Leftfield

Bigwigs Debate 'Too Big to Fail'

Krugman actually makes a valid point amidst his wrong conclusions: A visibly TBTF organization is not necessary to pose a systemic risk. LTCM is an example. Those off-balance-sheet items and leveraged counterparty risks create a situation where they, and now Dubai, can be the pinprick necessary to deflate a bubble and magnify unknown shocks to the whole ponzi system and start an avalanche.
Our leaders profit from this arrangement, not the taxpayers. Don't hold your breath for solutions.

On Bailouts and Moral Hazard

Didn't Washington just sell back $billions of warrants back to GS and a few others before they matured into profitability? Seems, our leaders can't stand it if the taxpayers don't shoot themselves in the foot EVERY time.
The sucker at this poker table is clearly the taxpayer. Who is now forking over the chips to Wall St., win, lose or draw. And, the few leaders who lost their jobs in Sept. '08 drew golden parachutes that could support a city block of normal families, for life.
The specter of mobs with pitchforks is being used to discredit any logical, sensible, moral reform of the rampant abuse of the system by the privileged that's continuing to worsen while Rome burns. Lehman could have been handled with some sensitivity. A false dichotomy between status quo and a straw man of worst case alternatives is stalling any reform and implementation of credible policies. Our overpaid leadership class is demonstrating only skill in acquiring gains for itself. None in solving the problems.

Time for the U.S. Economy to Reindustrialize

I appreciate the sacrifices made to gain and preserve real rights. I have a problem with the overbearing, overreaching government that lets the largest offenders write the laws. it has failed in it's mission to provide basic predictable rule of law to facilitate the pursuit of opportunity without costly, useless and excessive, demeaning claptrap, obstacles and hurdles.
My mother is a lifelong Democrat, usually, and was night supervisor at a nursing home. She marveled how inspectors would come in, make them change a window one year, change it back the next.
I had a rental property, built 1890, after many inspections suddenly had to change the original bathroom window to put a much smaller one. One that wouldn't allow escape.
Not necessarily big deals in themselves except that the legal system and the bloated government and regulatory systems are dysfunctional, destructive and unevenly applied. There are more than enough straws on the camel's back. This is tyranny.

Time for the U.S. Economy to Reindustrialize

"Those control freaks you were talking about were no where in evidence as the mortgage/securitiztion ponzi scheme ran it's course. Nor were there any intrusive government regulations." Tom Armistead.

My point exactly. They pick on the little guy, let the fat political contributors get away with murder, followed by taxpayer assistance. This has been the means that has lowered objective standards in our society by almost every measure, including financial health. That the public, and even those who have the training and knowlege to know better, consider it benighted to even discuss it is appalling and bewildering to me.

Jamie Dimon Makes Best Case for Not Breaking Up Big Banks

Dimon actually advocates consequences to managements and unsecured investors in TBTF's. What's amazing is that that is radical a year after the epic bust. But, I've read convincing arguments that the large institutions do not provide better services or efficiencies. The talent picked for success of running a more local or regional size entity hardly scales effectively when size is excessive.
Those institutions are only succeeding because they are politically favored with overleveraging trading desks that put losses to the taxpayer and mark to magic accounting of their distressed assets. And, financial products have successfully imposed costs and created lavish compensation through opacity, complexity and deceit. All other types of businesses progress by creating efficiencies and lower costs.
Of course, the discussion by our misrepresentative "leaders" is so dishonest and ineffective that any thoughts of consequences at all by a major player is big news.

Time for the U.S. Economy to Reindustrialize

"Paint the building the required color, plant the right type of trees, make the bathroom window the right size, no big deal." Tom Armistead.
Pullease! That this once-great society has to be hobbled to the requirements of obsessive control freaks only is repugnant to me. Look at the results; we're lying, faking and stealing our way to buy a bit more time until the whole ponzi collapses rather than paying our way. Courtesy of all those regulators, lawmakers, paper-pushers we have so much of whose concept of orderliness and control fails where it really counts, such as Wall St. And, hey, what is positive about resultant US finances after this era of mandates, edicts, costs and taxes? Or the educational system?

Too Big to Fail: The Real Choice

Government is desperately, and only, looking for ways to cover up their TBTF friends like a cat covers up in a litter box. Not, properly disposing of the problem at all.
The word "conversion" is quite suitable, pertaining to "contingent convertible bonds." Legally, it means, theft.

The Next Step in the Bank Implosion Cycle

The same managements mostly in charge of the same banks (anyone replaced left with a generational fortune golden parachute), fewer, more concentrated players, thanks to taxpayer largess. They are playing another financial shell game; and I understand the financial carry trade is bad for business in the host country. We'll find out the degree of leverage when this pile implodes.
No discernible efforts to real reform from Washington. No clawback from upfront bonuses management receives for financial engineering that blows up later. No criminal charges; what the heck, they got Martha Stewart a few years ago.
Continued overbuilding thanks to bailouts added to foreclosures. No improvement in the real economy.
Wash, rinse, repeat.

The Secret to the Banking Sector's Success

Our economy and society have been levitated (increasingly badly for the majority) by magic, smoke and mirrors for decades. Going into debt before credit cards once meant, taking an advance on your salary. Clearly, a chunk of your pay was spoken for for a period of time. New, painless-sounding avenues for borrowing have been constantly invented and financially engineered since to hide the truth.
Every new or overworked euphemism for bankrupt, insolvent, broke or ruined has been to perfume, pretend and extend this farce. It's been obvious for decades that unfunded liabilities were multiples of GDP and that a private business using government accounting would be in jail. An advance is now taken out on, what, centuries of our descendants, and it is growing faster than ever. This article shows a new wrinkle ($trillions involved).
Are these lies worth it to us and our grandkids?

More Goldman Outrage

Let's hope their greed will be their downfall. The seeds of their destruction. Soon. It will be appreciated if there's something left for the rest of us by then.

Real and Fake: A Tale of Two Economies

I figured out something about Ebay and will try to extrapolate to this article: Management DOESN'T CARE about the small sellers they are shafting in an economy where Ebay should be a lifeline. They have Paypal, a financial business, and they are setting Ebay on autopilot with the vastly reduced labor force needed to supervise only large merchandisers. They are willing to accept decline in that business as a tradeoff. Paypal is their real focus. Stuffing it to the rabble also keeps them acceptable at the cocktail parties in the "highest" circles.
Our leaders don't much care about the real economy either. It is a nuisance, all these small, complaining constituents. Throw them crumbs, throw them lies, but take care of the best people (crony kleptocrats).
It's working!

Big Banks: The Consensus Is Cracking

Music to my ears. King, a major government official willing to call delusional public policy, "a delusion."
Wall St. has been at the public trough repeatedly, and it got far worse after the repeal of Glass Steagall. So, that genie, at least, can and must be put back in the bottle.
Yes, break up the big banks. Don't forget clawback and, as banks are a publicly-licensed trust, abused like never before, there criminal avenues to pursue.

Wasted Lessons from AIG

Coming the day after COLA was suspended for SS, coming on a year that is likely a record for Wall St. bonuses, I wonder what line of reasoning our "representatives" use. Is it, these policies will somehow work out, despite all evidence to the contrary? Or is it, don't worry, we're all above the law?
Or is it, such abject stupidity that our lawmakers don't have a clue that the $trillions they're handing out to kleptocrats aren't just party favors?

More on Greed, Regulation, Lehman, The Financial Industry

I admit I tended to swallow free-market ideology right up until TARP disabused me. The point you make about greed and sloth being different sides of the same coin, i.e: Both being about obtaining unearned "rewards" despite any suboptimal social outcomes, is most useful. Big government favors rent seekers of all sorts and I wished to be freed from it's burdens, but the most greedy, the oligarchs, discard free markets in a nanosecond to buy the influence that has suffering Main St. paying $trillions to kleptocrats and the largest bonuses in history to Wall St. this year (Bloomberg radio, 10/13).
So, your plan of regulation and a system to handle TBTF failures looks good to me. I like the part about haircuts; how is it GS got paid 100% on contracts it had with AIG?
I would like to see lots of clawback and, there has to be plenty of flagrant criminal activity to prosecute.

If a Bubble Bubble Bursts Off the Balance Sheet, Will Anyone Be There to Hear It?

Off balance sheet items became in-pocket pay to Wall St. This fraud aches for clawback and criminal charges. However, Washington runs it's ponzi finances similarly, and, like two drunks, they keep each other standing.