Bernanke on Bank Supervision
Submitted by
CalculatedRisk on Wed, 03/17/2010 - 11:12am (295 comments)
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There is nothing more dangerous than an "extremely bright and very well-informed economist".
Pauline Prissy Pony says, "You can always bank on Ben!"
China drought leaves millions short of water - Yahoo! News
History rhyming...only this time we get to play the UK and China gets to play us?
energyecon wrote:
Who gets to play China? Mao marched on its adversaries to bring in harmony and peace. Who is gonna replace the communists? Neo-Communists? Heirs to the fallen monarchy of old?
"The Fed employs hundreds of extremely bright and very well-informed economists. "
Groupthink...I think it unlikely that an economist gets an FRB job without a declaration of faith in the neoclassical orthodoxy.
i noticed in late 2007 and I've never taken an economics course or an an accountring course.
But let's be practical. What other institution did a better job?
That is pretty much the worst example of leadership I've witnessed in a while.
If all of your current options suck, then you go out and build it. Just assigning it to the least sucky institution is not how it gets fixed.
OT. Where would oil prices be if based only on consumption? I would think between $35-40 per barrel plus an OPEC premium amount.
The Fed employs hundreds of extremely bright and very well-informed economists.
Oxymoron apoplexy.
The light rail system in Portland, Or is pretty nice.
I'm watching this video on Hayek right now. Interesting how long ago he predicted this is how it would be since "regulators are always backward looking while entrepreneurs are always forward looking":
Observations On The Road To Serfdom And An Open Thread | zero hedge
Nemo wrote:
And nothing more rare.
They need to staff up on High School drop outs to see the mess in advance!
Yet here is the USDA forecast that appears to show China's wheat harvest increasing 1.8% on a year over year basis...
World Wheat Production, Consumption, and Stocks
From the previous link on the drought in China:
I ended up getting caught on the phone so this was pigged, but this is for you, Eric:
Eric wrote in the
thread:
Fight the man, Eric, fight the man.
http://img100.imageshack.us/img100/9907/podborka1211.jpg
http://img694.imageshack.us/img694/5189/crazygoats11.jpg
http://yachtpals.com/files/userimages/seagull.jpg
HomeGnome wrote:
Yes. Yes it is. Very nice. They report a 44¢/pass-mi cost and 36% farebox recovery.
steelhead wrote:
My guess: about 6x natural gas, plus an OPEC premium. So, yeah, maybe somewhere in the $30s.
Who knows, though? Maybe we've entered a permanent disconnect. Shale fracting, horizontal drilling make NG plentiful relative to demand.
We don't fertilize many more acres than we did in 2000 or produce more industrial chemicals, not enough to move the needle anyway.
Maury the Credit Responsibility Panda wrote:
On an energy content basis, 6x is the convention used in the oil & gas industry. I have seen 10x used in Alberta as an economic equivalent when Alberta was seriously oversupplied with associated gas and had constrained takeaway capacity.
edit: and today at closing per Bloomberg we are at 19.3x
Rob Dawg wrote:
Are the costs so high because it's a govt operation full of overpaid, featherbedded political cronies?
"Unfortunately all the regulators missed the problems."
That's pretty easy to do, when your looking the other way...
Need an Upton Sinclair icon.
Maury the Credit Responsibility Panda wrote:
A lot of ammonia production moved offshore during the relatively high NG prices of the early 2000's, IIRC. That capacity is slowly starting to move back here given our glut of gas and cheap prices.
Which is good, because quality of that overseas stuff was crap. You can only handle urea so many times before it turns into powder.
All the financial degrees in the world are no match for frugality and a little common sense.
Had that been widespread during 2003 and 2004 we might never have seen the housing market do what it did.
Unfortunately common sense is neither.
ShadowInventory wrote:
Nah, buses are WAY cheaper. ~9c a passenger mile. Dawg's link was good.
The high cost of Light Rail probably has more to do with fat government contracts handed out to insiders, a la, the big dig.
energyecon wrote:
Energy content ratio is 5.8:1. Thus today's Henry Hub $4.299 price = $24.93/bbl oil.
For JD:
2 reasons not to:
1) they declare bankruptcy, new 'owners' (even though the same as the old) will not recognize your life time pass.
[true story: the local mountain in my hood when I was growing up was owned by the hoa of a huge subdivision, a selling point was free skiing for you, family and friends(unlimited) for life....guess how long that lasted before mountain was bankrupt and 'owned' by a new corp- (answer: they did make it a few years)]
2)They know where you live and all other vip passholders live, contract killers probably have bulk rates.
Maury the Credit Responsibility Panda wrote:
Market structure is a significant consideration - oil is globally traded, and it's handling characteristics make it easy to put in a tin can and float around the planet. Natural gas, as a function of very different handling characteristics, is still priced in a number of regional markets. But conditions of oversupply have existed in the past and ISTM that oil would need a big haircut to get back into those ranges...
Rob Dawg wrote:
That's kind of disturbing, actually. Bottlenecks and substitution constraints aside, that speaks to something else going on.
EDIT: I'd just compare it to corns and soybeans: normally soys sell for around double that of corn. It varies, because the markets are different, but not usually by more than a buck or two. The idea that corn could sell for $4 and soys for $32 just seems ludicrous. I recognize the significant differences between NG/Oil and corn/soy, but it's still a strange situation.
"Mass Delusion" "Cognitive Dissonance" "Political Bias"
Call it by its true name: FAILURE.
People need to be fired and indicted.
Interesting Times wrote:
Seems that is the only way to get promoted at the Fed, SEC and Treasury...
noob goldberg wrote:
Energyecon and I have been screaming as much for some time. What you won't get from either of us is how it plays out. We are approaching the lows for storage seasonally so have a much room for the lowest priced gas in ages yet the price keeps going lower. Oil demand is down, shipping costs generally down (just not at lows) and production cheating is rampant as Iraqi supplies come back on line. Howsoever it plays out it will be massively disruptive. So disruptive that it might get blamed for the second dip despite the two being coincidental.
"Doubtless others will be skeptical, trotting out the Fed's spectacular underestimation of financial problems during 2005-2007. That criticism is of course well taken, and both the Fed and the economics profession as a whole have much more work to do in terms of recognizing exactly what should have been done differently. But let's be practical. What other institution did a better job? Where in Washington today do you see an agency with the intellectual resources to get this right?"
Well, it's not an agency, but you can get to CR from any computer with web access.
If you insist on hiring people, try Shiller, Roubini, and Thornberg.
CR
i agree that the fed can do the job the question is will they
with an emphasis on "will"
how many times have we seen good systems populated by bad people and thus a break down
once in a while good people in a bad system and with great luck and fortitude can save the day
but for oversight to work we need a combination of the two, good systems and good people
one of the reasons the fed, SEC and other regulators failed was
we were living in a political-economic world that decreed "we dont need no stinkin regulation"
as long as the federal reserve is primarily influenced, if not outright controlled by private banking interests
then i have little faith that the federal reserve is the right institution for regulating the top 14 banks
because the profit motive runs counter to stability and sound practices
and btw who or what is going to effectively regulate the shadow banking system ,
the real force multiplier for doom in this crisis
some investor guy wrote:
I cannot wait to see the new friezes on the Treasury Building.
Anyone who thinks this crisis is "over" is delusional. It has just begun.
Minsky is in his grave laughing.
ooh, what a wide-ranging debate. Did the Fed's sharp minds do a good job? Does the system need some adjustment so that maybe next time their chances of reading the signs will be improved? Maybe we need another institution staffed with well-paid, well-meaning economists, so that the
can keep its regulatory capture skills intact? Hey, wait... these institutions just stole a trillion dollars, representing the lifetime labor of hundreds of thousands of people! The pretense that we need to look at 'reforms' rather than prison sentences is bizarre.
Wow. My bank's mortgage rate is back down to 4.875 with zero points today.
About energy, propane is a weird industry. The companies I deal with do not publish their prices. Calculating out our last $3.79/gal fill, I do believe it would be cheaper at this point to switch to electric. That's insane.
Rob Dawg wrote:
I've watched you guys discuss this, but I hadn't really internalized it or compared it to a market I was familiar with. I appreciate your patience
I hope a second economic dip is the extent of the disruptive rationalizing. Wars have been fought over less.
So their argument is that "everyone sucked" and "didn't do their jobs" but the Fed was the best of all the incompetents. That gives me great optimism.
I am just wondering what they are going to blame the next major downturn on...
mock turtle wrote:
Well when politicians select regulators from the industries they are to regulate... It's probably not a good idea to hire prison guards directly from the prison population...
Only 18 of this country's banks control over 40% of the financial assets. They are growing larger as I write this.
Meanwhile, traditional loans are less than 20% of their business, while non-interest management fees are rising.
People, they have no incentive to lend. It's no longer their business to lend.
The problem wasn't that there weren't enough smart & educated people in the Fed. Certainly, I imagine they were the best at what they do. The issue is that I suspect that these people had a certain intellectual or educational "stance" that created a blindspot for them. For example, if you want someone in charge of safety at a plant, you don't hire a person with risk-taking tendancies. You want someone detail-oriented, skeptical, and determined. If the Fed failed, its because the organization has a cultural and philosophical problem. The "We're the best, and only we can do it" is a tragic fallacy that misses the point of why everything went wrong. We need to put different people in place.
noob goldberg wrote:
My point being, I don't think it's likely the Oil/NG spread gets resolved by NG prices rising.
We already more or less know that the world can't tolerate $140 oil. Maybe at that point, it's cost-effective to build all those NG-powered cars and power plants. Then, the spread would probably over-narrow.
"The Fed employs hundreds of extremely bright and very well-informed economists"
it's like every place I've seen that tried to outsource software development.
It doesn't matter how many bright outsource people you hire if management doesn't know how to use them effectively
People, they have no incentive to lend.
Good thing, because the borrowers don't have much incentive to pay back.
Rob Dawg wrote:
Not an issue for the Gnomester; he doesn't actually live there or pay taxes there, and as you point out, the fare is subsidized.
ShadowInventory wrote:
It's important to understand this:
THE TOP TIER BANKS ARE NO LONGER BANKS.
Owww, the KD font is hurting my brain.
O ya should have included every union position right down to the paper clip reclaim specialist...
Kind of like Casino banks!
Interesting Times wrote:
Perhaps the war on organized crime was misguided. It forced wiseguy wannabes into politics and government instead....
noob goldberg wrote:
There are a lot of traditional ratios that aren't working right now. But you'd go broke waiting for them to narrow.
I'm looking at you, sliver.
poic wrote:
It's necessary. 40% of the business the Fed is not "regulating" is no longer banking.
mp wrote:
They are now the future of a universal empire.
THE TOP TIER BANKS ARE NO LONGER BANKS.
Speaking of bank supervision - and the lack thereof - here's for the WFC watchers
Wachovia Bank charged with violating anti-money laundering law -
Miami-Dade Breaking News
- MiamiHerald.com
All I was saying is that the light rail in Portland, Or was real nice.
Really helped getting around after a few pints of Deschutes.
Portland Pub - What's On Tap
poic wrote:
Owww, the KD font is hurting my brain.
THAT'S NOT A FONT!! IT IS U P P E R C A S E!!
anvildoc wrote:
The Fed didn't fail. It successfully transferred vast sums of money to the People Who Matter. The bright young economists it employs are props to maintain the illusion that it has some other, more benevolent mission.
we have forfiture laws in this country that are down right scary
in some state, if you are pulled over the side of the road and you are carying a lot of cash
the police can confiscate it, and your car, and maybe even your house
and you have to prove that this undocumented wealth was not the product of drug dealing or some other covered offense
ah but when it comes to banking
you can do more damage o the country than bin laden and all the rest of the terorrists combined
you can use deposits to cover prop desk casino gambling where the institution gets the profits and the tax payer gets the risk
you can crash the whole system
and what do the cops take?
do they take your bank, your money your aspen home, your home on the med, tor any of the other toys
no
in fact not only do you get to keep all the loot
but you get a bonus
its about time we get some effin justice
i want some of these
ers in jail and their ill gotten gains attached pending prosecution for all the fraud
period
mock turtle wrote:
Or "should" they? It's a private institution, not a regulatory agency. This idea of them effectively policing themselves with essentially no watchdog is at best misguided....Remember, they don't want government interference (aka oversight) because it would jeopardize their "independence"...
Yes, without full information there's always the risk of accidentally designing a stress test so harsh that it includes the possibility of failure. The enhanced quantitative surveillance will be a big help here.
(Or maybe I've been reading too much about Lehman these past few days.)
Romer? ......Christina Romer??
The last I heard of her she said UE would be capped at 8% if ARRA passed. How's that working?
watered down version of WFC article: Wachovia to pay $160 mln in money laundering probe - MarketWatch
I wonder if their system will model invisible OTC naked CDS and other derivatives that tend to blow up idiot-run companies like AIG.
When you sleep with the squid, you get the beak.
mp wrote:
Was his nickname "Buster" Hyman?
snow. Rain. Earthquakes. Hopefully not the black plague. though plague often followed those things because rodent burrows are disturbed and they hit the road.
Wall St. committed TREASON against the United States of America and its' citizens; aided and abetted by FEDgov.
Mr Slippery wrote:
When you sleep with the squid, you get the beak.
I am, like, totally saving that, dude!
Outsider wrote:
You folks need to get it through your skulls that outfits like Bank of America, Citigroup, Wells Fargo, JPM Chase are no longer banks.
Nobody who watches Greenspan being interviewed by CNBC's David Faber on the documentary "House of Cards" could believe that the Fed could be an effective, objective regulator.
Even accounting for Greenspan's desire to rationalize and sugar-coat his own behavior, his admissions on how little desire the Fed has to take away the punch bowl are shocking.
The truth is the Fed has a vested interest in propping up big banks and helping them and their top executives make money. They will consistently do this, even if it's killing Main Street. That's basically what Greenspan told Faber. They don't give a sh*t about average people.
... and production cheating is rampant as Iraqi supplies come back on line. - RD
does anyone have an opinion on how China's access to the Iraqi oilfields will impact price?
rich wrote:
THEY ARE NOT BANKS!
You could unite folks with the first part of that - no so much with the second.
ResistanceIsFeudal wrote:
The "Monetary Guild", or "The Guild" for short?
anvildoc wrote:
The system requires that those blindspots be in place. Swap out the people and the new staff will wear the same blinkers, if nothing else is changed.
mock turtle wrote:
4 letters: RICO
mp wrote:
What? But it's so sunny outside of my front window.
http://img205.imageshack.us/img205/9920/podborka69.jpg
Yalt wrote:
The system requires that those blindspots be in place. Swap out the people and the new staff will wear the same blinkers, if nothing else is changed.
That's the nature of hive-mind... And TPTB have already decided that is our future.
Yalt wrote:
Yes, if you replace them with people that keep their foot on the pedal. But you could replace them with cautious people and you'd have a different result. But, who knows maybe boom & bust works out better than creep & crawl?
SCAP is a welcome addition to the ever growing bowl of alphabet soup, hhhhmmm hhhhmmmm good.
lawyerliz wrote:
Black Plague is a
with today's medicine; it's the pneumonic 
variety you need to worry about.....
Maury the Credit Responsibility Panda wrote:
Ah, I see what you're saying. I can't disagree with that.
mp 12:54 pm
'You folks need to get it through your skulls that outfits like Bank of America, Citigroup, Wells Fargo, JPM Chase are no longer banks. "
--
how bout we call em
financial welfare queen dark casino whores...would that work?
Mark it zero, Smokey.
dum luk wrote:
I'll keep that in mind, dum luk.
The 18 firms that used to be banks are now Goldman Sachs on mega-steroids.
Their retail banking business is simply an artifact of what they were before the repeal of Glass-Steagall.
You really need to frame the discussion correctly.
THEY ARE NO LONGER COMMERCIAL BANKS.
mp wrote:
Don't stop there. Is AIG an insurance company? And how many "manufacturing" firms produce product just so their financing arms can turn a profit financing the purchase?
cinco-x
RICO RICO RICO yes!!
Yalt wrote:
Well, hell, yes!
YES. tHE Beak. . . excellent.
"..no longer commercial banks"
and thats why i asked CR or anyone
where is the proposal to regulate the "shadow-non banking system"
the SIVs, the hedge funds, the investment "banks" the monolines etc
My point is: the entire environment has changed.
Bank no longer means bank.
The Fed is attempting to regulate something that no longer exists.
It's time for new definitions.
anvildoc wrote:
How would you do that? Who would do it, and why? The large institutions that effectively control the Fed--what incentive do they have to self-impose a cautious regulator?
Yalt wrote:
So in a way, the banks are no longer banks and everyone else are now banks ;0
I'm afraid liz has come down with advanced Denninger's syndrome, and there is no known cure...
mock turtle wrote:
the SIVs, the hedge funds, the investment "banks" the monolines etc
YES! YES! YES! YES!
Until now I had thought Prof Hamilton was reasonably clued-in, but this really makes me wonder. In all of my dealings with central bank regulators I'm always flabergasted by how little they actually understand about how financial markets really work. It's pretty hard to regulate something you don't understand, using an academic playbook from a decade or two ago.
ok, I'll ask, what are they. . . other than criminal enterprises.
Yalt wrote:
You're right from a realistic standpoint, I was just objecting to the author in the quoted article that was showering the people at the Fed with praise and denied that there could possibly be a "Human Resources" problem
If not Bernanke, who, if not Timmy who, if not O, who. This has been one big problem in our culture, doesn't matter if you didn't have the smarts to get out of the rain, but was a good student or was from the right college or ran in good social circles then you had the smarts to be in control.
The "big banks" are now heavily involved in shadow banking.
Traditional banking is now only a small part of their business.
An artifact.
An artifact that is going to kill this country's economy.
Climate change, The banksters and China are tired and need a break.
what about BERNAKE'S MONESTER by henry paulson
fuel for my nightmares:
i grew up afraid of the boogeyman. my parents didn't have a youtube of being consumed by predator
to scare me into 'good' behavior.
The facade is intact, but the rest is a charade...
mock turtle wrote:
I don't know. I really don't. This should be so self-evident to even the least clued-in.
Some of them are professional gamblers as well, or even primarily.
Rob Dawg wrote:
Going to put together a historical plot from EIA data for the ratio - bbl
anvildoc wrote:
Yes, I agree that's the primary issue. But it's systemic--it may not exactly be deliberate but it's not a matter of unfortunate hiring errors. They're hired because they're the people the job, as currently conceived, requires.
I am just wondering what they are going to blame the next major downturn on...
Isn't it obvious? Al Gore.
MaryAnn wrote:
Don't kid yourself, Timmy's job here isn't to be in control. His only purpose in all of this is to wear it, as far as I'm concerned.
He's one double-dip recession and a hooker-scandal away from being the scapegoat.
Juvenal Delinquent wrote:
Would that be a case of Denningitis?
Oh, that's a keeper.
mp wrote:
I got the message, mp. Seriously, I realize what you are writing.
.
I also no longer use any of them if I have a choice. (Have used BoA and C; SEP IRA is at WFC)
Maury the Credit Responsibility Panda wrote:
The only solution is a forced eviction from the foil hut:
http://img215.imageshack.us/img215/9894/foilhut01.jpg
it's the pneumonic
Biopreparat in the old SU supposedly weaponized it, or was on its way to weaponizing it. But of course the new dispensation there would never dream of stockpiling such a horror.
I only read Denninger once and never went back, 'cuz he scared me to death.
uh-oh. . .
noob goldberg wrote:
I doubt I can find it but wasn't this discussed here when he was hired? I seem to recall an article someone posted that basically described Geithner's primary asset to be his absolute and unswerving loyalty, his willingness to take one for the team regardless of the personal consequences.
I'm not saying he isn't a bright guy, just that it wasn't the primary reason he got the job.
energyecon wrote:
Excellent. More data at cmegroup.com -> energy tab that might be useful.
Yalt wrote:
I do remember having those discussions so long ago. I think we were right.
noob goldberg wrote:
No wonder he caught it in there... it has to be shiny side out, dammit!
Consider this:
As of June 30, 2009, here's the notional value of derivatives held by the top 3 New York banks as a % of their assets.
BofA 2221%
Citi 2527%
Chase 4562%
Now, do you really think they're interested in lending to you?
Do you really think they're in the business of traditional banking?
Maury the Credit Responsibility Panda wrote:
I'm messed in the head. I didn't notice that the foil was the wrong way; my first reaction when I saw the picture was that one of his light-bulbs was burnt out.
I liked when Uncle Bern said that the FED did not want the job of regulating just the "too big to fail" banks. I mean who would want that job.
I wish he would have said, there is no longer anything "too big to fail".
Doubtless others will be skeptical, trotting out the Fed's spectacular underestimation of financial problems during 2005-2007.
Why wouldn't anyone be skeptical? Lets see, real income for the bottom 80% of workers flat/down for the 00's. House appreciation double digit most years during the decade. Didn't ANYONE ever sit down and work out a household budget where the median income household could afford a median priced home using an AMORTIZED (were buying not renting, right?) mortgage.
If anyone bothered they would have found out it was IMPOSSIBLE (at least for the last 3 or 4 years before the meltdown) to have an amortized loan and enough left over to cover living expenses.
"The Fed employs hundreds of extremely bright and very well-informed economists. "
Groupthink...I think it unlikely that an economist gets an FRB job without a declaration of faith in the neoclassical orthodoxy.
Exactly: Nothing will change until the government and the public realize that eCONomics is not a real science and that these so called experts are given too much political sway, and that they are in the clutches of the oligarchy. Nothing is worse than an eCONomist that lobbies for the TBTF banks.
And besides, Citi must be destroyed. Them other ones too.
I would choose the hooker-scandal if I were timmy.
Easiest way out.
Power tends to corrupt. Started out in banking in highschool. The best 10 year education I could have ever gotten. The reason for more bank supervision most of the employee's now adays start out with big titles and large paychecks and have no idea who is doing what and don't give a crap as long as it doesn't get in their way of moving up the ladder for more power and more money.
derivatives?
please move along, nothing to see here
if you continue loitering, I'll have to call security
Traditional banking is now only a small part of their business.
An artifact.
An artifact that is going to kill this country's economy. - mp
traditional banking is going to kill this country's economy?
At the end of the day, the Fed isn't regulating diddle squat s*&t, except the smaller, regional banks.
The large banks, the so-called "too big to fail" banks, are now operating in a totally unregulated environment, except for their artifact business.
This must be gotten under control before it blows up again.
And it will blow up again.
pavel.chichikov wrote:
I am just wondering what they are going to blame the next major downturn on...
Isn't it obvious? Al Gore.
It wouldn't surprise me if the next crisis was blamed on "Al Gore rhythms" actually.
noob goldberg wrote:
I've got a "Clue." It was "Helicopter Ben," in the "Oval Office" with the "Printing Press."
barfly wrote:
Yes! Because traditional lending is now controlled by the new shadow banking structure!
They have no incentive to use that channel, hence no lending as long as they control it.
The only "traditional lending" you're going to see will come from the smaller, regional banks.
mp
+++1
THEY ARE NO LONGER COMMERCIAL BANKS.
Isn't the model now to borrow from FR at near 0% and then turn around and buy interest bearing treasuries and pocket the difference in HUGE bonuses?
Dylan Ratigan hit it out of the park when he scoffed at the notion of needing big bonuses to retain the talent. Said it was the POSITION (access to fed window) and not the talent that generated the profit.
"But let's be practical. What other institution did a better job? "
Kyle Bass, John Paulson, Peter Schiff, how many more names does he need? The freakin' FBI was complaining about mortgage fraud in 2004.
IMHO they should just shut about this revisionist history, admit they f*cked up, and promise never to do it again. Claiming "there is no way we could have known" just makes them look like even bigger idiots.
mp wrote:
The unregulated, mysterious, and giant derivatives market is the new Fed. The built-in threat of doom gives it the power of last resort, and it sets the monetary policy.
mp wrote:
You know, regional banks, the ones about to be destroyed by CRE and then subsumed by the TBTFs.
nowhereman wrote:
Groupthink...I think it unlikely that an economist gets an FRB job without a declaration of faith in the neoclassical orthodoxy.
It's deeper than that... no one hired by the likes of FRB was educated at an elite or non-elite institution which didn't teach in accordance with neoclassical orthodoxy. If they had they would not be considered credible much less elite or top-tier. The real problem is a powerful set of ideas that has been transformed for political reasons into a poisonous and elitist ideology
Rob Dawg wrote:
Yes, that could easily happen, probably will.
mp and they know it too, the blowing up,i mean
lawyerliz wrote:
That's because you have something much more valuable - practical experience.
How many more times do we need to see academics screw up before we realize academics are useless in understanding real markets?
We should never have arranged a bailout of LTCM, the system should have been allowed to crash then and there, to drive home the message that fancy risk models are useless in a market run by animals.
Feetsies of clay in a mandarin type society.
mp wrote:
Yes, that could easily happen, probably will.
It's the fate for any institution allowed to run roughshod over the laws of the land. Tyranny. Banking needs to be corralled and broken down into component parts.
Government doesn't need all these little banks running around.
A faster solution.
Time for the FED to shut it all down and zero out the derivatives.
Then start leading directly to real companies and people.
They are half way there already.
steelhead wrote:
Sounds about right. Same as the equity markets - would be about half their current levels based on fundamentals (not every stock, but the market as a whole, I can name stocks of companies who are insolvent that are trading at billion plus market caps).
The bottom line, in the big picture of things, is that the Fed is regulating diddle squat.
The shadow banking giants are now calling the shots.
The only thing the Fed can hope to do is deal with the blowback.
black dog wrote:
Hell, no. They can't afford to sit around and collect 3% a year, or for that matter to lend out at 5% a year. Because you can't make the margins on those things that are required to fill in the enormous hole that all this toxic waste has blown in their balance sheets.
They're taking that free money, and they're pressing their bets.
And they know what will happen if they lose those bets - the Treasury will ride to the rescue. It's already been proven.
And they will lose.
mp wrote:
Less than 10% of mortgages end up on bank balance sheets. For the other 90% they retain no credit risk. They are not lenders of mortgages, they are brokers, nothing more.
ghostfaceinvestah wrote:
Less than 10% of mortgages end up on bank balance sheets. For the other 90% they retain no credit risk. They are not lenders of mortgages, they are broke, nothing more.
There, I added to it.
ghostfaceinvestah wrote:
Exactly!
They have become shadow bankers.
Mr Slippery wrote:
They should have just talked to me. True story - in summer 2006 I saw a tape of subprime mortgages for a securitization where 75% of the borrowers have FICOs less than 575. Most of these loans were 2/28s.
You don't need a PhD to know that was gonna end badly.
I clearly remember my Ah-ha! moment that there was a bubble. It was spring of 2004. I was interested in a small parcel. The landowner gave me a price. Went to the bank and worked out a deal. Went back to the landowner a few weeks later. Price went up $50K. Went back to bank and then back to landowner - another $50K. WTF?!? Been sitting tight ever since.
mp its their monster they created it and of course they cannot control it, monsters are like that.
rich wrote:
especially if it is killing Main Street.
Now if CR had written "Bernanke on Shadow Bank Supervision" as opposed to "Bernanke on Bank Supervision," I could go along with it.
But, as I said, these outfits are no longer "banks."
The use of the term "bank" for such organizations is obsolete.
Rook! Godzilla
mp wrote:
The use of the term "bank" for such organizations is obsolete.
they become criminal enterprises and a threat to national security - which is why they want an international body of laws to govern their behavior.
as i asked CR at 1240 above
and continue to ask
"and btw who or what is going to effectively regulate the shadow banking system ,
the real force multiplier for doom in this crisis "
because these bankstas- terrorists crashed the system before and they will crash it again
mp wrote:
How about calling them anti-banks, since they now function in the exact opposite manner of a bank? The Shadow Federal Reserve derives it power from the ability to destroy money and hold the economy hostage, whereas the Federal Reserve derives its power from the ability to print money..
got a question
will wachove really pay their fine,or will the taxpayers pick it up? arent they under the fed umbrella?
mp wrote:
I agree. Another convenient instance of oversimplification...
Volker: "supervision is hard" ?
I remember fondly when it hit me.
During the Dot Com days near quarter end deadlines, the corp I was working at was driving inventory around in circles to call it sales / revenue....
That's when I knew it. The system is being totally gamed by "little tricks" - Adding up all those little tricks over time got us to where we are today.
Whiskey wrote:
I don't care what you call them, just don't call them banks.
They are no longer banks.
Using the term "bank" implies a role for them in society that no longer exists.
This is interesting - since the banks f*cked up on credit risk, they are going to go back to gambling big time on interest rate risk.
Markit Launches New Synthetic MBS Product
mp --
How long do you think it is until we hit the next BIG blow up?
I was thinking that too.
gloom blue cross/shield approved a week at a rehab facility.
ca wrote:
Less than 10 years, and it will be the last one.
Interesting Times wrote:
That game's been going on every since execs stoopped looking more than one quarter ahead (because they weren't rewarded for doing so by Wall Street or their stock-price-based bonuses)
The outlook wasn't brilliant for the Mudville Nineteen that day;
The score stood fortitude, with but one skinning more to play,
And then when Lehman died at first, and Bear Stearns did the same,
A sickly silence fell upon the patrons of the game.
A straggling few got up to go in deep despair. The rest
Clung to that hope which springs eternal in the human breast;
They thought, if only Bernanke could get but a whack at that -
We'd put up even money, now, with Bernanke at the bank.
"Fraud!" cried the maddened thousands, and echo answered fraud;
But one scornful look from Benjamins and the audience was awed.
They saw his poker face grow stern and cold, they saw his muscles strain,
And they knew that Bernanke wouldn't let the opportunity to plunder go by again.
They can't afford to sit around and collect 3% a year, or for that matter to lend out at 5% a year.
The current yield curve is to the banks liking. Having said that I really don't know what the big banks are doing. The banks buying treasuries is something I regurgitated from krugman.
heres the bottom line
the shadow bankstas are counterfeiting money, disguised with complexity and fancy terminology
they "create" financial instruments that are traded and are treated as if they have monetary value
and they charge the financial system a tax for the purchase and sale of these financial instruments
mp wrote:
At the end of the day, the Fed is a Cartel run by and FOR the "too big to fail" banks. The Fed is doing it's job, maximizing profits and eliminating competition. I have no doubt they have many very intelligent people working for them. The question is what they're trying to do. And the answer isn't what most think it is. Nor is it noble.
mp wrote:
Isn't pretty much a rule that once people start thinking Citigroup looks good, the system is about to experience another crisis?
mp wrote:
Same as forever as far as some peoples' mindset go. Tiime enough for another generation of bankstas to steal and grow rich. Good times!
Whiskey wrote:
Yes.
As Minsky said, "Stability is destabilizing."
mp wrote:
I'm thinking we get one more warning shot this year.
mp --
"the last one"........can you explain further?
mp wrote:
I still believe that the wheels of the last one are in motion. Or perhaps I'm just hopeful, as the sooner this corrupt/fascist/kleptocratic system fails the better. And then we can rebuild.
I'm also hopeful that it isn't needlessly violent. But history is stormy on that front.
The Fed is the anachronistic fig leaf for an economy dominated by finance that has run amok.
ca wrote:
What is there to explain? It will be the last one.
It will be the end of the capitalist system as we know it.
I remember when the light-bulb went on for me....
Chuck Prince had announced that Citigroup was projecting to lose an amount of money, and then a few months later, the actual amount of their loss was 160x his prior estimate.
I happened to be in a friend's house that has around a 160 window panes when it hit me, and I was talking with my friend and explaining how it would be like me renting his house and calling him up and telling him i'd broke a window, sorry about that-only to have me admit a short time later that in actuality all 160 panes had been smashed in~
Bernanke thinks that charging people twice as much for housing is wealth creation.
Based on that idiotic CONcept (housing inflation), Bernanke should be fired and never allowed to manage banks or credit again.
RE wrote:
I can think of a couple ways that analogy might be....extended. But they are too graphic and distasteful to share.
Bob Dobbs wrote:
The difference is that there will probably be little opportunity to trade the next down-leg. Everything now relies on the government's credit rating. With only one leg to stand on, it'll come down fast when that leg is kicked out.
Juvenal Delinquent wrote:
Bulletproof, the new form of banker transparency.
Wall St. is primarily a skimming operation. It's NOT about lending or CONnecting borrowers with savers. It's about credit creation.
Greensham, Bernanke and a handful of other eCONomists, CONned people into believing that senseless credit creation was actually wealth creation. It's a big LIE.
Glass ceilngs-scissors-paper.
CFDIC (Casino Federal Deposit Insurance corp) Don't you feel better?
mp wrote:
I will take the under on that.
Gavshire Hathaway wrote:
The question is what they're trying to do. And the answer isn't what most think it is. Nor is it noble.
Oh, it's "noble", all right... Word well chosen.
Gavshire Hathaway wrote:
I agree, we won't make it through this crisis with the system as we know it intact. Unemployment at 10% in 2012 we see to that.
Soli-lent green has people.
My light-bulb was checking my T Rowe Price account and realizing that I had actually lost money over 4 years.
This has all happened before. Many words have been written by eminent and learned men about the perils of private bankers being given control of an economy.
Traditional banks had, I believe, a noble role in society.
Traditional banks had loan officers and, as Minsky said, loan officers were "a partner of a borrower."
That's no longer the case.
noob goldberg wrote:
That's what out-of-the-money leap puts are for.
Take your time and spread them out--you'll take 100% losses on the first few and you don't want to run out of capital before the payoff.
Not that you'll be able to do anything with the money afterwards, but at least you'll have won the final game.
my light bulb was all of new subdivisions built in a county with maybe 40k just couldnt understand it. still cant.
mp wrote:
The difference was when the role of loan officer went from working with the borrower to ensure the loan was able to be repaid, to working with the borrower to ensure a loan was simply made.
The officers still exist, but their role has changed from gatekeeper to salesman.
the SIVs, the hedge funds, the investment "banks" the monolines etc
Doesn't look as though any proposal to regulate's going to come from the Obama administration--
NEWSMEAT ▷ Geithner Warns EU on Hedge Fund Regulation Plan
It's the difference between a loan as a loan and a loan as raw material for a securitization.
LBD said, "CFDIC"
dead center, on target
noob goldberg wrote:
Yes.
Yalt wrote:
Yes.
azurite wrote:
What a
ing shill.
No offense, shill.
I suspect there is some suasion behind the scenes: if the Fed buys your MBS, you damn well better use that money to buy (at least some) Treasuries. Seems like a decent explanation of why interest rates are still low. Could be the banks actually think the Treasuries are a good place to park their money, though; they aren't really that smart, just well-connected...
azurite wrote:
No, and that's why it's going to happen again.
It's really as simple as that.
Maybe it's not broken. Maybe it can be fixed.
btw sign at local bank stated that the $250k insured will expire 12/31/13/ on 1/1/14 it will go back to the 100k amount.
Anonymous Bosch wrote:
Well, it's definitely broken, and there seems to be very little will to fix it.
Yalt wrote:
On that happy note,
twilight zone.
Banks do not exist to "loan" money. Money itself is a loan. Banks exist to create credit.
The amount of inflaiton in the system far exceeds the amount of actual output. It wouldn't matter if the distribution of wealth and income was better. However bankers weren't going to let stagnant incomes stop the senseless credit creation/banker bonus gravy train. To get around the income problem, banks simply stopped worrying whether or not the loans would be self liquidating.
All this under Greensham and Bernanke.
Well, there still a whole lot of insured banks, and you can have multiple accounts each insured.
Of course since I'm mostly in cash right now I'm pretty certain that is the worst thing to do.
Just because in hindsight, what ever I have done usually seems to be the worst course.
CR - Time Warner is getting really flaky for me also. My connection has hung once and reset a number of times.
lawyerliz wrote:
I'm glad somebody got it--when I re-read my post I was afraid it might be seen as a reference to a hyperinflation. I didn't mean money'd be worthless because there was so much of it, but that it'd be worthless because nobody'd give a damn.
Beware of the Military-Industrial-Financial Complex to expand on Eisehower's warning.
Declinists have always projected America's imminent demise. For a change, they're onto something.
America May Truly Be In Decline - Newsweek.com
Call it America's Age of Angst. The buzz of negativity seems to be everywhere. DECLINE AND FALL: WHEN THE AMERICAN EMPIRE GOES, IT IS LIKELY TO GO QUICKLY reads the cover headline for British historian Niall Ferguson's article in the current issue of Foreign Affairs. Faced with an unemployment rate near 10 percent, a ballooning deficit, and a grueling partisan battle over health-care reform, both President Barack Obama and his Republican critics in Congress are complaining loudly about the government's inability to get things done.
The messages from the White House are somewhat schizophrenic and bullshit
OK I added this 
Main problem discussed here ad nauseum is there's no will on behalf of Wash DC and corptocracy to change rigged game i.e. Plutocracy cycle in America
http://i173.photobucket.com/albums/w50/alix2304/charts%20II/largeextremeinequalitychart-1-1.jpg
Elizabeth Warren, admits she's afraid of what the future holds for the economic well-being of almost all Americans.
I say....
1950's to 1980's viable middle class
1980's to 2005 asset inflated middle class
2005 + fast diminishing middle class
BOL
I love the ad I'm getting at the bottom of the page. "75% Return On Investment Within One Hour! A Better & Easier Way To Make Money," apparently by trading in tech stock options.
A fitting commentary.
The Fed is attempting to regulate something that no longer exists.
It's time for new definitions.
I say we change their names to squidquariums.
I keep getting the Beluga Caviar ad on the bottom of my page...
...the $250k insured will expire 12/31/13/ on 1/1/14 it will go back to the 100k amount.
so they're only giving us four years to prepare?
B@stards!
Funny, I get a Scottrade ad, and I already have an account with them.
Go figure this guy was unemployed ...
‘Jedi’ to sue over religious rights - thestar.com
Usually, by the time I get to the bottom of the page, the product is no longer available.
as I've said before, twas the late summer & fall of '07 when the pipeline slammed shut & business disappeared & I read that Countrywide had a quarter trillion in foreclsre losses & I skimmed through Irvine Housing Blog & thought, oh, fesces, the world is coming to aN End. The sky is falling!!!! mUCH EYEROLLING. But I didn't hide my fears.,
Remember!
Banks (under Glass-Steagall and before derivatives) are not banks (after Glass-Steagall's demise and with derivatives).
Have a nice day.
Juvenal Delinquent wrote:
And I keep getting ads for Private Storage.
I'm afraid this might reflect some discrepancy in our respective modes of life.
...there is no shortage of endangered feces on Wall*Street
. Yalt wrote 2:18 pm
I love the ad I'm getting at the bottom of the page. "75% Return On Investment Within One Hour! A Better & Easier Way To Make Money," apparently by trading in tech stock options.
A fitting commentary.
sheesh at the bottom of my page i get
earn 1000 percent instantaneously...
youre being mistreated~!
I see your . and raise you 2 .'s
...
My ad is for trading tips ... I'm gonna be rich bee-yawtch!
You made your point, Coming out!
Hardways, Field and Prop bets, say they will or say they wont~
Nice. GFI's LPS link is getting some play in the MSM:
Mortgage delinquencies at historic highs - Personal Finance blog - Money Magazine's More Money
Edit: For ex: An incredible 10% of all U.S. loans are delinquent.
OK, now that is funny.
Mars doomsteads are crowded with rovers and the like, so i'm thinking more along the lines of a 'stead on Phobos instead.
Phobos PICTURES: Stunning Close Up Of Martian Moon
Kauai_Kahuna wrote:
slashdot.org - home of geeks and nerds - has been promoting this for years... Actually when you understand the concepts of all the different religions, Jedi is a pretty good choice... Now if I could just get my lightsaber up....
i got awesome penny stocks, oh they dont know me.
also got Chrome,trying it out now
ShadowInventory wrote:
The Schwartz is strong with me.
Juvenal Delinquent wrote:
Those ridges look like sedimentary deposits - that rock must have been part of an ocean bed at one time... and they want to find out if it's solid? with all those impact craters? looks pretty solid to me... still would be interesting to get a sample and find out if it is limestone and silicon laid down some time ago....
There's a purple pill for that now.
Anonymous Bosch wrote:
My daughter, the RN, erroneously sent me an email with a link to a Canadian pharmacy selling 'female viagra'... apparently she had intended this missive for a friend or coworker or something.... anyway, I have that to hold over her for the rest of my life....
Anonymous Bosch wrote:
What about for my double-ended light saber?
Juvenal Delinquent wrote:
Isn't that the moon that's supposed to crash into Mars in about 250,000 years?
I got a good deal on a time-share, it was a million bucks, but I got an amazing deal on a loan and it costs me just a dollar a year for the next 3 million years, and they tell me the facilities are nice there.
More good news....
WASHINGTON (AP) -- President Barack Obama has nominated the sister of National Public Radio legal affairs correspondent Nina Totenberg (TOH'-ten-burgh) for a federal judgeship.
Obama on Wednesday tapped Amy Totenberg for a seat on the U.S. District Court for the Northern District of Georgia. She has been in private practice and has served as an arbitrator in Atlanta since 2000.
The Harvard Law School graduate also is a special master in federal court in Maryland and a court monitor in federal court in the District of Columbia.
ShadowInventory wrote:
Russia has never actually gotten a probe to Mars, has it? It is not a task for savages, but my recollection is that they have been particularly snakebitten.
March 17 (Bloomberg) -- JPMorgan Chase & Co. was sued by ex-New York Mets outfielder Lenny Dykstra, who claims the bank reneged on loan commitments after he bought the California home of former National Hockey League star Wayne Gretzky.
We've talked about this before.
I heard there is around a 30% success ratio on mar's. It's kind of like someone does not want us messing up their neighbourhood.
Rob Dawg wrote:
Yes I think the lender who foreclosed on the house had to go to Lenny's bankruptcy judge to make him give back the expensive stove that was in the kitchen of the house... I recall a custom stove made in France that had cost about $50k.... Lenny was never too good with the value prop....
Rob Dawg wrote:
Dykstra could not be reached from his car under the overpass for comment.
How could a single human being, unaided, possibly rack up that much debt?
Rob Dawg wrote:
Got
?
Maury the Credit Responsibility Panda wrote:
He was on CNBC touting some kind of options strategy shortly before his bubble popped...
There was some NFL QB who went under in a big way recently too - I cant remember who exactly - I'm sure someone does...
...didn't Dykstra used to spit
all over the field of play?
Give me enough credit, and an amoral mindset. I'm sure I could surprise everyone.
When some people got a whiff of the perceived 'good' life, there was no way a $700 stove from Lowes was gonna work, no sireee Bob.
ShadowInventory wrote:
Google says Bernie Kosar
black dog wrote:
That's microeconomics. Most Fed analysis is macro, or at least aggregated.
It's too bad we can't ask Michael Jackson.
ShadowInventory wrote:
Yeah, it was a Martingale. That's how he showed this incredible string of wins when he was writing for Cramer, by only closing out his winning positions.
So he'd have 20 tiny positions in 3 - 4% winners, but have very large positions expire worthless because he kept doubling down on them.
Also, he seemed to have no concept of a hedged position, like putting on a spread with decent mathematical odds of success. The condor spreads are very deterministic. You know your max loss and max gain. But Dykstra was always balls-out naked long or short something.
Is Dykstra the one that CNBC used to quote his stock picks ... or was that some other ball player?
I'm already missing Impossible*
That's microeconomics. Most Fed analysis is macro, or at least aggregated.
Well, that is part of the problem then. If you don't work from the ground up you're susceptible to GIGO in your models.
Anonymous Bosch wrote:
I'm sorry, I malremembered. I thought someone told me once Dykstra had $400m in debt. It turns out it was only about $50m. Piker.
Well I'm working in the local county counsel's office, doing local law. Full time, but for free. It's pretty interesting, especially in comparison to wall street law.
'scuze me but if enough people find themselves in the same quandry doesn,t it become macro?
Bubblisimo Gerkinov wrote:
Could be that famous double-threat athlete/financier John Bradshaw Layfield, the wrestler and former college player.
He is Meredith Whitney's husband.
Michael Jackson leaves $1 billion in assets, $500 million in unpaid debts
I don't know why I looked this up , I'm celebrity phobic. But, what? $500 mil in concerts?
14 or 15 sequential up days in the SPY.
This time really is different.
SPY: Historical Prices for Standard & Poor's Depositary Re - Yahoo! Finance
O is being interveiwed on tv. He wants the floor without questions.
Must be nice to be in send only mode all the time.
Spellbinding performance by Benito, bravo
YouTube - Screamin' Jay Hawkins- I put a spell on you
Could one person really have run their plastic surgey bill into the hundreds of millions?
O, we just don't trust anyone right now. Do we have a reason?
Juvenal Delinquent wrote:
Nice pix, but I've always had a thing for Deimos.
Juvenal Delinquent wrote:
Dont forget all the hush money payments to the parents....
Yes JD
Anonymous Bosch wrote:
This Is It (Michael Jackson concerts) - Wikipedia, the free encyclopedia
"Randy Phillips, president and chief executive of AEG Live, stated that the first 10 dates would earn the singer approximately £50 million.[9]"
There were going to be 50 shows, so that would be £250 million, if we make an assumption that perhaps he gets more on the back-end shows that could raise the number -- or even a share of the royalties for sale of concert materials after the fact?
MJ probably paid out more than the Catholic Church. Don't forget the drugs.
MrBeach wrote:
This might be of interest, although I wouldn't want to imply that this time really isn't different;
NTHENOs KNOWS - INTERESTING DOW STATS
The rule of 2-3 times income is out of whack. With higher taxes, insurance, etc... 1 to 1.5 is reasonable now. If we lived a
70's lifestyle with 1 car, no cell phones, no cable, maybe 2 times income.
mp wrote:
Seriously, isn't that what happened in 2008? That's what we were told.
MP, I understand what you are saying. Events are in motion NOW.
The rule of 2-3 times income is out of whack. With higher taxes, insurance, etc... 1 to 1.5 is reasonable now.
Great. Now all our money goes to pay for bloat, instead of for tangible assets.
These clowns may have graduated from top business schools, but their actions show they couldn't pass the exam to get out of second grade Baptist Sunday School.
hoops, if you check back here, that's great! Great opportunity, great experience, great community service. I'm glad you stuck with the field. It seems to suit you.
:pat on back:
Jonathan wrote:
Greetings all!
I've been a lurker here for a few years but finally registered and this thread struck a chord.
Starting around 2003 I had been saying to whomever would listen that what I was seeing built (I'm an architect) and more importantly, BOUGHT, just didn't make sense to me. I knew we were close to the blow up point when, in the summer of 2005 I was driving to Rehoboth Beach on the Delaware shore and got lost somewhere between Wilmington and Millford trying to avoid traffic on Rt 16.
I was driving through the woods, 20 miles from nowhere, when I came apon a new McMansion development in a former corn field. They were having some sort of sales promotion because the banners were up, the baloons were festooned, the flags were flying, and the signs were saying "Starting in the mid 400's"
Who in their right mind was going to spend nearly half a million on a McMansion in a corn field 40 miles south of Dover AFB? It made no sense. AT ALL. The deeper question begged itself. Who in their right mind would DEVELOP a project like this and who on earth would ever underwright it?
I knew then that we were close to the blow up point. I remember thinking My GOD, its full of Tulip Bulbs