How many more iterations do we think will occur before "preprivatization"? JP | Homepage | 02.06.09 - 1:23 am | #
Only when they've wasted every precious effing cent from the borrowing capacity of our once great country. They'll only do the right thing after it's too late to do anything.
Maybe they should wait a few more weeks. Last I see, the equity is getting cheaper by the day. That way, we can save some taxpayer money.. nahh.. that makes too much sense.
I wonder how many "conservatives" presented a few years ago with a choice between socialized medicine or a government owned banking system would have chosen the latter. Bitter irony its what we get first.
Only when they've wasted every precious effing cent from the borrowing capacity of our once great country. They'll only do the right thing after it's too late to do anything. MLM | Homepage | 02.06.09 - 1:25 am | #
Then I need to rephrase my question as: How many more iterations before we've wasted every precious effing cent from the borrowing capacity of our once great country?
I think it's clear, if it wasn't already, that they don't know what the hell they're doing - and what Bernanke thought would work didn't and what all their top advisors thought would work won't and they're tossing up ideas until one of them sticks.
Not realizing that confidence has left the building.
How many more iterations do we think will occur before "preprivatization"? \t JP | \t \t \tHomepage | \t02.06.09 - 1:23 am | # Once we quit talking about tax cuts, we're getting close.
No shit... The freaking cream of the crop economists can't agree what gets us out of this morass. No shit the politicians don't know what the hell to do. You can't get up in front of the american people and say: "sorry. you is all proper fucked. now learn to fish and plant potatoes". so they keep rolling out these retarded attempts at doing the right thing. keep the hope alive! second half recovery! mustard seeds!
you are naive... they are unwilling and hubris ridden, not dumb.
//Also, there seems to be some urgency about putting this together stat. What's likely going on behind the scene that we can't see?
Jillayne | Homepage | 02.06.09 - 1:33 am | #//
How many more iterations before we've wasted every precious effing cent from the borrowing capacity of our once great country? JP | Homepage | 02.06.09 - 1:31 am | #
I can't imagine it will be more than two years. More likely sometime in the next 12 months.
Why won't they (Geithner and co) nationalize or "pre-privative" the banks? Jillayne | Homepage | 02.06.09 - 1:33 am | #
1. Conflict of interest. (They would be wiping out their buddies.) 2. CDS cascade will take out several others. 3. Deflation that will be hard to overcome, because of complete loss of confidence.
If you still haven't buried all your cash in your backyard confidence has not left the building. If you still have cash that mentions god and trust and the federal reserve, confidence has not left the building. when confidence leaves the damn building you'll know it. you'll be wiping your ass with 100 dollar bills trying to exchange bucket fulls for pesos and yuan.
Obama is lost just like Bush was. .... He is using fear tactic just like Bush. \t wawawa | \t \t \t \t02.06.09 - 1:33 am | The one key difference being that Obama lives in this reality and seems to have a more than passing acquaintance with the Constitution, the English language, and Political Economy 101. No, he ain't perfect, but comparing him to the last 8 years at this point is just delusion at best. That being said, I would be really happy if he'd quit finding people to fill cabinet posts who can't fill out a tax return. Is it that fricking hard to be honest on your filings?
do you detect that there is a rising tide of anger coming from the joe six packs? I do. I don't believe that the American public will stand for another bank bailout that leaves the stockholders intact.
YES.. and it will become positively nasty when empolyment insurance runs out.
//do you detect that there is a rising tide of anger coming from the joe six packs? I do. I don't believe that the American public will stand for another bank bailout that leaves the stockholders intact.
Jillayne | Homepage | 02.06.09 - 1:42 am | #//
I suspect monday morning will be another kick the can day. With the Fed providing liquidity, losses are not occurring at lightening speed like last fall.
Sure, trickling in money into banks where they abuse it is awful.
But do you really think this group, or any political group, for that matter is capable of running the entire US Financial System. Not going to happen wihtout massive chaos. Then we'll be discussing how they screwed up the privatisation.
I don't see the political will to take a drastic step unless a catalysing event recognized by everyone occurs. The problems to date have not been appreciated by the majority yet.
Perhaps we should discuss what such an event might be?
"I have run the gamut from dismay to anger to my current emotion, supreme disappointment. ... [I was certain] US policymakers like NEC head Lawrence Summers and Treasury Secretary Timothy Geithner had studied the Japanese crisis up and down and realized that you needed to meet a banking crisis head-on, not with halfway measures that left the system crippled.
...
Why are we here? Why, months after TARP, are we still not willing to dig down in the balance sheets of troubled banks and disgorge the questionable assets once and for all? Why, with a new Administration, supposedly unfettered from the ideological positions of the last Administration?
...
We used to wonder aloud at the intransigence of Japanese policymakers. How could they allow their banking system to deteriorate? Why not take decisive action? Now we know: Fettered to an adherence to the status quo and an aversion to the concept of nationalization, the political will to attack the problem head-on is overwhelmed by the enormity of the financial crisis."
What gets me is this "it doesn't go FAR enough" business. Geez, we know that every government initiative only fails because enough money wasn't spent on it.
I share Dr. Duy's frustration. Calculated Risk | Homepage | 02.06.09 - 1:52 am | #
CR - a lot of folks here think it is the cascading cross defaults & CDS threat that has them clinging to the 'bad bank' like a security blanket. What do you think?
CR - I have come to the conclusion that it's not a lack of political will. The system really is corrupt. Our elected representatives are being paid in ways large and small to avoid doing the right thing. I'm sure that eventually the whole story will come out. But by then it will be too late.
How long and how many dollars has it been since Bear started to blow up? And we still don't have any clearinghouse for CDS's? That's got to make you wonder.
Geez, we know that every government initiative only fails because enough money wasn't spent on it. Comrade Bear (tj & the bear) | 02.06.09 - 1:54 am | #
That pesky SEC and their intrusiveness. If only we'd spent less money on them and cut taxes more...
Neo-liberal and neo-con are two sides of the same coin. It's not at all surprising that neolibs of the Summers and Geithner variety are unable to embrace bank nationalization.
It would be like telling them to opposed NAFTA because it's become obvious that free trade dogma isn't working. You'd be asking them to violate their core ideology (and betray their friends). They won't do it unless and until there are no other options (and by that time it's too late).
I don't care how "smart" Summers is and what a "nice guy" Geithner is. These were horrible picks by Obama.
I think their fear of nationalization is really a fear of unintended consequences.
For example, lets say you nationalize big banks X,Y & Z.
Given the panic in the system, what is to stop everyone pulling their from all non-nationalized banks to redeposit at national (presumably safer) banks? This would damage our economy.
Geez, we know that every government initiative only fails because enough money wasn't spent on it. Comrade Bear (tj & the bear) | 02.06.09 - 1:54 am | #
That pesky SEC and their intrusiveness. If only we'd spent less money on them and cut taxes more...
\t 1966 | 02.06.09 - 2:02 am | #
My answer to both of these comments is that some government initiatives lack the resources to be effective, and some will obviously be ineffective no matter how much money is thrown at them. Without necessarily accusing anyone, may I point out that knee-jerk partisan responses are slowly poisoning the discourse here?
Feb. 6 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithners strategy to aid the nations banks will likely emphasize guarantees of toxic assets over proposals to create a so-called aggregator bank that would remove them from balance sheets, according to people familiar with the plan.
Taxpayers be prepared to over pay bankers and gird thy loins!
Responding to my own comment above: if the fear is a run on all non-nationalized banks damaging the economy, then a plausible solution is stealth-nationalization of the worst banks via guarantees.
Of course, we are left with the outrage of private employees living large on the public teat. But perhaps the alternative scenario is worse.
My answer to both of these comments is that some government initiatives lack the resources to be effective, and some will obviously be ineffective no matter how much money is thrown at them. MLM | Homepage | 02.06.09 - 2:07 am | #
I absolutely agree 100% with you. My apologies for the snark.
I considered mine a shot at politicians in general -- and the economists claiming the stimulus is too small in particular -- and not at any specific party. It's just one of those BS phrases you've heard your entire life.
[Quoting Duy]: Why are we here? Why, with a new Administration, supposedly unfettered from the ideological positions of the last Administration? Calculated Risk | Homepage | 02.06.09 - 1:52 am | #
HAHAHAHAHAHA!! The chains are not ideological. What is so difficult about "bought and paid for" to understand. It explains everything. It makes predicting 100% effective.
I'm going to go further, given the fear and panic, it seems impossible to create a nationalized bank that will not instantly become a super-bank attracting all depositors of USD assets.
Putting it differently, the existence of even one national bank will cause all the others to shrivel.
stealth-nationalization of the worst banks via guarantees. Mr. Beach | 02.06.09 - 2:08 am | #
That's not nationalization. That's protecting equity and bondholders at the expense of taxpayers. And it won't work, because it doesn't write down any debt. Too much debt is the problem -- either you fix that or you're just kicking the can down the road. And what's down the road is starting to look pretty ugly.
HAHAHAHAHAHA!! The chains are not ideological. What is so difficult about "bought and paid for" to understand. It explains everything. It makes predicting 100% effective. Plantagenet | 02.06.09 - 2:11 am | #
Damn straight, which is why I've been confident about my depression call for years.
Neo-liberal and neo-con are two sides of the same coin. It's not at all surprising that neolibs of the Summers and Geithner variety are unable to embrace bank nationalization.
Nationalizing the banks represents a failure to the idealogues on both sides. For the neo-cons, it would mean the free markets have failed. For the neo-libs, nationalization is one step above holding gold (ewwww). Furthermore, it would mean that they don't get to demonstrate the superiority of their ideas; it's not enough for the Best and the Brightest to clean up Hanky Panky's mess. And there's also ego at stake. Simply no way that Rubin et al. slip quietly into the night.
dryfly, I think the CDS issue can be resolved, but it should really all be done in one major step. It sounds like we are going to get another Paulson like temporary solution on Monday.
I don't suggest I have the solutions, but all this wavering really destroys confidence. Oh well ... maybe Geithner will surprise us with a pony on Monday.
What CR said, dryfly. I need to find a ubernerdlike item I saw on CDS recently. A nationalization should invalidate any swap contracts. That's the diff btw swaps and actual real insurance. You get what u pay 4.
Without necessarily accusing anyone, may I point out that knee-jerk partisan responses are slowly poisoning the discourse here? MLM | Homepage | 02.06.09 - 2:07 am | #
May I point out that knee-jerk partisan responses are slowly poisoning the discourse in Congress.
Republicans, the 'allegedly loyal opposition,' are in reality only in it for themselves. They, like their leader, Rush, want Obama to fail so that they can try to win elections in 2010. They can only about two things: power and money.
It's about time for Obama to tell them to go fuck themselves and filibuster all they want so that the American people can see how pathetic the Republicans they elected truly are.
This is war. Choose you side 'cause if you're wearing the other guy's uniform, you're in my sights.
This is like the plot of a horror movie - where the audience can see the monster/villain around the corner but the protagonists keep making the same mistakes over and over again and one by one they get killed by the monster/villain.
IMO the republicans should let Obama try his stimulus plan... he won the election and elections have consequences.... and then when the stimulus is perceived to fail... well they can use that against Obama
In a strange way it's almost like Obama is playing the republicans... I will say that filibustering the stimulus might just be political suicide long term
Either you national all the banks or none. You national one bank, money will flow to it from the non-nationalized, which will cause multiple collapses. Capitalism as we know it is over in that scenario. There's too much ideology, and unwillingness to lose face, among the economic leadership for them to go down that road.
MLM writes:
Only when they've wasted every precious effing cent from the borrowing capacity of our once great country. They'll only do the right thing after it's too late to do anything.
MLM | Homepage | 02.06.09 - 1:25 am | #
Excuse the repeated credit-binge theme, but there may be no 'right thing' to do after decades of excessive, wrong-minded monetary expansion, far surpassing real rates of growth in personal income.
Modern science can be viewed as the culmination of a long series of corrected errors, and recovery from the long credit expansion and current debt collapse may evolve from another long series of corrected mistakes.
How many more iterations do we think will occur before "preprivatization"? MLM | Homepage | 02.06.09 - 1:25 am | # More like premature privatization. The crappy stuffs goes to government, the good stuff of today stays at the bank. Tomorrow that good stuff will be crappy stuff and the bank is one epic fail.
Either you national all the banks or none. You national one bank, money will flow to it from the non-nationalized, which will cause multiple collapses. purple | Homepage | 02.06.09 - 2:34 am | #
I don't know that that is true. If the nationalized bank was paying 0.25% on interest bearing accounts, would everyone run to it?
Until all of the bad loans are cleaned up it will be a long time to recovery. The middle of 2012 anyone. That of course if their is anyone that still has a decent job to buy a new house and a car.
Maybe we need a Postal Service banking system, like Japan. How embarrassing for the major banks -- "sorry BofA, I feel safer keeping my money with the post office!"
Does the government have the ability to study the balance sheets of every bank in the United States over a weekend? Mr. Beach | 02.06.09 - 2:13 am | #
Do they need to? They can just go over to Reggie Middleton's blog. I mean really, if the banks were even half way healthy we wouldn't be speculating on if and w
Reuters.com
[...]
Nationalise the banks, limit the rewards to those who work in what he calls the utility part of the system and have a completely uninsured second leg that can take all the risks it wants and lose its shirt, he said in an interview in Davos at the World Economic Forum.
They rigged the game. We pay them for their profits, there is no clawback so their incentive is to hide the risk they are taking.
Which is why eventually as someone who loves free markets, a total nationalisation of the part of the business that requires insurance and does clearing and payments needs to happen.[...]
I think a lot of people have reached the same opinion. In the past year the deposits in my credit union have increased from less than $600mil to over $700mil. With a slight decrease in membership at that.
otishertz: The frauds need to be punished and their profits clawed back to help pay for reconstruction. Instead we're just giving them mo money. TANJ!!!
guantonimo for the bad bankers and their bad bank!
otishertz writes:
this heartbreak, this disaster, will pass. our way of life will change dramatically. the changes will make us better human beings and better stewards of our Earth.
look at it this way. we all get a second, completely different life.
this demon monster of corporate colonialism that harvested the heath and wealth of its own was the snake eating its own tail. it was impossible for it to persist. car culture and sprawl for sprawls sake was dumb. fun, but dumb.
the whole country is experiencing the same feelings DC. we will ultimately be a different, better and more humble country (after some light cannibalism). maybe we will even become a country that values human life and dignity and takes care of its own.
if we can help our own I predict our pride as a nation will rise as we adapt to and conquer the obstacles before us. we need to fight fear and fascism with kindness, reason, and an intention of healing eachother.
yes, we gotta pull up bootstraps but we also gotta stop insulting those who can't.
i see the multiple lines of homeless on NW 5th avenue snake around corners amd i see the photos of the depression and i think;
GOD DAMN IT if we can give 18 billion in bonuses to frauds, along with trillions in other bailouts then we can go to these economic refugees and comfort them, put a bed under them, put food in their mouths, get them to the doctor, pull needles out of arms.
HEAL AND FORGIVE. these are our people. we are all in this together.
otishertz | 02.06.09 - 3:13 am | #
I think should the banks survive with Fed assistance, then we should garnish all of their wages and profits until paid back in full. I'm tired of this handouts to the ultra rich.
o more corporate liability shield for directors of companies that are entrusted with the safekeeping of our money.
this goes for insurance companies too.
if bank directors are personally responsible for losses they cause their customers (by betting with their money)and cannot pass those losses onto taxpayers with impunity (and a fat bonus)then we are moving in the right direction.
What if the government made it harder/more punitive for both individuals and businesses/LLCs to default? Would that cause many assets to begin the process of detox?
Obama needs to take this to a higher level, especially in his communication. The theatrics are nice, but they have more than run the course. Tonight he came before the crowd with the appeal to authority argument, referring to 'They', those economists say. It's a replay of Bush's 'those intelligence people say'. He has to lay some real cards down on the table and talk straight goods. He should own the argument, take it on personally.
I love that the consensus among the readers is that the stimulus is too small/misdirected to work, yet they castigate the Republicans for not supporting the plan. Why should they vote for something they don't think will work and will further damage the country? Simply because Obama won?
Well, I read Bugeyed Dr. K's column and I read his book. All this yammering, here, in D.c., all over means little. It does serve to vent some pressure from our pipes. Frequent sex is more effective. Laughing out loud at raucous stories is good too. Down here we have on talk radio someone I call the world's largest talking dumb ass. He spouts the anger and roils his listeners to spit flecked anger. He uses nothing that resembles the truth. He whines and snivels like a mangy hound with blood swollen ticks fastened to his balls. And if someone (not me, not ever) should call to correct him about his outright lies he cuts them off with a, we gotta go it's another hard break. Most people listen to him for the entertainment his little circus provides.
Speaking of anger, this is how it grows. Hannity, Beck, Boortz, et al stir the pot and the great silent majority of producing citizens simmer to a slow rolling boil. It's coming, I'm stocked up, and when it happens it will happen all at once to the surprise of absolutely everybody. Violent? No, probably not. Dramatic? Could be. Mostly it will be more and more leaning back, arms folded upon our collective stomach from which springs all things.
I would suggest, the problem isn't wiping out the shareholders (pretty much done), or even the bond holders (oops, there go the pension savings). The problem is what percentage of the Banks' liabilities - ie. customer deposits, are you prepared to wipe out, and how exactly is that going to be explained to the general public.
BH: aside from the unfortunate pic of you in leather, you always have thoughtful things to say
Spoke with a secondary school psychologist who handles six schools in our area. She and her husband (an educator) have moved to 30 acres and lots of space where 'nobody knows we're here'. She has stocked up, is planning a fish pond and perhaps a cow or two. I suggested heritage seeds. She leaned back, raised her eye brows and said, wow I didn't know that about the seeds. I said "Welsome to the long emergency."
She's educated, has property, kids grown and gone. She's mad too. She managed to spew a few of her corn chips while she talked.
"I would suggest, the problem isn't wiping out the shareholders (pretty much done), or even the bond holders (oops, there go the pension savings). The problem is what percentage of the Banks' liabilities - ie. customer deposits, are you prepared to wipe out, and how exactly is that going to be explained to the general public."
Simple. Government simply states that deposits are good. Next objection?
We have excess shelter; we're still growing food pretty well. If we conserve, save, invest, retool, stop spending on wars, and share a lot it may not be that bad.
The more I think on it, the more I believe that the Federal gov't doesn't have the power that it appears to.
Like Fannie Mae or Lehman Brothers, there's a lot of illusion.
Other people may start thinking this way. The CA counties witholding money are a seed. You don't get to break this much of the Belief System & integrity without consequences.
.
shoppingaround(Unrated) writes: \tVolker, Are you in SD? \t shoppingaround | \t \t \t \t02.06.09 - 6:05 am | # ## Nope, that's one down 19 to go, next question Kitty Carlye.
We must get the banks on the road to privatization. Objections, like what happens to the deposits, bond holders, CDSs, etc., are just attempts by socialists to sabotage the process.
Ah, but Cheney's not there...is he? \t shoppingaround | \t \t \t \t02.06.09 - 6:12 am | #
## Nobody knows. He and Joe spent awhile together at an undisclosed location. Notice how soon after that he was jockeying a wheel chair. And Joltin Joe began to sing a different tune....... could be.
I only asked about San Diego, as every time I'm visiting family there, I am shocked at the vile constantly on am radio there. (I've been overseas most of the last 15 years, so there are many things in the states that shock me these days.)
reptillian writes:
We must get the banks on the road to privatization. Objections, like what happens to the deposits, bond holders, CDSs, etc., are just attempts by socialists to sabotage the process.
Sorry, I meant to write "kleptocrats and plutocrats" where I wrote "socalists." It is early here.
There is one connecting thread running through the destruction of the Republic, the corruption of government and society, the abuse of fiat money power, the brutalization of American life, and the imperial overstretch.
Multigenerational thinking is beyond Americans' short-term mind, so they are at a loss in understanding what overcame them since the funding of the FED in 1913:
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."
Woodrow Wilson, after signing the Federal Reserve into existence.
Some would say the destruction of the republic is part and parcel of free people governing themselves. I want to see bankers grubbing potatoes in North Dakota, chopping cotton in Louisiana. Re-education will be fun, productive and who knows--maybe we'll find us a future president just like the People Republic of China did.
We need to restore the free markets. One step in that direction is the privatization of the banks. Our economy is being destroyed by the kleptocrats and plutocrats now in contol of the banks.
Our "bankers" have behaved like terrorists: "Give us 700 B. or something bad is going to happen."
Many people are confused. Yes, strictly speaking, deposits at a bank are "liabilities," on the bank's books. But how do you explain Merrill Lynch salivating at the prospect of having access to BofA's retail deposits?
Wouldn't surprise me about Texas thinking they could leave any ol' time. It's a Republic, not "just" a state. Texans love to claim that they can fly their flag at the same height as Old Glory--same as any other sovereign country. Even school children pledge allegiance to the Republic in the a.m., right along with the Pledge of Allegiance to the U.S.
Many Texans I know would be shocked to see DLD's link denying their ability to cut themselves "free."
We can always find ways to spend more stimulus on our military
"Lind, a prominent theorist of so-called fourth-generation warfare (insurgencies carried out by groups such as al-Qaeda), argues that "the Navy's aircraft-carrier battle groups have cruised on mindlessly for more than half a century, waiting for those Japanese carriers to turn up. They are still cruising today, into, if not beyond, irrelevance."
We have a problem with demagoguery at this point. Many are fond of criticizing socialism, nationalization, etc., but the truth is that the demagogues aren't defending a free market, capitalist system. They are defending a system run by and for kleptocrats and plutocrats. To restore confidence in the banks it is necessary to truly privatizate them. In order to accomplish that goal it will be necessary for the government to sieze them.
To restore confidence in the banks it is necessary to truly privatizate them. In order to accomplish that goal it will be necessary for the government to sieze them. \t reptillian | \t \t \t \t02.06.09 - 7:03 am | #
## Sort of a two step deal, sure I get it. Of course step one is done by force and step two is done at the leisure of the forceful. But will step two happen?
our top leaders do not have loyalty to this country-summers and geithner know what they doing-by the way I bought a 2004 lexus ls 430 for 16900
book value 22000-deflation is here
I like dooming and glooming as much as the next guy/gal, but y'know I actually didn't think we would get here, no matter that I was musing on it a year+ ago.
For those wondering about who's left, who's toxic, and how, there is no better guide than July 14 2008 Bloomberg on Citi. It's all there. Well, $1.1T in sh!tpile is there, but not the frankly alarming CDS story, but still, that's the compass.
In addition, consider the last couple of days of posts on the ABS market continuing bust and now CMBSs. Translate to balance sheets. These - in an environment of bare minimum transparency - would not be paper cuts but mortal wounds. But that is not what we see and will pay for.
Well actually I won't, directly, because I'm taxed elsewhere, in a place that's been right royally skrood in this clusterfk of doom.
Best wishes taxpayers, my heart goes out to you, and yr children, and theirs.
I think it's sorta logical what needs to be done; the constitution allows it, having set precedence:...Governments are instituted among Men, deriving their just powers from the consent of the governed...whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
Well, guys and gals...you safe/happy? And do you consent to any of this?
"The assets of the Fed, thereby, hold up the value of the dollar. At the end of the day, it is these assets that the Fed can use to defend the dollar's value externally and internally."
To those who believe that nationalization would trigger massive cds defaults, cds are merely contracts that the government may cancel by law at any time. For example, in 1933 the government banned "gold clauses" that required one contracting party to pay another in gold. The Supreme Court upheld the law as constitutional. The same principle explains why bankruptcy laws can cause contract rights to be discharged.
Okay, now that I see most of you are mad as hell and are not going to take it any more, what should we be doing other than sticking our head out the window and shouting? Here are my suggestions:
Withdraw your savings from any bank that has received TARP money and let them know that is the reason you are closing your account.
Deposit said savings into a local credit union.
Let your Congressperson know that voting for more bank bailouts is a litmus issue, ie., you will vote for their opponent next election regardless of what else they may do in the meantime.
Forward these suggestions to as many friends/family as you can. Keep it simple and explain that immediate action is needed, just like Paul Revere, to protect their children and grandchildren.
If such a movement gathered even a small amount of steam, it would make any further bailouts fail, and we would finally get to the point in Washington where nationalization would be the only solution. You can tell your grandchildren you were Paul Revere when it mattered...
While it is true that the noise has increased in this forum, I for one am heartened by the change in tone.
The people with some understanding of the problems and with enough concern about them to stay informed, will radicalize fast enough, they might get something done before the masses radicalize- which won't be pretty. (I know there are some influential people here.)
Is there a consensus here, now, that is as radical as that which was dismissed as "tinfoil" only a couple of years ago?
I think there is, and it is very encouraging to me.
"If the American people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered."
President Thomas Jefferson, letter to Treasury Secretary Albert Gallatin (1802)
Dumb luck, I am not sure I understand
how do you unwind the positions?
The commodities act of 2000 passed unanimously by the senate ranks up there with the repeal of Glass Steagall. One of the reasons I feel not much difference between the two parties.
Although I don't remember the case, I seriously doubt the S. Ct's opinion affected existing contracts. It is extremely rare to uphold a law that alters existing contracts. Sale into slavery comes to mind. Of course legislatures can ban certain contracts going forward, or a court could void them on common law grounds. For example, surrogate motherhood payments.
We don't have to go back to the Great Depression (when output fell over 20% and unemployment peaked over 25%); even a stag-deflation and near-depression like that in Japan would be most severe for the U.S. and the global economy. And while six months ago I was putting the odds of this L-shaped near-depression at 10% or so, they have now risen to one-third.
We just can't seem to pull the bandaid off quick, we decided the pull a 1mm at a time. Soros had a dent idea, take the bad assets and all the bank capital. Leave the performing assets and let the private sector recapitalize the banks.
That is an interesting letter you referenced from Jefferson to Taylor.
"The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens. Funding I consider as limited, rightfully, to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally, by the laws of the Creator of the world, to the free possession of the earth he made for their subsistence, unincumbered by their predecessors, who, like them, were but tenants for life"
Well, if the current market price of the equity is used, then these steps would come pretty close to preprivatization. What is the current mkt cap of C? or BAC? Under $45 B combined. So if we used market prices for these converts, we would come pretty close to nationalization. Better than a bad bank. It dilutes the heck out of the existing shareholders, which is a good thing.
Oh, here is a good one Dick Bove just put a strong buy on BAC. One of the best contrary indicators out there. Why that idiot has a job, let alone still is in invited on TV etc is beyond me.
No good will come from propping up the same screwup bankers (at this point, it is the bankers, not the bank, we are propping) that destroyed the system in the first place.
We are now enabler #1 of bad business practices.
PS to poster above, some credit unions are having bad paper problems now too.
Are we going to nationalize now, or are we going to wait until there's no "good" bank left for us to recover even a thin a bailout dime?
All numbers worse than the expectations:
NF Payrolls Actual -598K, expectation -540K
Manufacturing Payrolls Actual -207K, expectation -145K
U3 Actual 7.6%, expectation 7.5%
I think there has to be some trench warfare and lots of jawboning before this can happen, and I think O is doing it.
Most are clueless, are not tied to financial blogs, and need to be clued in.
Somebody who doesn't even know what a heritage seed is isn't gonna do well with a garden, at least at first.
As a half hearted gardener for some years, let me tell you the work is back breaking if you do it as the needed scale, it is also complicated, you need to know a lot, and mom nature can screw you up.
I fear to look at my poor tomatoes, what with the cold we've had here.
mule, I am assuming the positions are not "unwound" but that by law a nationalization is not an event of default, any more than any "sale" of 100% of bank shares would be an event of default. In other words, the contract stays in place, just the default clause is invalidated, which is exactly how FDR and Congress invalidated gold clauses.
Ticker Tape of Doom,
Yes: what Taleb says. Recognize that there is a utility function for banks, either highly regulated or even non-profit (that's what I'd favor). Also recognize that utility banks have no business chasing speculative profits.
Fully guarantee the utility non-profit banks. Let private investment chase the other stuff and let them fail completely if they are wrong - and also tax the snot out of speculative earnings because of the danger it poses for the rest of us.
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
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1 currency sooner, you are correct that such laws are rare, as is the need for them. Congress shouldn't lightly make illegal that which was legal between consenting adults at the time of consent, ie., at the time of contract. But our Constitution does allow Congress to invalidate certain types of contracts on "public policy" grounds. If the main objection to nationalization is the cross-default language in the cds market, I have no doubt that "public policy" can justify the invalidation of such default clauses after the fact, just as Congress did (and the Supreme Court upheld) with respect to the gold clause. After all, it appears these clauses are "weapons of mass financial destruction" that banksters are effectively threatening to detonate if their banks are nationalized.
1) We really don't know what Geithner and Obama might announce next week.
There have been reports in the media for the past couple of weeks, all attributed to "sources," never a named source, the stories are mutually contradictory, and many of the reported plans not only make no sense in general economic terms but also make no sense in immediate political terms.
2) That suggests that these stories are either made up crap by the media or trial balloons or leaks to move public opinion in opposite directions or stories put out by the banks to try to shape the issue.
I don't think these are trial balloons because several of the ideas are too eminently ridiculous. That leaves the other three possibilities or a mix of them.
Remember, Elizabeth Warren just released some really embarrassing information on TARP's purchase of crap at major excess prices...would you ever want to propose another purchase scheme after that???
3) I agree completely that nationalization/preprivatization is the right course of action. But I did not see anyone on this thread reflect on the enormous political mountain that plan would need to climb over to be implemented.
It is not just bankster opposition. It is more than two centuries of American political tradition that stands in the way.
The Republicans in the Senate possibly have the ability to stop the stimulus bill, about which there is far less controversy than there would be for a bank nationalization/preprivatization.
I don't know what Obama and Geithner will say next week, but I am 100% certain that no one could have succeeded in proposing bank nationalization between January 20 and now. No one, not FDR, not Conjure, not Krugman or Yves or Buiter or anyone else calling for it.
To the extent that Obama might see the necessity of some form of nationalization, then his steps so far - waiting for the bad news to come out and shaping opinion, perhaps, through some leaks - would make the most sense to get it done.
4) I think Obama may well have cornered the Republicans by baiting their leaders into making some absurd statements on the stimulus bill. As a matter of political analysis (as opposed to partisan ranting), if he can now paint the Republicans as unconcerned about the 500,000 Americans who are losing their jobs every month and unconcerned about the pleas from Republican governors despearate to keep their states going, then there will be cracks in the ranks of the Repubs in the House and Senate, and more of them will lose their seats in 2010.
5) Last, for all my respect for Conjure and MP, and my recognition that they are far better at forecasting than I will ever be, I think Conjure clock may not have been helpful in creating a short term time horizon. The depression was already baked in the cake. All kinds of actions should have been taken long ago, and several steps should be taken now. Sooner is much better in all kinds of ways . . . and, yet, there is every reason to think the depression will be L shaped. Long term strategy and planning is needed, because there is no short-term fix.
There's lots of public talk about immediate horizons, little about long term plans.
What gets set up for the next few years in terms of political viablility may well be much more important than any specific acts taken now.
It is pretty amazing how the plan keeps shifting. I think they realize the bad bank is unworkable, but they can't take the next step and preprivatize the insolvent banks.
CR, I would like to propose a different scenario. During the campaign, we all heard that Obama will be bringing his professorial style to the Washington. We heard that he really enjoys getting a bunch of people together and debating every single idea.
I think that what we are seeing is this style in action. I think that the media does not know how to handle the bits and pieces that leak out of the White House as they come up with their plan. If we are to believe the dozens of former students who have spoken publicly, these bits and pieces are in no way representative of the final decision; they are simply bits and pieces of the discussion for that day. The media will eventually learn that this is the case and in the future they will file away and not report anything until a decision is made, or they will simply say that this is what they were talking about today but no decision has been made.
This morning Im envisioning a comic strip showing millions of babies crying while they hand over small denominated cash to Obamas right hand while Obamas left hand is distributing billions to a few powerful bankers .Its a very sad day in America.
joe shmoe, I agree that nationalization would be a very difficult sell to many, but I sense that a majority of Americans from both parties are fed up with the socialization of losses for private gain. If Obama wants change, this would be the change I could believe in.
I think the discussion is being moved in that direction, and will be more so next week when the banksters go to Congress.
I think that's part of the process that has to happen first, before a nationalization proposal should be put on the table.
For a comparison, look at what the Clinton's did on Health Care in 1993. They went in with their plan, without laying political groundwork, and they got squashed, big time. And on that issue there was much more real room to compromise and still get a good outcome.
With the banks today it is very different. there is really only one proper way to deal with them, and that just happens to be the most antithetical to long standing political tradition.
Until the nationalize the banks this mess will go on and on and on.
BTW the market is nowhere near bottom. There is no capitulation at all. The bullish mentality still prevails. At the slightest bit of phony positive news the market jumps up. The bottom will come only when good news has no effect on the market. When it doesn't move whatever the news. That seems still long in the future.
I think they're wavering in fear in the face of the inevitable.
How many more iterations do we think will occur before "preprivatization"?
this is starting to get ridiculous.. just nationalize the banks!
These banks gots lot of equity. Who knew? Maybe the govumint is going to make a profit off all that equitee!
How many more iterations do we think will occur before "preprivatization"?
JP | Homepage | 02.06.09 - 1:23 am | #
Only when they've wasted every precious effing cent from the borrowing capacity of our once great country. They'll only do the right thing after it's too late to do anything.
"To deal with the toxic assets at the heart of the financial crisis,"
Therein lies the problem...tis not the heart, but merely a symptom.
Until they get passed that, it will be more of the same capital wasting horse shit we've had for decades and decades.
Nostrovia,
Nothing ever changes.
From 1987 forward, Greenspan's modus operandi for any problem was "throw money at it".
Now that we have realized the error of his ways, what's the solution? "Throw money at it".
Maybe they should wait a few more weeks. Last I see, the equity is getting cheaper by the day. That way, we can save some taxpayer money.. nahh.. that makes too much sense.
How many trial balloons are they going to leak?
At this point, they must clearly have discussed nationalization. It is likely that denial is still the operative word here.
I suspect that many hope that by buying some more time, somehow, something else will happen that will cause the economy to recover.
Comrade Misean is Dope,
Good news! If they don't fix the real source of this problem quickly, there won't be a future for anyone (including them).
I wonder how many "conservatives" presented a few years ago with a choice between socialized medicine or a government owned banking system would have chosen the latter. Bitter irony its what we get first.
Nytol...they said I'd get used to the clonidine in a few weeks, but 2mg of this stuff still knocks my ass out.
dc1000...Good luck.
Nostrovia,
Yves over at Naked Capitalism discusses the possibility of the Fed becoming insolvent. Fascinating stuff.
The short version is this: the Fed overpays for assets and the value of its balance sheet eventually goes negative.
What are the ramifications of that on the purchasing power of the USD?
Anyone looking for nightmares before going to sleep?
Only when they've wasted every precious effing cent from the borrowing capacity of our once great country. They'll only do the right thing after it's too late to do anything.
MLM | Homepage | 02.06.09 - 1:25 am | #
Then I need to rephrase my question as: How many more iterations before we've wasted every precious effing cent from the borrowing capacity of our once great country?
I think it's clear, if it wasn't already, that they don't know what the hell they're doing - and what Bernanke thought would work didn't and what all their top advisors thought would work won't and they're tossing up ideas until one of them sticks.
Not realizing that confidence has left the building.
It does not matter, in the way you think.
//Yves over at Naked Capitalism discusses the possibility of the Fed becoming insolvent. Fascinating stuff.//
Obama is lost just like Bush was.
I am not impressed by this guy "change and hope", he was already talking about catastrophy if congress delays passing thie stimulus bill.
He is using fear tactic just like Bush.
they're tossing up ideas until one of them sticks.
Speed | 02.06.09 - 1:31 am | #
I just wish most of them didn't involve mortgaging the future.
CR,
Why won't they (Geithner and co) nationalize or "pre-privative" the banks?
Also, there seems to be some urgency about putting this together stat. What's likely going on behind the scene that we can't see?
How many more iterations do we think will occur before "preprivatization"?
\t JP | \t \t \tHomepage | \t02.06.09 - 1:23 am | #
Once we quit talking about tax cuts, we're getting close.
No shit... The freaking cream of the crop economists can't agree what gets us out of this morass. No shit the politicians don't know what the hell to do. You can't get up in front of the american people and say: "sorry. you is all proper fucked. now learn to fish and plant potatoes". so they keep rolling out these retarded attempts at doing the right thing. keep the hope alive! second half recovery! mustard seeds!
you are naive... they are unwilling and hubris ridden, not dumb.
//Also, there seems to be some urgency about putting this together stat. What's likely going on behind the scene that we can't see?
Jillayne | Homepage | 02.06.09 - 1:33 am | #//
"sorry. you is all proper fucked. now learn to fish and plant potatoes"
We're getting there.
How many more iterations before we've wasted every precious effing cent from the borrowing capacity of our once great country?
JP | Homepage | 02.06.09 - 1:31 am | #
I can't imagine it will be more than two years. More likely sometime in the next 12 months.
tj,
"I just wish most of them didn't involve mortgaging the future."
That's double plus punny on so many levels.
Gah....
Night.
Nostrovia,
Racist1,
what is money in a post-industrial fiat currency dominated world? think about it..
Hi lucifer,
Thank you for your reply. What would have to occur to change their willingness?
OP-ED COLUMNIST; On The Edge - NY Times
KRUGMAN - ON THE EDGE
Speed,
how is conjure doing..
Why won't they (Geithner and co) nationalize or "pre-privative" the banks?
Jillayne | Homepage | 02.06.09 - 1:33 am | #
1. Conflict of interest. (They would be wiping out their buddies.)
2. CDS cascade will take out several others.
3. Deflation that will be hard to overcome, because of complete loss of confidence.
Third Bank of the United Statesclock:
11:57:50
Also...
C is a dead bank operatin' at this point.
If you still haven't buried all your cash in your backyard confidence has not left the building. If you still have cash that mentions god and trust and the federal reserve, confidence has not left the building. when confidence leaves the damn building you'll know it. you'll be wiping your ass with 100 dollar bills trying to exchange bucket fulls for pesos and yuan.
Red Beans and Rice Recipe : Patrick and Gina Neely : Food Network
Read beans & rice recipe:
Krugman: Democrats have, incredibly, been on the defensive
What else is new. There is no Democratic leadership. The best we have is Boxer for shit's sake.
JP,
2 and 3 are invalid.
you might want to google more information about the conditions and events that led to the french revolution.
humans are incapable of doing the right thing for the right reasons.. they usually do the right thing for the wrong reasons.
//Thank you for your reply. What would have to occur to change their willingness?
Jillayne | Homepage | 02.06.09 - 1:36 am | #//
Obama is lost just like Bush was.
.... He is using fear tactic just like Bush.
\t wawawa | \t \t \t \t02.06.09 - 1:33 am |
The one key difference being that Obama lives in this reality and seems to have a more than passing acquaintance with the Constitution, the English language, and Political Economy 101.
No, he ain't perfect, but comparing him to the last 8 years at this point is just delusion at best.
That being said, I would be really happy if he'd quit finding people to fill cabinet posts who can't fill out a tax return. Is it that fricking hard to be honest on your filings?
lucifer,
do you detect that there is a rising tide of anger coming from the joe six packs? I do. I don't believe that the American public will stand for another bank bailout that leaves the stockholders intact.
Once we quit talking about tax cuts, we're getting close.
1966 | 02.06.09 - 1:34 am | #
Yup - that and 'bipartisanship'.
They'll only do the right thing after it's too late to do anything.
MLM | Homepage | 02.06.09 - 1:25 am | #
Sounds vaguely familiar...a certain cigar-smoking boozer from England comes to mind.
KRUGMAN - ON THE EDGE
FFDIC | 02.06.09 - 1:36 am | #
Yeah, it's all the obstructionista Republicans' fault. If only they would just let Summers and Geithner do what's right.
For all that Krugman is clearly an intelligent guy, I really get tired of the partisan BS. Even if the Repubs aren't part of the solution.
YES.. and it will become positively nasty when empolyment insurance runs out.
//do you detect that there is a rising tide of anger coming from the joe six packs? I do. I don't believe that the American public will stand for another bank bailout that leaves the stockholders intact.
Jillayne | Homepage | 02.06.09 - 1:42 am | #//
I suspect monday morning will be another kick the can day. With the Fed providing liquidity, losses are not occurring at lightening speed like last fall.
Sure, trickling in money into banks where they abuse it is awful.
But do you really think this group, or any political group, for that matter is capable of running the entire US Financial System. Not going to happen wihtout massive chaos. Then we'll be discussing how they screwed up the privatisation.
Yup - that and 'bipartisanship'.
\t dryfly | \t \t \t \t02.06.09 - 1:45 am | #
And I think we're at 12:59.9 pm on that particular clock based on POTUS comments tonight.
Thank god.
"I suspect monday morning will be another kick the can day. "
i really think the air above spx 850 is downright thin.
i can't say that i visualize timmay filling the trading floor with serene confidence.
I don't see the political will to take a drastic step unless a catalysing event recognized by everyone occurs. The problems to date have not been appreciated by the majority yet.
Perhaps we should discuss what such an event might be?
"sorry. you is all proper fucked. now learn to fish and plant potatoes"
Racist1 | 02.06.09 - 1:34 am | #
Check.
Check.
Jillayne, I think Professor Duy really captured what is happening, see Fed Watch: And Now We Know ...
"I have run the gamut from dismay to anger to my current emotion, supreme disappointment. ... [I was certain] US policymakers like NEC head Lawrence Summers and Treasury Secretary Timothy Geithner had studied the Japanese crisis up and down and realized that you needed to meet a banking crisis head-on, not with halfway measures that left the system crippled.
...
Why are we here? Why, months after TARP, are we still not willing to dig down in the balance sheets of troubled banks and disgorge the questionable assets once and for all? Why, with a new Administration, supposedly unfettered from the ideological positions of the last Administration?
...
We used to wonder aloud at the intransigence of Japanese policymakers. How could they allow their banking system to deteriorate? Why not take decisive action? Now we know: Fettered to an adherence to the status quo and an aversion to the concept of nationalization, the political will to attack the problem head-on is overwhelmed by the enormity of the financial crisis."
I share Dr. Duy's frustration.
best wishes.
"Perhaps we should discuss what such an event might be?"
BAC under a buck will be significant. so will seeing previously 'safe' banks like RF, JPM, and WFC start to really circle the bowl be a milestone.
Perhaps we should discuss what such an event might be?
Mr. Beach | 02.06.09 - 1:51 am | #
A 200 pt down day on the DJIA that isn't immediately followed up a 200 pt uptick the next?
MLM,
What gets me is this "it doesn't go FAR enough" business. Geez, we know that every government initiative only fails because enough money wasn't spent on it.
BIG NEW TEXAS McMansions under $300k (299k - 269k) short easy commute to downtown Dallas live high life like the Bushes...
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CR: Agreed. Political will is sorely lacking. The public will support extraordinary action when facing an extraordinary threat.
Although we here appreciate the threat to the existential threat faced by the banking system and the USD, the vast majority do not.
Thanks, CR. I will go read and study Duy.
If the Gov takes convertible preferred, automatic in 7 years, all will survive, by whatever means.
Common shareholders and mutual funds will be saved I say. Better to have shares at 99c and no div than be wiped out.
BAC preferred trading at $9.40...saved.
Bondholders...still untouchable.
Re-elect everyone.
"Although we here appreciate the existential threat posed by the banking system and the USD"
fixed
Wanting to go to Sorry. Page not found.
The stock price of a bank is irrelevant to the general public. They care more about access to their funds and the purchasing power of their money.
Last year, when gasoline was above $4, people noticed and were demanding action.
@bgates:
It sure feels that way these days.
FFDIC writes:
Wanting to go to www.Citi.gov
Is that snark, or a hint?
I share Dr. Duy's frustration.
Calculated Risk | Homepage | 02.06.09 - 1:52 am | #
CR - a lot of folks here think it is the cascading cross defaults & CDS threat that has them clinging to the 'bad bank' like a security blanket. What do you think?
TIA.
CR - I have come to the conclusion that it's not a lack of political will. The system really is corrupt. Our elected representatives are being paid in ways large and small to avoid doing the right thing. I'm sure that eventually the whole story will come out. But by then it will be too late.
How long and how many dollars has it been since Bear started to blow up? And we still don't have any clearinghouse for CDS's? That's got to make you wonder.
Geez, we know that every government initiative only fails because enough money wasn't spent on it.
Comrade Bear (tj & the bear) | 02.06.09 - 1:54 am | #
That pesky SEC and their intrusiveness. If only we'd spent less money on them and cut taxes more...
Neo-liberal and neo-con are two sides of the same coin. It's not at all surprising that neolibs of the Summers and Geithner variety are unable to embrace bank nationalization.
It would be like telling them to opposed NAFTA because it's become obvious that free trade dogma isn't working. You'd be asking them to violate their core ideology (and betray their friends). They won't do it unless and until there are no other options (and by that time it's too late).
I don't care how "smart" Summers is and what a "nice guy" Geithner is. These were horrible picks by Obama.
I think their fear of nationalization is really a fear of unintended consequences.
For example, lets say you nationalize big banks X,Y & Z.
Given the panic in the system, what is to stop everyone pulling their from all non-nationalized banks to redeposit at national (presumably safer) banks? This would damage our economy.
"a lot of folks here think it is the cascading cross defaults & CDS threat that has them clinging to the 'bad bank' like a security blanket."
It won't make any difference.
Geez, we know that every government initiative only fails because enough money wasn't spent on it.
Comrade Bear (tj & the bear) | 02.06.09 - 1:54 am | #
That pesky SEC and their intrusiveness. If only we'd spent less money on them and cut taxes more...
\t
1966 | 02.06.09 - 2:02 am | #
My answer to both of these comments is that some government initiatives lack the resources to be effective, and some will obviously be ineffective no matter how much money is thrown at them. Without necessarily accusing anyone, may I point out that knee-jerk partisan responses are slowly poisoning the discourse here?
FFDIC - that was good. Surrlsly, mite b
Bank.gov
But you knew that.
Feb. 6 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithners strategy to aid the nations banks will likely emphasize guarantees of toxic assets over proposals to create a so-called aggregator bank that would remove them from balance sheets, according to people familiar with the plan.
Taxpayers be prepared to over pay bankers and gird thy loins!
Responding to my own comment above: if the fear is a run on all non-nationalized banks damaging the economy, then a plausible solution is stealth-nationalization of the worst banks via guarantees.
Of course, we are left with the outrage of private employees living large on the public teat. But perhaps the alternative scenario is worse.
My answer to both of these comments is that some government initiatives lack the resources to be effective, and some will obviously be ineffective no matter how much money is thrown at them.
MLM | Homepage | 02.06.09 - 2:07 am | #
I absolutely agree 100% with you. My apologies for the snark.
MLM,
I considered mine a shot at politicians in general -- and the economists claiming the stimulus is too small in particular -- and not at any specific party. It's just one of those BS phrases you've heard your entire life.
Is that snark, or a hint?
Fair Economist | Homepage | 02.06.09 - 2:01 am | #
snarkhint
[Quoting Duy]: Why are we here? Why, with a new Administration, supposedly unfettered from the ideological positions of the last Administration?
Calculated Risk | Homepage | 02.06.09 - 1:52 am | #
HAHAHAHAHAHA!! The chains are not ideological. What is so difficult about "bought and paid for" to understand. It explains everything. It makes predicting 100% effective.
I'm going to go further, given the fear and panic, it seems impossible to create a nationalized bank that will not instantly become a super-bank attracting all depositors of USD assets.
Putting it differently, the existence of even one national bank will cause all the others to shrivel.
I absolutely agree 100% with you.
1966 | 02.06.09 - 2:10 am | #
As do I, BTW. Beside the point, though.
Why not buy the good assets from the banks and let the rest die?
stealth-nationalization of the worst banks via guarantees.
Mr. Beach | 02.06.09 - 2:08 am | #
That's not nationalization. That's protecting equity and bondholders at the expense of taxpayers. And it won't work, because it doesn't write down any debt. Too much debt is the problem -- either you fix that or you're just kicking the can down the road. And what's down the road is starting to look pretty ugly.
Does the government have the ability to study the balance sheets of every bank in the United States over a weekend?
HAHAHAHAHAHA!! The chains are not ideological. What is so difficult about "bought and paid for" to understand. It explains everything. It makes predicting 100% effective.
Plantagenet | 02.06.09 - 2:11 am | #
Damn straight, which is why I've been confident about my depression call for years.
Neo-liberal and neo-con are two sides of the same coin. It's not at all surprising that neolibs of the Summers and Geithner variety are unable to embrace bank nationalization.
Nationalizing the banks represents a failure to the idealogues on both sides. For the neo-cons, it would mean the free markets have failed. For the neo-libs, nationalization is one step above holding gold (ewwww). Furthermore, it would mean that they don't get to demonstrate the superiority of their ideas; it's not enough for the Best and the Brightest to clean up Hanky Panky's mess. And there's also ego at stake. Simply no way that Rubin et al. slip quietly into the night.
@MLM: I think kicking the can down the road is all that is politically possible at this moment.
I have to go to bed before 2:22 am or I'll turn into a banker..
dryfly, I think the CDS issue can be resolved, but it should really all be done in one major step. It sounds like we are going to get another Paulson like temporary solution on Monday.
I don't suggest I have the solutions, but all this wavering really destroys confidence. Oh well ... maybe Geithner will surprise us with a pony on Monday.
best to all.
Bernanke doesn't have any more tricks up his sleeve?
Maybe Monday is 'shock and awe' day for the markets?
Maybe they are setting up really low expectations and then drop in huge, globally-coordinated news that just blows everyone away?
Unlikely, but maybe?
I think kicking the can down the road is all that is politically possible at this moment.
Mr. Beach | 02.06.09 - 2:14 am | #
It sure looks that way. But after this moment, everything will be increasingly difficult.
Best luck to all, especially dc1000.
Good night.
Does the government have the ability to study the balance sheets of every bank in the United States over a weekend?
Mr. Beach | 02.06.09 - 2:13 am | #
Ask Fanny & Freddy. [No]...
CR: Do you think it is possible to nationalize just a few banks? Would you keep your deposits in a non-nationalized bank? Would anyone?
I think any attempt to nationalize one will instantly put all non-nationalized banks in jeopardy.
To me, it is an all or none game. Nationalize ALL banks in a weekend. This seems like a draconian step that may cause more fear than it is worth.
The alternative: stealth-nationalize via guarantees.
Oh well ... maybe Geithner will surprise us with a pony on Monday.
Calculated Risk | Homepage | 02.06.09 - 2:15 am | #
LOL! Thanks CR.
G'night. I have some disastrous 'business forecasting' tomorrow and need my 'happy sleep'...
Mr. Beach, not over a weekend ... but they should have started some time ago (Paulson would have helped I'm sure).
Now we are going to get stuck with a plan that will leave us limping along.
Oh well, I'm going to bed. I've heard there is some economic release at 5:30 AM (pacific time) that might be of interest - and I need some sleep!
best to all.
Good night to all.
G'night CR. Keep up the great work.
Calculated Risk: ..not over a weekend ... but they should have started some time ago (Paulson would have helped I'm sure).
Now we are going to get stuck with a plan that will leave us limping along.
I think Paulson and Bernanke must be surprised that their multiple facilities and guarantees of the larger banks are not restoring confidence.
Of course, that goes back to them not understanding 'peak debt'. Now, if they had started with that idea...
Now really good night!
What CR said, dryfly. I need to find a ubernerdlike item I saw on CDS recently. A nationalization should invalidate any swap contracts. That's the diff btw swaps and actual real insurance. You get what u pay 4.
Without necessarily accusing anyone, may I point out that knee-jerk partisan responses are slowly poisoning the discourse here?
MLM | Homepage | 02.06.09 - 2:07 am | #
May I point out that knee-jerk partisan responses are slowly poisoning the discourse in Congress.
Republicans, the 'allegedly loyal opposition,' are in reality only in it for themselves. They, like their leader, Rush, want Obama to fail so that they can try to win elections in 2010. They can only about two things: power and money.
It's about time for Obama to tell them to go fuck themselves and filibuster all they want so that the American people can see how pathetic the Republicans they elected truly are.
This is war. Choose you side 'cause if you're wearing the other guy's uniform, you're in my sights.
This is like the plot of a horror movie - where the audience can see the monster/villain around the corner but the protagonists keep making the same mistakes over and over again and one by one they get killed by the monster/villain.
Obama is trying to resurrect Banks that are insolvent several times over and stimulate a broken economic model.
The deux ex machina plan !
IMO the republicans should let Obama try his stimulus plan... he won the election and elections have consequences.... and then when the stimulus is perceived to fail... well they can use that against Obama
In a strange way it's almost like Obama is playing the republicans... I will say that filibustering the stimulus might just be political suicide long term
Either you national all the banks or none. You national one bank, money will flow to it from the non-nationalized, which will cause multiple collapses. Capitalism as we know it is over in that scenario. There's too much ideology, and unwillingness to lose face, among the economic leadership for them to go down that road.
MLM writes:
Only when they've wasted every precious effing cent from the borrowing capacity of our once great country. They'll only do the right thing after it's too late to do anything.
MLM | Homepage | 02.06.09 - 1:25 am | #
Excuse the repeated credit-binge theme, but there may be no 'right thing' to do after decades of excessive, wrong-minded monetary expansion, far surpassing real rates of growth in personal income.
Modern science can be viewed as the culmination of a long series of corrected errors, and recovery from the long credit expansion and current debt collapse may evolve from another long series of corrected mistakes.
How many more iterations do we think will occur before "preprivatization"?
MLM | Homepage | 02.06.09 - 1:25 am | #
More like premature privatization. The crappy stuffs goes to government, the good stuff of today stays at the bank. Tomorrow that good stuff will be crappy stuff and the bank is one epic fail.
Either you national all the banks or none. You national one bank, money will flow to it from the non-nationalized, which will cause multiple collapses.
purple | Homepage | 02.06.09 - 2:34 am | #
I don't know that that is true. If the nationalized bank was paying 0.25% on interest bearing accounts, would everyone run to it?
Until all of the bad loans are cleaned up it will be a long time to recovery. The middle of 2012 anyone. That of course if their is anyone that still has a decent job to buy a new house and a car.
Obama is trying to resurrect Banks that are insolvent several times over and stimulate a broken economic model.
mmckinl | 02.06.09 - 2:34 am | #
To be fair, he is not the first to try.
Maybe we need a Postal Service banking system, like Japan. How embarrassing for the major banks -- "sorry BofA, I feel safer keeping my money with the post office!"
Obama is trying to resurrect Banks that are insolvent several times over and stimulate a broken economic model.
mmckinl | 02.06.09 - 2:34 am | #
To be fair, he is not the first to try.
Blackhalo
~~~~
Did it work before?
Did it work before?
mmckinl | 02.06.09 - 2:55 am | #
Reinflating a bubble? Not likely.
Does the government have the ability to study the balance sheets of every bank in the United States over a weekend?
Mr. Beach | 02.06.09 - 2:13 am | #
Do they need to? They can just go over to Reggie Middleton's blog. I mean really, if the banks were even half way healthy we wouldn't be speculating on if and w
Save Capitalism From The Banks:
Reuters.com
[...]
Nationalise the banks, limit the rewards to those who work in what he calls the utility part of the system and have a completely uninsured second leg that can take all the risks it wants and lose its shirt, he said in an interview in Davos at the World Economic Forum.
They rigged the game. We pay them for their profits, there is no clawback so their incentive is to hide the risk they are taking.
Which is why eventually as someone who loves free markets, a total nationalisation of the part of the business that requires insurance and does clearing and payments needs to happen.[...]
when.
BTW- Why is the shnapster up so late? That worries me a little.
Forget the banks. Let them go.
I think a lot of people have reached the same opinion. In the past year the deposits in my credit union have increased from less than $600mil to over $700mil. With a slight decrease in membership at that.
otishertz: The frauds need to be punished and their profits clawed back to help pay for reconstruction. Instead we're just giving them mo money. TANJ!!!
briwerk,
guantonimo for the bad bankers and their bad bank!
otishertz writes:
this heartbreak, this disaster, will pass. our way of life will change dramatically. the changes will make us better human beings and better stewards of our Earth.
look at it this way. we all get a second, completely different life.
this demon monster of corporate colonialism that harvested the heath and wealth of its own was the snake eating its own tail. it was impossible for it to persist. car culture and sprawl for sprawls sake was dumb. fun, but dumb.
the whole country is experiencing the same feelings DC. we will ultimately be a different, better and more humble country (after some light cannibalism). maybe we will even become a country that values human life and dignity and takes care of its own.
if we can help our own I predict our pride as a nation will rise as we adapt to and conquer the obstacles before us. we need to fight fear and fascism with kindness, reason, and an intention of healing eachother.
yes, we gotta pull up bootstraps but we also gotta stop insulting those who can't.
i see the multiple lines of homeless on NW 5th avenue snake around corners amd i see the photos of the depression and i think;
GOD DAMN IT if we can give 18 billion in bonuses to frauds, along with trillions in other bailouts then we can go to these economic refugees and comfort them, put a bed under them, put food in their mouths, get them to the doctor, pull needles out of arms.
HEAL AND FORGIVE. these are our people. we are all in this together.
otishertz | 02.06.09 - 3:13 am | #
Enslavment enforced gradually. One step at a time will not cause heavy rebellion.
I think should the banks survive with Fed assistance, then we should garnish all of their wages and profits until paid back in full. I'm tired of this handouts to the ultra rich.
o more corporate liability shield for directors of companies that are entrusted with the safekeeping of our money.
this goes for insurance companies too.
if bank directors are personally responsible for losses they cause their customers (by betting with their money)and cannot pass those losses onto taxpayers with impunity (and a fat bonus)then we are moving in the right direction.
What if the government made it harder/more punitive for both individuals and businesses/LLCs to default? Would that cause many assets to begin the process of detox?
Ticker-
Ha! Perfect analogy.
anon-
captured the emotional dynamics of the two sides/ideologies perfectly.
Obama needs to take this to a higher level, especially in his communication. The theatrics are nice, but they have more than run the course. Tonight he came before the crowd with the appeal to authority argument, referring to 'They', those economists say. It's a replay of Bush's 'those intelligence people say'. He has to lay some real cards down on the table and talk straight goods. He should own the argument, take it on personally.
i hope he can handle this very well...
Next time there is a Big Bang......we gotta make sure it is regulated.
Watch my hands.
I love that the consensus among the readers is that the stimulus is too small/misdirected to work, yet they castigate the Republicans for not supporting the plan. Why should they vote for something they don't think will work and will further damage the country? Simply because Obama won?
What kind of moronic groupthink is that?
Racist1, congrats, you are closing in on the record for most posts blocked.
Re-think your ID or your message before attempting to influence this community again.
Fail.
Well, I read Bugeyed Dr. K's column and I read his book. All this yammering, here, in D.c., all over means little. It does serve to vent some pressure from our pipes. Frequent sex is more effective. Laughing out loud at raucous stories is good too. Down here we have on talk radio someone I call the world's largest talking dumb ass. He spouts the anger and roils his listeners to spit flecked anger. He uses nothing that resembles the truth. He whines and snivels like a mangy hound with blood swollen ticks fastened to his balls. And if someone (not me, not ever) should call to correct him about his outright lies he cuts them off with a, we gotta go it's another hard break. Most people listen to him for the entertainment his little circus provides.
Speaking of anger, this is how it grows. Hannity, Beck, Boortz, et al stir the pot and the great silent majority of producing citizens simmer to a slow rolling boil. It's coming, I'm stocked up, and when it happens it will happen all at once to the surprise of absolutely everybody. Violent? No, probably not. Dramatic? Could be. Mostly it will be more and more leaning back, arms folded upon our collective stomach from which springs all things.
yeah, pull the scab off verrry slooowly. The long drawn out pain builds character.
It's coming, I'm stocked up, and when it happens it will happen all at once to the surprise of absolutely everybody.
Agree. I search for semantic shifts that might indicate what's happening but I can't find them yet. But it has to be happening.
I don't know what it looks like when it happens. But many things which seem foundational are revealed as an illusion.
.
I would suggest, the problem isn't wiping out the shareholders (pretty much done), or even the bond holders (oops, there go the pension savings). The problem is what percentage of the Banks' liabilities - ie. customer deposits, are you prepared to wipe out, and how exactly is that going to be explained to the general public.
-- w
BH: aside from the unfortunate pic of you in leather, you always have thoughtful things to say
Spoke with a secondary school psychologist who handles six schools in our area. She and her husband (an educator) have moved to 30 acres and lots of space where 'nobody knows we're here'. She has stocked up, is planning a fish pond and perhaps a cow or two. I suggested heritage seeds. She leaned back, raised her eye brows and said, wow I didn't know that about the seeds. I said "Welsome to the long emergency."
She's educated, has property, kids grown and gone. She's mad too. She managed to spew a few of her corn chips while she talked.
O! BTW: stress level rising and spreading amongst teens. Given that this is a 'lost decade' coming a la Japan, describe the revolutionary.
If we had just let the system crash hard in 2007, we'd already be rebounding.
"I would suggest, the problem isn't wiping out the shareholders (pretty much done), or even the bond holders (oops, there go the pension savings). The problem is what percentage of the Banks' liabilities - ie. customer deposits, are you prepared to wipe out, and how exactly is that going to be explained to the general public."
Simple. Government simply states that deposits are good. Next objection?
Volker,
Are you in SD?
We have excess shelter; we're still growing food pretty well. If we conserve, save, invest, retool, stop spending on wars, and share a lot it may not be that bad.
The more I think on it, the more I believe that the Federal gov't doesn't have the power that it appears to.
Like Fannie Mae or Lehman Brothers, there's a lot of illusion.
Other people may start thinking this way. The CA counties witholding money are a seed. You don't get to break this much of the Belief System & integrity without consequences.
.
What are the constraints on invoking Executive Orders?
shoppingaround(Unrated) writes:
\tVolker,
Are you in SD?
\t shoppingaround | \t \t \t \t02.06.09 - 6:05 am | #
## Nope, that's one down 19 to go, next question Kitty Carlye.
What are the constraints on invoking Executive Orders?
\t shoppingaround | \t \t \t \t02.06.09 - 6:10 am | #
## None if you're Dick Cheney.
Ah, but Cheney's not there...is he?
BH: California is a bellweather state. We'll soon see this in others, and then some as well.
We must get the banks on the road to privatization. Objections, like what happens to the deposits, bond holders, CDSs, etc., are just attempts by socialists to sabotage the process.
Ah, but Cheney's not there...is he?
\t shoppingaround | \t \t \t \t02.06.09 - 6:12 am | #
## Nobody knows. He and Joe spent awhile together at an undisclosed location. Notice how soon after that he was jockeying a wheel chair. And Joltin Joe began to sing a different tune....... could be.
I only asked about San Diego, as every time I'm visiting family there, I am shocked at the vile constantly on am radio there. (I've been overseas most of the last 15 years, so there are many things in the states that shock me these days.)
Reptillian;
"Simple. Government simply states that deposits are good. Next objection?"
That they'll end up calling the result 'the lost century.
reptillian writes:
We must get the banks on the road to privatization. Objections, like what happens to the deposits, bond holders, CDSs, etc., are just attempts by socialists to sabotage the process.
Sorry, I meant to write "kleptocrats and plutocrats" where I wrote "socalists." It is early here.
California is a bellweather state. We'll soon see this in others, and then some as well.
Other things are already happening, although, like the birth certificate thing, the MSM think they can ignore it.
EIGHT STATES DECLARE SOVERIENTY
Congressman
Calls for Interest-Free Dollars
Welcome to Indiana Honest Money
Missouri House of Representatives
FOUR STATES NOW HAVE GOLD/SOUND MONEY BILLS IN PLAY
There is one connecting thread running through the destruction of the Republic, the corruption of government and society, the abuse of fiat money power, the brutalization of American life, and the imperial overstretch.
Multigenerational thinking is beyond Americans' short-term mind, so they are at a loss in understanding what overcame them since the funding of the FED in 1913:
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."
Woodrow Wilson, after signing the Federal Reserve into existence.
Talk:Woodrow Wilson - Wikiquote
The destruction will proceed as planned.
Farewell, Western man.
and Vermont has a secession bill floating around
So do you think Biden now knows some secret that is too horrible for him to discuss?
Or Cheney has something over Biden? Or just otherwise very persuasive?
Some would say the destruction of the republic is part and parcel of free people governing themselves. I want to see bankers grubbing potatoes in North Dakota, chopping cotton in Louisiana. Re-education will be fun, productive and who knows--maybe we'll find us a future president just like the People Republic of China did.
We need to restore the free markets. One step in that direction is the privatization of the banks. Our economy is being destroyed by the kleptocrats and plutocrats now in contol of the banks.
Our "bankers" have behaved like terrorists: "Give us 700 B. or something bad is going to happen."
So do you think Biden now knows some secret that is too horrible for him to discuss?
Or Cheney has something over Biden? Or just otherwise very persuasive?
\t shoppingaround | \t \t \t \t02.06.09 - 6:27 am | #
## You're not the sharpest knife in the drawer.
Would we miss Vermont? Other than those postcard Christmas holidays? A passport and visa shouldn't be too dificult, I would imagine....
Thanks, nice chatting with you, too.
Would we miss Vermont?
No, but it would set a precedent.
Imagine State after State opting out, leaving the full weight of the Federal Debt on fewer and fewer taxpayers.
.
What if we all opted out?
Doesn't Texas have an option to leave the union if it wishes?
me - ignorant other-side-of-the-ponder
Many people are confused. Yes, strictly speaking, deposits at a bank are "liabilities," on the bank's books. But how do you explain Merrill Lynch salivating at the prospect of having access to BofA's retail deposits?
Texas Annexation Question -Does Texas have permission to withdraw from the Union? - Texas State Library
ah no, amazing what a little googling uncovers.
Wouldn't surprise me about Texas thinking they could leave any ol' time. It's a Republic, not "just" a state. Texans love to claim that they can fly their flag at the same height as Old Glory--same as any other sovereign country. Even school children pledge allegiance to the Republic in the a.m., right along with the Pledge of Allegiance to the U.S.
Many Texans I know would be shocked to see DLD's link denying their ability to cut themselves "free."
We can always find ways to spend more stimulus on our military
"Lind, a prominent theorist of so-called fourth-generation warfare (insurgencies carried out by groups such as al-Qaeda), argues that "the Navy's aircraft-carrier battle groups have cruised on mindlessly for more than half a century, waiting for those Japanese carriers to turn up. They are still cruising today, into, if not beyond, irrelevance."
Economic Death Spiral at the Pentagon - by Chalmers Johnson and Tom Engelhardt
OT: (but isn't it all) 3 generations moving back in together: Bay Area Families Moving In Together In Recession - cbs5.com
. . . and it's swell!
12many dopes,
Not as OT as one might think. It's going to be the only option for many, I suspect.
We have a problem with demagoguery at this point. Many are fond of criticizing socialism, nationalization, etc., but the truth is that the demagogues aren't defending a free market, capitalist system. They are defending a system run by and for kleptocrats and plutocrats. To restore confidence in the banks it is necessary to truly privatizate them. In order to accomplish that goal it will be necessary for the government to sieze them.
To restore confidence in the banks it is necessary to truly privatizate them. In order to accomplish that goal it will be necessary for the government to sieze them.
\t reptillian | \t \t \t \t02.06.09 - 7:03 am | #
## Sort of a two step deal, sure I get it. Of course step one is done by force and step two is done at the leisure of the forceful. But will step two happen?
retillian,
But don't you think most sheeple would rather not think about that? It's just too scary for them.
They cling to the "free market" argument because they don't WANT to think about what is really happening?
our top leaders do not have loyalty to this country-summers and geithner know what they doing-by the way I bought a 2004 lexus ls 430 for 16900
book value 22000-deflation is here
OMFG.
I like dooming and glooming as much as the next guy/gal, but y'know I actually didn't think we would get here, no matter that I was musing on it a year+ ago.
For those wondering about who's left, who's toxic, and how, there is no better guide than July 14 2008 Bloomberg on Citi. It's all there. Well, $1.1T in sh!tpile is there, but not the frankly alarming CDS story, but still, that's the compass.
In addition, consider the last couple of days of posts on the ABS market continuing bust and now CMBSs. Translate to balance sheets. These - in an environment of bare minimum transparency - would not be paper cuts but mortal wounds. But that is not what we see and will pay for.
Well actually I won't, directly, because I'm taxed elsewhere, in a place that's been right royally skrood in this clusterfk of doom.
Best wishes taxpayers, my heart goes out to you, and yr children, and theirs.
C
CR: You make so much sense. So do so many others here.
IMHO the train really starting leaving the station w the bipartisan repeal of Glass-Steagall in 1999, of course favored by Summers and Rubin.
Rubin of course went to the supposed biggest beneficiary of that repeal.
IMHO the single most important piece of legislation would be to repeal the repeal of Glass-Steagall.
I think it's sorta logical what needs to be done; the constitution allows it, having set precedence:...Governments are instituted among Men, deriving their just powers from the consent of the governed...whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
Well, guys and gals...you safe/happy? And do you consent to any of this?
"The assets of the Fed, thereby, hold up the value of the dollar. At the end of the day, it is these assets that the Fed can use to defend the dollar's value externally and internally."
The Insolvency of the Fed - Philipp Bagus - Mises Institute
To those who believe that nationalization would trigger massive cds defaults, cds are merely contracts that the government may cancel by law at any time. For example, in 1933 the government banned "gold clauses" that required one contracting party to pay another in gold. The Supreme Court upheld the law as constitutional. The same principle explains why bankruptcy laws can cause contract rights to be discharged.
CR Hisself:
It is pretty amazing how the plan keeps shifting.
The people who planned you into the crisis are the people who plan your response.
Okay, now that I see most of you are mad as hell and are not going to take it any more, what should we be doing other than sticking our head out the window and shouting? Here are my suggestions:
If such a movement gathered even a small amount of steam, it would make any further bailouts fail, and we would finally get to the point in Washington where nationalization would be the only solution. You can tell your grandchildren you were Paul Revere when it mattered...
While it is true that the noise has increased in this forum, I for one am heartened by the change in tone.
The people with some understanding of the problems and with enough concern about them to stay informed, will radicalize fast enough, they might get something done before the masses radicalize- which won't be pretty. (I know there are some influential people here.)
Is there a consensus here, now, that is as radical as that which was dismissed as "tinfoil" only a couple of years ago?
I think there is, and it is very encouraging to me.
"If the American people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered."
President Thomas Jefferson, letter to Treasury Secretary Albert Gallatin (1802)
trigger massive cds defaults,
Dumb luck, I am not sure I understand
how do you unwind the positions?
The commodities act of 2000 passed unanimously by the senate ranks up there with the repeal of Glass Steagall. One of the reasons I feel not much difference between the two parties.
YouTube -
Although I don't remember the case, I seriously doubt the S. Ct's opinion affected existing contracts. It is extremely rare to uphold a law that alters existing contracts. Sale into slavery comes to mind. Of course legislatures can ban certain contracts going forward, or a court could void them on common law grounds. For example, surrogate motherhood payments.
Dumb Luck
As a furriner, I have fewer political options, but:
YouTube - Muddy Waters - You Can't Loose What Your Never Had
C
I'm pretty sure that Jefferson quote is inaccurate.
Check this out :
Wall Street Executive Air | Mark Fiore's Animated Cartoon Site
Roubini:
We don't have to go back to the Great Depression (when output fell over 20% and unemployment peaked over 25%); even a stag-deflation and near-depression like that in Japan would be most severe for the U.S. and the global economy. And while six months ago I was putting the odds of this L-shaped near-depression at 10% or so, they have now risen to one-third.
Yup:
voila
We just can't seem to pull the bandaid off quick, we decided the pull a 1mm at a time. Soros had a dent idea, take the bad assets and all the bank capital. Leave the performing assets and let the private sector recapitalize the banks.
Yogi
That is an interesting letter you referenced from Jefferson to Taylor.
"The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens. Funding I consider as limited, rightfully, to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally, by the laws of the Creator of the world, to the free possession of the earth he made for their subsistence, unincumbered by their predecessors, who, like them, were but tenants for life"
Well, if the current market price of the equity is used, then these steps would come pretty close to preprivatization. What is the current mkt cap of C? or BAC? Under $45 B combined. So if we used market prices for these converts, we would come pretty close to nationalization. Better than a bad bank. It dilutes the heck out of the existing shareholders, which is a good thing.
Oh, here is a good one Dick Bove just put a strong buy on BAC. One of the best contrary indicators out there. Why that idiot has a job, let alone still is in invited on TV etc is beyond me.
-598k, unemploymnet rat 7.6%
No good will come from propping up the same screwup bankers (at this point, it is the bankers, not the bank, we are propping) that destroyed the system in the first place.
We are now enabler #1 of bad business practices.
PS to poster above, some credit unions are having bad paper problems now too.
Are we going to nationalize now, or are we going to wait until there's no "good" bank left for us to recover even a thin a bailout dime?
Thanks for being on top of things, Dirk.
You're faster than Bloomberg!
Nasty revisions, now total losses since start -3.6 million. However avg hourly earnings up 0.3%.
TAKE THE MARKET ON THAT.
All numbers worse than the expectations:
NF Payrolls Actual -598K, expectation -540K
Manufacturing Payrolls Actual -207K, expectation -145K
U3 Actual 7.6%, expectation 7.5%
"It is pretty amazing how the plan keeps shifting."
Nobody can deal with an insoluble problem. The thing can't be fixed and taking over the banks involves dealing with too many pals and buddies.
Remember that Goldman Sachs got its tax cheat slipped in where the health lobby failed.
What's the U6? Bloomberg is uhmmm sucking right now and won't load...must be getting flooded..
All numbers worse than the expectations:
MrM | 02.06.09 - 8:41 am | #
They're skyin' 'em.
They beat the whisper number.
What's the U6? Bloomberg is uhmmm sucking right now and won't load...must be getting flooded..
Comrade Kristina | Homepage | 02.06.09 - 8:42 am | #
15.4 (not seasonally adjusted) /13.9
And U6 is now at 13.9%
I think there has to be some trench warfare and lots of jawboning before this can happen, and I think O is doing it.
Most are clueless, are not tied to financial blogs, and need to be clued in.
Somebody who doesn't even know what a heritage seed is isn't gonna do well with a garden, at least at first.
As a half hearted gardener for some years, let me tell you the work is back breaking if you do it as the needed scale, it is also complicated, you need to know a lot, and mom nature can screw you up.
I fear to look at my poor tomatoes, what with the cold we've had here.
It will only supplement for most.
The difference between what Jefferson said or wrote and what he did is enormous, just like most politicians.
Thanks supafly
mule, I am assuming the positions are not "unwound" but that by law a nationalization is not an event of default, any more than any "sale" of 100% of bank shares would be an event of default. In other words, the contract stays in place, just the default clause is invalidated, which is exactly how FDR and Congress invalidated gold clauses.
This may wake some up, the 78 billion lost in TARP so far.
Financials skying premarket. I see a bulk purchase of SKF @ 3:55 PM in my future.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTDor5YnbmQM&refer=home
Laws are only meaningful within the context of a higher social order.
And the banks are up big premarket. Why?
Ticker Tape of Doom,
Yes: what Taleb says. Recognize that there is a utility function for banks, either highly regulated or even non-profit (that's what I'd favor). Also recognize that utility banks have no business chasing speculative profits.
Fully guarantee the utility non-profit banks. Let private investment chase the other stuff and let them fail completely if they are wrong - and also tax the snot out of speculative earnings because of the danger it poses for the rest of us.
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President Thomas Jefferson, letter to Treasury Secretary Albert Gallatin (1802)
Ghost of F. D. Roosevelt | Homepage | 02.06.09 - 8:03 am | #
...a letter that seems to have first been invented some 111 years after Jefferson died.
voila
1 currency sooner, you are correct that such laws are rare, as is the need for them. Congress shouldn't lightly make illegal that which was legal between consenting adults at the time of consent, ie., at the time of contract. But our Constitution does allow Congress to invalidate certain types of contracts on "public policy" grounds. If the main objection to nationalization is the cross-default language in the cds market, I have no doubt that "public policy" can justify the invalidation of such default clauses after the fact, just as Congress did (and the Supreme Court upheld) with respect to the gold clause. After all, it appears these clauses are "weapons of mass financial destruction" that banksters are effectively threatening to detonate if their banks are nationalized.
A few responses to CR's post and this thread.
1) We really don't know what Geithner and Obama might announce next week.
There have been reports in the media for the past couple of weeks, all attributed to "sources," never a named source, the stories are mutually contradictory, and many of the reported plans not only make no sense in general economic terms but also make no sense in immediate political terms.
2) That suggests that these stories are either made up crap by the media or trial balloons or leaks to move public opinion in opposite directions or stories put out by the banks to try to shape the issue.
I don't think these are trial balloons because several of the ideas are too eminently ridiculous. That leaves the other three possibilities or a mix of them.
Remember, Elizabeth Warren just released some really embarrassing information on TARP's purchase of crap at major excess prices...would you ever want to propose another purchase scheme after that???
3) I agree completely that nationalization/preprivatization is the right course of action. But I did not see anyone on this thread reflect on the enormous political mountain that plan would need to climb over to be implemented.
It is not just bankster opposition. It is more than two centuries of American political tradition that stands in the way.
The Republicans in the Senate possibly have the ability to stop the stimulus bill, about which there is far less controversy than there would be for a bank nationalization/preprivatization.
I don't know what Obama and Geithner will say next week, but I am 100% certain that no one could have succeeded in proposing bank nationalization between January 20 and now. No one, not FDR, not Conjure, not Krugman or Yves or Buiter or anyone else calling for it.
To the extent that Obama might see the necessity of some form of nationalization, then his steps so far - waiting for the bad news to come out and shaping opinion, perhaps, through some leaks - would make the most sense to get it done.
4) I think Obama may well have cornered the Republicans by baiting their leaders into making some absurd statements on the stimulus bill. As a matter of political analysis (as opposed to partisan ranting), if he can now paint the Republicans as unconcerned about the 500,000 Americans who are losing their jobs every month and unconcerned about the pleas from Republican governors despearate to keep their states going, then there will be cracks in the ranks of the Repubs in the House and Senate, and more of them will lose their seats in 2010.
5) Last, for all my respect for Conjure and MP, and my recognition that they are far better at forecasting than I will ever be, I think Conjure clock may not have been helpful in creating a short term time horizon. The depression was already baked in the cake. All kinds of actions should have been taken long ago, and several steps should be taken now. Sooner is much better in all kinds of ways . . . and, yet, there is every reason to think the depression will be L shaped. Long term strategy and planning is needed, because there is no short-term fix.
There's lots of public talk about immediate horizons, little about long term plans.
What gets set up for the next few years in terms of political viablility may well be much more important than any specific acts taken now.
Indebtedness precludes any semblance of Democracy. It's nothing but pure debt now, absent even the facade of Democracy.
It is pretty amazing how the plan keeps shifting. I think they realize the bad bank is unworkable, but they can't take the next step and preprivatize the insolvent banks.
CR, I would like to propose a different scenario. During the campaign, we all heard that Obama will be bringing his professorial style to the Washington. We heard that he really enjoys getting a bunch of people together and debating every single idea.
I think that what we are seeing is this style in action. I think that the media does not know how to handle the bits and pieces that leak out of the White House as they come up with their plan. If we are to believe the dozens of former students who have spoken publicly, these bits and pieces are in no way representative of the final decision; they are simply bits and pieces of the discussion for that day. The media will eventually learn that this is the case and in the future they will file away and not report anything until a decision is made, or they will simply say that this is what they were talking about today but no decision has been made.
This morning Im envisioning a comic strip showing millions of babies crying while they hand over small denominated cash to Obamas right hand while Obamas left hand is distributing billions to a few powerful bankers .Its a very sad day in America.
joe shmoe, I agree that nationalization would be a very difficult sell to many, but I sense that a majority of Americans from both parties are fed up with the socialization of losses for private gain. If Obama wants change, this would be the change I could believe in.
Dumb Luck
I think the discussion is being moved in that direction, and will be more so next week when the banksters go to Congress.
I think that's part of the process that has to happen first, before a nationalization proposal should be put on the table.
For a comparison, look at what the Clinton's did on Health Care in 1993. They went in with their plan, without laying political groundwork, and they got squashed, big time. And on that issue there was much more real room to compromise and still get a good outcome.
With the banks today it is very different. there is really only one proper way to deal with them, and that just happens to be the most antithetical to long standing political tradition.
Interesting take on the TARP 1.0 hearings:
Follow the Money
Insert obligatory we're all ___ now.
Until the nationalize the banks this mess will go on and on and on.
BTW the market is nowhere near bottom. There is no capitulation at all. The bullish mentality still prevails. At the slightest bit of phony positive news the market jumps up. The bottom will come only when good news has no effect on the market. When it doesn't move whatever the news. That seems still long in the future.
Readers with a sense of humor might enjoy this social satire video at Bond Wooley Film and Television