Rolling US Economy Into The Shitbin Thread

Gill Sans is a pretty terrible font for body text.

I keep having a vision of a New Yorker style cartoon where a fat dude sits on his living room couch, surrounded by Cheetos and beer and remote controls and his wife stands in the doorway, looking at him, and he's saying "I'm too big to fail"

Scheer: another ex-Goldman Rubinite on the way...

Obama's Toxic Advisers

Bernie Sanders, the senator from Vermont who is independent in spirit as well as party label, has placed a hold on President Obama's nomination of Gary Gensler to head the Commodity Futures Trading Commission.... I am eager for Barack Obama to succeed, but I see this appointment as further evidence that the president has entrusted his economic policy to the wrong people.

Gensler helped create this financial crisis when he was in the Treasury Department back in the Clinton era, when bipartisan cooperation with Wall Street lobbyists was all the rage....

In congressional testimony supporting the radical deregulation of the financial derivatives market, Gensler had insisted with great enthusiasm that "OTC derivatives directly and indirectly support higher investment and growth in living standards in the United States and around the world." As to the many trillions of dollars in credit swaps that now afflict the world economy, Gensler specifically called for freeing swaps of this kind from existing government regulation in the Commodity Exchange Act, which regulated other futures such as wheat sales. He said, "...[S]wap transactions should not be regulated under the CEA. ..."

Not much time to get into it now, I'm afraid, but I spotted two very interesting related pieces about the financial industry's rise in the U.S.: the first, a short post from Josh Marshall, and the second, a long article from Simon Johnson in the May issue of The Atlantic (which was released early online, obv.).

For me, these articles raised questions about the nature of work in the United States, e.g., why did we allow ourselves to get to the point where the financial sector was the nation's "dominant industry" (paraphrasing the CEO at the press-conference after Pres. Obama's meeting with business leaders); what kind of work should we, as a nation, emphasize, especially after the rush to globalize the economy (presumably so we could enjoy the higher-end service jobs, a notion that's always seemed to be a bit silly to me)). Anyway, interesting pieces.

I'm looking forward to reading those articles. But "we" can't enjoy those higher-end service jobs, because there can't be enough of them. Maybe this is the same as all the other riggings of economies to favor the rich throughout history. But this one seems different, because even the kinds of jobs you'd think you couldn't take away, like farming b/c people have to eat, are in fact hardly possible now in the US.

Also of interest is Simon Johnson's TPM interview of about a month ago:

Listen to how casually radical his proposed solution is: Be ready to take down a series of elites and, as Johnson puts it, "oligarchs" in the U.S. fiancial sector to, essentially, "drain the swamp" and get the economy and banking sectors moving again.

Haha. Okay, that didn't work. Try this.

iirc he dropped the 'o' bomb more than once on moyers a few weeks ago

Doug Henwood: "So Obama fired Rick Wagoner at CEO of GM. No doubt he deserved it, but why do all the idiot bankers that Pres. Yeswecan met with on Friday get to keep their jobs? Oh yeah, I know. Only automakers get put through the wringer for a little federal spare change. Bankers get blank checks, no questions asked. And only autoworkers get their contracts ripped up. Ripping up bankers’ contracts would be governing by anger, and we don’t want to do that!"

http://doughenwood.wordpress.com/2009/03/29/one-down-dozens-to-go/

Well, AIG was forced to take a new CEO.

And doesn't Citigroup have a different CEO now?

The banking industry has had nowhere near the amount of conditions that the automotive sector has had to take on.

But the government didn't promise to bail-out all failing industries. Instead, it's acting on a case-by-case (or industry-by-industry) basis to prevent a very bad recession from metastasizing into a depression. Whether the auto industry requires similar concessions as those made to the banks (or whether we should have made concessions to the banks) is, admittedly, an open question.

the banking industry does not need an entire transformation and operational restructuring to survive.

OH NO?

They've been doing a heckuva job.

since black swan was mentioned on this thread, i'm posting this here:

http://wrongtomorrow.com/

(http://wrongtomorrow.com/blogposts)

http://content.yieldmanager.edgesuite.net/atoms/8b/99/78/2d/8b99782d8367ffabf635a178e7b64a72.gif

yuan renminbi
http://www.latimes.com/business/la-fi-yuan3-2009apr03,0,865582.story

interesting interview by bill moyers of william black, with black calling bullshit on the bailout
http://www.pbs.org/moyers/journal/04032009/watch.html

tough break, GM

It'd be good if everyone calling bullshit on the bailout would actually do any good.

Is there a youtube mashup of various congressman/women saying "It's this or the economy dies" [quick cut] "This bailout needs to stop"? Cos I want to see one.

srsly, maximum NY unemployment is $430/week. How'm I sposed ta eat after the rent, COBRA, MetroCard & utils?

http://www.nytimes.com/2009/04/19/nyregion/19benefits.html?ref=nyregion

no shit; I lost my second job in four months this week, I have some "contract" work pending but getting paid on that jeopardizes even the shitty amount of unemployment I'm eligible for from California ($450 a week) because they'll classify me as 'self-employed' and therefore fucked...not even sure what to do about that.

I was wondering when something like this would happen.
http://www.forbes.com/2009/04/22/fannie-freddie-kellermann-business-wall-street-freddie.html

Talking more about the suicide than the rest of the article.

wow, Cali get $20 a week UI more than NY.

your pal and Bam's:

http://www.nytimes.com/2009/04/27/business/27geithner.html?hp

An examination of Mr. Geithner’s five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Street’s giant financial institutions....

In a May 15, 2007, speech to the Federal Reserve Bank of Atlanta, Mr. Geithner praised the strength of the nation’s top financial institutions, saying that innovations like derivatives had “improved the capacity to measure and manage risk” and declaring that “the larger global financial institutions are generally stronger in terms of capital relative to risk.”

Two days later, interviews and records show, he lobbied behind the scenes for a plan that a government study said could lead banks to reduce the amount of capital they kept on hand.

While waiting for a breakfast meeting with Mr. Weill at the Four Seasons Hotel in Manhattan, Mr. Geithner phoned Mr. Dugan, the comptroller of the currency, according to both men’s calendars. Both Citigroup and JPMorgan Chase were pushing for the new standards, which they said would make them more competitive. Records show that earlier that week, Mr. Geithner had discussed the issue with JPMorgan’s chief, Mr. Dimon....

Geithner would have been much better as an undersecretary, with someone far more old school as Treasury Sec. He is too vested in the wrong financial model to fix it.

old school!? pre-Greenspan?? those guys are all dead.

Not so, but they probably were passed over for promotions and so are more obscure.

old school!? pre-Greenspan?? those guys are all dead.

Paul Volcker is alive and well ... and being ignored.

Paul Volcker is alive and well ... and being ignored.

Less "ignored" than "on deck" should Geithner fail. Some recent story said that one of the centerpieces of his plan -- the public-private partnerships ("PPP") -- isn't drawing much interest from the private sector, because they fear gov't over-regulation of the PPP's operations (such as compensation limits). Matthew Yglesias thinks this is another reason to opt for bolder measures, such as nationalization and/or receivership.

Unless they've taken the option off-the-table with their rhetoric, I think the Admin. still might be laying the groundwork for bank nationalization, if the more conservative efforts fail.

I pretty much meant dead to the feds.

Overregulation... boy, do we need it now.

good god. Depressing.

http://www.theatlantic.com/doc/200905/imf-advice

Yeah. But sometimes Simon Johnson gives more mixed (and more optimistic) signals about the state of the economy. I haven't kept up with it over the past week or so, but Johnson's blog -- The Baseline Scenario -- is really worthwhile reading on the economy, and especially the banking crisis.

yes, his blog (and really, it's written by several people) is awesome but he's never been optimistic about the marriage between bankers and the government.

And the article in the Atlantic outlines the astonishing way that Obama has been rolled.

dow has recouped all '09 losses, up over 8400 for the first time since jan. 13. hmmmmmm
http://hosted.ap.org/dynamic/stories/U/US_WALL_STREET?SITE=AP
rolled or roller?

And the article in the Atlantic outlines the astonishing way that Obama has been rolled.

Jury's still out, I think. Depends on whether you think (a) he's determined not to nationalize (which would humble the "oligarchs" Johnson refers to in the article) and, even if you think Obama's determined not to nationalize at the moment (but not necessarily against the concept if circumstances further deteriorate or his current plans don't work) (b) he won't have enough political capital to nationalize if his current, less radical, bank plans fail.

Geez; not a very coherent post. Apologies.

Dad got layed off yesterday after 25+ years.

Yikes. Sorry to hear it.

I can't help but have a queasy feeling about the direction of the economy. I still get the impression that govt action is focused on making sure banks survive, getting credit flowing, etc. which is all well and good but doesn't seem to address deeper problems. Such a huge percentage of our economic growth during the boom years was in two (interlinked) areas -- housing and financial services. Those areas of the economy may come off life support but they're not exactly going to see a sharp rebound any time soon. What's going to be the true basis of a recovery? I can't help but think we're just going to be locked into high unemployment and slow growth for a while.

I also can't help but use "I can't help but" twice in a post.

What's going to be the true basis of a recovery?

A healthy and educated workforce

By the way, that's not code for anything

You're right to have that queasy feeling. The USA is right on course for continuing job losses through 2009 followed by a jobless, basically stagnant "recovery", as far as I can see.

Obama's economic team, far from being the whizbang powerhouse they were touted to be, appear to be no better than financial sector apparatchiks, with no new ideas and no stomach for forcing the banks to take their losses.

not according to the onion
http://www.theonion.com/content/news/nation_ready_to_be_lied_to_about?utm_source=a-section
"Why, just today we made excellent progress with GM, whose CEO Fritz Henderson told us that every penny of federal and taxpayer funds would go directly to the construction of three new auto plants in Detroit that will create over 90,000 new jobs and spark the economic rebound we've been waiting for."

appear to be no better than financial sector apparatchiks

Well, yes.

What's going to be the true basis of a recovery?

___________________________

A healthy and educated workforce

Fitter, happier, more productive, comfortable, not drinking too much

Regular exercise at the gym, 3 days a week

* * * *
Sleeping well, no bad dreams, no paranoia

* * * *
No killing moths or putting boiling water on the ants

chubbos ate my 401k