Submitted by Deadhead
Dear Larry Summers: You’re a funny guy!
Larry: So many of us really do appreciate your oft noted deep concern in regards to the unemployment situation in the USA as well as the big push to rein in the banks, but with thousands of comedians out of work, it just isn’t fair that you are delivering the best comedy and crowding out these comedians from their rightful work.
You really banged it home the other day at the Economist’s Buttonwood Gathering in the city of CSO’s (Collateralized Shit Obligations), also known as the electronic pump and dump financial center, currently rated number 3 in the world, irrespective of Marc Haines’ daily claim otherwise.
Let’s take a look at a few of your statements from the conference that will certainly cement your odds of post Obama employment with Lorne Michaels.
"Financial institutions that have benefited from government support can, should and must use this moment to think about what they can do for their country -- by accepting the necessary regulation to protect the American people," Summers said in remarks prepared for delivery at the Economist's Buttonwood Gathering in New York. – Larry Summers
Larry…since when is it up to these institutions to “accept” regulations? The way the deal is supposed to work is that the American people via Congress pass laws to tell said institutions what they can do or not. You know what is even funnier? We probably have all the laws and regulations already on the books but the regulators (surprise Larry, that would be the Executive Branch, where you work and have previously worked) have simply sat on their asses and looked the other way. By the way, please don’t go all political and blame previous administrations because all administrations have been guilty of letting the cheat street banking crowd get their way. So, cut the crap and publicly state that the Obama administration will aggressively enforce the law through the SEC, FDIC, OCC, OTS, CFTC, Treasury, and, oh yes, the FBI and Justice Department. We do not need any more words, we need action. Now.
"There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system." – Larry Summers
Standing ovation on this one Larry because you are absolutely correct, notwithstanding your buddy Lloyd Blankfein’s hypocritical whining in last weekend’s WSJ. Speaking of that, LB, have you retired that $22 Billion of FDIC TLGP debt that we American taxpayers are backstopping with our risk? For pete’s sake, when is Goldman Sachs going to go out to the cap markets and borrow like a big boy instead of continuing to hang on the FDIC teat?
Anyways, back to you Larry. We taxpayers already know that we are supporting the banks, but essentially all that has happened is they have used that wall of money to go out and play in the financial market sandboxes, shuffling electronic greenbacks back and forth in yet another bubble induced paper profit extravaganza. We are not producing economic growth or jobs in this manner and the banks certainly do not appear to be disgorging the huge amount of crap debt on their balance sheets, save for the allegedly independent Federal Reserve buying spree of MIAAHMBS (Mold Infested And Abandoned Houses Mortgage Backed Shit) through freshly devalued American dollars. Speaking of those balance sheets, how about you and the administration commenting on some reasonable financial approach to fix this mess, with definitive time standards, other than the menagerie of revised FASB 157 “mark it anyway you want”? Seeing that FASB 166/167 is effective Q1 2010 (unless the Amer. Bankers Assoc. can get off a Flutiesque Hail Mary pass and crush it), how about telling us American taxpayers what the administration’s official position is in regards to the necessary large increased capital requirements that will be necessary to offset the GCITOSIVFM (Grand Cayman Incoming Tsunami Of Special Investment Vehicle Fecal Matter)? I see the financial institutions are whining and moaning to Sheila Bair that the audacity of putting aside capital to cover massive incoming losses is anathema to them and would result in the complete and total annihilation and destruction of the United States of America by the time Q1 earnings are reported. Seems to me that we have seen this movie before.
From Mish’s site: “In calling for financial-services companies to accept new regulations, Summers said bank executives and other financial-industry managers should consider the recent financial crisis within the context of a broader set of crises that have occurred in recent years, including the Latin American debt crisis, the 1987 stock-market crash, the savings-and-loan debacle, the Mexican financial crisis, the Asian financial crisis, the collapse of Long Term Capital Management and the bursting of the dot-com bubble.”
Larry: that’s a real knee slapper for you to be giving a reminder that people who have been involved in the referenced crises should learn from their mistakes. So, where were you when all this happened? And Greenspan? And Bernanke? And your pal Rubin? And the Wall Street crowd? How come no mention of the current derivative crisis, you know, the one mentioned by Brooksly Born when you were at Treasury? Didn’t you have some phone calls with her?
"[We have] one crisis every three years," Summers said. "Surely a system that produces this many accidents and accidents this severe is a system that is in very much need of reform."- Larry Summers
Larry: You got this comedy routine thing down pat because there is just nothing like ending with a big kaboom! How about some more “reform” jokes like this:
Let’s just say for laughs that the historic debt levels of consumers, corporations, the Fed balance sheet (that part that the Fed tells us about, anyways) local/state/Federal governments as well as the enormous toxic debt of our financial system have been, ummmm, errr, uhhhh…. “contained”. Yes, that’s it: contained! Tell the people that the monster has been “contained”. Oh joy, phew, we’re safe now!
How about we then have the Fed create zillions and zillions (that would be “Z” as in Zimbabwe) of new dollars and buy the toxic debt from various institutions? Hey, how about they then take that money and play in the stock market, driving up equity prices to P/E ratios higher than the average American can count and do yet another stock market bubble bath (you know, kind of like your examples of LTCM and the dot com bust)? Americans will feel soooo good that the Dow Jones “hit 10,000”, just like 10 years ago, now that they have spent the last of their 201k on boxes of macaroni and cheese and the ever popular ramen noodles. Let’s leave them dying in their seats by telling Main Street not to worry a bit, even though unemployment is still going to go up, it’s always a “lagging” indicator and we are entering a jobless recovery! If that doesn’t work, perhaps we can get the mantra going that the same crew who got us here has new and improved economic engineering that is on the verge of the greatest economic theory of all time: The Growthless Recovery! Surely that will kick the Dow to 12,000 and save some coin for the PPT on futures purchases.
Then, in a classically historical fashion, let’s prove once and for all, darnit, that a central bank like the Fed can successfully monetize the direct debt of a bunch of respectable and altruistic politicians (say, $300 billion for starters) with no adverse effects whatsoever? Hey, it’s different this time people, trust us, okay?
Larry, I cannot tell you how many times I have read in many sources that you are “..the smartest guy in the room.” I’m also reminded that in the land of the blind, a one eyed man is king.