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.

Mon 2010-08-23 11:11 EDT

Hussman Funds - Valuing Foreign Currencies: Currency is both a means of payment and a store of value. [2000-09-22]

John P. Hussman, Ph.D

Any currency is both a means of payment and a store of value. So when you try to determine what it's worth, you have to consider both what it can buy in terms of goods, and what it can earn if you hold it as an asset. An exchange rate is just the price of a currency...If you look at a currency as a means of exchange...you can get a reasonable idea of the "long term" tendency of the currency by tracking the movements of price indices in two countries. This is what traders refer to as the "Purchasing Power Parity" (PPP) value of the exchange rate...But PPP is only a tendency that holds loosely over the long term. Over the short term, there's another important factor: interest rates...anytime long term interest rates, after inflation (i.e. real interest rates) are expected to be higher in the foreign country than in the U.S., the foreign currency will be above PPP...

2000-09-22; currency; Hussman Funds; meaning; payment; store; valued; Valuing Foreign Currencies.

Jesse's Café Américain Mon 2010-08-16 16:09 EDT

Chris Whalen: Nothing Has Changed Because It's The Fraud and Corruption, Stupid

Jesse

...The dirty little secret of the Dodd-Frank legislation is that by failing to curtail the worst abuses of the OTC market in structured assets and derivatives, a financial ghetto that even today remains virtually unregulated, the Congress and the Fed are effectively even encouraging securities firms to act as de facto exchanges and thereby commit financial fraud. Allowing securities firms to originate complex structured securities without requiring SEC registration is a vast loophole that Senator Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) deliberately left open for their campaign contributors on Wall Street. But it must be noted these same firms have a captive, client relationship with the Fed and other regulators as well, thus a love triangle may be the most apt metaphor...a recent key supervisory officer appointment by the Federal Reserve Bank of New York (FRBNY)...choice of Sarah Dahlgren as Head of Supervision...Ms Dahlgren has been at the center of many of the Federal Reserve's most embarrassing failures in the area of bank supervision and in particular with respect to the failure of American International Group (AIG)...

change because; Chris Whalen; corruption; fraud; Jesse's Café Américain; Stupid.

Sat 2010-05-22 19:56 EDT

36,000 firms at high risk of collapse: Dun & Bradstreet - Business news, business advice and information for Australian SMEs | SmartCompany

James Thomson

Credit agency Dun & Bradstreet has delivered a blunt warning to SMEs about the patchy state of the economic recovery, warning it downgraded the risk profiles of a staggering 80,000 firms during the March quarter -- a greater number of firms than were downgraded during the first quarter of 2009. D&B now has 36,000 firms rated as being at "high risk" failure over the next 12 months, with the majority of those being smaller and young firms (less than four years of operation). D&B's director of corporate affairs Damian Karmelich, says the spike in risk downgrades is particularly worrying when compared to last year, when the economy was performing much worse...

000 firms; 36; Australian SMEs; Bradstreet; business advice; Business news; Collapse; dun; high-risk; inform; SmartCompany.

The Wall Street Examiner Sat 2010-05-22 19:56 EDT

Imagine There's No Credit Market: Another Look At German Controls

...Thus, when people speak of "rescuing the credit markets" they really mean to say rescuing the liquidity providers who failed to assess lending risks so profoundly they can't make required payments. When people talk of German restrictions killing the credit markets, they really mean killing the middle-men (which may or may not have a deleterious effect on government borrowing). German restrictions on certain types of equity and credit transactions are not aimed at reduced government borrowing. They are aimed at reducing the amount (and means of capture) of profit "earned" by middle-men in the transaction- profits, mind you, as per our model, in the case of government borrowing, come either as a result of the money's original owner getting less interest than a direct deal would generate, the government paying more interest (which only comes from higher tax revenues) than a direct deal would generate, or some combination thereof. ...liquidity providing actions of "credit market" middle-men has run amok. As per J.S. Mill, that credit markets are exerting a distinct and independent influence of their own means they are out of order. With increasing frequency, credit is mispriced or unwisely extended and liquidity, the raison d'être of these people, dries up when it is needed most. Yet the middle-men who fail in their tasks expect to be rescued from their failures, and given even more ways to profit from lending other people's money, while the pool of available savings shrinks. ...In one sense I'm quite happy about all of the financial sector bail-outs governments have provided these credit-market middle-men. Before the bail-outs, one had to argue that finance was like a tax on monetary exchange, now this point is clear, finance is, in fact, a tax- and a growing one at that.

credit markets; German-Controlled; imagine; looking; s; Wall Street Examiner.

Sun 2010-05-09 09:18 EDT

Why Do Senators Corker And Dodd Really Think We Need Big Banks? >> The Baseline Scenario

Simon Johnson

On Friday, Senator Bob Corker (R, TN) took to the Senate floor to rebut critics of big banks. His language was not entirely senatorial: ``I hope we'll all come to our senses'', while listing the reasons we need big banks. And Senator Chris Dodd (D, CT) rose to agree that (in Corker's words) reducing the size of our largest banks would be ``cutting our nose off to spite our face'' and that by taking on Wall Street, ``we may be taking on the heartland.'' Unfortunately, all of their arguments in favor of our largest banks remaining at or near (or above) their current scale are completely at odds with the facts (e.g., as documented in our book, 13 Bankers). ...As for why exactly Senators Corker and Dodd really support big banks, it seems increasingly likely that this is all about campaign contributions.

Baseline Scenario; Dodd Really Think; Needs Big Banks; Senator Corker.

Mon 2010-04-19 15:42 EDT

Why The World Is Headed For A Balance Sheet Recession - Credit Writedowns

...[Richard Koo] believes the US, Europe and China are headed for a period of incredibly weak consumer spending not unlike what Japan has been through...what US policymakers are trying to do is to both increase asset prices and consumption in order to short circuit the D-Process i.e. prevent the debt deflation that results from deleveraging and asset and price deflation. Almost all measures taken to date are attempts to prop up asset prices (artificially I believe)...we are in for a debt restructuring across Europe, and in America and China because of the accumulation of debt and malinvestment. Policy makers are reverting to the same old game of asset price inflation to stave this off...It leaves us with chronically weak consumption trends acutely exacerbated by the demographic trends of an aging populace...these dynamics are particularly problematic for Europe because of the strictures imposed by the Euro, the large public sector debt-to-GDP ratios and the advance age of the populace. The Greek problem is the tip of the iceberg and the Europeans are seriously deluded if they think their troubles are over...

Balance Sheet Recessions; credit writedowns; Head; world.

Sat 2010-01-09 13:15 EST

A real ``loaves to fishes'' miracle, taking place every day in America <<; Fabius Maximus

...buying a Congressman provides the highest return on investment available today in America. No wonder capital investment and R&D lag our peers, when bribery pays off so well.

America; day; Fabius Maximus; FISHING; Loaves; Miracle; Real; take place.

The Full Feed from HuffingtonPost.com Thu 2010-01-07 19:46 EST

D+7: Shock and Awe

Dennis Santiago, CEO, Institutional Risk Analytics

..the burning question, of course, is "will moving your money have an effect?" And by effect, I don't mean making a momentary political statement. I mean making a structural difference to the country's financial system. The answer is yes, and here's how..if the public shifts a small fraction of the nation's core deposit base into these institutions it magnifies the stabilizing effect on this portion of the financial system. That's provided the receiving bank is already in good shape, of course, and isn't saddled with other problems. That's why the listing tool we created for the MoveYourMoney campaign only shows the best of breed, to our best ability to identify who they might be. I

7; awed; com; D; full Feeds; HuffingtonPost; shocks.

Thu 2010-01-07 19:31 EST

Capital City | Mother Jones

Kevin Drum

A year after the biggest bailout in US history, Wall Street lobbyists don't just have influence in Washington. They own it lock, stock, and barrel...This is a story about politics. It's about how Congress and the president and the Federal Reserve were persuaded to let all this happen in the first place. In other words, it's about the finance lobby--the people who, as Sen. Dick Durbin [5] (D-Ill.) put it [6] last April, even after nearly destroying the world are "still the most powerful lobby on Capitol Hill. And they frankly own the place."...It's about the way that lobby--with the eager support of a resurgent conservative movement and a handful of powerful backers--was able to fundamentally change the way we think about the world. Call it a virus. Call it a meme. Call it the power of a big idea. Whatever you call it, for three decades they had us convinced that the success of the financial sector should be measured not by how well it provides financial services to actual consumers and corporations, but by how effectively financial firms make money for themselves. It sounds crazy when you put it that way, but stripped to its bones, that's what they pulled off.

capital city; Mother Jones.

The Full Feed from HuffingtonPost.com Wed 2009-11-25 10:44 EST

Fed Beaten: Bill To Audit Federal Reserve Passes Key Hurdle

The Huffington Post News Editors

In an unprecedented defeat for the Federal Reserve, an amendment to audit the multi-trillion dollar institution was approved by the House Finance Committee with an overwhelming and bipartisan 43-26 vote on Thursday afternoon despite harried last-minute lobbying from top Fed officials and the surprise opposition of Chairman Barney Frank (D-Mass.), who had previously been a supporter. The measure, cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), authorizes the Government Accountability Office to conduct a wide-ranging audit of the Fed's opaque deals with foreign central banks and major U.S. financial institutions. The Fed has never had a real audit in its history and little is known of what it does with the trillions of dollars at its disposal.

Audit Federal Reserve Passes Key Hurdle; billed; com; Fed Beaten; full Feeds; HuffingtonPost.

Harper's Magazine Thu 2009-11-19 10:20 EST

An Object Lesson in Governmental Failure: Derivatives reform

KEN SILVERSTEIN

If you want to understand why Congress seems completely incapable of checking the power of Wall Street, look back to a hearing on the Hill last October 7, and the subsequent events surrounding it...he House Financial Services Committee hosted a panel on reform of the market for derivatives,...the committee, headed by Congressman Barney Frank (D-Wall Street), invited a panel of eight guests who were distinguished by their uniformly pro-industry positions...In response to complaints from Americans for Financial Reform, which represents hundreds of consumer groups and labor unions, the committee issued an invitation--the night before the hearing was held -- to Rob Johnson of the Roosevelt Institute. For the committee, the last minute inclusion of Johnson -- a former managing director at Bankers Trust Company and former economist at the Senate Banking Committee and Senate Budget Committee -- apparently constituted sufficient balance...About five days later Johnson submitted his full testimony to the committee, to be included on its website along with the statements of the other eight panelists...the committee's general counsel would not allow posting of the testimony because Johnson had not submitted it during the hearing. (Of course, since Johnson had been invited at the last minute it was impossible for him to fulfill this pointless requirement.)

Derivatives reform; Governmental Failure; Harper's Magazine; object lessons.

Tue 2009-10-27 13:03 EDT

`We still have the same disease' - The Globe and Mail

On anniversary of Lehman collapse, author of The Black Swan can say 'I told you so'...Nassim Nicholas Taleb: Central bankers have no clue. In the first place, the financial crisis was not a black swan. It was perfectly predictable. They ignored the phenomenal buildup in leverage since 1980. They acted like airline pilots who'd never heard of hurricanes. After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions.

disease; globe; mail.

The Big Picture Sun 2009-10-11 16:08 EDT

Kaptur & Johnson on Bill Moyers

Former International Monetary Fund chief economist Simon Johnson and US Rep. Marcy Kaptur (D-OH) report on the state of the economy... MARCY KAPTUR: Think about what these banks have done. They have taken very imprudent behavior, irresponsible. They have really gambled, all right? And in many cases, been involved in fraudulent activity. And then when they lost, they shifted their losses to the taxpayer. So, if you look at an instrumentality like the F.H.A., the Federal Housing Administration. They used to insure one of every 50 mortgages in the country. Now it's one out of four. MARCY KAPTUR: Because what they're doing is they're taking their mistakes and they're dumping them on the taxpayer. So, you and I, and the long term debt of our country and our children and grandchildren. It's all at risk because of their behavior. We aren't reigning them in. The laws of Congress passed last year in terms of housing, were hollow. ... SIMON JOHNSON: And Rahm Emanuel, the President's Chief of Staff has a saying. He's widely known for saying, `Never let a good crisis go to waste'. Well, the crisis is over, Bill. The crisis in the financial sector, not for people who own homes, but the crisis for the big banks is substantially over. And it was completely wasted. The Administration refused to break the power of the big banks, when they had the opportunity, earlier this year. And the regulatory reforms they are now pursuing will turn out to be, in my opinion, and I do follow this day to day, you know. These reforms will turn out to be essentially meaningless.

Big Picture; Bill Moyers; Johnson; Kaptur.

Tue 2009-09-29 11:39 EDT

The Health Care Deceit

Paul Craig Roberts, CounterPunch

...The health care bill is not about health care. It is about protecting and increasing the profits of the insurance companies. The main feature of the health care bill is the ``individual mandate,'' which requires everyone in America to buy health insurance. Senate Finance Committee chairman Max Baucus (D-Mont), a recipient of millions in contributions over his career from the insurance industry, proposes to impose up to a $3,800 fine on Americans who fail to purchase health insurance...The telltale part of Obama's speech was the applause in response to his pledge that ``I will not sign a plan that adds one dime to our deficits.'' Yet, Obama and his fellow politicians have no hesitation to add trillions of dollars to the deficit in order to fund wars...t was the war in Afghanistan, not health care, that President Obama declared to be a ``necessity.''

Health Care Deceit.

The Big Picture Thu 2009-09-03 15:36 EDT

BLS Birth Death Conundrum ?

B/D defenders were horrifically wrong across the board about nearly everything -- about the housing crisis, the credit collapse, the recession, the market crash, and of course, the massive loss of jobs since hiring peaked late 2007-08...

Big Picture; BLS Birth Death Conundrum.

Thu 2009-02-26 00:00 EST

Jesse's Café Américain: America vs. the Oligarchs

Jesse's Café Américain: America vs. the Oligarchs; Bill Moyers interviews economist Simon Johnson; financial coup d'etat

America; Jesse's Café Américain; oligarch.

Thu 2009-02-26 00:00 EST

The banks' reverse takeover of Britain | Coffee House

The banks' reverse takeover of Britain, by Fraser Nelson | Coffee House; financial coup d'état -- ``instead of the taxpayers owning the banks, the banks now seem to own the taxpayers''

bank; Britain; coffee-house; reverse takeover.

Tue 2009-02-24 00:00 EST

Financial Coup d'Etat at The Catherine Austin Fitts Blog

Financial Coup d'Etat at The Catherine Austin Fitts Blog; Washington-Wall Street partnership engineered fraudulent housing and debt bubble, illegally shifted vast amounts of capital out of the U.S., and used privitization as a form of piracy

Catherine Austin Fitts Blog; financial coup d'etat.