It must be dawning on most people now that the whole financial services sector is simply one big ponzi scheme - a long running scheme whereby surplus value can be extracted from the rest of us by the global financial elites with little effort. Examples like AIG, the stanford ponzi, Madoff, etc are merely the tip of a much bigger iceberg. Greed prevailed and the illusion of financial value has been stripped bear. The infinite growth of debt has now come up against the finite limits of the earths resources.
Once again...as Ed McMahon would say, "You are Correct, Sir!" Look forward to various forms of Balkanization in the future happening in a neighborhood not too too far from you.
I first heard of Clara Lemlich from the fine PBS Series, "New York, A Documentary Film" by Ken Burns. Of course, the Triangle Shirtwaist Factory fire became the catalyst for the progressive movement underway at the time, which also propelled Al Smith to prominence in New York State.
I worked 18 years for a corporation that employed the Sheet Metal Workers Union. All of us salaried employees knew that our compensation and benefits package were a collateral benefit to the union labor contracts. That was almost 30 years ago, however. I'm not sure that today's corporate salaried employees get that relationship.
We sorely need more Clara Lemlich's, Rose Schneiderman's, Sam Gompers' and Al Smith's today. We need strong labor unions and fair minded bureaucrats in Washington in order to level the "business" playing field. It really does benefit everyone in society when that exists.
Thanks again midtowng for another nostalgic look at our roots.
since it's obviously a ponzi scheme and a scam, how can the U.S. taxpayer be left on the hook to perpetuate the entire system?
People in the 3rd world have been dealing with this dilemma for decades. Their corrupt leader takes on enormous amounts of foreign debts, sometimes to fight useless wars, most times to just line their pockets. Then the impoverished public is left with a government that provides no services, but taxes them mercilessly to pay interest on the debt.
It's immoral to make these poor people pay for these debts, but America has often sent its army in if they refused to pay.
Now the game has come home to the developed world. But things aren't going to work the same, because an entire world that is impoverished and in debt servitude is a very unstable world. There will be violence.
The quality of a derivative instrument is only as good as the actually data it consists of. All the other analytics are "derived" from that underlying data. Now, it may not have been 100% fraud, but a lot of things go into scoring a mortgage besides Fair Issac. School district, employer size, security, demographic composition. Many of these statistical methods are never used at the mortgage committee level. It's basically unregulated, making more art than science.
I think we should all do Swedish. I'm referring to Sweden taking the swiftest action for nationalization, they wiped out the shareholders, fired all of the executives and they sure didn't pussyfoot around...and they had the least damage to their overall GDP.
But when a world is built on fiction it will melt down but I am starting to think this "oh we would have a global financial meltdown, the world will end as we know it", was a mistake, unless they are decoupling this mess behind the scenes before they "blow up the building" on institutions like AIG and Citigroup....but it sure does not look like that's what is going on.
I think it is time to preserve the segments of the financial system that are relatively healthy and write-off the rest. It is over for the financial conglomerates.
I'm not sure what the question was yesterday but the New York Times has written a host of articles explaining the details.
The Origins of Subprime, derivatives is one of the top read posts on EP and is really long, going into the history of derivatives and some of these vehicles. (A professor did a drive by post and it appears reposted her article here).
Also said that it was financial industry lobbyists and they are still so powerful (which is amazing because they are using taxpayer money) that's why they are not nationalizing the banks and throwing these people out.
OMG, where to begin. Outraged? Hell yes! Pissed? You betcha! How about we bring back the stocks and put all the bastards in them. Since there are so many of the SOBs, it would probably solve the unemployment problem as well. BTW Robert, did you follow the links to the Times Topics for derivatives and credit default swaps? They answered my questions regarding yesterday's thread on CDOs.
This paragraph really drives home our dilemma:
Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going. Indeed, that may be the single most important reason it can’t let A.I.G. fail. If the company defaulted, hundreds of billions of dollars’ worth of credit-default swaps would “blow up,” and all those European banks whose toxic assets are supposedly insured by A.I.G. would suddenly be sitting on immense losses. Their already shaky capital structures would be destroyed. A.I.G. helped create the illusion of regulatory capital with its swaps, and now the government has to actually back up those contracts with taxpayer money to keep the banks from collapsing. It would be funny if it weren’t so awful.
If I were the administration, I would get out in front of this tsunami and start speaking frankly, now! The people who perpetrated this scam need to be brought into the sunlight and absolutely, unmercifully grilled and prosecuted. The continued assurances, platitudes and non-speak from Bernanke, Geithner and Summers will not suffice. I would think that Congress will be compelled to start investigations real soon.
And it is not rich vs. middle class and poor. It is a predatory class vs. middle class and poor. This predatory class is what has hijacked our economy.
Robert Johnson said on Bill Moyers Journal that he is very concerned that powerful moneyed interests are influencing bailout policy decisions and so am I. Geithner is going out his way to preserve this failed system.
When is someone going to explain to the public exactly how AIG got into this mess . . . fraud or mismanagement. It is always somebody else's fault then these companies fail. Now it's a math equation's fault? At the end of the equation, AIG was the mullet. To learn more go to www.newyorkshockexchange.com
kind of a "how worse can it get, you are internally evaluating these CDO ABS @ 95% loss and 78% loss".
I have to agree, if it's worthless, take the pain, deal with the disaster and at least move on to build.
I don't know the inner workings of structured finance but it's clear enough to know that unregulated markets do not work at all...
and it also appears there should be some serious monitoring on use of probability models of any kind! If the Fed/SEC/FDIC/Congressional experts on hand cannot understand the model....well, maybe it's not a good idea to create a new "market" based on it!
and worse, I've been flaming one IBM as well as G.E. who are obviously running ad campaigns to get stimulus money because they are notorious to even promise! Promise to create U.S. jobs to get federal, state contracts...as in writing, on paper, agreed to, part of the deal...
and they do not create the jobs and yet the states never seem to say "hey, screw you IBM, give us back our incentive package".
"Nothing from Nothing leaves nothing..." To build from the bottom-up, we must assume zero cost in many cases as a starting point. When Demand=0, Value=0, regardless of P (Price). A growing pile of manure in a season when fields are fallow is a good example. (It may have tons of nitrogen, but it's only value is relative to its utility.)
Another problem with most of these securities is...they have no comparables, so there's no possibility to ratiocinate their values. I once had a prof that used to say, "If I demand water, and quantity=0, then price=thirst." Absent a grasp of the ROI for these, the
natural valuation starting point should be zero.
Thank you Sean Hannity! The man's been in office less than a month. Take a chill pill, please. This right wing hysteria lacks dispassionate objectivity:-)
Outsourcing is on the rise, according to BLS numbers. The major companies doing it to cut costs here are Citigroup, Lockheed Martin, IBM, and a number of hi-tech manufacturing players. It may be that the current incentives (tax and otherwise) are not sufficient to stop this enormous outflow of U.S. jobs that's occurring right before our eyes.
It must be dawning on most people now that the whole financial services sector is simply one big ponzi scheme - a long running scheme whereby surplus value can be extracted from the rest of us by the global financial elites with little effort. Examples like AIG, the stanford ponzi, Madoff, etc are merely the tip of a much bigger iceberg. Greed prevailed and the illusion of financial value has been stripped bear. The infinite growth of debt has now come up against the finite limits of the earths resources.
Once again...as Ed McMahon would say, "You are Correct, Sir!" Look forward to various forms of Balkanization in the future happening in a neighborhood not too too far from you.
I first heard of Clara Lemlich from the fine PBS Series, "New York, A Documentary Film" by Ken Burns. Of course, the Triangle Shirtwaist Factory fire became the catalyst for the progressive movement underway at the time, which also propelled Al Smith to prominence in New York State.
I worked 18 years for a corporation that employed the Sheet Metal Workers Union. All of us salaried employees knew that our compensation and benefits package were a collateral benefit to the union labor contracts. That was almost 30 years ago, however. I'm not sure that today's corporate salaried employees get that relationship.
We sorely need more Clara Lemlich's, Rose Schneiderman's, Sam Gompers' and Al Smith's today. We need strong labor unions and fair minded bureaucrats in Washington in order to level the "business" playing field. It really does benefit everyone in society when that exists.
Thanks again midtowng for another nostalgic look at our roots.
There is a flaw in the calculations in that houses destroyed for what ever reason is in the range of 600-700,000 anualy
an abstraction. This way they can mask the parts that don't necessarily produce the outcome they like. (ex. Real GDP, Core Inflation)
It has always been about class warfare.
People in the 3rd world have been dealing with this dilemma for decades. Their corrupt leader takes on enormous amounts of foreign debts, sometimes to fight useless wars, most times to just line their pockets. Then the impoverished public is left with a government that provides no services, but taxes them mercilessly to pay interest on the debt.
It's immoral to make these poor people pay for these debts, but America has often sent its army in if they refused to pay.
Now the game has come home to the developed world. But things aren't going to work the same, because an entire world that is impoverished and in debt servitude is a very unstable world. There will be violence.
The quality of a derivative instrument is only as good as the actually data it consists of. All the other analytics are "derived" from that underlying data. Now, it may not have been 100% fraud, but a lot of things go into scoring a mortgage besides Fair Issac. School district, employer size, security, demographic composition. Many of these statistical methods are never used at the mortgage committee level. It's basically unregulated, making more art than science.
I think we should all do Swedish. I'm referring to Sweden taking the swiftest action for nationalization, they wiped out the shareholders, fired all of the executives and they sure didn't pussyfoot around...and they had the least damage to their overall GDP.
But when a world is built on fiction it will melt down but I am starting to think this "oh we would have a global financial meltdown, the world will end as we know it", was a mistake, unless they are decoupling this mess behind the scenes before they "blow up the building" on institutions like AIG and Citigroup....but it sure does not look like that's what is going on.
I think it is time to preserve the segments of the financial system that are relatively healthy and write-off the rest. It is over for the financial conglomerates.
We need to bite the bullet and end this failed financial system and start over. It is not worth saving.
I'm not sure what the question was yesterday but the New York Times has written a host of articles explaining the details.
The Origins of Subprime, derivatives is one of the top read posts on EP and is really long, going into the history of derivatives and some of these vehicles. (A professor did a drive by post and it appears reposted her article here).
Also said that it was financial industry lobbyists and they are still so powerful (which is amazing because they are using taxpayer money) that's why they are not nationalizing the banks and throwing these people out.
Last video in this Friday Night Videos post is his interview.
OMG, where to begin. Outraged? Hell yes! Pissed? You betcha! How about we bring back the stocks and put all the bastards in them. Since there are so many of the SOBs, it would probably solve the unemployment problem as well. BTW Robert, did you follow the links to the Times Topics for derivatives and credit default swaps? They answered my questions regarding yesterday's thread on CDOs.
This paragraph really drives home our dilemma:
If I were the administration, I would get out in front of this tsunami and start speaking frankly, now! The people who perpetrated this scam need to be brought into the sunlight and absolutely, unmercifully grilled and prosecuted. The continued assurances, platitudes and non-speak from Bernanke, Geithner and Summers will not suffice. I would think that Congress will be compelled to start investigations real soon.
And it is not rich vs. middle class and poor. It is a predatory class vs. middle class and poor. This predatory class is what has hijacked our economy.
Robert Johnson said on Bill Moyers Journal that he is very concerned that powerful moneyed interests are influencing bailout policy decisions and so am I. Geithner is going out his way to preserve this failed system.
When is someone going to explain to the public exactly how AIG got into this mess . . . fraud or mismanagement. It is always somebody else's fault then these companies fail. Now it's a math equation's fault? At the end of the equation, AIG was the mullet. To learn more go to www.newyorkshockexchange.com
kind of a "how worse can it get, you are internally evaluating these CDO ABS @ 95% loss and 78% loss".
I have to agree, if it's worthless, take the pain, deal with the disaster and at least move on to build.
I don't know the inner workings of structured finance but it's clear enough to know that unregulated markets do not work at all...
and it also appears there should be some serious monitoring on use of probability models of any kind! If the Fed/SEC/FDIC/Congressional experts on hand cannot understand the model....well, maybe it's not a good idea to create a new "market" based on it!
and worse, I've been flaming one IBM as well as G.E. who are obviously running ad campaigns to get stimulus money because they are notorious to even promise! Promise to create U.S. jobs to get federal, state contracts...as in writing, on paper, agreed to, part of the deal...
and they do not create the jobs and yet the states never seem to say "hey, screw you IBM, give us back our incentive package".
Yes they surely will.
"Nothing from Nothing leaves nothing..." To build from the bottom-up, we must assume zero cost in many cases as a starting point. When Demand=0, Value=0, regardless of P (Price). A growing pile of manure in a season when fields are fallow is a good example. (It may have tons of nitrogen, but it's only value is relative to its utility.)
Another problem with most of these securities is...they have no comparables, so there's no possibility to ratiocinate their values. I once had a prof that used to say, "If I demand water, and quantity=0, then price=thirst." Absent a grasp of the ROI for these, the
natural valuation starting point should be zero.
Thank you Sean Hannity! The man's been in office less than a month. Take a chill pill, please. This right wing hysteria lacks dispassionate objectivity:-)
Outsourcing is on the rise, according to BLS numbers. The major companies doing it to cut costs here are Citigroup, Lockheed Martin, IBM, and a number of hi-tech manufacturing players. It may be that the current incentives (tax and otherwise) are not sufficient to stop this enormous outflow of U.S. jobs that's occurring right before our eyes.
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