Weekend Economists' Perpetual Anticipation Weekend: Feb. 6-8, 2009

[Demeter]

"Perpetual Anticipation" is a charming trio (almost a round) for three overwrought women from Sondheim's "A Little Night Music" which is based on a Bergman film.

Bergman first achieved international success with Smiles of a Summer Night (Sommarnattens leende) (1955), which won for "Best poetic humor" and was nominated for the Golden Palm at Cannes the following year. Sondheim also got awards for his version.

By the way, "A Little Night Music", like the film before it, has absolutely NOTHING to do with Mozart.


MRS. NORDSTROM:
Perpetual anticipation is good for the soul
But it's bad for the heart.
It's very good for practicing self-control,
It's very good for morals, but bad for morale.
It's very bad.
It can lead to going quite mad.
It's very good for reserve and learning to do what one should.
It's very good.
Perpetual anticipation's a delicate art,
Playing a role,
Aching to start,
Keeping control
While falling apart.
Perpetual anticipation is good for the soul
But it's bad for the heart.

MRS. SEGSTROM:
Perpetual anticipation is good for the soul
But it's bad for the heart.
It's very good for practicing self-control,
It's very good for morals, but bad for morale.
It's too unnerving.
It's very good, though, to have things to contemplate.
Perpetual anticipation's a delicate art,
Aching to start,
Keeping control
While falling apart.
Perpetual anticipation is good for the soul
But it's bad for the heart.

MRS. ANDERSSEN:
Perpetual anticipation is good for the soul
But it's bad for the heart.
It's very good, though, to learn to wait.
Perpetual anticipation's a delicate art,
Keeping control
While falling apart.
Perpetual anticipation is bad for the heart.


So, while waiting to see if this turkey of a stimulus bill will ever fly (never mind the actually work part), while waiting to see if Obama will cook his own goose, or let the GOP do it for him, indulge your taste for horror and suspense and who-dun-it by perusing the latest scoop we can find on "the state of the bustling US economy" (that's from another musical, called How Now, Dow Jones?, but that's another story, as Bernadette Peters remarks in "Into the Woods".

[Demeter]

1. First, This Weekend's Bank Failure: Georgia bank fails, seventh closure of the year

http://www.marketwatch.com/news/story/georgia-bank-fails-marking-seventh/story.aspx?guid={0ADB4918-43F9-46A3-8EDD-19A2503A81B3}&siteid=yahoomy

McDonough, Ga.-based FirstBank Financial Services was closed by regulators Friday, marking the seventh bank failure of the year and the 32nd of the recession, according to the Federal Deposit Insurance Corp.
Birmingham, Ala.-based Regions Bank has agreed to assume all of FirstBank's deposits and purchase roughly $17 million of the failed bank's assets, the FDIC said.

Regions said in a statement that it marks the second time in five months that it's acquired the deposits of a failed bank through the FDIC.

LOOKS LIKE BANKING HAS A NEW LINE OF BUSINESS!

[Demeter]

13. Flash! Extra! Courtesy of UIA: #8!

http://www.fdic.gov/bank/individual/failed/alliance.htm...

On February 6, 2009, Alliance Bank, Culver City, CA was closed by the California Department of Financial Institutions (DFI) and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled the following information which should answer many of your questions.

It's a "Twofer" Friday!

[Tansy_Gold]

15. Regions advertising on cable in Arizona

At least I think it's the same outfit. I saw the first commercial Thursday evening during the rerun of Olbermann.

One o' those things that makes you go hmmmmmmmmmmm.........



Tansy Gold.

[Demeter]

2. Second, the Weather Report

Ann Arbor is approaching freezing again, and snow is starting to melt. With any luck, black ice will not form tonight, so that I may return from my early morning drive and continue to post here tomorrow morning...

and now, back to the whether....

[Demeter]

42. Weather Update--S'posed to hit 50F!

Do I hear 55?

[DemReadingDU]

61. S'posed to hit 49 here in Ohio!

It will be good to get all this snow and ice gone. But, there is no where for the melted water to go, the ground is still frozen. It is nasty out there for my 2 dogs, and even worse when they come in.

:hi:

[amandabeech]

70. My Mom, who lives 40 miles north of Muskegon, will be ecstatic.

I'll call her this weekend to get some happy vibes!

I KNOW how much the January or February thaw gets the spirits up Upnorth!

[AnneD]

75. Greetings Weekender's....

It's a balmy 77 here in Houston, partly cloudy with a 5 mph breeze. We are enjoying this now because in a few months, you will be able to cook the breakfast of your choice on the sidewalk.

[amandabeech]

76. I spent a year in Tyler. Just a little cooler, but the egg thing holds.

One of my cousins lives in Houston. She is from Chicago originally, and in 25 years has made only marginal progress on adjusting.

Love your avatar, by the way. Miss Ann was a great lady.

[AnneD]

78. Ann is one I go back to often.....

I just stitched to FDR-for obvious reasons. Some DEM'S need to be reminded of what a real DEM looks like.

I'll be happy to make breakfast al fresco for you this summer.:rofl:

[Demeter]

3. Fed's consumer plan to start later in February

WHAT'S THIS? YOU SAY, SOMEBODY ACTUALLY HAS A PLAN?

http://www.marketwatch.com/news/story/new-consumer-loan-facility-track/story.aspx?guid={EE91BB10-5074-4430-825C-2D4D7CDB029B}&siteid=yahoomy


WASHINGTON (MarketWatch) -- A new program to try to get credit flowing for small business and consumers is on track to start later this month, the Federal Reserve said Friday.

In a statement, the Fed didn't specify a date, but disclosed more details of the terms and conditions of the loans.

There's a lot riding on the initiative, known as the term-asset-backed securities loan facility, or TALF, which is seen as a new model for the Fed's efforts to reopen clogged credit channels.

The asset-backed securities market for consumer loans has come "to a near standstill," the Fed said.
In particular, the Fed will set up a special-purpose vehicle to purchase and manage the assets and the Treasury will invest in the program to protect the Fed from losses.

Under the plan, the Fed will lend up to $200 billion to owners of certain AAA-rated asset-backed-securities backed by auto loans, credit-card loans, student loans and small business loans.

The New York Fed will announce monthly loan subscriptions and settlement dates.

Borrowers will be able to choose either fixed or floating interest rates on the TALF loans.

The fixed interest rate will be 100 basis points over the 3-month Libor swap rate, while the floating interest rate will be 100 basis points over 1-month Libor.

The central bank also published preliminary collateral haircuts for the securities, depending on the expected life of the loans.

Greg Robb is a senior reporter for MarketWatch in Washington.

[Demeter]

4. The Week In Review: Stimulus and bank rescue hopes boost Wall Street

http://news.yahoo.com/s/nm/20090206/bs_nm/us_markets_stocks_65

NEW YORK (Reuters) – Stocks rallied for a second day on Friday on hopes Washington's stimulus package and a bank rescue plan will bolster the ailing economy, even as data showed the biggest one-month job losses in 34 years.

A nearly 12 percent surge in bank shares (.BKX) led Wall Street higher. Investors anticipate the plan scheduled to be announced on Monday by Treasury Secretary Timothy Geithner will shore up banks' balance sheets and spur lending.

Bank of America (BAC.N) soared more than 25 percent the day after falling to its lowest level since 1984 on investor fears it would have to be nationalized -- a fear that the company's chief executive on Friday said was unfounded....

CLICK ON THE LINK TO READ MORE, IF YOU CAN STOMACH HARRY REID....

[Demeter]

12. Actual unemployment rate 13.9%: Merrill Lynch

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090206/REG/902069980/-1/FWDailyAlert01

[Demeter]

5. SEC says magnitude of Ponzi schemes growing (And Whose Fault Is That?)

http://news.yahoo.com/s/nm/20090206/bs_nm/us_sec_madoff_1

WASHINGTON (Reuters) – The frequency of Ponzi schemes is not increasing but the magnitude of the frauds is, a Securities and Exchange Commission official said on Friday.

The SEC has been under intense scrutiny for not uncovering the alleged $50 billion fraud carried out by former Nasdaq Chairman Bernard Madoff, who is accused of running a massive Ponzi scheme for years.

Donald Hoerl, director of the SEC's Denver office, said the agency has filed about 70 Ponzi cases in the last two years and has filed four cases since Madoff was charged in early December.

"That's not a dramatic upswing in terms of the number of cases," said Hoerl, speaking at the Practising Law Institute's annual SEC Speaks conference. "What is different is the magnitude of the Ponzi schemes."


...He said the schemes follow a typical pattern: They are led by a very charismatic person, they involve secretive and very successful trading programs, and the investment advisers are seldom registered with the SEC.

It's "a scheme that's been with us for a very long time," Hoerl said. "It has been a constant part of the SEC's (enforcement) program."

Lawmakers grilled SEC officials earlier this week, chastising them for not paying heed to Harry Markopolos, a former investment manager who repeatedly tried to warn U.S. regulators about Madoff, and for not examining Madoff's firm more aggressively.

[Demeter]

6. Stampede by banks to beat bonus crackdown: Lloyds and Barclays will both pay out millions

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5672126.ece

Banks dependent on taxpayer support are planning to rush out hundreds of millions of pounds in bonuses to senior bankers and traders before a threatened crackdown.

As ministers prepared to curb excessive remuneration, it emerged that Barclays and Lloyds Banking Group were poised to follow Royal Bank of Scotland (RBS) by paying bonuses within weeks.

Lloyds, which has taken £17 billion in rescue money from the Government, appears ready to give hundreds of millions of pounds to top executives and more junior staff.

Barclays, which has tapped the Bank of England for billions of pounds in loans and guarantees, is believed to be planning even larger payouts. According to the terms of its purchase of the North American division of the collapsed Lehman Brothers, Barclays is due to pay $2.5 billion (£1.7 billion) in bonuses to traders and dealmakers on Wall Street in the next few days....

READ ON ABOUT HOW IT'S GOING OVER (LIKE A LEAD BALLOON) WITH THE BRITISH PUBLIC

[Demeter]

7. While Back At Home, They Keep Us Guessing

Here's an educated guess by

The Baseline Scenario http://baselinescenario.com/2009/02/05/insuring-bankers-bonuses/

What happened to the global economy and what we can do about it
Insuring Bankers’ Bonuses

Here’s what we know so far about the plans for the US banking system that Tim Geithner will unveil next week.

1. The heart of the scheme will, most likely, be an insurance arrangement, in which the government (part Treasury and mostly Fed) insures a big part of large banks’ portfolio of toxic assets against further loss. The devil is in the pricing of this insurance and how transparent that is - and we will put out more on this shortly - but the clear signal so far is that this will be a veiled major recapitalization of banks at taxpayer expense.

2. As announced yesterday, the government will set restrictions on the pay of executives in banks that participate. But note that, under these rules, bonuses are not restricted. Instead, they are just deferred and paid in shares. In other words, if there is cheap recapitalization through government-provided insurance, these executives are getting an incredibly good deal.

Think about it this way. While the macroeconomy goes badly, the government will pay out on the insurance policy and keep the large banks in business. Once the macroeconomy turns around, as of course it will, the banks can pay off the government and pay out massive bonuses.

We are, in effect, insuring incompetents (i.e., the executives who got us into this mess) against both the delayed consequences of previous bungling by themselves and any future missteps they may make.

But even this won’t be enough for the top dogs on Wall Street. We predict that banks will start resetting the strike price of previously deferred bonuses, along the lines of what we have already seen from Google. Watch carefully and track what happens in your comments here.

What we really need is a simple, transparent recapitalization of the banking system. More complicated proposals are opaque and less likely to work. And once people see through the illusions, there will be great disappointment and much resentment.

(This post was written jointly by Peter Boone and Simon Johnson)

[Demeter]

8. And Here's the Criticism: A "New" Bailout Plan? Hardly.

http://www.informationarbitrage.com/2009/02/a-new-bailout-plan-hardly.html

I watched our President's brief address on prime time this evening. His delivery was passionate. His message, strong and partisan. His intentions were clear. Rally support for his stimulus program. In the wake of a few really bad days of press, his honeymoon period clearly over, I thought he did a strong and ballsy thing. Problem is, the plans being bandied about concerning the financial sector are still off the mark. How is it, after the mistakes made by Paulson and the prior Administration that we are still unclear as to what the plan should be? As I've said before, I just don't get it.

But now it's even worse. It seems as if the discussion among those in power has gone back to what we had during Bush II, injecting capital into sick institutions, yet on "tougher" terms than we had previously. Simply doing more of something that was flawed from the beginning isn't going to help solve the problem any better. Why the brainy President Obama or the equally brainy Larry Summers don't seem to get this is beyond me. From tonight's WSJ Online:
WASHINGTON -- The Obama administration's financial-rescue plan is shaping up to include capital injections with tougher terms than the first round and an expansion of an existing Federal Reserve lending facility that could potentially buy up toxic assets clogging the system, according to people familiar with the plans.

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

Instead of buying preferred shares, as it did before, the government is discussing taking convertible preferred stakes that automatically convert into common shares in seven years. Such a move could help banks as they look for ways to bolster common equity. When a bank takes a loss, it has to subtract that amount from the value of its common equity. As losses mount, investors increasingly believe banks need to find ways to shore up this first line of defense on their balance sheets.

To get money, banks would likely have to pay a higher dividend to the government than the 5% rate the government charged in the first round of infusions and agree to a host of new restrictions, such as lending above a baseline level, reporting frequently on their use of the money and curbing executive salaries. While Treasury wouldn't preclude healthy banks from participating, the stricter terms would likely attract primarily weaker banks in need of capital.

Does anyone else see how dumb this is? Let's see:

1. The sickest banks with the lousiest managements get access to Government (read: taxpayer) capital.
2. The Government is looking to play accounting/ratings games by making the instruments convertible into common after seven years, by which time any self-respecting and solvent bank will have paid off the preferred well before its conversion date.
3. The curbs on salaries will likely cause many firms to reject Government capital even if they are very sick, preferring to hang onto their compensation "call option" and hope that things turn around in order that their firm avoids bankruptcy. By this time they will have scooped out far more compensation than what is permitted under the new Government guidelines.

And let's not forget these not-so-trifling issues:

1. Banks with toxic asset-laden balance sheets will still be reluctant to lend, even with Government capital injections. And forcing them to lend will only put us right back in to the world of the GSEs (Fannie Mae, Freddie Mac), which may well cost taxpayers several trillion dollars.
2. Bad managements will still be running the show, even after losing billions or even tens of billions of dollars.
3. Common equity holders and debt holders are still being bailed out, perpetuating a moral hazard that should have ended months ago for many (Citi, BofA, etc.).

Have we learned nothing over the past six months? The ideas being proposed simply won't work, and I don't care which Harvard Ph.Ds are saying so. It is a matter of transparency. It is a matter of good governance. It is a matter of creating healthy institutions that are in a position to fund the renewal and growth of this country. Current plans do not contemplate any of these things. Why not? That is a mystery. President Obama has his chance to take a stand, the right stand, and I'm afraid his first big step forward will in fact be two steps backwards. And the country will suffer for it.

[Tansy_Gold]

16. Perhaps we'd best read up on our 1640s British history.

Especially since, if you follow Kevin Phillips' analysis, much of what happened in England at that time directly spilled over into the colonies, particularly the brand new colonies of Virginia and Massachusetts in the "new" world.

Of course all the political and social and economic history may all be window dressing. After all, the English did behead their king almost a century and a half before the French.


TG

[Demeter]

18. Okay, Now I'm Going to Have to Look It Up

[Tansy_Gold]

31. My comment was a response to yours about the British public

and the lead balloon of their bank bail-out, meaning that they, like the French (and many others, of course, including the Russians), had quite literally given FRSPs. There is, after all, a point at which the populace will retaliate. How far away are we from that point? :shrug: I dunno. I'm not sure I want to find out, either.

Phillips' "The Cousins' Wars" is superb. I read it first in 2000 when I was taking a politics class, and I knew nothing about him. One of my profs asked why I was using it as reference since Phillips was such a staunch republican and I said, "But the points he seems to be making in this book aren't very rightwing at all." The history of the three wars -- English Civil, American Revolution, American Civil -- and the political/cultural links between them seem (to me and apparently to Phillips, too) to explain a lot of the present situation, including economic. His later books -- particularly "Wealth and Democracy" and "American Theocracy" -- expand upon the same analysis.

Tansy Gold, who got to sleep in this morning until 5:30!!!!

[Demeter]

34. I Think The British Have Lost Their Bloodlust, Though

Wish their American cousins could make the same claim (when it's not GOP blood, mind you. There's a tremendous squeamishness about shedding real criminal blood). And as for the French....who knows?

[Tansy_Gold]

40. You're probably correct,

But we've all had our share of riots in the past. IF things get bad enough and IF there are enough rioters, anything can happen. It's the pitchforks and torches mentality.

The execution of Charles I was, I think, a pretty cold-blooded affair, very deliberate and "official," much more along the lines of a criminal trial. Not to say that there weren't high emotions involved, but the Russian and French revolutions have always seemed to me much more mob-driven, more volatile, than either the English or American revolts against monarchy. But that could be a prejudice of perspective. The American civil war, though conducted by nominally government military apparatus, resulted in the Lincoln assassination, so that could be a somewhat comparable event to the guillotine and the Romanov massacre. I dunno.

What we also have here is that the means of quelling riots have perhaps been decimated by events and policies of the past eight years. National Guard troops have been siphoned off to Iraq and Afghanistan, and state and local "peace-keeping" forces have been diminished due to pay cuts, staffing cuts, etc. We may be left :scared: with the repatriated Blackwater mercenaries after they're removed from Iraq.

:shrug:


Tansy Gold

[Demeter]

43. I Think a Lot of BlackWater Is Actually Foreign Nationals

(Probably because US thugs were either too stupid or too expensive or have been killed off already, or got the hell out when they saw what a colossal FU Iraq was).

I haven't any fact or link to back up that impression, though.

[Tansy_Gold]

55. I dunno. BF just finished Scahill's book and has already lent it

to someone else, but it'll come back eventually.

But I already know enough about Prince to consider him dangerous, very dangerous. And I also don't think the "militias" were as disbanded as a lot of people thought they were after OKC and McVeigh.



TG, who has not completely taken off her :tinfoilhat:

[Dr.Phool]

73. I read a while back that they were hiring a lot from Central America.

Old death squad members from El Salvador, and Peruvian National Guardsmen. People who take a lot of enjoyment in killing others.

[DemReadingDU]

63. I think we are far from retaliation. Most people have food and shelter

When it becomes difficult for people to find something to eat, and a warm place to sleep, then the masses will retaliate. I really have no idea when that happens.

[Tansy_Gold]

65. Yes, true, but the growing numbers of those who don't,

and the possibility of an accelerating downward spiral should cause some awareness, if not actual concern. A job depletion rate of 20,000/day is not something to sneer at, and the fact that those in power are doing everything possible to maintain the downward spiral and indeed jump-start it into fourth gear should be, well, a bit alarming.

[DemReadingDU]

68. Oh, I am alarmed, very much so. We here, are all alarmed

but I know many many people who still think life is great, nothing to worry about, the stock market always comes back. Head buried in the sand. I could scream at them, WAKE UP!

Not until they have no job, savings gone, no pension, no 401(k)/IRA, and are hungry and cold, then they will wake up. Because then, they are finally affected. But for now, it's always somebody else who is in the bad situation.

I want to SCREAM!

We need a new smiley, one who screams. Guess this will do for now

:grr:

[fedsron2us]

122. The UK has a long and bloody history of internal strife

which we Brits like to gloss over. Our rulers also like to play down the fact that from the time of Simon De Montfort there has been a thread of radical political discourse running under the surface of British politics which emerges from time to time in outright rebellion against the status quo. Most people forget that the English were the first people in Europe to put their monarch on trial and then cut off his head. I suspect this is because British history is always a three steps of change forward followed by two steps of conservative retrenchment backwards.

Right now I detect a feeling in the air that we are about to enter what Marxists call a pre Revolutionary state. There is huge anger amongst the populace about where a greedy and mendacious political and financial class has taken the country but little focus or direction in its expression. The payout of bonus to banks in receipt of taxpayers bail out money has definitely been one of those 'let them eat cake' moments that has got everyone searching for their pitchforks. However, I do not think that the political and economic situation is going to trigger a major challenge to the powers that be just yet. That will probably happen after the General Election in 2010 when we are likely to see a change of government in Westminster. If we have a Conservative regime in Westminster trying to force its policies on Nationalist assemblies in Scotland and Wales then there is a good chance that the UK will break up. Watch this space because I think the 2012 Olympics are going to occur right at the time these events kick off.

[Demeter]

129. The Fruit Doesn't Fall Far From the Tree

Although we Americans come from every spot on the planet, a kind of virus infects those who stay to mingle their fortunes in the melting pot. It is that elusive echo of the Enlightenment that brought this nation into being. And since the people of the Enlightenment in America were predominantly English, that same radical strain of which you speak runs through our nation, too.

There are other strains of thought, religious fanaticism mostly, that run countercurrent to the basic Enlightenment heritage. And each strain waxes and wanes. Some times I wish the especially self-defeating ideas would die a swift and permanent death. Occasionally, one noxious one has. Usually to be replaced by two more obnoxious ideas.

If Clinton hadn't upset the fascists' timetable, we would have had that revolution by now. We wouldn't have had any other choice. But because the wobbly electoral process managed to deliver Clinton and Obama, we are still trying to change peacefully. At least, some of us are.

[Demeter]

9. China outraged after India bans all toy imports (Will the MSM Mention This ?)

http://www.telegraph.co.uk/finance/financetopics/recession/4511451/China-outraged-after-India-bans-all-toy-imports.html

India has banned all imports of toys from China for six months, in the first major example of protectionism following the financial crisis.

The ban came amid growing global tensions about protectionism, with Europe and Canada warning the US about its determination to get consumers to buy American goods and wildcats strikes in the UK over the use of foreign workers.

State media reported that the Chinese government is likely to appeal to the World Trade Organisation to reverse the ban, which is the latest blow to China's beleaguered toy industry.

China makes three-quarters of the world's toys, but a combination of safety fears and the global slowdown has hit the sector hard. By the end of last year, the number of companies exporting toys from China had halved to just over 4,000. Tens of thousands of factories have been shuttered, according to toy trade associations in Hong Kong.

India imports around half of its toys from China and its market is worth around Pounds350 million a year. The Indian government gave no reason for the ban, although Raj Kumar, the president of the Toy Association of India, said politicians were acting in the interests of the economy and consumer safety.

In December, the Chinese government raised the export tax rebates for Chinese toys by 14 per cent in a bid to help manufacturers. According to Mr Kumar, the rebates put Indian toy manufacturers at an unfair disadvantage.

"The ban cannot hold water. The Indian side is doomed to lose in the court if the Chinese government appealed to the WTO Dispute Settlement Body," said Fu Donghui, managing director of Allbright Law Firm Beijing, and a legal expert on trade issues.

"In the past, the Chinese government always kept silent. But the situation is changing, and resorting to the WTO is the right choice to prevent the trade partners from abusing the WTO regulations," he told the state-owned China Daily newspaper....

[Demeter]

10. Hooray! China has bottomed out. (Wishful Thinking Dept)

http://mpettis.com/2009/02/hooray-china-has-bottomed-out/


Have we reached a bottom? A lot of analysts are pointing to the improvement in both measures of Chinese PMI to suggest that Chinese manufacturing may finally have reached a bottom, even though both PMI measures are still well below 50 and so indicate a contraction in manufacturing. More impressively the stock market has rebounded, with the SSE Composite bouncing off its January 13 close of 1863 to reach, as of yesterday 2108 (up 13.1%). Today it traded up another 2.0% in the morning before giving it all back, and more, during the afternoon to close down 0.5% for the day. Before the market turned Bloomberg today reported a very optimistic fund manager:

“Stocks continue to be lifted by speculation more stimulus measures are on the way,” said Michiya Tomita, a Hong Kong-based fund manager of Chinese stocks at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. “There’s a growing perception that China’s economy will recover surprisingly fast.”

Surprisingly fast? I’ll take that bet. Aside from the normal excitement we all get from the right kinds of stimuli, part of the recent optimism seems to reflect the huge upsurge in bank lending I reported last week – with loans in January rising by RMB 1.3 trillion. Nearly one-quarter of that was provided just by ICBC. According to an article in today’s Bloomberg:

Industrial & Commercial Bank of China Ltd., the nation’s largest, said it offered 252.1 billion yuan ($36.9 billion) of new loans in January in response to the government’s stimulus plan to avert an economic slowdown. The bank lent 69.3 billion yuan to power grid, railway, roads, and hydroelectric power projects, and 135 billion yuan in discounted bills to small and medium-sized companies, the Beijing-based firm said in an e-mailed statement, without giving comparisons. New loans to individuals, including mortgages, amounted to 16 billion yuan.

China dropped lending quotas and unveiled a 4 trillion yuan stimulus package in November to maintain economic growth and counter the global financial crisis. Banks have responded by raising lending targets and focusing on railways, roads, power grids and other infrastructure projects with stable returns. Domestic banks offered a record 1.2 trillion yuan of new loans last month, representing almost a 50 percent gain from a year earlier, the China Securities Journal said yesterday.

ICBC aims to advance 530 billion yuan of new loans in 2009, about the same as last year, the 21st Century Business Herald reported today. The bank plans to complete 45 percent of the loan target in the first quarter. ICBC attracted 271.2 billion yuan of deposits in January, equivalent to a quarter of the total increase in 2008, according to today’s statement.

I have long argued that credit is a much better gauge of money supply in China than any of the monetary aggregates, so this explosion in bank lending should suggest at least that China is making the right moves from a monetary point of view – pumping liquidity into the system to avert a contraction in money supply that would exacerbate the contraction in demand. But I have three very serious problems with the optimism associated with the latest numbers on credit expansion.

First, this credit expansion is not all that it may seem. Aside from the fact that a lot of this new credit has consisted of an increase in bill discounting, in order to understand what is really happening to total credit in the Chinese economy we need much better data. There are persistent rumors that part of the increase in bank lending consisted of putting back on balance sheet loans that were taken off balance sheets in 2007 and 2008 when the PBoC was trying to constrain bank lending. It isn’t really new credit. We also don’t have a very good feel for what is happening in the informal banking sector, and in the past there was evidence that contraction and expansion in the informal banks counteracted what occurred in the formal banking sector.

What is more, there is clearly an increase in lending games aimed at making policymakers happy by showing fat loan books. One of my students just visited me today with an example that involved his father. I don’t want to get into too much detail, for obvious reasons, but the net effect of the transaction involving his father was that an entity was created to borrow money from a bank, the proceeds of which were deposited in a CD, which was then assigned in ownership to the real borrowing entity, which then used the CD as collateral for the “real” loan. Aside from the complications used probably to get around credit restrictions, one single loan was recorded as two loans plus a CD deposit. Apparently the lending bank knew about all the intermediate steps. Surprise, surprise! It turns out that if your career prospects depend on increasing the total amount of loans outstanding, with less focus on the quality or structure of the loans, in fact it isn’t hard to show very nice, fat loan book....

THIS HAPPY FELLOW CHIRPS ON FOR MANY MORE INCHES....

[Demeter]

11. Get Your Madoff Fix here!

http://www.nakedcapitalism.com/2009/02/sec-stonewalls-at-senate-hearings-on.html

[Demeter]

48. Plaintiffs take aim at Madoff’s auditors

http://www.ft.com/cms/s/0/cc8cddbe-f3b4-11dd-9c4b-0000779fd2ac.html

By Brooke Masters, Stanley Pignal and Joanna Chung

Published: February 5 2009 20:04 | Last updated: February 5 2009 20:04

With evidence mounting that US broker Bernard Madoff’s business and personal assets will not cover what his investors believe they are owed, plaintiffs’ lawyers are taking aim at targets with deeper pockets: the global auditing firms.

At least 11 of the nearly two dozen investor lawsuits filed since Mr Madoff was arrested on December 11 name national branches of PwC, Ernst & Young, KPMG or BDO as co-defendants. Among the top five, only Deloitte so far appears to have escaped a Madoff-related lawsuit.

The pace has accelerated this week, with two US claims filed against KPMG and PwC on Wednesday and one slated to be filed against E&Y in Luxembourg over the next few days.

None of these firms directly audited Mr Madoff’s broker-dealer business – he used a three-man shop called Friehling & Horowitz. But the global firms audited many of the hedge funds that funnelled money to Mr Madoff, and their investors have rushed to the courthouse. They argue that the feeder funds had so much of their money with Mr Madoff, and his operation was so unusual – it served as both custodian and money manager – that the fund’s auditors had a special duty to examine his books as well as those of the feeder fund.

TONS MORE GEEKY DETAIL AT LINK---WHO WOULD HAVE THOUGHT THAT MADOFF HAD AN AUDITOR????

[psychmommy]

79. now that was good tv. cspan 3 feed was horrible though.

i hope they replay it this weekend. vollmer is a shit heel. he is begging to be played by dana carvey. i see an snl skit.

[Tansy_Gold]

14. First Rec! Whoo Hooo!!!

Okay, okay. I'll tone it down.

I've had a horrendous week, hard work for little pay, chewed out by a boss I've never seen, and it's probably going to rain this week-end.

Which is all right because maybe I'll be able to spend some time with the WEE!


Tansy Gold

[Hugin]

30. Darn.

:/

I have a good excuse, tho.

:hi:

[Demeter]

35. You are Forgiven, Prag

I am having a hard time with your name change, though.

[Hugin]

38. I knew I should have gone with the second 'n'.

"Huginn"... Alas, it's too late now!

:7

:hi:

[Demeter]

39. It just looks too much like "Huge" to my bleary eyes

and I know by your posts that you must be sleek and svelte as a greyhound.

[Hugin]

44. Well, maybe a 'grey' dog would be a better description.

:rofl:

[Dr.Phool]

17. How Theresa Hatt Caused The Financial Crisis

Last month, Theresa Hatt died at 52, after a brief struggle with cancer.

Hatt, who lived in Portland, Maine, and worked for the city of Scarborough, had had several credit cards in her name. So, shortly after her death, Hatt's son, Paul Kelleher, began the sad task of calling his mother's creditors, to inform them of her passing.

The calls were uneventful, if depressing, until Kelleher got to Bank of America. Here is how he says his conversation with a representative of the company's estates unit went:

Paul Kelleher: Yes, I'm calling to inform you that my mom died on the 24th of January.

Bank of America Estates representative: I'm sorry. Oh, it looks like she never even missed a payment. That's too bad. Well, how are you planning to take care of her balance?

PK: I'm not going to. She has no estate to speak of, but you should feel free to just go through the standard probate procedure. I'm certainly not legally obligated to pay for her.

BOA: You mean you're not going to help her out?

PK: I wouldn't be helping her out -- she's dead. I'd be helping you out.

BOA: Oh, that's really not the way to look at it. I know that if it were my mother, I'd pay it. That's why we're in the banking crisis we're in: banks having to write off defaulted loans.

"I lost it there," Kelleher, a mild-mannered 30-year-old who lives in Brookline, Mass., where he works remotely for a Washington DC-based non-profit, told TPMMuckraker. When pressed, he said, the estates rep backed off that last claim, but only a little, continuing to suggest that cases like his mothers had played a role in the financial crisis.

The rep's apparent intention, as Kelleher described it, was to mislead him into believing that he was obligated -- at first legally, then, failing that, morally -- to cover his mother's debt (which, in any case, was not large: she had had a $1000 limit on her card). Of course, Kelleher was sophisticated enough to know that's not true. But how many other less savvy callers in similar situations, he wondered, might respond to the rep's breezy "how are you planning to take care of her balance?," with a confused "I guess I'll mail in a check"?

And what bothered Kelleher as much as the estate rep's insensitivity, not to mention her apparent effort to deceive, was the impression he got that she wasn't winging it.

"It seemed rote," Kelleher said. "It was too naturally delivered to have been a misstatement."

That impression was strengthened when Kelleher eventually spoke with the rep's supervisor, Eric Davis. Kelleher said that when he recounted his conversation with the rep, Davis apologized -- for what, exactly, it was unclear -- but told him: "That's not how she meant it."

From his conversation with Davis, said Kelleher, "it sounded like was encouraged."

How strongly encouraged, we wondered? And how common was this particular rep's approach? So we tracked down a former rep for Bank of America's collections unit. And according to the former rep, Kelleher's interlocutor was doing just what she was told .

The former rep, who worked until quite recently at B of A's Belfast, Maine-based collections unit, described for TPMmuckraker a system in which staffers responsible for making collections were routinely encouraged to mislead customers or those calling on their behalf, and were financially incentivized to do all they could to get payments.

Kelleher's reported conversation, the former rep said, "sounds like how I would have attempted to collect" in such a situation. "I would have asked: 'How do you plan on paying for this?'"

The rep said that employees were encouraged to walk right up to the line of actively deceiving a caller about the consequences of non-payment. "As long as you don't get caught ," the former rep added, "there's no really no punishment." The former rep did not work in the estates unit, but confirmed, based on direct knowledge of B of A's practices, that it operates similarly to the former rep's own unit.

The former rep said that employees responsible for collections receive "feedback" about their phone performance from managers who monitor the calls. (When you hear "this call may be monitored for quality assurance purposes", the "quality assurance" oftentimes isn't quality of service from the customer's perspective -- it's quality of performance from the rep, who's being trained to be as effective as possible at extracting money from callers.)

The former rep added that if a manager had listened to the performance of Kelleher's rep, he would likely tell her: "Good job!" By contrast, if he had heard the rep failing to make any serious effort to convince Kelleher to pay his mother's debt, he would have told her "that was not a good 'listening score,'" -- the term gets at the precision with which a rep's phone performance is monitored -- and would have encouraged her to take a tougher approach.

There are also more direct ways to ensure that collections agents play hardball.
"We were obligated to collect 45 percent of the debt that rolled in to us," said the former rep, adding that that figure fluctuated. Employees who consistently failed to meet that baseline might be fired. "People lost their jobs all the time for non-performance."

And there were bonuses of us as much as $5000 a month for reps who successfully brought in a certain percentage of "collectible money", said the former rep, using the industry's cold-blooded jargon.

What's the larger point here? Well, here's one: When the automakers were asking Washington for a bailout recently, there was a lot of talk about insisting on conditions -- like requiring that they build more fuel-efficient cars -- that would be in the national interest. Bank of America and its competitors have already taken billions in taxpayer dollars. So it seems logical to insist on a similar set of public interest conditions -- and the industry's range of deceptive and rapacious lending practices would be a natural place to start.

Neither Eric Davis, the B of A supervisor, nor B of A's public relations office immediately responded to a request for comment.


http://tpmmuckraker.talkingpointsmemo.com/2009/02/how_theresa_hatt_caused_the_financial_crisis.php

[Hugin]

32. Customer disservice is an epidemic...

One of those long-distance 'customer service reps' at DishNetwork
was abusive to my spouse on a call made to try to get them to service what they sell... I'm quite angry about it.

Due to this, I've spent most of my free time this week trying to compose a coherent 'customer comment' about exactly how far they can shove their equipment up their collective output ports after they've removed their unsightly crap from my property... That is if I don't have whoever they send arrested for trespassing. Believe me... After their "representative's" treatment of my S.O. I -will- be there.

It's inexcusable.

:grr:

[Dr.Phool]

33. Dish Network is absolutely the worst.

I had 2 run-ins with them. The last time, I canceled my premium channels, and they kept charging me. When I called to get it straightened out, they pretty much flat-out called me a liar, and said I had not canceled. I then told them to get their shit out of my house...NOW.

They sent me the wrong boxes to send the equipment back. Nothing fit right. I called to tell them, and please send me the right boxes. I was then told that it was MY responsibility to make sure it go back safely. Wanna bet? After a very heated exchange, I took their boxes, and dropped them (read, threw) very hard, several times on the floor, crammed them into the wrong boxes, made sure they were well secured with duct tape, and sent them back.

That's the last dealings I'll ever have with them. They pissed me off so bad, that I'd rather give my money to Rupert Murdoch (DirecTV), than have anything to do with them again.

[Hugin]

36. Sounds like a plan...

I'd long ago mentally added DishNetwork to the corporate dungheap.

The only reason it was here was because of my S.O. and now they've gone and pissed in that bowl of cereal.

Now, I can't get it shut down fast enough to suit the Spouse.

I doubt I'll be replacing it with any service. I've moved on past TeeVee.

[Demeter]

37. Thanks for the Tip, Doc.

I was contemplating going to dish, because I hate Comcast bundles. I neither need nor want 16 assorted sports channels, Fox and the Catholic dial-a-whatever. I'll wait and see if and when AT&T gets their cable upgrade if they are any more customer oriented....

[Tansy_Gold]

45. I recently had some, er, difficulties with our local cable outfit

regarding a cable box that died. *I* disconnected the dead one, *I* returned it to their local office, *I* picked up the new one, *I* installed the new one, and then *I* had problems with the new one. After four nasty phone calls with their service reps who gave me WRONG information (and one who hung up on me), I pointed out that I had SAVED them at least one and maybe two service calls. I wanted more than mere credit for the two weeks I'd been without service. (BF is sports addict and goes into very testy withdrawal. . . . . )

In the process of figuring out a "credit," the service supervisor discovered my monthly charge had never been adjusted when I returned a second cable box eight months ago.

That further infuriated me and I said that was unconscionable. They had the notation on my account that I'd returned it, but never gave me credit on my bill.

I eventually ended up with a discount equivalent to 6 months service.

It's a relatively small outfit but they have a local office with real people, and having a dozen sports channels (and old western movies) keeps BF out of my hair when I need to work.

Speaking of work, it's calling my name right now.



Tansy Gold

[Demeter]

47. See, What I Really Need Is a Boy Friend

I knew there was something missing. Darn.

[Hugin]

52. Did you forget the little sarcasm thingie?

It's easy to forget.

:hahaha:

[Demeter]

56. No

Chastity is highly overrated.

[Hugin]

72. So, I'm told...

by my youngest little cherub.

Well, I'll keep my eyes open for you, but, 'perfection' is a tall order.

Are you sure there's no 'good-e-nuffs' lurking about?

[Demeter]

84. There Is Nobody and Nothing Lurking About

I don't get out much anywhere.

[Hugin]

92. If it's any consolation, you have us.

Granted a collection of oddities and mixed nuts. :7

But, you must admit... Highly effective.

(Not counting that "Jobs Forum" thing... We're still working on
it.)

[Demeter]

100. the Marketeers are a Great Comfort!

Never doubt that! It's hard to find people with an interest in stuff like this and a willingness to learn beyond the latest media meme.

[Tansy_Gold]

102. As you are to us.

:grouphug:

[Demeter]

103. Aw, Shucks!

Saw your thread with everybody jumping on you...that was a brave thing, trying to bring enlightenment to the heathens.

[Tansy_Gold]

108. Well, y'know, it was one of those times when I knew, without a

shadow of a doubt, that I was right. I'm rarely that certain.

But also, I had all the wisdom -- and I do not use that word lightly -- that I had gained from reading SMW and WEE, from following links and the links in them.

One of BF's best friends in CA has a PhD in economics. Supposedly this guy has "met" Krugman and Reich and a few others, and through him BF says he has, too. He's an incurable name-dropper so who knows.

But BF's economic expertise is mostly what he's picked up from casual conversations from this friend. He can honestly sit at my dining room table and spout bullshit along the lines of "My friend Jim showed me the modeling that proves raising corporate income taxes would eliminate all other taxes and produce a surplus. I don't believe in personal income taxes. I think it's the worst way to fund government. Estates shouldn't be taxed either; that income is being taxed twice and that's not fair" and line after line after line of right wing libertarian nonsense. Not thirty seconds after this spew, he will agree with Rachel Maddow that tax cuts on individuals are the LEAST effective way to stimulate the economy. When I point out the absurdity of his contradicting of himself AND that it illustrates how little he really knows about the subject, he just shuts up or starts talking sports.

It's not that he's stupid -- he really isn't -- but he's too lazy to do the real research. He grabs onto soundbytes and thinks he's taken a whole academic course in the subject.

I can't do that. I have to read and research and study, and if I go with my instinctive gut, my native intelligence, my inborn logic, then I say so. The appointment of Geithner, which is really what sparked the whole November tirade, was something that just struck me at every level as wrong.

I posted the same reply (the link and the rubber stamp) on another Editorials thread, the one that posted Frank Rich's column. Rich says much of the same thing as I did, adding of course the more recent problems with the Daschle appointment. But Rich also adds, which I think is telling, that the lone dissenting voice in Obama's economic team -- Paul Volcker -- is being pushed aside by the arrogant and despicable Lawrence Summers. Summers, an asshole by every report I've ever read, should NEVER have been put on the team. Not so prominently. Not to blatantly. Not so in-your-facedly. Rubin was horror enough. Geithner was a message. Summers was an insult.

And there was more to come.

When Obama took Janet Napolitano from Arizona, he handed this state back to the McCain morons. Janet was a voice of sanity in a state dominated by right wing Republicans. We had clawed our way back, ousting J.D. Hayworth and Rick Renzi. We've elected a whole lot of women to high office in this state. Indeed, it's indicative that even Jan Brewer, the right wing nut case secretary of state who has taken over as governor, is a woman. And yes, I'm not ignoring the fact that Napolitano jumped at the opportunity; she's to blame, too. There was a sense, at least in MY mind, that Obama felt he had to make some kind of concession to poor John McCain, the desperate old man who looked so pathetic on the campaign trail with his own personal Anna Nicole Smith propping him up, making him smile, pretending to love him while all the while just waiting for him to die. . .. . .

Now Obama is considering Kathleen Sebelius, the Dem governor of Kansas, for HHS. Kansas is the home of Phill Kline the wacko county attorney who lives and breathes anti-abortion frenzy. Kansas is the home of creationists on the school boards. Kansas and the loyal Dems in it NEED Kathleen Sebelius far more than Obama needs her ties to the insurance industries.

Why can't he find someone other than elected officials, former elected officials, former cabinet officers from former administrations? Are there no other qualified people? Goddess knows, there are enough of us right here on WEE and SMW to fill half a dozen cabinets and do so better than the current crop! Do we have tax problems? Probably. Are we delinquent on our mortgages, our creidt cards, our student loans, our car payments? Oh, probably a few here and there. Have we ever hired undocumented immigrants, paid them cash, skirted payroll taxes? Without a doubt.

But how many of us have taken gazillions of dollars in bribery money to push through legislation that we knew was harmful to our fellow human beings? Lined our pockets with tons of gold by selling out our friends, our family, our environment? I'm not sure someone with a 500 credit score couldn't do a better job at HHS than a lobbyist/consultant who has no problem forking over $120,000 to OVERpay past due taxes.

I got the rubber stamp made years ago because it had become a family joke. "Stop jumping out of the swingset," I warned my son repeatedly, "or you'll break something." He broke his wrist. That kind of thing.

A couple of days ago, Krugman was on Olbermann or maybe it was Maddow and said something taxes on the already wealthy. BF mis-heard the comment and repeated back to me something I not only knew Krugman wouldn't say but I had in fact not heard him say. I correct BF's mis-hearing. Determined to prove me wrong, he watched the repeat and, sure enough, *I* had heard Krugman correctly and BF had heard him incorrectly. I will give BF credit for admitting his error. I will also say I was not hesitant to pick up the rubber stamp.

When I know I'm right, I can be a regular pit bull.




Or I can just be




Tansy Gold

[Tansy_Gold]

53. You want mine?

:evilgrin:

[Demeter]

57. No, thanks

I want one without such a heavy sports addiction. Perfectionism is my downfall....

[Hugin]

51. The repetitive motion injury the last eight years have caused in my data entry digit has rendered me

me unable to properly reply in situations like you describe.

First it was 'Self-service' at the gas stations... Now! They have us
PAYING to do what is rightfully THEIR service calls.

I suppose it would be kind of expensive to fly in a technician from Faroffisstan to actually perform physical repair... Why not get the customer to do it? Republican Supply-side ideology has it that no American should ever be paid to do these things... *GASP* They might go Union! :eyes:

The system is very broken and I see very little happening to correct the course.

[Tansy_Gold]

54. Absolutely

In this particualr case with the cable box, a simple set of instructions would have sufficed to eliminate all their problems.

1. My cable box would have been hooked up properly.
2. I would not have become frustrated and angry.
3. Their reps would not have continued to give me wrong information.
4. I would not have demanded compensation
5. I would never have found out they were still charging me for the extra box. (I tend not to read the bill but just pay it online.)

All in all, I figure it cost them about $800. It cost me $2 in gas and a couple hours time.

Any time I can pull money out of the hands of the fat cats, I consider it a good day.



TG

[Dr.Phool]

67. I'm the most laid back guy on the planet.

I still get enraged when I think about conversations with their "customer service". And, it's been nearly 2 years. I switched over to them when Murdoch bought DirecTV.

The only thing I miss is Amy Goodman with my morning coffee.

[Demeter]

19. Bad Bank/Worse Bank (Economic Geeks Are WORSE than computer Geeks)

I GET A THROBBING HEADACHE TRYING TO FOLLOW THIS REASONING...

http://accruedint.blogspot.com/2009/02/bad-bankworse-bank.html

So what do we think of Geithner's Bad Bank idea? Is this the solution that will finally fix the economy? Will this mark a Bottom (tm)?

First of all, the universal bad bank idea is much better than how the TARP is currently being utilized, namely equity injections into private banks. When you have the government actually owning private companies, it opens up any number of Pandora's boxes. Already the government is trying to influence how banks operate by forcing them to lend out TARP injections. That's a terrible precedent.

On the other hand, if the government simply buys certain assets from banks, that could be the end of it. Congress could attach certain rules and regulations surrounding the asset purchases, for example, forcing banks to agree to executive pay restrictions. But once the purchases have happened, that could be the end of it.

If you want to some day return to real capitalism, then we need to figure a way to get through the current crisis. But we also need to do it in such a way that government interference in private business is minimized. As long as government owns banks, that isn't happening.

How should the purchases of bad assets be handled?

I'd like to see it done something like this. We form a new company, call it LoanCo. The Federal Government capitalizes LoanCo with some amount of money, say $500 billion. LoanCo agrees to hold weekly reverse auctions. Each auction is held with specific types of mortgages or mortgage securities. For example, one week might be OptionARMs with a certain FICO range, original loan size range, vintage year and interest rate. The next week would be a different set of characteristics.

Each bank would offer to sell their block of loans at some price, expressed as a percentage of original loan amount. LoanCo would have a pre-determined total amount they will be buying. The purchases would occur at the lowest price that "cleared" the market. Essentially, banks would be giving LoanCo limit sell orders. Bank of America might say they'd sell some set of loans at 60% of par or better. If LoanCo gets all the loans they want by paying 30%, then B of A is left out in the cold. If LoanCo winds up paying 70%, then B of A simply gets better execution.

But rather than get cash for the bad assets, the selling bank gets stock in LoanCo. All interest received by LoanCo is initially retained, but all principal is immediately returned to shareholders. The government guarantees half of the principal in these loans. In exchange, the government keeps all interest payments until LoanCo starts winding down and keeps any principal payments over the initial purchase price. So for example, if a loan was sold to the government at $60 but they eventually recover $80, taxpayers keep the $20.

(Note there is a somewhat similar plan being proffered in today's WSJ. Robert Pozen's idea is similar to mine in many ways, but I like mine better).

The advantage of my system is that banks would get capital relief, as LoanCo stock has a guaranteed value of at least $0.50 cents on the dollar. It would also make investors in banks feel more confident, knowing that the value of distressed mortgage assets can't be any worse than half of its current value.

This would also create a somewhat market-based price for the "bad" assets, at least more so than creating some model to determine a price. There is a good chance that LoanCo would suffer from selection bias. Banks would have to submit loans with certain criteria, but they would clearly pick the "worst" loans that fit that criteria. But in the scheme of things, this shouldn't be a deal breaker.

The downside of this plan is that banks get very little in fresh cash, only certainty as to the downside on their assets. But I argue that's not all bad. If we just give banks cash, they are essentially allowed to grow earnings on the backs of taxpayers. By issuing stock, the banks get the capital certainty they need, but have to figure out how to grow earnings on their own.

And I argue that banks will start lending once the fear of another round of bank runs diminishes. The margins on new loans should be excellent. I don't think we need to dole out free cash in order to incent banks to lend.

And the best part about LoanCo is that its clearly a one-time deal. The moral hazard and long-term government intervention problem is limited.

PERSONALLY, I DON'T THINK THIS NATION EVER HAD REAL CAPITALISM. AND I'M NOT SURE WE'D WANT IT, EITHER.

[Demeter]

20. More Than You'll Ever Want to Know About Pensions Around the World

http://pensionpulse.blogspot.com/2009/02/broken-pension-model.html

[Demeter]

21. Why don't we hear a lot more about SDRs?

SPECIAL DRAWING RIGHTS: http://en.wikipedia.org/wiki/Special_Drawing_Rights

http://rodrik.typepad.com/dani_rodriks_weblog/2009/02/why-dont-we-hear-a-lot-more-about-sdrs.html

This one seems a no-brainer to me. The easiest and quickest way to create global liquidity and enable credit-starved emerging and developing countries to increase their spending is for the IMF to engineer a vast new SDR allocation. It can be done at the stroke of a pen, and it does not require the IMF to negotiate a program for every country that needs a loan.

Let's remember some basic facts. The U.S. fiscal stimulus will be a lot less effective if it is not accompanied by similar fiscal action elsewhere. Developing nations are severely limited in what they can do in this respect because they have little room for domestic borrowing. Serious fiscal stimulus requires that they have resort to external resources, of which there is a severe shortage at the moment (both because of the flight to quality and the borrowing that is going on in the developed world). The existing swap lines and the IMF's new short-term lending facility have had few takers, in part because no country wants to signal that they are (or may be) in trouble and running out of resources. A generalized SDR allocation--in return for a commitment to spend a share of these resources in pursuit of a globally coordinated fiscal stimulus--would give countries the cover needed to do what is good for them and for the rest of the world without suffering a reputational penalty.

The main objection to the creation of SDRs has always been that this would be inflationary. In the current environment, this is a plus rather than a minus. Inflationary, you say? Pile it on! That is exactly what the doctor ordered.

So if you want to reduce protectionist pressures in the U.S. and elsewhere while helping the developing countries get over a crisis that is not their doing, SDRs can be a large part of the solution. So I repeat my question: why don't we hear more about this?

UPDATE: I see that Montek Ahluwahlia has also called for an issue of SDRs, as has a group of economists around the University of Massachusetts at Amherst. Martin Wolf's otherwise excellent column today is mysteriously silent on this obvious remedy which would do much to advance his recommendations.

[Demeter]

25. I Wonder If Wolfowitz Wasn't Posted at IMF To Prevent This

as well as to further the Economic Hitmen.

[Demeter]

22. Bank insolvency: tips & tricks

http://interfluidity.powerblogs.com/posts/1233393659.shtml

So, your banking sector is basically insolvent, and your economy is teetering on the brink. No question, that's a rough situation. Never fear, Interfluidity is here. With the help of this uncredentialed blogger, you can turn your banking system around, save civilization as we know it, and still have time to do the laundry.

1.

Never, ever feed the zombies!

Zombie banks beg for money. They are very clever. They come up with ways you can give them money while pretending not to give them money, such as guaranteeing their assets, guaranteeing new debt issues, or buying up assets at "hold to maturity" values. Just say no! A healthy financial system cannot be run by zombies. "Rescuing" insolvent banks makes about as much sense as tying string to the arms of a loved one's corpse so it can come to the dinner table as a marionette. For a while that may be comforting (or not), but pretty soon it's sure to smell really bad, and it's gonna ooze. If you think you have engineered a miraculous turnaround, you have only made matters worse. An undead bank is an abomination. It will pretend good health but hide a rot. It will afflict you, over and over and over again, with harrowing near insolvencies (cf Citibank). Dead banks must be allowed to die.
2.

Help private individuals save good banks.

A bank is insolvent if no one will save it. Do what John Hempton recommends for a hypothetical, troubled GothamBank:

The government could inject some capital into the bank as a temporary subordinated loan. A third party could then be appointed... to produce fair accounts for Gotham. Ten weeks should do it... The management of Gotham can go to the markets. If the management can raise then the shareholders keep Gotham. Sure existing shareholders might get diluted — but at least they get to have a decent go at keeping their capital stake. If they can't or won't fund the bank in full knowledge of its position then it is nationalised.

The government might go a step farther: It could provide loans at near-Treasury interest rates to creditworthy individuals willing to commit capital to ailing banks. Individuals who take the loans would agree to hold the bank's shares until the loan was fully paid.

In effect, the government would help bail out tenuous banks. But it would require private citizens to certify banks' viability by putting their wealth on the line first. Investors would have to accept personal bankruptcy before taxpayers take a loss. (Of course, investors could skip the loan and put up cash if they prefer.) If investors fail to provide capital on these terms, then a bank is clearly not worth keeping alive. There can be no question that the bank is "illiquid but not insolvent", since the government has offered liquidity on generous terms to help get the deal done.

(For the record, I view this procedure as too generous. As far as I'm concerned, banks that have extracted asset guarantees from taxpayers — yes, that means Citibank and Bank of America — have conceded their insolvency and been purchased by the state. If private capital swoops to the rescue now, the new owners will benefit from a substantial public transfer. Nevertheless, in deference to people's heebeegeebies about the government owning what it pays for, I'd put up with that if we had a fair procedure for evaluating and enforcing bank solvency going forward.)
3.

Nationalize, reorganize, privatize spin-off to taxpayers.

Insolvent banks become wards of the state. They are nationalized. The "N-word", as Paul Krugman put it may seem un-American, but any time a US bank fails, it is taken into some form of receivership by the FDIC. Often the operations of the dead bank are quickly merged with a healthy bank so we can pretend we live in a capitalist utopia. But that doesn't change the story. The old bank is nationalized, its good assets are sold to another bank (which pays by assuming dead-bank liabilities), and the FDIC takes control of what remains. When we talk about "nationalizing", say, Citibank, we are asking nothing more than that it should be treated like Suburban Federal Savings Bank, CenterState Bank, and MagnetBank were this very weekend. There is not actually any controversy over nationalizing banks. There is controversy over nationalizing large and politically influential banks, and there is controversy over having banks operate for more than a brief period under direct control of the state.

Obviously, banks that had Robert Rubin on their boards are entitled to no gentler treatment than Suburban Federal enjoyed this weekend. The trouble with big banks is that they are too big to be merged into someone else, but are deemed too "systemically important" to be liquidated. That means if the FDIC takes such a bank into receivership, it would have to operate under state control. Americans are legitimately nervous about this. What we need is some means by which the government could commit to restoring banks to private ownership after they are reorganized and recapitalized.

Henry Blodget suggests we refloat the banks immediately, so the government is not in the business of forcing banks to make stupid loans or determining what is and isn't appropriate for people to get paid.

But refloating is hard. If the government were to rush-sell a generously capitalized bank with a one-shot whole-company IPO, taxpayers would end up with a raw deal. No private owner would sell a large firm this way, because it would be a very dumb thing to do. (IPOs typically only offer a fraction of a firms shares, and are known to fetch poor prices. The famous IPO "pop" goes to flippers, not to the firm or its original shareholders. There's a deep literature on the phenomenon of "IPO underpricing".)

Here's an idea. The government should commit to fully reprivatizing nationalized banks (really their sliced-up and reorganized successors) within a year of taking a bank into receivership. But rather than selling the reorganized banks, the government should structure the divestitures as spin-offs. The government should distribute equal numbers of shares to every adult US citizen. Individuals could decide whether to hold the shares or sell them. The new banks would be publicly listed, so they'd quickly have frenetic market prices like every other firm. The government would spread the transfers out over several months. (People who need immediate cash will sell their shares as soon as they get them. If everyone gets shares at the same time, motivated sellers might flood the market and end up selling at a crappy price.) To promote efficient pricing of the new banks, prior to the spin-off the government would remove hard-to-value "toxic" assets into asset management companies, which would not be privatized, but managed conventionally to maximize taxpayer value.

This proposal ensures that US taxpayers, in aggregate, get what they pay for when they rescue a bank. It puts banks into private hands while avoiding the corruption and theft of public wealth that invariably attends privatization. It would function as a mild "stimulus" — even though no public cash would be disbursed, the distributed shares would increase consumption. (Liquidity constrained individuals would sell their shares to savers, whose cash is then mobilized to buy stuff.) Having the government recapitalize banks and then give them away might seem rough on the budget, but it's far less costly to taxpayers broadly than offering windfalls to zombie bank shareholders and management by subterfuge, which is our current practice. If the exercise were made revenue neutral by raising taxes to recoup the recapitalization cost, the whole thing would amount to a flat transfer, which is good policy anyway.

LOTS OF INTERESTING COMMENTS FOLLOW

[Demeter]

23. Beyond the age of leverage: new banks must arise

http://www.ft.com/cms/s/0/85106daa-f140-11dd-8790-0000779fd2ac.html

By Niall Ferguson

Published: February 2 2009 19:14 | Last updated: February 2 2009 19:14

Call it the Great Repression. The reality being repressed is that the western world is suffering a crisis of excessive indebtedness. Many governments are too highly leveraged, as are many corporations. More importantly, households are groaning under unprecedented debt burdens. Worst of all are the banks. The best evidence that we are in denial about this is the widespread belief that the crisis can be overcome by creating yet more debt.

The US could end up running a deficit of more than 10 per cent of gross domestic product this year (adding the cost of the stimulus package to the Congressional Budget Office’s optimistic 8.3 per cent forecast). Today’s born-again Keynesians seem to have forgotten that their prescription of a deficit-financed fiscal stimulus stood the best chance of working in a more or less closed economy. But this is a globalised world, where unco-ordinated profligacy by national governments is more likely to generate bond market and currency market volatility than a return to growth.

There is a better way to go but it is in the opposite direction. The aim must be not to increase debt but to reduce it. Two things must happen. First, banks that are de facto insolvent need to be restructured – a word that is preferable to the old-fashioned “nationalisation”. Existing shareholders will have to face that they have lost their money. Too bad; they should have kept a more vigilant eye on the people running their banks. Government will take control in return for a substantial recapitalisation after losses have meaningfully been written down. Bond­holders may have to accept either a debt-for-equity swap or a 20 per cent “haircut” (a reduction in the value of their bonds) – a disappointment, no doubt, but nothing compared with the losses when Lehman went under.

There are precedents for such drastic action, notably the response to the Swedish banking crisis of the early 1990s. The critical point is to avoid the nightmare of a state-dominated financial sector. The last thing America needs is to have all its banks run like the rail company Amtrak or, worse, the Internal Revenue Service. State life-support for moribund dinosaur banks is an expedient designed to avert the disaster of a generalised banking extinction not a belated victory for socialism. It should not and must not impede the formation of new banks by the private sector. So recapitalisation must be a once-only event, with no enduring government guarantees or subsidies. There should be a clear timetable for “reprivatisation” within, say, 10 years.

The second step we need to take is a generalised conversion of American mortgages to lower interest rates and longer maturities. The idea of modifying mortgages appals legal purists as a violation of the sanctity of contract. But there are times when the public interest requires us to honour the rule of law in the breach. Repeatedly during the course of the 19th century governments changed the terms of bonds that they issued through a process known as “conversion”. A bond with a 5 per cent coupon would simply be exchanged for one with a 3 per cent coupon, to take account of falling market rates and prices. Such procedures were seldom stigmatised as default. Today, in the same way, we need an orderly conversion of adjustable rate mortgages to take account of the fundamentally altered financial environment.

Another objection to such a procedure is that it would reward the im­prudent. But moral hazard only really matters if bad behaviour is likely to be repeated. I do not foresee anyone asking for or being given an option adjustable rate mortgage for many, many years. The issue, then, is simply one of fairness. One solution would be for the government-controlled mortgage lenders and guarantors, Fannie Mae and Freddie Mac, to offer all borrowers – including those on fixed rates – the same deal. Permanently lower monthly payments for a majority of US households would almost certainly do more to stimulate consumer confidence than all the provisions of the stimulus package, including the tax cuts.

No doubt those who lose by such measures will not suffer in silence. But the benefits of macroeconomic stabilisation will surely outweigh the costs to bank shareholders, bank bondholders and the owners of mortgage-backed securities.

Only a Great Restructuring can end the Great Repression. It needs to happen soon.

The writer is a contributing editor of the FT and the author of The Ascent of Money: A Financial History of the World. He is also senior adviser to GLG Partners. A longer version of this article is available at https://www.glgpartners.com/pdf/Beyond_The_Age_Of_Leverage_Niall_Ferguson.pdf.

Send your comments to Niall Ferguson

[Demeter]

24. "Dear Mr. Volcker: It's the Banks, Stupid"

http://www.nakedcapitalism.com/2009/02/guest-post-dear-mr-volcker-its-banks.html


Guest blogger and former Congressional staffer Lune was kind enough to provide this post on Volcker's testimony before the Senate Banking Committee today. Enjoy!

From Lune:


Paul Volcker, former Fed chief and currently the head of President Obama's Economic Recovery Advisory Board, and the chairman of the Group of Thirty, testified to the Senate Banking Committee in today's hearing on the U.S. financial regulatory system. As summarized by the NY Times, Volcker made the following recommendations:

Mr. Volcker called for the end of the mortgage lending giants Fannie Mae and Freddie Mac as hybrid public-private enterprises, saying instead that Washington should assist borrowers through "clearly designated government agencies."

He also called for the registration of hedge and equity funds of any substantial size, as well as periodic reporting and disclosure from such firms.

For banks and other firms that are large enough to shake the entire financial system if they fail, he called for "particularly close regulation and supervision, meeting high and common international standards."


There were other ideas discussed as well:

Among the ideas considered Wednesday was the creation of a super regulatory agency, perhaps within the Federal Reserve, which would be charged with coordinating responses among the diverse alphabet-soup of agencies overseeing financial companies....

House Financial Services Committee Chairman Barney Frank has said the first priority in overhauling financial regulation is to set up an entity to oversee systemic risks of the kind that wreaked havoc on Wall Street last year.


Mr. Volcker's recommendations are largely drawn from the Group of 30's report which lists the following core recommendations:

1. Gaps and weaknesses in the coverage of prudential regulation and supervision must be eliminated. All systemically significant financial institutions, regardless of type, must be subject to an appropriate degree of prudential oversight. (Recommendations 1 through 5.)

2. The quality and effectiveness of prudential regulation and supervision must be improved. This will require better-resourced prudential regulators and central banks operating within structures that afford much higher levels of national and international policy coordination. (Recommendations 6 through 8.)

3. Institutional policies and standards must be strengthened, with particular emphasis on standards for governance, risk management, capital, and liquidity. Regulatory policies and accounting standards must also guard against procyclical effects and be

4. consistent with maintaining prudent business practices (Recommendations 9 through 12.)

5. Financial markets and products must be made more transparent, with better-aligned risk and prudential incentives. The infrastructure supporting such markets must be made much more robust and resistant to potential failures of even large financial institutions. (Recommendations 13 through 18.)


While Volcker's proposals are reasonable, they fail to deal substantively with one of the primary reasons for the regulatory failures we have seen so far. Those failures have not been from the lack of statutory authority invested in such agencies as the Fed and the SEC, but rather the lack of will to exercise that authority.

The Fed already has broad authority to investigate banks and supervise lending standards. And the SEC has ample jurisdiction to investigate such scandals as the ongoing Madoff affair.

Yet both have been asleep at the switch. As a previous article in this blog noted, Greenspan blocked proposals from his own Fed Governors to investigate predatory lending well before the current crisis (quoting from the WSJ):

Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.

"I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

"He was opposed to it, so I didn't really pursue it," says Mr. Gramlich, a Democrat who was one of seven Fed governors.


Similarly, the Madoff affair, including today's testimony of SEC officials before Congress, shows the extent to which the SEC outright ignored whistleblowers' information and attempts to get the agency to investigate gross abuses.

In today's crisis mode, there is virtually no limit on the government's ability to intervene in the financial industry. Yet we're still getting bad proposals such as the TARP and the bad-bank models which commit trillions of public funds to Wall St. with no significant reform of the practices that got us in our current mess. This is not due to a lack of authority to create a better response.

Mr. Volcker and the Group of 30 are correct that we need to reform the regulatory structure. But the problem today isn't so much with the structure itself as the fact that that structure is so thoroughly captured by the industry it's supposed to regulate, that any authority vested in it becomes toothless.

In particular, the creation of a "systemic risk" regulator smacks of trying to isolate all the bad-cop duties of the regulators into one underfunded, powerless authority so that the rest of the agencies don't have to do the unpleasant task of standing up to the banks when they get too big. That way, they can focus instead on serving as boosters for the industry that they will lucratively enter once their terms in government are over.

Who will stand up for the systemic risk regulator, and give it real power and influence? No one in Congress will ever get campaign contributions serving as the protector and benefactor of a regulatory agency whose sole purpose is to say "No". Especially when by definition, the systemic-risk regulator will have to say "No" to enormous financial players with lots of money available to spend on extensive lobbying.

It is telling that in the case of financial firms that are so large and entrenched that they become Too Big To Fail, Volcker can only suggest "particularly close regulation and supervision, meeting high and common international standards." Pardon me, but I thought that was what they were supposed to be subjected to right now. Why haven't they been, and what in Volcker's recommendations will actually succeed in doing it in the future?

While structural reforms are necessary, I assert the real answer to preventing the next crisis is to prevent any one firm from becoming Too Big To Fail in the first place. The advantages to the financial system of creating giant banks, aside from the stratospheric executive compensation that follows, appear to be nil. Indeed, most of the Too Big To Fail banks in this world are insolvent, and rapidly taking the world's economy and governments with them. Eventually, most of them will be brought under (de facto if not necessarily de jure) public receivorship, broken up, and sold as parts.

We should use that opportunity to make sure they stay as parts, and don't re-assemble into Citi-sized godzillas again.

Volcker took a courageous stand as Fed chief when he raised interest rates to stamp out inflation, even at the cost of real economic pain. And similarly, he has been one of the few inside-the-beltway economists who quickly realized the magnitude and dimensions of the current economic crisis. He should call up that courage once again and use his considerable reputation and influence to force the current goliaths to disassemble from their current Too Big To Fail sizes. Otherwise, all his reasonable recommendations on regulatory reform will be quickly made toothless by the financial industry and the government officials who serve it.

[Demeter]

26. Analyst Blames OPEC for Oil Price Plunge

http://www.nakedcapitalism.com/2009/02/analyst-blames-opec-for-oil-price.html


Admittedly, the report from Emirates Business 24/7 (hat tip reader Michael) is only one expert's opinion, but it focuses on an issue that hasn't gotten the attention it warrants, namely, the level of the current oil glut and how much it is going to take to work it down. The subtext of this piece is that absent a pickup in oil demand, it is going to take quite a lot of discipline among OPEC members, far more than they have exhibited to date, to get oil prices to a presumed target level of $75 a barrel.

From Emirates Business 24/7:

A prominent Arab energy analyst has blamed Opec for the collapse in crude prices, saying the oil cartel has failed to fully comply with output cuts and kept sending contradicting messages to the already sceptic market.

Nicholas Sarkis, Director General of the Paris-based Arab Petroleum Research Centre (APRC), which acts as an adviser to the Organisation of Arab Petroleum Exporting Countries (Oapec), described Opec's behaviour in dealing with the faltering crude demand over the past few months as "suicidal."

In an article published in the APRC's monthly magazine, Arab Oil and Gas, Sarkis urged the 12-nation Opec to announce a target for its oil price and to abide by output reductions to attain it.....

"For the third time in a row, the latest meeting held on December 17 had the immediate impact not of bringing about the hoped-for rebound in prices but of speeding up their collapse, so much so that the monthly average value of the Opec crude basket fell from $112.4 in August, the month preceding the first of these Opec gatherings in September, to $49.7 in November and an average of $34.9 in the week that followed the December meeting," he said.

"At first sight, this calamitous outcome may seem particularly surprising insofar as the organisation decided in the meantime to implement relatively large cuts in production, reducing output by a total of 4.2 million bpd from January 1."

Sarkis cited three main reasons for Opec's failure to prevent the price crash including the fact that the latest reductions remained ink on paper until January 1 and the previous cut of 1.5 million bpd was not fully enforced, with the rate of compliance by its members not exceeding 55 per cent.


Yves here. Note that that level of compliance is far below what we have seen claimed elsewhere, but is consistent with Nigeria complaining about cheating prior to the last OPEC meeting. Back to the article:

He said the second reason is that the surplus of supply on the world market has led to a sharp increase in industry stocks in industrialized countries, which reached an estimated level of fully 2,707 million barrels at the end of November, equivalent to more than 57 days of forward consumption, or five days more than the average of 52 days that are regarded as "normal".

He noted that the level of stocks corresponds to double the annual output of Iran and to more than five times the production of Algeria....

"Just to return to a level of stocks that can be regarded as more normal, which is to say to soak up a stock surplus corresponding to five days' consumption, or some 240 million barrels, Opec countries would now have to start applying absolutely strictly the cumulative reduction in output of 4.2 million bpd for a period of nearly two months, provided, of course, that world demand did not decline further, especially in the run-up to next spring, when world needs could decline by 0.9-1 million bpd relative to the first quarter of 2009," he said.

"A third reason, but by no means the least, for the failure of Opec decisions is the widespread skepticism with which they were greeted by the oil markets. That skepticism is attributable first and foremost to the partial compliance with the 1.5-million bpd cut in that was due to take effect on November 1...."

According to Sarkis, several official communiqués released by Opec over the past few months "curiously omit to give an exact figure for the desired level of prices and a clear road map for getting there". He said things would certainly have been different if exporting countries had decided at their last three conferences simply to return to the system in use before the war in Iraq in March 2003, "which entailed setting a floor price and a ceiling price for their exports", as well as implementing automatic, precise reductions and increases in production to attain their ends.

In the current circumstances, he added, the price of $75/b that is regarded as desirable by Saudi Arabia and many others represents a good average of the figures that have been more or less explicitly suggested by various officials in both exporting countries and industrialised nations.

"Restoring oil prices to a level of at least $75 seems that much more necessary insofar as an almost unanimous consensus is evident on both sides about the fact that the level to which oil prices have fallen can only discourage investments both in the hydrocarbon industry and in those involving the development of other energy sources, " Sarkis said....

"As far as a possible recovery in oil prices is concerned, we will now have to wait and see the full scale of the cuts in production implemented in both Opec and non-Opec countries. Another positive factor could be acceleration in the closure of wells and small fields that have become unprofitable in the current environment, especially in North America."

[Demeter]

27. S&P forecasts 200 defaults

http://www.ft.com/cms/s/0/643f2dea-f150-11dd-8790-0000779fd2ac.html

By Anousha Sakoui in London

Published: February 2 2009 17:46 | Last updated: February 2 2009 17:46

About 200 US junk-rated companies are likely to default this year, according to Standard & Poor’s, affecting almost $350bn worth of debt and adding impetus to alternatives to bankruptcy, such as distressed debt exchanges.

About half of the 17 US defaults seen in December were a result of distressed exchanges, where a company offers lenders new securities of a lesser value than the debt they are owed, usually to cut interest costs or delay principal repayment.

Debt exchanges are becoming an increasingly common way to restructure debt outside of bankruptcy in the US – they remain rare in Europe – as US companies struggle to refinance $500bn worth of bonds and more than $1,000bn worth of bank loans amid the credit crunch.

S&P said that there was a higher proportion of rated companies in the single-B category than ever before, with 800 business that make up one-third of all corporate ratings. “We expect nearly 200 speculative-grade companies to encounter some form of financial distress, leading to default in 2009,” S&P said. “Currently, we have more than 180 companies rated B-minus or below with negative outlooks. That is where we expect many of the defaults will occur.”

The agency added that the 185 companies most at risk had about $341bn of debt outstanding. Outside the US, 61 junk-rated companies with another $56bn worth of debt are also seen as highly likely to default.

The sectors most at risk are retailers and restaurants, cars and car suppliers, gaming and lodging, media and entertainment, and newspaper and printing. Among the biggest companies at risk are Harrah’s Entertainment, Ford Motor and Claire’s Stores in the US and NXP and Ineos in Europe.

The burgeoning interest in debt exchanges has not come entirely smoothly. Bondholders initially fought against such moves by GMAC, the financing arm of General Motors, and Realogy, a property brokerage, for example.

However, S&P believes investors are likely to become increasingly receptive to exchange offers to improve the recoveries they are likely to make. A dearth of so-called debtor-in-possession financing, which helps companies manage their way through a bankruptcy or reorganisation, has increased the risk of highly costly liquidations.

Additional reporting by Nicole Bullock in New York

[Demeter]

28. Excellent Rant on Bankers' Compensation from DU

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=423111&mesg_id=423111

[Ghost Dog]

29. A song for the times:

(Received by email, thus:

STAND BY ME (IN THE STREETS OF THE WORLD...)


Unos tipos han estado por varios paises grabando
a músicos callejeros diferentes versiones de : Stand by me.

El resultado es éste.
Otra forma de hacer poesia

Great!


http://www.youtube.com/v/Us-TVg40ExM&hl=es&fs=1 )

Trans: Some guys have been in various countries recording street musicians playing different versions of: Stand by Me.

This is the result.
Another way to make poetry

¡Bueníssima!

&sk=1eT9DX6D6_ZCXMXuqR3Gwfy3z0ww6c9QC&use_get_video_info=1&load_modules=1&fs=1&hl=es&onscreensearch=0&cr=US&title=Playing%20For%20Change%3A%20Song%20Around%20the%20World%20%22Stan...&avg_rating=4.9345039019&length_seconds=327

[Demeter]

58. You're Back! There Was Concern About You and the Weather in Spain

[Ghost Dog]

59. Hey! I've been around. You get used to the crazy hispanic

weather, eventually.

&sk=1eT9DX6D6_ZCXMXuqR3Gwfy3z0ww6c9QC&use_get_video_info=1&load_modules=1&fs=1&hl=es&onscreensearch=0&cr=US&title=Playing%20For%20Change%3A%20Song%20Around%20the%20World%20%22Stan...&avg_rating=4.93458897755&length_seconds=327

[Hugin]

62. Yeah, welcome back Ghost Dog!

:hi:

[Ghost Dog]

66. Pssst. I was just now working this thread:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3727773

a bit. :)

And, with a nod to Rachel below, I reckon it's useful to add:

2/5/09 President Obama Speech on the Economy in Williamsburg, Va. PART 1 of 2
2/5/09 President Obama Speech on the Economy in Williamsburg, Va. PART 2 of 2

[Demeter]

41. Rachel Goes Economically "Ballistic"

This is classic. Send it to your friends. Send it to your enemies. Send it to Harry Reid. Hell, send it to Obama!


http://www.youtube.com/watch?v=xHw773EO314

[Demeter]

46. What She's Based Her Rant On

http://www.motherjones.com/mojoblog/archives/2009/02/12147_spending_vs_tax_cuts_as_stimulus.html

[Hugin]

60. Rachel has long been one of my favorites.

:)

I'd like to see some of the Money going into stimulating Basic Research in any number of fields.

The more I watch the more I become convinced that much of what we're seeing right now is a deliberate action on the part of the Corporate Right to discredit any sort of move toward a New New Deal championed by President Obama.

It's a colossal hissy-fit by the Corporatist after the ass kicking they were delivered by the American people in November...

Me? I'm not going to blame President Obama for any of this... There are many 'agendas' at play right now and of course the loudest one is being played by the Corporations which own, shockingly enough... The majority of the Corporate Media.

I came to my decision regarding President Obama over the last week or so, that I'm going to give him all the slack and free ride which was undeservedly given to Booosh over the preceding eight years. President Obama should receive no less of a benefit-of-a-doubt and unlike his predecessor, he is applying what I consider to be positive moves on many fronts. Yes, he's not perfect and is making some mistakes... But, he's signaled a willingness to do what's necessary to get back on track. Now my jaundiced eyes are on the Legislative Branch.

[DemReadingDU]

64. Bullpucky!

I saw this last night, Rachel is good!

How come we get it, and those in charge...don't
:crazy:

[Demeter]

123. Maybe They Cancelled the Dish Network Over at the White House?

[Demeter]

49. Dave Lindorff: Gloomy Outlook from Business Experts

http://www.buzzflash.com/articles/lindorff/196

... comes word from some experts in the business community that things are not going to be getting better soon, and that when they do, they will not get back to the way things were in 2006 or early 2007, before the recession began.

In an interview I did for the trade publication Investment Management Weekly on Thursday, Putnam Investments' global asset allocation head Jeffrey Knight said that while the stimulus could "help to prevent a Great Depression sequel," at the same time "Those who measure prosperity against the Faustian opulence of the last 10 years may find that stability, equilibrium, and even recovery will still feel like a deep depression."

Another fund manager, Ron D'Vari, co-founder and CEO of a new fund management firm that specializes in so-called distressed assets -- the very things that have the nation's banks reeling on the edge of failure -- says the economy has fallen into "an L-shaped recession where it's hard to say how long it will be down at the bottom." D'Vari also told me, "We think we will have a sort of subsistence economy -- not like North Africa, but it could look like just getting by for some time before you see the start of a real recovery."

Now these guys were all talking about how things look to them assuming passage of the stimulus package. In other words, the stimulus package is not going to turn things around. In fact, D'Vari pointedly referred to the close to $1-trillion package as 'just a pain-killer, not a final cure."

President Obama would do well to heed these kinds of hard-nosed views. He's not likely to be hearing them right now. To date, he has chosen for his economic team mainly retreads from the Bush and Clinton Administrations -- people such as Larry Summers and Tim Geithner who helped set the nation on its current disastrous economic course by promoting globalization and the flight of jobs overseas as well as the deregulation of Wall Street, by advocating a shift of the tax burden from the wealthy to the working classes, by urging the gutting the safety net for those who lose jobs or can't find them, and by advocating measures to artificially pump up asset values, whether real estate or the stock market.

These are clearly not people who are going to want to call attention to the economic and social train wreck that their own policies have produced.

Nor does Obama's latest announcement of his new Council of Economic Advisers look much better. Headed up by Paul Volcker, the Carter and Reagan choice for Federal Reserve Chairman, and a close associate of the Rockefeller family and the Chase banking empire who helped bring us the heretofore worst recession since the '30s during the early 1980s, that panel includes Jeffrey Imelt, chairman of mega-defense contractor General Electric; Jim Owens, chair of Caterpillar (a firm that just sacked 20,000 employees and during its recent contract disputes with the UAW hired scabs and locked out employees, racking up a huge number of labor law violations); William Donaldson, President George W. Bush's SEC chair, who had to resign that position in disgrace in 2005 after his agency missed the Enron and Worldcom meltdowns and collapses as well as some early hedge fund disasters; Martin Feldstein, the head of Ronald Reagan's Council of Economic Advisers and an adviser to Obama's opponent, John McCain; and Austan Goolsbee, a senior economist with the Democratic Leadership Council, a strong proponent bank deregulation and of the job-killing NAFTA and the World Trade Organization treaties. True, the panel does include some token labor representatives such as former Mineworkers Union president Richard Trumpka of the AFL-CIO and Anna Burger of the SEIU, but wholly absent are more progressive economists in line with the likes of Nobel laureates Paul Krugman and Joseph Stiglitz, or former Clinton labor secretary Robert Reich, much less left-leaning economists such as James Galbraith or Dean Baker.
.................

What the country really needs at this point is straight talk and creative new ideas -- not returns to policies of the '90s, '80s, '70s or perhaps even the '30s.

Obama needs to hear from experts who know that the economy of the United States is not going to rebound to anything like where it was in the last few years, and that drastic new programs and approaches are needed if the U.S. is not to continue a slow slide into Third World status. And the American public needs to hear the same honest news.

An economic "team of rivals" is a great idea, but to get that, Obama would have to be willing to reach over to the left side of the spectrum, not just the right.

DAVE LINDORFF is a Philadelphia-based journalist. His latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and now available in paperback). His work is available at www.thiscantbehappening.net.

[Dr.Phool]

96. That list made me want to puke.

More of the same old, same old. And in some cases, even worse than that. I think the only clown missing is Alan Greenspan.

[Tansy_Gold]

126. Another "clown"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x423688

[Dr.Phool]

128. Yes, another Klown. As in "Killer Klowns From Outer Space".

[Joe Chi Minh]

120. We'll know whose side he's on by his approach to cleaning up your

election system. If he doesn't want to know, he's in the Republicans' pockets. Likewise the corporate media.

I'm not saying he doesn't have plans to do so. A lot of people seem to expect him to everything at once.

[Demeter]

50. US explores converting stakes in banks

THIS SOUNDS LIKE ANOTHER NON-STARTER OF A RETREAD IDEA....


http://www.ft.com/cms/s/0/dc25654e-f3e5-11dd-9c4b-0000779fd2ac.html

By Krishna Guha in Washington and Francesco Guerrera and Julie MacIntosh in New York

Published: February 6 2009 00:51 | Last updated: February 6 2009 00:51

US officials are examining ways gradually to convert government stakes in banks into ordinary shares as banks accumulate losses, according to people close to the discussions.

The point would be to provide a drip-feed of additional common equity as needed to cover losses – without the government owning a larger stake in the banks than is necessary.

Timothy Geithner, Treasury secretary, will announce the financial sector rescue plan on Monday along with a set of policies designed to reduce foreclosures and boost the housing market. The Treasury declined to comment on its deliberations.

One idea that has been considered by policymakers is for the government to change its existing holdings in the banks, which have taken the form of preferred shares – non-voting stock that carries a fixed dividend – into convertible preferred shares that could be converted into common stock.

Under this proposal, the shares would automatically convert into common equity if there were a decline in a bank’s health – as measured by its so-called tangible equity ratio, for example. The government may also make future capital injections in the form of such convertible preferred shares.

Some policymakers think this would give the government more “bang for the buck” than buying more preferred shares....

[DemReadingDU]

69. Catherine Austin Fitts: Financial Coup d'Etat

Joanne98 posted this tread
To paraphrase...
We are experiencing a global “heist”. Capital is being sucked out of country after country.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x56054
http://solari.com/blog/?p=2058

Last month Fitt's wrote
1/14/09 Financial Coup d’Etat & Your 401(k) by Catherine Austin Fitts
$2 trillion has been lost in 401(k) and IRAs. Where did it go?
http://solari.com/blog/?p=2005

[Hugin]

71. Any AutomaticEarths for us this week? n/t

[DemReadingDU]

74. February 6 2009: Dance to the moment you live in

Yesterday's (Friday) was quite lengthly. Maybe I will just send you the link, be sure to look at the picture at the top

http://theautomaticearth.blogspot.com/2009/02/february-6-2009-dance-to-moment-you.html


Edit: I'm thinking the 2 faces of the little girl in the picture must have been a fluke in photography back in those days?
Oh, the intro is good too, about capitalism.

[Tansy_Gold]

77. The point being made here is one I've been trying to make at least

since 9/11/01 --

Don't fear the people who have hope; fear the ones who have lost it. They will become the assassins, the suicide bombers, the family annihilators, the mass murderers. Notice that I do not qualify them as "would-be."

They will become petty thieves and burglars, child abusers and vandals and bullies. They will be con artists and swindlers. When wronged, they will seek revenge instead of recompense.

There will always be the occasional madman (or madwoman) who commits an atrocity out of mental illness. They hear voices telling them to kill their children or they see signs of satan written in glowing letters on a stranger's forehead. The Ted Bundys. The Jeffrey Dahmers. The Charles Mansons.

But then there are the otherwise sane people who are caught up in the web of madness, sometimes as individuals and sometimes as members of the rabid, uncontrollable mob. Contagious hysteria. Epidemic fear.



Tansy Gold

[DemReadingDU]

80. I do not think that most Americans realize that when the bad times come,

Many will resort to whatever means they can, for survival. Be it stealing, robbery, even killing. It's in the back of my mind, yet I can't dwell on it, because very few of us have been raised in such dire conditions that it's inconceivable that such violence can occur.

I think that's why building a small community of your neighborhood is going to be so important in everyone's best interests. People will need to help each other in whatever way they can. Open our hearts, share food and shelter, do some bartering. Because not to, well, the results are unthinkable.

[DemReadingDU]

81. TAE: February 7 2009: The Unbearable Lightness

2/7/09 Saturday's posting

Click link for picture, Ilargi's intro (another long one), related articles, followed by the comments section.
http://theautomaticearth.blogspot.com/2009/02/february-7-2009-unbearable-lightness.html

[ozymandius]

82. So Sayeth the Nobel Laureate

Paul Krugman

A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.

....

So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next.

It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

and So Sayeth commenter #33

I'll give him six months before I make up my mind, but so far Bam is a disappointment. I don't know why I'm surprised, clearly $63 million dollars from Finance Insurance Real Estate industries apparently trumps 67 million votes.

If Obama were serious,
1. The criminals who caused this financial disaster would all be facing RICO charges instead of getting $18 billion dollar taxpayer funded bonuses.
2. Instead of Geithner (tool of the NY Fed) we'd have Volcker (the man who tamed inflation back in the 70s) Instead of Summers (failed college president) we'd have Nouriel Roubini (the NYU economist who called this disaster three years ago)
3. Instead of throwing good money after bad, he'd declare a bank holiday, send in the auditors to force banks to mark to market then nationalize the insolvent banks, give the bond holders a hair cut, guarantee the depositors, then start a Federal "good bank" that would function like a utility.
4. Just like Roosevelt in the depression, he would cancel the derivatives contracts that threaten the system.
5. Force 'cram downs' where banks adjust mortgages down to match underlying market realities and then give the bondholders 80% of the upside if the houses appreciate.
6. Rewrite the extremely punitive bankruptcy law that the credit card companies and their cronies (I'm looking at you Biden) forced through in 2005.
7. Launch a real investigation to determine whether speculative manipulation drove oil to $150.

I could go on and on, but now is the time to start thinking about a 2012 primary challenge. I would also suggest that you consider your contingency plans given the possibility of S&P500, Dow 5000 and a dollar collapse. I'm not saying put everything you have into gold, just make sure you're not going to be standing in a line at a soup kitchen if everything goes into the can, because it's a real possibility.

— AS, Chicago

[Demeter]

83. There You Are! Good Posts!

I had an Armageddon piece by a goldbug, but I'm afraid to post it. It's either so far out as to be ludicrous, or too likely. I couldn't decide.

[DemReadingDU]

88. Krugman blog: What the centrists have wrought

2/7/09
Paul Krugman: I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus.

The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad.
http://krugman.blogs.nytimes.com/2009/02/07/what-the-centrists-have-wrought/

[Hugin]

91. "This is really, really bad."

:|

[Demeter]

93. He Sounds More Than Discouraged

Krugman sounds burned out. It must be more than bad. It must be catastrophic.

[DemReadingDU]

94. For Krugman to say this, it must be horrible

He usually spins things positively.


Morning everyone!
Now that our snow is mostly melted, today is scoop patrol in the yard from the dogs.

[Demeter]

99. We Are Only about Half-Melted, and the Ice Was Treacherous this morning

but more warmth should clean it up this week, before it snows again. I really think that winter's back is broken, though. At least, I hope it is.

[DemReadingDU]

95. Krugman: What all but 5 Republicans support

From Friday's blog

2/6/09

Paul Krugman: Thirty-six out of 41 Republican Senators voted for the proposed DeMint amendment to the stimulus bill — a massive package of permanent tax cuts that would create a huge hole in the budget, while doing very little to help the economy.
There isn’t much room for bipartisanship when 87.8% of the other party is totally irresponsible.

http://krugman.blogs.nytimes.com/2009/02/06/what-all-but-5-republicans-support/



Edit to another Friday entry from Krugman
2/6/09 Appeasing the centrists

Atrios is right, though I’d put it a bit differently: centrism is a pose rather than a philosophy. And to support that pose, the centrists are demanding $100 billion in cuts in the economic stimulus plan — not because they have any coherent argument saying that the plan is $100 billion too big, not because they can identify $100 billion of stuff that should not be done, but in order to be able to say that they forced Obama to move to the center.

Which raises the obvious question: shouldn’t Obama have made a much bigger plan, say $1.3 trillion, his opening gambit? If he had, he could have conceded to the centrists by cutting it to $1.2 trillion, and still have had a plan with a good chance of really controlling this slump. Instead he made preemptive concessions, only to find the centrists demanding another pound of flesh as proof of their centrist power.
http://krugman.blogs.nytimes.com/2009/02/06/appeasing-the-centrists/




Republicans are so evil, only thinking of themselves. They don't get it, that everyone must sacrifice, support each other, help each other thru the bad times. I would even willing to bet that these type of Republicans have done nothing to prepare and will come after me with a gun to take what little I have saved for my family.
:mad:

another edit: I think Obama should veto this bill with all these tax cuts. The Democrats need to get a different purely stimulus bill, no tax cuts. It will take longer, and the economy might tank, then blame the Republicans because the Repubs didn't want to create jobs, only tax cuts for themselves.

[Tansy_Gold]

97. "Dear Mr. Krugman:"

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=7922946#7923438


and

[DemReadingDU]

98. I remember that, excellent rant

love that stamp!

BTW, I added another edit to my previous post.

[Demeter]

101. And Instead of Slimy Tom Daschle, or Former Insurance Commissioner Sibelius

We'd have Howard Dean, a proven populist, administrator, and political innovator, with health care expertise from the front lines, friends in every state Party in the Union, and a no-nonsense Yankee background.

Rahm Emmanuel is going to have to get over himself and extend a hand to the man who put Obama in office, or he's going to have to find another line of business.

And Obama is going to have to relinquish his provincial Chicago roots that he clings so tightly to for comfort and start going for the best that America has to offer. He's also going to have to stop trying to single-handedly drag the GOP into the 21st Century. that's not his job. Leave that to Limbaugh and Steele.
:rofl:

Seriously, if Obama doesn't stop trying to rehabilitate every failed business exec and political hack in DC and Wall St, he's going to find that competent people will wash their hands of him.

[Tansy_Gold]

104. Ditto! Ditto!

:rofl:

Steele is a joke. Oughta be dunked in milk like the. . . .. cookie. . . . that he is. (is that a forbidden epithet?)


Sorry. My bad.



Tansy Gold, who is sometimes an epithet all by herself

[Demeter]

105. Let's NOT Toss Our Cookies in This Thread, Please!

Sorry, couldn't resist.

[Demeter]

85. "Today we turn our attention to the world’s most privileged outcasts"

http://www.dailyreckoning.com/wall-street-bankers-the-worlds-most-privileged-outcasts/

“Once envied, Wall Street bankers are now mocked,” says a headline at the International Herald Tribune .

So many people are getting on the bankers’ case; we’re beginning to feel sorry for them. After all, what did they do wrong?

Well...they floated the whole world economy on a sea of debt... even making loans to people they knew were going to sink.

And they took bonuses on profits they hadn’t actually earned.

And they paid themselves the cash that their banks now desperately need.

And, they created trillion-dollar debt torpedoes – which are now exploding all over the planet, leading to $32 trillion in losses...so far.

And they set the stage for a cycle of mass unemployment, strikes, depression, protectionism, riots, revolutions, poverty and probably even starvation.

And, oh yes, they blew up their own banks too.

[Demeter]

86. Email box update: I'm down to 4 lonely newsletters

That enormous cloud of backed up email has finally been beaten into submission.

Some of it was irrelevant or uninteresting. Some of it timed out, as events progressed faster than I could post or even read about them. But at least some recovery from the cascade of unwanted events of last year has been made, at great cost and effort. It helps to be born a stubborn Pollack, in this time of Bush and beyond...

Thank you all for making it worth my while to plow through that pile. I learned a lot. I hope you were at least entertained.

In the future I will be able to be more current and perhaps even broader ranging across the available material. The future is ours, let's make the best of it.

In the meanwhile, let the posting continue!

[Tansy_Gold]

87. Between this thread and working-daily SMW I have learned

soooooooooooooooooooooooooooo much! thank you thank you thank you!

:yourock:

[Hugin]

89. Hooray!

:applause:

and congratulations on a job well done!

There's going to be more... Much more.

But, now we :party: !

[DemReadingDU]

90. Thank you Demeter

and good night

[DemReadingDU]

106. Marketwatch: Fix the System

2/6/09 Fix the system, not the cause by Thomas Kostigen

There are some who believe that it wasn't an apple that tempted Adam and Eve, it was actually a banana. Whatever fruit it was that cast them out of the garden doesn't matter, though; the system failed. We are facing failed systems today in economics, politics and taxes, yet we aren't trying to fix them. We are simply rearranging temptations. We'll never stomp out lying, or cheating. We'll never stomp out avarice. Try as President Obama might, a salary cap on chief executives' pay isn't going to send much of a message to people who work in the finance industry, an industry built around making money. You and I both know some crafty accountant is right now figuring a way around those caps. When it comes to taxes, the system there, too, is flawed. When some of the most savvy and educated people in the country can't get their taxes straight, you know it's time to fix what the IRS acronym should really stand for: Internal Revenue System. Pork-barrel politics need the same treatment. The barrel needs to be emptied and crushed. Those political days should be long gone.

In short, the Obama administration has misstepped. It's focusing on the causes of failures rather than the system of failures. Back up the truck, Barack, and start again. It's appalling that "a little," maybe 1%, maybe 5% -- or maybe even 50% -- of the current fiscal stimulus package is admittedly wasteful spending by the administration and politicians on Capitol Hill. That's like saying, "I only cheated a little." We operate on a rules-based accounting system in the United States. The rest of the world pretty much operates on an "intent-based" system. Hence, our rules are, well, meant to be broken. The term loophole wouldn't exist if we moved to an intent-based system -- and simplified it. There is no reason on earth that a tax filing should come to 24,000 pages, as General Electric Co.'s has. Similarly, an intent-based system should be part of Wall Street's way of doing business. Transparency is something to avoid in finance. Darkness produces profit; when both sides of a trade know what the other holds, transparently, there go margins.

The hundreds of trillions of dollars in derivative instruments that Wall Street can only account for in "nominal value" terms -- because who knows what the real value is -- needs to be called in and accounted for. To be sure, none of these things will be easy to do. But none of these things are even being addressed. Throwing more than a trillion dollars at a system that is broken is not going to fix the problems before us today. If the $350 billion we threw at the problem just a few months ago didn't fix things, and we didn't learn a lesson from that, well then fool us once again. And we should be ashamed. The great infrastructure spending we heard about accounts for less than one-fifth of the new stimulus bill. Many of the most important issues, such as spending on water infrastructure, have been slashed. Meanwhile, more than one-third of the bill includes new tax cuts: the rationale that caused much of the mess we are in today. We need a new operating system, not version 3.0. Otherwise, I'm afraid to say the system will just crash again. And that would be a sin given all the goodwill in the world right now. Furthermore, it's just bananas.

more...
http://www.marketwatch.com/news/story/Its-system-not-cause/story.aspx?guid={772EB47B-D9D7-426A-9806-5438E8C85334}

[Demeter]

107. Frank Rich Leads The Revolution: Slumdogs Unite! By FRANK RICH

SOMEDAY historians may look back at Tom Daschle’s flameout as a minor one-car (and chauffeur) accident. But that will depend on whether or not it’s followed by a multi-vehicle pileup that still could come. Even as President Obama refreshingly took responsibility for having “screwed up,” it’s not clear that he fully understands the huge forces that hit his young administration last week.

The tsunami of populist rage coursing through America is bigger than Daschle’s overdue tax bill, bigger than John Thain’s trash can, bigger than any bailed-out C.E.O.’s bonus. It’s even bigger than the Obama phenomenon itself. It could maim the president’s best-laid plans and what remains of our economy if he doesn’t get in front of the mounting public anger.

Like nearly everyone else in Washington, Obama was blindsided by the savagery and speed of Daschle’s demise. Conventional wisdom had him surviving the storm. Such is the city’s culture that not a single Republican or Democratic senator called for his withdrawal until the morning of his exit. Membership in the exclusive Senate club, after all, has its privileges. Among Daschle’s more vocal defenders was Bob Dole, who had recruited him to Alston & Bird, the law and lobbying firm where Dole has served as “special counsel” when not otherwise cashing in on his own Senate years by serving as a pitchman for Pepsi and Viagra.

http://www.nytimes.com/2009/02/08/opinion/08rich.html?_...


EVERY WORD IS POETRY AND TRUTH AND A CALL TO ARMS--SIMPLY THE BEST HE'S EVER WRITTEN, AND A STUNNING SUMMATION OF THE POLITICAL ECONOMY OF THE US TODAY. I CANNOT RECOMMEND IT TOO STRONGLY.

[DemReadingDU]

109. For the Number Wonks

From Dan W's blog
http://ashizashiz.blogspot.com/

IT'S JUST BASIC MATH!!! It's neither 'gloom-and-doom' hocus pocus, nor decidedly a-factual Nostradamus-esque visions of the future...it's just math.

Numbers gleaned from several sources, including Wiki sources & the U.S. Census Bureau. Some sources quoted directly

The United States population is roughly 305,000,000
About 79% of Americans live in cities or suburbs
Over 50% live in cities with populations over 50,000
Over 250 cities in the U.S. have over 100,000 people
9 cities have more than 1 million residents
There are roughly 6000 registered hospitals in the US
10 to 15% of Americans live below the poverty line
In 2007, 37.3 million Americans lived in poverty.
The richest 10% of Americans possess 70% of the wealth
The top 1% possesses 33.4% of net wealth.
Government activity accounts for about 12% of GDP.
The service sector accounts for about 65% of GDP
The leading sector by income is finance and insurance
Agriculture accounts for less than 1% of GDP
About 150 million people “are” employed with earnings
80% are full-time jobs
79% are employed in the service sector
Health care is the leading field of employment
There are roughly 70 million public school students
There are about 25 million businesses in the US
Small businesses are about 50% of the workforce
Roughly 29 million children get free lunch
There are roughly 95,000 public schools in the U.S.
There are roughly 6.8 million teachers
The national average salary for teachers is $45,000
Average 4 year college tuition, about $35,000
About $8,000 per-pupil is spent
26,300 food pantries in the United States

OK, let’s have fun with extrapolation!!

We’ll begin with unemployment.
more...

Next let’s examine poverty.
more...

How about growth:
more...

lots more...
http://ashizashiz.blogspot.com/2009/02/you-want-numbers-ill-give-you-numbers.html


edit: In previous postings, Dan has mentioned that he has been a high school history teacher for 20 years and a high school principal, and is currently employed at Dartmouth College.

[Demeter]

110. Another Horrifying Clip:

These of course are conservative estimates, as the layoffs in many sectors (colleges, hospitals, manufacturing) are just beginning to ramp up. And so conservatively, we are looking at U6 unemployment rates of close to 25% by the end of June, 2009. 25%!! In real numbers: 28.3 million people unemployed. CONSERVATIVELY! I haven’t even accounted for the fact that 50% of full time workers work in companies that employ under 500 people, and it is those small businesses that are going to suffer the most under a regime of disappearing credit and no support from the public sector. Or that, since the service sector and health care are the predominant employment sectors in the US, and since both of those sectors are going to face dramatic collapses as consumer spending totally dries up and as insurance coverage evaporates, unemployment figures may in fact accelerate even further than expected.


THIS IS EXACTLY WHY THE COMPROMISE STIMULUS BILL IS A FIASCO AND IT HASN'T EVEN PASSED YET. IT TOTALLY IGNORES THE PROBLEM AND FEEDS GOP FANTASIES ABOUT THE US ECONOMY. IT ISN'T REALITY BASED. IT ISN'T EVEN POLITICALLY BASED. IT'S ANOTHER PLACATE THE STUPID GOPPERS MEANINGLESS GESTURE. IT'S GOT HARRY REID WRITTEN ALL OVER IT.

NO MONEY FOR FOOD STAMPS, HEALTH CARE, JOBS OR EDUCATION FOR THE DESTITUTE OR ABOUT TO BE DESTITUTE. LOTS OF GIFTS TO THE WEALTHY. WE HAVE TO GET THE DEMOCRATS TO VOTE THIS CRAP DOWN, AND SEND A MESSAGE TO REID TO GET OUT OF THE WAY, AND INCIDENTALLY TELL OBAMA THAT HE'S WAY OUT OF LINE WITH THIS BIPARTISANSHIP NONSENSE.

IT PARTIALLY WORKED WITH TARP, IN SPITE OF SHRUB, WHICH I'M SURE ATE HIS SOUL. MAYBE WITH OBAMA, PUBLIC OUTCRY WOULD ACTUALLY BE HEARD.

[DemReadingDU]

111. So true

Why do the Democrats always compromise to the Republicans? We are in charge now. The people we voted for, need to assert themselves and get a purely stimulus bill with lots of jobs and provisions for critical services. No tax cuts. Obama needs to vote down this bill full of tax cuts. If the Republicans filibuster a bill without tax cuts, so be it. The repubs would be seen as blocking the recovery for the American people.

In November, We voted for CHANGE, not more of the same.

jeesh.

[Tansy_Gold]

112. If you look at the Editorials posting of the Frank Rich column

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x423452

You'll see that there are some (perhaps many) right here on DU who are woefully ignorant/enamored and totally in denial of the facts.

They can be shown that some of us predicted this ten weeks ago. They flamed us then and they continue to do so.

Sometimes even DU is more like Duh.


TG

[DemReadingDU]

113. Spouse isn't in denial, he sees unemployment rising, businesses shutting down. but

He's more like in disbelief. He doesn't deny any of these economic woes. He truly believes Obama is going to turn things around for the better, because Obama has experienced people for his advisers. I try to explain why these advisers will hurt us rather than help us. Now he tells me that I'm obsessed. He plainly doesn't want to discuss this further.

:crazy:

P.S. I just re-read my previous post. I meant to say Obama needs to 'veto down' this stimulus bill, but instead said 'vote down'. lol

[DemReadingDU]

114. Hm, here's a different way to look at this

From a comment in TAE

Greenpa said...

" Larry Summers is a walking talking lump of brain damage. Who, it just so happens, decides over your children's future welfare. Go read that quote again and tell me how you feel."

Yes, he is, and like Mike, I found the words from Larry Summers very depressing-

At first.

Look, guys- you/we REALLY have to get over looking at the situation one move at a time. It's a game with endless moves. And I will guarantee you Obama is playing at least 6 moves ahead. Chess Grand Masters play 11 moves out, yes?

Yep, Mr. Summers is a flaming idiot. Notice that his comments don't exactly align with Obama's publicly stated beliefs, though.

I would have to say, though, that Summers is NOT "in charge" of our children's future. What happens next in the US economy, and the world economy - is OUT OF ANYONE'S control. Yes? It's way too late to avert a really hellacious collapse.

And who is holding the bag? Why, Mr. Summers.

Which COULD give someone the chance to say - "look, these ideas have now been totally discredited. We're going to try something else."

Anything Mr. Summers can or will do- will be useless. I think that's what most of us here believe. Actions which might actually make a difference- are politically out of reach. At the moment. After we hit the real bottom?

Maybe. Maybe Obama knows we're going to hit bottom, regardless. And just as some of us suspect Obama may have been set up by the powers that be to take the blame for the collapse- could it be he's setting others up?

He can always give us the big Obambi eyes, afterwards "Gosh, folks; I was just taking the BEST advice everyone said there was. I'm SO sorry these guys turned out to be total morons."

I'm not married to the idea this is true- just saying; if I were playing chess here; I'd pay serious attention to this possible pathway.
February 8, 2009 11:37 AM


edit to add this response

Anonymous said...

Greenpa,I hope you are right.I ,in fact,think you may be on to something...
Remember during the campaign when it looked like Ms Clinton was the "winner by a length",right before Obamasan cut her off at the knees?.
I have watched his actions since elected,and he has done something I have never seen a pol do,that is ,start doing the pledges he made from day one.Very little of the excuses that usually follow completion of a campaign.
If a person truely intended to radically change the system,would it not be the best way to insure all his possible critics were silenced by letting the powers-that-be in his own party...and the ones truly holding the reins of power...to try their best..and to fail and to fail so miserably it was obvious to everyone that it was time for "new rules"
Of course,things might get a little rough out here in flyover country
Obama IS playing 6 moves ahead.I just hope he is playing for the working folks of this country


snuffy
February 8, 2009 1:01 PM

http://theautomaticearth.blogspot.com/2009/02/february-7-2009-unbearable-lightness.html?showComment=1234111020000#c4931212316485446088

Interesting, a chess game? Time will tell.

[Tansy_Gold]

116. I dunno. Sounds too Vizzini-ish for me, and look what happened to him.

http://www.imdb.com/title/tt0093779/quotes

(about 3/8 down the page)

Vizzini: (Vizzini stops suddenly, and falls dead to the right)

[DemReadingDU]

117. Hard to say. Obama may be steps ahead of the economic team, but

there may be others who are steps ahead of Obama.

I dunno either.

[Demeter]

124. If Obama Is Sitting There Fiddling With Chess, the Economy Is Going To Roll Down Like a Tsunami Over

him and everybody else. We don't have time to play these little mind games.

[Tansy_Gold]

125. Fiddling around

Westley: (as he is unsuccessfully fighting Fezzik) Look, are you just fiddling around with me or what?
Fezzik: I just want you to feel you're doing well. I hate for people to die embarrassed.

[Demeter]

127. I'm Dying in a Flaming Temper if I have to Die from This Incompetence

I have no reason to be embarrassed, unlike some people we could mention.

[Demeter]

121. "You keep using that word. I do not think it means what you think it means. "

I don't even have to look--nah-nah, na-na-nah!

[Dr.Phool]

115. DU isn't the place it used to be.

One reason I barely wander out of SMW, WEE, and LBN.

[Pale Blue Dot]

118. Sigh.

You're right, of course. :-(

[Tansy_Gold]

119. Me three

And even when I do, it's usually to econ-related threads and I usually get flamed. :evilgrin: and :-( at the same time.