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Chris Whalen Sends Memo To Obama, Says It Is Time To Break The Refinance Strike By The Big Banks
Memo to Obama: time to break the refinance strike by the big banks
by Chris Whalen
There are growing signs of unease bordering on desperation inside the
Obama White House. Most of the O Team now understands that the real,
private economy never got out of Dip Number One. The prospect of a
permanent downward shift in “trend growth” to a lower track, and
continued double digit unemployment, are driving a search for
alternative measures that has even touched conservatives in the worlds
of finance and economics.
The Obama Administration and the Fed have taken the position that the
crisis affecting the U.S. economy and the financial sector is slowly
ending. In fact, the largest banks remain profoundly troubled by bad
assets on their books as well as claims against these same banks for
assets sold to investors. By allowing banks to “muddle along” and heal
these wounds using low interest rates provided by the Fed, the Obama
Administration is embracing a policy of deflation that has horrible
consequences for U.S. workers and households.
In a post over the weekend on ZeroHedge – “Bernanke Fed Drives Deflation With Zero Rate Policy”
— I described the negative effects of the Fed’s low interest rate
policy on bank earnings, as well as consumer and corporate spending and
saving. When interest rates are low, savers move their preference for
liquidity to infinity, especially after the past several years of market
breakdown. Retirees spend less because the interest earned on bonds and
savings has plummeted. Here’s an excerpt:
When the Fed buys securities through QE, it is removing
duration from the markets, pushing down yields and volatility. For a
while this boosts the net interest margin (NIM) of leveraged investors
such as banks, who are able to borrow at lower rates to fund current
assets. As assets re-price to the low rates maintained by the Fed,
however, NIM begins to disappear. Over the medium to longer term, think
of duration and NIM as being linked, so obviously a sustained period of
QE is bad for NIM. This is why NIM in the U.S. banking sector is
starting to fall.
Just as the earnings of leveraged investors like banks are starting
to suffer due to zero rate policy, so too the spending by all manner of
savers, from retirees to companies and not-for-profits to
municipalities, is falling too. Fed Chairman Bernanke and the other
members of the FOMC are killing the real economy to save the banks — but
none of the benefit flowing to the banks is reaching U.S. households.
In fact, the Obama Administration has been providing political cover for
the Fed to conduct a massive, reverse Robin Hood scheme, moving
trillions of dollars in resources from savers and consumers to the big
banks and their share and bond holders.
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As John Maynard Keynes said just before he died...
“I wish I’d drunk more champagne.”
+1 :)
Obama's next move is therefore another misguided "get money into people's needed hand" lunacy during which he instructs Benron Bernanke to print as much as it takes to get the velocity going. Ben then replaces his helicopter with a B52 to carpet bomb the economy with another 100 trillion fresh cash. Well we all know where that goes, don't we?
Hyperinflation, bitchez!!
whee no more debt
Mother nature is a bitch and she will have her way with these fuckers. We are fools to think we are above or beyond the touch of natural systems. We are natural systems. Deflation- loss of faith as they print into it - currency crisis.
The jig will be up.
Exactly! Nature has a way of sorting this shit out and it will get sorted out. Such crass and desperate manipulation can only work so long, meanwhile it makes the inevitable collapse all the more painful and harder.
This is a Kantian argument for the existence of God, not nature. If it's nature you want, I submit to you the Human variety of Nature.
They will get their just desserts, but not at the hands of a toothless and nebulous Nature.
you accidentally capitalized 'god'
Poor god. He doesn't fit in lower case society.
http://www.youtube.com/watch?v=GfQTZBA6Jg8
Nature has no purpose?
Mother Nature is a terrorist, just look at Earl.
I guess max pain applies in all sorts of places.
Precisely.
respect bro' but thats my problem...
why wait on mother nature to administer justice...these mother fuckers only understand that which they practise - warfare...shit, im thru with that "don't worry, when u get to heaven u'll get ur pie n the sky" shit... this is class warfare...ride, or die...
Nature does not preclude the options you mention. The spilled blood of all animals eventually waters the grasslands and forests of life. To be very clear, the debt, including the unfunded obligations and the derivatives market, IS A FORCE OF NATURE and will need to be reckoned with every bit as much as a hurricane, earthquake, or tornado. Just because it is man-made does not mean it acts any different than the rest of nature.
Collapse and composting will happen along many dimensions. The system is designed to collapse every 60-80 years because of the concept of interest. These folks are using the collapse to exploit the rest of us who do not have access to the apparatus. But I think they will get theirs, and I don't mean God will get revenge and they will get theirs in Hell. They are making their own worlds and lives, shitty places to live. And yes, some of "God's" creatures are quite conscious of it and quite angry. That too is nature. Deflation is nature. In a normal cycle abundance and scarcity are both normal. We have had too much abundance (not sustainable) for too long. Mother will have her correction.
Mother nature mother nature what's on your plate.
Are you serving up leftovers trying to make the right fate.
Chiron in Aquarius describes the wounded community, the distrust of hope and retreat from ideals. However, it can also raise awareness of how our collective ideas imprison us in an icy world of abstraction. Chiron's last passage through Aquarius was January 1955 until March 1960. This was the suburban '50s in the U.S., a period of withdrawal from idealism. In his last address as president Dwight Eisenhower, the great general, warned America against the growing influence of the military-industrial complex. His words were prophetic, but the message has not be absorbed. Perhaps it will be this time.
Damn skippy
Very well put, nature does take care of everything, maybe not always the way we would prefer, but it will always balance out...like a garden...growth, then compost, which aids the next growth...
"In a normal cycle abundance and scarcity are both normal. We have had too much abundance (not sustainable) for too long. Mother will have her correction."
Golden, absolutely golden...(no pun intended, or maybe it was...:).
It is comforting that you exist with your awareness of the bigg(er)est picture, based on your posts I have read.
Thanks tomdub_1024.
Every other day I have it in me to try and be mature. The rest of the time I am just a MsCreant. Unlike other things in this economy, this can be banked on. We are all miners here in the comments section.
Mark-to-market, yes, empowering FNM/FRE, eh, hell no.
Let housing prices collapse already. That would've been an incredible "stimulus."
why? so people can actually afford homes. crazy talk. heh.
+ at least $72,000,000,000,000
A swing and a miss for Chris Walen, even though I like the guy he is wrong.
This proposal goes against Austrian economic policy so stick it, its wrong. Peter Schiff explained it on his blog the other day.
That's the problem with you Austrians, you adhere to your creed like it's some kind of religious orthodoxy. Gives me the creeps, even though I agree with most of it.
Whalen's analysis of what's going wrong is very insightful and I think mostly correct. His solutions are mostly bad.
thats like saying laws of gravity only adhered to religious orthodoxy.
yes, that's what i mean, y'all seem to think your set of economic theories are as infallible as gravity. gives me the creeps.
they are.
In fact, the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders
If so the why are the banks stocks on 52 week lows? This "weath" transfer is going into the POCKETS of the banksters.....
This "wealth" transfer is going into the POCKETS of the banksters.....
Exactly. We know where to get some back.
Fed Chairman Bernanke and the other members of the FOMC are killing the real economy to save the banks — but none of the benefit flowing to the banks is reaching U.S. households. In fact, the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders.
Bernanke is a putz. He answers to the JPM & GS gangsters.
Jaime and Lloyd pitch, Ben and Timmy catch.
Yup - Jesse Jackson even said it was "Jaime's Town".
Don't forget Hank Paulson and Lloyd "My Publicist Told Me to Vanish" Blankturd. They can pitch or receive, having no qualms about servicing their masters in any disgusting way possible, as long as it is remunerative.
Wasn't Obama a man of the people? Reverse Robin Hood? Hope? Change? ....collapse...
Like all candidates, he's a man of the big check writing people.
Obama had better switch from pro-bank to pro-middle-class real quick or you can kiss the democrats goodbye in November.
Republicrats. Democans. The left/right game is meant to distract us. Same shit, different lobbyist.
Fight back. Stop feeding the beast.
Yep. They're all the same nowadays. It's all a game.
Unk-switching (the way that you mention) is not a part of his or his cohorts/posse's plan. Our Dear President has no clue, nor care, to support the middle class (have some, want more). In many ways, I'm thinking that this is "operation hummingbird" (Night of the Long Knives) or Tet--resulting in the destruction of the Viet Cong. A purifying event, where only the true believers remain.
http://www.google.com/search?q=%22operation+hummingbird%22&ie=utf-8&oe=u...
Then, O will run against the "Do-Nothing" Congress.
But, if we grant that he and his handlers are smart (Soros et al. in the background), then it is all intentional, we just think that the current generation of politicians are honest and have the country's interest in view.
- Ned
(Honest Politician: one who stays bought.)
"Obama had better switch from pro-bank to pro-middle-class real quick"
Yet another "hard pivot"?
Has he ever drove toward the basket?
Reverse wealth distribution
Spread the money around...Wall Street
none for you
all for me
none for you
all for me
none for you
all for me
....
Maybe one for you, nineteen for me:
http://www.youtube.com/watch?v=fCTGRP2u4gw
- Ned
Obama works for the banks. It's pretty clear. Why dirty more words on that topic.
Maybe the next president will be better...
Tell me that is a joke...
Actually, I think this one is dumber than the last one...
George Bush... Give the new guy your Dunce Cap...
Potemkin presidents, Potemkin everything. Ponzi, Ponxi, Ponchi. Tao de Ponxi.
Keep propping it up and we will keep believing that there actually is a functioning system that we can analyze and get numbers out of that make sense.
'In fact, the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders.'
Same as it ever was. Except it'll be the bond holders who get the winnings, not the share holders. They will get screwed just like they did in 2008 when the next crash happens. Bond holders do not not ever go to the barbers; they don't need haircuts. Goddamn hippies.
Unless the banks are taken over like GM and Chrysler. Then the bondholders get screwed too.
I suspect Barry can't handle being called un-American again. Besides, TPTB could not care less about bond holders in a stupid manufacturing company. They care a bit more about the banks though for some reason.
When banks fail they make cannonball-plunge in the swimming pool of the economy. Plus, before they go they make threats of bursting the bottom of the pool out, draining the whole system.
When manufacturers fail they are like a turd in the pool. Gotta live with it a while, but eventually the filter and the chlorine will take care of it. Oh well, no more shitty Chevys... more room for shitty Geelys. Besides, they were shorting GM from a year before....
A barrett .416 at 2000 yards could drop any of those banksters before they blow out the bottom of the pool...heheh...I can see the black helicopters now...shouldn't have had that last glass of wine '-/-
Bondholders will start getting fleeced as soon as interest rates uptick.
It's jarndyce and jarndyce - the O will wait to take action, pending the banks' consuming tax dollars and fees and spending it on outrageous pay[offs] for those running the show.
Its a Bleak House - ing market to be sure!
The Fed and Odummo are trying to force individuals and companies out of the banks and government bonds into the stock market and corporate bonds.
It is punishing those who have been fiscally responsible by saving and rejecting debt.
duh
Yes, nothing has changed. Seven years of party followed by seven years of lean.
hope it's only seven!
Jubilee bitchez... seven years, then one year vacation, 49 years and then reset.
Sometime our policymakers will have to understand that prolonging the statu quo with zero interest rates will just hold deflation - simply because it promotes misallocation of capital.
Something I highlighted recently in a post :
http://themargincallblog.blogspot.com/2010/08/to-stop-deflation-raise-interest-rates.html
Chris Whalen,
The Fed will never, ever raise interest rates again. They will keep rates here until the Fed is dissolved in roughly 10 years (or less). If the Fed raises rates the entire system comes tumbling down, NIM be damned.
I think of the Fed as the first driver on a freeway to hit a patch of dense fog. The minute they hit their breaks they cause a huge pile-up behind them. They're not going to hit the breaks. They may run off the highway because they can't see where they're going but that's a risk they can take. What they know will happen is that tapping the breaks will put a lot of people in the hospital.
You doubt me? Think of that long line of USTreasury investors trying to make %30 a year rolling over bonds as yields fall. What will raising rates do to that line? The Fed might as well set up a Water Cooled Browning .30 caliber machine gun at the Treasury auction window. Right? Are you with me. That's how bloody it would be if they raised rates. Not going to happen.
You're 100% correct. As many say: QE to Infinity! Or more.
That's how bloody it would be if they raised rates.
This is the dilemma that we are in thanks to Benny and his ZIRP policy. He is killing middle America, but he perceives he has no options. Benny started out with the thesis that the GD was caused/exacerbated by the enormous number of failed banks, hence he has done everything to insure their survival. What a huge and costly error in judgement.
I think he cranks up the helicopter and hands out the free money but buys endless treasuries to keep rates down. I see no way this ends well. The sooner some adults take over and demand we take our medicine the sooner the healing starts. Good thing for Benny he does not live in France in 1795 ....
sschu
I think you are quite generous suggesting Benny was merely foolish. The fact is that his decisions helped himself and those around him. Those are not results easily attributable to mere negligence or stupidity.
+$1T
Never assume negligence or stupidity when someone is making money.
Benny a fool/tool or a mastermind, not sure. But he is an academic first, into his equations, data and giving flowery speeches. I vote that he has been used by the best fleecers anyone has ever seen, the Wall Street bankers are as "good" at it as it gets.
This is not to excuse Benny, quite the opposite, he made a deal with the devil, thought he could handle them, could not and should be held accountable. He will someday.
Fool or mastermind, does it really matter, we have been shafted in the end.
sschu
That's assuming that the Fed actually survives the imminent collapse, and its barons (sorry, governors) don't wind up as dog food.
As long as there are nuclear states willing to provide safe harbor, a robber barron need not fear revolution.
It's goin to be bloody no matter what the Fed does...it already is...the banks may have accounting rules on their side to show they aren't underwater, but the middle class American has no such benefit. The IMF set up a credit facility today with, get this, UNLIMITED BORROWING CAPACITY...What the fuck does that tell ya? By your bags of rice and beans, get your PUR water filter and any alcholic beverage you enjoy, then kick back and watch the show!
deflation or inflation? squabble squabble, all partisan paths lead to collapse, bitches!
This article has myopic focus on the housing market. He's trying to cure the disease that struck 3 years ago by having all of the mortgages refinanced. Most good borrowers have already refinanced anyway. Who is going to do principal writedowns and refinancing for all of the bad borrowers? They are just defaults waiting to happen anyway. TPTB will not reestablish that owing money means something again through another wave of free money, this time more 'targeted'. Instead, they will just establish that contracts and owing money means even less, destroying the economy further.
You're a smart one I can tell...two years ago I my assets were strong and in a conservative plan...my real estate was 62% equity and 38% debt. I had a conservative business model - I bought properties I could add 5% value (I was'nt looking for 20% year sitting on my ass)and used my broker's license to get another 5% advantage on the in and out - I had great cash flow. Then the market died. Now I have no cash flow and 20% equity and the a bit less debt, I did everything right, including trusting the system...so go fuck yourself.
http://www.mybudget360.com/how-we-lost-1million-households-from-2008-to-2009-new-census-data-financial-contraction-in-housing/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+mybudget360/QePx+(My+Budget+360)
Household Formation from US Census:
Down 1.3 million households in 2009.
President Obama looked out of the window in the Oval office and thought to himself,I,m President of all I survey,the only cloud on the horizon is the financial problems but I,ve got that covered,
Just then the phone rang,
" Good morning Mr President,Bernanke calling " (President thinks cheek of it a direct call )
he replies, " How many times have a told you,you don,t ring me,I ring you,if you do ring me you fill in a request form in triplicate and wait for a reply "
Bernanke replies " I did Sir one month ago ",
President replies "Well I haven,t seen it and anyway my secretary has been busy dealing with prank calls from some weird outfit called Zero Hedge,those guys are better informed than me,what do you say to that Bernanke ?
reply " I tend to do the opposite of that Tyler Durden Geezer,too truthful for my liking,never make an investment banker,we are in the game of not telling investors the truth "
President replies, "Absolutely correct Sheeple are there to be sheared are they not "
rapidly loosing interest in the call the President then says " Anyway what is it,I am in a meeting in a bit with my private Gold Broker,very pressing matters"
Bernanke then speaks fast in an emotionly charged voice " The markets is tanking Sir,we can,t spend the QE ",
reply "What the $$$£ do you mean you can,t spend the QE,you don,t even have to print it its just a computer credit"
terse reply " The Computer has totally crashed Sir its run out of Zero,s,its gonna take 72 hours to fix and by then the US dollar will be toast "
silence,
President then replies "Well sell some physical from Fort Knox,sell it and make it snappy "
reply "Can,t Sir,since the last audit in 1959 a scam has come to light Sir,Gold has been exiting via the Kitchen Garbage and has gone on so long we only have painted Tungsten Sir "
President replies "Get some credit and buy some physical then "
Bernanke replies " Can,t Sir the Chinese,Iranians,Indians,Malaysians and Arabs have brought the lot Sir "
President replies " Ah well,anyway my meetings calling,you,ll have to speak to Hillary Clinton about all this I don,t deal with minor matters,oh yeah and this call never took place "
Phone call exited.
Just an everyday story from those good old folks at the Whitehouse.
To be continued.
"killing the real economy to save the banks"
Sums it all up quite nicely. But more accurately it is: "killing everyone to save the bankers."
+1
Note he said "bankers" and not "banks".
And not "bank investors".
Nor "bank bondholders."
As for the bankers and politicians after this blows up? Tuez-les tous, Dieu reconnaîtra les siens.» Arnaud Amaurybanksters...as in eat the banksters!
Jack-"We had to destroy the village in order to save it."
http://en.wikipedia.org/wiki/B%E1%BA%BFn_Tre
but, now, considering what we know about Peter Arnett, maybe it wasn't ever said (?).
- Ned
The fed has a dual mandate: Make the rich richer and the poor poorer. So far it's working very well.
Downward spiral to oblivion continues, drip by painful drip. Net worth of Individuals will continue to deflate. Nest eggs, personal assets of every kind will go the same way. Incomes will stagnate (deflate in real terms) and employment opportunities will maintain the downward glide path. Buying power will continue to crater along with balance sheets as the cost of living begins to hit it's inflationary stride. Capital will flee the shores as it has already started to do, going on its merry way to fund sneaker factories in Bolivia, electronics makers in South Korea, and green car makers in Guanzong.
But the zombie banks will open their doors every weekday morning, and Christmas bonuses will continue to dazzle, trickling down to maids, chauffeurs, cooks and butlers. There'll be boom times in the domestic servant industry.
The political parties will continue to sell out to the highest bidder as nobody else has any money. They will only get elected to advance the wealth and power of their backers, which will increasingly be big oil interests (drill,baby, drill!) and banksters of varying stripes (Wall Street will ride again!).
Pretty, ain't it? Only gold will protect your net worth. It will rise as your buying power continues to crumble. I would only dabble in the other PMs cautiously.
Bank Profits Soar, Lending Falls As Banks Pay Next To Nothing For Funds08-31-10 03:00 PM
"Historical records on commercial banks' cost of funds going back to the inception of the agency in 1934 show that the last time banks paid less than one percent for the year was 1960.
With the main interest rate effectively at 0.19 percent, savers suffer in a low interest-rate environment as banks pay less to attract deposits. The Federal Reserve's policy-making body, the Federal Open Market Committee, has kept the rate at which banks lend to each other for overnight funds between 0 and 0.25 percent since December 2008.
Elsewhere in the FDIC report, the agency noted that two of every three banks reported higher profits compared to last year as firms put away the least amount of money to cover losses since the January-March period of 2008. Money socked away for a rainy day would otherwise be recorded as profit."Nice sepia bag.
The Obama administration did all of this to satisfy its benefactors on Wall Street and now the administration and its supporters wonder why they're getting doged.... Seems that the LCC's have been trampled and there is no more trust since the answers provided are either outright lies or sink lower than the "believe what I say and not what you see" kinda crap.
In fact, the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders.
Bush's fault. Only racists and bigots ask questions about Barrack.
god dang brown people r messin' up our culture an' givin' the rich people all the money, danggit the rich people are brown people, too. If ya got money, you're brown. If yer poor, yer brown. Sukkin up all our tax moneys that's needed to kill brown people that're fixin' to make us follow sharia laws.
It's always the brown people, taking & leeching, and keepin' us from doin' something wit our life. Yessir.
Pass me another beer.
Anyway...divide & conquer and stuff: I know how to get under people's skin.
One policy change alone will fix this mess. It will drive a huge amount of liquidity out into equity and real estate investments. Just as Volcker did in the 1980's announce a target inflation rate of say 3%. With Volcker it was to bring disinflation - now the Fed's objective should be re-inflation at all costs, and let the markets know it.
Forget propping up the Dollar let it sink like a stone. Forget targeting rates on Treasuries, who cares about nominal yields. Investment decisions are based on REAL yields. Look at Japan, even with JGBs at 1% their economy is floundering. Target negative 1% real yields on Fed funds and watch the fun begin.
Print to the stated goal, no matter what it takes.
One of the main problems is we have deflation and the Fed does not want to admit it. The deflation is in wages and is masked by productivity. If you have a business that employs 100 peopel and you fire 20% or 20 of them, and make the remaining 80 do the work of 100 with no increase in wages - you have a very insidious form of wage deflation, that does not show up in the CPI/PPI numbers. But it is real, couple that with increasing the amount of health insurance premiums paid by worker s and you have a big problem. Now collapse these remaining workers home equity and 401K balances, it is no wonder we have a very sick economy.
We have to reflate now, before the "deflation" psychology sinks to far in. If it does it will be as hard to change as the inflation psychology was in the 1980's. It will take a pretty large dose of inflation to uproot it.
the indonesian citizen obama will do everything in his usurped power to save the banks.....that's rockefellers' boy...
www.obamacrimes.com
Bernanke cannot raise rates. Japan cannot raise rates. That's a good chunk of the world's debt that is stuck at zero until the lights go out. (Australia and Canada still can raise rates, at least until their housing markets tumble.)
Imagine the effect on portfolios, government finances, pension funds, etc. if US and Japanese rates jumped 200 pips. Japan would consume the totality of government revenues just servicing debt, leaving nothing for schools, roads, defense...government stuff. (I envisage a future Japanese government composed entirely of a single solitary individual, working pro bono, whose job is to make interest payments on the debt. Cannot even afford an office teapot. Call her The Mrs. Watanabe.)
So much new government debt has been issued since ZIRP began, in both the US and Japan, and much of a short duration. So many pensions in Japan have marked their JGB's at current market (in order to book "gains"...it's a Japanese thing), and all recent buyers of US debt need a razorblade to clip the meager coupons.
Ever try hedging a few trillion (or a few hundred trillion in yen)? How about trying to run a matched book when rates go from zero to something and you've been funding short term?
The horror!
Seriously, one day we'll get some investigative journalist that asks. What the fuck does Obama do??? Daily he shows what a tool/fool he is. He wants a stimulus bill, Pelosi pulls a thousand page $700 billion bill passed unread and Oblame signs, unread. He wants Obamacare, Pelosi has got a thousand page $800 billion bill, passed unread and Oblame signs unread. Omnibus $400 bil, Pelosi/Reid whatever on and on.
Oblame does the world apology tour. Obama is always campaigning, still. Throw money at this throw money at that. But mostly for Obam, it's party time. Concerts, WH parties, golf, vacation do some campaigning. Reading from Mr. Teleprompter always. I think, like Biden, Obam is told to limit his public comments without the TOTUS, inflames the public don't ya know.
This guy obviously doesn't like the job, the White House, the constitution. Now with November coming these dems are starting to feed on themselves or keep their distance from each other.
I can only hope for success in November sending a message that the people are mad as hell and we're not going to take anymore. No more bailouts, we need to start throwing people in jail. Do you think any of these clowns give a crap about the train wreck this country is on?
We hear from the White House, "the economy and jobs are the presidents top priority"... bullshit. Oh and we have Cap and Tax plus amnesty which must be passed before November.
Anyone? Oh we have Bernanke, "ZIRP and the last qtr was unusually uncertain". Translation: "I don't have a fucking clue".
Thanks to ZeroHedge for providing a forum for dragging all these corrupt bastards out in the light.
Go ahead and junk my post Obamabots.
There are no Obamabots on this forum. The problem is there are way to many sheep on this forum who actually believe there is a meaningful difference between Odummo and W's policies.
Worst yet the sheep on this board actually believe Odummo is a Socialist, Communist or Muslim. Odummo is smooth talking atheist skumbag who's only allegiance is to the elite who promoted him and funded his election. The goal is to transfer all assets to the elite and leave the debt for the taxpayer.
what he said
Whelan is terrific...same with Meredith Whitney...lets throw in Rosie while we're at it.
The problem is one can agree with them and still lose money. If the market, and we all know what is meant by "the market," really believed the kind of logic that hits ZH every week, the SPX would be where SocGen and others say its going; hell probably lower. But the shorts have been creamed all year. Just this week there was talk about continued purchases of both stocks and real estate by the Fed, and frankly do we really believe the Fed is acting alone to bolster key global asset values?
What's the answer? The mother of all sovereign short squeezes? Anyone capapable of cogent thought knows that the world has been playing for time since the credit crisis hit, (or maybe we should call it the credit plague,) but if sovereigns do whatever must be done to keep the system together, and I mean everything, what are we left with then?
| Jesse’s Café Americain | August 08, 2010
Now might be a good time to re-read The Quiet Coup by Simon Johnson which appeared in The Atlantic Magazine.
Although he keeps using the term "emerging market governments" in fact he is discussing a post bubble country that has experienced a period of express, fostered by a partnership between business and government that is known as crony capitalism.
Here is his description of the rise of the financial sector in the US from his book, 13 Bankers, which describes how the rise of concentrated financial power poses a threat to economic well-being is a must read as well.
"The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.
”Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007."
I have not read his book yet, but it's on my list. I hope he includes some information on the decade long campaign to repeal Glass-Steagall, led by Sandy Weill and Robert Rubin, which opened Pandora's box in 1999. It is a mistake to view what happened as some accident, or a natural development. It was a pre-meditated campaign to subvert the economy and the political protections of the vast majority of US citizens.
In the meanwhile, here are a few quotes from his piece in Atlantic Magazine which is a prelude piece to his book.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.
I am not so optimistic that this reform is possible, because there has in fact been a soft coup d'etat in the US, which now exists in a state of crony corporatism that wields enormous influence over the media and within the government. Let's be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unshakable will to power.
This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill-gotten gains.
But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake up call, and the tide then turns to genuine reform.
http://jessescrossroadscafe.blogspot.com/2010/08/recommended-re-read-quiet-coup-by-simon.html
Bernanke knows what he's doing. Redistribution of wealth under the guise of helping the economy. Through what? Cash for clunkers? Tax credits for overpriced homes? Propping up stocks? Everyones tapped out.
Change is needed and not the kind Obama failed to deliver.
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