Weekend Economists' Innocents Abroad (and at home!) April 30-May 2, 2010

[Demeter]

Another week and another month draw to a close. And What a week and month those were!

As you may or may not know, Samuel Langhorne Clemens, commonly known as the author Mark Twain, left us bereft one hundred years ago on April 21st, 1910.
This weekend is devoted to his legacy, and in my usual belated fashion, it's only 9 days late!

From Wikipedia:

"Samuel Langhorne Clemens (November 30, 1835 – April 21, 1910), well known by his pen name Mark Twain, was an American author and humorist. Twain is noted for his novels Adventures of Huckleberry Finn (1884), which has been called "the Great American Novel", and The Adventures of Tom Sawyer (1876). He is extensively quoted. Twain was a friend to presidents, artists, industrialists, and European royalty.

Twain was very popular, and his keen wit and incisive satire earned praise from critics and peers. Upon his death he was lauded as the "greatest American humorist of his age", and William Faulkner called Twain "the father of American literature".

Samuel Langhorne Clemens was born in Florida, Missouri, on November 30, 1835, to a Tennessee country merchant, John Marshall Clemens (August 11, 1798 – March 24, 1847), and Jane Lampton Clemens (June 18, 1803 – October 27, 1890). John Marshall Clemens was the first of five children born to Samuel B Clemens and Pamela Goggin (1775–1844), who married on October 29, 1797 in Bedford County, Virginia.

Twain was the sixth of seven children. Only three of his siblings survived childhood: his brother Orion (July 17, 1825 – December 11, 1897); Henry, who died in a riverboat explosion (July 13, 1838 – June 21, 1858); and Pamela (September 19, 1827 – August 31, 1904). His sister Margaret (May 31, 1830 – August 17, 1839) died when Twain was three years old, and his brother Benjamin (June 8, 1832 – May 12, 1842) died three years later. Another brother, Pleasant (1828–1829), died at the age of six months. Twain was born two weeks after the closest approach to Earth of Halley's Comet. On 4 December 1985, the United States Postal Service issued a stamped envelope for "Mark Twain and Halley's Comet."

When Twain was four, his family moved to Hannibal, Missouri, a port town on the Mississippi River that served as the inspiration for the fictional town of St. Petersburg in The Adventures of Tom Sawyer and Adventures of Huckleberry Finn. At that time, Missouri was a slave state, and young Twain became familiar with the institution of slavery, a theme he would later explore in his writing.

In March 1847, when Twain was 11, his father died of pneumonia. The next year, he became a printer's apprentice. In 1851, he began working as a typesetter and contributor of articles and humorous sketches for the Hannibal Journal, a newspaper owned by his brother Orion. When he was 18, he left Hannibal and worked as a printer in New York City, Philadelphia, St. Louis, and Cincinnati. He joined the union and educated himself in public libraries in the evenings, finding wider sources of information than he would have at a conventional school. At 22, Twain returned to Missouri."

And then his adult life began.

Mark Twain saw a lot, and in the end, he did not enjoy most of it. I know how he felt, as I think this generation will have similar misgivings at the end of life. But why wait until then, when we have the Economy!

Post it--Twainisms, Geithner-abuse, anything to enlighten and entertain or fret. we're here all weekend!

[ozymandius]

1. Ha! First!

First time ever too! Good evening, Demeter.

[Demeter]

6. Congrats, Ozy!

glad to have you aboard.

[ozymandius]

8. Thanks!

I am happy to have a little while to spend here. :hi: Dang! That was some cliff diving finish to the trading day.

[Hugin]

7. Sorry, I'm late.

I'm typically first. :blush:

But, tonight I was dining on Schadenfreude... A dish, best eaten slowly. (I'm sure Mr. Twain would agree.)

[Demeter]

20. Nobody Is Ever Late Around Here

(with one possible exception)

[InkAddict]

95. We may, however, just be trying to learn how some folks get all the donuts even

when they're a dollar short...Oh, the things we learn about Banksters in Weekend Econ and SMW...

One can only hope that TUMMYACHES are on the way!

[ozymandius]

2. Twain on a banker (we think):

BANKER

A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain.

[jotsy]

3. Are you plannin' to get shitty wit' it?

As of about 20 minutes ago, 4 banks down so far, all but one in Michigan are in Puerto Rico.

[Demeter]

4. This Week's Bank Closings Have a Carribean Theme!

FIRST--THREE BANKS IN PUERTO RICO

Eurobank, San Juan, Puerto Rico, was closed today by the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Oriental Bank and Trust, San Juan, Puerto Rico, to assume all of the deposits of Eurobank.

The 22 branches of Eurobank will reopen during normal business hours as branches of Oriental Bank and Trust...As of December 31, 2009, Eurobank had approximately $2.56 billion in total assets and $1.97 billion in total deposits. Oriental Bank and Trust paid the FDIC a premium of 1.25 percent to assume all of the deposits of Eurobank. In addition to assuming all of the deposits, Oriental Bank and Trust agreed to purchase essentially all of the failed bank's assets.

The FDIC and Oriental Bank and Trust entered into a loss-share transaction on $1.58 billion of Eurobank's assets. Oriental Bank and Trust will share in the losses on the asset pools covered under the loss-share agreement...

As part of this transaction, the FDIC will acquire a value appreciation instrument. This instrument serves as additional consideration for the transaction.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $743.9 million. Oriental Bank and Trust's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Eurobank is the 58th FDIC-insured institution to fail in the nation this year. Eurobank is one of three institutions closed in Puerto Rico today.


R-G Premier Bank of Puerto Rico, Hato Rey, Puerto Rico, was closed today by the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Scotiabank de Puerto Rico, San Juan, Puerto Rico, to assume all of the deposits of R-G Premier Bank of Puerto Rico.

The 29 branches of R-G Premier Bank of Puerto Rico will reopen during normal business hours as branches of Scotiabank de Puerto Rico...As of December 31, 2009, R-G Premier Bank of Puerto Rico had approximately $5.92 billion in total assets and $4.25 billion in total deposits. Scotiabank de Puerto Rico paid the FDIC a premium of 1.35 percent to assume all of the deposits of R-G Premier Bank of Puerto Rico. In addition to assuming all of the deposits, Scotiabank de Puerto Rico agreed to purchase essentially all of the failed bank's assets.

The FDIC and Scotiabank de Puerto Rico entered into a loss-share transaction on $5.41 billion of R-G Premier Bank of Puerto Rico's assets. Scotiabank de Puerto Rico will share in the losses on the asset pools covered under the loss-share agreement...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.23 billion. Scotiabank de Puerto Rico's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. R-G Premier Bank of Puerto Rico is the 59th FDIC-insured institution to fail in the nation this year. R-G Premier Bank of Puerto Rico is one of three institutions closed in Puerto Rico today.


Westernbank Puerto Rico, Mayaguez, Puerto Rico, was closed today by the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Banco Popular de Puerto Rico, San Juan, Puerto Rico, to assume all of the deposits of Westernbank Puerto Rico.

The 46 branches of Westernbank Puerto Rico will reopen during normal business hours as branches of Banco Popular de Puerto Rico...As of December 31, 2009, Westernbank Puerto Rico had approximately $11.94 billion in total assets and $8.62 billion in total deposits. Banco Popular de Puerto Rico did not pay the FDIC a premium to assume all of the deposits of Westernbank Puerto Rico. In addition to assuming all of the deposits, Banco Popular de Puerto Rico agreed to purchase approximately $9.39 billion of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Banco Popular de Puerto Rico entered into a loss-share transaction on $8.77 billion of Westernbank Puerto Rico's assets. Banco Popular de Puerto Rico will share in the losses on the asset pools covered under the loss-share agreement...

As part of this transaction, the FDIC will acquire a value appreciation instrument. This instrument serves as additional consideration for the transaction.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.31 billion. Banco Popular de Puerto Rico's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Westernbank Puerto Rico is the 60th FDIC-insured institution to fail in the nation this year. Western Bank was one of three institutions closed in Puerto Rico today.

Madre De Dios! That's $5.284 BILLION in Puerto Rico Alone!

CF Bancorp, Port Huron, Michigan, was closed today by the Michigan Office of Financial and Insurance Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Michigan Bank, Troy, Michigan, to assume all of the deposits of CF Bancorp.

The 22 branches of CF Bancorp will reopen during normal business hours beginning Saturday as branches of First Michigan Bank...

As of December 31, 2009, CF Bancorp had approximately $1.65 billion in total assets and $1.43 billion in total deposits. First Michigan Bank paid the FDIC a premium of 0.75 percent to assume all of the deposits of CF Bancorp. In addition to assuming all of the deposits, First Michigan Bank agreed to purchase approximately $870 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and First Michigan Bank entered into a loss-share transaction on $808.1 million of CF Bancorp's assets. First Michigan Bank will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $615.3 million. First Michigan Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. CF Bancorp is the 61st FDIC-insured institution to fail in the nation this year, and the second in Michigan. The last FDIC-insured institution closed in the state was Lakeside Community Bank, Sterling Heights, on April 16, 2010.


Champion Bank, Creve Coeur, Missouri, was closed today by the Missouri Division of Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with BankLiberty, Liberty, Missouri, to assume all of the deposits of Champion Bank.

The sole branch of Champion Bank will reopen on Saturday as a branch of BankLiberty...

As of December 31, 2009, Champion Bank had approximately $187.3 million in total assets and $153.8 million in total deposits. BankLiberty did not pay the FDIC a premium to assume all of the deposits of Champion Bank. In addition to assuming all of the deposits, BankLiberty agreed to purchase approximately $152.6 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and BankLiberty entered into a loss-share transaction on $113.5 million of Champion Bank's assets. BankLiberty will share in the losses on the asset pools covered under the loss-share agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $52.7 million. BankLiberty's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Champion Bank is the 62nd FDIC-insured institution to fail in the nation this year, and the second in Missouri. The last FDIC-insured institution closed in the state was Bank of Leeton, Leeton, on January 22, 2010.

WELL, ONE FROM TWAIN'S HOME STATE, AND ONE FROM MINE, TO ROUND OUT THE FIRST HOUR...

WHILE I KNOW ONLY WORDS OF FRENCH, DOESN'T CREVE COEUR MEAN 'BROKEN HEART'?

[Robbien]

28. Iceland asked for five billion to bail out its banks and this was huge news

Stock markets wobbled, fights among countries broke out, IMF bullied people around.

Puerto Rico has failure of three of its eleven banks requiring a five billion bailout and the news is a footnote on friday night's notice of bank closures.

Strange world we live in.

[Demeter]

33. A Billion Here, a Billion There..

[Demeter]

34. Another Missouri Bank Goes Down

BC National Banks, Butler, Missouri, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Community First Bank, Butler, Missouri, to assume all of the deposits of BC National Banks.

The four branches of BC National Banks will reopen on Saturday as branches of Community First Bank...As of December 31, 2009, BC National Banks had approximately $67.2 million in total assets and $54.9 million in total deposits. Community First Bank did not pay the FDIC a premium to assume all of the deposits of BC National Banks. In addition to assuming all of the deposits, Community First Bank agreed to purchase essentially all of the failed bank's assets.

The FDIC and Community First Bank entered into a loss-share transaction on $37.9 million of BC National Banks' assets. Community First Bank will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.4 million. Community First Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. BC National Banks is the 63rd FDIC-insured institution to fail in the nation this year, and the third in Missouri. The last FDIC-insured institution closed in the state was Champion Bank, Creve Coeur, earlier today.

[Dr.Phool]

47. Frontier Bank, Everett WA, come on down......

On Friday, April 30, 2010, Frontier Bank, Everett, WA was closed by the Washington State Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled the following information, which should answer many of your questions.

[Demeter]

51. Thank You, Doc~

Frontier Bank, Everett, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Union Bank, National Association, San Francisco, California, to assume all of the deposits of Frontier Bank.

The 51 branches of Frontier Bank will reopen during normal business hours as branches of Union Bank, N.A....As of December 31, 2009, Frontier Bank had approximately $3.50 billion in total assets and $3.13 billion in total deposits. Union Bank, N.A. did not pay the FDIC a premium to assume all of the deposits of Frontier Bank. In addition to assuming all of the deposits, Union Bank, N.A. agreed to purchase essentially all of the failed bank's assets.

The FDIC and Union Bank, N.A. entered into a loss-share transaction on $3.04 billion of Frontier Bank's assets. Union Bank, N.A. will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.37 billion. Union Bank, N.A.'s acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Frontier Bank is the 64th FDIC-insured institution to fail in the nation this year, and the sixth in Washington. The last FDIC-insured institution closed in the state was City Bank, Lynnwood, on April 16, 2010.

[Demeter]

52. Well, With Damages of at Least $ 7. 322 BILLION

I sure hope that Alaska and Hawaii and Guam can hold on to themselves for a bit longer....

[ozymandius]

5. Greed defined (in case Blankfein is reading, he may want to know a definition)

GREED

The man who is born stingy can be taught to give liberally-with his hands; but not with his heart. The man born kind and compassionate can have that disposition crushed down out of sight by embittering experience; but if it were an organ the postmortem would find it in his corpse.

[Demeter]

9. German MPs claim Greece needs €120bn

Greece will need financial assistance amounting to between €100bn-€120bn over the next three years, German parliamentarians claimed after meeting Dominique Strauss-Kahn, managing director of the International Monetary Fund, and Jean-Claude Trichet, president of the European Central Bank
Read more >>
http://link.ft.com/r/WDI4RR/D4IM0O/JQU4J/A7ESN9/A74K84/4O/t

[Demeter]

42. The crisis will spread without a Plan B

http://www.ft.com/cms/s/0/47f48646-53bd-11df-aba0-00144feab49a.html

The past weekend’s spring meetings of the International Monetary Fund in Washington focused on the Greek sovereign debt crisis – the first such crisis in living memory to concern a high-income country, and in the eurozone no less. Even more telling than the shift of focus from emerging markets is the widening divide in the views of those institutions and governments leading efforts to secure an orderly resolution.

Continuing on the path of least resistance – a “Plan A” of official financing banking on a mix of deep fiscal cuts, inadequate structural reforms and hopes that markets will stay open, with growth doing much of the heavy lifting – is a risky bet that is very likely to fail. Already this week, financial markets and credit rating agencies have voted against this approach and started to price in a high probability that Greece will need to restructure its public debt coercively, with contagion to the rest of the eurozone periphery now a serious risk. Augmenting the programme for Greece alone – up to €100bn-€120bn as suggested by the IMF – will not work either.

Far better to move to Plan B. This would involve a pre-emptive debt restructuring for Greece; a strengthened fiscal adjustment plan in the eurozone periphery; far-reaching structural reforms; a larger IMF/European Union programme to help Greece and prevent contagion to others; further monetary easing by the European Central Bank; fiscal and domestic demand stimulus in Germany; and a co-ordinated effort to address the institutional weaknesses of Europe’s economic and monetary union...Plan A entails a brutal fiscal retrenchment to restore debt sustainability. It will lead to higher unemployment and social unrest now, but only restore competitiveness in the distant future. It will intensify deflationary and political pressures in Europe’s south and so raise real interest rates over time. If it is not seen to be working right away, real interest rates will continue to rise sharply and quickly as they have this week. It will also exacerbate market fears of subordination: the more IMF support is needed, the larger the haircut meted out to private sector creditors if restructuring is eventually required.

Thus, Plan A risks a disorderly default and financial crisis. The alternative route of a pre-emptive debt rescheduling via an exchange offer has worked where it was tried early enough and supported with enough official financing and political commitment: Pakistan and Ukraine in 1999, Uruguay in 2002 and the Dominican Republic in 2005.



Nouriel Roubini is chairman and Arnab Das head of market research at Roubini Global Economics

[Demeter]

67. The inevitability of Greek default

http://www.nakedcapitalism.com/2010/04/the-inevitability-of-greek-default.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

.

German Chancellor Angela Merkel is feeling pressure to force German banks to take a haircut on Greek debt by both her own party and opposition leaders (like Frank-Walter Steinmeier, the former Vice Chancellor and now head of the opposition in the Bundestag). This is the first public indication that German politicians recognize that a Greek default would negatively impact the capital base of German domestic institutions which hold large amounts of Greek sovereign debt.

So, now the rhetoric is shifting away from one purely of austerity for Greece in return for (the now larger) aid to one in which Greece undergoes a voluntary restructuring.

three scenarios for Greece at this juncture.

* In scenario one, you eject Greece from the Eurozone, they devalue their currency and, after a turbulent period, they are on the road to recovery.

* Outcome number two is to depreciate the Euro, of course. The Euro is dropping as we speak. But, I am talking about a more serious decline. As I recall, the Euro dipped to as low as 83 cents during Robert Rubin’s strong dollar policy days. If the EU structures the bailout in the right way (fully backstops the period of increasing debt to to GDP) and floods each country with liquidity (aka prints money), you are sure to get this kind of outcome. Everyone gets a massive boost to competitiveness. Problem solved.

* Neither of these scenarios is particularly palatable as they are likely to increase already mounting trade friction. The... only other viable alternative: a restructuring or default.

So, where there has been a lot of political posturing around scenario number one (or its analogue in Germany and a few core Europe countries leaving the euro), there has been little public discussion from policy makers about scenarios two and three.

At the same time, some sort of Greek default is now no longer simply a theoretical possibility among many others, indeed talk of the inevitability of some form of debt restructuring (albeit voluntary) grows with every passing day. Erik Nielsen, European Economist with Goldman Sachs, said this week he is expecting Greece to offer some sort of “voluntary debt-restructuring” to creditors over coming months, while JP Morgan issued a research note saying that while such restructuring may not be imminent, the move would make sense given that Greece could be seen as “the sovereign analogue of a ‘bad’ company with a bad capital structure”.

Restructuring is simply a polite word for default, with the difference that it is normally carried out by agreement. The most likely form of restructuring in the present context would be debt rescheduling, whereby short and medium-term debt is converted into a long-term version, as happened with the so-called “Brady bonds” devised by the US Treasury to resolve the debt difficulties of a number of Latin American countries in the late 1980s.

[Demeter]

68. Greek 2 Year Yields 20 Percent, Italy Up 6 Basis Points, Portugal Up 7 Basis Points, Spain Up 27 Bas

http://www.nakedcapitalism.com/2010/04/guest-post-greek-2-year-yields-20-percent-italy-up-6-basis-points-portugal-up-7-basis-points-spain-up-27-basis-points.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

It’s not just Greece and Portugal.

As Simon Johnson reports:

This is not now about Greece (with 2 year yields reported around 20 percent today) or Portugal (up 7 basis points) or even Spain (2 year yields up 27 basis points; wake up please) or even Italy (up 6 basis points). This is no longer about an IMF package for Greece or even ring fencing other weaker eurozone economies.

This is about the fundamental structure of the eurozone, about the ability and willingness of the international community to restructure government debt in an orderly manner, about the need for currency depreciation within (or across) the eurozone. It is presumably also about shared fiscal authority within the eurozone – i.e., who will support whom and on what basis?

(In related news, Eurozone sovereign credit default swaps widened somewhat Tuesday, but tightened again after the German finance minister said that Germany will rush through a disbursement of funds to Greece.)

Standard & Poor’s downgraded Spain’s sovereign credit rating today from AA+ to AA, after recently slashing Greece’s rating to junk and lowering Portugal’s rating two notches from A+ to A-.

Ambrose Evans-Pritchard writes that there are “ominous signs of investor flight from Spain and Italy.”

As this Reuters chart shows – based on information from BIS – France, Switzerland and Germany are the largest holders of Greek debt:

SEE GRAPH AT LINK


David Rosenberg notes:

Portugal’s stock market has traded down to a 12-month low and it’s so bad in Greece that the government has banned short selling for two months. (Hey, it worked in the once-capitalistic U.S.A. didn’t it?) We see in the NYT that Barclay’s analysts believe that Greece needs €90 billion to see them through, €40 billion for Portugal and €350 billion for Spain!That is €480 billion of refinancing help, which dwarfs the latest €45 billion EU-IMF joint aid announcement by a factor of TEN (according to Ken Rogoff, the IMF is maxed out after €200 billion)! Do euros grow on trees as fast as Bernanke-bucks? Would the ECB, modeled after the Bundesbank, ever resort to the printing press for a fiscal bailout? Where exactly is this money going to come from?

***

Yesterday was really as much, if not more, about Portugal than it was about Greece. Contagion risks are spreading as they were amidst the turmoil around Bear Stearns in early 2008 …

combined fiscal and current deficits are the highest in the industrialized world, save for Iceland (and we know what shape it is in). The amount of debt it has to refinance in the coming year is as large as the entire Greek economy …

***

If the other two major rating agencies follow S&P’s lead and cuts Greece to “junk”, then the ECB would be in a real bind for it cannot hold below-investment-grade bonds on its balance sheet. If the ECB does accept junk-rated Greek debt as collateral, then the sanctity of its balance sheet will be seriously undermined; though this ostensibly didn’t matter too much to the Fed in the name of saving the system.

Nouriel Roubini says “in a few days there might not be a eurozone for us to discuss.”

It is tempting to assume that this is just a European problem. But that might be a very erroneous assumption. See this, this and this.

And as Megan McCardle writes:

The most terrifying words I’ve seen written so far about the growing crisis in Greece were penned by Yves Smith yesterday: “So the whole idea that the financial crisis was over is being called into doubt. Recall that the Great Depression nadir was the sovereign debt default phase. And the EU’s erratic responses (obvious hesitancy followed by finesses rather than decisive responses) is going to prove even more detrimental as the Club Med crisis grinds on.”

The Great Depression was composed of two separate panics. As you can see from contemporary accounts–and I highly recommend that anyone who is interested in the Great Depression read the archives of that blog along with Benjamin Roth’s diary of the Great Depression–in 1930 people thought they’d seen the worst of things.

Unfortunately, the economic conditions created by the first panic were now eating away at the foundations of financial institutions and governments, notably the failure of Creditanstalt in Austria. The Austrian government, mired in its own problems, couldn’t forestall bankruptcy; though the bank was ultimately bought by a Norwegian bank, the contagion had already spread. To Germany…. It’s also, ultimately, one of the reasons that we had our second banking crisis, which pushed America to the bottom of the Great Depression, and brought FDR to power here.

[Demeter]

69. SUPPORTING BLOGS TO ABOVE

http://www.washingtonsblog.com/2010/02/ferguson-and-faber-sovereign-debt.html

Ferguson and Faber: Sovereign Debt Crisis Will Spread World-Wide, U.S. Debt Is Unsafe from February this year...

http://georgewashington2.blogspot.com/2010/01/threat-of-sovereign-default-is-real.html

"This Time, It Is Not The Usual Suspects Such As Brazil And Mexico Who Are In the Worst Positions. Instead, It Is the Industrialized Nations"

http://www.washingtonsblog.com/2010/02/global-sovereign-credit-default-swaps.html

What Do Rising Sovereign Credit Default Swaps Mean?

[Demeter]

72. No Wonder the Eurozone is Imploding

http://www.nakedcapitalism.com/2010/04/guest-post-no-wonder-the-eurozone-is-imploding.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

There Wouldn’t Be a Crisis Among Nations If Banks’ Toxic Gambling Debts Hadn’t Been Assumed by the World’s Central Banks

As I pointed out in December 2008:

The Bank for International Settlements (BIS) is often called the “central banks’ central bank”, as it coordinates transactions between central banks.

BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.

In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.

No wonder Greece, Portugal, Spain and many other European countries – as well as the U.S. and Japan – are facing serious debt crises.

But They Had No Choice … Did They?

Well, actually, they did.

The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach (as are other central bankers).

Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the government’s attempts to prop up the price of toxic assets no one wants is not helpful.

BIS slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, “the use of gimmicks and palliatives”, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”.

Remember, America wasn’t the only country with a housing bubble. The world’s central bankers let a global housing bubble develop. As I noted in December 2008:

The price of Southern California homes is already down 41%, Southern California hasn’t fallen as fast as some other areas, and we’re nowhere near the bottom of the market. Moreover, the bubble was not confined to the U.S. There was a worldwide bubble in real estate.

Indeed, the Economist magazine wrote in 2005 that the worldwide boom in residential real estate prices in this decade was “the biggest bubble in history“. The Economist noted that – at that time – the total value of residential property in developed countries rose by more than $30 trillion, to $70 trillion, over the past five years – an increase equal to the combined GDPs of those nations.

Housing bubbles are now bursting in China, France, Spain, Ireland, the United Kingdom, Eastern Europe, and many other regions.

And the bubble in commercial real estate is also bursting world-wide. See this.

***

Moreover, the real estate bubble formed the base upon which a series of bubbles in derivatives were built. Specifically, mortgages were packaged in “collateralized debt obligations” (CDOs), which were sold in enormous volumes all over the world. Credit default swaps were then bet against the companies which bought and sold the CDOs.

Now, with housing prices crashing, the CDO bubble is crashing, as is the CDS bubble.

A series of other derivatives bubbles are also crashing. For example, the “collateralized fund obligations” – sort of like CDOs, but where the assets of a hedge fund are the asset being bet on – are getting creamed as hedge funds are forced to sell off many hundreds of billions in assets to cover margin calls.

As everyone knows, the size of the global derivatives bubble was almost 10 times the size of the world economy. And many areas of derivatives are still hidden and murky.

So the bust of the derivatives bubble could even be bigger than the bust of the housing bubble.

BIS also cautioned that bailouts could harm the economy (as did the former head of the Fed’s open market operations). Indeed, the bailouts create a climate of moral hazard which encourages more risky behavior. Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers.

These truths are as applicable in Europe as in America. The central bankers have done the wrong things. They haven’t fixed anything, but simply transferred the cancerous toxic derivatives and other financial bombs from the giant banks to the nations themselves.

Are Debt-Based Economies Sustainable?

Of course, Eurozone countries like Greece and Italy have been living beyond their means and masking their real debt levels for years (with a little help from Goldman Sachs, JP Morgan and the boys) – just like the U.S.

And of course, Eurozone central banks – like America’s Federal Reserve – create fiat money out of thin air. As I argued in March, one or the primary problems is that Europe and America have debt-based economies, and the debt-based ponzi scheme has reached it’s maximum limit:

Private banks don’t make loans because they have extra deposits lying around. The process is the exact opposite:

(1) Each private bank “creates” loans out of thin air by entering into binding loan commitments with borrowers (of course, corresponding liabilities are created on their books at the same time. But see below); then

(2) If the bank doesn’t have the required level of reserves, it simply borrows them after the fact from the central bank (or from another bank);

(3) The central bank, in turn, creates the money which it lends to the private banks out of thin air.

It’s not just Bernanke … the central banks and their owners – the private commercial banks – have been running the printing presses for hundreds of years.

Of course, as I pointed out Tuesday, Bernanke is pushing to eliminate all reserve requirements in the U.S. If Bernanke has his way, American banks won’t even have to borrow from the Fed or other banks after the fact to have reserves. Instead, they can just enter into as many loans as they want and create endless money out of thin air (within Basel I and Basel II’s capital requirements – but since governments are backstopping their giant banks by overtly and covertly throwing bailout money, guarantees and various insider opportunities at them, capital requirements are somewhat meaningless).

The system is no longer based on assets (and remember that the giant banks have repeatedly become insolvent) It is based on creating new debts, and then backfilling from there.

It is – in fact – a monopoly system. Specifically, only private banks and their wholly-owned central banks can run printing presses. Governments and people do not have access to the printing presses (with some limited exceptions, like North Dakota), and thus have to pay the monopolists to run them (in the form of interest on the loans).

At the very least, the system must be changed so that it is not – by definition – perched atop a mountain of debt, and the monetary base must be maintained by an authority that is accountable to the people.

SEE ORIGINAL LINK FOR SUPPORTING ARTICLES AND LINKS

[Demeter]

74. Bank Runs in Greece – Harbinger of Another Axis of Euromarket Risk?

http://www.nakedcapitalism.com/2010/04/bank-runs-in-greece-%E2%80%93-harbinger-of-another-axis-of-eurobank-risk.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Yves Smith writes: Sometimes I can miss the blindingly obvious.

Like other observers of the widening sovereign debt crisis in Europe, we’ve commented on the fact that the big reason for Germany to work towards a rescue (more likely, the end game is a restructuring) of Greece and other Club Med members at risk is that its own banks, like those of France, are exposed if Greece defaults. Given that Eurobanks were thinly capitalized in the runup to the crisis and have recognized even fewer losses than their US counterparts, they are still fragile and vulnerable to systemic shocks. So the axis of contagion seemed to be through bank holdings of Greece sovereign debt (as well as having written CDS on Greek debt).

But we neglected to consider a more direct source of trouble, namely, that of bank runs in the countries at risk. John Mauldin’s latest newsletter tells us that is already underway in Greece:

Money is flying from Greek banks, which makes sense, as how can a bankrupt Greek government guarantee Greek bank deposits? I know that Greek bankers may have a different view, but Greek depositors are voting with their feet. And …it is not just Greece. It is fast becoming Portugal. And Spain is not far behind in my opinion.

Yves here. Despite all the noise about government debt defaults, the pattern in the Great Depression was selective default (war debt being the big favorite). However, this was also an era before bank deposit insurance was the norm for advanced economies. Moreover, Europeans may be even more quick trigger to pull funds out of banks, given that they have more direct experience of the fragility of governments (World War II memories, the implosion of Yugoslavia on its borders, the impact of general strikes). Recall that in the financial crisis, many US depositors were nervous about bank safety (witness how bank analysis service Institutional Risk Analyst offered a retail bank soundness product to cater to inquiries).

So we have a second potential axis of contagion, via impairment of banks in the Club Med countries themselves. That has the potential to affect:

1. Bondholders of banks in Club Med countries (witness the virtual shutdown of bond issuance in Europe)

2. Companies, whether domestic or foreign, who do business in Club Med countries (transactions are normally settled in local banks; finding banks both sides to a commercial deal will find acceptable may loom as a issue)

3. Most important, interbank markets

So far, the reaction to the Greece/Club Med crisis seems to be a generalized widening of risk premia (ex the US, where investors seem to believe the eurozone can implode without having any adverse impact here). We may start to see more differentiation, in particular, further widening in exposures that are arguably on the front lines, as the crisis grinds on.

[Demeter]

78. Roubini Says Rising Sovereign Debt Leads to Defaults

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEv_4Sp6xERU

[Demeter]

10. CHINA TOWN

It all goes here

[Demeter]

11. China to build reactors in Pakistan

Beijing has agreed to build two civilian nuclear reactors in Pakistan, say Chinese companies and officials, in a deal that could reignite the global debate about nuclear commerce and proliferation
Read more >>
http://link.ft.com/r/WDI4RR/D4IM0O/JQU4J/A7ESN9/FXYQ2D/4O/t

[Demeter]

12. Dangers loom beyond the eurozone

The crisis in Greece serves as a warning to other countries not to lose control of their fiscal positions and the confidence of markets. But advanced countries have now stretched their public budgets so far that investors, economists and international organisations are getting worried.

Returning to form, the International Monetary Fund warned this month that reducing budget deficits, “should precede the normalisation of monetary policy” in many economies and that they “need to make more progress in developing and communicating credible medium term fiscal adjustment strategies”.

Willem Buiter, chief economist of Citi, uses rather blunter language. “Today’s ‘best of breed’ may be the same dog that yesterday was fit only for the World’s Ugliest Dog Contest – an indicator of just how far the fiscal conditions in most advanced industrial countries have deteriorated,” he says.

The problem is simple. Huge budget deficits resulting from the financial crisis have put public debt on an unsustainable trajectory and doubts are growing that the political will exists for the nasty medicine to be swallowed...

Read more >>
http://link.ft.com/r/WDI4RR/D4IM0O/JQU4J/A7ESN9/C5XYOB/4O/t

[Demeter]

13. US cities forced to consider bankruptcy

With cities, towns and counties across the country hard hit by the recession, local officials, investors and analysts are questioning whether bankruptcy could become more common... Since 1937, there have been a little more than 600 cases of Chapter 9, the part of the federal bankruptcy code applicable to municipalities, said James Spiotto, a partner at the Chapman and Cutler law firm.

Probably the most high-profile case came in 1994 with Orange County, California. Since the downturn hit, the city of Vallejo, California, went bankrupt in 2008. Last year, filings more than doubled from the previous year but still only came to 10. Among the larger cities, Harrisburg,PA and Detroit have raised the idea, without formal plans.

“Most municipal bankruptcies have been special districts with recourse to only one source of revenue and not large cities that are more diverse and have some sway to get investors to forbear,” said Matt Fabian, managing director of Municipal Market Advisors. The belief that municipalities rarely go bankrupt, or even default, is the bedrock of the $2,800bn (€2,100bn, £1,825bn) municipal bond market where they raise money at relatively low cost for public projects. If filings increase, market experts expect them to be mostly small, special cases.

They have long argued that the fear of higher borrowing rates associated with bankruptcy is severe enough to discourage most.

But with cities such as Harrisburg considering it, these long-standing beliefs are being challenged. “ ... The more bankruptcy is publicly discussed as an option for financial relief, the more its tarnish wears off, increasing the likelihood of its actual use”, Fitch Ratings warned in a report earlier this year.

The biggest impediment, however, could be that the process is much more prohibitive than for companies. Municipalities need permission from their state, and some states do not allow it. The municipality also must negotiate with creditors first, which could prevent a filing.

Read more >>
http://link.ft.com/r/WDI4RR/D4IM0O/JQU4J/A7ESN9/LQJN4B/4O/t

[Demeter]

14. Goldman, CDOs, and All That Jazz

[Demeter]

15. Goldman pressed for CDO loss settlement

Goldman Sachs is in talks over a potential settlement with an investor that claims that it lost money and went out of business after buying into a $1bn (€760,000) mortgage-backed security that was later privately criticised by a senior executive at the bank
Read more >>
http://link.ft.com/r/0QSDPP/ZBVH61/WH2F8/A7ESNF/1802FW/SN/t

[Demeter]

16. CDO fees flow to ratings agencies

Credit rating agencies are still being paid millions of dollars a year to report on the performance of collateralised debt obligations that have lost most of their value despite having been issued in many cases with triple A stamps of approval
Read more >>
http://link.ft.com/r/0QSDPP/ZBVH61/WH2F8/A7ESNF/QFPLXB/SN/t

[Demeter]

19. Gapper blog: Tourre testimony in Senate

Alan Rappeport blogs on the day-long hearing of present and former Goldman officials that was due to culminate in the testimony of Lloyd Blankfein, chief executive.
Read more >>
http://link.ft.com/r/9ULF66/D4IANH/DXJ2Y/FXRR0Q/JI9SU5/KI/t

[Demeter]

21. Deutsche Bank denies it faces any SEC charges

Deutsche Bank gave an unusually explicit denial that it knew of any potential charges from the US Securities and Exchange Commission as it tried to distance itself from fears that it could find itself in a similar position to Goldman Sachs, which faces fraud allegations
Read more >>
http://link.ft.com/r/9ULF66/D4IANH/DXJ2Y/FXRR0Q/5CAZKG/KI/t

[Demeter]

24. Goldman ‘criticised $1bn loan product’

Goldman Sachs officials privately disparaged a complex $1bn mortgage security that the Wall Street bank sold to investors, according to e-mails released by Senate investigators on the eve of hearings on the bank’s role in the financial crisis
Read more >>
http://link.ft.com/r/XYEWFF/OJUXEV/Q38E1/18MARX/FXYDSZ/T3/t

[Demeter]

29. Fab Finance BILL BONNER

Bill Bonner
Bill Bonner
This week, "Fabulous Fab" Tourre was forced to appear before the US Senate. The senators may not have been able to tell a derivative from a hole in the ground, but they knew what the mob wanted - blood. The poor French lamb was bled on Tuesday.

Meanwhile, an Englishman wrote to the TIMES, suggesting that media was being distracted from the big story:

"Based on recent Budget reports, since 2001 the proportion of GDP spent by government has increased from 47 per cent to 55 per cent of GDP. Over the same period total revenues decreased from 48 per cent to 42 per cent of GDP; while total expenditures increased by 70 per cent, total revenues increased by only 25 per cent...

"The rates of growth in expenditures in the three largest items are: social protection and services, 92 per cent; health; 102 per cent; and education, 76 per cent. The main sources of tax revenue increased by much less: the increases in the three largest sources of tax revenues are income tax, 36 per cent; national insurance, 56 per cent; and VAT, 1.6 per cent."

He's right. Fabulous Fab is a sideshow. The real story is fab finance. And at some point in the future, the effect of modern financial theory will become clear: it turns little problems into big ones.

Chesterton wrote that a landlady should consider a new boarder's philosophy, not his bank account. But the financial whizzes cared nothing about philosophy. In every instance, they brushed aside qualitative judgments in favor of quantitative ones, turning trifling, idiosyncratic risks into systemic catastrophes. Naturally, Tourre comes from the math-mad French school system. All they care about is numbers. Because you can crunch them, massage them, and twist them into whatever shape you want.

If you look at the financial industry over the past two or three decades, you see more or less the same trends - economists turned into mathematicians, investors turned into gamblers, and finance professionals turned into conmen.

But behind these trends is a bigger one: little, current risks have turned into much bigger future ones. Mutual funds took away the risk of selecting a single bad company but they increased the risk that the whole stock market might become dangerously overvalued. Likewise, other new investment vehicles removed from the investor the burden of making his own decisions. He didn't have to study balance sheets or meet company executives. He needn't worry that his office building would be struck by lightning or that his favorite new technology would be upstaged by even newer technology. The investment industry made it easy for him. He could now act with the insouciance of a mortgage lender; he could buy an ETF or a REIT.

The man on the street found himself in a similar territory. No longer were his financial risks entirely his own. If he fell sick, he could count on the National Health Service in England...and now Obama's new nationalized health care program in America. And in the largest financial takeover of all time, the government took on the burden of retirement finance too. Now the consumer could spend all his money, rather than save it. Grasshoppers and aunts - both got about the same government pension check. And now, society no longer faces the risk that some retirees will go broke; now it faces the risk that they all will.

The rise of the state corresponds to a decline in individual judgment. The idea was to eliminate the risks of personal failure by socializing them, much in the way an insurance company spreads the risk of fire hazard among hundreds of different homeowners.

Thus did the risk that one or two individual mortgages might go bad get replaced by the risk that the whole housing market would go bad. And instead of a relatively few bad decisions by a few bad bankers, we got a whole rotten mortgage industry. As for the risk that the homeowners might turn into pyromaniacs...the quants chose to ignore it. Then, in 2007, the whole town burned down.

The banks took horrible losses. The state rushed to the scene. It put out the fire at AIG, for example, and thereby kept the sparks off Goldman's roof. Iceland...Greece...Britain...the US - all poured liquidity onto the small forest brushfires...while debt tinder piled up in their public accounts. The big banks were saved. But now, government's own credit is at risk. From the householder to the mortgage lender to the big banks to the small governments to the big governments - fab finance pushes the costs of error into the future and onto a bigger and bigger pool of chumps.

[Demeter]

30. Poor Fab Tourre: Indignation Over the Goldman Scapegoat

Poor Fabulous Fab.

The young Frenchman went to all the right schools in Paris. He must have been good at math, because he got into Stanford. And then, it was onward and upward... He landed a job at Goldman. He was making millions. His girlfriend wrote to say how she'd like to curl up in his arms.

And then, at the tender age of 31, powee! Right in the kisser.

His beautiful derivatives lost 85% of its value in just 5 months, his clients get sore and now he's got a whole posse of senators on his tail.

The senate torturers didn't have any idea what Fabulous Fab was up to. They wouldn't know a derivative contract from a household fusebox. But they knew something had gone wrong. They knew the public was out for blood. And they knew the lights were on and cameras were rolling.

This was the time to impress the rubes back home. Get some Wall Street hotshot in the dock and grill him hard. And a Frenchman to boot! What luck.

I-N-D-I-G-N-A-T-I-O-N! The senators were positively shocked...shocked!...to discover that Fab...and Goldman...were out to make money. Maybe they thought the Goldman was a public utility - like Amtrak or the Post Office. Government services don't work very well, they may have told themselves, but at least they don't make any money!

Yes, senators can feign indignation when it is called for. But what are they so indignant about? Well, that's another matter. Who knows and who cares! The point is, the voters want to see them nail this little Frenchman...and they're going to make a good show of it.

The media reports suggest that everyone played along on Tuesday. The senators were indignant. The Goldman fellow denied any wrongdoing...but regretted that had sent the emails out. While the senators pretended indignation, the Frenchman's regret was certainly sincere. So was his denial. For, in fact, it's hard to know what he did wrong. Yes, he played his clients for suckers, but so what? That's what Fab Finance is all about - make money...and then dump the risk onto someone too dumb to know what he's doing. And then, when he blows up...and the whole system blows up...in come the senators to bail everyone out.

From Fab's perspective - and ours - if you can find bankers and hedge funds dim enough to take your derivative contracts - without wondering what is in them - you are performing a public service by separating them from their money. Better for the cash to be in the hands of someone who knows what to do with it - like Fabulous Fab himself.

But let us imagine that Fabulous Fab gets his hands on some real dough. And let's imagine that he is not in the mood to gamble on his own jackass derivatives...or to find some chump to sell them to.

What would he do with the money?

Ah...here, he would have to close his newspaper and turn off his television and think deeply about what is actually going on in the world. Forget the circus surrounding Goldman. Forget the news flow. Forget even the 'information' coming from the markets.

Now, it's time to think. This is real money we're talking about...not just casino chips.

Fab is no dope. He'd probably look at what is happening with Greek debt...and he'd be suspicious of all government bonds. After all, Greece's finances are not so different from a half-dozen other countries - including the US of A. True, Greece's debt problems have investors running to the relative safety of the US...which lowers borrowing costs for the US and makes it easier for the feds to finance their debt.

But the problem of too much public debt can't be solved by low interest rates and more debt. Eventually, the US runs into the same problem the Greeks face now. Only the US problem is even bigger...and there is no bigger, richer nation to bail it out.

Fab figures all of that out... He figures US lending rates may go down in the short run, but in the long run, the feds face the same predicament - they need to borrow more and more money just to keep the show on the road. And eventually, lenders will want higher interest rates. And it won't be too long before Moody's and Standard and Poor's take a hard look at America's balance sheet too.

The news yesterday was that the rating agencies may downgrade Spain, Portugal, and Ireland even further. And Reuters reported that the Greek debt alone would cost bondholders $265 million - if Greece has to reschedule (that is, if Greece defaults on its loans).

Greece now. Then Spain. Then Ireland. Then Britain. Then America.

[Demeter]

32. Oliphant Chimes In

http://imgsrv.gocomics.com/dim/?fh=88bd1cd5e631170b8e49666b7c446c00&w=750.0

[Demeter]

55. Jon Stewart on Goldman Sachs

http://blogs.uncommonwisdomdaily.com/red-hot-energy-and-gold/jon-stewart-on-goldman-sachs/

[Demeter]

91. dilbert

[Demeter]

92. That's It for Now

I have got to go wash out my brain. See you all either after dinner, or sometime Sunday noon or so...

that's if I can take any more pain. The stupid, it hurts. The fraud, it burns. The overwhelming burden of knowledge that nothing can be done about, it's crushing.

[Demeter]

41. Fuld Understated Pay More Than $200 Million, Lehman’s Budde Says

http://www.bloomberg.com/apps/news?pid=20601108&sid=aE9Y67JEld0E

Before Lloyd Blankfein of Goldman Sachs Group Inc. took his place, Richard S. Fuld Jr.’s angry face was the universal symbol of Wall Street greed.

On Oct. 6, 2008, three weeks after Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history, Lehman’s former chief executive officer found himself before Representative Henry A. Waxman, the California Democrat who chaired the House Committee on Oversight and Government Reform. Waxman has stared down plenty of CEOs over the years, yet this had to be one of the most intense confrontations of his career.

“Mr. Fuld will do fine,” Waxman said. “He can walk away from Lehman a wealthy man who earned over $500 million. But taxpayers are left with a $700 billion bill to rescue Wall Street and an economy in crisis.”

Fuld said he was a victim, not an architect, of the collapse, blaming a “crisis of confidence” in the markets for dooming his firm. Reckless management had nothing to do with it. “Lehman Brothers,” he said, “was a casualty.”

Fuld and Waxman went on to disagree about just how much money Fuld had taken out of Lehman before it went under, Bloomberg Businessweek reported in its May 3 edition. Fuld, now 64, said his total compensation from 2000 through 2007 was less than $310 million, not the $485 million that appeared on Waxman’s chart. He said 85 percent of his pay was in Lehman stock that had become worthless. “I never sold my shares,” Fuld said at one point. At another, he said he had not sold the “vast majority” of them.

“That just seems to me an incredible amount of money,” Waxman responded.

Under Oath

Among those closely observing Fuld was a 49-year-old former Lehman lawyer named Oliver Budde who was watching the hearing at home on C-Span. Budde (pronounced Boo-da) was certain Waxman’s figures weren’t too high. They were too low, and he could prove it. Fuld, he believed, had understated the amount he was paid during those years by more than $200 million, and now he had done it under oath, for the entire world to see....

[Demeter]

46. The Feds vs. Goldman By Matt Taibbi

http://www.rollingstone.com/politics/news/;kw=<3351,136554>?RS_show_page=0

The government's case against Goldman Sachs barely begins to target the depths of Wall Street's criminal sleaze...

[DemReadingDU]

88. Taibbi: Bob Rubin Cuddles

First you need to read
Bob Rubin Just Wants to be Cuddled by Iris Mack

So that’s what this is about. For a moment I was totally speechless and had to dig into my Harvard trained PhD brain to figure out what the hell he meant by “cuddling”! What can I say; once a teetotaling math geek, always a bit slow to pick up on signals from the menfolk. So the former Treasury Secretary had a “crush” on me! And not long afterward the former Treasury Secretary had his tongue down my throat and hands everywhere sort of like an octopus. But as soon as the thought entered my mind — the former Treasury Secretary has his tongue down my throat?! — I came to my senses a bit and awkwardly went back home before we both got too carried away. This is to say, I said to myself that there would be no other former Treasury Secretary appendages entering any other of my orifices.
.
.
Things were much more relaxed by the time I walked him back to the Ritz – which was along the way to my South Beach condo. When we passed a homeless man along the way he made a bit of a show of opening up his fat leather billfold and producing a dollar — “There but for the grace of God…” he remarked melodramatically — and I gave him a lot of heat for that, because who exactly did he think he was kidding? I said give the man a job. Heck, you’re the head of a bank!

more...
http://www.huffingtonpost.com/iris-mack/bob-rubin-just-wants-to-b_b_557621.html


Taibbi responds...


5/1/10 Bob Rubin Cuddles
Matt Taibbi

No man’s behavior looks attractive when he’s cheating on his wife, but this little tell-all by a woman who had a sort-of fling with former Goldman chief and Treasury Secretary Bob Rubin is more than unusually embarrassing. It’s all coming out now — Goldman is officially the new Tiger Woods. The next revelation has to be something involving Gary Cohn and Ted Haggard.
.
.
A multi-multi-millionaire giving a homeless guy a dollar on the way to the Ritz… if that isn’t the perfect metaphor for the modern “Third Way” Democratic Party, I don’t know what is. And Jesus, is there any area of human interaction where these guys aren’t complete and utter culturally tone-deaf buffoons? Even during the hearings, every last one of these Goldman guys, it was like they had no idea how awful they sounded, and how much the whole world wanted to reach through the TV and pull their tongues out every time they opened their mouths. It’s amazing.

An even creepier side note about that above passage: what if it’s true? What if a Bob Rubin really does, a hundred million dollars later, still retain some ingrained fear of being broke and forced to live on the street? That would really be telling, and go pretty far toward explaining the pathology, I think. Or maybe not. But it’s interesting.

more...
http://trueslant.com/matttaibbi/2010/05/01/bob-rubin-cuddles/

[Demeter]

90. wow

What a find. Thanks for posting it.

I have to go lie down now.

[Demeter]

48. Goldman’s public purpose and problems with the Abacus deal

http://www.nakedcapitalism.com/2010/04/goldmans-public-purpose-and-problems-with-the-abacus-deal.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[Demeter]

50. Goldman (and DeutscheBank) as Predator

http://www.nakedcapitalism.com/2010/04/goldman-and-deutschebank-as-predator.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

One of the things that has been striking as revelation of bad behavior in the collateralized debt market has gotten more press is that a number of commentators who had taken the “nothing to see here, move on” stance have gotten religion.

Even more dramatic has been the change in perception of Goldman. The firm has had its vocal critics (including yours truly) but they seemed an ineffective minority. Goldman’s arrogance seemed only to confirm its “Government Sachs” connections, that it could do as it pleased and thumb its nose at the rest of us to boot. It compounded the public outrage over its record 2009 bonuses through its hamhanded, narcissistic rationalizations. Lloyd Blankfein’s “We’re doing God’s work” has come to epitomize what is wrong with the financial services industry post-crisis the same way Chuck Prince’s “We’re still dancing” did for the bubble era.

So the has been more that a little bit of schadenfreude at work. The press and public sentiment against Goldman has become widespread and heightened with the SEC lawsuit over Abacus AC1 2007. Even the supposedly bipartisan Senators were on the same page in Tuesday’s marathon hearings.

Now some point out, correctly, that Goldman is being singled out. On the one hand, there was a lot of bad behavior in the industry that has yet to be scrutinized closely. On the other, collateralized debt obligations were the ground zero of the crisis, and the banks like Goldman that were particularly “innovative” are now looking to have been too clever by half. As I discuss in some detail in ECONNED, these vehicles were spectacularly leveraged. Comparatively small amounts of capital produced greatly disproportionate systemic effects. Both our own contact with structured industry experts, and other accounts of subprime short strategies make clear that DeutscheBank was at least as aggressive as Goldman as far as real-estate-related CDOs were concerned. For instance, Deutsche was also creating synthetic CDOs on behalf of subprime short John Paulson; it had its own version of Goldman’s Abacus program (Deutsche’s was called Start).

A striking point of the hearings was that Goldman kept claiming that it was a mere market-maker, while the Senators kept asserting that the firm had a duty to customers. While Goldman arguably did not have a fiduciary duty, it most certainly is required to make accurate disclosures as an underwriter, and that is the basis of the SEC’s suit. Moreover, even if Goldman’s actions were narrowly legal, markets operate on trust. What happens to capital formation if investors increasingly regard markets as a shark pool?

MORE AT LINK

[Hugin]

94. Buffett Says He Supports Goldman’s Blankfein 100% (Update2)

By Betty Liu and Andrew Frye

May 1 (Bloomberg) -- Warren Buffett, the Wall Street critic who invested $5 billion in Goldman Sachs Group Inc., said he supports the bank’s Chief Executive Officer Lloyd Blankfein “100 percent” after the firm was sued by regulators for fraud.

“He’s done a great job running that firm,” Buffett said today in Omaha, Nebraska in a Bloomberg Television interview before the shareholders meeting for his Berkshire Hathaway Inc. “He’s smart. He’s high grade.”

Buffett became one of Goldman Sachs’s most visible advocates amid public outrage over the bank’s pay practices and conduct with customers. He backed Blankfein in January, saying the bank’s leader since 2006 “has been the right man” for the job. Last month, Goldman Sachs was sued by the U.S. Securities and Exchange Commission, and Blankfein, 55, was pilloried in Congress on April 27.

The SEC said Goldman Sachs misled clients on the sale of assets tied to home loans as the housing market started to falter. The bank, which said the suit is unfounded, must weigh the risks of a legal battle against the benefits of a more immediate resolution as politicians vilify the firm as a symbol of the Wall Street excess that led to the collapse of the residential real estate market.

More on this... http://www.bloomberg.com/apps/news?pid=20601087&sid=acPWLsc.YUnQ&pos=4

_________________________________________________________________________________________________________________

*tsk* Warren, apparently I hardly knew you. :puke:

[Demeter]

98. Buffett defends Goldman's Abacus deal

http://www.marketwatch.com/story/buffett-economic-trends-stronger-2010-05-01?siteid=YAHOOB

Berkshire Hathaway Chairman Warren Buffett defended Goldman Sachs Group Inc. Saturday and said there was nothing wrong with the complex deal at the center of the Securities and Exchange Commission's civil-fraud allegation against the investment bank.

OH, YEAH? THE SAGE OF OMAHA HAS TURNED TO PARSLEY.

...the company's stake in Goldman is worth a lot more than when Buffett made the investment at the height of the financial crisis in late 2008.

Berkshire bought $5 billion of preferred securities and warrants in Goldman Sachs, giving the investment bank a big boost. The securities pay a 10% annual dividend, so Berkshire gets half a billion dollars a year from the bank, money Buffett can use for other investments.

On Saturday, Buffett said the SEC suit may have actually helped Berkshire's Goldman investment.

Goldman can buy the preferred securities back from Berkshire at 110% of their value, sending $5.5 billion in cash to close the deal. Berkshire would probably put that money in short-term securities and they could lose money, Buffett explained.

Goldman would probably like to get rid of these securities, but the government has probably told the firm that it can't buy them back, Buffett said.

"Our preferred is paying $15 a second. Tick tick tick. I don't want those ticks to go away. They go on at night when I'm asleep," Buffett said. "We love the investment."

FOLLOW THE MONEY, FOLKS

...The Berkshire chairman risked his reputation in 1991. At that time, Buffett owned a big stake in Salomon Brothers, which was close to collapse after becoming embroiled in a criminal investigation into rigged Treasury bond auctions. Buffett testified in Congress and steered the firm through the ordeal. It was eventually bought by Citigroup. The investment wasn't one of Buffett's most lucrative.

"Salomon was a somewhat similar situation," Buffett said Saturday, recalling that his motto at the time was, "Get it right, get it out fast and get it over."

Getting accurate information is the most important of these, Buffett added.

"That means some delay," he said. "You have to gather information." ...

[Demeter]

99. Goldman didn't tell SEC about mortgage moves for months

http://www.mcclatchydc.com/2010/04/30/93252/goldman-sought-to-shed-risky-mortgage.html#ixzz0mdvHseLc

In December 2006, Goldman Sachs embarked on a frantic effort to shed billions of dollars in risky mortgage securities and purchase exotic insurance to protect itself against what it had concluded could be the collapse of America's housing market.

Yet for nine months, until Sept. 20, 2007, the Wall Street giant didn't disclose its actions in key filings with the Securities and Exchange Commission, in telephone conferences with analysts or in its press releases.

A McClatchy review of hundreds of pages of subpoenaed company records released by a Senate panel Tuesday, as well as Goldman's SEC filings, has revealed how closely the company guarded its secret exit plan.

Goldman's failure to tell the investors who bought its risky mortgage securities that it had made an array of wagers against housing is at the heart of the furor now enveloping the nation's premier investment house, the only major Wall Street firm to exit the subprime mortgage market with minimal damage.

By the time Goldman finally began to divulge its strategies to the SEC, credit markets were freezing up and the investment bank was well on its way to making billions of dollars in revenue from its negative bets, known in the industry as "shorts."

Consider this contrast between the firm's public face and its private maneuvering.....

Read more: http://www.mcclatchydc.com/2010/04/30/93252/goldman-sought-to-shed-risky-mortgage.html#ixzz0midoRhbg

[Demeter]

100. Goldman Loses Room to Maneuver After Public Testimony

http://preview.bloomberg.com/news/2010-04-30/goldman-sachs-loses-room-to-maneuver-after-public-testimony-by-officials.html

Goldman Sachs Group Inc. may have backed itself into a corner by speaking out quickly to counter fraud claims by the U.S. Securities and Exchange Commission.

In the two weeks since the SEC filed its lawsuit, Goldman Sachs has released multiple written defenses, sent executives to Capitol Hill for sworn testimony and put Chief Executive Officer Lloyd Blankfein on television to explain the firm’s conduct as the housing market soured. While broadcasting its story, the New York investment bank also has given regulators, lawmakers and law enforcement agencies material to scour for contradictions that could weaken its defense.

SEC attorneys are already poring through the April 27 Senate testimony of Fabrice Tourre, the 31-year-old banker at the center of the lawsuit, looking for any deviation from sworn statements he made during the agency’s investigation, according to a person familiar with the probe who declined to be identified because the matter isn’t public.

“Going under oath and committing yourself before you have any idea what kind of a case might be brought against you -- and more particularly what the evidence in that case might be -- is going to seriously curtail a defense lawyer’s ability to find running room to defend you,” said Samuel Buell, a former federal prosecutor who is now a law professor at Washington University in St. Louis.

Before the hearing, Tourre and Blankfein, 55, were interviewed under oath by the Senate Permanent Subcommittee on Investigations. Senator Carl Levin, the Michigan Democrat who heads the panel, said he’s looking into whether they “tried to fudge” their responses in the public hearing this week. Blankfein will appear next week at the annual shareholders meeting to answer questions related to the lawsuit....

[Demeter]

17. OILCAN!

Or maybe it can't.

[Demeter]

18. Oil spill overshadows BP results

BP has exceeded analysts’ expectations with a 135 per cent rise in post-tax profits for the first quarter, and continued to cut its debts thanks to the rebound in oil and gas prices
Read more >>
http://link.ft.com/r/9ULF66/D4IANH/DXJ2Y/FXRR0Q/8AM5E9/KI/t

[Tansy_Gold]

103. Oil can -- and does -- but can we?

Not wishing to sound stupid, but figuring I can post just about anything here safely. . . . . .

I don't understand this oil spill/leak/whatever. I mean, yes, of course, I understand what happened to cause the leak and I understand why BP can't stop it, but I don't understand why so little is being done about it. Maybe it's because I'm ignorant of how these things function, and I don't like being ignorant so I'm going to ask to be enlightened.

I assume BP, or any other oil company that drills and operates this kind of well, knows that the oil trapped beneath the sea floor is under pressure and that once the oil reservoir (or whatever it's called) is breached, the oil will come gushing up into the pipe. If it's NOT underpressure, it would have to be pumped out with some sort of mechanism. Either way, they would know whether it's under pressure and if so, how much.

Failure to have a mechanism in place for controlling a "leak" should something happen to the pipe would be criminal neglect, imho, if they knew there was sufficient pressure to cause a leak.

That's the first part, and from what I've read and seen it appears that BP is criminally negligent. Okay, fine.

The second part is the part I really don't get.

When the crude oil comes up the pipeline from the actual well to the drilling platform, it has to go somewhere. I assume, again, it goes into tanker or there is a direct conveyance, meaning a pipeline that goes directly from the drilling rig to an on-shore refinery. Unless the crude is refined on the drilling platform, there has to be a means to get it from there to the refinery. Have I got that much right?

Despite the enormous pressure of being underwater and under however much of the actual sea floor, this leaking crude is still managing to reach the surface, which means it's signicantly lighter by volume than the water.

So, tell me this: Why aren't there vacuum-equipped ships going around sucking this stuff up, loading it into tankers, and carting it off to the refineries? Or are there? Is this beyond their capacity? If so, why?

I understand, I think, about the "booms." These are devices deployed to surround and contain the "spill" on the surface. Apparently there aren't enough of them to contain this large a quantity, or there is too little control of the leak from the source, or whatever. But one has to assume that if there are such things as spill-containing "booms" than there must be other things that collect the oil once it is contained by the "booms." Where are these other things, these vacuums or slick-collectors or whatever they're called?

Or does Tansy Gold just see things in too simplistic a manner?

[Demeter]

104. Where's the Profit In That?---Corporations

"Heck of a job, guys!" and all that jazz.

[Tansy_Gold]

105. Well, the profit is in all that crude oil to be sucked up and actually

delivered to a refinery.

Seriously -- BP has an investment in this well. Even if they're too stupid to have a shut-off valve or whatever, they've got to have some interest in recapturing the crude and getting it to a refinery. They're in the business of making a profit, and they should have some means of making it.

And at this point they should have a profit motive in avoiding -- or ultimately in paying for -- the penalties and lawsuits resulting from their failure to have an "oops" plan in place.

On the other hand, whoever makes the booms must have some means of getting the oil from inside the containment area into. .. . well, into something to remove it to a refinery. I mean, that's the ultimate destination of the crude no matter where it comes from. And it's well known that crude oil floats on water and it tends to move toward shore, so someone's got to have a profit incentive to do this. Think what it would do for military budget if the Coast Guard (which is or at least used to be an arm of the Treasury Dept, not DoD) could claim salvage rights to a couple million bbls of crude oil??!!



TG

[DemReadingDU]

106. Some oil is being sucked up

I just can't remember where I read about it.
Ah here are a couple links...


edit to add 1 article

4/23/10
Oil company BP, which had been using the oil rig, stated that it had at its disposal four planes that can disperse chemicals to break up the oil, as well as 32 vessels, which would be able to suck up over 171,000 barrels of oil a day from the surface.
http://www.examiner.com/x-40861-SF-Top-News-Examiner~y2010m4d23-Top-News-Tackling-oil-rig-disaster-number-one-priority--Obama


Whoa, wait a minute. Are they mistaking barrels for gallons? This blowout is leaking perhaps 25,000 barrels per day equating to appx 1 million gallons per day.
(originally 5000 barrels or 210,000 gallons per day, 1 barrel = 42 gallons, now 5 times worse)

or
those 171,000 barrels are a combination of oil and water?


edit for another article

5/1/10
North Vancouver's Aquaguard is one of the only companies in the world that makes skimmers, remote controlled devices which suck in as much as one barrel of oil per second. "There are currently three of these systems being sent from Mexico towards the spill," Aquaguard's chief operating officer Cameron Janz said. "Next week we're going to be sending more skimmers down there for some of those smaller lakes or rivers or marshlands areas for sure." But good technology only goes so far, and Javadi says there are still challenges ahead. "Down in the Gulf of Mexico, there are many waves, which is pushing the oil over the booms, so the boom is put in place, but the oil is going over it and spreading further."
http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20100501/bc_oil_spill_100501/20100501?hub=BritishColumbia

[mbperrin]

107. You're seeing just fine. I grew up in the oilpatch here in west Texas

and worked ten years in the wellhead business, 8 of those in management, so I have some insight into the industry. The wellhead is what controls the oil and/or gas coming from the wellbore after completion, and which controls pressure during drilling.

BP did select a blowout preventer as do all drillers - you can't drill without it as a practical manner. But subsea drilling is really expensive, and very often, management in these oil companies don't know much about what they're managing, so a basic BOP was put on the floor, operated by signal carried by cable. There is a $500,000 more expensive model that responds to both cable instruction and acoustic signal. The acoustic signal can be set to operate when noise in the operation exceeds a given dB or several other options.

When the explosion occurred, it must have damaged the cable, making the BOP inoperable. They've had the undersea robots attempting to trigger it manually, but when the rig sank, the drill string no doubt collapsed at less than a vertical angle, very likely putting a collar directly in the way of the rams to close the annulus. Front office interference with field operations is common and often costly.

In our own business, a prominent independent operator who once ran for governor of the state was well-known for hiring graduates of his alma mater, regardless of ability. During inventory, we made a game of showing these accountants wrong items to verify their inventory. We would often represent a few thousand dollars worth of bull plugs, ball valves, and nipples as valves, adapters, tees, casingheads, spools, and other equipment worth into the 3 or 4 million dollar range. I know of cases in other branches where they bought their own equipment at list price to use on a well after being told theirs was junk.

Post-disaster planning has never been much of an issue for these companies - they don't do it. If you're ever in Reagan County, Texas, the site of the discovery well for this end of the state, you'll hundreds of thousands of acres of land that looks like the craters of the moon from all the spills and blowouts there in the early days when they were still developing control techniques. Oil company execs don't live there, though, just regular people. Lack of imagination and the desire to save some money led to this disaster, just like most of them.


Here's a link to the Santa Rita #1: http://www.tshaonline.org/handbook/online/articles/SS/dos1.html

[DemReadingDU]

108. Thanks for your insight

quite interesting

[Robbien]

111. BP chose not to buy that $500,000 BOP for this well

even though this well was the deepest well ever drilled, BP chose not to add any extra safety measures


Leaking Oil Well Lacked Safeguard Device
http://online.wsj.com/article/SB10001424052748704423504575212031417936798.html


The oil well spewing crude into the Gulf of Mexico didn't have a remote-control shut-off switch used in two other major oil-producing nations as last-resort protection against underwater spills.

The lack of the device, called an acoustic switch, could amplify concerns over the environmental impact of offshore drilling after the explosion and sinking of the Deepwater Horizon rig last week.


The accident has led to one of the largest ever oil spills in U.S. water and the loss of 11 lives. On Wednesday federal investigators said the disaster is now releasing 5,000 barrels of oil a day into the Gulf, up from original estimates of 1,000 barrels a day.

U.S. regulators don't mandate use of the remote-control device on offshore rigs, and the Deepwater Horizon, hired by oil giant BP PLC, didn't have one. With the remote control, a crew can attempt to trigger an underwater valve that shuts down the well even if the oil rig itself is damaged or evacuated.

The efficacy of the devices is unclear. Major offshore oil-well blowouts are rare, and it remained unclear Wednesday evening whether acoustic switches have ever been put to the test in a real-world accident. When wells do surge out of control, the primary shut-off systems almost always work. Remote control systems such as the acoustic switch, which have been tested in simulations, are intended as a last resort.

Nevertheless, regulators in two major oil-producing countries, Norway and Brazil, in effect require them. Norway has had acoustic triggers on almost every offshore rig since 1993.

The U.S. considered requiring a remote-controlled shut-off mechanism several years ago, but drilling companies questioned its cost and effectiveness


------



BP's eye is always on the short term bottom line. And BP has some very highly paid lobbyists who made sure our country was stopped from requiring the safety measure be used.

[Demeter]

22. CAR TALK

[Demeter]

23. Ford Motor delivers net earnings of $2.1bn

Ford Motor reported its fourth consecutive profitable quarter on Tuesday and forecast ‘solid profits’ for 2010 as a whole, a year earlier than expected
Read more >>
http://link.ft.com/r/9ULF66/D4IANH/DXJ2Y/FXRR0Q/ZB6OM8/KI/t

[Demeter]

101. Toyota now faces 327 state, federal lawsuits

http://hosted.ap.org/dynamic/stories/U/US_TOYOTA_LAWSUITS?SITE=NEYOR&SECTION=HOME&TEMPLATE=DEFAULT

DETROIT (AP) -- Toyota Motor Corp. now faces more than 320 lawsuits in federal and state court related to its sudden acceleration problems.

In a report filed Friday with U.S. District Judge James Selna, attorneys for the plaintiffs and Toyota listed 228 federal cases and 99 related cases in state courts. A judicial panel consolidated the federal cases before Selna last month. Selna's court is in Orange County, California, near Los Angeles and close to Toyota's U.S. headquarters. The next court date in the case is scheduled for May 13.

The lawsuits began appearing last fall as Toyota initiated the first of a series of recalls eventually involving about 8 million vehicles - including about 6 million in the U.S. - over acceleration problems in several models and brake issues with the popular Prius hybrid. Toyota said the acceleration problems were caused by faulty floor mats and sticky accelerator pedals. Some plaintiffs also claim that there is a defect with Toyota's electronic throttle control system, but Toyota denies that.

Plaintiffs are alleging injury and death due to the sudden acceleration as well as breach of warranty, fraud and economic injury because the values of their vehicles plummeted after the recalls. A key early decision in those cases is whether to establish millions of similar Toyota owners as a single class, meaning all would be affected by a potential damages award or settlement. In the documents filed Friday, Toyota says that drivers who haven't experienced any malfunctions shouldn't be included in the class.

Attorneys estimate that if Toyota were to settle the cases for even a modest payout to affected motorists, it could cost the company at least $3 billion and possibly much more. In comparison, drug maker Merck & Co. has paid more than $4.8 billion into a settlement fund for tens of thousands of claims from people who used its withdrawn painkiller Vioxx.

Toyota already has paid a record $16.4 million fine to the National Highway Traffic Safety Administration, which linked 52 deaths to acceleration problems.

[Demeter]

25. Walmart to seek lawsuit review

Walmart is to ask the US Supreme Court to overturn a large class-action sex discrimination lawsuit against it, after a US federal appeals court narrowly ruled the long-running case could proceed
Read more >>
http://link.ft.com/r/XYEWFF/OJUXEV/Q38E1/18MARX/OJNFL3/T3/t

[Demeter]

26. NY Times eyes local editions in WSJ clash

The NY Times is talking to other papers about tie-ups in which they could supply pages of local content to its flagship newspaper as it girds for the launch of a local version of the Wall Street Journal on its home turf
Read more >>
http://link.ft.com/r/A1TNOO/GK90H8/Q38E1/18MV21/6VZCHY/T3/t

I THOUGHT OF THIS FIRST!

[Demeter]

27. Voting for the Revere Award for Economics

Voting for the Revere Award for Economics for the three economists who first and most clearly anticipated and gave public warning of the Global Financial Collapse and whose work is most likely to prevent another GFC in the future, will close in a few days. Please vote. So far the number of people voting has been disappointing. To stimulate interest, the poll has now been set to reveal to you the current results once you have cast your votes. You can vote for three. To view a timeline and to vote now, click here:

http://rwer.wordpress.com/vote-here-for-the-revere-award-for-economics/


It takes only seconds. By voting you reward the deserving.

[Demeter]

31. And now, there's a new phenomenon: the illegal EMIGRANT.

BILL BONNER, AGAIN


First this news item from The New York Times:

WASHINGTON - Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

The Federal Register, the government publication that records such decisions, shows that 502 expatriates gave up their US citizenship or permanent residency status in the last quarter of 2009. That is a tiny portion of the 5.2 million Americans estimated by the State Department to be living abroad.

Still, 502 was the largest quarterly figure in years, more than twice the total for all of 2008, and it looms larger, given how agonizing the decision can be. There were 235 renunciations in 2008 and 743 last year. Waiting periods to meet with consular officers to formalize renunciations have grown.

It is not easy to renounce your citizenship. If you are wealthy, the costs can be very high, as the feds try to punish you for leaving. Davidson comments:

Just as there are "illegal immigrants" to the United States, so there are also now growing numbers of "illegal emigrants" from the United States. While statistics are necessarily sketchy, evidence suggests that there has been a dramatic upsurge in the number of US persons living abroad. According to the Association of Americans Resident Overseas, (AARO) apart from the military and other US government employees, 5.26 million US citizens reside abroad, a 67 percent increase since 2008. "Among the benefits the study cites of a life abroad are statistics that show expats earn more, pay less tax, have a better work/life balance, have an improved quality of life, enjoy broader cultural opportunities, and enjoy better job prospects."

In the opinion of the US State Department the AARO estimate is 25% too low. The State Department suggests that about 1.34 million Americans have become "illegal emigrants," which is to say that they have gone abroad and "fallen off the radar." As one report stated, "If an American living abroad stops paying their taxes, stops visiting the US, stops using embassy or consulate services they will not be OFFICIALLY counted anymore."

[Demeter]

35. The Adventure Begins! When We Last Left Our Star of the Evening...

On a voyage to New Orleans down the Mississippi, the steamboat pilot, Horace E. Bixby, inspired Twain to pursue a career as a steamboat pilot; it was a richly rewarding occupation with wages set at $250 per month, roughly equivalent to $72,400 a year today. A steamboat pilot needed a vast knowledge of the ever-changing river to be able to stop at the hundreds of ports and wood-lots along the river banks. Twain meticulously studied 2,000 miles (3,200 km) of the Mississippi for more than two years before he received his steamboat pilot license in 1859.

While training, Samuel convinced his younger brother Henry to work with him. Henry was killed on June 21, 1858, when the steamboat he was working on, the Pennsylvania, exploded. Twain had foreseen this death in a detailed dream a month earlier, which inspired his interest in parapsychology; he was an early member of the Society for Psychical Research. Twain was guilt-stricken and held himself responsible for the rest of his life. He continued to work on the river and served as a river pilot until the American Civil War broke out in 1861 and traffic along the Mississippi was curtailed.

Missouri was a slave state, considered by many to be part of the South, and was represented in both the Confederate and Federal governments during the Civil War. Years later, Twain wrote a sketch, "The Private History of a Campaign That Failed", which claimed he and his friends had been Confederate volunteers for two weeks before disbanding their company.

Twain in 1867

Twain joined his brother, Orion, who in 1861 had been appointed secretary to James W. Nye, the governor of Nevada Territory, and headed west. Twain and his brother traveled for more than two weeks on a stagecoach across the Great Plains and the Rocky Mountains, visiting the Mormon community in Salt Lake City along the way. These experiences inspired Roughing It, and provided material for The Celebrated Jumping Frog of Calaveras County. Twain's journey ended in the silver-mining town of Virginia City, Nevada, where he became a miner. Twain failed as a miner and found work at a Virginia City newspaper, the Territorial Enterprise.<21> Here he first used his famous pen name. On February 3, 1863, he signed a humorous travel account "Letter From Carson – re: Joe Goodman; party at Gov. Johnson's; music" with "Mark Twain".

Twain moved to San Francisco, California in 1864, where he continued working as a journalist. He met other writers, such as Bret Harte, Artemus Ward, and Dan DeQuille. The young poet Ina Coolbrith may have romanced him.

His first great success as a writer came when his humorous tall tale, "The Celebrated Jumping Frog of Calaveras County", was published in a New York weekly, The Saturday Press, on November 18, 1865. It was an immediate hit and brought him national attention. A year later, he traveled to the Sandwich Islands (present-day Hawaii) as a reporter for the Sacramento Union. His travelogues were popular and became the basis for his first lectures.

In 1867, a local newspaper funded a trip to the Mediterranean. During his tour of Europe and the Middle East, he wrote a popular collection of travel letters, which were later compiled as The Innocents Abroad in 1869. It was on this trip that he met his future brother-in-law.

http://www.youtube.com/watch?v=5vyHe3V1s-w&feature=related

http://www.youtube.com/watch?v=leYj--P4CgQ&feature=related

[Demeter]

36. We Can't All Be (Net) Exporters Tim Duy's Fed Watch

http://economistsview.typepad.com/timduy/2010/04/we-cant-all-be-net-exporters.html

[Demeter]

37. Fraudonomics THIS WEEKEND'S MUST READ!!!

http://nypress.com/article-21163-fraudonomics.html


The big dirty secret of why you should worry about a fraud crackdown more than Goldman Sachs—revealed for the first time by an anonymous private equity 'hypocrite' and 'liar.'

. . . . . . .

There was a strange moment last week during President Obama’s speech at Cooper Union. There he was, groveling before a cast of Wall Street villains including Goldman Sachs chief Lloyd Blankfein, begging them to “Look into your heart!” like John Turturro’s character in Miller’s Crossing…when out of the blue, the POTUS dropped this bombshell: “The only people who ought to fear the kind of oversight and transparency that we’re proposing are those whose conduct will fail this scrutiny.”

The Big Secret, of course, is that every living creature within a 100-mile radius of Cooper Union would fail “this scrutiny”—or that scrutiny, or any scrutiny, period. Not just in a 100-mile radius, but wherever there are still signs of economic life beating in these 50 United States, the mere whiff of scrutiny would work like nerve gas on what’s left of the economy. Because in the 21st century, fraud is as American as baseball, apple pie and Chevrolet Volts—fraud’s all we got left, Doc. Scare off the fraud with Obama’s “scrutiny,” and the entire pyramid scheme collapses in a heap of smoldering savings accounts.

That’s how an acquaintance of mine, a partner in a private equity firm, put it: “Whoever pops this fraud bubble is going to have to escape on the next flight out, faster than the Bin Laden Bunch fled Kentucky in their chartered jets after 9/11.”

And that’s why this SEC suit accusing Goldman Sachs of fraud is really just a negotiating bluff to give Obama’s people some leverage—or it’s supposed to be, anyway—according to the PE guy. He dismissed all the speculation that the fraud investigations would turn on other obvious villains like Deutsche, Merrill, Paulson & Co., the Rahm Emmanuel-linked Magnetar and so on.

“You don’t get it, Ames. Even Khuzami, the SEC guy in charge of the Goldman case, is a fraud; the fucker was Deutsche’s general counsel when they pulled the same CDO scam as Goldman. You have no idea how deep this goes.”

And it’s clear that a lot more people here are aware of how fundamentally rotten things are but they’re not willing to face the big fraudonomics bummer yet, preferring instead to stick with specific accusations.

My position on this was, “Good, throw the book at those crooks too, I don’t see what the problem is here.”

This was exactly what I argued a week ago, during a verbal slapfight with that acquaintance of mine. We were making a scene in a Midtown yuppie restaurant, arguing over just how much damage Wall Street had caused, and what to do about it.

His position was indefensible, and he knew it, so he switched tactics:

“OK Ames, which bankers would you throw the book at? Because you’re arguing that they’re all guilty. So which ones do you go after? Two of them? Three? Half of them?”

“Every last one of them. Lock ’em up in one of their private prisons.”

“Not gonna happen, Che.”

“Che? Me? Listen, Scarface, I’m about law and order. Don’t any of you PE degenerates believe in that anymore?”

“OK, here’s the deal, Che. I’m going to walk you through this nice and slow so that even an agave-sweetened hippie like you can understand this. Stick with me, this is gonna be a little complicated. Ready?” And so he began.

“Let’s say the government decides one day, ‘You know, we oughta listen to Che here, let’s throw the book at every firm and every executive that our people can make a case against. Because you know, gosh, it’s all about rule of law and blind justice, just like Che says.’ OK, so now this means indicting just about every serious player in finance, so they take down Goldman Sachs, they take down Citigroup, JP Morgan, BofA… and they also serve all the big funds who are at least as guilty, if not more. So they shut down Pimco, Blackrock, Citadel… maybe they indict Geithner and Summers, haul in some of Bush’s crooks… right?”

“Go on, I’m gonna order some hot, buttered popcorn for this. Don’t mind me.” I liked what I was hearing so far.

“OK, now guess what you’ve just done? You’ve just caused the markets to completely tank. Remember what happened after the Lehman collapse? Remember how popular that made every politician in Washington? Still wondering why they coughed up a trillion bucks? They were scared for their lives; that’s why they voted for that bailout. You’d have done the same goddamn thing. But if we go after everyone guilty of fraud and theft, the market crash this country would see would make 2008 look like Sesame Street. Open that can of worms labeled ‘Fraud’ and the whole fucking economy collapses. You may as well prosecute people for masturbating. No one will know where the fraud investigation stops and who will be charged next—everyone will try to cash out, and the markets will tank to zero. And guess what happens when the markets tank to zero? Every fucking American with a retirement plan, or an investment portfolio, or a 401k—every state pension plan in the country, every teacher’s pension fund, every fireman’s pension—every last one of them will be wiped out. That’s what the Lehman collapse taught us.”

“Us? It didn’t teach anything but that this country is run by maniacs.”

“Jesus H. Christ, you’re even more clueless than the idiots who managed the Lehman collapse. I mean, didn’t everyone get it how badly those idiots screwed up with Lehman? It was the biggest screw-up this hemisphere has ever seen. You had Secretary Paulson and Fed Chief Bernanke scratching their asses not knowing what to do, so then they go, ‘OK, we’re supposed to be a free market economy, and we’re supposed to be the Republicans—let’s try something different for a change since nothing else is working. Let’s go out on a limb and actually give this “free market” thing a whirl. Who knows? Maybe the “free market” really works the way we always say it does. Nothing else seems to work, let’s let the free market decide Lehman’s fate. Maybe corporate-socialism isn’t the answer.’ So they hung Lehman out in the free-market, and BAM! The. Shit. Hit. The. Fan. No shit, dudes—the free market is for suckers, didn’t your daddy teach you idiots that? Not only did Lehman collapse—everything collapsed; confidence in the entire system collapsed. And here’s what I’m trying to explain to simpletons like you: Our economy is just a confidence game. Don’t ask me how it got this way, don’t care.”

I tried saying something insulting to him, but he just talked right over me. He was on such a roll.

“I’m sure you have the answer, you and Ron Paul and all the other pot-smoking libertarian do-gooders have it all figured out. But what I’m saying is, no confidence means end of the confidence game. That’s what Lehman showed. Every single player in finance suddenly had to face the fundamental problem—this whole fucking economy is built on fraud and lies and garbage. So when Lehman collapsed, every single player panicked, going, ‘If Lehman was nothing but a Ponzi scheme—and I know what I’m running is a Ponzi scheme—holy shit, that means everyone else is running a Ponzi scheme too! Run for the exits!’ No one trusted anyone else, everyone pulled out, and the entire global economy collapsed just like that. And that meant your parents, my parents, every teacher, every fireman, every person in the country going into retirement, every price on every asset—wiped out.

“And here’s what I’m trying to get you to understand: In the grown-up world, when an entire country’s savings accounts are wiped out because of some do-gooder and his law books and his Thomas Jefferson ‘What about free and fair markets?’ crap, that is a big problem—people don’t give a fuck about Jefferson and ‘free and fair markets,’ they just want their savings to be worth something. And people are right: Jefferson was an imbecile. He should have been a folk singer, not a Founding fucking Father. But that’s another issue that’s over your head—the point is, the guy who destroys this economy because it’s ‘the right thing to do’ will have to flee for his life, and whatever president or political party was in power when that decision was made will be out of power for the next 200 years. That’s why Washington panicked and passed ‘the bailout,’ they didn’t want to be the fools whom all the Ponzi victims blame for tanking the Ponzi scheme, so they broke the glass and pumped up a newer, bigger Ponzi scheme. It was an expensive 14 trillion dollar lesson in, ‘Stay the fuck away from free-market experiments, assholes!’ How naive are you people to actually believe that ‘free market’ crap? The problem is when people in power are stupid enough to listen to guys like you: all the do-gooder libertarians and the do-gooder free-market Republicans who forgot that they’re supposed to lie. Hello!”

“Libertarian, me? Since when was I ever a libertarian?”

“That’s my point: Fools like you don’t even know who you are anymore. They forgot that they’re supposed to lie about all that libertarian free-market shit, keep it far the fuck out of policy. But instead of just lying about free-markets while secretly propping up Lehman, the idiots actually tried pulling off a ‘free-market’ miracle, and we had to pay $14 trillion just to find out what I could have told them for no fee at all, which is: ‘Hey, assholes, you’re supposed to be hypocrites, OK? You’re supposed to be two-faced free-market liars, not libertarian Quakers! You’re not supposed to believe in anything—your job is to get up in front of the public and lie about free markets and the rest. Period.’

“That’s it, how fucking hard is it? Look, watch my face: Say one thing out of one side... and do the other out of the other side. Got that? Let everyone else whine and cry about, ‘Ooh, that’s not fair, ooh, that’s a bailout, that’s socialism, that’s corruption.’ That’s what losers do—they whine. You, for example, Che—you whine all the time, and look at you... Can you pay the bill for this meal? Is there a libertarian on earth who can afford to buy a decent meal in Manhattan? And now, look at me: I’m a hypocrite. Hell yes I am! I lie every day of my life, I lie to myself in my sleep. Hell, I’m lying to you right now, in fact I don’t even know what the fuck I’m saying anymore because I’m so used to lying. And yet—who’s the guy with the black card? Who’s the one who’s going to pick up the check tonight? Guys with power, guys like me, we lie. You got that? ‘Lie’ as in ‘My Lai’ the massacre—as in, ‘My Lai you long time, me so free-markety.’ You distract the dumbshits with free-market B.S. because hey, for whatever reason, that’s what the public likes to hear, it doesn’t really matter what lie you feed them so long as it’s the lie that puts them in a trance. And then behind the scenes, you do the very opposite: You fix the game, you cover up this problem here with those funds there, you move shit around, you skim budgets and you subsidize the system, you cover up the bad shit and once in a while throw a has-been to the wolves to keep the public entertained—that’s the way the system works, and anyone who’s an adult understands that. And everyone who doesn’t understand that can go form an online libertarian chat group and complain with all their little libertarian friends about free markets and Jekyll Island and ‘Wahhh! It’s not not fair, waahhhh!’”

“What’s with the libertarian accusation?”

“It’s just that you all sound the same to me. Libertarians, hippies—is there really a difference? You all whine alike: ‘It’s not fair, man! Ooh! You can’t do that, it’s fraud, it’s corruption, ooh no!’ Or: ‘It’s the income inequality, man; Goldman Sachs controls us all man; it’s socialism for the rich; it’s all too scary for my retarded 5-year-old libertarian brain!’ Seriously, anytime I meet libertarians like you—”

“Listen—I’m not a fucking libertarian, OK? I want free handouts. How clear do I have to make this? Me—handouts. Me—Big Government. I want to collectivize your productive cash, because I am a resentful parasite. Are you capable of processing a single word of what I’m saying to you, Spaz?”

“Uh-huh, sure, whatever. Here’s the thing: I think it’s great that you and your friends memorized Road to Serfdom in between Star Trek episodes—no really, I’m happy for you. Yeah, we’re all so proud. But here’s the thing: We grown-ups are really, really busy now trying to sort out the free-market mess you made with that Lehman move of yours. Yeah, so why don’t you run along to your libertarian chat rooms and have your little debates about Jekyll Island and the gold standard, because it really means a lot to us. And report back to me as soon as you have it all figured out, m’kay? Just get the fuck out of my face and leave the adults alone.”

It got a lot more vicious and personal than this, but when our verbal slap-fight ended—and he paid the bill—I thought about what he said, and it made a lot more sense. Fraud has become so endemic in this country that it’s woven its way into America’s DNA, forming a symbiotic relationship that can’t be undone without killing off the host. If they push it just a little too hard, the entire American economy could crash, asset values could tank, and that means tens of millions of extremely pissed off retirees and Baby Boomers. As the Wall Streeter put it: “Whoever is responsible for bursting this latest bubble by exposing all the fraud—and tanking all the markets—will not only be out of power for at least a generation, but they’ll all have to get radical reconstructive surgery on their faces and seek political asylum somewhere remote. No one wants to be that guy, and that’s why it’s not going to happen.”

That may be true, but all bubbles to eventually burst, all Ponzi schemes do collapse. The only question is when. For those of us not on the verge of retiring, the sooner we have this day of reckoning and get it over with, the better.

[Demeter]

38. Fun Fraudonomics Facts By Mark Ames

http://www.nypress.com/article-21164-fun-fraudonomics-facts.html

. . . . . . .

Ever since I got kicked out of Russia and forced back home, I’ve been collecting all kinds of news articles about fraud, in a document file titled “America Is Russia.” Here’s a sampling.

* Accounting Fraud: Last year, America’s leading banks were insolvent. So Tim Geithner and Larry Summers forced an accounting rule change called “mark-to-model,” which let banks essentially scrape a pile of dogshit off the sidewalk, fling it into a vault, and mark it “worth 1 billion dollars.” Voila! The banks are making record profits.

* Big Pharm Fraud: Between May 2004 and March 2010, a handful of top drug companies like Pfizer, Eli Lilly and Bristol-Myers paid over $7 billion in criminal penalties for bribing doctors to prescribe drugs for unapproved uses, but it was a small price to pay for the tens of billions they earned poisoning Americans. Up to 100,000 Americans die every year from misprescribed drugs. Bummer for you guys.

* Greenspan Fraud: America’s central banker didn’t believe fraud is a crime that should be regulated, and he forced out a do-gooder regulator named Brooksley Born, who disagreed. Then Alan Greenspan pumped up the biggest housing bubble in human history, and once it was ready to burst, he quit the Fed and went on the payroll of three firms that made billions on the subprime crash: Paulson & Co., Deutsche Bank, and Pimco.

* Bond Fraud: America’s $2.8 trillion municipal bond market is rife with so much fraud, thanks to contracts done in backroom deals, it’d make an Uzbek bureaucrat blush. It wasn’t always this corrupt: In 1970, 85 percent of muni bond deals were done through open tenders, but last year, only 15 percent of bond deals were done in the open. Result: Muni bond defaults soared 20 times in 2009 over 2008.

* Regulatory Fraud: In the OTS, OCC, Fed, pension benefit guaranty agency and of course the SEC, where whistleblowers were routinely ignored because the regulators were too busy painting their monitors while surfing sites like www.fuck-my-wife.com.

* Journo Fraud: The Washington Post got caught whoring out their venerable editorial staff to corporate lobbyists for anywhere from $25,000 to $250,000 a date, depending on the access. The%u202FAtlantic Monthly admitted to TalkingPointsMemo that it routinely sold access to its editorial staff for cash. Henry Blodget, banned for life from the securities industry by the SEC for committing fraud, runs a media site called Business Insider, which has Blodget articles like: “HOLD EVERYTHING: The SEC’s Fraud Case Against Goldman Seems VERY Weak.”

* Teaching Fraud: Fifty-three percent of MBA students admit to cheating, more than any other discipline. In 1940, only 20 percent of university students said they cheat; today, that number is as high as 98 percent. The same with schools, where administrators routinely fix their students’ standardized test scores. Half of all elementary schools in Georgia may have fudged their students’ scores; two-thirds in California.

* Judicial Fraud: Juvenile court judges in Pennsylvania took millions of dollars in kickbacks from privately run prisons in exchange for sentencing thousands of innocent kids to juvenile prison terms. Chronic on-the-bench masturbation is running rampant: an Oklahoma judge was accused of using a penis pump on the bench, while nearby in Texas, a Harris County judge masturbated and ejaculated on a defendant’s hand.

* Lit Fraud: James Frey’s addiction “memoir” A Million Little Pieces turned out to be A Million Pieces of Bullshit, the biggest literary fraud of our time. Fooled readers sued, Oprah chewed him out and Frey is now a bestelling “fiction” author.

[Demeter]

39. Mark Twain speaks

http://www.youtube.com/watch?v=zt64F_ZYCmE&feature=related

[jotsy]

53. Failure to maintain a healthy blood pressure prevented me from finishing this article earlier today.

And of course, three sentences in from where I left off was all it took for my heart rate to jump. Hit the reply button for your finishing comment: Nodding. Avidly.

[bread_and_roses]

82. sounds about right to me (n/t)

[Roland99]

109. I say, let the shit hit the fan and keep on hitting the fan until the asshole are outta ammo.

ugly visual, I know. but for crying out loud!!

[Demeter]

40. Hal Holbrook in "Mark Twain Tonight!" (1967)

http://www.youtube.com/watch?v=PNql_eRsWJo&feature=related

http://www.youtube.com/watch?v=2PQCNUWRCJI&feature=related

http://www.youtube.com/watch?v=H_rBdNkYEVo&feature=related

http://www.youtube.com/watch?v=MjugreWQbz8&feature=related

http://www.youtube.com/watch?v=Ozsi6iRHzOc&feature=related

http://www.youtube.com/watch?v=z-JtcC7mRTw&feature=related

http://www.youtube.com/watch?v=YIXzG0kg15c&feature=related

http://www.youtube.com/watch?v=V2OTMmDHHRU&feature=related

http://www.youtube.com/watch?v=G3ZOyPjB9J8&feature=related

http://www.youtube.com/watch?v=KiSadfJK7nY&feature=related

[Demeter]

43. When You Lie Down With Them Dept: Morgan Stanley Has 69% Tier 1 Capital Exposure to the PIIGS

http://jessescrossroadscafe.blogspot.com/2010/04/when-you-lie-down-with-dept-morgan.html


That statistic about Morgan Stanley was an eye opener in terms of percent of capital exposure. No wonder Angie Merkel is playing hard to get, holding out for more than another back rub. Morgan Stanley looks like it done slipped in the pig wallow, don'cha know.

Gentlemen, start your presses...

[Demeter]

49. Morgan Stanley: Strategic Defaults Reach 12%

http://www.nakedcapitalism.com/2010/04/morgan-stanley-strategic-defaults-reach-12.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[Demeter]

44. Legislating a Conscience on Wall Street

http://www.newsweek.com/id/237048

Lloyd Blankfein doesn't seem to feel responsible for anything beyond Goldman Sachs’s bottom line. Nor should he, according to the meager mores of Wall Street. Goldman, you see, is a "market maker," as Blankfein loves to repeat. This absolves the firm of any fiduciary responsibility for the deals it sets up for its clients. Creating "liquidity" in the markets, Blankfein believes, is Goldman’s only social responsibility. At a hearing of the Senate's Permanent Subcommittee on Investigations on Tuesday, Chairman Carl Levin repeatedly tried to get Blankfein to concede that Goldman was morally wrong to bet on the sly against securities that it had touted as solid investments to its clients. No, no, no, the Goldman CEO demurred, that's not how the financial system works any more. "There's been a change in the sociology of the business in the last 10 to 15 years," Blankfein explained patiently. "Somewhere along the line," he said, big clients stopped asking investment banks for good advice and started to seek them out only to set up deals for them—merely to underwrite the transactions and be on the other side of them. That forced Goldman to transform itself from a private partnership in the late '90s into a publicly traded company in order to obtain the big-time capital it needed to create such deals. It also apparently gave Goldman carte blanche to shaft any helpless investor on the other side of those transactions. Liquidity is all. Nothing else matters....

[Demeter]

45. The Greediest of All Time / What They Got Away With

http://photo.newsweek.com/content/photo/2009/3/photos-the-greediest-people-of-all-time.html

http://photo.newsweek.com/content/photo/2008/9/photos-ceos-golden-parachutes-from-failed-firms.html

[Demeter]

54. Mark Twain Marriage and children

Charles Langdon showed a picture of his sister, Olivia, to Twain; Twain claimed to have fallen in love at first sight. The two met in 1868, were engaged a year later, and married in February 1870 in Elmira, New York She came from a "wealthy but liberal family", and through her he met abolitionists, "socialists, principled atheists and activists for women's rights and social equality", including Harriet Beecher Stowe, Frederick Douglass, and the writer and utopian socialist William Dean Howells, who became a longtime friend.

The couple lived in Buffalo, New York from 1869 to 1871. Twain owned a stake in the Buffalo Express newspaper, and worked as an editor and writer. Their son Langdon died of diphtheria at 19 months.

In 1871, Twain moved his family to Hartford, Connecticut, where starting in 1873, he arranged the building of a home (local admirers saved it from demolition in 1927 and eventually turned it into a museum focused on him). While living there Olivia gave birth to three daughters: Susy (1872–1896), Clara (1874–1962) and Jean (1880–1909). The couple's marriage lasted 34 years, until Olivia's death in 1904.

During his seventeen years in Hartford (1874–1891), Twain wrote many of his best-known works: The Adventures of Tom Sawyer (1876), The Prince and the Pauper (1881), Life on the Mississippi (1883), Adventures of Huckleberry Finn (1884), and A Connecticut Yankee in King Arthur's Court (1889).

Twain made a second tour of Europe, described in the 1880 book A Tramp Abroad. His tour included a stay in Heidelberg from May 6 until July 23, 1878, and a visit to London.

Love of science and technology


He was fascinated with science and scientific inquiry. He developed a close and lasting friendship with Nikola Tesla, and the two spent much time together in Tesla's laboratory.

Twain patented three inventions, including an "Improvement in Adjustable and Detachable Straps for Garments" (to replace suspenders) and a history trivia game. Most commercially successful was a self-pasting scrapbook; a dried adhesive on the pages only needed to be moistened before use.

His book A Connecticut Yankee in King Arthur's Court features a time traveler from contemporary America, using his knowledge of science to introduce modern technology to Arthurian England. This type of storyline would later become a common feature of the science fiction sub-genre, Alternate history.

In 1909, Thomas Edison visited Twain at his home in Redding, Connecticut and filmed him. Part of the footage was used in The Prince and the Pauper (1909), a two-reel short film.

[Demeter]

56. A Formidable Twain Reference Site

http://www.twainquotes.com/

[Demeter]

57. Whew! Too Much Information!

I should have saved Mark Twain for a slow-news week. It's late and I'm tired. Let's pick it up here tomorrow--if you can stand it.

Goodnight all!

[AnneD]

58. Mark Twain's advice to girls......

Another Sun article described a 1909 visit to St. Timothy's School in Catonsville, where he had some advice for the girls who were graduating: "There are three things that come to my mind which I consider excellent advice. First, girls, don't smoke -- to excess. I am 73 1/2 years old and have been smoking for 73 of them. But I smoke ... in moderation; only one cigar at a time.

"Also, never drink -- to excess.

"The third admonition is, don't marry -- to excess."

[AnneD]

59. My favorite Twain quote on sex in our old age.....

From the time a woman is seven years old till she dies of old age, she is ready for action, and competent. As competent as the candlestick to receive the candle. But man is only briefly competent:...After fifty his performance is of poor quality; the intervals between are wide, and its satisfactions of no great quality to either party; whereas his great-grandmother is as good as new.
- Letters from the Earth

[bread_and_roses]

81. "Letters from the Earth" is THE essential Twain, imho

I can't read much of Twain - not novels, anyway - please note this is NOT a literary criticism: I accord him all his kudos and stature - I just can't stand dialect in any form. But ah, "Letters from the Earth!" I encountered it by luck and happenstance in high school, and it is still among my all-time favorites.

[AnneD]

83. I have an ear for dialect......

and impersonating and have punked many of my friends on occasion. The best way to understand end enjoy dialect is to read aloud. It is more for your ear and not your eye. I discovered this when I read the poetry of Poe. To read his poetry rather than recite him is to miss his true genius. Now that I think of it-Mom reading the Brerer Rabbit stories to us when we were kids may have been the seed.

I discovered Letters while in HS too. Great stuff and my fav too.

[AnneD]

60. Twain on religion, Hawaii, and paradise....

Nearby is an interesting ruin--the meager remains of an ancient temple--a place where human sacrifices were offered up in those old bygone days...long, long before the missionaries braved a thousand privations to come and make permanently miserable by telling them how beautiful and how blissful a place heaven is, and how nearly impossible it is to get there; and showed the poor native how dreary a place perdition is and what unnecessarily liberal facilities there are for going to it; showed him how, in his ignorance, he had gone and fooled away all his kinsfolk to no purpose; showed him what rapture it is to work all day long for fifty cents to buy food for next day with, as compared with fishing for a pastime and lolling in the shade through eternal summer, and eating of the bounty that nobody labored to provide but Nature. How sad it is to think of the multitudes who have gone to their gaves in this beautiful island and never knew there was a hell.
- Roughing It

[Zenlitened]

61. Congratulations Comcast; You're The Worst Company In America!

http://consumerist.com/2010/04/congratulations-comcast-youre-the-worst-company-in-america.html

After four rounds of bloody battle against some of the most publicly reviled businesses in America, Comcast can now run up the steps of the Philadelphia Museum of Art and hold its hands high in victory -- it has bested everyone else to earn the title of Worst Company In America for 2010.

In a three-day, knock-down, drag-out bout with Ticket "Apollo Creed" Master, the little cable company that could showed just how badly their horrendous service, exorbitant costs, throttled internet and plans to acquire NBC Universal have ticked the Consumerist readers.

All that remains is for the Golden Poo to be delivered to Comcast HQ in the City of Brotherly Love. We fully expect them to set it in a place of honor in the lobby, where all guests can see it.

[Demeter]

76. As a Former Customer, I Say, I'm Not Surprised

They earned it.

[Zenlitened]

62. Effect of wind on stock market returns: evidence from European markets

http://www.informaworld.com/smpp/499064062-56068228/content~db=all?content=10.1080/09603100802243766

Abstract

Environmental psychology studies have found evidence that wind speed has a strong influence on mood and comfort. This study investigated the relationship between wind speed and daily stock market returns across 18 European countries from 1994 to 2004. A significant and pervasive wind effect was found on stock returns.

This finding was supported by psychological literature claiming that mood affects judgement and decision-making in situations involving uncertainty and risk, and coincides with the argument of misattribution. This investigation also found strong seasonality effect and temperature effect in European stock markets.

Specifically, the influence of wind on stock returns is demonstrated to be more significant than that of sunlight, indicating that wind might exert a stronger impact on mood than sunshine and hence be a better proxy for mood than sunshine. Above all, our findings contradict the rational asset-pricing hypothesis and contribute to the behavioural finance literature.

Via Paul Kedrosky:
http://paul.kedrosky.com/archives/2010/04/puffy_stock_mar.html

[Festivito]

63. Debt: 04/21/1910 2,652,665,838.04 (UP 2,652,632,104.99) (Up a lot.)

(From before he was born until after he died, the debt went up tremendously to almost three-million dollars from a mere thirty-four thousand a whopping $28.77 per 1910 census counted American, about 8% of GDP. Good weekend all.)


37,513.05 01/01/1836
33,733.05 01/01/1835 11/30/1835

2,652,665,838.04 7/1/1910
2,639,546,241.04 7/1/1909 4/21/1910

2,652,632,104.99

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo1.htm

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo3.htm

I could not resist the need to post something depressing.

[Demeter]

64. Feel Free

It's ALL depressing. Schadenfreude is a good dessert, but one can't live on it.

Frankly, I don't know how much more of this I can stand to read and post today. It's like torture, knowing that the world is run by Bertie Woosters (overprivileged, cotton-wrapped twits) with nary a Jeeves in sight to fix up the inevitable catastrophes.

On an historical note: Mark Twain's adult life--Civil War to 1910--spans the beginning of the end of the United States as envisioned by the Founding Fathers. It was in the Civil War that Big Business started its hostile takeover of the government and the economy. Both Teddy and Franklin Roosevelt beat them back for a time, but the onslaught has been relentless, and we will be eating the bitter fruit for a long time...

[bread_and_roses]

84. Speaking of Bertie Woosters, the Kentucky Derby runs today (honest, there is a relevance, sort of)

Now, I love thoroughbred horses, and hate everything else about horse racing - but in one of those mental gymnastics we're all capable of, I follow the sport avidly. There are no horses in my life (alas) so it is vicarious substitution for a dream I'll never fulfill of owning a horse, any horse.

But of all the things I detest about the horse world, and TB racing in particular, is that it is the playground of the rich in 99.9% of all cases.

And case in point for elitism at its finest, witness this article about the vision to remake OTB in NYC:

http://www.wnyc.org/news/articles/154236

Betting on a New Demographic for OTB

... Cooper* says he’d be angry to see these parlors go. The tracks are too crowded, the hot dogs too expensive for guys like him. But there are some people who would be quite happy to see these OTB parlors disappear. Like Sandy Frucher, the man chosen last year to resuscitate New York City OTB as its new chairman.

"People have described it to me as a gathering of, sort of, people who are down on their luck or losers or whatever," Frucher says.

We’re sitting in his home -– a five-story townhouse decorated with antique Chinese vases and tapestries. Frucher says he doesn’t like gambling much. He saves his betting for the stock market. But he says he still knows exactly what OTB’s problem is. It needs an image makeover.

"In England, horse racing is the sport of kings," Frucher says. "In the United States, it used to be 'National Velvet.' Now, the picture is some poor folks who’ve had some bad luck, standing in front of a deteriorating, ugly, rotten OTB parlor."

... So Frucher has a plan ... The demographic of OTB’s future will look a lot different when he’s done with it, he says: younger, hipper, richer ... This is Sandy Frucher’s vision: twenty-something-year-old girls dancing under chandeliers in trendy bars -– betting on horses in between cocktail sips. In six months, Frucher hopes to install self-service Internet betting terminals at bars like the Village Lantern at Bleecker and Sullivan to replace the OTB parlors he’ll shut down.

*a regular OTB customer/bold emphasis added

Ah, yes. "Betting" on the Market and surrounded by antiques = "class"
Betting on horses in a grimy gaming parlour = "losers"

Let it all come crumbling down. There is no fixing this mess. How else will we ever remember that money is just a social construct? It should have happened in '08 on that psychopath Bush's watch. Because it didn't, Obama is now mired in the Matrix himself - and THAT is probably the fundamental cause of every bad move we've seen since.

on edit: "owning" is the wrong word - I don't need to own one - just have the opportunity to be around them. For me, they are somehow magically elemental, fundamental, grounding.

[Demeter]

93. You Are Still Among the Living--Good!

[Roland99]

110. A group of not-so-elitists had a Derby contender yesterday, though.

http://www.courier-journal.com/article/20100429/SPORTS08/4290371/Chasing+Dreams+indeed++Syndicate+caught+on+in+Noble+s+Promise

One of them is just a mailman from outside Lexington.


Made me a bit weepy yesterday watching the race...longing some for my Old Kentucky Home, far away.

[bread_and_roses]

115. Yes, "Noble's Promise" - and running 5th in the Derby is not too shabby -

It's a horror of a race, with twenty in the herd. I thought maybe the jock sent him a second or so too early, but that's not a professional opinion, and I could well be dead wrong onit. It might have been the distance, might have been having an infection a short time before, might have been he just ran out of gas in the stress of that particular race - it's a big deal for a horse to be able to win at 1 1/4 mile at those speeds.

But he showed he's what they call "a nice horse" (a big complement) - and there are plenty of 1 1/8 mi races with good purses if he can't manage the extra 1/8. Believe me, he's already outrun what any of the Sheiks and Princes and Bluebloods and "Old Money" in racing think proper for a $10,000 colt.

Hurrah for his team of owners, I hope they had the ride of their lives going to the Derby and many more great days with this "cheap" colt!

[Demeter]

114. My Sister Called to Tell Me Her Horse DIDN'T Win

She was just so happy it didn't collapse and die on her...(she only bet on it, not own it or anything)

[Festivito]

96. I wish things were run by a hapless Bertie,

rather than his relatives updated with think-tank jails filled with filtered Jeeveses.

If we as a nation do not find and implement some better ideals, I fear we will soon implode.

[Demeter]

65. Mark Twain's Financial troubles

Twain made a substantial amount of money through his writing, but he squandered much of it in bad investments, mostly in new inventions, particularly the Paige typesetting machine. It was a beautifully engineered mechanical marvel that amazed viewers when it worked, but was prone to breakdowns. Twain spent $300,000 (equal to $7,518,462 today) on it between 1880 and 1894, but before it could be perfected, it was made obsolete by the Linotype. He lost not only the bulk of his book profits but also a large portion of the inheritance of his wife.

Twain also lost money through his publishing house, which enjoyed initial success selling the memoirs of Ulysses S. Grant but went broke soon after, losing money on the idea that the public would be interested in a biography of Pope Leo XIII. Fewer than two hundred copies were sold.

Twain's writings and lectures, combined with the help of a new friend, enabled him to recover financially In 1893, he began a 15-year-long friendship with financier Henry Huttleston Rogers, a principal of Standard Oil. Rogers first made Twain file for bankruptcy. Then Rogers had Twain transfer the copyrights on his written works to his wife, Olivia, to prevent creditors from gaining possession of them. Finally, Rogers took absolute charge of Twain's money until all the creditors were paid.

Twain embarked on an around-the-world lecture tour in 1894 to pay off his creditors in full, although he was no longer under any legal obligation to do so. In mid-1900, he was the guest of newspaper proprietor Hugh Gilzean-Reid at Dollis Hill House. Twain wrote of Dollis Hill that he had "never seen any place that was so satisfactorily situated, with its noble trees and stretch of country, and everything that went to make life delightful, and all within a biscuit's throw of the metropolis of the world". He returned to America in 1900, having earned enough to pay off his debts.

Speaking engagements

Twain was in demand as a featured speaker, and appeared before many men's clubs, including the White Friars, the Vagabonds, the Authors, the Monday Evening Club of Hartford, and the Beefsteak Club. He was made an honorary member of the Bohemian Club in San Francisco. In the late 1890s, he spoke to the Savage Club in London and was elected honorary member. When told that only three men had been so honored, including the Prince of Wales, he replied "Well, it must make the Prince feel mighty fine." In 1897, Twain spoke to the Concordia Press Club in Vienna as a special guest, following diplomat Charlemagne Tower. In German, to the great amusement of the assemblage, Twain delivered the speech "Die Schrecken der deutschen Sprache" ("The Horrors of the German Language").

[Demeter]

66. Fiscal Sustainability Facts and Solutions

"The unspoken entitlement is the US military. The US spends about half the entire world's military budget.

1) Social Security, at current rates, is not expected to run short of money before 2037.

2)The simplest way to "fix" Social Security, if you're worried about a "problem" 27 years in the future, is simply to remove the contribution limit. End of problem. Period. Social Security is not in crisis.

3) The reason politicians want to "fix" Social Security is to increase the SS surplus, so they can use it for other things.

4) Medicare has more serious issues. However the simplest way to fix healthcare in the US is to move single payer, which would reduce healthcare per person by one-third. It has worked for every other country in the history of the world that has done it. It will work for the US. Since we've admitted now that everyone deserves health care, and since it's cheaper, and better, why not use the next round of healthcare to fix Medicare by fixing health care?

The unspoken entitlement is the US military. The US spends about half the entire world's military budget. There is, actually, no one in the world who can invade or seriously threaten the US in any fashion. (Is Canada going to invade? Mexico?) You can easily slash the military budget in half and still be so far ahead of any possible combination of enemies that it isn't even close.

And yes, taxes are going to need to go up. Here's a simple fix—tax all income over 5 million at 90%. It won't hurt the economy (the best economy in America's history was back when marginal tax rates were this high in the 50's and 60's). It will mean that the rich, who got almost the entire bailout and whose irresponsibility threw the US into its worst economic crisis since the Great Depression will pay for it.

Something to ponder the next time entitlement programs come up for the chopping block.

http://crooksandliars.com/ian-welsh/fiscal-sustainability-facts-and-solution

[Demeter]

70. Good Morning, Everyone!

We are having a gully-washer of a thunderstorm!

I had a chance conversation yesterday with a CPA who talked with an IRS agent in the course of an audit. The agent told him how embarrassing it was to audit people's taxes when the man he works for, Timmy Geithner, is a tax cheat.

[Demeter]

71. Is Geithner in SIGTARP’s Crosshairs?

http://www.nakedcapitalism.com/2010/04/is-geithner-in-sigtarps-crosshairs.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

A Bloomberg story today on Neil Barofsky, the head of the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, contained this explosive little item (hat tip Tom F):

The TARP watchdog has also criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc. was saved from insolvency in 2008, when Geithner was head of the Federal Reserve Bank of New York.

The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

In Senate Finance Committee testimony on April 20, Barofsky said SIGTARP would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group Inc. that is at the center of a U.S. Securities and Exchange Commission lawsuit filed against the investment bank on April 16.

Yves here. We’ve been told that Barofsky is political, despite his “take no prisoners” image, and indeed, his report that criticized the New York Fed for paying out 100% of the notional value to holders of AIG credit default swaps bore that out when it bizarrely exonerated the Fed for its repeated retrades of the AIG funding, which is of greater economic consequence than the failure to negotiate a haircut on the CDS).

In fact, this investigation was first discussed publicly in late January, when SIGTARP made it abundantly clear that is was not prepared to tolerate New York Fed intransigence. As we noted then:

Oh, this is starting to get VERY interesting. L’affaire Fed/AIG is beginning to smell a little like Watergate, where an imperial organization that thinks it writes its own rules (then the Nixon administration, here the Fed) fights tooth and nail to keep certain activities hidden well away (recall, for instance, the Saturday night massacre).

Now of course, the Fed lacks the Nixonian appetite for dirty tricks and open confrontation. And unlike Watergate, where a crime had been committed, here instead we have a mystery: why is the Fed so desperately to hide the details of the AIG bailout, particularly since the bulk of what they say they are trying to sequester is already in the public domain? (And my own little pet peeve is that the focus has been strictly on how much Geithner knew and when. Ahem, what about Bernanke? He and Paulson were virtually joined at the hip during the crisis, and Paulson was heavily involved in all the bailouts. Was the NY Fed a rogue organization of some sort? How can you not say the board of governors is not ultimately responsible for a matter as significant as the AIG rescue?)

As this little scandal brews, the Fed has engaged in the classic error of withholding documents, so that the cover-up may well prove to be a more serious matter than the underlying chicanery (although we rather doubt that; more on that in due course). And remember, the Fed is a regulator! Here we have a body that has as one of its significant duties enforcing rules, both legislation as well as its own regulations, bending them in its dealing with the SEC and refusing to comply with subpoenas. Why should the public trust an organization that puts itself above the rule of law?

So the real significance of the Bloomberg update today is Barofsky would be unlikely to mention the idea that his investigation could result in charges unless he thought it probably would result in charges.

Another factor favoring this outcome is that Barofsky has the wind in his sails in taking on Fed secrecy. While the audit the Fed movement isn’t getting as much press as Goldman, Greece, and the financial reform bill slugfest, it continues to gain momentum. From a story at Huffington Post by Ryan Grim:

As unusual a coalition as can be crafted in the Senate plans to fight for an amendment to the Wall Street reform bill that would open the Federal Reserve to a serious audit by the Government Accountability Office. Sponsored by Sen. Bernie Sanders (I-Vt.), the language is modeled after an amendment that passed the House, sponsored by Reps. Alan Grayson (D-Fla.) and Ron Paul (R-Texas).

Sanders is joined by four Republicans of varying politics: John McCain (Ariz.), Jim DeMint (S.C.), David Vitter (La.) and Sam Brownback (Kan.). If Democrats in the Senate back the measure, it would have at least 63 votes, but Banking Committee Chairman Chris Dodd (D-Conn.) is opposed and has argued against a broad audit.

Yves here. While there is a large and growing constituency for reining in the Fed, I am not convinced that anyone in the circles of power is willing to take on a Cabinet secretary who most see as sincere but badly captured.

WELL, WE SHALL SEE. AS A LAST RESORT, FRSP!

[Demeter]

73. The End of the Twain Story

Twain passed through a period of deep depression, which began in 1896 when his daughter Susy died of meningitis. Olivia's death in 1904 and Jean's on December 24, 1909, deepened his gloom. On May 20, 1909, his close friend Henry Rogers died suddenly.

In 1906, Twain began his autobiography in the North American Review. In April, Twain heard that his friend Ina Coolbrith had lost nearly all she owned in the 1906 San Francisco earthquake, and he volunteered a few autographed portrait photographs to be sold for her benefit. To further aid Coolbrith, George Wharton James visited Twain in New York and arranged for a new portrait session. Twain said four of the resulting images were the finest ones ever taken of him.

Twain formed a club in 1906 for girls he viewed as surrogate granddaughters, the Angel Fish and Aquarium Club. The dozen or so members ranged in age from 10 to 16. Twain exchanged letters with his "Angel Fish" girls and invited them to concerts and the theatre and to play games. Twain wrote in 1908 that the club was his "life's chief delight."

Oxford University awarded Twain an honorary doctorate in letters (D.Litt.) in 1907.

In 1909, Twain is quoted as saying:

I came in with Halley's Comet in 1835. It is coming again next year, and I expect to go out with it. It will be the greatest disappointment of my life if I don't go out with Halley's Comet. The Almighty has said, no doubt: 'Now here are these two unaccountable freaks; they came in together, they must go out together.'

His prediction was accurate – Twain died of a heart attack on April 21, 1910, in Redding, Connecticut, one day after the comet's closest approach to Earth.

[Demeter]

75. Austerity by Tony Judt

http://www.nybooks.com/articles/archives/2010/apr/19/austerity/?pagination=false

My wife earnestly instructs Chinese restaurants to deliver in cardboard cartons. My children are depressingly knowledgeable about climate change. Ours is an environmental family: by their standards, I am a prelapsarian relic from the age of ecological innocence. But who traipses through the apartment switching off lights and checking for leaking faucets? Who favors make-do-and-mend in an era of instant replacement? Who recycles leftovers and carefully preserves old wrapping paper? My sons nudge their friends: Dad grew up in poverty. Not at all, I correct them: I grew up in austerity.

After the war everything was in short supply. Churchill had mortgaged Great Britain and bankrupted the Treasury in order to defeat Hitler. Clothes were rationed until 1949, cheap and simple “utility furniture” until 1952, food until 1954. The rules were briefly suspended for the coronation of Elizabeth, in June 1953: everyone was allowed one extra pound of sugar and four ounces of margarine. But this exercise in supererogatory generosity served only to underscore the dreary regime of daily life.

To a child, rationing was part of the natural order. Indeed, long after the practice ceased, my mother convinced me that “sweets” (candy) were still restricted. When I protested that school friends appeared to have unlimited access to the stuff, she explained disapprovingly that their parents must be on the black market. Her story was all the more credible because the legacy of war was ever-present. London was pockmarked with bomb sites: where once there had been houses, streets, railway yards, or warehouses there were now large roped-off areas of dirt, usually with a dip in the middle where the bomb had fallen. By the early 1950s unexploded ordnance had been mostly cleared and bomb sites—though off-limits—were no longer dangerous. But these impromptu play spaces were irresistible for small boys.

Rationing and subsidies meant that the bare necessities of life were accessible to all. Courtesy of the postwar Labour government, children were entitled to a range of healthful products: free milk but also concentrated orange juice and cod-liver oil—obtainable only in pharmacies after you established your identity. The orange juice came in rectangular, medicine-like glass bottles and I have never quite lost the association. Even today, a large glassful prompts in me a sublimated pang of guilt: better not drink it all at once. Of cod-liver oil, urged upon housewives and mothers by benevolently intrusive authorities, the less said the better.

We were fortunate to lease an apartment above the hairdressing shop where my parents worked, but many of my friends lived in substandard or temporary housing. Every British government from 1945 through the mid-1960s committed itself to large-scale public housing schemes: all fell short. In the early 1950s, thousands of Londoners still lived in “prefabs”: urban trailer parks for the homeless, ostensibly temporary but often lasting for years.

Postwar guidelines for new housing were minimalist: three-bedroom houses were to comprise at least nine hundred square feet of living space—about the size of a spacious one-bedroom apartment in contemporary Manhattan. Looking back, these homes seem not merely pokey, but chilly and underfurnished. At the time, there were long waiting lists: owned and managed by local authorities, such houses were intensely desirable.

The air over the capital resembled a bad day in Beijing; coal was the fuel of choice—cheap, abundant, and domestically produced. Smog was a perennial hazard: I recall leaning out of the car window, my face enveloped in a dense yellow haze, instructing my father on his distance from the curb—you could literally not see beyond an arm’s length ahead of you and the smell was awful. But everyone “muddled through together”: Dunkirk and the Blitz were freely invoked without a hint of irony to illustrate a sense of national grit and Londoners’ capacity to “take it”—first Hitler, now this.



..............................................................................

It was this “togetherness” that made tolerable the characteristic shortages and grayness of postwar Britain. Of course, we weren’t really a family: if we were, then the wrong members—as Orwell had once noted—were still in charge. All the same, since the war the rich kept a prudently low profile. There was little evidence in those years of conspicuous consumption. Everyone looked the same and dressed in the same materials: worsted, flannel, or corduroy. People came in modest colors—brown, beige, gray—and lived remarkably similar lives. We schoolchildren accepted uniforms all the more readily because our parents too appeared in sartorial lockstep. In April 1947, the ever-dyspeptic Cyril Connolly wrote of our “drab clothes, our ration books and murder stories…. London now the largest, saddest and dirtiest of great cities.”

...............................................................................

I don’t think I fully appreciated the impact of those early childhood years until quite recently. Looking back from our present vantage point, one sees more clearly the virtues of that bare-bones age. No one would welcome its return. But austerity was not just an economic condition: it aspired to a public ethic....

Moral seriousness in public life is like pornography: hard to define but you know it when you see it. It describes a coherence of intention and action, an ethic of political responsibility. All politics is the art of the possible. But art too has its ethic. If politicians were painters, with FDR as Titian and Churchill as Rubens, then Attlee would be the Vermeer of the profession: precise, restrained—and long undervalued. Bill Clinton might aspire to the heights of Salvador Dalí (and believe himself complimented by the comparison), Tony Blair to the standing—and cupidity—of Damien Hirst.

In the arts, moral seriousness speaks to an economy of form and aesthetic restraint: the world of The Bicycle Thief. I recently introduced our twelve-year-old son to François Truffaut’s 1959 classic Les Quatre Cents Coups (The 400 Blows). Of a generation raised on a diet of contemporary “message” cinema from The Day After Tomorrow through Avatar, he was stunned: “It’s spare. He does so much with so little.” Quite so. The wealth of resources we apply to entertainment serves only to shield us from the poverty of the product; likewise in politics, where ceaseless chatter and grandiloquent rhetoric mask a yawning emptiness.

The opposite of austerity is not prosperity but luxe et volupté. We have substituted endless commerce for public purpose, and expect no higher aspirations from our leaders. Sixty years after Churchill could offer only “blood, toil, tears and sweat,” our very own war president—notwithstanding the hyperventilated moralism of his rhetoric—could think of nothing more to ask of us in the wake of September 11, 2001, than to continue shopping. This impoverished view of community—the “togetherness” of consumption—is all we deserve from those who now govern us. If we want better rulers, we must learn to ask more from them and less for ourselves. A little austerity might be in order.

[Demeter]

77. Milken: Nouriel Roubini and Mike Milken on What's Next

longish video

http://paul.kedrosky.com/archives/2010/04/milken_nouriel.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+InfectiousGreed+%28Paul+Kedrosky%27s+Infectious+Greed%29&utm_content=Google+Feedfetcher

[Demeter]

85. WHAT A FRUSTRATING VIDEO!!!

I want to go beat them both over the head for ignoring the Reality of People.

People went through great struggles to get here in the US because they were DYING in their native lands, DYING of religious, economic, and social class OPPRESSION and INJUSTICE.

THEY DIDN'T COME HERE FOR TAX INCENTIVES--THEY CAME FOR LAND AND WORK AND FREEDOM.

And now we have none of these. We have Soviet-style governmental oppression, and worse than a soviet economy. Fraud is endemic. Our public education system is gutted. Our health care was never anything and it's just gotten measurably worse. Our governmental ethics is a total sham and war criminals walk our street, encouraging domestic terrorists to terrorize anyone who isn't white, male and militantly Xtian.

AMERICA HAS LOST ITS JUSTIFICATION FOR EXISTING. ONLY THE NUKES KEEP US FROM BEING INVADED IN A HOSTILE TAKEOVER BY CHINA.

Listen to these economists drool over the oil in Iran.

To thoroughly dissect this one video could take a year or two, and lots of blood-pressure intervention.

AND THEY BITCH ABOUT OUR HOUSES. I BITCH ABOUT THEIR MORALS AND THEIR RIDICULOUS ASSUMPTIONS. IF THE LORD SHIVA IS BRINGING ABOUT DISTRUCTION, STOP WITH THE BAND-AIDS FOR THE RICH. REBUILD FOR ALL PEOPLE.

And they call this a Christian nation? Where?

[Demeter]

79. Random Thoughts on the irony of Minarchism

http://one-salient-oversight.blogspot.com/2010/04/random-thoughts-on-irony-of-minarchism.html

....So is it possible for the government to provide any form of positive societal intervention (public education, health care, etc) without having any form of "sword"? Is it possible to have a government that does have a place in society but does not have any power in the form of military, police, law enforcement or prisons? I don't think so; besides, it's never been done.

What I would like to point out is that government often defines itself by the sort of power it wields. If the state has the ability to create a better society by, say, providing free health care, then government would define itself by the good that it does in that area: namely reducing infection rates, preventing the spread of communicable diseases, increasing awareness of public health issues and so on. Similarly if the state has the ability to create a better society through public education then it would define itself by the good that it does via public education, namely improving literacy and numeracy rates, providing young people with opportunities that they would not have had otherwise and providing for scientific and technological endeavour to benefit society. If we think of other areas of government involvement in society - such as the importance of intervening in markets in the form of monetary policy, the space program, the building and maintenance of electricity, water and transport infrastructure, environmental legislation and improvement programs - then we will see that governments will define themselves in those areas.

And by "define itself", I'm talking about the role that government sees itself in having in society. And government here refers both to the employees of the state and the representatives we elect to make laws and decisions for us on our behalf.

But if we limit the government to merely minarchism - military, police, legal system, prison - then we will have a state that is defined only by its ability to enforce punitive punishment. We elect people into office whose job it is to enforce punitive punishment and we allow the government to employ only those people involved directly in or in support of punitive punishment. Thus government would only ever wish to justify itself by its ability to punish.

It's no secret that the United States of America has the smallest government system in the western world,* and this along with the world's largest prison population - in both absolute and per capita rates. By being so limited, America's governments (Federal, State and county) define themselves only by that which they are allowed to do best which, in this case, is to wield the "sword".

Thus the irony is that minarchism actually produces a fear of government while simultaneously allowing the government more power and reason to exercise its ability to punish. By contrast, western democracies that have "mixed" economies (a combination of government intervention and a free market) have larger governments but less desire to enforce punitive punishment. In fact these nations (mainly western European welfare states and social democracies) have smaller armies and smaller prisons.

Which leads me to the following conclusion: Small governments are more likely to oppress, while large(r) governments are less likely to oppress....

[Demeter]

80. Mark Twain's Writing Career

Twain began his career writing light, humorous verse, but evolved into a chronicler of the vanities, hypocrisies and murderous acts of mankind. At mid-career, with Huckleberry Finn, he combined rich humor, sturdy narrative and social criticism. Twain was a master at rendering colloquial speech and helped to create and popularize a distinctive American literature built on American themes and language. Many of Twain's works have been suppressed at times for various reasons. Adventures of Huckleberry Finn has been repeatedly restricted in American high schools, not least for its frequent use of the word "nigger", which was in common usage in the pre-Civil War period in which the novel was set.

A complete bibliography of his works is nearly impossible to compile because of the vast number of pieces written by Twain (often in obscure newspapers) and his use of several different pen names. Additionally, a large portion of his speeches and lectures have been lost or were not written down; thus, the collection of Twain's works is an ongoing process. Researchers rediscovered published material by Twain as recently as 1995.

IT SEEMS THAT SOMETHING NEW WAS UNCOVERED IN THE PAST 12 MONTHS...SEE THE FORMIDABLE SITE ABOVE

[AnneD]

86. If Mark Twain were alive today.....

he would be very old.....

But aside from that, I think he would fit right in. I could see him paling around with Jon Stewart, George Carlin, and Steve Colbert. He would be quietly raising money to help Richard Prior. He would be like Art Buckwald, columnist and author and of course......

Hal Holbrook would be an out of work actor.

He was a true American original.

[Demeter]

87. Mark Twain Was the Last American Man Who LIKED Women

His courtship and married life are the essence of romance. The loss of his wife and daughters killed him.

And he was so open and free of fraud. Would any of our Wall Street fraudsters forsake the get-out-of-jail free card of bankruptcy and work to repay all creditors? Don't make me laugh. And he didn't go into debt for frivolous reasons. He didn't live by fraud.

[AnneD]

89. He did like the ladies-in a good way...

He viewed boys more like Tom and Huck and didn't have much use for them (until they grew up a tad). I have male friends that are like that as are my brothers. Now don't get me wrong, I love my nephews as we all do. But nieces are special. Once those little rose bud hands grab your finger for the first time-your heart is never the same.

[Demeter]

97. By the Way, Workers of the World--Happy May Day!

Next year, in Eutopia!

[Demeter]

102. Early journalism and travelogues

Cabin in which Twain wrote Jumping Frog of Calaveras, is located on Jackass Hill in Tuolumne County. Historical marker and interior view available.

Twain's first important work, "The Celebrated Jumping Frog of Calaveras County", was first published in the New York Saturday Press on November 18, 1865. The only reason it was published there was that his story arrived too late to be included in a book Artemus Ward was compiling featuring sketches of the wild American West.

After this burst of popularity, Twain was commissioned by the Sacramento Union to write letters about his travel experiences for publication in the newspaper, his first of which was to ride the steamer Ajax in its maiden voyage to Hawaii, referred to at the time as the Sandwich Islands. These humorous letters proved the genesis to his work with the San Francisco Alta California newspaper, which designated him a traveling correspondent for a trip from San Francisco to New York City via the Panama isthmus. All the while, Twain was writing letters meant for publishing back and forth, chronicling his experiences with his burlesque humor. On June 8, 1867, Twain set sail on the pleasure cruiser Quaker City for five months. This trip resulted in The Innocents Abroad or The New Pilgrims' Progress.

This book is a record of a pleasure trip. If it were a record of a solemn scientific expedition it would have about it the gravity, that profundity, and that impressive incomprehensibility which are so proper to works of that kind, and withal so attractive. Yet not withstanding it is only a record of a picnic, it has a purpose, which is, to suggest to the reader how he would be likely to see Europe and the East if he looked at them with his own eyes instead of the eyes of those who traveled in those countries before him. I make small pretense of showing anyone how he ought to look at objects of interest beyond the sea – other books do that, and therefore, even if I were competent to do it, there is no need.

In 1872, Twain published a second piece of travel literature, Roughing It, as a semi-sequel to Innocents. Roughing It is a semi-autobiographical account of Twain's journey to Nevada and his subsequent life in the American West. The book lampoons American and Western society in the same way that Innocents critiqued the various countries of Europe and the Middle East. Twain's next work kept Roughing It's focus on American society but focused more on the events of the day. Entitled The Gilded Age: A Tale of Today, it was not a travel piece, as his previous two books had been, and it was his first attempt at writing a novel. The book is also notable because it is Twain's only collaboration; it was written with his neighbor Charles Dudley Warner.

Twain's next two works drew on his experiences on the Mississippi River. Old Times on the Mississippi, a series of sketches published in the Atlantic Monthly in 1875, featured Twain’s disillusionment with Romanticism. Old Times eventually became the starting point for Life on the Mississippi.

[Roland99]

112. Greece agrees to historic bailout by euro zone and the IMF

Greece agrees to historic bailout by euro zone and the IMF
http://www.marketwatch.com/story/greece-accepts-historic-financial-rescue-reports-2010-05-02

Greece reached an agreement under which it would accept a bailout package of direct loans from euro-zone countries and the International Monetary Fund, media reports on Sunday said.

The reports put the potential value of that package at 100 billion to 120 billion euros ($132.5 billion to $159 billion) over three years.

...

Addressing the public, he said, "I want to tell Greeks very honestly that we have a big trial ahead of us. ... he years ahead are difficult but we will make it," Reuters reported.

This is the first time that a member of the 16-nation euro zone resorted to a financial bailout, and the political struggle about whether to rescue Greece has been bitter.

[Demeter]

113. Anybody Think this is a Good Idea?

Maybe the Greeks should have just defaulted.

[Demeter]

116. That's another Weekend Wasted

While I should be posting more, there's so many other things waiting for attention.

I am frankly horrified each week by the levels of stupidity, cupidity, and just plain evil that we find. Even the good news is horrifying.

I wonder if there is a practical limit as to how many things one can neglect and ignore simultaneously? Infinity minus one?

Next weekend is of course Mother's Day. See you then!

[bread_and_roses]

117. apologies if already posted - I've not been around much - "The Rescue That Really Worked"

http://www.newsweek.com/id/236807

... What was Norway's secret?

Our GDP did fall during 2009. But it started to grow again at the end of 2009. The important thing is we have managed to keep unemployment down, the lowest unemployment in Europe. It's now at 3.3 percent which is not much higher than before. The reason is we conducted a classical countercyclical policy when the financial crisis hit Norway. We increased demand by reducing the interest rate from 5.75 percent to 1.25 percent and we increased demand by expanding the fiscal stimulus.

... we have are strong and responsible trade unions

... Banks are only 2 percent of your country's economy ... we have good regulations covering the whole financial sector. One lesson we have learned from other countries is that if you have regulations not covering the whole sector, you create loopholes.

... The reason we have this sovereign fund is we have saved most of the oil revenues rather than spend them on tax cuts. Our value-added tax is 25 percent and gasoline price is $8 per gallon.

on edit: forgot to add all emphasis added

Norway is ranked the best place to live by the UN so it doesn't sound like the VAT & gas prices are hurting their citizens too awful much and I'd guess they have national health care, etc. It is too bad that the wealth is based on fossil fuels (off-shore, too, I think? - the degree of my ignorance when I have not looked things up is appalling) - but at least the citizenry is getting SOMETHING out of it. And are they not whalers, too? (alas). No place is perfect, but at least it doesn't sound like the Vampire Squid have the country in a stranglehold.

[Demeter]

118. It was in queue, thanks for taking it up