Offshore Sweatshops.

[xssve]

It's a symptom, as was bundler's trading sexual favors for paper from brokers.

And the credit market freeze was exactly that - there was no liquidity crisis, Banks are flush, the money is there, but they're suddenly loathe to exchange cold hard cash for paper that might turn out to be just... paper.

i.e., it was a confidence crisis - what would cause them to lose confidence?


To make a long story short, having failed to exercise due diligence in obtaining this paper, they now sit on the cash and expect the government to restore the confidence they destroyed so they can get their bonuses again. They can't trust each other so they trust nobody, it's pure pucker factor.

I'd have nationalized every fucking one of them, forced them to swallow their losses, renegotiate the mortgages to reflect a rational market price, and let the ones with the least exposure buy it back as a reward for sound business management - but that would be socialism - it's not your ball, you can't just take it and go home, just go home if you want to, but leave the fucking ball.

To a large extent, this is the underlying truth of a fiat currency to begin with, it doesn't belong to anybody, it belongs to the system, and by extension, everyone.

The drawback of that is it would reward the speculators who created the mess at the expense of the banks that let them do it - which is what is happening anyway, since under the current conditions, they're simply defaulting on their loans if the market value is less than their mortgage - either way the bank is left holding the paper, which is probably as it should be, other than that little problem with credit that results.

The deal that was struck was a good one, but naturally, nobody wants to stick to it - the bottom line here is the bonuses, everything else is incidental, that's how finance works, it's how it's always worked - it not a public service, however much they try to sell you on that idea.

People don't differentiate between Naked short sellers and short sellers. Naked SS isn't responsible for the economic collapse. In your view stocks aren't important right, bond world funds the running of operations at companies? Banks weren't dealing in new bond issuance, GE had trouble issuing new 10 and 20 year bonds. Naked SS are just a sideshow, most people want to blame all short sellers for causing the actual collapse, something that would have been dealt with if people weren't gunning the stocks of the companies down. The short sellers revealed the house of cards, they were the efficiencies in a mostly inefficient marketplace. I don't think the naked short sellers are so terrible. What they did was illegal, but I think it's a real minor issue in the scheme of things.

It's really safe assuming derivatives cast against the housing bubble are the main reason why the credit markets froze. Money thought to exist but it doesn't. Without the panic in bond world, the pseudo run on banks, they're saying the housing market would have been dealt with. I don't follow the newest argument for the crisis, I think it's still a matter of worthless derivatives and insufficient insurance on those MB securities. It wasn't just fear, the actual money to fund operations didn't exist.

Placing any blame on naked SS or legal SS is just a way of pinning down a guy stealing a TV during a riot instead of blaming all of the fixed-income operations at every major bank. Blaming a culture that leads to violence or a culture that leads to financial Armageddon doesn't sit well with the people who created that culture.

 

[JAMESBJOHNSON]

There is a long tradition of Yankee double shuffling. Consider that much of the fortunes of the New England Shipping trade was in the China-India-opium trade.

I think the Brits commoditized the opium trade and built the framework for all later drug cartels, but the Americans helped a good deal.

New England made its money hauling slaves to the New World, then whaling, then opium.

 

[JAMESBJOHNSON]

You might bitch, but I'm sure that JBJ and myself don't own one....I don't because I won't subsidize Apple's exploitation of third world labor, JBJ doesn't because he's too cheap.....
BTW - my woman crushed her's under her heel and tossed it when she learned that child labor probably went into the construction of her favorite music machine.....
The girl makes me proud!!!
Now if I could just get her to quit buying gasoline at Shell.............

I'm cheap in the context of efficient.

There are two kinds of cheap: One kind of cheap buys a pound of ground fat & gristle to save 20 cents; the other kind of cheap goes for the exact-same thing, for less money (resources).

 

[LaRocha]

It's a symptom, as was bundler's trading sexual favors for paper from brokers.

And the credit market freeze was exactly that - there was no liquidity crisis, Banks are flush, the money is there, but they're suddenly loathe to exchange cold hard cash for paper that might turn out to be just... paper.

i.e., it was a confidence crisis - what would cause them to lose confidence?


To make a long story short, having failed to exercise due diligence in obtaining this paper, they now sit on the cash and expect the government to restore the confidence they destroyed so they can get their bonuses again. They can't trust each other so they trust nobody, it's pure pucker factor.

I'd have nationalized every fucking one of them, forced them to swallow their losses, renegotiate the mortgages to reflect a rational market price, and let the ones with the least exposure buy it back as a reward for sound business management - but that would be socialism - it's not your ball, you can't just take it and go home, just go home if you want to, but leave the fucking ball.

To a large extent, this is the underlying truth of a fiat currency to begin with, it doesn't belong to anybody, it belongs to the system, and by extension, everyone.

The drawback of that is it would reward the speculators who created the mess at the expense of the banks that let them do it - which is what is happening anyway, since under the current conditions, they're simply defaulting on their loans if the market value is less than their mortgage - either way the bank is left holding the paper, which is probably as it should be, other than that little problem with credit that results.

The deal that was struck was a good one, but naturally, nobody wants to stick to it - the bottom line here is the bonuses, everything else is incidental, that's how finance works, it's how it's always worked - it not a public service, however much they try to sell you on that idea.

My first and second impulses were that the government should nationalize every bank that asked for TARP money, before the GOV made it safe and encouraged banks to take it. And even though I'm a shareholder in Citi, I still think the government should nationalize and break apart citi because I don't think they're a viable entity past being an efficient deposit bank. Obviously, I'm assuming there's no chance of that and that the government thinks they're going to make serious money on their investment in citi, that's why I buy when the stock goes below 3.25.

The problem with those early impulses was the certainty that Morgan Stanley and Goldman Sachs would have merged and then been the only financial institution dealing in investment that was independent of government meddling. JP Morgan likely would have been the only traditional deposit bank left and who knows if they would've kept their investment wing alive. So you'd have one entity for personal finance that everyone would flock to and one for issuance of business loans and keeping your money 'safe'.

Looking back it seems that the government did just about everything right. The Bush-Obama government has probably done what the Japanese and European centers will never do. Mitigate disaster, make a future of growth possible without years of runaway inflation or deflation. Right now the mantra is 'Jobs will never come back!', but at least we've passed the inflationary hysteria phase. Non-commodity inflation with a growth in GDP is precisely what the doctor wants when exiting a deflationary quagmire, the sort of quagmire the Japanese are still treading water in going on decade three.

 

[JAMESBJOHNSON]

LA COCKAROCHA

Jobs will return but they'll be different jobs, and there will be plenty of hostility and opposition to the new ways until government figures out how to tax them and mega-corporations exhaust their legal challenges. But new industries are on the horizon because America is filled with Henry Fords and Thomas Edisons.

 

[LaRocha]

Besides for America being the most efficient moneymaker ever, America has a healthy growth in population through baby making and immigration that will continually support the basic premise of capitalism. New consumers, workers, and new self-made markets. Populations are still out of control in BRIC countries, while the Japanese and Euros have no- or negative growth. You can't support German style pensions with a dwindling workforce.

The debt to the Chinese only looks out of control because we're still in a recession. Three years ago you'd have some economist whining about the debt on News Hour with Jim Lehrer while everyone else was applauding the tax cuts and fiscal responsibility of the war spending on Fox News. No one's going to care about the debt in two years when there's economic growth and higher taxes, they'll just be complaining about higher taxes and how it's going to kill growth. The routine doesn't change, just the players.

 

[JAMESBJOHNSON]

LAROCHA

I dont share your optimism. I expect we'll experience an Albanian Moment for a while, until American innovators prevail over government and WAL-MART. The aim of the government and WAL-MART is 3 car companies, 3 grocery stores, 3 computer companies, 3 hospital chains, 3 banks...you got the idea. The system is classic Albanian-Soviet Bloc. American genius will be outlaws for a while.

 

[Dragonlipz]

I'm cheap in the context of efficient.

There are two kinds of cheap: One kind of cheap buys a pound of ground fat & gristle to save 20 cents; the other kind of cheap goes for the exact-same thing, for less money (resources).

JBJ, don't be dissin' fat & gristle.....many a young cock has fed on it to grow to pulsing manhood!!!
I always wanted to say that to you.................

 

[xssve]

My first and second impulses were that the government should nationalize every bank that asked for TARP money, before the GOV made it safe and encouraged banks to take it. And even though I'm a shareholder in Citi, I still think the government should nationalize and break apart citi because I don't think they're a viable entity past being an efficient deposit bank. Obviously, I'm assuming there's no chance of that and that the government thinks they're going to make serious money on their investment in citi, that's why I buy when the stock goes below 3.25.

The problem with those early impulses was the certainty that Morgan Stanley and Goldman Sachs would have merged and then been the only financial institution dealing in investment that was independent of government meddling. JP Morgan likely would have been the only traditional deposit bank left and who knows if they would've kept their investment wing alive. So you'd have one entity for personal finance that everyone would flock to and one for issuance of business loans and keeping your money 'safe'.

Looking back it seems that the government did just about everything right. The Bush-Obama government has probably done what the Japanese and European centers will never do. Mitigate disaster, make a future of growth possible without years of runaway inflation or deflation. Right now the mantra is 'Jobs will never come back!', but at least we've passed the inflationary hysteria phase. Non-commodity inflation with a growth in GDP is precisely what the doctor wants when exiting a deflationary quagmire, the sort of quagmire the Japanese are still treading water in going on decade three.

The deal was, that the Government and the Fed would hold bonuses hostage until the TARP money, IOU's in the form of preferred stock, was paid back with tier One capital - in some sense it was a partial nationalization, without the regulatory overhead which is the real problem when it comes to nationalization - the regulatory structures to do that simply don't exist, either the people or the expertise. GM may be a test bed for that sort of thing, but taxpayers are usually leery about such things and for good reason, managing companies on the micro level really isn't the Government's role, in this case I believe the alternative however, is that GM simply disappears.

In spite of this, it's business as usual after the bailout, and they appear to be simply ignoring the deal - although that blog fails to mention how much preferred stock in those companies is still being held by the Government.

It was actually a rather elegant solution to the liquidity crisis, but I'm rather more interested in whether or not the government actually ends up profiting by this, or if "too big to fail" has simply become another rationalization for corporatism.

Naturally, I suspect the latter, and from another angle, given that most of them appear to still be swimming in cash, it looks a lot like a deal to prop their stock prices up so they can collect their bonuses.

 

[LaRocha]

LaRocha made some serious money along with the US Gov by owning citigroup today. The Gov benefited from their stakes in these shitty banks, Paulson used to work at Goldman Sachs and made crazy money making bets like the ones the Gov made two Novembers ago.