Rolling US Economy Into The Shitbin Thread

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

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.

Maybe. But maybe something more subtle and subversive is happening here. I'm not sure if it's a good-or-a-bad thing, especially compared to outright nationalization, but it does seem to mean the government has more options to control -- and leverage over -- banks than its had before. Now we'll see if they have the stomach to use that power, if it's needed (i.e., if and when the current nurse-them-along-and-hope-they-"earn their way out of it" strategy fails).

long run, the diminishment of the financial services industry could be a boon to the rest of the economy in that in the future people who otherwise would've worked in that industry apply their lol talents elsewhere. what kind of technical or scientific advancements could we have if the folks who came up with all of those arcane and inpenetrable financial formulas had worked in, say, high tech or remained in academia? (i did add "lol talents" b/c those arcane and inpenetrable formulas are what has brought us to the brink of the financial abyss.)

also, while i'm as skeptical as many others about Geithner and his crew over the banking sector the mere fact that the Obama administration passed a stimulus package (the other part of their approach to the economy) puts them leagues ahead of an economics team under an erstwhile McCain administration (who ideologically would rule such an approach out of bounds right from the start).

enough serious people would have been telling mccain that spending had to increase; the diff would have been that he'd have poured it all into drilling and the military

I will gladly take an Obama administration's weaknesses and bad points over any McCain administration conceivable. But no president should get a free pass on lackluster policy, just because the opposition gives you the heebie-jeebies.

treason! don't force Dems to get a new line of denial for 3-3/4 years.

Obama's economic team, far from being the whizbang powerhouse they were touted to be

by whom?

The White House press corps, which always sits in the lap of a new president for (at least) the first few months, gazing at him adoringly and shouting hosannahs upon his every action. Or so it has ever been in my lifetime.

In rejecting “nationalization” (regulatory takeover and conservatorship), the government has not ensured a private, properly functioning banking system. Instead, it has muddled into a broken-down, undercapitalized system that is nominally in private hands, but is able to tap the state for apparently limitless support.

Quoted from that Baseline Scenario link above. OTM. This, btw, is the Hank Paulson model in all its wretched glory.

I see strands of hope in that Baseline Scenario blog entry. More potential control/leverage. Maybe that's just a collateral consequence of the effort to inject capital into troubled big-banks, and represents power that the Administration will never use. But maybe it will use it, in small and possibly big ways.

That's why I say the jury's still out on this subject.

OTOH, wtfdoiknownothingthat'swhat. I realize this all too well.

xpost

When a bank is insolvent the government doesn't need an excuse to exert control and it certainly doesn't need to hold stock so it may hope to have some leverage with the management that drove it into insolvency.

No. It takes it over, cleans up the books, writes off bad assets, then looks for a buyer to run what is generally a much smaller, but stronger bank. If the bank was a total bust, it pays off the depositors and closes the doors.

The reason why the FDIC isn't doing this is politics. The big US banks have totally fucked the world economy, looting it with the tacit blessing of the Bush administration. They deserve to have electric wires attached to their genitals by Lyndie England. Instead they are being protected from the consequences of their rapacity, because the alternative appears too painful.

What is being missed here is that the present course will entail a lot of pain, too, a slow, grinding pain over many years that will punish the innocent more than the guilty and leave the USA worse off in the future than the clean, direct approach would.

Becoming captive shareholders of enormous failed banks is not a position of strength. I do not see this as a reason for hope.

The reason why the FDIC isn't doing this is politics

Or the Admin. is afraid of the reaction to -- and possible ripple effects of -- nationalization.

I'm not saying I buy into this, but that's my understanding of the reluctance to nationalize (aside from broader philosophical objections to nationalization, which I do think are rooted in defensive politics (Obama doesn't want to be tarred and feathered as a "socialist")).

He is anyway though.

long run, the diminishment of the financial services industry could be a boon to the rest of the economy in that in the future people who otherwise would've worked in that industry apply their lol talents elsewhere

Seeing as how even if they fail miserably and take down the world economy they can still rack up huge fortunes, I don't see why these lol talents would want to abandon what is being verified as a sure-thing as leveraged by us taxpayers. If anything this should be a lesson to the next generation of burgeoning banking criminal masterminds. In a few decades these banks will be racing against each other to make the 08s version of 'too big to fail' a laughably inadequate.

I think the idea is that forthcoming regulations will, by design, shrink the banking sector.

Just as long as it isn't simply shrinking the total number of banks.

"Nationalization" is a red herring, pure scare tactics. The FDIC is supposed to step in and take over insolvent banks, and always has since its inception.

The big banks have managed to sidestep this action by insisting that their worthless assets are really worth plenty, except for the small detail that they are not generating revenue and no one will buy them.

The idea that the managers of insolvent banks should be allowed to tap dance around bank examiners and lie their heads off and the media obligingly invokes the horrors of "nationalization" should be perceived as a hoot, except the CEOs and CFOs of ginormous money center banks like BofA have such solid brass cojones because they have routinely bought off the Congress and both political parties with the crumbs from their table, so really it is a scandal of the worst sort.

Well, I don't necessarily disagree. As I said upthread, I just see the possibility that the Admin. is laying the groundwork to do more, should current plans fail (having common stock with voting rights is one way to exercise power, should the Admin. choose to use that power).

But I might be totally misreading the situation. That is, Wall Street/Big Banks might have totally overpowered the Admin., which is why we're seeing less bold moves, and nothing -- besides muddling through -- in the works.

the banks are in bad shape, but most of them aren't comatose (as they were during the Great Depression). also, the "conventional wisdom" is that it's a few (very) bad apples -- like Citibank and Bank of America -- as opposed to the entire banking sector, which is in contrast to the S&L crisis 20 years ago (also, i don't remember if any of the S&Ls fell into the "too big to fail" category though i suspect that they didn't since all that occurred before Gramm-Leach-Bliley passed).

anyway, since the banking sector isn't dead it still can fight back (as they have been lately) which again is in contrast to the situation that prevailed during the Great Depression. i guess that we should be thankful for that, though it also means that they're still strong enough to fight any proposed reforms that would crimp their style as it were.

WOW: Real U.S. Unemployment Rate is 15.8%.