Gretchen Morgenson
I loves me some Gretchen Morgenson. She’s one of the few folks who have been paying attention for the last few years, and constantly pointing out "you know, I do believe that the financial sector may be without proper attire. Indeed, it might just be that the sod is 3 sheets to the wind, buck naked and running down Wall Street screaming "money, money, money! Give it all to me! To me. It’s all mine! Ahahahahaaha!"".Or somesuch. Point being that Gretchen has known that that the Emperor didn’t have any clothes and he was planning on stealing everything that wasn’t nailed down. So I’d just like to point out something I expect she’d agree with (er, in a more genteel fashion):
…whatever the number is, it will also represent, in stunning red ink, the cost to society of financiers who are shortsighted and greedy and regulators who don’t regulate.
Must be read while remembering this line:
And taxpayers weren’t supposed to be left holding defaulted mortgages and abandoned homes while executives who presided over balance sheet implosions walked away with millions.
See now, here’s how this works. If the suckers don’t make sure the executives who profited from the last seven years of debauchery don’t suffer for it, they’ll do it again. Why shouldn’t they? They got stinking rich, and we got stuck with the bill? What reason could they possibly have to not do it again?
As for the regulators, they are all captured either by the revolving door between industry and government or by academic ideology which doesn’t really believe in regulation and which believes that risk can be managed through mathematical models, without recognizing the fundamental limitations of mathematical models – that even on the rare occasions when they work, they don’t work if the numbers in are wrong, and those numbers are always wrong if it’s in people’s interest to lie about them and you don’t bother to check because it’s in your interest to let them lie.
Regulators who don’t believe in regulation can’t regulate. Executives whose real job is to grow their bonuses will do that, no matter what the cost to anyone else.
And until we remember rule #1: "don’t reward people for bad behaviour" this sort of thing will just keep happening.
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Yeah, Ian, it has amazed me for some time how all these oh so wonderful executives that can do nothing correct get paid millions to screw a company into the ground and then get millions more to screw up the fix.
They get the millions and we get the screws.
If the government would just get out of the way and let the free market work its magic this would sort itself out.
It all began with Reagan and his “government is the problem.” The only thing government is good for, for this gang, is transferring wealth from us poor shmucks to the people who it “belongs to,” the rich and powerful. You do this by removing regulations, giving huge tax breaks to the rich, and encouraging greed as a virtue and the market as some law of nature.
Unfortunately there comes a point where the economy that has turned into a purely consumer driven one bankrupts most of its consumers with these policies and then the fun begins.
No whining, now, you hear me, no whining.
Oh, but you have to pay a lot to attract the best executive level ”talent,” or that’s at least what they always say. Doesn’t matter if they fail wherever they go, they’ll always be ”top tier talent.”
BigMoney CEOs are very good at selling themselves however, and suppose that’s why they keep getting jobs.
Gee, accountability, what a concept!!
I’ll bet we’d get better corporate leadership if we outsourced it to India…..and at a reasonable rate.
Can you say S&L bailout?
Sure – I thought you could.
Can you say McCain?
Telco immunity – Financier Immunity – FEMA Trailer Immunity – Harriet Meyers Josh Bolten Karl Rove Scooter Libby Immunity. Immunity for everyone except the common man. Common man pays. If he doesn’t pay, he goes to a corporate-owned prison whose owners are also immune.
Here’s what I said to Mark Begich in the last thread:
…I sure hope you help push for holding the lawbreakers from this administration accountable for their crimes.
It just won’t do to give them a pass because it’s expedient. We were victimized twice -at least- by the Iran Contra crowd. It cannot be OK to ransack the treasury and commit crimes against humanity and then walk away without consequences. Consider it preventive maintenance for the future.
She’s not just ahead of the pack, she has a time machine!.
Er, at least, that’s my current working hypothesis.
That would be one pronunciation.
Another would be Bush.
There are a large number of alternates
It began long before that. The very days and weeks that FDR’s New Deal was just being set up in an effort to save everyone from financial ruin saw the beginnings of opposition to anything the government might try to solve the problems people face everyday which are to large for the individual to deal with.
Social Security when it arrived was condemned as ‘unChristian…communist…and against the laws which underly society such as Darwinian theory’, I shit you not, and we still see today those toads, those vile scum masquerading as men who decry government, even though they’ve spent their entire lives in it, and it’s good works.
Social Security is ‘disgraceful’ for McSame a man who never worked a day in his life outside the protected confines of government. A man who’s built a career from graduating 894th from Annapolis and being ignominously shot down, he says, in ‘Nam.
What are we to think of him or the idiot Norquist. Men who’ve spent their lives protecting the very, very rich from having to pay their fair share. That’s right the very rich do not pay their share of the tax burden. And forget about the idea that you will ever be one of them. Baring winning the lottery, long odds, you will not.
And so we stumble forward a nation of losers who, entranced by the TeeBee, think that because we can afford all the beer we want and an HDTV that we are rich.
Gonna be an interesting election: The ineptitude and moral cowardice of Obambi vs. McSame and the same old gambits.
Is people learning?
We’ll get to find out.
Obama
Pelosi
Reid
There is going to be a bailout so your bank with your money in it will stay open. With the current crew of Dems accountablity?
Not so much.
You just gave me a post “now that we’ve tried the best CEOs money can buy, why don’t we try some guys who’ll take the job for 100K, no bonusses. They can’t possibly do a worse job…”
Yes, but the MFs did the job they were hired to do and did it most excellently.
So very clear, they are not working for us.
I think that literally every single article I’ve ever read from a BigMedia outlet advances that argument without any question or sense of irony. Would be great to change that public perception.
If the Fed assumes Freddie and Fannie’s obligations in a take-over, will that really double our public debt? How is that actually possible without some decision-making by someone other than Helicopter Ben?
It’s the same the whole world over,
It’s the rich what gets the pleasure.
It’s the poor what gets the blame.
Ain’t it all a bleedin’ shame?
Twas ever thus.
Isn’t there an implied Federal guarantee for Freddie and Fannie?
If the Fed assumes Freddie and Fannie’s obligations in a take-over, will that really double our public debt? How is that actually possible without some decision-making by someone other than Helicopter Ben?
It isn’t the take over of Freddie & Fannie the banks fear, its the loss of fees from originating mortgages.
Speaking of topics…we exchanged comments a while ago where I mentioned Hyman Minsky and his model to predict economic behaviours. Did you ever check into Minsky at all, and if so did you have any thoughts?
Some background:
New Yorker Feature:
http://www.newyorker.com/talk/…..lk_cassidy
Minsky’s Seven Stages
http://www.askaboutmoney.com/s…..hp?t=24601
“Implied” covers a multitude of sins.
This will not ‘double the debt’ not all the mortgages held by the two entities are in default not even very many of them. The paper they hold is not totally worthless it’s just made both of them unprofitable for now and for some time to come.
Not the end of the freakin’ world.
And yes you the taxpayer will get to foot the bill. That’s for the benefit of all. Not just the crooks who are getting away with the swag.
It’s also known as ‘the full faith and trust of….’ our government. The folks who represent us. If we don’t like the way they are doing it there is a solution.
Replace them.
I’m ready.
How about you?
Richard Clarke and AJ Rossmiller upstairs in book salon. Yes that Richard Clarke.
For robber barons, government is the problem.
Government is a people’s only weapon against brutery — which is why the brutes are always trying to trick people into hating government.
Book Salon upstairs with guest Richard Clarke
Our Treasury Secretary Henry Paulson headed Goldman Sachs before taking up his current position. He has talked in general terms about greater oversight of markets if problems arise but has been loathe to regulate to prevent the recurrence of speculative bubbles. The crude oil bubble coming so closely on the heels of the subprime collapse shows that he will do as little as possible and nothing fundamental.
yes, we can bail them out but we need a strict accountability program; something that uses the talking points of the folks who gave us the bankruptcy legislation, the TPs that said we cant let folks just sign up for credit cards and then walk out on debt.
we need something that seizes there actual PROPERTY and makes them LIABLE, and also bails out the rest of us. But the perpetrators, the CEOs, and CFOs, and board folks-maybe, and other senior execs, they lose some shit, and maybe do some time with Puerco in the big house.
A little something to take the edge off. A reminder that life is not all disaster.
Christian the Lion
The man who appears towards the end with no shirt is George Adamson, of Elsa fame, who was murdered by poachers in Kenya in 1989.
“Regulation is always bad for business.”
How do I know this? Why the think tanks who are supported by Business tell me that. The CEOs and PR firms who work for the businesses tell me that. The conservative talk radio hosts who work for advertiser dollars tell me that.
Who comes out and says that regulation is GOOD for business? Who comes out and says that we NEED government to keep an eye on things? Nobody. And when they do, they are ATTACKED. Who attacks them? The think tanks, the talk radio hosts the people who make money in an unregulated environment.
Do taxes ever pay for oversight? For government regulation? Yes. Are taxes ALWAYS BAD to corporations? “Yes!” say the corporations. Who should we believe, the corporations or the data. The corporations will ALWAYS push for what they can get, it is their nature. Someone should push back. And when there is no one to push back they will win. And after the whole thing falls apart? “Nobody could have anticipated…” THEY ARE WRONG about regulation and they know it, but that doesn’t stop them from pushing.
Like a child they EXPECT someone to push back and I’ll bet they are secretly happy when they lose because the smart ones understand that they really need regulation. Children need and want discipline yet they still cry when they are punished for breaking the rules.
Regulation. Good for Business. Good for American.
It ALWAYS behooves the people who don’t want regulation to tell stories of TOO MUCH regulation. Are there sometimes cases of too much regulation? Yes.
Are their many, many more cases of too little or NO regulation? YES. 1000 times yes.
Should we promote these cases, make the people go to jail, and extract our money back from these people so that this won’t easily happen again? Yes.
(Dear Enron: I want my money back, you lying jerks. -Signed California)
But who will PAY us to do this? Because I can tell you right now that the the pay for people who support NO regulation is GREAT. The people who are in FAVOR of regulation aren’t really paid as well by the corporate lobbyists. Business will spend millions to avoid regulation that will earn them billions. We can barely muster thousands to protest against collapses that will impact millions.
Regulation. Good for Business. Good for American.
And if you disagree with me let me ask you who you work for and who funds you. Has your industry benefited from regulation? Have you ever benefited from regulation? Before you answer no, consider the car you sit in, the chemicals in your home, the food you eat, the hard hat you wear, the water you drink and the air you breath
I’ll bet you have benefited from regulation. Do businesses and neocons still fight regulation anyway? Sure. Because almost every company CEO doesn’t want to follow the rules. But he wants the other guy to. I can’t tell you how many CEOs whom I’ve met who say, “All I want is an unfair advantage.” If they looked at the FACTS they would realize that regulation is GOOD for them, the industry and the country. But they are not paid to look at the facts for the INDUSTRY or the country. All they care about are themselves or maybe their own company.
The US benefits when we have regulation, but of course the US isn’t who they want to help. And if there are no consequences for bad behavior, they will keep doing it again and again. No stick on our side, lots of carrots on the other.
Time for some Harvard MBA to do some studies about how GREAT regulation is for everyone and how the desire to destroy and circumvent regulation is bad for business, bad for America and bad for the economy.
This is major example number five about the need for oversight that oversee, regulation that regulates, government that governs. Now we consequences and regulations put back into place with enforcement, funding and teeth. Why? Because as I’ve said:
Regulation. Good for Business. Good for American.
It’s probably not legal, but if no one tells them that, well, the Fed is in the middle of the biggest regulatory power grab in history, as far as I can see. And since everyone is too paralyzed to do anything, they’re getting away with it.
A lot of people assumed so. Strictly speaking they’re private, but because they started as government and becuase they’re “too big to fail” a lot of poeple figure the government wouldn’t let them fail. The government has explicitly rejected this view in the past, but no one really believed them.
Silverado S&L Denver owned by a Bush bailed by The Resolutiom Trust Fund,now defunct. The Texas book od foreclosures was 8 inches thick and investors picked up rental properties for a song renting them back to foreclosed families.
This formula with some new wrinkles was the “Housing Bubble” that kept the Bushco econ afloat. Developers. builders all got paid in full (his redneck friends). The mortgage companies knew a bail was in the plan like the Resolution Trust. Same people win same lose bait and switch the consumer. All the debt is transferred to Uncle Sam and nothing is left in the US Treasury for the safety net for people that lose their jobs and have to spend their retiement to last through the next decade.
The big dog knew thw scenaio from before Clintons presidency.
Disaster Capitalism
The Neocon business plan was in place before the Bush administration. They know thw impacts of their policy. They get rich the econ is in disaray and more harvesting of assests using leverasged ubfriendly buyouts. The wolf pack and the hyena pack are circling the herd.
Thanks Ian.
It’s not only greedy financial corporations . . . the problem, of course, extends to healthcare organizations, and the heretofore unassailable academia. Healthcare Renewal details some of the bad boys in these arenas at http://hcrenewal.blogspot.com/…..html#links
If I may, please let me suggest some reading. There are two macroeconomic theories that seem at play. The first is Development-Dependency theory, developed by Andre Gunder Frank. Sadly, he passed away in 2005, right when we needed him the most.
The other theory is called “The Kondratieff Wave.” It’s a phenomenon that seemed to be held off by liberal capitalism. Now that LC is gone from America’s economy and the so-called “free market” has taken it’s place, the clock is again ticking. Not good.
We’ve just come out of the Spring Inflationary Growth Phase of the wave, evidenced by the growth of stock market prices. We are in the Summer phase of the wave, marked by Stagflation. Because the economy lacks its old government-based circuit breakers, the only thing preventing the rest of the cycle is Adam Smith’s old invisible hand… except with so much economies of scale working in the negative direction now (ie., near monopolies), I think that hand isn’t just there but invisible; I think it’s plum disappeared.
As I said yesterday, most (though not all) business executives are as dumb as a box of rocks (witness our MBA-in-Chief) and have no clue what they are doing (at least in terms of running their businesses). Add to this the kinds of adverse incentives built into current executive compensation packages and the total lack of accountability and you have a recipe for economic disaster. It is not just in the financial industry, but nearly everywhere to varying degrees (particularly in Detroit). There are a number of reasons for this, but two big ones are the fact that companies no longer promote from within (so that the CEO actually knows the business he is running) and the single-minded focus on return to investors and stock prices.
There is no doubt in my feable little mind, that over this weekend the wheels are turning in Washington and come Monday or Tuesday the latest, Joe and Jane sixpack are going to be for the surprise of their lives. We the American taxpayer are going to be paying for a bail out of Freddie and Fannie for the rest of our lives as well as our childrens and theirs as well to the tune of over five trillion dollars and not one politician or banker will ever see the inside of a jail cell.
When this comes to pass, there should be a cry from the populace the likes of which Washigton has never seen. Every blog regardless of political stripe should call for a walk out of one day in protest. If that doesn’t get anyones attention, then the next one should last a week and just bring the country to a halt.
When the peoples business is no longer being served, under the Constitution, we do have a way of changing things. You know that line that starts off: When in the course of human events. I sincerely hope that apathy doesn’t get the better of us.
Keynes said that bankers do not fear bank failures, as long as they all fail in the same way at the same time. What they fear most is failing in a way different from their peers.
As an economist, if I were fealing all free market magicky, I would be obliged to say that if correct incentives were in place, they woudl appear spontaneously with the property rights and free market magic, and there would be a crtiical mass of bankers who would strive to succeed and increase prosperity in ways uniquely different from their peers. But Keynes was smarter and knew more than me, and he was very doubtful about that, at least without a lot gummint regulation. When they can do anything at all, such a banker beast is mythical and doesn’t exist -sort of like a Machiavellian prince who is hated and not feared. They bite the dust so fast, for all practical purposes they are nonexistent.
Let me describe what I’m seeing from a different perspective: the Bushies and their Wall Street allies are jerking the markets around to make money off them as all criminals generally do. There is a loud wail about how the economy is going to crash disastrously. That loud wail does not explain WHY they should fail, just that they probably will. The loud wail about Freddy & Fanny don’t explain WHY they should fail, just that they likely will. The loud wail is a cover story for the very real manipulations forcing difficulties on people.
The timing of the government intervention of Indymac bank is somewhat similar. It’s not accidental. It’s not a natural response of problems. It’s intentional political intervention at a specific time to achieve a specific goal.
Did Chuck Schumer’s letter cause Indymac to fail? No. They’ve been sinking ever since they began to make bad loans, just like all the other stupid lenders.
So, what’s next?
I expect the Housing Aid bill to be passed by the House and Bush to sign it and the housing market to slowly recover over a period of a couple of years. The scum who have used it to make money have put a hell of a lot of people through the wringer and stolen all their pennies. Bush smirks.
The next major Bush problem is oil prices. His regulator has stood by and watched as the oil prices have been jacked up by the ICE market and Bush smirks.
The upcoming oil markets regulation bill (whatever it’s name) will face some opposition from House & Senate Republicans, particularly in the senate where not all are up for reelection this year. It’s going to be hard for House Republicans to vote against a bill which might bring gasoline prices down. But, some will make an effort. In the senate there were a bunch of Republicans who simply didn’t show up or refused to vote against the Housing bill, so I suspect they will also show opposition to the bill. Can they rustle up enough R votes to stop it? I doubt it, but their stunt (not voting on Housing) shows they’re certainly willing to pass the buck to the House reps and let them take the heat. Nice bunch of thugs.
You can bet Bush and his oil market thugs will pull out the stops to take advantage while they can. If the Fanny & Freddy thing is an indicator they’ll be doing some pretty despicable things with regards to oil just as the Dem regulatory bill comes up for a vote.
Thing is these Republicans who *might* side with Bush aren’t going to get anything for that loyalty. Bush policy is to use and stab in the back anybody who might be handy. Dems can campaign with recent behavior to let the public know just whose side those Repubs are on (Dubya’s).
Finally, it’s gonna take time to be rid of Bush and the effects of his horrendous administration (and those who have died are lost forever). In the mean time the ride is gonna be bumpy and he’s gonna make more people suffer for his own benefit (and that of his friends). All we can do is fight fight fight and push the Congressional Repubs away from Bush to divide & conquer and for the nation’s good and for the good of a 2-party system. Minimizing Bush is critical despite the wild demonstrations he and his friends can make (see Freddy & Fanny). There’s just not much we can do about those things.
Bush is a weenie and he’s gonna go down hard. It’s just gonna take some time.
I like Spocko’s post, above. It squares with a sad truth: that we libs/progressives/whatevers are seriously outgunned in the ideas marketplace by the likes of AEI and all the other lavishly funded right-wing PR operations (oh, excuse me, “think tanks”) that keep pushing right-wing framing out there, for lazy, shiftless reporters (oh, excuse me, “reporters” with quotes) to pick up on.
I have an impression of a flood-tide of well-organized position papers, PR feeds, “news” items, video feeds, etc., all with right-wing framing, being pumped relentlessly into the news stream by these outfits, and on “our” side, I see nothing remotely comparable.
I had some hope with the formation of the Rockridge Institute, but they slipped under the surface and sank recently and that’s kind of it as far as progressive lobbying groups, at least that I’m aware of.
What we need is a Scaife of our own: a filthy rich progressive who’ll bankroll a think tank of lefty “scholars” who can write, persuade, engage, and get the message out. For starters, I’d nominate Spocko and Cliff Schecter as key “scholars” because they both have given lots of thought to framing and communications isues.
Unfortunately, though, I’m not a Scaife. (Look, here I am contributing to a stone-cold thread, that’s how sharp I am!)
When I try to explain to people why the “war on some people who use certain kinds of drugs” is so wrong, I use the Enron analogy. If you are dealing drugs they can arrest your mother or girlfriend for taking a phone message at your house. When an Enron or Bears & Stern goes down, maybe we see a top executive or two take a perp walk. If we were serious about white collar crime the way we are about drugs – the secretaries, mailroom guys and IT folks would all be in the slammer.
And from taking sociology courses in the topic (and been in the working world, including a great deal of temping, for a decade or two), people at an underhanded organization generally know what’s going on. There shouldn’t be too much of a presumption of innocence.
More comparisons of drug forfeiture laws and government bailout policies is a fruitful line of inquiry.