Blog entry Sun 2010-10-10 09:51 EDT

Crony Capitalism: Wall Street's Favorite Politicians

Zach Carter

A full 90 members of Congress who voted to bailout Wall Street in 2008 failed to support financial reform reining in the banks who drove our economy off a cliff. But when you examine campaign contribution data, it's really no surprise that these particular lawmakers voted to mortgage our economic future to Big Finance: This election cycle, they've raked in over $48.8 million from the financial establishment. Over the course of their Congressional careers, the figure swells to a massive $176.9 million. The full list of these Crony Capitalists is below, along with the money they pulled in from Big Finance, according to data compiled by the Center for Responsive Politics (opensecrets.org)...

blog entry; Crony Capitalism; Wall Street's Favorite Politicians.

Sat 2010-10-09 10:56 EDT

And Then There Were None | afoe | A Fistful of Euros | European Opinion

Edward Hugh

...rather than being over, what the debt crisis now may be entering is a new stage, where one sovereign bond after another is being chisled out and sent off to join their Greek counterpart in the isolation ward...the Irish economy has never really left recession...Irish GDP has now contracted on a quarterly basis for 9 out of the past 10 quarters, and there is no evident end in sight....the riskiest lenders to nationalized Anglo Irish Bank may not get all their money back...In the Portuguese case it is the budget deficit issue which is unsettling the markets, with the spread widening sharply following the revelation that far from the deficit being reduced is was actually increasing...Neither the European sovereign debt crisis nor the banking sector crisis has been resolved and both continue to mutually reinforce each other...the EU's stress tests for banks had manifestly failed to restore the necessary confidence.

afo; euro; European opinion; fisted.

Fabius Maximus Wed 2010-08-25 09:31 EDT

The face of America's decline

Fabius Maximus

...Mark Hurd, until recently CEO of HP. See the face of America's economic decline...from ``The Real Reason for Ousting H.P.'s Chief``, Joe Nocera, New York Times: [according to] Charles House, a former longtime H.P. engineer: The way H.P. made its numbers...was not just cutting any old costs, but by ``chopping R.&D.,'' which had always been sacred at H.P. The research and development budget used to be 9% of revenue, Mr. House told me; now it was closer to 2%. ``In the personal computer group, it is 0.7%''...Here we see America's formula for decline... 1. Fantastic pay for leaders 2. Stagnant pay for employees 3. Cutting jobs (efficiencies, forcing harder work, moving off-shore) 4. Slash investments in the future (capex, training, R&D)...

America s decline; Fabius Maximus; Faces.

Wed 2010-07-21 10:26 EDT

Professor Jamie Galbraith's testimony to Deficit Commission | Angry Bear

1. Clouds Over the Work of the Commission. ... 2. Current Deficits and Rising Debt were Caused by the Financial Crisis. ... 3. Future Deficit Projections are Generally Based on Forecasts which Begin by Assuming Full Recovery, but this Assumption is Highly Unrealistic. ... 4. Having Cured the Deficits with an Unrealistic Forecast, CBO Recreates them with Another, Very Different, but Equally Unrealistic Forecast. ... 5. The Only Way to Reduce Public Deficits is to Restore Private Credit. ... 6. Social Security and Medicare "Solvency" is not part of the Commission's Mandate. ... 7. As a Transfer Program, Social Security is Also Irrelevant to Deficit Economics. ... 8. Markets are not calling for Deficit Reduction; Now or Later. ... 9. In Reality, the US Government Spends First & Borrows Later; Public Spending Creates a Demand for Treasuries in the Private Sector. ... 10. The Best Place in History (for this Commission) Would be No Place At All.

Angry Bear; deficit Commission; Professor Jamie Galbraith's testimony.

billy blog Thu 2010-07-15 16:35 EDT

Employment gaps -- a failure of political leadership

Overnight a kind soul (thanks M) sent me the latest Goldman Sachs US Economist Analysis (Issue 10/27, July 9, 2010) written by their chief economist Jan Hatzius...It presents a very interesting analysis of the current situation in the US economy, using the sectoral balances framework, which is often deployed in Modern Monetary Theory (MMT)...some of the top players in the financial markets have a good understanding of the essentials of MMT...he US is likely to have to endure on-going and massive employment gaps (below potential) for years because the US government is failing to exercise leadership. The paper recognises the need for an expansion of fiscal policy of at least 3 per cent of GDP but concludes that the ill-informed US public (about deficits) are allowing the deficit terrorists to bully the politicians into cutting the deficit. The costs of this folly will be enormous...

Billy Blog; employment gap; failure; political leadership.

Tue 2010-04-27 08:22 EDT

Anecdotal Economics: A Chicken in Every VAT

...The retail consumer is back, and she* is in the mood to shop, we reliably are told. The Census Bureau reported March 2010 Advance Retail and Food Service Sales improved 7.6 percent from a year ago, and for 1Q2010 are 5.5 percent above 1Q2009...So why do state sales tax revenues tell a different, disconnected story? In the Nelson A. Rockefeller Institute of Government's April 2010 State Revenue Report, which chronicles the woeful status of state tax collections, concludes that sales tax collections fell almost 9.0 percent in 2009, a statistically significant 2.8 percent more than the reported decline in retail and food service sales made up estimated by the Census Bureau...It's a significant disconnect between theory (Census Bureau) and reality (actual sales tax collections), much as the similar, significant disconnect between the Employment Situation reported by the Bureau of Labor Statistics (theory), which appears to be masking the true extent of unemployment in America with all those marginally attached and discouraged workers, and the meaningful decline in actual payroll tax withholdings (reality), as reported by the Treasury Department in its Daily Treasury Statements...

Anecdotal Economics; chickens; VAT.

Fri 2010-02-26 16:37 EST

Wall Street's Bailout Hustle : Rolling Stone

MATT TAIBBI

...The nation's six largest banks -- all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry -- set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007..."What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?" asks Eliot Spitzer...A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble? The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients...a brief history of the best 18 months of grifting this country has ever seen...

Rolling Stone; Wall Street's Bailout Hustle.

Sun 2010-01-31 23:06 EST

The Formula for This Market Rally In Simple Terms

The first, most obvious trend is the Manic Mondays trend...for the 43 weeks ended Friday January 8, 2010, stocks have rallied on 30 out of the 43 Mondays...these Monday ramp jobs have contributed the bulk of the market rally's gains since March 2009...The second trend that has dominated this market since the March 2009 bottom is the Bernanke Options Expiration juicing. In simple terms Ben Bernanke has shown a REAL preference for pumping money into the financial system on the exact week when options are expiring...The final trend that has dominated this market is cousin to the Manic Monday Ramp Job. It is the Night Session Ramp Job...from September 13, 2009 until year-end, ALL of the stock market's gains occurred in the over-night futures session from 4:00 ET to 9:30 AM ET...So there you have it, the three most dominant trends of this market rally. None of them are pretty. None of them involve fundamentals. And ALL of them are directly related to the Fed's liquidity pump.

Formula; markets Rally; simple terms.

zero hedge Mon 2009-11-30 11:15 EST

Fannie Mae Reports Massive Q3 Loss, Asks For Another $15 Billion From Government As It Is Set To Become Largest US Landlord

The latest particular does of lunacy and economic calamity coming out of the intellectual midgets at Fannie and the FHA should be sufficient to push the market well into 1,100 territory tomorrow. FNM's loss for Q3 is $18.9 billion, up from $14.8 billion in Q2, a time when the market was up a good 15%: ever wonder who keeps on subsidizing those gain? That's right - you. Credit-related expenses increased to $22 billion in Q3 from $18.8 billion in Q2. Oh, and Fannie now wants another $15 billion rescue from the Treasury (which is having some troubles with getting that pesky debt ceiling raised to one googol) so it can continue with its plan of keeping shadow inventory away from the market, rent foreclosed houses to their owners at staggeringly low rates, and continue the pretence that bank's balance sheets are well capitalized...

15; asks; becoming largest; Fannie Mae Reports Massive Q3 Loss; government; landlord; set; Zero Hedge.

Calculated Risk Wed 2009-11-25 11:38 EST

Fannie Mae: $18.9 Billion Loss, Requests Another $15 Billion

CalculatedRisk

Press Release: Fannie Mae Reports Third-Quarter 2009 Results Fannie Mae (FNM/NYSE) reported a net loss of $18.9 billion in the third quarter of 2009, compared with a loss of $14.8 billion in the second quarter of 2009. ... Third-quarter results were largely due to $22.0 billion of credit related expenses, reflecting the continued build of the company's combined loss reserves and fair value losses associated with the increasing number of loans that were acquired from mortgage backed securities trusts in order to pursue loan modifications. ... As a result, on November 4, 2009, the Acting Director of the Federal Housing Finance Agency (FHFA) submitted a request for $15.0 billion from Treasury on the company's behalf.

15; 18; 9; Calculated Risk; Fannie Mae; losses; requesting.

Dr. Housing Bubble Blog Fri 2009-11-20 08:25 EST

Fannie Mae and Wells Fargo Announce Creative Mortgage Solutions: A New Thing Called Renting. Option ARM Scenarios, Lease for Deed, and Delaying the Financial Future.

Last week, foreclosure Hall of Fame member and government stepchild Fannie Mae announced a stunning $18.9 billion loss. Remember last year when we were told that bailing out the enormous Government Sponsored Entities that we would be turning a profit? Well that didn't exactly pan out and both Fannie Mae and Freddie Mac have been a vortex for taxpayer money. With that said, Fannie Mae announced a ``lease for deed'' program that will essentially convert struggling homeowners to that feared word, renters. In the same week after Attorney General Jerry Brown sent his letter to the top option ARM wheelers and dealers in California, Wells Fargo came out with its ingenious solution. Wells Fargo has decided, at least as it stands, to convert their Pick-A-Pay option ARMs into glorious interest only loans for periods of six to ten years.

deed; delays; Dr. Housing Bubble Blog; Fannie Mae; financial future; leased; New Thing Called Renting; Option ARM Scenarios; Wells Fargo Announce Creative Mortgage Solutions.

naked capitalism Tue 2009-10-27 11:49 EDT

Wow, judges now nixing lenders' foreclosure claims entirely in court

Edward Harrison of Credit Writedowns

Gretchen Morgenson: One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn't proved its claim to a delinquent borrower's home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. Edward Harrison: I see this as a watershed case in jurisprudence surrounding mortgage-related bankruptcies and foreclosures. The reason this is huge is that it echoes the case in Kansas...what legal rights do lenders or their agents have in foreclosure in the new byzantine world of securitized mortgages. In the New York case the judge nixed the entire claim as the mortgagee could not prove it had legal claim to the mortgage note...PHH and MERS, the two lender agents in each cases, are not the actual owners of the mortgages. They are the agents of the mortgagees. This is why these cases have a lot to do with securitization.

court; foreclosure claims entirely; judge; naked capitalism; nixing lenders; Wow.

zero hedge Thu 2009-09-17 09:42 EDT

Excess Liquidity Game Is Coming To An End

David Rosenberg notes M1, M2 and MZM have commenced contracting at an alarming rate: M1 fell 1.0% in the August 24th week and over the past four weeks is down at a 6.5% annual rate. M2 has contracted in each of the past four weeks too and over that time has slipped at a 12.2% annualized pace, which is a near-record decline. We see the same trend in the broad MZM money measure -- off at a 15.8% annual rate over the past month. Bank credit also remains in a fundamental downtrend -- contracting at an epic 9% annualized pace over the past four weeks. So for the first time in the post-WWII era, we have deflation in credit, wages and rents, and from our lens this is a toxic brew that in the end will ensure that the focus on capital preservation and income orientation will be the winning strategy over a strict reliance on capital appreciation.

comes; ending; Excess liquidity game; Zero Hedge.

naked capitalism Tue 2009-09-08 15:19 EDT

Links 9/8/09

DownSouth tellingly quotes Hannah Arendt and paraphrases Reinhold Niebuhr on economic growth and progress.

Links 9/8/09; naked capitalism.

Calculated Risk Fri 2009-09-04 19:01 EDT

Junk Bond Default Rate Passes 10 Percent

CalculatedRisk

From Rolfe Winkler at Reuters: U.S. junk bond default rate rises to 10.2 pct -SP The U.S. junk bond default rate rose to 10.2 percent in August from 9.4 percent in July ... Standard & Poor's data showed on Thursday. The default rate is expected to rise to 13.9 percent by July 2010 and could reach as high as 18 percent if economic conditions are worse than expected, SP said in a statement. ... In another sign of corporate distress, the rating agency has downgraded $2.9 trillion of company debt year to date, up from $1.9 trillion in the same period last year. Bad loans everywhere ...

Calculated Risk; Junk Bond Default Rate Passes 10 Percent.

Bruce Krasting Fri 2009-09-04 18:31 EDT

Fannie Has .9 Trillion in Troubled Loans - 8K

Bruce Krasting

Fannie Mae's 8k has an interesting slide. It is a look at their questionable assets. The slide is not easy to read. It can be found in the 2009 Second Quarter Supplement, on page 5. The report describes FNM's exposure to problematic classes of mortgages on their book. That total comes to a whopping .9 Trillion. The total book of business is $2.7 Trillion, fully 32% of their book is troubled.

8k; 9 trillion; Bruce Krasting; Fannie; troubled loans.

Mish's Global Economic Trend Analysis Sun 2009-08-30 12:03 EDT

Greater Than One in Four FDIC Insured Institutions are Unprofitable; Bank Problem List at 15 Year High

Michael Shedlock

The second quarter 2009 Quarterly Banking Profile has some interesting charts and facts that inquiring minds will be interested in.Insured Institution Performance Higher Loss Provisions Lead to a $3.7 Billion Net LossMore Than One in Four Institutions Are UnprofitableCharge-Offs and Noncurrent Loans Continue to RiseNet Interest Margins Show Modest ImprovementIndustry Assets Decline by $238 BillionThe Industry Posts a Net Loss for the Quarter The Industry Posts a Net Loss for the Quarter Burdened by costs associated with rising levels of troubled loans and falling asset values, FDIC-insured commercial banks and savings institutions reported an aggregate net loss of $3.7 billion in the second quarter of 2009. Increased expenses for bad loans were chiefly responsible for the industry's loss. Insured institutions added $66.9 billion in loan-loss provisions to their reserves... ``Conventional wisdom regarding money supply suggests there is massive pent up inflation in the works as a result of the buildup of excess reserves...The reality is excessive debt and falling asset prices have rendered the best efforts of the Fed impotent. Banks are not well capitalized, they are insolvent, unwilling and unable to lend.''

15-year high; Bank problem listings; FDIC insured institutions; greater; Mish's Global Economic Trend Analysis; unprofitable.

Fri 2009-07-24 00:00 EDT

Jesse's Café Américain: Friedman Resigns as NY Fed Chairman, Had Been Buying Goldman Stock in 2008-9

Jesse's Café Américain: Friedman Resigns as NY Fed Chairman, Had Been Buying Goldman Stock in 2008-9 -- ``it is perfectly all right for a Fed Chairman to buy shares in one of the banks he is 'regulating' especially when he is helping to make critical policy decisions directly involving them.''

2008 9; Buying Goldman Stock; Friedman resigns; Jesse's Café Américain; NY Fed Chairman.

Tue 2009-04-21 00:00 EDT

The feds must investigate AIG's fishy $12.9 billion payment to Goldman. - By Eliot Spitzer - Slate Magazine

The feds must investigate AIG's fishy $12.9 billion payment to Goldman. - By Eliot Spitzer - Slate Magazine

12; 9; Eliot Spitzer; Fed; Goldman; investigate AIG's fishy; payment; Slate Magazine.

Mon 2008-06-09 00:00 EDT

Hussman Funds - Weekly Market Comment - The Fed's Policy Rule: Regret-Minimax - June 9, 2008

"government spending is a much stronger determinant of persistent inflation trends than money itself."

2008; Fed's Policy Rule; Hussman Funds; June 9; Regret-Minimax; weekly market comments.

Fri 2008-03-21 00:00 EDT

Mish's Global Economic Trend Analysis: How To Beat The Street (the old fashioned way)

Goldman level 3 assets rise about 9 billion; net income 1.5 billion

beat; Mish's Global Economic Trend Analysis; old-fashioned way; Street.

Fri 2008-02-15 00:00 EST

Money Matters: World Elite Rats Destroy U.S. Sovereignty

by Elaine Meinel Supkis; in comments: "people can't credit a handful of intelligent and very directed and motivated people who desire to launch a war...The 'leaders' mill around, hoping for excuses to draw the sword and attack. But the sort of people who launched the 9/11 attacks were classic in their organization and the way they carried out their plans. The US contribution was to ignore them, not interfere with them and to let them do as the attackers wished. The DESIRE of Bush for an attack was very great."

money matters; World Elite Rats Destroy U.S. Sovereignty.

Thu 2007-11-29 00:00 EST

naked capitalism: On Fictitious Government Statistics (4.9% GDP Growth Edition)

overstating GDP

4; 9; Fictitious Government Statistics; GDP Growth Edition; naked capitalism.

Mon 2006-09-11 00:00 EDT

America's warrior nation - The legacy of 9/11

America's warrior nation - The legacy of 9/11, by Gore Vidal

9 11; America's warrior nation; legacy.

Wed 2005-02-09 00:00 EST

Reason: Neal Stephenson's Past,

Reason: Neal Stephensons Past, Present, and Future: The author of the widely praised Baroque Cycle on science, markets, and post-9/11 America

Neal Stephenson's; reasons.