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Thursday: “I ripped their faces off”

Vegas, baby!

Vegas, baby!

According to Frank Partnoy, former derivatives dealer and now law professor, that’s what he and his buddies used to say after they sold some murky derivative to suckers like Orange County, CA and Proctor and Gamble.  Partnoy gave a fascinating interview with Terry Gross yesterday on Fresh Air and discussed the history of the derivatives market.  One of the prime movers and shakers of the deregulation racket was Wendy Gramm, wife of former Senator Phil Gramm.  Wendy worked for Bush Senior’s administration and after she left government in 1993, she went to work in the private sector.  Guess where she ended up.  Go on, you’ll never guess.  Ok, I’ll tell you.

She went to work for Enron.

You can’t make this stuff up, Folks.

Partnoy’s description of the mid-nineties derivatives market sounds an awful lot like Enron.  Imagine trading floors full of  the smartest guys in the room, gambling and speculating and existing on a pure adrenaline high.  It’s a place where Jack Welch style “rank and yank” performance evaluations hone the workforce down to its leanest and meanest predators.  They ripped people’s faces off because they were rewarded very well for doing it.  Unstoppable id.  Oh, and Partnoy says they were pigs to women too.  It almost makes me wonder if the obnoxious Obamaphiles who invaded DailyKos last year were sent there from some of these institutions.

Wall Street has a gambling addiction.  This is what Simon Johnson of Baseline Scenario has told us about bankers in Japan.  The bankers and brokers are poweless over their addiction but they are refusing to surrender to a higher power to restore sanity.  We know now that Geithner and Obama are enablers because they refuse to make the finance industry feel genuine pain.  And while the economists debate the details of the Geithner plan, the recipients of taxpayer largess are already making arrangements to go on another binge.  Naked Capitalism caught this nugget in the New York Post:

As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post…

But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.

One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.

The secondary market represents a key cog in the mortgage market, and serves as a platform where mortgage originators can offload mortgages in bulk that have been converted into bonds.

Yields on such securities can be as high as 22 percent, one trader noted.

BofA said its purchases of secondary-mortgage paper are part of its plans to breathe life back into the moribund securitization market….

While some observers concur that the buying helps revive a frozen market, others argue the banks are gambling away taxpayer funds instead of lending.

What the banks and other institutions like AIG need is an intervention and rehab.  Nationalization would have been a good place to start.  Unfortunately, we’re going to have several more years at the craps table instead.

Hat tips:

151 Responses

  1. They ripped everyone off.

  2. So, they’re using our money to buy toxic assets and then they’ll turn around and sell them to others using our money (again)? Sounds like a win-win…for them. Lose-Lose for us.

    • I guess if they can’t get their dirty mitts on our Social Security, this is the next best thing!

      • If Obama keeps giving all our money to the banks, social security, medicare, medicaid, and what’s left of welfare and food stamps will be gone. They will just tell us they can’t pay. Then we are going to have a vast country filled with people who have no money and most of whom will have trouble getting food. Obama needs to wake up and get some new advisors very very quickly!

    • I’m shocked – shocked I tell you! No one ever could have imagined that the places who sold us toxic assets for more than their worth would then buy them back with the money we gave them if the system was set up to ensure that the probability of profit was high and loss next to nil.

  3. RD,

    I’m so glad you wrote about this! I listened to the interview on Fresh Air yesterday, and I just finished listening to it again. I was so angry when I heard what Partnoy had to say yesterday afternoon, that I thought my head would explode! Going to read your post now…

  4. Wendy Lee Gramm served under Reagan as head of OMB’s office of regulatory (or deregulatory) affairs. Then under Bush I, she was head of the Commodity Futures and Trading Commisson (doing the opposite of what Brooksley Born stood up to as CFTC head later in the decade). Then Wendy went on to join the Enron Board with an “audit” role to commit more malfeasance. Why Wendy and Phil Gramm are not serving time, I don’t know.

    • And Gramm was the one who was advising McCain during the campaign. Either way, whoever won the election, we would have been seriously f*cked.

    • I can’t believe the overall lack of accountability so far. There should be a number of individuals from companies such as Citi and AIG as well as from within the regulatory and over sight bodies being investigated. So many of the governmental players (from the Senate to various regulatory agencies) seem to have had conflicts of interests.

      • They should all be in jail for fraud!

      • Never happen – they are all in the same bed. We don’t have jails big enough

        • If we legalize pot then there might be more room for the corporate criminals 😉

          • Seriously, yes. It could also be taxed, creating tremendous source of revenue, maybe even ending our deficit. Create income to use for health care, all the other needed programs.
            And – at least reduce the problems with Mexican drug gangs. Maybe even legalize everything – have system like in England.

            Pharmaceuticals don’t want pot legalized, though.

  5. So we bailed out these jerks so they can create a bigger financial hole so then the gov’t bails them out again.

    While the so-called crisis gets hard working schleps laid off and unemployed.

    This is all a mirage to let these addicted free marketers play with hard earned 401Ks and people’s livelihood.

    ENOUGH of this crap. And Geithner wants more executive power? For what? So he can gambler away our Social Security when the 401K money runs out?

    • We should have just let them all file for bankruptcy – they might have learned something of value – this way they only learn that papa will bail them out when they get in trouble the next time. 😦

      • YEah!

        Whatever happened to Chapter 7/11???

        That’s what the airlines do, and do they cause a financial catastrophe?


        So why where these companies allowed to be bailed out instead of telling them to file for bankruptcy?


        • Then there could and would be a public record of waste and malfeanse. We couldn’t have that.

          • BINGO. Bankruptcy means going before a judge and having the books opened so everyone can see exactly what you’ve been doing.

            My gut tells me that the whole reason for this madness is a desperation to avoid the sunshine at all costs, by both the banks AND the politicians.

  6. Jeffrey Sachs breaks down the Githner plan. He boils it down to this:

    Heads the bankers win, tail the taxpayers lose.

    PS: Just keep in mind this is a zero-sum game.

    • “Tim Geithner, Treasury secretary, and Lawrence Summers, director of the White House national economic council, suspect that they cannot go back to Congress to fund their plan and so are raiding the Federal Reserve, the Federal Deposit Insurance Corporation and the remaining Tarp funds, hoping that there will be little public understanding and little or no congressional scrutiny. This is an inappropriate institutional use of the Fed, the FDIC and the Tarp. Mr Geithner and Mr Summers should at the very least explain the true risks of large losses by the government under their plan. Then, a properly informed Congress and public could decide whether to adopt this plan or some better alternative.”

      This may sound like a simplistic statement, but I just fear that our checks and balances aren’t working, and that too much power is being concentrated in the Treasury and Federal Reserve.

      • Sounds suspiciously like how Bush used to operate and how we ended up with warantless wiretapping. The new government mantra for the last decade has been what the taxpayers don’t know won’t hurt us.

      • “Checks and Balances?” do we have those anymore?

  7. When I listened to Partnoy, I simply couldn’t believe it. He said that they were selling side bets on things like sports events. It’s even worse than Las Vegas–no regulations at all! So our economy has basically been based on pieces of paper these thieves called “financial instruments” that actually represent nothing productive whatsoever.

    If the economy melts down completely, at least we’ll be forced to live simply and actually produce things again. Unfortunately, a complete economic meltdown will probably mean political collapse also. That will really be a nightmare!

    • Not from where I’m sitting it wouldn’t be a nightmare. Frankly the politicians have been playing games with American lives for a little too long. A collapse could potentially mean real reform.

      • If the political system completely collapses? We would have no leaders, no Constitution. The U.S. would break up into sections and we would probably have civil war. I hope we can reform the economic system and at least save our Constitution.

        • The political system collapsing does not necessarily mean that the ideas our country was founded on collapse.

          We don’t appear to have many worthwhile leaders now. Why in the world would I want to keep them?

          With the political system we have right now the Constitution is being scrapped. We lost fourth amendment rights already. The last few political cycles have been a travesty. We actually watched swaths of people being discounted in this country and the choice of a select few prevailing.

          You say collapse of our political system will percipitate things that are already occuring. I say they could percipitate an opportunity to get back to the foundation and principles our country was founded on. There will always be leaders. Perhaps the next generation will not be insulated from the people they are expected to speak for.

          • Well, I actually agree with you to some extent, but if that does happen suddenly there could be a lot of pain, and most likely blood in the streets. I’d like to see a movement back to a society that actually produces things instead of placing bets on pieces of paper.’

    • And traditionally, when the political system breaks down, isn’t that when the dictator or oligarch steps in? And it helps to have the people behind him, to pretend that it’s the “people’s” call. Hmm, I wonder who that might be?

      No one – no one in our government – not in admin nor in Congress seems to be raising any questions about changing this horrible financial system. I don’t see how anything good can happen until this Las Vegas system is completely ended. Till criminal behavior is called what it is, and punished, or at least, brought to trial. But I don’t see any sign of that happening.

    • So our economy has basically been based on pieces of paper these thieves called “financial instruments” that actually represent nothing productive whatsoever.

      bb, what they’ve been doing is basically trading their goddamn BOOKIE SLIPS back and forth, trying to drive the prices of those BOOKIE SLIPS higher and higher, and hoping they are not the last man holding when Vinnie comes round with the baseball bat.

      They’ve been playing the horses, giving it trustworthy-sounding names, and calling it “investments”.

      • I know, and it’s beyond disgusting. Somehow the American people need to really understand this. How can we help the information go viral?

        • Well, I broke down this morning and posted a full rant on my personal blog. My personal blog is one that I work hard to keep completely politics-free, since it’s my escape, my place to talk books and nonsense and TV shows and family and recipes and kids, with my friends of all political stripes.

          But I made an exception this morning and went into full rant mode (I even borrowed one sentence from you, bb – hope you don’t mind.)

      • You have such a wonderful way of using the RIGHT term … trading bookie slips indeed and EXACTLY!

    • I need to investigate this further but I heard that at the turn of the previous century Congress had become so corrupt and out of touch and control that the People revolted and that several congressman were beaten up, one or two to death.

      That led to a renewal of the Parties.

      So guess what? If our great-great-grand-fathers could clean house, so can we.

  8. Let’s face it, an uneducated and politically indifferent public elected Bush, not only once but twice, and then handed off the national interest to Obama without question. A majority of the public failed to ask pertinent questions during the run up to the Iraw war, turned their backs on the pervasion of FISA, shrugged off the crimes of the Bush administration, and allowed commonsense to outweigh the lack of experience and ties to Wall Street by Obama.

    Those voices crying foul were lost in the wind and this is the result. Regulatory commissions and oversight are always needed to at least prevent some deterrence by those willing to take advantage but we never learn. The scandal of the Savings and Loans back in the 80’s have taught us nothing. The hotshots continue to rake it in while the rest of us are expected to suck it up once again.

    These shysters need to be hauled off to jail but instead we will underwrite their scams to the detriment of our own welfare. Just one more laugh on the giggle machine toward the suckers who refuse to heed the signs. We get what we deserve through our own failures to pay attention and demand more than ruffles and flourishes.

    • I agree with your frustration, yet recognize that in all fairness to the uneducated masses, it is difficult at times to gain access to accurate information. Perhaps too many people take what they hear and see on television or read in print at face value. (All the “smart” people on television were essentially telling us Obama was the best candidate.)

      • True, but the signs were all there. How many times were the Obots asked to list just one thing about Obama that gave them a reason to vote for him and each time they came up empty? They were basing decisions based on nothing more than emotion without asking how this man could emerge from the swamp of Chicago politics unscathed? Who were his friends? Who were his backers? How did this candidate, with zero experience overall, rise to the forefront? Why were the pundits and the MSM not asking the pertinent questions?

        They were willing to sit back and allow the bilge to be poured onto their heads without considering the outcome because it was easier than allowing reason to enter the equation.

        • But we have all this HOPE and CHANGE now!

        • Pat, I started to get suspicious of Obama after reviewing the resume he had posted on his official website (his accomplishments just didn’t overly impress me, and it seemed as though he only stayed in each elected office long enough to run for the next higher office). Unfortunately, the general public at large (many of whom are totally turned off by politics) don’t go that far. What saddens me is I know of people who generally vote Republican (I live in a red state now), that made the decision to cross party lines for Obama because they just didn’t think this country could take 4 more years of Bush policies.

          I have friends that argued with their parents and other relatives about all the red flags concerning Obama, only to hear rehashed talking points from CNN, MSNBC and other msm cheerleaders (just as many people spouted rehashed negative talking points about Clinton during the primaries). My daughter’s teacher actually told her that CNN was the best cable news outlet to watch for fair and balanced election coverage.

          I have to confess to not doing enough homework in the past. Christopher Dodd was elected to the Senate in Connecticut long before I could vote, and like an idiot I voted for him more than once fully believing he was an upstanding member of the Senate. Now, I realize there were signs going back for years that he was often self serving and had conflicts of interest.

    • I beg to differ. Bush had to steal 2 elections and Obama one primary.

  9. Sen. Bernie Sanders has blocked another Goldman Sachs alumnus who has been nominated by Obama to head the Commodity Futures Trading Commission (CFTC). From Sanders’ statement:

    Mr. Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of A.I.G. and has resulted in the largest taxpayer bailout in U.S. history. He supported Gramm-Leach-Bliley, which allowed banks like Citigroup to become “too big to fail.” He worked to deregulate electronic energy trading, which led to the downfall of Enron and the spike in energy prices. At this moment in our history, we need an independent leader who will help create a new culture in the financial marketplace and move us away from the greed, recklessness and illegal behavior which has caused so much harm to our economy.


    • Let’s hear it for Sanders. Thank God there is at least one voice of reason.

    • Don’t these people have any shame?

      Apparently not.

      These people are robbing this country left and right while Obama insists on hiring more of these criminals.

      Obama needs to be impeached – NOW.

    • Does that mean that Sanders succeeded in keeping another sh*head out of there? Who else or was he the lone voice crying in the wind?

      I love Sanders. Have you noticed that we hear nothing from fellow Dems fighting for Frankin. I think that’s because he would be another guy fighting along Sanders, actually brave enough to stand up to Administration. Obviously, they don’t want that.

      Also, is anyone keeping tabs on media? For a few days it was great watching the righteous outrage, even the small beginning of class warfare, from the right side. But since that “brilliant” press conference, I’ve been seeing memes about the “poor” AIG guys who worked so hard for those bonuses, about how so many worked their way up from the slums and are being so abused now, blah blah blah.

      My guess is that word came down from somewhere (AIG, Admin, network) to leave those poor guys alooooooooone.

      Brezinski was on Morning Joe, though, today, talking about greed, about the craziness of such enormous salaries when there’s so much poverty. He even said that you can’t spend 500 or 250 mill, and that money should be given back (didn’t say how or to whom), even said 50 mil was too much, and could be reduced to 25 mill. Cramer was there, grinning sheepishly.

      I’m willing to accept someone having 50, even 100 million. But once you go beyond that, as so many have, it’s such total excess, and evil. Think of what could be that money to benefit society. On second thought, let’s leave it at 50 mill top.

      • I don’t trust Zbigniew Brzezinski one bit. He has been an Obama supporter since early 2007. He’s just trying to tamp down the public anger and resentment and pacify the proles.

  10. This is off topic, but did anyone happen to see the video posted at noquarter where Geithner was essentially very supportive of those within China who are calling for a new international monetary unit? I’ll see if I can link it, it was interesting to watch.

    • didn’t geithner later say he was “kidding?” or something?

      b/c that is soooo funny. ha. ha.

      • Typical of this Administration. Geitner was having an “open mind” moment and open his fat mouth at the same time to put his foot in it.

        This administration represent by excellence what I call ” the Globalization Generation”. They come from the “New” corporate and financial worlds where frontiers exist only to differentiate preferable regulations and legal systems from each other.

        So in that vein, the idea of a global monetary serpent or basket is an attractive concept, even if the reality of it is counterproductive to their own interests.

        They are open and attracted to everything labelled Global. But there is a breaking point fast approaching where globalization will shift from meaning choosing the most favorable regulation local system to globalization of the control systems.

        Hence the Geitner moment “Globalization Yes, Globalizayion No”

    • I just don’t know if Geithner performs that well when speaking on camera, he tends to say things which make the market uncomfortable.

      • Maybe TOTUS has a cousin who can keep Geithner in line. Teleprompter of the Treasury — TOTT?

    • They need to put a muzzle on Geithner, or better still, fire him today!

      • I think that maybe we should all start looking into RECALL vote for POTUS. Are there any constitutional scholars around who can look into this possibility???

    • yeah, i read that last night. Doesn’t he know that’s the LAST thing a Secretary of Treasury should say? It may be interesting, but you don’t say that unless you want every one to dump dollars which is what you’re doing already through the FED.

      • I think this is similar to when Obama talked against NAFTA in Ohio and then sent Goolsbee to reassure the Canadians that he was just lying to get votes. I think Geithner said what he really believed the first time.

  11. someone get me out of moderation upthread, please.

  12. It reminds me of when an Army post closes. The property, that is usually in a very lucrative location, is sold off pennies on the dollar (never announced to the public) to developers. Never mind that they initially, basically, horn-swoggled it from the good people of the area.

  13. Trying this again.

    So our economy has basically been based on pieces of paper these thieves called “financial instruments” that actually represent nothing productive whatsoever.

    Yep, bb. What they’ve been doing is basically trading their god%@mn BOOKIE SLIPS back and forth, trying to drive the prices of those BOOKIE SLIPS higher and higher, and hoping they are not the last man holding when Vinnie comes round with the baseball bat.

    They’ve been playing the horses, giving it trustworthy-sounding names, and calling it “investments”.

    • Isn’t there a 12 step program for gamblers?
      These people need help.

      • The usual help for these institutions is to let them EAT their goddamn losses and go down in flames into receivership. That’s how it’s supposed to work.

        Unfortunately, we have had 8 years of, and are looking at 4 more years of, an administration that thinks dear little Johhny needs to be bought a new car every time he wrecks the old one.

      • Yes, I think it’s called prison.

  14. Gah! In moderation again!

    • you causing trouble again, WM?

      • Who, me? It wasn’t even one of my GOOD rants! I didn’t even throw any major f-bombs or refer to excrement or NUFFIN, man. *sniff*

  15. When regulation and oversight must come from and be directed by people from both sides of the aisle who are funded by the very people and institutions to be regulated and reviewed, what can we expect? The question of this time is how do we develop responsible, principled oversight that is free of the political posturing and payola that has our system by the gonads.

  16. Shame? No longer exists. Spitzer is now writing a column. Rove is a contributor to Fox along with Dick Morris. O’Reilly still garners high ratings while writing books on “morality”. Delay is hauled out every so often to offer his opinion. Dodd continues to sputter about his predictment. Wives are on the lobbyist payroll. Bush is making speeches and intending on writing a book. Cheney is making guest appearances along with Condi Rice. Blago could not get enough of the camera. Obama has backed off on campaign promises that brought the crowds to their feet in a state of euphoria. Hell, even OJ walked around for a number of years and was paid for appearances up to the end. The Octo Mom is raking in a fortune.

    Shame? Does not exist. As a matter of fact your worth escalates the more tarnished you are. The public be damned. Under indictment? We have any number of shows lined up just for you. And don’t forget to bring your lawyer!

    • Lol, Pat. Interesting synopsis. What a crew!

      However, I’m glad to see Spitzer out there again. His behavior is asymptom of our disturbed patriarchal society, where that’s almost the norm for powerful men. As much as I abhor it, it’s mostly personal, though hypocritical, but I give a bit of a pass there, because he’s fighting for the right things for the people. That’s my gold standard. Just as I forgave Clinton.

      I even miss Edwards, though I’m very angry at him for his stupidity and selfishness. But he was one of the few voices for the little guy, and we need that. We also need people ready to take on their own party “leader”.

  17. I am in moderation as well.

  18. And is Mr. Bernie Sanders not a socialist? The only one to be elected in the US? Well, good for him. His statement is right on and how seldom do we get to see someone actually make a point worth making.

  19. And Pat Johnson—makes another point worth making. Shame is a highly devalued emotion that needs to be returned to the public forum.

    • We need to come up with the electronic equivalent of the public stocks… but somehow it would never be the equal of the original if people and youth cannot pass by and heap their contempt on the object of public scorn. No rotten fruit and vegetables being thrown, no loogies… I don’t think it qualifies as cruel and unusual punishment anymore…

  20. Heads up…over at the Washington Note…Steve Clemons outfit is running this economic symposium on how to stop the “fumbling” on economic policy….two big names attending…Laura Tyson (remember her from the Clinton years>) and GEORGE SOROS….

    What will they be saying????

    From the announcement…

    “The purpose we have in organizing this meeting is to try and position some of the key issues that should be considered at the London G-20 meeting and to begin to emphasize that the fumbling on economic policy needs to stop. (my bolding)

    It’s time to begin organizing a Team B economic policy effort — even if it is organized by a network of concerned civil society leaders.”

    A Reminder: Live Streaming of the First “Bernard L. Schwartz Economic Policy Symposium” Today (3/26) With a Rather Interesting Group & Agenda (To End “Fumbling” on Economic Policy)


    • EEK!! Moderation again!!! Soros and Tyson streaming live….

      • Excellent stuff, insightA-thank you for letting us know.

        -listening to it now, (even tho I had intended to go out shopping…)

  21. Give Obama a grade. I know these things are meaningless but I can’t resist the possibility. When I gave him my F the F’s and D’s stood at about 30% which seems like a pretty high # for the MSNBC blog. So please make a contribution. Sorry, I don’t know the proper mechanics of a link.


  22. The situation is crappy! Good to hear though that there are more that shares ones opinions..

  23. http://news.yahoo.com/s/ap/20090326/ap_on_go_pr_wh/stimulus_jobs_numbers

    “WASHINGTON – If space exploration were conducted like the job forecasts under the government’s new stimulus law, man surely would have missed the moon. But this isn’t rocket science.

    No promise from President Barack Obama is more important to the wounded economy than his vow to save or create some 3.5 million jobs in two years. In support of that bottom line, the government even tells states how many jobs they can expect to see from the spending and tax cuts.

    But precise trajectories are impossible to plot and even approximations can be wildly off, as the authors of these forecasts acknowledge, usually more readily than the policymakers who use them to promote the plan.”


    Funny, I don’t think anyone mentioned this type of stuff while the stimulus bill was being rushed through Congress.

    • It just doesn’t make sense. 5.5 million are collecting unemp insurance, plus the million or 1.5 million (like me) that were perma-lancers, part timers, contract workers who are not entitled to unemp insurance.

      That’s at least, so far 6.5 to 7 million people. And HOW many jobs the Obominator wants? 3.5? During the campaign it was 5 million.

      Again, we are still S.O.L.

      Can we impeach this moron?

  24. I wish it was called the Obama and Geithner plan. Obama agrees with this plan and was apart of its creation. If it fails Geithner is going to get all the blame and Obama will look like he had nothing to do with it. This all reminds me of the stimulus. Nancy Pelosi got all the blame.

    • I agree. Who the heck is Geithner anyway? None of us lowly people ever heard of him and suddenly he holds so much power over us?

      • any one who was President of the NY FED was one of the most powerful people on the planet, most folks don’t know that but Chair FED and President of NY FED= more powerful than just about any one other than POTUS

        • Wasn’t there something about him maybe being too nice to his buddies? Approving a huge loan to JP Morgan when the CEO is also a director of the NY Fed?

          Looking at his career though, would you have guessed that he’d be such a mess as Treasury Sec?

          • It is the Obama factor. He can do that to anybody. I don’t think Geithner being fired and replaced will change anything. Obama and THEM(the real guys pulling the strings) will still be there to lead the way.

          • Downticket, I wonder what the tell all books will be like after his admin is over. He must be a terrible boss to work for — always leaning on his staff then letting them take the flack.

  25. For RD- 😉

    A leading executive has been kidnapped by striking workers in France.

    In the third credit crunch abduction inside two weeks, pharmaceuticals chief Luc Rousselet was locked into a room at the 3M factory at Pithiviers, some 60 miles south of Paris.

    Mr Rousselet, the director of the American 3M Group, had arrived on Tuesday lunchtime to negotiate severance payments after 110 of the workforce of 235 were sacked.


    • Yes, that’s something which has always happen in France. Strickers picket not only to prevent access to factories but to prevent management to get out. An old tradition which now explain my overnite fantasy/solution dream to lock up and guard the AIG tower exists and transform the whole building into a makeshift prison for all those jailbirds flipping us one.

      • I love that part in Sicko* where it says:”In France the government is afraid of the people.”
        … and here the people are afraid of the government.

        (*and how sad it was to see Moore drink the koolaide)

  26. James Carville tries to explain Obama’s problems and narrows it down to the fact that derivatives are hard to understand. His definition:

    A scheme “rich, greedy bankers thought up to make more money selling them to other rich, greedy bankers. They did not understand what they were selling. Buyers did not understand what they were buying and insurers did not understand what they were insuring. Now the taxpayer is stuck with these things that no one can explain.”


  27. Carville is a dirty word – in moderation.

  28. Wall Street has a gambling addiction.
    The World has a gambling addiction…There are >1000 Trillion dollars “worth” of toxic derivatives on the world markets, $58 trillion are credit-default swaps…I don’t think anyone has a clue about how to get out of the derivatives bubble.

    • Actually, they do. Patient zero was the real estate market and the mortgage defaults. Hillary wanted to cure patient zero before he got hyperviral. But noooooo.

      Now we have losses, paper money worth nothing and the trick is to absorb those losses in the economy at large. An overall distribution of the losses does cause a recession. An unbalanced distribution of the losses causes temporary relief and then an even more severe and lengthly recession sometimes even a depression.

      Wall Street knows that perfectly well. They bought themselves an opportunist puppet and are pushing through Summers and Geitner for an unbalanced distribution of the losses on the taxpayers. We are now experiencing the temporary relief (that should last about 4-6 months) and then once Wall Street is made whole on its losses, the bottom will drop for the rest of us.

      Geitner’s Plan has one and only one goal: to reverse the DOW and other indexes. That will give the impression to the American people seeing their 401K recover (for a while) that the worse is over. To do that they had to funnel fresh money to banks to cover their losses and go back in the black on their balance sheets. The Geitner plan is ONLY a gimmick window dressing the transfer of billions of taxpayer monies to banks at no cost to them (without even interests to be paid because the transfer is not a loan it is a gift).

      Once that money is in the hands of banks, their balance sheets improve and theirs shares go up, The Dow and the others indexes react positively and the machine goes optimist. Confidence comes back and the economy starts moving forwads again.

      But the foundations are missing. That money taken from the taxpayers will not be replaced. So on one hand the 401Ks go up but on the other hand governement cannot pay its bills (the taxpayer money is gone to the banks and the economy recovering is not generating enough revenues). So there is only two solutions: printing more money which lead to devaluation of money and inflation of prices, hence recession soon after

      or raising taxes which leads to recession.

      So there you have it folks. Liquidate your portfolios now, get out of the stock market now, sell your houses now. And this winter before inflation kicks in, buy yourself a house at real value price, pay as much as you can on it, and fasten your seat belts

    • I can’t stand it! It’s so damn exciting.

  29. Good Lord he’s giving a speech and having another PR moment. It’s another Town Hall meeting. Does this man every actually WORK?

    • He thinks his job is to let his advisers decide and he sells whatever decision they make to the American people.

      Googling Bill Clinton’s quote of what Obama said last October when the wall street crisis first hit:
      “He said, ‘Tell me what the right thing to do is. What’s the right thing for America? Don’t tell me what’s popular. You tell me what’s right — I’ll figure out how to sell it.'”


    • I’m seriously to worry that Obama is in over his head.

      Stuff like this, appearing on Jay Leno, another townhall…

      It looks like somebody who’s trying to just tell the people “nevermind your anger and frustration. Remember, you like me… I’m likable”

      This is really getting worrisome.

      • i know the press doesn’t seem bothered by it, but it looks like Nero fiddling while Rome burns to me. I want to see pictures of him sitting at his desk looking at the executive summary of the bank stress test with Sheila Bair briefing him on the expected number of failures in the next 6 months. Sitting on the floor of a Wizards game, drinking a beer is not something I want to see POTUS do. It’s something some idiot hollywood celeb would do.

      • I caught the tail end of his town hall in which he appeared rather tired with a slow and rambling speech pattern, and noticed that he quickly brushed everyone off at the end with a quip about hoping they all understood he didn’t have time to chit chat. I guess we can either assume he has important business, really needs a work out or nap, wants to duck out on additional unscripted questions, or has lunch plans.

  30. All that have problems with the GIVE act better speak up now.
    The senate leader wants a vote on it by Friday. As usual no time to read all the amendments before voting,
    The blog NEWS SPEAK has information on the act and amendments.




    • There are already millions of people who do volunteer work so I do not understand this forced volunteerism.

    • What is the difference between this bill and the ServeAmerica Act? That purpose of that bill was to also expand volunteerism to people of all ages and to strength the existing programs and create new ones. People were also not going to be forced to volunteer.

      • The Serve America Act has been replaced by the House-initiated GIVE Act, which mandates a national volunteer requirement in elementary and secondary schools. The blog HelenK mentioned (News Speak – http://catsden.wordpress.com/ ) has more information.

        • Thank you again.

          Where do you live in CA. I live in Hemet CA



          • No need to thank me.

            I’m from scenic Sacramento, home of one of the most famous Obamavilles. Hey, maybe we’ll get assigned to the same workcrew! I’m hope I’m just paranoid, but there’s this horrible feeling of waiting for the second shoe to drop.

        • Thank you for posting that link. That’s a really nice site.

          • Laurie, is your gravatar a Vespa. I’m looking at a small screen, so sorry if it’s something else that should be obvious.

          • it’s an Aprilia scarabeo-our scooter! (Spring brings out the worst in people!!!) 8)

        • So why was it replaced? McCain and Hillary supported it. Obama also supported.

          • Looks like Senator Mikulski can be thanked.

            From LOC Thomas:

            Read twice and referred to the Committee on Health, Education, Labor, and Pensions.

            Committee on Health, Education, Labor, and Pensions. Ordered to be reported without amendment favorably.

            Committee on Health, Education, Labor, and Pensions. Reported by Senator Mikulski with an amendment in the nature of a substitute. Without written report.

            Placed on Senate Legislative Calendar under General Orders. Calendar No. 34.

  31. Everyone listen to the live streaming insightanalytical mentioned:


    • I caught the tail end and was able to listen to Soros speak and answer some questions. He sounds really knowledgeable with respect to the markets and the economy, and so far he seems to be pleased with Obama (with the exception of his failure to re-capitalize the banks). I find myself torn over what to believe about him, whether he’s been manipulating things or if he’s just been astute enough to benefit from the crisis. I really wish we had some real investigative journalists out there who would at least attempt to provide accurate information.

      • Sensible.

      • Yes-he seemed very reasonable. I didn’t like the reply to the last question about education and healthcare, where he said that a new financial world would need new structures in place , and that he was pleased with what Obama was doing in those areas. It sort of made my hackles rise.

        After all, this was the guy who broke the Bank of England-didn’t care how many people suffered there.

        From The Australian interview:

        Soros says his 1992 attack on the British pound, which forced then Chancellor of the Exchequer Norman Lamont to accelerate Britain’s withdrawal from the European Exchange Rate Mechanism, is an example of his constant search for the opportunities created by imperfect markets overshooting and under-shooting in that way.

        “The authorities lagged, you see. There is this reflexive cat-and-mouse game going on between markets and the authorities all the time and I am more aware of it than perhaps most others, therefore I acted more decisively.

        Obviously he is the cat…

        read the Australian article and all its links-any info is better than nothing. Hope to be able to listen to the conference again-missed Martin wolf and others.


  32. I broke down this morning and wrote a full-blown economic rant on my personal blog. My personal blog is one I have worked very hard to keep completely politics-free, because it’s my escape. It’s where I go to chat about everything from books to family to silliness, with hundreds of friends of all political stripes, so I made a decision long ago that it would be kept pretty much apolitical.

    This morning I broke my own rule, because this crap needs to get OUT THERE. I called it “An Economic Rant – skip if you want”

    “So I’ve been closely following, and reading a heck of a lot from all sides on what is going on with the US economy, and I am PISSED.

    Part of the problem is that people throw lots of terms around, and the average Joe has no idea what they mean, so thinks “well, it’s so complicated, I guess the experts know what they’re doing.” You know what? I call bullshit. It is not as complicated as they are making out, so let me tell you exactly what the deal is with all these “credit default swaps”, and “mortgage derivatives”.

    Here’s the deal: They are BETS. Not assets, not anything real – BETS. The original mortgages are assets (no matter how devalued at the moment) but not this shitpile of derivatives. Our financial markets have basically been teetering on top of pieces of paper these thieves called “financial instruments” that actually represent nothing productive whatsoever. They represent wagers.

    What they’ve been doing is basically trading their goddamn BOOKIE SLIPS back and forth, trying to drive the prices of those BOOKIE SLIPS higher and higher, and hoping they are not the last man holding when Vinnie comes round with the baseball bat.

    They’ve been playing the horses, giving it trustworthy-sounding names, and calling it “investments”.

    So, what to do?

    Well, in a sane world, Vinnie usually comes round with a baseball bat. The usual help for these institutions is to let them EAT their goddamn losses and go down in flames into bankruptcy receivership. Maybe there needs to be some taxpayer infusion of money to at least partially pay off some creditors and things, but the companies are broken up, their assets unwound, and the garbage cleaned out. That’s how it’s supposed to work. That’s what’s been done in the past with the S&L scandal, etc.

    Unfortunately, we have had 8 years of, and now (amazingly, since its a Democratic one) seem to be looking at 4 more years of, an administration that thinks dear little Johnny Q. Financier needs to be bought a new car every time he wrecks the old one. And he doesn’t have to get his license suspended or do a defensive driving course or NOTHIN’. Nope, he’s being assured that only will the taxpayer cover your losses, but you don’t even have to call the game and turn in those bookie slips, or amend your behavior.

    Nope, you can sit right back down at the table and double down on the bad bets you already made, and we’ll cover most of that too. Because we are so terribly afraid that if we don’t, little Johnny will throw a tantrum and start kicking and screaming and deliberately destroying grandmother’s china (i.e. crash the markets.)

    The excuse we keep being given for why the ARCHITECTS of this fiasco like Geithner, Summers, key CitiCorp and Goldman Sachs execs, etc are the ones being appointed to solve it is that “you need the bomb-maker to defuse the bomb”. Again, I call bullshit. Who the hell is telling Obama this crap, and WHY is he listening?? In the real world, you do not go to the bombmaker to defuse the bomb. At least, not outside of a Marvel comic book you don’t. You get independent, trustworthy, skilled technicians of the bomb squad to do that.

    This is fucking madness. It’s fucking madness. “

    • Well, in a sane world, Vinnie usually comes round with a baseball bat.

      Love this.

    • http://www.nypost.com/seven/03252009/business/double_dippers_161157.htm

      “As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post.”

      Didn’t anyone ever tell them it’s not polite to double dip?

      • Yep, exactly as we predicted. This plan does nothing but incentivize the original culprits to DOUBLE DOWN on the bets, since the losses will now be subsidized.

        My GOD, how can people be so stupid.

        • it’s pretty easy, the smart people are still working on Wall Street in Hedge funds that are making huge amounts of money off of this, and the dumb people are still working in Washington DC making decisions with other peoples money

        • Do you think they’re trying to inflate or maintain the value of these securities so their existing portfolios don’t take additional hits? In any event, increasing their exposure to mortgage backed securities just doesn’t seem the right thing to do, but heck, what do I know, I’m not some hot shot Wall Street insider (they probably hope to make a killing off the tax payer).

        • The audacity of stupidity. Someone should write a book.

  33. http://foxforum.blogs.foxnews.com/2009/03/25/debt-bomb-rocks-wall-street/

    “Wall Street got rocked Wednesday by a “debt bomb” economists have worried about for decades.

    Hours after the United Kingdom failed to attract enough buyers for its auction of $2.5 billion of 40-year bonds, the United States Treasury had similar difficulties with its sale of $34 billion worth of five-year notes and was forced to raise their interest rate to a much higher yield than had been anticipated.

    Such problematic debt offerings came on the heels of Germany having two failed auctions of its bonds already this year.”

    • That was a huge message yesterday to the Treasury From Wall Street … FED basically bought HIGH and sold LOW, not a good thing. This isn’t good news because it shows there’s going to be difficulty funding all that deficit spending the Obama administration is planning in their budget. I’d say we’re not going to get what we were promised.

    • was thinking about doing my thread about that today, because believe me, that’s HUGE news, coming on top of calls for the Dollar to be removed as a reserve currency from other countries, it’s a thumbs down on the Obama economic plan. HUGE thumbs down.

      • When you combine this news with the information coming out of the CBO, things are getting downright scary.

  34. http://www.dailymail.co.uk/news/worldnews/article-1164771/Im-having-good-crisis-says-hedge-fund-manager-1billion-world-plunged-recession.html

    “A hedge fund manager who predicted the global credit crunch has said the financial crisis has been ‘stimulating’ and the culmination of his life’s work.”


    You mean like this guy?

  35. I.R.S. to Offer Deal to Tax Evaders

    Published: March 26, 2009

    The Internal Revenue Service, under pressure to bring in money to the faltering economy, plans to give offshore tax evaders a big break.

    The agency has drafted a plan that significantly lowers a penalty that applies to wealthy Americans who hide money overseas in secret accounts, a person briefed on the matter said Thursday. The plan is intended to lure out of hiding scores of wealthy people who must come forward and declare their accounts in order to take advantage of the lower penalty.



  36. On days like these,I’m happy that I left.

    G’nite guys. Got to get some work done before leaving the office.

  37. http://www.bloomberg.com/apps/news?pid=20601087&sid=aKqkjyYkFN8w&refer=worldwide

    “March 25 (Bloomberg) — California Governor Arnold Schwarzenegger said a make-shift tent city for the homeless that sprang up in the capital city of Sacramento will be shut down and its residents allowed to stay at the state fairgrounds. “

    • Pix of that tent city even made it over here. People are worried-if that’s what’s happening in the US -what will happen here?

  38. Chicago Trib article (03.26.09):

    “Rahm Emanuel’s profitable stint at mortgage giant
    Short Freddie Mac stay made him at least $320,000”


  39. New open thread up!

  40. “Maybe even legalize everything – have system like in England.”

    Pot is not legalised here, if by everything you mean pot.

    *iz confused*

  41. The MF-ers in Congress appear to b eencouraging folks to usethe tax dollars ofus to buy these toxic assets.

    If they do they can keep their bonuses.


  42. Turns out Morgan Stanley’s John Mack and Charlie Rose married sisters. They all met at Duke or something. Damn frat parties.

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