winterspeak.com Sat 2010-05-22 14:02 EDT

Richard Koo, who is so close, is still wrong

winterspeak

...Richard Koo, who understands the situation in Japan (which is very very similar) quite well still makes suboptimal recommendations because he too does not understand how the financial system works...He's correct in saying that massive fiscal stimulus saved Japan. They really were on the brink of their Great Depression in the 80s, and have avoided it without going to War. This is good, but none of it was necessary, so really represents a massive failure. Koo thinks that the Govt is spending the money the private sector has saved. In fact, Govt spending is what is giving the private sector its savings! Government is not borrowing anything. Japan should really just massively slash taxes and fund its private sector. Let the balance sheets heal already! Koo does not talk about all the terrible malinvestment that the Governments fiscal spending did. The US should simply implement a payroll tax holiday until inflation starts to tick up. Right now, the US's savings desire is not as high as the Japanese's, but a double dip might get it closer. That just means the US will need even higher deficits. It took Japan 20 years to start getting comfortable with sufficiently large deficits. Now might be a good time to go long the Nikkei, actually.

closed; com; Richard Koo; Winterspeak; wrong.

naked capitalism Fri 2010-03-19 15:02 EDT

SEC, Fed Alerted By Merrill of Lehman Balance Sheet Games in March 2008

...The Valukas report shows both regulators were monitoring Lehman on a day-to-day basis shortly after Bear's failure. They recognized that it has a massive hole in its balance sheet, yet took an inertial course of action. They pressured a clearly in denial Fuld to raise capital (and Andrew Ross Sorkin's accounts of those efforts make it clear they were likely to fail) and did not take steps towards any other remedy until the firm was on the brink of collapse (the effort to force a private sector bailout as part of a good bank/bad bank resolution)...Merrill warned both the SEC and the Fed in March 2008 that Lehman was engaging in balance sheet window dressing of a serious enough nature for it to put pressure on Merrill (as in it was making Merrill look worse relative to the obviously impaired Lehman)...

Fed Alerted; Lehman Balance Sheet Games; March 2008; Merrill; naked capitalism; SEC.

Fri 2010-02-12 21:31 EST

The Cash Committee: How Wall Street Wins On The Hill

Ryan Grim and Arthur Delaney

...In the fall of 2008, Democrats took the White House and expanded their congressional majorities as America struggled through a financial collapse wrought by years of deregulation. The public was furious. It seemed as if the banks and institutions that dragged the economy to the brink of disaster -- and were subsequently rescued by taxpayer funds -- would finally be forced to change their ways. But it's not happening. Financial regulation's long slog through Congress has left it riddled with loopholes, carved out at the request of the same industries that caused the mess in the first place. An outraged American public is proving no match for the mix of corporate money and influence that has been marshaled on behalf of the financial sector...

Cash Committee; Hill; Wall Street wins.

Thu 2009-11-19 10:26 EST

How Goldman secretly bet on the U.S. housing crash | McClatchy

Greg Gordon

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting. Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies. Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk...

Goldman Secretly Bet; McClatchy; U.S. housing crash.

Tue 2009-09-22 08:29 EDT

Guest Post: Satyajit Das on Dr. Jekyll and Mr. Hyde Finance

Satyajit Das

One year ago, AIG was brought to the brink of bankruptcy as a result its exposure under credit default swaps (''CDS'') (a form of credit insurance). Asset backed securities and Collateralised Debt Obligations (''CDOs''), which lived up to its cheery nickname Chernobyl Death Obligation, brought the financial system to the edge of collapse...If you assumed that these events meant that wild beast of derivatives would be tamed, then you would be wrong. History tells us that there will be cosmetic changes to the functioning of the market but business as usual will resume in the not too distant futureIf you assumed that these events meant that wild beast of derivatives would be tamed, then you would be wrong. History tells us that there will be cosmetic changes to the functioning of the market but business as usual will resume in the not too distant future.

Dr. Jekyll; Guest Post; Mr. Hyde Finance; Satyajit Das.

Tue 2009-02-24 00:00 EST

AlterNet: Is America on the Brink of a Food Crisis?

by Robert Jensen

AlterNet; America; brink; Food Crisis.

Fri 2009-02-13 00:00 EST

Mish's Global Economic Trend Analysis: Brink of Debt Disaster

(John Kemp)

brink; Debt Disaster; Mish's Global Economic Trend Analysis.

Wed 2009-02-11 00:00 EST

US and UK on brink of debt disaster- International Business-News-The Economic Times

brink; Debt Disaster; Economic Times; International Business-News; UK.

Tue 2008-09-02 00:00 EDT

Mish's Global Economic Trend Analysis: Ten Financial Entities On The Brink

brink; Financial entity; Mish's Global Economic Trend Analysis.