Simon Johnson

Not just Greece ...

Forget the economists ... call in the criminologists.

I applaud and welcome Paul Krugman's clarification ...

It is NOT a republican versus democratic issue ... It is a reform versus spin issue!

• Thomas Hoenig op-ed: Keep the Fed on Main Street (NYT)
• Internal Goldman inquiry found Fab Fab to be in the clear, probably will not fire the Frenchman, as the SEC's probe commenced in August 2008 (FT)
• Weil: Goldman's Abacus spin dodges the big question (Bloomberg)
• Lowenstein: Goldman's staged explosion deserves apology (Bloomberg)
• Schroeder: Buffet rented good name to Goldman too cheap (Bloomberg)
• Radioshack sale rumors getting more aggressive, someone really needs to dump their position: Shack sale talk heats as CEO eyes pay'Day' (NYPost)
• Citi, with a meaningless market cap, beats meaningless estimates on lower writedowns as FASB 157 is a long lost memory and mark to myth is the norm (Bloomberg)

Surprises these days come from everywhere: one day we find that some of the wealthiest hedge fund managers are only so thanks to clever schemes involving the enabling of investment banks who have the biggest rolodex of "putzes," finding the last remaining "greater fools" available, another day we discover that a deal that Goldman had no qualms about, was passed on by what may well have been the last remaining ethical bank, Bear Stearns. Greg Zuckerman, as pointed out by Wall Street Manna, in his book "The Greatest Trade Ever" describes Paulson's meetings with Goldman, Bear and Deutsche to "ask if they could create CDOs that Paulson & Co. could essentially bet against. Ironically, it was Bear Stearns that rejected the offer: "[Bear Stearns trader Scott Eichel] worried that Paulson would want especially ugly mortgages for the CDOs, like a bettor asking a football owner to bench a star quarterback to improve the odds of his wager against the team ... he felt it would be improper." Eichel told Zuckerman, " 'It didn't pass our ethics standards; it was a reputation issue, and it didn't pass our moral compass." Sure enough, Goldman et al (allegedly) took down Bear shortly thereafter, and gave it away to Jamie Dimon for pennies on the dollar. In the world of Wall Street, where everyone tries to destroy the dumbest, those who play by some ethical historical rulebook all end up seeing a "run" on their liquidity sooner or later.

"[Goldman] designed something intentionally complex that's basically a mechanism of transferring money from you to John Paulson. John Paulson, it is true, has not been charged with anything. But he was involved in designing the security. For all we know right now it was probably his idea and if he walks away without being charged, it shows how broken our system is." This is Simon Johnson discussing the Goldman fraud charges on Friday night with Bill Maher. Could the public's attention now be shifting ever more toward those top performing hedge fund managers who year after year made billions, and instead of praising them for their acumen, are now seeing a sentiment shift toward one of wealth merely as a result of massive criminal collusion between the hedge funds and the big banks... well big bank, cause Goldman is really all that's left of the traditional broker/dealer complex. Which once again invokes our long-standing point: the DOJ should immediately break up Goldman Sachs into many smaller entities, due to the firm's unquestionable (allegedly) criminal monopolistic impact on the marketplace. Christine Varney - wake the #&$* up! And whatever happened to that FBI investigation into SAC? Will Stevie Cohen be next as the mid-term elections approach and the public demands blood from someone?

Is someone finally standing up to the vampire squids of the world?

Or is this yet another p.r. stunt, where deals will be cut, a few low-level patsies will be convicted, and business as usual will continue?

Only time will tell ...

There is very little chance that economists will improve their models because ...

Even folks inside the belly of the beast think they should be broken up ...

There are many factors which affect rental prices, including: (1) the general health of the economy; (2) demographics; (3) housing strength; (4) population growth; (5) migration patterns; and (6) wealth distribution.

Isn't that like Charles Manson saying murder is "deeply unfair"?

Is blogging making any real difference? Are bloggers turning the tide, or howling into the wind?

The small banks will lend, if we just stop the too big to fails from stifling competition ...

Instead of going into a lengthy analysis about the pros and cons of Chris Dodd's financial reform bill, I'll let the Senator speak for himself ...