUS SCREED

http://www.commondreams.org/view/2011/09/15-0

We have the purpose of preventing bigots and ignoramuses from controlling… the United States.

--Clarence Darrow at the Scopes Monkey Trial.

Welcome to the late great United States – a country in economic and moral free fall. A country in thrall to a cult of greed, selfishness, and ignorance. A country that is trying to hold onto its belief in its own “exceptionalism,” even as it rejects the very forces that made it exceptional.

Once, the US was a leader in science. Today, most Americans are scientifically illiterate and one of the major political parties – Republicans-- largely rejects science and scientists as "elitist." Research budgets are being slashed. The space shuttle has flown its last flight. Climate scientists are demonized and marginalized, even as epochal storms, heat waves, and draughts sweep across our country and lay waste our planet.

Once, US infrastructure was the envy of the world. Our planes, our trains, our highways, our damns, bridges, buildings and communication systems were the benchmark against which other countries measured their worth. Investing in it created well-paying jobs and wealth-generating capacity. Now, it is a crumbling punch line to a tragic national joke.

Once, the US system of laws and regulations was recognized as the pre-requisite of a civilized and prosperous society. It created transparent markets; honest securities exchanges; level playing fields for all players; equitable sharing of wealth between workers and managers; safe and humane working conditions; a clean and livable environment. Today, most Americans think government regulation destroyed the economy. They even believe that the plutocrats who destroyed this regulatory infrastructure -- the most successful wealth-generating machine in the world’s history -- are the “job creators” and the source of the formerly shared prosperity that is now disappearing into the coffers of the few from the wallets of the many.

Once, the US educational system was the preeminent model for educating the populace. While our Universities are managing to hold on to their esteemed position by their thumbnails (partly by attracting talented foreign students), our K-12 programs are not keeping up.

What do these all have in common?

They were the source of our national prosperity and they were funded or enabled in whole or part by the government.

[bread_and_roses]

40. That's a good article - with a few qualifiers

... read it the other day and noted it. It's particularly good on the correlation between gov spending and what could most simply be called "civilization."

However, I take exception to the author's case that once upon a time...

Once, the US system of laws and regulations was recognized as the pre-requisite of a civilized and prosperous society. It created transparent markets; honest securities exchanges; level playing fields for all players; equitable sharing of wealth between workers and managers; safe and humane working conditions; a clean and livable environment. Today, most Americans think government regulation destroyed the economy. They even believe that the plutocrats who destroyed this regulatory infrastructure -- the most successful wealth-generating machine in the world’s history -- are the “job creators” and the source of the formerly shared prosperity that is now disappearing into the coffers of the few from the wallets of the many.

... it's a bit overstated - things were not quite so halcyon. It would have been more accurate, I think, to say "the most transparent etc. in the world" or " a society moving toward and systematically addressing deficits in transparency, equality, etc."

I also take exception to this sentence:

These events are connected. When greed becomes our moral compass, then tolerance and humanity die, and prosperity is a casualty.

Greed has always been and will always be with us. Humans are what humans have always been - creatures of their environment (which these days includes the mass media, as rightly noted in the article). Given the whole article, I think the author may have been referring to the deliberate promotion, promulgation, and deification of greed as good by our Oligarch Overlords, rather than individuals' failing, but that is not clear in that sentence and I think it undermines his point considerably.

However, these are fairly minor quibbles over a good article, plainly written and accessible.

edit for misplaced quote box - oh, and I got in the 9th Rec :)

[Demeter]

44. I would think it was the officially sanctioned lawlessness that destroyed America

and for that, one need go no further than the CIA, BFEE, and BCCI for the root and the start of the end.

[Demeter]

28. Sen. Sherrod Brown: Don't Raise OUR Retirement Age. Raise Pension Retirement Age on Capitol Hill

http://blog.buzzflash.com/node/13010

Following yesterday's release of a budget proposal that would dismantle Medicare and leave the door open for raising the retirement age on Social Security to age 69 or higher, U.S. Sen. Sherrod Brown (D-OH) held a news conference call today to outline new legislation he is introducing that would require Members of Congress to "walk in the same shoes" as working Americans.

Brown's bill, the Shared Retirement Sacrifice Act of 2011, would amend the Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS) to directly tie the Social Security retirement age to current and future Members of Congress' access to their federal retirement benefits. On the call, Brown released a county-by-county estimate showing the number of Ohio senior citizens that receive Social Security benefits.

"Raising the Social Security retirement age might sound fair to politicians who come to work every day in a suit and tie, but it's a nonstarter for working Ohioans who stand on their feet all day long in a restaurant or on a factory floor," Brown said. "Social Security is under attack by those who falsely think it adds to the federal deficit. These same politicians want to give extra tax cuts to the wealthiest two percent of Americans and tax breaks for big corporations and Big Oil while dismantling Medicare. It's time for Washington politicians to make the same sacrifices that they're proposing for millions of Americans...That's why I'm introducing legislation that would require Members of Congress to 'walk in the same shoes' as working Americans by tying their pension and retirement benefits to the Social Security retirement age. If these politicians want to ask Americans to continue working into their late 60s and early 70s before receiving critical retirement benefits, there's no reason why they shouldn't have to make the same sacrifices as well," Brown continued.

Currently, Members of Congress can begin collecting pensions as early as age 50, while working Americans cannot collect full Social Security benefits until age 66. According to the Congressional Research Service (CRS), retirement with an immediate, full pension is available to Members of Congress covered under FERS at age 62 or older with at least five years of federal service; at age 50 or older with at least 20 years of service; and at any age to Members with at least 25 years of service. For Members covered by CSRS, retirement with an immediate, full pension is available to Members age 60 or older with 10 years of service in Congress, or age 62 with five years of civilian federal service, including service in Congress.

[Demeter]

29. Lehman Three Years Later: What We Haven’t Learned by: Dean Baker

http://www.truth-out.org/lehman-three-years-later-what-we-havent-learned/1316097681

...Very little has changed about either the realities on the ground or the intellectual debate on economic issues in the last three years. The too-big-to-fail banks are bigger than ever as a result of crisis-induced mergers. Financial industry profits now exceed their pre-crisis share of corporate profits, and executive pay and bonuses are again at their bubble peaks.

None of the executives who pushed and packaged fraudulent mortgages have gone to jail. Even those who have faced civil actions, like Countrywide’s Angelo Mozilo, have almost certainly still come ahead after making large payments to settle suits.

And all the top policy people who guided us to this economic disaster are still doing just fine. When Alan Greenspan isn’t collecting his seven-figure salary from PIMCO, the country’s largest bond fund, he is sharing his wisdom with the world on the Sunday morning talk shows.

More importantly, little of their perceived wisdom has been questioned. Central banks around the world are still targeting 2.0 percent inflation as their main, if not only, policy goal. They are acting as though nothing in the world has happened that might cause us to question this policy...In some ways this is an incredible turn of events. However it also should have been entirely predictable. The same people who controlled the key levers of power before the collapse continued to control them after the collapse. They created an official story and ensured that people heard little else...

[Demeter]

30. The Phony Solyndra Solar Scandal

http://www.truth-out.org/phony-solyndra-solar-scandal/1316098873


...Solyndra was a startup solar-power equipment manufacturer based in Fremont, California that went bankrupt at the end of August. The company's solar collectors used a special tubular internal design that let it collect light from all directions, and were made with a copper-indium-gallium-diselenide (CIGS) thin film that avoided using then-expensive silicon. It was one of several companies that received assistance from the government, in an attempt to push back on China's strategic targeting of green-energy manufacturing.

The company, partly backed by the conservative Walton family had received a loan guarantee from the Department of Energy. The loan, which was originally pushed by the Bush administration, was 1.3% of the DOE portfolio.

The economy tanked and cut demand, and at the same time Solyndra could not compete with subsidized companies located in China as they rapidly scaled up. So Solyndra ran out of money. Conservatives and oil interests are using the bankruptcy as a platform to attack green energy and the idea of green jobs in general, solar power in particular, President Obama as always, stimulus funding and the idea of developing a national strategic industrial policy to push back on China and others who have their own national policies to win this key industry of the future...

THE REST IS A CHARTING OF THE PROPANGANDIZATION OF THE FALLOUT OF THIS FAILED STARTUP--IT READS LIKE A WAR CRIME.

[DemReadingDU]

63. Of course!

It's sad that a company that got some of our taxpayer money went bankrupt. BUT

BUT
how many billions of our taxpayer money have the TBTF banks taken, and they are still insolvent and we are still propping them up and foreign banks are getting our taxpayer money too
:mad:

[Demeter]

31. A Political Casualty of 9/11: The Anti-Corporate Globalization Movement

http://www.truth-out.org/political-casualty-911-anti-corporate-globalization-movement/1316099319

media accounts have omitted an important political casualty: the short-lived "anti-globalization" movement, perhaps the largest American social movement since the civil rights and Vietnam War era.

I watched the massive November 1999 protests against the World Trade Organization (WTO) from my computer, a high school student with a budding interest in social justice eagerly clicking "refresh" on the brand new Indymedia web site: Teamsters and Turtles, steelworkers and socialists shutting down streets and anarchists smashing Starbucks' windows. The police conducted mass arrests and unleashed tear gas, but a shocked elite was forced to hunker down in hotel rooms: the summit failed and the march of global capitalism stumbled.

We had no idea it would come to such a quick and sudden end. A rapid-fire series of mass demonstrations forced secretive financial institutions, corporations (and political parties) to make their case to the American people for the first time in a very long time, and there was a sense of incredible optimism and power. Older activists were amazed to see people back in the streets and I felt like it was an incredible time to be a young activist. We expected major social change and so did everyone else.

"The surprisingly large protests in Seattle by critics of the World Trade Organization point to the emergence of a new and vocal coalition that will make it far harder for the Clinton administration to move ahead with its plans for freer trade," observed The New York Times in December 1999. "In addition, many Seattle protesters hope their movement will last longer than the Vietnam War movement because their target, globalization, is not a single issue that can be resolved by a peace treaty."

"A Noah's ark of flat-earth advocates, protectionist trade unions and yuppies looking for their 1960's fix," grumbled Thomas Friedman, the Times columnist and owner of a 11,400-square-foot mansion who would, six years later, release a bestselling manifesto praising globalization for making the world, umm, "flat."

In Seattle, 50,000 students, union members and environmentalists shocked the powers that be and shut down the meeting of global financial and political elites, demanding an end to corporate "free trade" that, five years after NAFTA was signed, was pitting the peoples of the worlds against one another in a race to the bottom: whatever country had the lowest wages, weakest environmental protections and offered the most outrageous protections for big business "won."

A movement against corporate globalization, also known as neoliberalism, that was initiated in the global South had arrived in the United States - and big time. My classmates and I organized dozens of high school students onto buses to protest against the International Monetary Fund (IMF) and the World Bank in Washington, DC, and the Free Trade Area of the Americas (FTAA) in Quebec City. We brought hundreds of students into the streets protesting sweatshop labor outside Gap and Nike stores...

**************************************


This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

**************************************

GO READ IT ALL

[bread_and_roses]

74. that's a good article - I remember how thrilled I was by Seattle...

...and then - poof. The fragmentation into defending separate, discrete causes - every one of which was under assault - began. So that now my mailbox fills every day with pleas for this petition, that action, this cause, that natural disaster, this humanitarian crisis. Far more than anyone can cope with. And probably futile. We keep trying to fix the symptoms, not the causes, for the most part.

It's ineffective.

I dread that the author may be over-sanguine about labor as an organizing force...there are some feeble squeaks out of our leadership, but I'm betting they'll be asking us to support the lesser evil again in '12. I don't think they are "there" yet. I very much hope I'm wrong.

[tama]

104. People won

in Seattle, and it was an amazing wictory and still is - WTO is still going nowhere! It was all too clear that 9/11 and the following war hysteria morphed alternative globalization movement into fruitless and reactive anti-war movement and the momentum was lost, for a while. Beneath the big headline radar the grass roots revolution has been going on and growing, ecovillages and other communities, guerilla gardening, alternative local and internet money systems etc. It's a tsunami, we are, revolution is. Looking from the top, for a while it seems that the waters are receding, but that just means that the big waves are going to come to shore. We shall overcome, surf the Wave!

http://cloudappreciationsociety.org/wavewatchers-companion/

[Demeter]

32. What Wall Street doesn’t want us to know about oil prices By Bernie Sanders

http://www.washingtonpost.com/opinions/what-wall-street-doesnt-want-us-to-know-about-oil-prices/2011/09/14/gIQAiOodVK_story.html

The top six financial institutions in this country own assets equal to more than 60 percent of our gross domestic product and possess enormous economic and political power. One of the great questions of our time is whether the American people, through Congress, will control the greed, recklessness and illegal behavior on Wall Street, or whether Wall Street will continue to wreak havoc on our economy and the lives of working families.

...the American people have a right to know why oil prices are artificially high. The CFTC report proved that when oil prices climbed in 2008 to more than $140 a barrel, Wall Street speculators dominated the oil futures market. Goldman Sachs alone bought and sold more than 860 million barrels of oil in the summer of 2008 with no intention of using a drop for any purpose other than to make a quick buck.

Wall Street, of course, wants to hide this information. They don’t want the American people to know the extent to which speculators keep oil prices artificially high and the great damage that does to our economy. After the information became public, it was suggested that some on Wall Street may stop trading in the oil futures market. Good!

Second, Congress recognized last year that excessive oil speculation must end. The Dodd-Frank financial reform legislation required the CFTC to eliminate, prevent or diminish excessive oil speculation by Jan. 17, 2011. Months after that deadline, the commission still has failed to enforce the law, and speculators still are making out like bandits.

Third, the commodity regulators’ claim that they cannot end excessive oil speculation because they lack sufficient data is nonsense. As the information I released makes clear, the commission has been collecting this information for more than three years. The time for studying is over. It is time for action...Now it is appropriate to lift the veil of secrecy in the oil futures market. The American people have a right to know how much excessive speculation has driven up oil prices and which Wall Street firms are doing it.

[Demeter]

33. HUMOR--THE BEST MEDICINE--- OR WEAPON

[Demeter]

34. And Dilbert

[Demeter]

37. SITE FOR FUNNY PET PICTURES

http://icanhascheezburger.com/category/hall-of-fame/

[DemReadingDU]

35. Rudolf Elmer – the man who exposed the dark side of global finance

9/17/11 Interview
Rudolf Elmer – the man who exposed the dark side of global finance

Blowing the whistle on government or corporate malpractice takes great courage and involves a high sense of civic duty, as whistleblowers often put their lives on the line in order to inform society on behaviour that is against its citizens' interest as well as the basic principles of democracy and human rights. Because of the possible consequences of such an act, it is important to have the feed-back of prominent whistleblowers who share their experience, thoughts and advice with potential whistleblowers and society as a whole, as anyone can find themselves in the uncomfortable seat of government or corporate crime witness from inside. Also, because they are often the victims of smear campaigns, at Liberté-info we like to give whistleblowers the opportunity to be heard without the bias and censorship that can surround economically motivated media outfits. Plus this is #OccupyWallStreet day, a good occasion to talk about global financial crime.

A big thanks to Rudolf Elmer, who has been only recently (July 25, 2011) freed after six months of jail, for his time.
Enjoy your reading,


Mr Elmer, can you tell us about yourself?

I am a CPA having worked for Credit Suisse, KPMG, Julius Baer, the Chinese Noble Group and Standard Bank for Africa. Locations where I have worked include Switzerland, New York, Cayman Islands, Jersey, Isle of Man and lastly Mauritius. I consider myself an expert in offshore business due to the fact that I held several positions from Chief Operating Officer, Compliance Officer, Investment Manager and even designer of alternative investments such as capital guaranteed products.


When precisely did you witness unfair, illegitimate and/or illegal behavior within your company, and what was it that you witnessed?

Working in the Caymans from 1994 to 2002 when I became part of the inner circle, I started to realize that there were opaque business practices with respect to the bank's business. At the beginning it looked like tax efficient structures related to Switzerland only and only to the bank. I thought it was not that dubious and was informed that headquarters in Zurich agreed with Swiss tax authorities. Unfortunately, that was not the case, and it became worse due to several deals made in a kind of shadow banking system. When I was fired in 2003 I reviewed in detail the trust and company data. I was a Compliance Officer and some of the critical information was withheld by the local management. I discovered evidence that the bank actively promoted tax evasion and provided secrecy to criminal clients, clients who already had been sentenced to up to 15 years of imprisonment due to drug dealing and murder. Read about the matter is the article from The Guardian newspaper “Isle of Plenty” and “A rare glimpse into the offshore world” both edited by well-known investigative journalist Nick Davies.


You have chosen to give Wikileaks data in a nonanonymous way– it was made during a public event announced in advance. What was your motivation for making it broadly known?

I put my name on my first whistleblower letter to Wikileaks. It gives more credibility to the fact that falsified data was published. Because it was an act of civil disobedience, my name was necessary. It was the right thing to do because Wikileaks supported my cause, translated to English my complaint to the European Court of Human Rights and wrote the story, “Is David Helvetic and Goliath a Bear?” After having tried to create awareness of the issue for six years, the public got involved and learned about my fight.

much more...
http://www.liberte-info.net/interviews/elmer.html

[DemReadingDU]

58. #OccupyWallStreet day

I found this via Twitter

http://twitter.com/#!/search?q=%23occupywallstreet

Occupy Wall Street Day
On September 17, we want to see 20,000 people flood into lower Manhattan, set up tents, kitchens, peaceful barricades and occupy Wall Street for a few months. Once there, we shall incessantly repeat our one simple demand until Barack Obama capitulates.
http://www.adbusters.org/campaigns/occupywallstreet

edit to add
9/16/11 Twitter #occupywallstreet movement aims to mimic Iran

Kalle Lasn, co-founder of the venerable counterculture magazine AdBusters, has taken to Twitter and other websites to help organize a campaign encouraging tens of thousands of Americans to hold a nonviolent sit-in on Saturday in lower Manhattan, the heart of the U.S. financial district -- a protest monikered, hashtag and all, as #occupywallstreet.

"There's a very visceral anger against the financial community," Lasn said. "Many people feel that these people who are financial fraudsters, who basically got away with it, have yet to be brought to justice ... . It seems like 'We the People' now have to congregate on Wall Street and other financial districts around the world, and force the global economic system to move in a better, more just direction."
Adbuster's protest campaign began in July, with the launch of a simple campaign website, https://occupywallst.org/ , calling for a march through the streets of Lower Manhattan, culminating with a sit-in at the New York Stock Exchange, just as demonstrators in Tunisia occupied Tunis' November 7 Square, or as Egyptians did in Cairo's Tahrir Square.

more...
http://edition.cnn.com/2011/09/16/tech/social-media/twitter-occupy-wall-street/index.html

[Demeter]

39. Obama's "Jobs Act" Proposal: Why Less Is More of the Same

THE SIGN OF A NON-PRESIDENT--NOTHINGBURGER PROPOSALS, REPACKAGED AND REJECTED OVER AND OVER...

http://www.truth-out.org/obamas-jobs-act-proposal-why-less-more-same/1315923699

On Thursday, September 8, President Obama proposed a $474 billion "Jobs Act." What we got from Obama was a 2009 "Stimulus Light" proposal, with all the problems of the prior 2009 stimulus package in the form of inadequate magnitude of spending, wrong composition and targets and bad timing.

First, on the matter of the magnitude of spending in the proposal, some think it was bold. But put it in context; $447 billion just won't achieve the job creation it claims. It's once again too little for an economy the size of the US, for an economy in as deep an economic hole as it is and in an economy facing growing downward momentum at home in the context of a global economy also rapidly slipping.

In February 2009, President Obama proposed $787 billion in economic stimulus. Unemployment was about 25 million. More than two years later, after the $787 billion has been spent, unemployment (measured by the Labor Department's U-6 rate) is still around 25 million. Why, therefore, should Obama's latest proposals to create jobs, consisting about half the size of the 2009 stimulus, expect to create jobs when the larger stimulus did not?

On Thursday, September 8, President Obama proposed a $474 billion "Jobs Act." What we got from Obama was a 2009 "Stimulus Light" proposal, with all the problems of the prior 2009 stimulus package in the form of inadequate magnitude of spending, wrong composition and targets and bad timing.

First, on the matter of the magnitude of spending in the proposal, some think it was bold. But put it in context; $447 billion just won't achieve the job creation it claims. It's once again too little for an economy the size of the US, for an economy in as deep an economic hole as it is and in an economy facing growing downward momentum at home in the context of a global economy also rapidly slipping.

In February 2009, President Obama proposed $787 billion in economic stimulus. Unemployment was about 25 million. More than two years later, after the $787 billion has been spent, unemployment (measured by the Labor Department's U-6 rate) is still around 25 million. Why, therefore, should Obama's latest proposals to create jobs, consisting about half the size of the 2009 stimulus, expect to create jobs when the larger stimulus did not?

MUCH MORE DEVASTATING TRUTH AT LINK

[Demeter]

41. Thom Hartmann on the News - September 14, 2011 VIDEO

http://www.youtube.com/watch?feature=player_embedded&v=zpXmPFUQyJ8

[Demeter]

42. The End of Loser Liberalism: Making Markets Progressive By Dean Baker (2011)

http://www.cepr.net/index.php/publications/books/the-end-of-loser-liberalism

DOWN LOAD THE BOOK:

http://www.deanbaker.net/images/stories/documents/End-of-Loser-Liberalism.pdf

[Demeter]

43. OR, IF YOU WANT SOMETHING CLASSIC: LEWIS CARROLL'S BOOKS

http://www.gutenberg.org/catalog/world/readfile?fk_files=2167627&pageno=2

http://www.gutenberg.org/files/12/12.txt

I HAVE SEEN OTHER SITES WITH THE ORIGINAL ARTWORK...IF I CAN FIND THEM AGAIN I'LL POST HERE..

[Tansy_Gold]

77. Link to gutenberg file of the artwork

http://www.gutenberg.org/files/114/114-h/114-h.htm

[Demeter]

80. Thanks!

[Demeter]

46. More on the European Bank Bailout Cross-posted from Credit Writedowns

http://www.nakedcapitalism.com/2011/09/more-on-the-european-bank-bailout.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

...US Treasury Secretary Timothy Geithner is over in Europe right now banging the table about the need for a Euro TARP. Cullen Roche calls it a Euro TALF. Whatever you call it, its a bailout; the original TALF sure was. Is this why the Fed went all radio silent? ....I think that’s it exactly. The last post I wrote on The European Bank Bailout talks a lot about how unpopular these bailouts are; and since this is effectively a backdoor bank bailout, it makes sense that Ben Bernanke would want to keep mum, “to keep his powder dry” for QE3 as one of my friends e-mailed.

Here’s what I think is happening:

1. European politicians are paralysed and are only doing enough to push off the day of reckoning. Muddling through means deepening crisis for the euro zone. Only when all other options have failed and the euro is about to break apart will the Europeans think about fiscal union and the like. I believe the sovereign debt crisis will deteriorate further for just this reason. And then we will just have to see what the politics of the individual countries in Euroland look like. If austerity brings the economy to a crawl and europopulism is well advanced, the euro will collapse. If not, the Europeans will push forward with greater integration.
   
   
2. In the interim that means bailouts, not just for sovereigns but for banks as well. You remember the dust-up over ECB Target2 liquidity? Well that was the beginning of the German revolt against the ECB’s quasi-fiscal policies. These moves, while absolutely necessary to prevent a Lehman-style crisis because of Euro politicians’ dithering, are politically charged. We now have seen two major ECB defections from Axel Weber and Juergen Stark. I think that there is even more discord behind the scenes.
   
   
3. Even so, the ECB has now been forced because of the wholesale market bank run now ongoing in Europe to go further. In order to deflect criticism, the ECB’s bailout of the Euro banks has been coordinated with four other central banks.
   
   
4. But the Fed’s lack of commentary demonstrates that the other banks are just a cover. First, the Fed feels politically constrained due to its own machinations in the past and the likelihood it will engage in a muscular easing policy if and when the US economy double dips. It does not want to come under attack for this Euro bank activity. Second, dollar swap lines are already in place and have been extended. This policy didn’t have to be announced this way. It was only to calm markets and buy time.
   
   
5. Meanwhile Tim Geithner thinks the Euro-TALF bazooka is the right way to buy significantly more time. He is over urging the Europeans to take out the bazooka by leveraging up the EFSF ten to one in order to buy the Europeans $2 trillion euros of fire power. Now, that’s a bazooka.
   
   If Stark and Weber resigned over this, what is the likelihood that the ECB is going to go for a Euro-bazooka $2 trillion TALF? I say it’s not going to happen. And that means, European politicians need to get that rabbit out of the hat soon because things will most certainly continue to deteriorate.

[Demeter]

47. Nurses Hold Actions Across Country Demanding Wall Street Transaction Tax

http://www.nakedcapitalism.com/2011/09/nurses-hold-actions-across-country-demanding-wall-street-transaction-tax.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

I (YVES SMITH) find it intriguing that the fact that nurses have staged protests against Wall Street has gotten pretty much no coverage in the mainstream media. I checked nurses + protest on Google News, and the only note take of their September 1 protest was a story in the Boston Herald and MarketWatch (but the latter merely published their press releases).

Nurses have the potential to become an effective and visible source of pressure, since they are disciplined, organized, and have a good public image and are a large group. But they need more turnout and more media interest in order to reverse the perception that nothing can be done about the banksters.

This report on The Real News Network provides a good overview of their position:

http://www.youtube.com/watch?v=J_i4ICDHABM&feature=player_embedded

[bread_and_roses]

49. Contemporary fantasicals

Just for a little light reading:

http://www.alternet.org/story/152418/how_5_upcoming_superhero_films_represent_american_wish_fulfillment/

How 5 Upcoming Superhero Films Represent American Wish Fulfillment
By Julianne Escobedo Shepherd, AlterNet
Posted on September 14, 2011, Printed on September 17, 2011
http://www.alternet.org/story/152418/how_5_upcoming_superhero_films_represent_american_wish_fulfillment

Over the course of the next year, a disproportionate number of superhero-centric movies are scheduled for release. This has much to do with both the increasing American appetite for glossy comic-book blockbusters and the nigh-guaranteed huge profits they’ll rake in, but there’s also something deeper involved: a need for a solution in a time of perpetual American crisis.

Now, I don't know if we have to go so "deep." I think the appetite for fantasy and special effects is not much different than our remote ancestors pleasure in sitting around the fire to chills and thrills at stories of gods and monsters.

But the descriptions of the films gives a little light relief from the state of the world.

edit to change "demons" to "monsters" which is more apt in context

[Demeter]

50. Sanity Check: “Revolt Over Risks of Elite Class of Bankers”

http://www.nakedcapitalism.com/2011/09/sanity-check-revolt-over-risks-of-elite-class-of-bankers.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The Financial Times’ John Gapper makes some remarks in his latest comment at the Financial Times, “Revolt Over Risks of Elite Class of Bankers,” that I found surprising:

The common thread of this week’s events is that national depositors and taxpayers are revolting against the idea that they should bear the risks of international finance and permit an elite class of global bankers such as Mr Adoboli – or the feckless citizens of other countries – to take the rewards. As they draw back, global financial regulation is creaking at the seams.

In some ways, this is a shame. It is the financial equivalent of the trade protectionism that erupted after the 1929 crash, when the US and other countries raised tariffs. But it is not surprising. Investment bankers in the City and on Wall Street have done little to earn back favour after the recent bail-outs.

I (YVES SMITH) have trouble with the idea that there ever was “global financial regulation”. Basel II was never implemented in the US.Even the initial Basel accord was implemented by national regulators and my understanding was that it was tweaked somewhat in various nations. There has been more communication and cooperation between national banking regulators post crisis, but that is not tantamount to international regulation.

Gapper may be seeing something I am missing, but from my US vantage, nothing has changed from what I wrote in ECONNED (published March 2010):

The firms that had been silently drained of capital and tied together in shadowy counterparty links teetered, fell, and looked certain to perish. There was one last capital reserve to tap, U.S. taxpayers, to revive the financial system and make the innovators whole. Widespread anger turned into sullen resignation as the public realized its opposition to the looting was futile.

A question to readers:

Has there been a meaningful change in sentiment towards major financial players in the UK and Europe? Is the public fed up enough with bankers that politicians might be forced to take action?

[Demeter]

52. Killing Jobs and Making Us Sick By JOE NOCERA

http://www.nytimes.com/2011/09/17/opinion/nocera-killing-jobs-and-making-us-sick.html?ref=opinion

“In January, Mr. Obama signed a food safety law that provides broad new authority to the Food and Drug Administration,” wrote Robert Pear in Friday’s Times, in an article about the Congressional appropriations mess. But House Republicans, he added, had voted “to cut the agency’s budget.”

Well, yes, in a nutshell, that is the sad story of the food safety law — the first major change in how the government regulates food safety in over 70 years. But the way the Republicans have dealt with its funding represents more than appropriations problems. It also represents the way they’ve allowed their unyielding antitax, antispend ideology to get in the way of common sense — and the common good.

A few weeks ago, in describing the absurd lawsuit the National Labor Relations Board brought against Boeing — for the crime of opening a plant in nonunion South Carolina — I characterized the N.L.R.B.’s effort as a case study in how Democrats hurt job creation. In that column I promised to return with an equally absurd Republican example. The refusal to properly fund the new food safety law is exactly that.

For years, the food industry and consumer groups have been aligned on the need to modernize the nation’s food safety inspection system. “Food-borne illnesses” — an outbreak of salmonella or E. coli, for instance — are a problem not just for consumers but for industry as well. Recalls are expensive. Sales shrink, even for companies not involved in the recall. Lawsuits ensue. Employees lose their jobs. It can take years to recover from a food scare....

[Demeter]

53. Alabama County’s Debt Deal Averts Bankruptcy

http://www.nytimes.com/2011/09/17/business/jefferson-county-averts-bankruptcy.html?_r=1&ref=business

The governing board of Alabama’s most populous county voted Friday to accept an agreement on how to restructure more than $3 billion of debt, avoiding what could have been the biggest municipal bankruptcy filing in American history.

The terms of the agreement call for Jefferson County, which includes the city of Birmingham, to shed about $1 billion of the debt, the majority of which is held by JPMorgan Chase. The agreement also offers the county several tools to lower the interest rate on roughly $2 billion of new, 40-year debt that will be issued to replace the current warrants.

“It’s been an agonizing process; it’s been going on for three and a half years,” said one Jefferson County commissioner, Joe Knight, explaining why he voted for the agreement. “Today we’re going to take a step. It’s time for a resolution of this lingering debacle.”

Even with the Jefferson County Commission’s 4-to-1 vote in favor of the agreement, a number of significant steps must still be taken by the state Legislature and other parties before the restructuring can close by the deadline of June 30, 2012. The county’s other creditors — including Bank of America, Bank of New York Mellon, Regions Bank, Assured Guaranty and Financial Guaranty Insurance — have agreed to use the new agreement as a framework for completing a definitive settlement with the county.

[Demeter]

57. Matt Stoller: Happy Lehman Brothers Bankruptcy Day

http://www.nakedcapitalism.com/2011/09/matt-stoller-happy-lehman-brothers-bankruptcy-day.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Cross posted from New Deal 2.0

Lehman’s bankruptcy happened three years ago today (SEPT. 15). It should be quite clear at this point that another Lehman is going to happen again. Policymakers didn’t deal with the crisis of 2008-2009; they turned it into a much longer crisis with far greater lasting damage...There are two intertwined issues with any major financial panic. One issue is liquidity — can an asset be sold or traded without significant movement in the price? Can an institution exchange its assets for assets of similar value? In a bank run, the answer is no. People are too afraid to accept that their bank deposit is worth what is in the account because they don’t trust the bank that tells them what they have in the account. The second issue is solvency — is there enough value to pay off all creditor claims? Are assets greater than liabilities, even in a liquid market? The basic point to understand about the financial crisis is that it isn’t in fact over. The liquidity crisis of 2008-2009 was temporarily abated, but the solvency problem hasn’t been dealt with. The global financial architecture is essentially dominated by too many obligations, a.k.a. debt, that cannot be paid. This can only be addressed by a mass writedown of debts. Usually creditors don’t like being told they can’t have the money they think they have and force is required. Debtor deals are often preceded by civil wars, world wars, or depressions. But not always — sometimes a debtor cartel can force writedowns. So that’s the solvency issue. What does this have to do with Lehman Brothers? Well, Lehman’s bankruptcy was the moment when the financial system looked feeble and insolvent. If you did not have an FDIC insured account, you could not be sure that money would be there the next day. Essentially, Lehman’s bankruptcy was the moment that the global bank run for businesses and billionaires became real. Companies that needed to make payroll, insurance companies that needed to pay out claims, corporations that funded themselves in the commercial paper markets, nonprofits and cities using auction rate securities — basically anyone with any need for liquidity — could no longer do business. Investors piled into “safe assets,” a.k.a. Treasury bills, sending the yield “down to a few hundreds of a percent.”

In the repo market, which is where the shadow banking system got much of its funding, there were margin calls because previously somewhat safe assets like corporate bonds required larger haircuts. It was, again, a giant bank run. The Fed and Treasury eventually stopped the bank run, providing enough liquidity and fiscal help to restore temporary confidence to the banking system. But the solvency crisis wasn’t solved. It has been papered over, and remains with us today, ready to rear its ugly head at any moment (see the Eurozone). A solvency crisis is often accompanied by a liquidity crisis, which is why the FDIC tries to shut down a bankrupt bank on a Friday and reopen it on Monday under new management. You don’t want a bank run when a bank goes under. You want depositors to be made whole and, ideally, to have so much confidence the system works that the real economy is entirely insulated from financial shocks. Unfortunately, the failure to address the solvency problem or put forward a framework that insures the banking system (using a scheme sketched out by Jane D’Arista in this prescient 1991 paper titled “No More Bank Bailouts”) means that users of the financial system are nervous...Lehman Brothers itself was insolvent, but its problems were probably common among investment banks at the time. I don’t have anything to add on why that institution went under. For that, the Valukas report on the firm’s bankruptcy provides an excellent explanation. Basically, everyone in a position of power in and around the investment bank was corrupt. Lehman had fairly reasonable risk controls; management just ignored them. Senior Lehman officer Ian Lowitt noted this in the summer of 2007, after a decision to ignore risk limits. “In case we ever forget; this is why one has concentration limits and overall portfolio limits. Markets do seize up.”

Yes, they do.

The regulators knew. As Anton Valukas, the bankruptcy trustee said, “So the agencies were concerned. They gathered information. They monitored. But no agency regulated.” There was the failure of information sharing among regulatory agencies, about which Valukas said: "Like most Americans, I was disturbed to learn after 9/11 that various intelligence agencies did not always share information with one another. I thought we learned something from that, but apparently not." And then there was the whole misleading investors problem, with Repo 105. But all of this was framed by a basic solvency crisis, which Tim Geithner memorialized with his comment about “air in the marks” in the bad assets on Lehman’s books. The investment bank owed more than it owned, and everyone knew it. It was a solvency crisis, that then became a liquidity crisis. This could have been fixed. But it hasn’t been, because of an overall failure of financial-friendly economists. I’ll quote Alice Rivlin, in a “let them eat cake” moment in 2008 on the foreclosure wave that triggered the crisis: "We should not forget that a lot of good came from the housing boom. Millions of people moved into new or better housing. Most of them (including most sub-prime borrowers) are living in those houses and making their mortgage payments on time."

Why should anyone think that Lehman won’t happen again? Elites have learned nothing...Many people are frustrated that the response to the crisis hasn’t been stronger. But it was always obvious that the goal of the crisis measures was to get the financial elites back to ordinary business as quickly as possible. In that context, the most reasonable question in the world is, why wouldn’t Lehman happen again? We don’t have a persuasive answer to that question. And until we do, we’re still in crisis.

[Demeter]

60. Latest Lame Obama Excuse: “Geithner Blew Me Off”

http://www.nakedcapitalism.com/2011/09/latest-obama-lame-excuse-my-staff-was-insubordinate.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

This does not pass the smell test. An Associated Press report on a to-be-released book by Ron Suskind tells us that Obama said that Geithner ignored his request to look into the feasibility of breaking up Citigroup (hat tip Buzz Potamkin):

A new book offering an insider’s account of the White House’s response to the financial crisis says that U.S. Treasury Secretary Tim Geithner ignored an order from President Barack Obama calling for reconstruction of major banks…

The book states Geithner and the Treasury Department ignored a March 2009 order to consider dissolving banking giant Citigroup while continuing stress tests on banks, which were laden with toxic mortgage assets. The directive from the president was one of the most important decisions during the first few months of his presidency.

In the book, Obama does not deny Suskind’s account, but does not reveal what he told Geithner when he found out. “Agitated may be too strong a word,” Suskind quotes Obama as saying. Obama says later in the book that he was trying to be decisive but “the speed with which the bureaucracy could exercise my decision was slower than I wanted.”

Geithner says in the book that he did not recall that Obama was mad at him about the Citigroup decision and rejected allegations contained in White House documents that his department had been slow to enact the president’s plans.

“I don’t slow walk the president on anything,” Geithner told Suskind.

“The Citbank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president’s authority was being systematically undermined or hedged by his seasoned advisers,” Suskind writes.

Suskind states that Obama accepts the blame for mismanagement in his administration while noting that restructuring the financial system was complicated and could have resulted in deeper financial harm.

One of the major complaints about Obama’s administration is that it was too easy on major financial institutions, including Citi. The president had wanted Treasury officials to focus on a proposal to dissolve the bank, but no plan was ever created, the book states.

Let’s be clear. I’m sure Suskind’s sources did indeed tell him what he reported in the book. But there is plenty of reason to believe that this idea, that Obama “ordered” a Citigroup resolution plan and Geithner ignored it, is just an effort to shift blame for an unpopular pro-bank strategy to Geithner.

Look at the spin: we are supposed to believe Obama wanted to be tougher with the banks and was thwarted by his Geithner. Does that mean we are also supposed to believe that Eric Holder also ignored Obama’s orders to prosecute?

The only problem with this effort at revisionist history is that it is completely out of synch with other actions the Administration took in February and March 2009 that had to have been approved by Obama. And his posture before this supposed Citigroup “decision” and after, has been consistently bank friendly. Obama knew from the example of the Roosevelt administration, which he claimed to have studied in preparing his inaugural address, that the time to undertake any aggressive action was at the very start of his term, in that critical speech. March was far too late to start studying the question of whether to nationalize Citigroup...Remember, Obama has been on the defensive since mid 2010, when it looked like the Democratic party was going to take big mid-term losses and they turned out to be even worse than expected. The realization that the Administration’s poor policy choices were coming home to roost would no doubt lead to trying to shift blame off the President on to convenient scapegoats. That mid 2010 timeframe likely coincided with Suskind’s research and interviews. And the “inexperienced President” positioning also serves to explain why an order-bucking staffer like Geithner is still in the saddle. Obama has since leashed and collared his advisors; this failure to exercise a firm hand was a short-lived problem, although the early mistakes that resulted still haunt him. A clever story, no?...Close observers can point to more evidence of Obama’s fealty to his financial lords and masters. He interrupted his campaign to whip aggressively for the TARP. Every single Obama appointee of any importance backed the strategy of protecting the banks, from the SEC to HUD to Treasury to DOJ. Don’t forget that Peter Orzag went to Citigroup after leaving, and Jack Lew came from the bank....It is hard to imagine that Obama would tolerate Geithner blowing off a major request. The spin fed to Suskind, “Obama was a green executive,” stands in sharp contrast with reports of Obama’s arrogance (a common description of his private demeanor) and his famously well run campaign. And most important, the idea that a windup plan for Citi was a SERIOUS request (as in input for a decision as to whether or not to act) was inconsistent with the stress test/confidence building plan already in motion. Thus a more logical explanation is that Obama did make a request, but it was understood by both Obama and Geithner to be a CYA exercise, something they could refer to if it ever proved necessary. Geithner gave it suitably low priority, particularly given that it would be a time consuming task and he was short staffed (there were numerous reports at the time of how Treasury had open positions). Obama was still miffed that it didn’t get done and chided Geithner about it...Put it another way: one of Obama’s striking characteristic is his shameless lying. While politicians are a famously untrustworthy breed, the magnitude of the gap between Obama’s campaign promises and his conduct is outside the pale (see this video starting at 6:40 in case you need a reminder). When asked about his repudiated campaign promises, Obama doesn’t try to say he’s honored them; he’s said that politicians lie. So his position is “Caveat emptor, you should have been smart enough not to believe me.” With that stance, there’s no reason to trust his self-justifying posturing via Suskind either.

WOW! JUST WOW AND I HAD TO SEVERELY CUT THIS...

[Demeter]

62. Economists Who Are Always ‘Surprised’ Should Re-Think Their Models and Assumptions

http://my.firedoglake.com/dakine01/2011/09/15/economists-who-are-always-surprised-should-re-think-their-models-and-assumptions/

Do they all become pod people when they go to DeeCee or is there just something about being an elected official that turns once (possibly) reasonable people into the worst type of concern troll (definition 2)?

1. concern troll

A person who posts on a blog thread, in the guise of "concern," to disrupt dialogue or undermine morale by pointing out that posters and/or the site may be getting themselves in trouble, usually with an authority or power. They point out problems that don't really exist. The intent is to derail, stifle, control, the dialogue. It is viewed as insincere and condescending.
A concern troll on a progressive blog might write, "I don't think it's wise to say things like that because you might get in trouble with the government." Or, "This controversy is making your side look disorganized."

2. concern troll

In an argument (usually a political debate), a concern troll is someone who is on one side of the discussion, but pretends to be a supporter of the other side with "concerns". The idea behind this is that your opponents will take your arguments more seriously if they think you're an ally. Concern trolls who use fake identities are sometimes known as sockpuppets.

3. concern troll

A person who lurks, then posts, on a site or blog, expressing concern for policies, comments, attitudes of others on the site. It is viewed as insincere, manipulative, condescending.

4. Concern Troll 63 up, 353 down

A phrase used by the progressive netroots whenever someone questions the effectiveness of their activism, or notices that they are acting like fools, and discrediting their causes by incredibly silly gestures.

5. Concern troll 90 up, 417 down

A phrase of absolutely no meaning, used by bloggers to shut down debate on their sites.
"Ignore the concern trolls."

[Demeter]

64. BofA, JPMorgan Fail to Make Fannie Mae Grade for Loan Servicing

http://www.bloomberg.com/news/2011-09-15/bofa-jpmorgan-fail-to-make-fannie-mae-grade-for-loan-servicing.html

Bank of America Corp. (BAC), the largest U.S. mortgage servicer, failed to make a list of companies doing a satisfactory job of assisting homeowners struggling to pay their mortgage, according to Fannie Mae. Of the 11 biggest servicers of Fannie Mae mortgages, Wells Fargo & Co. (WFC), Citigroup Inc. (C), Ally Financial Inc. and EverBank Financial Corp. are on track to receive satisfactory or better grades under a newly created customer service and foreclosure- prevention ratings system, the mortgage-finance company said in a statement. JPMorgan Chase & Co. (JPM), SunTrust Banks Inc. (STI), PHH Corp. (PHH), PNC Financial Services Group Inc. (PNC), OneWest Bank FSB and MetLife Inc. (MET) were the other companies that didn’t make the list.

“Servicers who achieve the highest ratings are leading the way in providing assistance to homeowners who are having difficulty making their mortgage payments,” Leslie Peeler, vice president of servicer portfolio management for Washington-based Fannie Mae, said in the statement yesterday...Loan servicers interact with borrowers, collect mortgage payments and oversee foreclosures. More than 228,000 U.S. homeowners received foreclosure filings in August, the highest total since March, RealtyTrac Inc. reported today. Default notices rose 33 percent from July as lenders began to speed up processing of paperwork delayed by probes into documentation practices, the Irvine, California-based data service said.

........................

Under Fannie Mae’s Servicer Total Achievement and Rewards, or STAR, program, mortgage companies were scored based on the number of distressed homeowners who receive help and the customer’s experience, such as the response time for complaints, in the second quarter. Satisfactory scores range from three stars for “at least median performance” to five stars for “superior performance.”...This is Fannie Mae’s first report on the STAR program, announced in February. Servicers below the median or with unsatisfactory results don’t receive a rating.

Andrew Wilson, a spokesman for Fannie Mae, said the company wouldn’t discuss the servicers who failed to make the list of those on pace for at least three-star ratings...Bank of America, which has given modifications to more than 910,000 borrowers since 2009, has “previously acknowledged that there is room for improvement in key areas, particularly those affecting the customer experience, and we are continually improving our processes to assist distressed homeowners,” Rick Simon, a spokesman for the Charlotte, North-Carolina-based lender, wrote in an e-mail. “Our team will continue working to prevent foreclosure for our customers who are experiencing hardships as a result of unemployment, underemployment and other continued economic conditions in our country,” said Simon, whose company announced plans on Sept. 12 to slash 30,000 jobs...

NICE IRONY JAB, THERE!

[hamerfan]

65. Musical Interlude

White Rabbit by Jefferson Airplane (1967)

http://www.youtube.com/watch?v=WANNqr-vcx0

[bread_and_roses]

75. On the first album I ever bought - and STILL fantastic - and not to mention...

from the later album: "we are stardust." And we indeed are! Something I take comfort in - the contemplation of deep time and space - when it's all too much, which is most of the time these days. I keep saying it and saying it, so I'll say it again - How did we come to this? I mean, I know some of the how - we all do - but still - it is so heartbreaking.

[Demeter]

66. The Government Giveth and It Taketh Away: The Significance of the Game Changing FHFA Lawsuits

http://www.subprimeshakeout.com/2011/09/the-government-giveth-and-it-taketh-away-the-significance-of-the-game-changing-fhfa-lawsuits.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+TheSubprimeShakeout+%28The+Subprime+Shakeout%29

It is no stretch to say that Friday, September 2 was the most significant day for mortgage crisis litigation since the onset of the crisis in 2007. That Friday, the Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac, sued almost all of the world’s largest banks in 17 separate lawsuits, covering mortgage backed securities with original principal balances of roughly $200 billion. Unless you’ve been hiking in the Andes over the last two weeks, you have probably heard about these suits in the mainstream media. But here at the Subprime Shakeout, I like to dig a bit deeper. The following is my take on the most interesting aspects of these voluminous complaints (all available here) from a mortgage litigation perspective.

Throwing the Book at U.S. Banks

The first thing that jumps out to me is the tenacity and aggressiveness with which FHFA presents its cases. In my last post (Number 1 development), I noted that FHFA had just sued UBS over $4.5 billion in MBS. While I noted that this signaled a shift in Washington’s “too-big-to-fail” attitude towards banks, my biggest question was whether the agency would show the same tenacity in going after major U.S. banks. Well, it’s safe to say the agency has shown the same tenacity and then some.

FHFA has refrained from sugar coating the banks’ alleged conduct as mere inadvertence, negligence, or recklessness, as many plaintiffs have done thus far. Instead, it has come right out and accused certain banks of out-and-out fraud. In particular, FHFA has levied fraud claims against Countrywide (and BofA as successor-in-interest), Deutsche Bank, J.P. Morgan (including EMC, WaMu and Long Beach), Goldman Sachs, Merrill Lynch (including First Franklin as sponsor), and Morgan Stanley (including Credit Suisse as co-lead underwriter). Besides showing that FHFA means business, these claims demonstrate that the agency has carefully reviewed the evidence before it and only wielded the sword of fraud against those banks that it felt actually were aware of their misrepresentations.

Further, FHFA has essentially used every bit of evidence at its disposal to paint an exhaustive picture of reckless lending and misleading conduct by the banks. To support its claims, FHFA has drawn from such diverse sources as its own loan reviews, investigations by the SEC, congressional testimony, and the evidence presented in other lawsuits (including the bond insurer suits that were also brought by Quinn Emanuel). Finally, where appropriate, FHFA has included successor-in-interest claims against banks such as Bank of America (as successor to Countrywide but, interestingly, not to Merrill Lynch) and J.P. Morgan (as successor to Bear Stearns and WaMu), which acquired potential liability based on its acquisition of other lenders or issuers and which have tried and may in the future try to avoid accepting those liabilities. In short, FHFA has thrown the book at many of the nation’s largest banks.

FHFA has also taken the virtually unprecedented step of issuing a second press release after the filing of its lawsuits, in which it responds to the “media coverage” the suits have garnered. In particular, FHFA seeks to dispel the notion that the sophistication of the investor has any bearing on the outcome of securities law claims – something that spokespersons for defendant banks have frequently argued in public statements about MBS lawsuits. I tend to agree that this factor is not something that courts should or will take into account under the express language of the securities laws...

[Demeter]

67. YOU REALLY OUGHT TO READ THE WHOLE THING...BUT IF YOU CAN'T

Predictions

Since everyone is eager to hear how all this will play out, I will leave you with a few predictions. First, as I’ve predicted in the past, the involvement of the U.S. Government in mortgage litigation will certainly embolden other private litigants to file suit, both by providing political cover and by providing plaintiffs with a roadmap to recovery. It also may spark shareholder suits based on the drop in stock prices suffered by many of these banks after statements in the media downplaying their mortgage exposure.

Second, as to these particular suits, many of the defendants likely will seek to escape the harsh glare of the litigation spotlight by settling quickly, especially if they have relatively little at stake (the one exception may be GE, which has stated that it will vigorously oppose the suit, though this may be little more than posturing). The FHFA, in turn, is likely also eager to get some of these suits settled quickly, both so that it can show that the suits have merit with benchmark settlements and also so that it does not have to fight legal battles on 18 fronts simultaneously. It will likely be willing to offer defendants a substantial discount against potential damages if they come to the table in short order.

Meanwhile, the banks with larger liability and a more precarious capital situation will be forced to fight these suits and hope to win some early battles to reduce the cost of settlement. Due to the plaintiff-friendly nature of these claims, I doubt many will succeed in winning motions to dismiss that dispose entirely of any case, but they may obtain favorable evidentiary rulings or dismissals on successor-in-interest claims. Still, they may not be able to settle quickly because the price tag, even with a substantial discount, will be too high.

On the other hand, trial on these cases would be a publicity nightmare for the big banks, not to mention putting them at risk a massive financial wallop from the jury (fraud claims carry with them the potential for punitive damages). Thus, these cases will likely end up settling at some point down the road. Whether that’s one year or four years from now is hard to say, but from what I’ve seen in mortgage litigation, I’d err on the side of assuming a longer time horizon for the largest banks with the most at stake.

[Hawkowl]

78. I predict a rash of bank subsidiary bankruptcies

First, I believe Greece is going to default very soon. This will give cover to the huge US banks to let some of their subsidiaries declare bankruptcy and make the lawsuits against them relatively worthless (can't get blood from a stone). For example the CEO of BofA has just threatened to take the Countrywide subsidiary into bankruptcy to negate the lawsuits. He could do this because BofA is essentially a holding company and has fenced off the Countrywide liabilities from the mother holding company. Of course, BofA, did siphon off Countrywide's lucrative assets such as the mortgage service arm!

Finally, all this bankruptcy "contagion" will first cement the double dip (or Greater Depression, your choice) while giving cover to the Federal Reserve to turn its money presses on hyper-print for QE3 to once again, save the world! :sarcasm:

So first sovereign insolvencies, then bank bankruptcies, followed by severe depression, leading to runaway money creation which leads to huge commodity price inflation while jobs continue to disappear.

Crap, I'm going to bed to pursue some happy nightmares.

[Demeter]

81. That is worse than my worst nightmare

I hope those bastards never sleep again. Or alternatively, never wake from an unending nightmare worse than what they have put us all through.

[Demeter]

68. BLOGGER'S CONFESSION

Folks, the stuff I'm digging up this weekend leaves me shaking...well, the shaking could be a dire need for breakfast and warmer clothing...

but it is incredible what people are openly, with attribution, posting in public. Something is going to blow, and blow real big. This can't go on and it can't go away without killing all of us in the process.

Is it 1963 yet?

http://en.wikipedia.org/wiki/Opposition_to_the_U.S._involvement_in_the_Vietnam_War

I'm going to go get some calories and do some gainful employment...

[Fuddnik]

70. BLOGGER'S CONFUSION!

Good morning folks. Just sitting here nursing a well deserved hangover. After I down a cup or two of coffee, I get to go to a birthday party. Actually, not a party, just the honoree, her husband, and us.

Should be fun. She called me semi hysterical, Thursday night. She's been working for the last year, helping her friend Dave Maynard, a retired New England radio legend, write his memoirs and stories about the hundreds of celebrities he interviewed over the years. They were just about to wrap it up and send it to the publisher, when she went into her computer to do some editing, and accidentally deleted THE WHOLE FUCKING THING!!!!! Not, the file, which would be recoverable. Just all the text in the file, other than the title, which is not.

So, have a happy week-end. All the forces are gathered for another well deserved hangover tomorrow.

Now, I've got to call a friend in Cleveland. We were in the union leadership together, and his wife was our dog's vet. They have a condo in Reno. And he's an airplane enthusiast, like me. And the Air Races is just the place he'd be.

[DemReadingDU]

71. Oh, the Air Races in Reno

Hope he was not near the crash, sad tragedy there.
:(

So no way to recover that accidentally deleted file?

I'll share a drink in spirit
:beer:

[Demeter]

76. There's got to be a backup file

all word-processing programs make backup files automatically.

Good luck to your poor friend.

[DemReadingDU]

72. It's going to be big

the longer this fraud continues, the bigger the boom

[Demeter]

69. Grais fights to keep $8.5 billion BofA case in fed. court

http://newsandinsight.thomsonreuters.com/Legal/News/2011/09_-_September/Grais_fights_to_keep_%248_5_billion_BofA_case_in_fed__court/

On Wednesday night, Grais & Ellsworth filed a 29-page brief laying out its arguments for why Bank of America's proposed $8.5 billion settlement with Countrywide mortgage-backed securities investors belongs in federal court, not in New York state court, where Bank of New York Mellon, as Countrywide MBS trustee, filed it. I'll talk about Grais's assertions in a moment, but first, I want to explain why the jurisdictional question is so crucial to the ultimate fate of BofA's proposed deal. Two transcripts tell that tale...BNY Mellon, you'll recall, used a highly unusual device when it asked for court approval of the proposed $8.5 billion settlement in late June. The bank filed the case as an Article 77 proceeding in New York state supreme court, taking advantage of a state law that permits trustees to seek a judge's endorsement of their decisions. Using Article 77 was a deliberate tactic by BNY Mellon, BofA, and the 22 institutional investors who support the settlement. The lawyers who put together the deal considered and rejected other possible vehicles for court approval, but decided that Article 77 was the fastest, cleanest way to resolve claims involving 530 separate trusts. The provision, which is usually invoked in garden-variety trust cases, gives broad discretion to trustees, who are generally assumed to be acting in the best interests of trust beneficiaries. The Article 77 strategy looked brilliant at the first hearing on the settlement before New York state supreme court judge Barbara Kapnick. According to a transcript of the August 5 hearing, Judge Kapnick shot down objectors to the deal who, in her view, wanted to proceed with discovery as if the case were a class action. "It's important to remember that this petition was brought as an Article 77 petition," the judge said. "It's not a class action. There aren't provisions in there to opt out that you are talking about. That's not what this is. If you started it, maybe that's what you would have done, but they started it and that's what they did. I have to work, at least now, within the confines of the proceeding that is before me."

But then David Grais of Grais & Ellsworth, in a move as bold and novel as the banks' use of Article 77, removed the case to federal court, arguing that the settlement is a mass action under the federal Class Action Fairness Act. And there, BNY Mellon met with quite a different reception. At a Sept. 1 hearing, Manhattan federal judge William Pauley gave BNY Mellon's counsel, Matthew Ingber of Mayer Brown, pretty rough treatment. "Isn't it unusual to use an Article 77 proceeding to seek approval for a settlement of this type," the judge demanded, according to a transcript of the hearing. "Isn't it odd that the trustee appears to have chosen such a proceeding whose main benefit appears to be to limit the rights of the trust beneficiaries to opt out of the settlementYou don't think that is in any way at odds with the trustee's fiduciary duty to the beneficiaries of the trust?" Judge Pauley went on to grill Ingber on the experts BNY Mellon engaged to determine the fairness of the settlement and the controversial side letter to the settlement agreement in which BofA affirms indemnity for BNY Mellon as trustee.

These are the same issues Grais & Ellsworth and other objectors to the settlement have raised and Judge Pauley is clearly listening to their arguments. It's dangerous to read too much into how judges behave at preliminary hearings, but if I were BofA, BNY Mellon, or any other supporter of the settlement, I'd prefer my chances before Judge Kapnick a lot more than another hearing in front of Judge Pauley. That's why BNY Mellon argued strenuously in a Sept. 1 brief in federal court that the case should be sent back to state court. Calling Grais's attempt to move the proceeding to federal court "frivolous," the bank made four key arguments. First, BNY's counsel at Mayer Brown and Dechert argued, the case isn't a mass action under the Class Action Fairness Act. There's only one plaintiff in the Article 77 proceedingBNY Mellon as trusteenot the 100 plaintiffs that define a mass action under the federal law. The Article 77 proceeding doesn't seek money damages, as CAFA requires, but simply judicial approval of the trustee's action; and Grais's client, a coalition of Countrywide MBS investors acting under the name Walnut Place, can't remove the Article 77 case to federal court because it's not a defendant in the proceeding.

Finally, the bank's lawyers pointed to a ruling by the U.S. Court of Appeals for the Second Circuit that holds claims under MBS pooling and servicing agreements fall into an exception to CAFA's removal provisions. As the bank's brief noted, Grais & Ellsworth knows the Second Circuit ruling, in a case called Greenwich Financial Services v. Countrywide, quite well: It was counsel to the MBS investors who sought, successfully, to send their case against Countrywide back to state court. To put an exclamation point on its assertion that Grais shouldn't have removed the case to federal court, the BNY Mellon brief asked Judge Pauley to award attorneys fees for the cost of litigating the removal petition...In Wednesday's filing, Grais & Ellsworth addressed all of the bank's arguments in a brief that essentially asked Judge Pauley to look beyond the technicalities of the Article 77 proceeding and treat the proposed settlement as a de facto class action. Picking up on the judge's own skepticism at the Sept. 1 hearing, the Grais brief asserted: "BNYM chose to file an Article 77 proceeding because it thought it could use the special proceeding to cherry-pick the aspects of class action settlements that it finds useful (court approval, global releases of the rights of all class members, 'objections' rather than interventions as of right, etc.), but to cast aside the aspects that it finds inconvenient (mainly the right to opt out)."

Grais asserted that even though BNY Mellon says it's the only plaintiff in the Article 77 proceeding and claims that the case doesn't seek money damages, there are in fact 530 trusts and $8.5 billion at issue. And even though the bank says Walnut Place isn't a defendant, the Grais brief said, Walnut has intervened in opposition to the proposed settlement, which makes it an adverse party in the state casea defendant in fact, if not in name. As for BNY Mellon's demand for attorneys fees, the brief said, "despite BNYM's repeated and reckless description of this removal as 'frivolous," there is no doubt that Walnut Place had an objectively reasonable basis for removing this action to federal court." The Grais brief also distinguishes between the Greenwich Financial case that led to the Second Circuit's holding and the Article 77 proceeding. Greenwich was a case between an MBS investor and Countrywide as the MBS issuer, the brief said. The Second Circuit's finding related to the rights of an MBS investor. But BNY Mellon isn't an MBS investor, so the appellate court's holding does not apply...In an interview, Grais explained the distinction. The Second Circuit, he said, found that the CAFA exception that sent the Greenwich case back to state court applies to rights an investor has as the owner of a security (as opposed to aninvestor's rights as the purchaser of stocks and bonds). BNY Mellon's rights as securitization trustee, on the other hand, derive from the Countrywide MBS pooling and servicing agreements and from New York trust law. Because the trustee does not own any securities and derives its rights from contract and state law, Grais said, the CAFA securities exception at the heart of the Greenwich ruling is not relevant in the BNY Mellon case.

Bank of New York Mellon has until tomorrow to respond to the Grais & Ellsworth brief. Judge Pauley has scheduled a hearing on the remand motion for next Wednesday. If he's as outspoken as he was at the first hearing, we should get a pretty good idea of whose going to be overseeing this case and whether the Article 77 gambit backfires on the banks.

[Demeter]

73. WILLIAM K. BLACK: "FIRE HOLDER, FIRE GEITHNER, FIRE BERNANKE" 10-25-2010

http://www.youtube.com/watch?v=I12oDVr2RZQ

[Demeter]

79. On a Philosophical Note

I'm not sure "philosophical" is the correct adjective for what's on my mind this evening....

Lewis Carroll's two nonsense stories are more than apt metaphors for our present state of affairs.

I am struck by not one, but two parallels between his text and current events.

The first parallel is between the Mad Hatter's Tea Party, and our Tea Party.

The Hatter's party is a mad mockery of a common social event of the author's time and place. And so is ours. The participants are all mad. he only difference is, Carroll's characters know it and admit it.

The second parallel is between Humpty Dumpty's abuse of the English language, and the abuse that the GOP and now even some Democrats are inflicting upon the language, in an attempt to bully through conversation via distortion of the very meaning of words.

I'm sure there are others, but I'm too tired to go line by line...

[Demeter]

82. I hate my jobs

all of them. Mostly because I don't get enough time to myself (when I'm awake and not exhausted). But the paper route is really beginning to chafe. If there's a way to suck the incentive out, the company has found it. Everything is done to suck the life out, nothing to put the life in.

I'm looking for a change for the better. In Michigan. I'm as mad as the Hatter.

[Demeter]

86. Less Work, More Living

http://www.truth-out.org/less-work-more-living/1316277775

Millions of Americans have lost control over the basic rhythm of their daily lives. They work too much, eat too quickly, socialize too little, drive and sit in traffic for too many hours, don’t get enough sleep, and feel harried too much of the time. It’s a way of life that undermines basic sources of wealth and well-being—such as strong family and community ties, a deep sense of meaning, and physical health.

Imagining a world in which jobs take up much less of our time may seem utopian, especially now, when a scarcity mentality dominates the economic conversation. People who are employed often find it difficult to scale back their jobs. Costs of medical care, education, and child care are rising. It may be hard to find new sources of income when U.S. companies have been laying people off at a dizzying rate.

But fewer work hours for people with jobs is a key step toward solving the unemployment crisis—while giving Americans healthier lives. Fewer hours means more jobs are available to people who need them. Living on less pay usually means consuming less, making more of the things one needs at home, and living lighter, whether by design or by accident.

Today, driven both by necessity and the deliberate choice to live simply, more Americans are shifting toward fewer work hours. It’s a trend that, if done correctly, could get us out of our current economic crisis and away from unsustainable economic growth.

[Demeter]

87. Middle-Class Death Watch: As Poverty Spreads, 28% of Americans Fall Out of Middle Class

http://www.truth-out.org/middle-class-death-watch-poverty-spreads-28-americans-fall-out-middle-class/1316275699

...nearly a third of Americans who were part of the middle class have fallen out of it...

[Demeter]

88. Can We Increase Gross National Happiness?

http://www.truth-out.org/can-we-increase-gross-national-happiness/1316270567

The small Himalayan kingdom of Bhutan is known internationally for two things: high visa fees, which reduce the influx of tourists, and its policy of promoting “gross national happiness” instead of economic growth. The two are related: more tourists might boost the economy, but they would damage Bhutan’s environment and culture, and so reduce happiness in the long run.

When I first heard of Bhutan’s goal of maximizing its people’s happiness, I wondered if it really meant anything in practice, or was just another political slogan. Last month, when I was in the capital, Thimphu, to speak at a conference on “Economic Development and Happiness,” organized by Prime Minister Jigme Y. Thinley and co-hosted by Jeffrey Sachs, Director of The Earth Institute at Columbia University and Special Adviser to United Nations Secretary-General Ban Ki-moon, I learned that it is much more than a slogan.

Never before have I been at a conference that was taken so seriously by a national government. I had expected Thinley to open the conference with a formal welcome, and then return to his office. Instead, his address was a thoughtful review of the key issues involved in promoting happiness as a national policy. He then stayed at the conference for the entire two and a half days, and made pertinent contributions to our discussions. At most sessions, several cabinet ministers were also present.

Since ancient times, happiness has been universally seen as a good. Problems arise when we try to agree on a definition of happiness, and to measure it...

[Demeter]

83. German economist: 'There is no alternative but Greece's euro zone expulsion'

WELL, THAT'S ONE OPINION...

http://www.creditwritedowns.com/2011/09/sinn-greece-eurozone-expulsion.html

Hans-Werner Sinn is making headlines with inflammatory remarks again. This time, German newspaper Die Welt has him on record as saying Greece must be expelled from the euro zone. My translation is below.

Welt Online: Almost one year ago I asked you if you regretted the introduction of the euro - and you said: "If I'm honest, yes, but we have it now, so there is no alternative." And now?

Hans-Werner Sinn: The yes is a little more hesitant, but I do think that the euro can be saved because most member countries are still quite competitive. But one must certainly wonder whether one or two countries belong.

Welt Online: How can such a small country like Greece cause all these eruptions at all?

Sinn: Greece is a textbook case. During this financial crisis, the capital markets have raised only one question: Will Germany pay or not? And if Greece is cut loose, it is feared that Germany will not pay in the other countries. Then a lot of rich people will lose a portion of their wealth. This is precisely the point. That’s what this is all about.

Welt Online: Should Germany pay?

Sinn: it has already paid a lot. We have to end this soon. Investors will have to forgo some of their money. Greece cannot be helped with continual transfers. Rather, Greece must get back on its own feet.

Welt Online: Are there any alternatives to leaving the euro zone?

Sinn: No. I said a year ago already that it is not terrible if Greece leaves. Its problem is not just the debt. The real problem is the lack of competitiveness. And there are only three possibilities there. Greece could receive transfers permanently. The consumption of this country is 17 percent higher than its national income! I do not think the community wants this nor that they should. And I also do not think that's good for Greece. The second option is to devalue Greece from within the euro area, by reducing wages and prices by 20 to 30 percent. But that's a push and shove that puts the country on the brink of civil war.

Welt Online: The third remaining option is rehabilitation outside the euro area.

Sinn: Exactly. They move to the drachma and devalue. In this way, Greece would be competitive again very soon. Of course, there are problems associated with this solution. If the country leaves, there would immediately be a bank run. Then the banks' balance sheets would burn up. But if it stays in and devalues ​​to the same degree, then even the bank buildings would burn. That's the difference.

Sinn macht Sinn; the logic makes sense. What Sinn is making plain is that Greece’s balance of payments problems would not go away if Greece were to remain in the euro zone. And this would mean more indebtedness and further transfers to Greece down the line when they get into trouble again – even if Greece defaults. So, if Greece stayed in the eurozone, it would have to go through the harsh internal devaluation route to competitiveness – and that mean depression, social unrest and potentially civil war. The alternative is leaving the euro zone completely.

EU leaders are now trying to figure out how to finagle a solution to this almost intractable roach motel of a currency union trap they have set up for themselves. Roaches check in but they don’t check out.

[Demeter]

84. What Next for Greece and for Europe? By PETER BOONE and SIMON JOHNSON

http://economix.blogs.nytimes.com/2011/09/15/what-next-for-greece-and-for-europe/?ref=business

Peter Boone is chairman of the charity Effective Intervention and a research associate at the Center for Economic Performance at the London School of Economics. He is also a principal in Salute Capital Management Ltd. Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.” THESE ARE PETERSON DRONES--BUYER BEWARE!



...There is nothing pleasant about the truth in such crisis situations, but denial is increasingly dangerous to all involved. Greece is on the front burner. Currently on offer is a debt swap for private-sector lenders that, once it goes through, will effectively guarantee 33 cents for every euro in bonds that they currently hold. That downside protection is attractive to banks — because they will get hard collateral in the restructured deal. (Greece would buy the bonds of safe European countries, like Germany, and hold them where creditors could get at them.) The first brutal truth is that this is a default by Greece, and all attempts to deny this or use another word just muddy the waters. Greece can probably afford to service debt restructured to this level — although that will depend also on the final terms of European Union and International Monetary Fund support. But the second truth is that this is a wasted opportunity for Greece, because it does not put Greece’s debt problems behind it; most likely, it will be back to ask for further reductions in principal in the future. The ice has been broken: the European Union has agreed that a euro-zone member can default. Greece should now go all the way — aiming to end up with new bonds that have grace periods of three years on interest and 10 years on principal.

The third truth — and the most difficult for many to stomach — is that in the context of any such deeper debt restructuring, the Greeks should cut public-sector wages across the board and bring down other spending to make Greece’s budget deficit much smaller immediately....Greece and the monetary fund need to assume another recession in 2012 and no growth for five years. They should aim to balance Greece’s primary budget on a cash basis in 2012 (since there would be no interest due, this would also mean they need no cash from any kind of lender). In this scenario, the new bonds could be collateralized with state property. There is nothing particularly fair or just about this set of outcomes. Everyone in Greece is already hurt by the consequences of excessive spending, big deficits and reckless lending (to the government) in the past.

But what are the alternatives? If Greece adopts some version of this deeper debt-restructuring approach, it can stay in the euro zone and find its way back to growth (assuming the world economy does not go down again sharply). Its private sector will eventually rebound...In contrast, if Greece were to leave the euro zone, its financial system would cease to operate; Greek banks depend to a great extent on support from the European Central Bank (for more background and the available numbers, see our recent Peterson Institute policy brief, “Europe on the Brink”). Do not try to run any modern economy on a purely cash basis; the further fall in gross domestic product would be enormous....If Greece pays its debts at the currently proposed level (33 cents on the euro), it will struggle to grow. The tax revenue needed to service that debt would burden businesses and households for decades — enterprising and productive people will move their fortunes and their futures elsewhere in the euro area or to the United States.

The fourth and most dangerous truth is that Italy and Germany are not ready for the next stage of the euro crisis...Any further adverse developments in Greece will precipitate a run on Italy — involving investors selling Italian government debt. The European Central Bank is currently prepared to buy Italian bonds, to keep interest rates below 6 percent. The Germans are obviously very worried by this approach — hence the resignation last week of Jürgen Stark, the senior German representative in the European Central Bank management. He has been replaced by someone who is likely to take an even tougher line on bond buying....Aside from the politics, the risk is that the euro loses credibility and falls steeply in value. The European Central Bank thinks it can “sterilize” any bond-buying by selling its own bonds into the market; this would mean no net increase in the supply of money (just fewer Italian bonds and more E.C.B. bonds held by the private sector)....

IT'S A MESS, ALL RIGHT

[Demeter]

85. Financial paralysis is gripping US and EU leaders, Kenneth Clarke

http://www.guardian.co.uk/politics/2011/sep/16/financial-paralysis-kenneth-clarke

Kenneth Clarke has accused US and European leaders of "paralysis" amid fears of a deepening global financial crisis. The former chancellor said governments appeared incapable of dealing with the growing prospect of another credit crunch and accused them of playing "short-term politics".

"The main thing I take from this crisis is unfortunately the political leadership in the USA and large parts of western Europe have been totally overwhelmed by the dimensions of the crisis, not able to cope," he said.

"You have paralysis in Washington, and paralysis in large parts of Europe because they are incapable of agreeing and everybody is fighting short-term politics."

CAN YOU LIMEYS KEEP IT DOWN? WE'VE GOT AN ELECTION OVER HERE....

[Demeter]

89. Mandatory E-Verify Would Overwhelm Social Security Administration, Increase Disability Backlog

http://www.truth-out.org/mandatory-e-verify-would-overwhelm-social-security-administration-increase-disability-backlog/131626

The train of threats to Social Security this year keeps on rolling, this time from the Chairman of the House Judiciary Committee. The “E-Verify” program threatens to undermine the Social Security Administration (SSA) and the millions of Americans who rely on it.

Assuming the President stays the course and refuses to propose Social Security cuts, E-Verify would represent the biggest threat to Social Security that is currently on the table – aside from the Republican Presidential Candidates. (Click here for the Strengthen Social Security Campaign’s position on E-Verify.)

The legislation in question is called the Legal Workforce Act and comes under consideration by the House Judiciary Committee today. The bill is not primarily designed to cut Social Security spending – rather, it is meant to curb the legal employment of every undocumented worker in America. While immigration-related, a mandatory E-Verify program would also cripple SSA by draining limited funding and imposing heavy burdens on one of the most efficient government programs in existence.

In short, E-Verify is a tool designed to prevent the employment of undocumented workers in the United States. Employers run the personal information of new hires though the E-Verify electronic system, which is connected to the SSA master database of Americans with Social Security numbers. In its developmental stages, the program has been optional for employers, but this new legislation would make it mandatory. Bottom line: E-Verify would add significant responsibilities and workload to an agency that is already overworked and underfunded, and jeopardize the ability of future retirees and disabled workers to get their benefits in a timely fashion. Here’s how:

Mandatory E-Verify would cost American workers their jobs and create confusion at SSA....

[Demeter]

90. Obama’s Economic Quagmire: Frank Rich and Adam Moss Talk About What’s Really in Ron Suskind’s BOOK

http://nymag.com/daily/intel/2011/09/obamas_economic_quagmire_frank.html

Adam: Hi, Frank. So there’s a little commotion about this new book Confidence Men, by Ron Suskind, which is being published on Tuesday. And as it happens, you and I have actually read it! So let's talk about that this week. To give readers a super-fast overview, it’s a book, essentially, about Obama’s economic team during his first two years in office. The news of the book, according to some reports, is that Tim Geithner was insubordinate to the president, pursuing his own pro-banker agenda. Or, according to other reports, that Larry Summers was insubordinate to the president, pursuing his own — well, monomaniacal agenda. I’d add that it’s also about Rahm Emanuel being insubordinate to the president, just because. Basically, it’s about the presidency being hijacked by these three guys. And the guys thing is important because they’re pretty awful to women. Anyway, they’re the villains. Paul Volcker, Christina Romer, and Elizabeth Warren are the heroes. Bankers win, America loses. Did I get that right?

Frank: Hi, Adam, and yes, you did! I would point out that among the other heroes are more women (Sheila Bair, Brooksley Born, Maria Cantwell) and at least one man, the Princeton economist Alan Krueger, who also seems to be a serious Suskind source and who has now returned to the White House to succeed Austan Goolsbee and Romer as head of the Council of Economic Advisers. Not that that will do any good. I think the portrait of Geithner is devastating — his countermanding of the president's wishes to make a Wall Street object lesson of Citigroup, his nasty "Elizabeth Warren strategy" to silence and neuter the administration's rare genuine reformer. And yet Geithner is the only member of the original economic team still standing in the White House, poised to countermand any other rare independent voice that might yet speak up, like Krueger's.

A: You think the portrait of Geithner is more devastating than the one of Summers? I guess. In that instance you cite, Obama asks to put the dissolving of Citibank on the table, and Geithner simply ignores him, "walking back" the decision, in political parlance. More insidiously, he creates the framework, borrowed from Hippocrates, of "first, do no harm," which effectively cuts off any bold reforms for fear of their potential effects on the market. But Summers is portrayed as an egotistical nut job, single-mindedly determined to get Bernanke's job; when he doesn't get it, he goes bananas. He is supposed to be a conduit for the collective advice of the team, but undermines his colleagues, only passing along advice and information that supports his positions. I was kind of stunned how many officials were willing to go on the record against him.

Peter Orszag relays this eviscerating quote that Summers said to him about Obama during the worst of the economic distress. According to Orszag, Summers says, "You know, Peter we're really home alone. There's no adult in charge. Clinton would never have made these mistakes." Later, Orszag says to Suskind, "Larry just didn't think the president knew what he was deciding. Was this outright and willful?" In other words, asks Orszag, was Summers saying, "I know more than the president flat-out? That strikes me as ... likely." In an amazing memo, Pete Rouse, who would replace Emanuel temporarily as chief of staff, recommends firing Summers for "Larry's imperious and heavy-handed direction of the economic policy process." Romer says Summers made her feel "like a piece of meat."

[bread_and_roses]

106. This is just staggering ...

WAS the Geithner tale just a CYA for Obama? Were things really this out of control? If so, why did not Obama call on the army of us ready to go to battle for him? What the hell was going on? Can any of it be at all true? There's so much smoke and mirrors in DC, who knows? Am I crazy to think that in other era's these sort of revelations would bring down a presidency? Yet it all seems to be taken as so much ho-hum ...

Wonderland indeed. I had no idea how perfectly apt this weekend's theme would be ... even though I thought I did ...

[Demeter]

91. Repeal our unfunded health law? No way, says GOP

http://news.yahoo.com/repeal-unfunded-health-law-no-way-says-gop-122101206.html

It's a massive health care entitlement with unfunded future costs over $7 trillion. Many conservatives are still upset at the way it was rammed through Congress.

But when the Republican presidential candidates were asked last week asked if they would repeal the Medicare drug benefit, they said no way. After all, Republicans created it.

Republicans want to pull the plug on the health care overhaul they call "Obamacare," but that law is arguably less a deficit driver than the Medicare drug plan they are defending...

[Demeter]

92. The Great Health Care Takeaway

http://www.truth-out.org/great-health-care-takeaway/1314713826

The health care crisis in the United States is getting worse with no visible end. The popular anger over unattainable or unaffordable health care has been diverted away from corporations by crafty politicians, always seeking to exploit a social disaster for their benefactors. Instead of making health care more affordable for the average person, politicians have successfully switched the messaging. Now, the purpose behind "reform" is to make health care less costly for governments and employers, at the expense of patients and workers.

This was the essence behind Obama's health care reform.

And although Republicans exploited the "individual mandate" in Obamacare to gain populist credentials, they wholeheartedly agree with the deeper philosophy of the plan, which aspires to control health care costs - for corporations and governments - by providing less health care services to those who need it. This agreement to "ration" health care aligns the two parties over the coming cuts to Medicare in Obama's bipartisan "Super Congress," while also binding the two parties' approach to health care on a state and business level.

Most workers now understand that there is a difference between apparently having health care and actually having health care: if you are technically "insured," but cannot afford doctor visits due to high deductibles and co-pays, you really aren't insured.

This fact, applied to Medicare, has startling consequences. The New England Journal of Medicine found, "For every 100 people enrolled in plans that raised co-pays, there were 20 fewer doctor visits, 2 additional hospital admissions and 13 more days spent in the hospital ..."

[bread_and_roses]

93. "Our Capitalist System Is Near Meltdown"

I didn't read much beyond the section I've quoted - I don't have time, besides, seems to above my head unless I really focus. I'll try to get to it later. But I thought the beginning was interesting.

http://www.commondreams.org/view/2011/09/18-6

Published on Sunday, September 18, 2011 by The Guardian/UK
Our Capitalist System Is Near Meltdown
The Ailing Euro Is Part of a Wider Crisis. A 1930s-style crash threatens us and our financial partners. Collective action is the only solution
by Will Hutton Published on Sunday, September 18, 2011 by The Guardian/UK

Eighty years ago, faced with today's economic events, nobody would have been in any doubt: we would obviously be living through a crisis in capitalism. Instead, there is a collective unwillingness to call a spade a spade. This is variously a crisis of the European Union, a crisis of the euro, a debt crisis or a crisis of political will. It is all those things, but they are subplots of a much bigger story: the way capitalism has been conceived and practiced for the last 30 years has hit the buffers. Unless and until that is recognized, western economies will be locked in stagnation which could even transmute into a major economic disaster.

...Capitalism is best conceived and practiced, runs the theory, by hunter-gatherer bankers and entrepreneurs owing no allegiance to the state or society.

This is nonsense. Business and the state co-generate wealth in a system of complex mutual dependence. Markets are beset by mood swings and uncertainty which, if not offset by government action, lead to violent oscillations. Capitalism without responsibility or proportionality degrades into racketeering and exploitation* ...

(emphasis added)

*I beg to differ ... capitalism is racketeering and exploitation, by it's very nature it can be nothing else. In functioning societies, that racketeering is regulated to maintain a manageable and controlled level that we Proles are content to live with. That bargain has broken down.

[bread_and_roses]

105. I've now read the rest of the article and it sounds like calling for more bail-outs?

I'm not that good on following the finance - but that's what it sounds like? He does want to separate retail and investment banking, but he writes of the system being "blighted by lack of demand" without at all examining the KIND of demand that capitalism creates - or considering whether or not that kind of demand is sustainable. This strikes me as conventional "liberal" analysis.

Of course, I could be completely wrong - I am really not up to deconstructing the financials.

(I know you've wrapped up, but I'm lagging at least a day due to crazed schedule over the past week.)

[Demeter]

94. With the presses delayed by the football games, I am cranky

and it's going to last through Thanksgiving. this is no way to run anything.

[Demeter]

95. The Great Bank Robbery

http://www.truth-out.org/great-bank-robbery/1315677479

For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. For banks that have filings with the US Securities and Exchange Commission, the sum stands at an astounding $2.2 trillion. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits.

That $5 trillion dollars is not money invested in building roads, schools, and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees. Such transfers represent as cunning a tax on everyone else as one can imagine. It feels quite iniquitous that bankers, having helped cause today’s financial and economic troubles, are the only class that is not suffering from them – and in many cases are actually benefiting.

Mainstream megabanks are puzzling in many respects. It is (now) no secret that they have operated so far as large sophisticated compensation schemes, masking probabilities of low-risk, high-impact “Black Swan” events and benefiting from the free backstop of implicit public guarantees. Excessive leverage, rather than skills, can be seen as the source of their resulting profits, which then flow disproportionately to employees, and of their sometimes-massive losses, which are borne by shareholders and taxpayers.

In other words, banks take risks, get paid for the upside, and then transfer the downside to shareholders, taxpayers, and even retirees. In order to rescue the banking system, the Federal Reserve, for example, put interest rates at artificially low levels; as was disclosed recently, it also has provided secret loans of $1.2 trillion to banks. The main effect so far has been to help bankers generate bonuses (rather than attract borrowers) by hiding exposures...

[Demeter]

96. William Black: Why Nobody Went to Jail During the Credit Crisis

http://neweconomicperspectives.blogspot.com/2011/09/william-black-why-nobody-went-to-jail.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+EconomicPerspectivesFromKansasCity+%28Economic+Perspectives+from+Kansas+City%29&utm_content=Google+Reader

PODCAST AND TRANSCRIPT

[Demeter]

97. U.S. Economy: A Lost Decade Into The Great Middle Class Poverty?

http://www.econmatters.com/2011/09/us-economy-lost-decade-into-great.html

[Demeter]

98. Glimpses of the Next Great Famine

http://www.nytimes.com/2011/09/18/opinion/sunday/kristof-glimpses-of-the-next-great-famine.html?_r=1&ref=opinion

[bread_and_roses]

99. No words

[Hotler]

100. I f only they were white, christian and there was

money to be made there we'd be there in a heart beat spreading democracy and winning hearts & minds. That article is so fucking sad. Nobody should EVER have to go to bed hungry.

[DemReadingDU]

101. So very sad

I worry for everyone after the financial bubble implodes. How many are going to have money to buy food or the skills to grow food.

I have no hope. I see no future.

[Demeter]

102. Randy Wray: Helicopter Ben – How Modern Money Theory Responds to Hyperinflation Hyperventilators

http://www.nakedcapitalism.com/2011/09/randy-wray-helicopter-ben-%E2%80%93-how-modern-money-theory-responds-to-hyperinflation-hyperventilators.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

In the first part of this series on hyperinflation I addressed the critic’s view that if Modern Monetary Theory were adopted, this would inevitably lead to hyperinflation. I argued that this is obviously false—MMT describes how any sovereign government that issues its own currency spends. They’ve all done it for the past “4000 years at least” as Keynes put it. All modern sovereign governments spend by “keystrokes”—making electronic entries onto balance sheets—what most critics somewhat misleadingly call “printing money”. There is no other way to spend a sovereign currency into existence. Only the sovereign government can create it. If you try to create US currency in your basement, you go to jail.

In the second part, I argued that hyperinflation is a rare occurrence. Obviously, if “keystrokes” inevitably lead to hyperinflation, then hyperinflation ought to be a common feature of just about all economies for the past 4000 years. Instead, we find that experience with hyperinflation is quite limited, and seems to result from very specific circumstances such as unwillingness or inability to impose and collect taxes, with civil war, or with huge external debts denominated in a foreign currency. And while goldbugs and others think that tying a currency to gold (or to a foreign currency) is a sure-fire way to avoid inflation, what we actually observe in the real world is that such systems are inherently unstable and rarely last long before they crash—often with an exchange rate crisis and high or hyper-inflation.

In this final part of the series I will address the belief that the US (and other countries with large budget deficits in their own floating rate currency) faces hyperinflation. Many fear that “Helicopter Ben” (Chairman Bernanke) has pumped so much “money” into the economy that high inflation, if not hyperinflation, will be the inevitable result. This is one of the reasons for the run into gold—supposedly an inflation hedge.

In reality, there is no surer bet than the wager that the US will not experience significant inflation for many years to come...

I'M NOT SO CONFIDENT--I LIVED THROUGH THE 80'S

[Demeter]

103. That's a wrap

Another weekend lost to the shopper's gazette's insane demands.