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.

Fri 2010-10-08 21:11 EDT

4ClosureFraud Posts Lender Processing Services Mortgage Document Fabrication Price Sheet >> naked capitalism

Yves Smith

...document fabrication is widespread in foreclosures. The reason is that the note, which is the borrower IOU, is the critical instrument to establishing the right to foreclose in 45 states (in those states, the mortgage, which is the lien on the property, is a mere ``accessory'' to the note). The pooling and servicing agreement, which governs the creation of mortgage backed securities, called for the note to be endorsed (wet ink signatures) through the full chain of title...Evidence is mounting that for cost reasons, starting in the 2004-2005 time frame, originators like Countrywide simply quit conveying the note. We are told this practice was widespread, probably endemic. The notes are apparently are still in originator warehouses. That means the trust does not have them (the legalese is it is not the real party of interest), therefore it is not in a position to foreclose on behalf of the RMBS investors. So various ruses have been used to finesse this rather large problem...We finally have concrete proof of how widespread document fabrication was...This revelation touches every major servicer and RMBS trustee in the US...The story that banks have been trying to sell has been that document problems like improper affidavits are mere technicalities. We've said from the get go that they were the tip of the iceberg of widespread document forgeries and fraud...

4ClosureFraud Posts Lender Processing Services Mortgage Document Fabrication Price Sheet; naked capitalism.

Tue 2010-08-24 19:45 EDT

HOMEOWNERS' REBELLION: COULD 62 MILLION HOMES BE FORECLOSURE-PROOF?

Ellen Brown

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles--and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof...

62; Foreclosure-Proof; home; homeowners; rebellion.

New Deal 2.0 Thu 2010-07-22 15:54 EDT

The Summer(s) of Our Discontent

Marshall Auerback

Virtually every profile on Larry Summers tells us that he is one of the most brilliant economists of his generation...Only Robert Rubin and Alan Greenspan played a more important role than Summers in promoting the deregulation and lax oversight that laid the foundations for the current crisis...the latest FT defense reflects Summers's fundamental lack of understanding of modern money. Contrary to his view, the late 90s surpluses was not the reason for that period's prosperity. The surpluses are what ended the prosperity. And until the public understands this, we should expect no fundamental improvement in economic policymaking from the Obama Administration...he violates one of Abba Lerner's key laws of functional finance: a government's spending and borrowing should be conducted ``with an eye only to the results of these actions on the economy, and not to any established traditional doctrine about what is sound and what is unsound.'' In other words, Lerner believed that the very idea of what good fiscal policy means boils down to what results you can get -- not some arbitrary notion of ``fiscal sustainability''...The government budget surplus meant by identity that the private sector was running a deficit. Households and firms were going ever farther into debt, and they were losing their net wealth of government bonds. Growth was a product of a private debt bubble, which in turn fuelled a stock market and real estate bubble, the collapse of which has created the foundations for today's troubles...

0; discontent; new dealing 2; s; summer.

Mon 2010-05-24 10:57 EDT

Asia Times Online :: World Order, Failed States and Terrorism

Henry C. K. Liu

The Washington Consensus, the synchronized ideology of US-based establishment economists, has for a quarter of a century wrought havoc in the developing world, leaving in its wake "failed states" vulnerable to economic, if not military, takeover. Yet the great failure of our age is not the concept of the sovereign state, but market fundamentalism itself...[10 part series]

Asia Times Online; failed state; terror; World ordering.

Wed 2010-05-19 11:53 EDT

billy blog >> Blog Archive >> When you've got friends like this ... Part 2

Part 2 in a series I am running about the propensity of self-proclaimed progressive commentators and writers to advance arguments about the monetary system (and government balances) which could easily have been written by any neo-liberal commentator. The former always use guarded rhetoric to establish their ``progressive'' credentials but they rehearse the same conservative message -- the US has dangerously high deficits and unsustainable debt levels and an exit plan is urgently required to take the fiscal position of the government bank into balance. In doing so, they not only damage the progressive cause but also perpetuate myths and lies about how the monetary system operates and the options available to a currency-issuing national government...

Billy Blog; blogs Archive; friends; Part 2.

zero hedge Thu 2010-05-13 17:50 EDT

Willem Buiter Issues His Most Dire Prediction Yet: Sees "Unprecedented" Fiscal Crises, US Debt Inflation And Fed Monetization

...we were very surprised when we read Willem Buiter's latest Global Economic View (recall that he works for Citi now). In it the strategist for the firm that defines the core of the establishment could not be more bearish. In fact, at first we thought that David Rosenberg had ghost written this...Buiter presents a game theory type analysis, which concludes that the US and other sovereigns will soon be forced into fiscal austerity. Among his critical observations (we recommend a careful read of the entire 68 pages), are that the US is highly polarized, and that the Fed, which is "the least independent of leading central banks" would be willing to implement "inflationary monetisation of public debt and deficits than other central banks." The next step of course would be hyperinflation. And Buiter sees America as the one country the most likely to follow this route. Most troublingly, Buiter predicts that a massive crisis is the only thing that can break the political gridlock in the US in order to fix the broken US fiscal situation...

debt inflated; dire predictions; Fed Monetizing; fiscal crises; see; unprecedented; Willem Buiter Issues; Zero Hedge.

zero hedge Fri 2010-04-23 20:02 EDT

An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility

Recently, Zero Hedge presented a snapshot analysis of the various securities that made up the triparty repo agreement involving JPM, Lehman and the Fed. We uncovered numerous bankrupt companies' equities that were being pledged as collateral for what ultimately was taxpayer exposure. To our surprise, this discovery is not an exception, and in fact in the days immediately preceding the collapse of Bear Stearns first, and subsequently, Lehman Brothers, the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions. On two occasions last year: on March 16, 2008, and subsequently on September 14, 2008, the Federal Reserve first established what is known as the Primary Dealer Credit Facility (PDCF), and subsequently amended it, so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent...

equity markets; Fed's interventions; overview; Primary Dealers Credit Facility; Zero Hedge.

naked capitalism Wed 2010-04-07 19:38 EDT

Have Bloggers ``Won''? And Is That a Bad Thing?

...[MSM difficulties] Richard Kline: ...Most of the MSM is owned by large corporations which abhor any serious questioning of the status quo. Most of the MSM decided a generation ago to pitch their product at the soft middle of the demographic curve; that's `dumb down' to those ow you who need a scorecard. Most of the MSM went to recent journalism school and bought into the idea of false `balancing' which has castrated their editorial opinion in favor of whoever is driving debate by telling the latest Big Lie. Then there is the problem of self-interested 'sources,' hardly new, and manageable when journalists were allowed to have an opinion themselves, but deleterious when they are supposed to be `neutral,' i.e. readily maniplulatible. Then there is the issue that too many journalists have decided to become propagandists for the status quo of the moment, making their reportage the worst kind of bandwagon swillage. Then too, MSM has responded, or rather _not_ responded to the emergence of new kinds of media spreading current information reportage: just when the MSM needs established `quality brand' to fall back on they find that they gutted the brand to fellate large shareholders and the interests of the same.

bad things; bloggers; naked capitalism; won.

Jesse's Café Américain Wed 2010-04-07 19:06 EDT

Banks Come Back For Another Bailout in Ireland While the US 'Manages Perceptions'

Jesse

The whole notion of bank bailouts is a tremendous injustice when not accompanied by personal bankruptcy and civil and criminal prosecution for those banks managers who created them and are found guilty of fraud. In addition, the owners of the banks, whether through debt or shares, should be wiped out and the bank placed in a proper receivership while its books are sorted out. The US is an accounting mirage. The notion that it will make money from its stake in Citi is a sleight of hand. The enormous subsidies to the banks both in terms of direct payments, indirect payments through entities like AIG, and subsidies such as the erosion of the currency and the deterioration of the real economy, will never be repaid. ...the facts seem to indicate that the US is still pursuing a policy of managed perceptions, accounting deceptions, and old fashioned insider dealing and other forms of corruption that always accompany government, but reach a feverish pitch in times of crisis. It is the establishment's form of looting.

Bailout; banking comes; Ireland; Jesse's Café Américain; managing perception.

Jesse's Café Américain Wed 2010-04-07 19:03 EDT

King World Interview with Andrew Maguire the Silver Market 'Whistleblower'

Jesse

"The Biggest Fraud in the World" I do not know what to think about this, except to just offer it up to you for your own information. I am disappointed, however, that only the blogs, and almost no one in the mainstream media, have bothered to cover this story and to speak to the principals, and to either debunk them, support them, or even consider what they have to say. This really is like the Harry Markopolos story, trying to get a hearing on the Madoff ponzi scheme, and being repeatedly ignored, intimidated, and discouraged in every way possible by the establishment, and even fearing for his life... I have now listened to this tape five times, carefully. It is a bombshell. This has to be dealt with, one way or the other. Bring it out into the light of day, and let the facts be known. This is either the equivalent of the fictionalized testimony on the order of the Salem Witch trials, or one of the most damning accusations of malfeasance in office against quasi-governmental agencies, and probably US officials, since Teapot Dome...

Andrew Maguire; Jesse's Café Américain; King World Interview; silver markets; Whistleblower.

naked capitalism Sun 2010-02-28 13:13 EST

Das: Mark to Make Believe -- Still Toxic After All These Years!

Satyajit Das

n 2007, as the credit crisis commenced, paradoxically, nobody actually defaulted. Outside of sub-prime delinquencies, corporate defaults were at a record low. Instead, investors in high quality (AAA or AA) rated securities, that are unlikely to suffer real losses if held to maturity, faced paper -- mark-to-market (``MtM'') -- losses. In modern financial markets, market values drive asset values, profits and losses, risk calculations and the value of collateral supporting loans. Accounting standards, both in the U.S.A. and internationally, are now based on theoretically sound market values that are problematic in practice. The standards emerged from the past financial crisis where the use of ``historic cost'' accounting meant that losses on loans remained undisclosed because they continued to be carried at face value. The standards also reflect the fact that many modern financial instruments (such as derivatives) can only be accounted for in MtM framework. MtM accounting itself is flawed. There are difficulties in establishing real values of many instruments. It creates volatility in earnings attributable to inefficiencies in markets rather than real changes in financial position...

Das; Make-Believe; marked; naked capitalism; toxic; years.

Tue 2010-01-12 23:32 EST

Dr. Edwin Vieira, Jr. on the Failure of the Public Sector, the Coming Military Crackdown and What Can Be Done to Stop It

...The foremost problem-because it is the source of, or contributes significantly to, almost every economic difficulty now plaguing this country-is the inherent and ineradicable instability of the present monetary and banking systems centered around the Federal Reserve System. The second problem derives from the first. It is the ever-accelerating development of a first-class para-militarized police-state apparatus centered around the United States Department of Homeland Security, with its tentacles reaching down into every police force throughout the States and localities. Fundamentally, this apparatus is not, and never was, designed to deal with international "terrorism". If that were its goal, its first task would be absolutely to secure the southern border of the United States, which it has never seriously attempted to do. Rather, it is being set up to deal with what the political-cum-financial Establishment anticipates (and I believe rightly so) will be massive social and political unrest bordering on chaos throughout America when the monetary and banking systems finally implode in the not-so-distant future-surely in hyperinflation, and probably in hyperinflation coupled with a gut-wrenching depression. Of these two problems, the second is actually the more dangerous...

Coming Military Crackdown; Dr. Edwin Vieira; failure; Jr; public sector; stop.

Debtor's prison Sun 2010-01-03 10:37 EST

Would a Single World Currency be GOOD for the world?

MAAA

...One Single World Currency (SWC) is a topic that we have discussed many times from the very early days of this blog. For months, our discussions have focused on the causes behind the eventual collapse of the current USD-backed financial system, the apparent INEVITABILITY of this collapse and the very high LIKELIHOOD that the proposed solution to this will be a global monetary system backed by a single currency unit -- perhaps a modified version of an IMF SDR as Jesse suggests, or something new altogether. While most of our energy has been spent demonstrating the high likelihood (in our opinion, inevitability) of a SWC, we have been cowards when it comes to taking a stance on a SWC either way. Our apparent neutrality thus far has been largely motivated by a desire to remain unbiased while we explored some of the Numbers/definitions first. Having set these foundations and thought about the matter for some time, the gloves finally come off and we declare ourselves to be VEHEMENTLY OPPOSED to a SWC, both technically and in principle and spirit...we argue that the significantly increased trade granularity of the past few decades diminishes the need for a SWC, and in fact, creates ideal situations for the establishment of more localized currencies, which would be infinitely more stable than a SWC...increased trade granularity (which is a fact) increases the pheasibility and stability of local, floating currencies, to the point that they might be a preferable alternative to a SWC.

Debtor s Prison; good; Single World Currency; world.

Bruce Krasting Thu 2009-11-19 10:52 EST

FHFA's DeMarco Speaks - Ouch!

Bruce Krasting

FHFA's Acting Director Edward DeMarco provided written testimony to the Senate today. I would give his presentation a B+. There is little room for optimism in this story. Mr. DeMarco did not gloss that fact over. A few snips from that speech: -From July 2007 through the first half of 2009--combined losses at Fannie Mae and Freddie Mac totaled $165 billion. In the first half of 2009, Fannie Mae and Freddie Mac together reported net losses of $47 billion. -Since the establishment of the conservatorships, the combined losses at the two Enterprises depleted all their capital and required them to draw $96 billion. The combined support from the federal government exceeds $1 trillion. -The short-term outlook for the Enterprises remains troubled and likely will require additional draws...

Bruce Krasting; FHFA's DeMarco Speaks; Ouch.

zero hedge Thu 2009-11-19 10:38 EST

An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility

the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions. On two occasions last year: on March 16, 2008, and subsequently on September 14, 2008, the Federal Reserve first established what is known as the Primary Dealer Credit Facility (PDCF), and subsequently amended it, so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent.

equity markets; Fed's interventions; overview; Primary Dealers Credit Facility; Zero Hedge.

New Deal 2.0 Tue 2009-11-03 20:07 EST

Roosevelt Institute Director and Senior Fellow Rob Johnson will lead Soros' $50 Million Effort

Rob Johnson, Director of the Economic Policy Initiative of the Roosevelt Institute, has been pegged to lead financier George Soros' $50 million effort to create an ``Institute for New Economic Thinking'', which will fund research, convene symposiums, and establish a journal -- all in the name of promoting free market skeptics and creating a new economic paradigm. To this end Soros is gathering market-skeptics this week, including Roosevelt Institute Braintruster and Nobel Prize-winner Joseph Stiglitz, George Akerlof, Michael Spence, and Sir James Mirrlees to start the conversation. ``Economics has failed not only to predict and explain what happened but has also failed to protect society,'' said Johnson in an article in Newsweek. ``That's what the crisis revealed. The paradigm has failed. There is no guidance.''

0; 50; effort; lead Soros; new dealing 2; Roosevelt Institute Director; Senior Fellow Rob Johnson.

Jesse's Café Américain Tue 2009-11-03 19:36 EST

Obama's Economic Policy Has Doomed the US to Stagnation - Or Worse

Jesse

This was the very moment of Obama's failure, when he allowed Summers, Geithner and Bernanke to establish the principle of "Too Big To Fail" and set up a financial oligarchy at the expense of taxpayers. We would have expected this out of the Treasury under Hank Paulson, but to see this kind of policy error favoring Wall Street over the US taxpayers from a government elected on the promise of reform is inexcusable, a disgrace. ...(Bloomberg) Nobel Prize-winning economist Joseph Stiglitz said the world's biggest economy is suffering because of the U.S. government's failure to nationalize banks during the financial crisis.

doomed; Jesse's Café Américain; Obama s economic policy; stagnated; worse.

Bruce Krasting Sat 2009-10-10 12:57 EDT

FHFA's DeMarco Speaks

Bruce Krasting

FHFA's Acting Director Edward DeMarco provided written testimony to the Senate today...From July 2007 through the first half of 2009--combined losses at Fannie Mae and Freddie Mac totaled $165 billion. In the first half of 2009, Fannie Mae and Freddie Mac together reported net losses of $47 billion. Since the establishment of the conservatorships, the combined losses at the two Enterprises depleted all their capital and required them to draw $96 billion. The combined support from the federal government exceeds $1 trillion. The short-term outlook for the Enterprises remains troubled and likely will require additional draws...

Bruce Krasting; FHFA's DeMarco Speaks.

Asia Times Online Sun 2009-09-13 10:25 EDT

THE BEAR'S LAIR : Possible October surprises

Martin Hutchinson

The inflation that might be expected in the United States from unprecedented expansionary monetary policies has failed to appear, while huge budget deficits have yet to produce higher interest rates. Far from being signs of a new economic paradigm, this merely means new bubbles are forming...Commodities and gold therefore are the destination of this year's hot money and are forming the new bubble...a fair-sized bubble has developed in the T-bond market...however...a modest resurgence in US inflation or difficulty in a long dated T-bond auction could cause confidence to flee the Treasury bond market and yields to leap uncontrollably upwards...the long-term costs of excessively cheap money are beginning to be seen in the US economy itself. By allowing money to remain so cheap for so long, and by running incessant payments deficits, the United States has surrendered the advantage of its superior long-established capital base, narrowing its capital cost advantage over emerging markets and exporting that capital to countries with less profligate approaches. Huge budget deficits, themselves worsening the trade deficit, merely export yet more US capital to the surplus nations. That makes it inevitable that the years ahead, in which the United States will no longer enjoy a capital advantage over its lower-wage competitors, will see highly unpleasant declines in US living standards.

Asia Times Online; BEAR'S LAIR; Possible October surprises.

Jesse's Café Américain Fri 2009-09-04 19:12 EDT

Hong Kong Bringing Its Gold Home From London

Jesse

"In the house of the wise are stores of precious treasure and oil, but a foolish man devours all he has." Proverbs 21:20 The People's Republic of China has been urging its citizens to convert some part of their savings into gold and silver, having recently liberalized the procedures by which individuals can obtain it. Hong Kong has built a new world class bullion vault, and is repatriating its gold reserves from the London Bullion Market Association (LBMA), where some speculate it had been committed for sale many times over. Hong Kong wishes to become its own regional Asia market maker for bullion metals. The rest of the world will rein in the Wall Street financial establishment, because the bankers have demonstrated an inability to manage their financial affairs...

Gold Home; Hong Kong Bringing; Jesse's Café Américain; LONDON.

Sat 2008-05-24 00:00 EDT

The price of everything: Power failure on Wall Street

unsupportable commodity valuations promoted by discredited Wall Street establishment

power failure; Price; Wall Street.

Tue 2007-10-02 00:00 EDT

The Establishment Rethinks Globalization

by Willam Greider (The Nation 2007-04-30); Ralph Gomory "what established authorities teach Americans about global trade is simply wrong"

Establishment Rethinks Globalization.