George Fiala

The IMF is planning to issue up to $150B in bonds, its first issue ever, an insider says. The move will allow larger emerging-market countries to boost their IMF contributions, in the hope of increasing their pull at the fund.

I wonder what would happen if the US loses it's ability to unilaterally veto any IMF action. Would we leave the fund?

Paul Wilmott, a nerd's nerd, thinks Wall Street quants failed by putting too much faith in their mathematical models. And he's got a plan to save them - and us.

What they did with David Li's formula was the biggest culprit. It let bundlers believe that mortgage default correlation was not a problem, and allowed them to bundle up tons of them and get AAA ratings. Of course, they then thought it was such a sure thing that it was too good to distribute, so the banks kept them off balance and then when it turned out defaults did bunch up, it was the banks that had kept all the risk (but not before they cashed out lots of profits). Remember they all needed to dance while the music was playing. But in the end it is all of us that has to pay to keep the banks going. Hopefully banks will get back to banking from now on (sure, I'm in Brooklyn and we have a bridge to sell, if you believe that one).

According to Rolling Stone columnist Matt Taibbi, Goldman Sachs (GS) basically runs the world, or at least America (which is sort of the same thing, right?).

This is what Smedley Butler said in the 1930's when he quit the marines....


On May 25 06:02 PM rocco69 wrote:

> Even more disgusting is that we invade and occupy so called terrorist
> states to protect GS and other corporate occupiers that have taken
> over and control the nation for their own interest.

According to Rolling Stone columnist Matt Taibbi, Goldman Sachs (GS) basically runs the world, or at least America (which is sort of the same thing, right?).

Maybe it's ok - America will destroy faster and we can start working for the Chinese and rebalance the world economy.

Former labor secretary Robert Reich says Social Security isn't nearly as big a problem as media reports would have us believe. Medicare truly is "a monster," but fixing has less to do with a cash shortage, and more to do with slowing the growth-rate of healthcare costs.

Social Security is an insurance plan... your payments are not taxation, they are payments that every worker must make to ensure that they are not impoverished in old age. You have a choice when you want to start taking payments, and what you get is based upon how much you have paid in. Yes, it did start out with government assistance at the beginning, but lifespans were shorter then so not that many people collected, and by now there is a huge surplus built up, as of today enough to pay all benefits for another 18 years at least and hopefully much more unless unemployments ramps up to Depression levels. It is only a Ponzi scheme if the US government defaults on the money that is owed Social Security that it has borrowed to fund general spending.

Roosevelt set up social security payments separate from tax payments to make sure that it couldn't be taken away by a Republican administration - by paying premiums people are invested into it, and it would be seen as a crime to take it away. Republicans have hated the Social Security program because it is a government run program and they feel that it takes away potential business from the private sector. However, many people have pensions that are administered by private businesses as well as the mandatory Social Security. And based upon how the private retirement plans have fared as of late, we should all be grateful to Roosevelt for making sure we have at least something....


On May 13 06:08 PM archman82011 wrote:

> Both social security and medicare are the biggest Ponzi schemes the
> world have ever seen.
> When are they going to stop pretending otherwise?

Annihilate the Perverse Effect of CDS on Bondholders

Looking at the 11 years since LTCM crash, maybe it would have been better to take the bitter medicine then rather than a smooth unwinding. The wrong lessons were learned and we've gone through two crises since, with this last one a doozy.

The problem of over-speculation is what should be focused upon, and unregulated CDS, especially naked, only contributes to speculation, not to investment in industry.

Credit Default Swaps May Be Playing a Supporting Role in Chrysler Bankruptcy Filings

If we are the greatest civilization, in your opinion, then why would we choose such crappy presidents (also in your opinion)?


On Apr 30 11:35 PM Al-USA wrote:

> I agree, the use of Barry O to refer to President Obama is disgraceful.
> I don't like President Obama, and of course I didn't vote for him,
> and I am very much against his support of the $trillions in Wall
> Street bailouts but, at the end of the day, he is President Obama
> of the United States of America, and, as such, deserves to be respectfully
> addressed; in print or otherwise.
>
> By the way, I also did not like President Bush, but would think the
> same of him or any other President of the, as yet, greatest civilization
> in the history of the planet...

Regulation often has unintended consequences, Nobel laureate Myron Scholes says at yesterday's Milken Institute roundtable on Whither Capitalism? While financial institutions may be regulated, he says, their functions cannot be regulated - and these functions will continue even if financial institutions are regulated to the point of destruction.

also - is this Milken Institute related to Michael Milken? If so, he ought to know better....

Regulation often has unintended consequences, Nobel laureate Myron Scholes says at yesterday's Milken Institute roundtable on Whither Capitalism? While financial institutions may be regulated, he says, their functions cannot be regulated - and these functions will continue even if financial institutions are regulated to the point of destruction.

The fact that this guy, one of those who has caused untold economic pain to millions of Americans is allowed to speak publicly, and even paid for it, ranks with Dick Cheney being free and given a public platform for his nonsense.

94-year-old economist legend Anna Schwartz is worried Ben Bernanke has lost sight of the big picture. Instead of the steady course that monetarists favor, she says the Fed and the Treasury "try to break news on a daily basis," and are focused on immediate gratification. "Bernanke is looking for sensations, with new developments every day."

The article states that most economists now believe that the Great Depression was caused by a lack of liquidity. This statement is said as a given, but I don't believe that is true. Many people still believe in the pushing on a string theory, and it is also true that Fed rates were quickly dropped following the market crash. It is difficult to get away from the populist idea that government budgets must be balanced, Roosevelt himself ran on a balanced budget platform in 1932, and many Republicans today are bitching and moaning over the Fed balance sheet and the budget deficit.

The fact is that we have loads of liquidity, and there has been loads of liquidity throughout this whole century so far - money sloshing around the globe, as was frequently mentioned, referred to the easy availability of credit, looking for bubbles to inflate wherever they could be found.

So while I do not doubt the influence and intelligence of Ms. Schwartz, the Friedman/Shwartz explanation of the Great Depression has been debunked my most everyone except for people like Amity Shlaes who to this day think that government is destroying the economy and most everything else.

Jeffrey Goldberg's superb Why I Fired My Broker.

Yes, I have had trouble trying to explain to my friends who think this way that they are basically blaming the victims. Their point is that since they didn't take out a big mortgage, anybody who did must be somehow evil, or at least a sinner. These are people who don't seem to understand that they weren't tempted because basically they have always been in a position to get a legitimate loan if that was what they would have wanted.


On Apr 15 10:09 PM D_Virginia wrote:

> Still, it's misplaced anger -- and it's very much reaching, at that.
>
>
> Out of a 3-page article about brokers (3 very long pages, being more
> like 16 pages when pasted into Word, totaling more than 6400 words),
> bearfund picked out the one tiny quote about his target of choice
> for his teenage angst: overleveraged homeowners whose government
> aid might raise his taxes by $10.
>
> Not overleveraged insurance companies whose government aid might
> raise his taxes by $100, not overleveraged banks whose government
> aid might raise his taxes by $1000, and not the executives of both
> who are walking away with millions in taxpayer dollars.
>
> Nope, homeowners. Clearly they're the root of all evil.
>
> I have solved the mystery, bearfund is really Rick Santelli.

Three great reads for lunchtime: 1) Obama's productivity mirage 2) Tea parties and TARP 3) The fake recovery

I read the first two - and I don't see what's so great about them. The first uses specious economic theory to explain how universal health insurance and alternatives to fossil fuels are backwards thinking and will lower standards of living... the second claims that these 'tea parties' sponsored by conservative groups are actually spontaneous, and the third one I will get to next.

The Shape of Recovery: Is It a V?

Stephen Roach has been writing Cassandra-like for years that a system in which the whole world is set up to produce things for the US consumer to buy, and to make sure it happens go on to lend us the money to pay for it is inherently unstable. The world has to re-balance, we (in the US) has to start selling to people poorer than us and we have to live on our accumulated wealth for a while as we invest to restart our export industries. This will takes years to happen, and when it's all done maybe we'll have a more stable system, albeit more equal.

So for now I say we are in for a long L, with the bottom of the L in a down position, but maybe after a decade or so, if we make the right decisions, we can be part of global system in which the wealth is shared and all are better off.

Writing this it seems like I'm describing a Utopia, but in a way I'd say it's somewhat similar to the situation in the early 1980s when Paul Volker pulled the plug on the economy to wring out inflation, setting of a couple of decades of relatively good times, but with the systemic flaws described above. Maybe this time we can get it completely right.

The IMF is set to warn toxic debts could spiral as high as $4T worldwide, with $3.1T coming from U.S.-originated assets. Wow, it seems like just last year we found IMF's forecast of $1T in losses shocking. Wait, it was.

This is more than even Roubini was estimating just a few weeks ago...

Obama's Big Win at G20: Europeans Lose Control of IMF

The fact is that it is the emerging third world countries who have money. We are the biggest debtors now.


On Apr 04 05:14 AM wildfirexx wrote:

> Does this mean the IMF will be controlled and run by the emerging
> third world markets, but the west will still be footing the bill?
> Sounds Insane to me!