Are you a snarker? Do these meeting matter? Why are we having these "potemkin meetings"?
The meeting should be public.
Fuck you Ludwig.
....this is nice - you can have both comment forms open at the same time.
From a previous thread, but illustrates one of my beliefs about humans.
Humans often think they have power and control over a stable and defined reality. Sure.... why not *S*
Keep on trying.. create 'new' banks, try to revive old networks, try to organize 'potemkin meetings'. Let us see where that takes you..
"Well now I suppose the media will have to laugh at themselves, as many outlets from Newsweek to the Financial Times of London are openly discussing the creation of a "bank of the world" that will control economic policies of every nation."
Stress test outcomes:
95% probability: everybodiy's healthy, just trust us
5% probability: we found some bad apples, and they were crushed for cider last night. We didn't remove the worms though.
I agree that the results should be made public. There is a "confidence" problem, along with other problems. Only a belief that "government knows best" could justify keeping the results secret. We now know that there are many people outside government who are capable of commenting knowledgeably about these banking problems.
You can spell confidence with CONfidene
I don't know how much support there will be for keeping the results private if they need to ask for a significant amount of new money.
They can make a good argument that it will jeopardize the banks. But if they ask for a lot of money to help who-knows-which-banks, people might accept that the whole system really is screwed. That might be worse than sacrificing an individual bank.
This whole thing is going to be nothing more then a scam, fraud and lies.
The March 31st headline from Reuters reads: Some bank stress test data to be made public
The text says: "I think when we're done with it, there will be definitely be some information that will be provided at the end of it, but exactly what that will be, and when it will be provided, will come forth later," said [U.S. Comptroller of the Currency John] Dugan, who supervises some of the nation's largest banks."
All of which tells us we don't know anything more about it today than we knew on March 31st.
"I think serious efforts will be made to respect the confidential nature of the test and its results," [Ludwig] said, but added that "there is a real danger that the results of the stress test are uncovered and this roils the markets."
This is what they said about publishing the list of AIG counterparties. The list was published. Did the markets collapse? Nope, they continued to rebound.
The only issue with publishing the results is the issue of credibility of those results.
"This whole thing is going to be nothing more then a scam, fraud and lies."
Well, I was thinking there would also be useful-idiot apologists, industry participants talking their book in the media, and at least one pundit using this event to demagogue his political agenda, but maybe that all falls within your observation...
This is a charade that has gone on far too long. If a bank is undercapitalized and can't come up with private capital then simply wipe out common, preferred, unsecured debt and the remaining bondholders get a haircut until there's sufficient capital. If that still doesn't pencil out then nationalize and dice up the carcass. It's criminal to have taxpayers subsidize losing investments.
reptillian wrote on Sun, 04/05/2009 - 2:54pm.
No Sudden Moves
Wow, Dowd with even less snark. hoocoodanode. Obama must have bewitched Dowd (yet another crime to attribute to him).
I have an appropriate name for such stress tests and meetings.
"Potemkin Tests" and "Potemkin Meetings"
No transparency == No resolution.
I don't know if this will be "the one" but "the one" is coming when the administration puts out a report and no one even bothers. I thought it was foolish the way the previous administration burned through international "goodwill." The way this administration is burning through domestic goodwill is frightening.
"there is a real danger that the results of the stress test are uncovered and this roils the markets."
You can't make this stuff up. This man advises financial firms. Only good news should be made public.
Reptillian
The White House and keeps telling us to trust them and they know best. Anyone outside of the government (Krugman, Roubini, Kramer, bloggers) who has a different opinion is told to "shut up"
I guess if they make the argument that the results have to be kept secret, just give us more money to allocate to those who need it, then they get around Congress adding any conditions like compensation caps. They can't do anything to participating banks that might distinguish them specifically as being at-risk.
Some, here, have said that a "Hitler" is comiong. If there is going to be an American Hitler, it may well be Sarah Palin.
Hereis the latest news summary. Apparently, there are problems with the father of her grandchild, not to mention that her sister-in-law has been arrested for burglary. But she is -- or was, during the campaign -- a most excellent demagogue. One needs to look no further than a video of her tugging at a $150K outfit while proclaiming that she is a "real American" to see this.
Rob Dawg Yogi
the whole purpose is to give us a specter of transparency. Smoke and Teleprompters
I maintain my position that the "stress test" to assure investors and the public that the banks balance sheets are clean, is not that at all.
They cannot provide enough capital to clean up the balance sheets, too much is needed for it to be accomplished. They can't pick and choose who lives at this point. They're going to have a hard enough time closing a few thousand small banks while forcing mergers on the rest, let alone dealing with the big ones.
They're either playing for time, getting more information (so that they can keep things going as long as possible, and then be aware when they've run off a cliff), using the whole procedure as leverage (or using new found information for leverage), or simply distracting the public and congress while they continue to spend/guarantee using dubious treasury/fdic/federal reserve programs
Am I really that alone in this opinion?
What a crap article. Yah, right, the Obamasiah is going to save us...
We've got the Aegean stables here, and not a Hercules in sight.
Anonymous @ 3:11pm
Could you enlighten me as to the reason why you chose to post?
EvilHenryPaulson wrote on Sun, 04/05/2009 - 3:09pm.
...They're either playing for time...
Am I really that alone in this opinion?
I've been pushing this meme for months. Remember that kid in 7th grade with the late book report? Every time he bargained for more time the promises of the results grew ever grander.
EHP: They cannot provide enough capital to clean up the balance sheets, too much is needed for it to be accomplished. They can't pick and choose who lives at this point.
I fully agree that the nation/world has enough capital to clean all sheets.
But I do think they can and will pick and choose who lives (and dies). Geithner served the tennis ball over the net hard today when he said those that needed extensive help might have to lose some boards/execs. I doubt that was a casual slip of the tongue. I'm beginning to think that some giants might be hacked up and sold off in pieces (which would be a very good moral lesson and helpful financially).
Did I miss something?
Public companies are required to disclose material information regarding their financial status. Since when did we lower our standards to the point where solvency is immaterial?
The system is so broken that all landmarks are lost, and we get statements like CR's "I think the stress test results should be public."
No, we need quarterly, audited, certified, marked-to-market financial statements will nothing hidden off the books and no side letters and no fraud.
But I am old fashioned.
Sara Palin must have the lefties scared to death. Four years till the next election and they are already trying to destroy her credibility from others actions. The hatred of these people is unreal.
"Am I really that alone in this opinion? "
I thought that was about the consensus here.
It's the Augean stables...the Aegean is the sea...just sayin'
We've gone beyond regulatory capture into something like regulatory suspension. The problems with the banks' balance sheets -- real or perceived, and at this the distinction is probably lost -- have created a threat so overwhelming that the regulators cannot act. They are suspended, feet pedaling furiously in the air, unable to get any traction whatsoever.
Sorry, real. 1.28 quadrillion says the wsj.
EHP is correct to mention the Aegean Sea. He is just thinking forward to solutions. But how do we flood K Street with it?
Am I really that alone in this opinion?
FWIW, my view is a lot more cynical - The Treasury still thinks this is a liquidity problem, but they yielded to the public pressure to confirm it is not a solvency problem. They are not actively trying to stress the balance sheet and size the problem, they are doing what they think needs to be done to avoid "roling the markets".
Lobbyi$t Bend Over wrote: Sara Palin must have the lefties scared to death. Four years till the next election and they are already trying to destroy her credibility from others actions. The hatred of these people is unreal.
One man's hatred is another man's concern for the nation. I don't think Sarah Palin is credible. Obama is capable of holding a news conference, if nothing else. That tends to raise the bar beyond Palin's reach.
lobbyi$t Ben Dover wrote on Sun, 04/05/2009 - 3:20pm.
Sara Palin must have ....
Nota bene. Mention of the "mayor" of what would be the 17th largest city or the 76th largest MSA or the 89th largest county is a signal to stop reading the comment.
A reader emailed me this:
One more point worth making - Results of the stress tests, especially if they show potential capital shortage, surely constitute a reportable material event and therefore must be publicly disclosed to the SEC to protect the shareholders, who are likely to be diluted.
It is not just the matter of public trust and fairness, it is the SEC law.
I think that is an important point.
best to all.
I tend to agree with Rob frequently anyway, but especially now on the subject of public confidence.
Simply can't get my mind around the high-stakes gamble here. Assurances that the undisclosed data is not too damaging are up against coming developments in which substance overcomes the plentiful talk. I don't think either Geithner or the President can rely on diverting attention or on a weak collective memory in the event.
Thanks CR, they better change that law fast...
I don't see the same people screaming about Obama's illegal Aunt? Obama is nothing but a daily talk show. I haven't seen him as credible from the first campaign speech I saw. He got elected.
let's call it a freudian slip with the Aegean / Augean
jimPortlandOR,
They can't pick and choose who lives/who dies, not only because of systemic risk but because they made it very clear they would not allow another large player to fall. If they break that, all pretence at cooperation is gone.
To bring just the big banks' balance sheets current, they need several trillion in cash. They can't get that full amount pass Congress and investors without being overcome by a responding force. Never mind that default rates are still climbing and recovery rates falling on top of movements that were initially presumed impossible.
If they knew they could recapitalize them into safety, this whole crisis would have been wound up during a weekend retreat because there are very good incentives to have acted quickly. The fact such action has not occurred, speaks volumes in support of my initial position.
lobbyi$t Ben Dover writes: ...
Your real name is Lobbyi$t , right? Do you think we're stupid? Are you a snarker?
I think we will get a national security argument, CR. (If they took the stress tests seriously.) The Fed has some experience with this one.
One more point worth making - Results of the stress tests, especially if they show potential capital shortage, surely constitute a reportable material event and therefore must be publicly disclosed to the SEC to protect the shareholders, who are likely to be diluted.
It is not just the matter of public trust and fairness, it is the SEC law.
this message is hereby censored. forget you ever read it.
Whoops! Your real name is Lobbyi$t Bend Over ?
Confidence surveys report a single unified number, but in reality there are many contradictory and overlapping confidences. Confidence for the Fox News (only) viewer is quite different than that for close market watchers.
IMO, the greatest fear that the administration has are (1) a run on banks generally (2) the true extent of the bad debt that is held on individual, pension accounts, and bank balance sheets would be disclosed. Either would be hard to contain, and both are politically fatal and economically have the potential for catastrophe.
One way of doing an end run around the SEC reporting without using the "I am the law" tactic:
Collect the data, look at it, do not compile a final report or any 'results'...
Another way to avoid SEC disclosure is not to tell the financial institutions the results for their institutions. No info, no reporting.
EHP: They cannot provide enough capital to clean up the balance sheets, too much is needed for it to be accomplished.
This is my sense from the maneuvering, and refusal to take the problem head on. But how much would it take? A few trillion to fill mortgage holes, but how much more for all the derivatives? Has someone tried to estimate this, or is it just too opaque to even make an order of magnitude, back of the envelope guess?
I see life as snark. Everybody has a angle they are selling , generally for their own reasons.
OT: for your Sunday night viewing pleasure:
Tonight at 9:00 EDT, National Geographic will present its new documentary, "Exporer: Inside Guantanamo," a two-hour presentation filmed during three weeks at the prison during August, 2008
If FASB can modify accounting rules, why can't SEC suspend some of its rules?
It is all for the greater good, right?
Another way to avoid SEC disclosure is not to tell the financial institutions the results for their institutions.
Bingo. And this appears to be the procedure. A party can file a FOIA request with the Treasury department, but the response will be the same as the Fed suit.
Obama the no hope candidate.
The reason there is a financial crisis is because the real value of assets did not match the value given to them by the system in place to determine the asset values. Perfect examples are AAA ratings for CDOs of MBSs or houses in the bubble.
There is no reasonable argument to be made that public information about the real status of publicly traded companies or companies on life support from the American Taxpayer should remain secret while they get to use the capital of the shareholders or the taxpayer. This secrecy has to stop. The markets are down and banks will not lend to each other because they cannot trust each other or other borrowers to repay. Why do a stress test? If the stress test shows who cannot be saved, then eventually that will become known when the decision is to close, bankrupt or takeover the bank.
Well, Lobbyi$t Bend Over -- or Ben Dover, whcihever you prefer -- how would you advise Governor Palin to deal with the fallen price of oil? Surely, the price decline will affect the oil royalties that the state of Alaska receives and, thus, the amount, that can be given to each resident annually. How will a smaller payout affect the governor's popularity? Could the governor get it together and answer questions at a news confernece about this?
Bond Girl, interesting ... national security. Hmmm ... I don't buy it.
All, please no personal attacks.
best wishes.
I like to see Gitmo not closed, but converted. It should be the holding facility for the Manhattan borough white collar indictees.
Anyone wonder why SEC, DOJ/FBI and other regulators haven't brought any criminal fraud cases except for Madoff?
Surely there are thousands who could be prosecuted, but the silence is telling.
Confidence levels would zoom upward with some Citi, JPM and BOA exec 'cooling' their heels in July in Gitmo.
CR,
In all my years of reading your observations this your most insightful.
"Materially reportable event" is likely to be the subject of much attention very soon.
This may be the straw that breaks the camel's back. We can only hope the conflict is "contained" to within the executive and will not spill out. We've seen historic inflection points for years. To date they've chosen maximum risk and least return with predicable consequences.
IMO any exemption from SEC reportable events for the stress tests would trigger wholesale disassociation with the US financial markets.
Another way to avoid SEC disclosure is not to tell the financial institutions the results for their institutions.
From FAQ
Q9: What recourse does a financial institution have if it disagrees with the outcome of the capital assessment?
A: The capital assessment is part of the supervisory process and thus subject to the same framework used for bank examinations or bank holding company inspections. There will be ample opportunity for discussions between the financial institutions and supervisory agencies regarding the loss estimates and earnings forecasts during the capital assessment process.
Remember - stress tests are conducted by the banks. The regulators only discuss/validate/challenge the results.
The banks have to know the result of their own stress tests.
"it is the SEC law"
THIS made me laugh so hard. so hard. since there is no enforcement and shallow stafff, i know the outcome.
And, if this does not work for the Pigmen, it can become a matter of national security...
Deadly serious:
FOIA must apply and be pursued with any direct appeal referred to the Supreme Court due to the timeliness and import of the issue.
JimPortlandOR,
http://www.fbi.gov/ucr/ucr.htm
That's a link tot he FBI annual crime report.
White collar crime is the majority, but street crime gets the majority of resources. They simply don't have the staff to prosecute these cases, they are apparently overwhelmed with cases right now as the recession expedites the end of many scams
Even if you redirected the money for 'war on drugs' to 'war on white collar crime', they'll need a long time to add staff with the skills in accounting, law, computers, etc
I of course agree with the sentiment, but a complete overhaul of law enforcement and the legal system is needed
IMO any exemption from SEC reportable events for the stress tests would trigger wholesale disassociation with the US financial markets.
I'd like to believe this Rob Dawg, but given that this hasn't already happened, I'm inclined to think the average investor isn't paying that much attention, and for the professionals it's just part of the game.
"it is the SEC law"
THIS made me laugh so hard. so hard. since there is no enforcement and shallow stafff, i know the outcome.
And, if this does not work for the Pigmen, it can become a matter of national security...
reply
From the agency that brought you the short selling ban...
'nuff said.
Materially reportable event"
they've been whitewashing these events for years. What makes anyone think it's going to hold water now... Sarbanes-Oxley?
FOIA does not apply to supervisory exams.
Sorry.
Remember this? Bloomberg, Fed Defies Transparency Aim in Refusal to Disclose
http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=home
If U.S. attorneys get the green light from the administration there will be prosecutions. Not until then.
The banks have to know the result of their own stress tests.
True, but then the banks knew their financial condition as of December 31st also and I don't recall any admissions of insolvency, just some writedowns and claims that "earnings" will be a challenge in 2009, or words to that effect.
Guantanamo,"
i never got the slang term Git-mo...I do get Guano though....
Personally, I think it would be a very bad decision for them to say nothing about the stress tests. People will assume the worst and act accordingly.
True, but then the banks knew their financial condition as of December 31st also and I don't recall any admissions of insolvency, just some writedowns and claims that "earnings" will be a challenge in 2009, or words to that effect.
Stress tests force banks to forecast their capital position through December 2010 under specific macroeconomic assumptions (ignore the base case, let's take only the more adverse case). This is different from reporting their position as of the end of 2008.
Even if you redirected the money for 'war on drugs' to 'war on white collar crime', they'll need a long time to add staff with the skills in accounting, law, computers, etc
Don't forget the huge number of FBI agents reassigned to chasing phantom terrorists. They would have to be brought back to chasing real criminals first.
CR, comments like this really are out of place, whether coming from Democrats or Republicans. I know a blog on the economy can't ignore politics, but there should be limits. Reading stuff like this makes me proud to be able to say that I don't vote Republicans or Democrats. Voting for a third candidate means I'm not associated with the likes of reptillian. Simply disgraceful.
Pittsburgh shooting -
she told police, he[her son] had been "stockpiling guns and ammunition, buying and selling the weapons online, because he believed that as a result of the economic collapse, the police were no longer able to protect society. Mrs. Poplawski reported that her son only liked police when they were not curtailing his constitutional rights, which he was determined to protect," the complaint said.
http://www.cnn.com/2009/CRIME/04/05/pittsburgh.officers.shot.dog/index.html
Here are the regulations concerning the disclosure of exempted information (e.g. supervisory examinations). Yep, looks like they're protected under current regs.
http://www.fdic.gov/regulations/laws/rules/2000-3800.html#2000part309.6
MrM, yes there is a difference, notably in drawing actual conclusions from the data. I would think, though, that the responsibility of public corporate executives already is to draw reasonable conclusions from the data and report that to the public. The fact that they haven't done that yet causes me to believe that they won't do that going forward.
I don't see the stress tests having a major impact on the way public banks report earnings for the second quarter.
Disgraceful, I'm asking people politely not to attack each other.
I haven't deleted any comments - or banned any posters - for some time. That might change. Now that we have a much better commenting system - with improvements coming shortly - I'll be working on increasing the signal to noise level.
best wishes.
This occured to me today. If I really wanted to know what was up with railroad freight stats. I would study all the published charts, etc. Then I would find the local train watchers group. These are people whose hobby is sitting and watching trains go by and logging them. They are train nuts and they usually have been doing it forever.
So if I was curious about shipments of XXXX to the port of YYYY or vice versa, well, they would know. They could probably give you good estimate of how they thought it was trending also.
reptillian,
Alaska actually set things up fairly well with the Permanent Fund. What is paid out IIRC is based on a five year average of the earnings of the corpus of the fund after the fund has been inflation proofed...the price of oil will impact the 25% of hydrocarbon royalties that are deposited into the fund, as well as what might be availabe to plug into the fund by appropriation (which has happened many times over the years). The corpus of the fund is not available for appropriation by the state constitution, and while the way the fund pays out of the earnings streams is a legislated function, that is the ultimate third rail of Alaskan state politics.
Somebody linked to this article earlier today:
http://www.atimes.com/atimes/Global_Economy/KD03Dj02.html
It has some (real?) numbers on derivatives holdings:
JPMorgan Chase, $88 trillion
Bank of America, $38 trillion
Citibank, $32 trillion
Goldman Sachs, $30 trillion
Wells Fargo-Wachovia Bank, $5 trillion
Britain's HSBC Bank USA, $3.7 trillion
I'm not knowledgeable on these things at all but am trying to learn.
Is the nationalization scenario workable with this many trillions? Are our options a bad 2-3 year depression versus a possible 10 year recession?
To all,
Yes, I understand that we haven't seen much in the way of refusal. What I see is a cusp. Will it be refusal internationally to buy USG debt? Will it be refusal to buy US denominated government obligations? Will it be refusal amongst the unwilling obligated? I have no clue. I do know that one of these will fail in a way that is uncontainable.
If anyone wants to report some White Collar Crime in the US, http://www.fbi.gov/whitecollarcrime.htm
They've got some good info, like under the Hedge Fund Fraud page:
Civil regulatory agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission have identified several indicators of fraud in hedge funds:
• Illiquid investments: investing in a commodity which is not easy to value (incentive to overvalue investment to earn a larger commission)
• Valuation issues: use of related parties to value illiquid investments or use of a non-independent fund administrator
This 1999 report is 6 pages of interesting charts, http://www.fbi.gov/ucr/whitecollarforweb.pdf
eg, Figure 6: White collar crime is popular with white people, and embezzlement is popular with women. *shrug*
The FBI is not who would be doing the white collar crime prosecutions. I would say IRS and Treasury making the case. The courtroom stuff would be assigned to the US Attorneys office and what ever task force or dept worked that.
If any of you are expecting plain vanilla SEC filings to disclose any of the shenanigans, you are simply underinformed - and that is being kind to your mental capacities.
There's way more buried in the regulatory subfilings, and I know some folks here must read Michelle Leder, or maybe not...
The earnings reports that move markets are frauds, plain and simple. No CEO anywhere "said" what they "said" in those filings.
The lawyers wrote it. The "public" call-ins are all with institutional investors and that is who gets their questions answered, is it not?
This chicanery is much more entrenched than, it seems, many here are accepting, and I thought this was a very astute crowd going back a long way.
l know not what to do.
CR,
Do you really believe in these potemkin audits?
signal to noise level.
Dont' fade the Rally!
how's that...
I'm a little surprised people here are considering the possibility of stress test transparency. The success of the administration's plans depend on the lack of it. The minute we know what those toxic assets are, it's over. The stock market hasn't been rallying because of transparency.
The lead time is going to be at least a year. They build a case, present to the individuals attorneys, and get them to roll over on a handful of people. Do that a couple times and you have a lot of people to stand up against a wall. Then you start doing pleas and pick a few for the publicity
sportsfan,
Given the implication of what gets disclosed, the usual practice is - if in doubt, do not disclose unless you legally have to. This is why in the current environment many companies stopped issuing guidance on their expected results. Similarly, the reason why a bank would not publicly comment on its future capital position is because "we just don't know what the future environment will look like, it is just too uncertain".
Stress tests are different. They define specific macroeconomic conditions, which the bank does not have to agree with, and ask the bank to develop a reasonable projection of its capital based under those conditions. Now the bank can't say the outlook is too uncertain.
Firlight2012, those are notional values, if all the derivative had to be paid out. The question is how many will have to be paid out.
Lothar - you are forgetting the power of class action suits
Intended or not, these stress tests are an excellent diversion judging by this thread
Lucifer, not really. Initially I thought it was a good idea, but 1) I think the scenarios are too mild (the "more adverse" is possible, but not the "baseline") - and 2) I think the results have to be made public. Also 3) I think there has to be clear understanding that any seriously insolvent bank will be nationalized.
We've failed on all 3 points. So I'm not optimistic.
best wishes
Intended or not, these stress tests are an excellent diversion judging by this thread
Good point. I am off for something more cheerful, movie or drinks or both
Class-action suits are another fraud on the system. Have you not known what Milberg Weiss did before they blew up and transmogrified into their latest incarnation as named in San Diego?
They are as much in on the downfall of this economy as anyone else frivolusly filing egregious lawsuits against viable companies who just saw their stock swing.
I'm a little bit past being patient with this stuff, and not that it will ever make a difference, but... I will hint where I can and hope other folks take up the cause.
Short of that, well...
Wow CR, you are actually commenting a lot. I used to live for Tanta recognition of a comment.
anotherajh
Even only 5% of the top 5 US banks is almost 10 trillion!
there must be more to this story.
http://thesixthward.blogspot.com/2009/04/fdic-slams-prudent-bank.html
[The banks have to know the result of their own stress tests]
Sure. In fact it's likely that they start with the result and work backwards to come up with the inputs. A charade.
MrM, if the banks don't have to agree with the assumptions behind the stress tests, namely the specific macroeconomic projections (and I agree they don't), then they can project their capital for the Treasury, but still not see that as a likely outcome.
The outcome can still be uncertain when it comes to financial reporting to the public. Absent some further rulemaking, such as requiring the banks to self-report the results of the stress tests, I can see how anything is likely to change with the quarterlies.
The bank's solvency has been an issue going back to the origination of the TAF and yet we still have no transparency related to that program or any since. Why should it change now, law or no law?
p.s.: Denninger's latest identifies a proposed cyber-security law that one-ups the Patriot Act:
http://market-ticker.denninger.net/archives/935-The-Constitution-Dies-To...
I looked in the mail but didn't get my invitation to the C shareholders meeting. They should mail to each household. Every single American is a C shareholder now. Quite an exclusive list.
BTW, anybody know what's happened to FFDIC? Hopefully his daughter's okay and he's spending time with her.
Firlight2012: Even only 5% of the top 5 US banks is almost 10 trillion!
Indeed! Unfortunately I've yet to see a way to approach an estimate. I suppose if it's more than 2%, we can safely conclude it's beyond even a long painful fix, and system reset is inevitable.
Yes, MrM, it is extraordinary how well class action lawsuits uncovered the (hidden) balance sheet weaknesses in Lehman, Bear Stearns, RBS, UBS, AIG, GM, Citi, BOA, Merrill, etc., and served to prevent the current debacle. And now, you suggest, they will help set us on a corrective trajectory without the need for trillions of dollars more in taxpayer subsidies.
Class action lawsuits are blunt swords wielded by self-interested tradesmen. One problem was that class action lawyers lacked the imagination to fathom the depth and breadth of the market frauds that were being perpetrated. In many ways, these attorneys also were compilict, by letting fraudsters off the hook relatively cheap (by paying the lawyers' fees) while the businesses were not required to make any managerial or accountability changes.
Lothar is right - the system is gamed beyond all comprehension and control.
CR,
These 'high functioning' idiots refuse to acknowledge one basic assumption about any functional economic system.
Economic systems are based on trust, measurable outcomes and some degree of rationality.
They are trying to do everything in their power to destroy peoples belief in the system. From lack of transparency, lack of clear plans, obfuscation of data etc.. this cannot end well.
I feel that they still live in an age where the working age population was increasing (60-late 90s) and the internet did not exist (pre 1995). The old tricks do not seem to be working anymore, but they cannot accept the new reality.
CR,
These 'high functioning' idiots refuse to acknowledge one basic assumption about any functional economic system.
Economic systems are based on trust, measurable outcomes and some degree of rationality.
They are trying to do everything in their power to destroy peoples belief in the system. From lack of transparency, lack of clear plans, obfuscation of data etc.. this cannot end well.
I feel that they still live in an age where the working age population was increasing (60-late 90s) and the internet did not exist (pre 1995). The old tricks do not seem to be working anymore, but they cannot accept the new reality.
IBM to Sun: no mas
oops .. accidental repost.
Hey, sounds like some of the Obama supporters are getting a bit antsy and irritated with the O-man.
Terrible, what he is doing, just continuing and expanding the ridiculous actions by Bush: more troops to Afghanistan, more money for the banks.
He took a bad situation, and made it worse.
You can still turn back, O-. But do it very soon.
EVERYONE MUST READ THIS!!!
http://www.pbs.org/moyers/journal/04032009/transcript1.html
Bill Moyers interviewing William K. Black, the senior regulator during the S&L crisis.
Here's a piece:
BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: You are.
WILLIAM K. BLACK: Absolutely, because they are scared to death. All right? They're scared to death of a collapse. They're afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we'll run screaming to the exits. And we won't rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it's foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, "We just can't let the big banks fail." That's wrong.
jg, there's no turning back at this point for Obama or any of us. The system is either resuscitated or it dies.
JPMorgan Chase, $88 trillion
Bank of America, $38 trillion
Citibank, $32 trillion
Goldman Sachs, $30 trillion
Wells Fargo-Wachovia Bank, $5 trillion
I understand many commenters here preach "The End is Near." Based on the derivative exposure, they may be right.
I don't see how nationalization or pre-privatization makes the derivative exposure simply disappear.
Nova, I disliked the JS-Kit interface ... I frequently lost comments. It was a pain.
I'll be participating more again!
Tanta really liked participating in the comments - some of her funniest comments were instant response to other posters! I believe all of those old comments have been transferred over.
best wishes.
The results will not likely be made public unless it leaks and any leaks will be denied. The public cannot handle the truth at this point and the Feds definitely don't trust the public.
Tanta really liked participating in the comments - some of her funniest comments were instant response to other posters!
She had a razor sharp mind with a highly developed sense of the absurd that she could channel through her wit. That was a very rare combination; hence Tanta Vive.
CR, I'm glad to hear that you'll be participating more in discussions as time and circumstances permit.
New Post: Introducing Hoocoodanode Comments
Just letting everyone know about the switch.
best to all.
FFDIC, hello. How's Angela doing?
sportsfan,
It isn't about the derivative exposure or any other particular financial aspect; it's all about the politics. I have and will continue to state that "the system" will fail due to the unwillingness of those in power to face facts and do the right thing. They have absolutely no incentive to do so.
Now, failure can take many forms, so don't read anything too specific in that.
sportsfan, I've always enjoyed the comments ... but I was tired of the problems. I think this will work out great.
best wishes.
FFDIC,
There you are! This topic was definitely something that we needed your insight on. Good to "see" you! Hope all is well with you and yours!!!
JimPortland--don't tell the banks the results.
Wow. That reminds me of the lenders who were doing ninjas whiting out financial information, when they actually had it.
"The old tricks do not seem to be working anymore"
-----
I don't know. Judging by the partisan excuses for Obama so far ("he's being deceived by his appointees"), the old tricks seem to be working pretty good. It''s like watching pro wrestling. Apparently the 80+IQ audience can detect the depths of deception, but not the Smartest Man on Earth.
sportsfan, I say, save the Republic and to hell with the banks.
It will be very painful for all, without a doubt. Oh well, too bad.
FFDIC, hello. How's Angela doing?
I'm happy to report Angela was finally discharged from the hospital, sent home and is undergoing outpatient treatments. We are grateful for you support, prayers, offers of blood donations, and repeated requests for updates. There were many times I did not think she would leave that hospital alive but they saved her young life. Hug your kid.
FFDIC,
Great!!! So happy to hear that!
Wow! Great to hear, FFDIC!
It isn't about the derivative exposure or any other particular financial aspect; it's all about the politics.
TJ, I've said before that I don't know that anybody could do anything to avoid a collapse at this stage.
"the system" will fail due to the unwillingness of those in power to face facts and do the right thing.
I don't pretend to know what 'the right thing' is that the Administration or Congress should be doing.
Bloomberg's latest count has Fed and Treasury spending or guaranteeing $12+T and actually disbursing $4+T to date.
Most of that money is from the Fed, of course, and much of Treasury's part was from the last administration, so one could reasonably call this a bipartisan or nonpartisan effort to stabilize the banking system. If it doesn't work, there will be plenty of blame to go around.
In the meantime, I'm no longer nearly as critical of Paulson as I was. As I've been saying, he must have seen something in the alternative that was both grave and global for him to have taken the actions he did.
I'm really happy for you and the baby and Angela.
I was getting worried when we didn't hear anything.
Hugs.
Great to hear that, FFDIC. Hugging my kids is something I never miss these days (when I'm fortunate enough to see them).
"sportsfan, I say, save the Republic ..."
That is most necessary, isn't it, if by 'the Republic', you mean a republic of law, in which constitutional rights are preserved and proper order is maintained. Without law and order, no society can survive. Even the so-called winners in a lawless society end by devouring one another.
I've had the feeling recently that few of us here understand the forces at work in this national/global drama. I've also had the sense that even the executive branch with all its powers is constrained by the complexity and scale of the struggle underway - a struggle for law and order.
The reality for any debtor is when they can't pay they don't. Time and patience is running out and there will be a universal AH HA moment with many consequences. I've tried to put myself in the shoes of the uber-wealthy bond holders and guess at their motivation and intent. What I've come up with is preserve the status quo until I've set my people up for success in the dissolution of the US and the dollar. Take all you can during the crisis and then be there to pick up the pieces when collapse becomes a reality. Make sure you own the political system and have the armed and trained forces ready to protect your assets.
The wholesale changes or ignoring of our laws and Constitutional guarantees leaves little doubt the "change" we want is approaching rapidly. Unfortunately the expected change isn't anything our unformed opinions imagine or currently grasp. Hunker down and watch. Really, what else can you do?
TJ, I've said before that I don't know that anybody could do anything to avoid a collapse at this stage.
Depends upon what you mean by collapse.
I've stated consistently that a new, "Greater Depression" was inevitable. Some might consider that a collapse, but I would disagree. However, attempting to delay or deny that inevitability risks a true collapse, wherein major economic & political dislocations can occur without warning.
So, on the one hand I'm saying a collapse could have been avoided but the chances of that happening were nil, so ultimately we're in agreement.
Okay?
My contacts report that Chairman Bair will make public comments on CR's new improved 'HOOCOODANODE' commenting system which she reportedly will say is in substantial complicance with all performance measures and does not expect any material deterioration during second quarter 2009. The FDIC board reportedly concurs.
TJ, that was funny. I'm inclined to agree with Pavel's recent comment to the effect that preservation of the Republic under our Constitution should be the most important goal and with Same O's recent comment that really all we can do is watch it happen.
I like my name in smokey blue caps.
"Take all you can during the crisis and then be there to pick up the pieces when collapse becomes a reality."
If that's all they might aspire to, how sad.
I've had the feeling recently that few of us here understand the forces at work in this national/global drama.
I'm not sure anyone really can. However, quite a number of us do understand the potential implications and have proceeded accordingly.
http://www.chron.com/disp/story.mpl/bizarre/6356671.html
Domino's gives away thousands of pizzas by mistake
CINCINNATI — "Bailout" was the magic word as Domino's had to give away thousands of free pizzas because someone stumbled on an online promotion the company scrapped. Domino's Pizza Inc. spokesman Tim McIntyre said Wednesday that the company prepared an Internet coupon for an ad campaign that was considered in December but not approved. He says someone apparently typed "bailout" into a Domino's promo code window and found it was good for a free medium pizza. Word about the code spread quickly Monday night on the Web and 11,000 free pizzas were delivered before it was deactivated Tuesday morning. Cincinnati-area franchise owner John Glass says his 14 stores gave away more than 600 pies, but that Domino's promised to reimburse him.
preservation of the Republic under our Constitution should be the most important goal
Agreed, although the Constitution is already a shadow of it's former self. My hope has always been that a "national BK" would rectify that, too.
FFDIC, et al.
Unlike JS-Kit, if you go to CR's site and reload to catch his most recent post, then click on comments, this tab will not disappear, but the newest comment string will open in a new tab.
FFDIC,
LOL!
re: reducing attacks in comments and increasing S/n ratio:
Very good news. Thanks.
Re class action suits - I never meant to say that they are a sufficient tool to prevent all kinds of abuse. I do say that there will be plenty of hungry lawyers going after banks that did not report negative outcomes of stress tests. One does not have to like the system to use it when needed.
Of course, Treasury and DOJ can give blanket amnesty in this case citing "unusual and exigent circumstances"
That is great news, FFDIC. And living hug your kid...
There will be no disclosure of information that is of value as long as the stress test charade keeps working by buying time. The model has always been to try and obfuscate the truth and let the banks earn their way out of the mess. This has worked in the past and many folks clearly think it will work again. The disclosure of information to shareholders is a nice thought- but is counter to how the system really works. The fact is that regulators are in violation of one of the key principles in which they operate. Prompt Corrective Action has been ignored to continue to try and kick this can down the road. The only way this is going to change is if those calling the shots think that they are going to be implicated in this mess. I think that day will come just not anytime very soon....
In the meantime I think Dylan Rattigan had the best quote describing the situation ""The stock market is and will remain a sideshow, a carnival, fools game until we actually deal with the fundamental problem of the total corruption of our banking system by both our Congress and a few banking executives here on Wall Street."
lobbyi$t Ben Dover wrote on Sun, 04/05/2009 - 4:20pm.
Sara Palin must have the lefties scared to death. Four years till the next election and they are already trying to destroy her credibility from others actions. The hatred of these people is unreal.
Scared to death? I am thrilled to death that this is the best the right wing can do. If she has credibility problems, she needs to look in the mirror, which I suspect she does with great frequency. I just hope she chooses Joe the Plumber as her running mate. He might make her look smart by comparison. By the way, Ben, is your real name Jack Abramoff?
An ex-girlfriend taught me the term "fake it till you make it". Turns out she was a liar and a cheat. Which brings me to the stress tests. If I can't see the outcome, how do I know the gov isn't minimizing how big a hole the banks are in. I want to see all of the skeletons out of the all the closets. Only after we know the magnitude of the problem can we assess if the gov is fixing it properly. Until then, I assume they aren't.
The general public and by extension congress have had enough, and will contribute no more to the Banking elites. The Fed and Treasury know this and therefore will not release stress testing data showing banks needing capital. Just another reason for no meaningful stress test data to be released. As others have said it is a waiting game.
""fake it till you make it""
i don't think the problem with the current administration is that they intentionally lie. The problem initially was in treasury & co being too arrogant to accept their inability to prevent the fall. The current problem is lack of will to go beyond ordinary economic tools and market views common to Wall Street. The best solution would be going AD HOC a hundred percent with various measures until the working one is found. Unfortunately such approach is not politically convenient. So all we get is stubbornness around outdated policies that covers lack of initiative and fear.
Anyway, since market has recovered from fearful valuations and there aren't any rosy earning reports on horizon when will it run out of fuel? (not that there aren't any good deals out there, still calling a top or bottom is a pure speculation at this point. ) What troubles me is that huge part or current rally is linked to financials which are bound to get slaughtered over & over & ....
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The Government's Hand Forced
Geithner and company, having apparently gathered a sufficient amount of data to determine which of the nation's nineteen largest Banks are adequately capitalized, will reportedly convene this week in order to devise a plan of action. The new accounting rules, conveniently implemented just prior to this "meeting of the minds", will be taken into consideration during this decision making process. Given the crucial nature of these tests, along with the Catch-22 that the Government has created for itself, we expect Treasury to take some form of decisive action in the next two weeks.
For starters, we are told that Treasury has all intentions of keeping the results of the stress tests shrouded in secrecy, and away from the judgmental eyes of the Market. Realistically however, the sieve-like tendencies that pervade every level of Government will impair Mr. Geithner's ability to maintain 100% secrecy. The game then, is for Treasury to act upon the results before any Government Insider decides to feed his sense of self-importance by whispering into the ear of a journalist.
Given that the above assumption is correct, we would additionally propose that it is nearly impossible that all nineteen banks managed to "pass" the tests. Furthermore, it is highly probable that at least a few Institutions will be viewed by the stress tests as beyond the point of repair. This being the case, Treasury will be forced to move in and either nationalize or dismantle the most crippled bank(
. Now, due to the anti-nationalization rhetoric that has emanated from Washington, this new rescue effort will likely embody the full spirit of nationalization, while assigning some sort of euphemistic moniker to the action.
In any event, the conclusion of the stress tests has effectively forced the Government's hand. Every day that passes without action will only serve to fuel speculation as to the identity of the "weak links in the chain". This is our humble view.
www.TheValueatRisk.blogspot.com