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As Bruce Krasting disclosed yesterday, Goldman's Josh Birnbaum "slipped" when disclosing the firm's prop equity positions, in listing the companies his firm was actively shorting. We hope none of these were naked shorts as that would not reinforce the case of prudent risk management by Goldman's discount window-accessible hedge fund (in other words, the entire firm).
....the firm had a big delta short in fins offset with no financial longs
April 27, 2010 | naked capitalism
That’s a great choice you give us to describe those employed in the financial services industry, either master thieves and deceivers like Goldman, or feckless bumblers like Goldman’s victims.
And these are the same guys who control the country’s financial future and wellbeing, and knock down multi-million dollar pay packages for either being 1) crackerjack liars or 2) stupid?
Making the rounds, a little Goldman humor (ht Brian):"You want the truth? You can't handle the truth. Son, we live in a country with an investment gap. And that gap needs to be filled by men with money. Who's gonna do it? You? You, Middle Class Consumer?
Goldman Sachs has a greater responsibility than you can possibly fathom. You weep for Lehman and you curse derivatives. You have that luxury. You have the luxury of not knowing what we know: that Lehman's death, while tragic, probably saved the financial system.
And that Goldman's existence, while grotesque and incomprehensible to you, saves pension funds. You don't want the truth. Because deep down, in places you don't talk about at parties, you want us to fill that investment gap. You need us to fill that gap.
"We use words like credit default swaps, collateralized debt obligation, and securitization? We use these words as the backbone of a life spent investing in something. You use 'em as a punchline. We have neither the time nor the inclination to explain ourselves to a commoner who rises and sleeps under the blanket of the very credit we provide, and then questions the manner in which we provide it!
We'd rather you just said thank you and paid your taxes on time. Otherwise, we suggest you get an account and start trading.
Either way, we don't give a damn what you think you're entitled to!"
Here is an image the ZH crew might love.
Chris Ware's rejected Fortune cover
It's not surprising that the editors of Fortune rejected cartoonist Chris Ware's fantastic cover for the May 2010 issue. It contains too much truth for comfort. Also, it hearkens back to the golden age of Fortune as an exemplar of beautifully designed and illustrated magazines, and so would have invited unkind comments about the magazine's typical current level of design aesthetics.
From Indie Pulp, reporting on the C2E2 panel that Ware participated in:
[Ware] showed a cover he did for Fortune magazine which was supposed to be on the Fortune 500 issue. He accepted the job because it would be like doing the 1929 issue of the magazine, and he filled the image with tons of satirical imagery, like the U.S. Treasuring being raided by Wall Street, China dumping money into the ocean, homes being flooded, homes being foreclosed, and CEOs dancing a jig while society devolves into chaos. The cover, needless to say, was rejected.
FULL SIZE IMAGE AVAILABLE AT LINK HERE (AND IT'S DELICIOUS):
April 24, 2010
Time for a good chuckle: Have a read of this excerpt from TIME magazine, circa 1933, about the evils of FDIC deposit insurance:
“Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed by both houses of Congress would rivet upon their institutions what they considered a monstrous system of guaranteeing bank deposits. Such a system, they felt, would not only rob them of their pride of profession but would reduce all U. S. banking to its lowest level. They saw their deposits which they had spent a lifetime to build up and protect with their good names confiscated by the Government to pay for the mistakes and dishonesty of every small town bankster . . .
Bank deposit guarantee schemes have been tried in Nebraska, Oklahoma, Kansas, Mississippi, Texas, North Dakota, South Dakota and Washington. They have invariably ended in failure and loss, if not in outright scandal and default. They have weakened the moral fibre of bankers and served chiefly as a temptation to bad banking. Honest banking has been penalized for dishonest banking.”
In an email Fabrice sent out on January 29, less than a week after the critical January 23 email sent to Marine (see above), he writes:
When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: "Well, what if we created a "thing", which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?") it sickens the heart to see it shot down in mid-flight... it's a little like Frankenstein turning against his own inventor ;)
Illya Kuryakin :
WTF is this Fabrice guy doing out there a free man anyway? Where is fucking Eric Holder?
fab fab is going to be someones bitch in prison.
The Best of the Best. The Smartest Guys in the Room. The epitome of financial acumen. God's work. The legendary and highly respected Goldman Sachs...
HAHA! this shit is gold! and Fab is an AAA rated douchebag!
D-bag? A really ghey D-bag. How does one recover from this expose? And read this quote again:
...standing in the middle of all these complex, highly levered exotic trades he created without necessarily understanding all the implications of these monstruosities !!! Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer will more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!
"Goldman Sachs should probably settle, said senior executives at three of the firm’s rivals."
Translation: Make this s**t go away before they start looking at us.
“The Big Short.”
Sounds like I’ve finally got a catchy name for the financial crisis, because these guys shorted the country.
Submitted by Tyler Durden on 04/23/2010 15:38 -0500
Submitted by 04/23/2010 | Tyler Durden
By now it is well-known that the bulk of the SEC's budget is spent on maintaining internet bandwidth to ensure that its 80286-based computers can cope with the terabytes of daily internet porn downloaded by its employees. In light of the need by the SEC to buckle up in preperation for the critical lawsuit against Goldman, which will make or break the agency, Bill Singer of Broke and Broker has come up with a simple list of several Standard Operating Procedures that the agency's employees must adhere to if they hope to have a job next year.We agree with his recommendations wholeheartedly.
REPORT OF SELF-APPOINTED CONSULTANT BILL SINGER
From: Bill Singer
To: SEC Chair Mary Schapiro
Date: April 23, 2010
RE: Allegations of Staff Porn Surfing: Proposed Remedies by Consultant
It has come to my attention that members of the SEC's Staff may be operating under a misimpression concerning a number of industry terms. Please ensure that the following expressions are properly explained to your Staff:
- Initial Public Offering: this is not the first sexual experience with a prostitute.
- Indication of Interest: this is not the negotiation of price with a prostitute
- Private Placement: this is not a consensual sex act between adults
- Regular Way Settlement: this is not the missionary position
- Pump And Dump: this is not an aberrant sex act
- The Spread: this is not something viewed at a peep show
- The Quiet Period: this is not the post-coital moment
- Breaking Escrow: this is not to be called the "money shot"
- Naked Short: this is not an undressed male Staffer on a cold day
- Self Regulator: this is an employee of FINRA not masturbation
- Secondary Offering: this is not a repeat sex act courtesy of Viagra
The SEC must immediately cancel any contemplated seminars with the Thailand securities authorities. This would not be a good time for Staff to be visiting Bangkok. In fact, the SEC should avoid any reference to that city whatsoever.
The SEC must immediately implement a policy that requires all Staff to use both hands on their computer keyboards at all times. Similarly, the SEC should provide Handi-Wipes for all visitors in the event that there is customary handshaking with Staff.
In response to growing reports of Staff vision problems and hairy palms, the SEC should expand its medical coverage to provide treatment for those maladies.
"the issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress."
April 20, 2010
...Wall Street wants is to water down reform so it can, according to Farrell, pursue these 8 goals:
(1) evade securities laws
(2) avoid taxes
(3) minimize capital requirements
(4) increase leverage
(5) hide speculative risks
(6) maximize short-term profits
(7) avoid stockholder disclosures, and
(8) manipulate regulators.
Any good parasite knows that it is better to not kill your host. Wall Street appears to have forgotten this.
The person who convinced regulators that CDS is not insurance deserves the George Orwell “Newspeak” award…
The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
These F@#king Guys - Goldman Sachs
Daily Show Full Episodes
Mar 12, 2010 | FT Alphaville
We wouldn’t have thought to ask Nouriel Roubini about Bernie Madoff’s alleged Ponzi scheme. But someone else has, and it’s thrown up an interesting tirade from the master of economic doom and gloom. Reprinted in its full forcefulness below, with selected highlights from us.
A reporter contacted me today with the following question:
“I am a reporter and I am doing a story on Bernard Madoff’s life after pleading guilty. As part of this I was wondering if you could comment on what significance he will have in the history of this period. Will he represent more than a scamster who stole a lot of money from a lot of people? As Bernie Ebbers and Ken Lay came to embody corporate greed and deceit, what will Madoff symbolize? I would really appreciate your insights on this”.
Here is my answer fleshed out in full:
Americans lived in a Made-off and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its overleveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now gone bust.
When you put zero down on your home and you thus have no equity in your home your leverage is literally infinite and you are playing a Ponzi game.
And the bank that lent you with zero down, a NINJA (no income, no jobs and assets) liar loan that was interest only for a while with negative amortization and an initial teaser rate was also playing a Ponzi game.
And private equity firms that did over a $1 trillion of LBOs in the last few years with debt to earnings ratio of 10 or above were also Ponzi firms playing a Ponzi game.
A government that will issue trillions of dollars of new debt to pay for this severe recession and to socialize private losses may risk to become a Ponzi government if – in the medium term – does not return to fiscal discipline and debt sustainability.
A country that has – for over 25 years – spent more than income and thus run an endless string of current account deficit and has thus become the largest net foreign debtor in the world (with net foreign liabilities that are likely to be over $3 trillion by the end of this year) is also a Ponzi country that may eventually default on its foreign debt if it does not – over time – tighten its belt and start running smaller current account deficits and actual trade surpluses.
Whenever you persistently consume more than your income year after year (a household with negative savings, a government with budget deficit, a firm or financial institution with persistent losses, a country with a current account deficit) you are playing a Ponzi game; in the jargon of formal economics you are not satisfying your long run intertemporal budget constraint as you borrow to finance the interest rate on your previous debt and you are thus following an unsustainable debt dynamics (discounted value of your debt growing without limit in NPV terms as the debt grows faster than the interest rate on it) that eventually leads to outright insolvency.
According to Minsky and according to economic theory Ponzi agents (households, firms, banks) are those who need to borrow more to repay both principal and interest on their previous debt; i.e. Minsky’s “Ponzi borrowers” cannot service neither interest or principal payments on their debts. They are called “Ponzi borrowers” as they need persistently increasing prices of the assets they invested in to keep on refinancing their debt obligations.
By this standard media US households whose debt relative to income went from 65 percent 15 years ago to 100 percent in 2000 to 135 percent today were playing a Ponzi game.
And an economy where the total debt to GDP ratio (of households, financial firms and corporations) is now 350 percent was a Made-Off Ponzi economy. And now that home values have fallen 20% and they will fall another 20% before they bottom out and now that equity prices have fallen over 50% (and may fall further) using homes as an ATM machine and borrowing against it to finance Ponzi consumption is not feasible any more. The party is over for households, banks and non-bank highly leveraged corporations.
The bursting of the housing bubble and of the equity bubble and hedge funds bubble and private equity bubble showed that most of the “wealth” that supported the massive leverage and overspending of agents in the economy was a fake bubble-driven wealth; now that these bubble have burst it is clear that the emperor had no clothes and that we are the naked emperor. A rising bubble tide was hiding the fact that most Americans and their banks were swimming naked; and the bursting of the bubble is the low tide that shows who was naked.
Madoff may now spend the rest of his life in prison. The US household and financial and non financial firms and government may spend the next generation in debtor’s prison having to tighten their belts to pay for the losses inflicted by a decade or more of reckless leverage, over consumption and risk taking.
Americans, let us look at ourselves in the mirror: Madoff is us and Mr. Ponzi is us!
You’re a Ponzi, Nouriel’s a Ponzi, we are all Ponzies now.
Mar 04, 2010 | FT Alphaville
Where to start?
The SEC on Thursday filed a civil action against one Sean David Morton, a.k.a. “America’s Prophet! A modern day Nostradamus with more hits than Barry Bonds and the Russian Mafia!”
Morgan, along with his wife Melissa and a string of companies, stand accused of fraudulently raising $6m from more than 100 investors.
According to the Commission’s complaint, in soliciting these individuals, Morton claimed that he would use his psychic expertise to provide investment guidance to his investing team, and he falsely touted his historical success in psychically predicting the various rises and falls of the market…
According to the Commission’s complaint, Morton used his monthly newsletter, his website, his appearances on a nationally syndicated radio show called Coast to Coast AM, and appearances at public events, to promote his psychic abilities. Morton made numerous materially false representations relating to his psychic abilities in order to solicit investors for the Delphi Investment Group. For example, Morton wrote to potential investors in his July 20, 2006 newsletter that: “I have called ALL the highs and lows of the market, giving EXACT DATES for rises and crashes over the last 14 years.” (emphasis in original.) The Commission alleges that this assertion, like others Morton made in soliciting investors, is false.
We learn from Sean’s personal website that:
Sean is a natural psychic, trained Remote Viewer, intuitive consultant, investigative reporter, and accomplished award winning director, screenwriter and film and TV producer…
Sean uses his talents and abilities to predict future occurrences and trends such as earth changes, political events and stock market fluctuations. He has an astounding “hit rate”, or percentage of successes.
And we get a flavour of what this allegedly meant in practice from the SEC court documents:
In one-on-one correspondence with potential investors, Morton was even more aggressive in his solicitation. For example, on October 7,2006, Morton wrote to a potential investor, Investor G, in two separate emails: “The more [money] you get me the MORE 1 can make for you” and “[g]ive ME enough money to help YOU! Give me enough so that the average profits will make a DIFFERENCE in your life.” (emphasis in original.) In a subsequent email, after Investor G had already invested with the Delphi Investment Group, Investor G told Morton that he would like to invest in other types of investments such as the stock market. . Morton replied, “for RIGHT NOW you will make the most with [the Delphi Investment Group]. Once the DOLLAR starts to DROP, which will happen soon, we are set to make a FORTUNE!” (emphasis in original.)
April 19, 2010 | The Big Picture
Afternoon humor, gathered from around the web:
The term “GS”, now entering the popular lexicon as a verb, meaning to lie AND make money from doing so, as opposed to “BS” – which is just to lie without the benefit of compensation.
There once was a man named Tourré
He toiled for The Squid night and day
At Paulson’s request
He created a mess
And sold it to bank IBK
Burning Documents Create Giant Smoke Plume over Goldman Sachs
With apologies to John Collins Bossidy
And this is good old Gotham,
The home of the rich and the odd.
Where Morgan talks only to Goldman,
And Goldman talks only to God.
The CDO’s maturity date is 2039, so any declaration of success is premature, said Rutledge of R&R Consulting.
“A man who jumps off a 100-story building can pass the 98th floor and say, ‘So far, so good,’” she said.
April 16, 2010
The Goldman case today had a devastating impact on investors in Deutsche Bank, which is said to have packaged similar securities as the one in the Goldman case. But maybe today’s action indicates Deutsche is in the clear.
At the time these securities were being created at Deustche, the general counsel of Deutsche Bank for the Americas was Robert Khuzami.
He is now enforcement director for the S.E.C. ...
Reality Bites said...
A large short position in the S&P is NOT the same as Goldman shorting its own stock. Goldman accounts for far less than 10% of the S&P500. A lot of people took short positions today judging by the drop in the stock market. Was the position initiated before the announcement or after? That's key as well, but rumors are rumors and the omniscience of Goldman Sachs is now more than just legendary. These guys prove that there is an all-knowing, all-powerful being, in fact several hundred such beings. Richard Dawkins is going to have a heart attack.
That would be hilarious, albeit completely and totally illegal, if Goldman's prop desk was shorting their own stock in anticipation of the announcement
Also, check this out: http://finance.yahoo.com/q?s=GPY100417P00170000
Someone made a KILLING on GS puts today
Last October, I saw a cartoon by Mike Peters in which a teacher asks a student to create a sentence that uses the verb “sacks,” as in looting and pillaging. The student replies, “Goldman Sachs.”
Why, these derivatives were SO complex that the poor Goldman management barely understood them themselves. They were tricked by Paulson. Tourre is a rogue trader. Bernie Madoff ate their Series 7 cheatsheets. Compliance was seconded to the Riviera. Lloyd was busy doing missionary work in Bangkok. More regulation will just hurt the recovery.
The Baseline Scenario
In the now famous words of Sarah Palin, “time for us to roll up our sleeves and reload”.
I am looking for Sarah Conner.
And you should be too…because I guarantee you, THEY sure as hell are looking for her.
The fate of all humanity hangs in the balance.
Think about what’s happening here:
- Gov’t levies civil fraud charges against GS.
- The civil fraud charges escalate to criminal fraud.
- The market remembers Arthur Anderson…and the fact that there mere charge of criminality is a death-blow to a financial entity.
- There’s a run on GS. Morgan Stanley’s next. C and BofA begin to swirl down the toilet bowl.
Welcome to TBTF 2.0.
Geithner, Bernanke and Summers have emergency meetings to save the financial system from collapse. Timmy sleeps on a cot in his office, while Vanity Fair correspondents chronicle his every bowel movement….
... ... ...
Half-Man, half-machine. Half-gov’t, half-private. The ultimate profit-seeking, revenue-collecting quasi-government super-human cyborg.
And he will…be back.
on Apr 16 21:26. 6 comments.
There’s got to be a sick squid joke in here somewhere.
There is even a song to go with the story - a rework of one from the Broadway show The Producers entitled "Bet Against the American Dream" - http://vimeo.com/10864430.
This photo from 2003 shows two regulators: John Reich (then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, and Ken Guenther of the Independent Community Bankers of America.
Former OTS Director John Reich, who served from 2005 to 2009, referred to WaMu Chief Executive Kerry Killinger as "my largest constituent" in a 2007 e-mail
Red tape recycled as red ink. Hoocoodanode?
Indictable crimes? Naahh. Shame? Nahhh. These guys are all going to land on their feet at cushy thinktanks, boards, law firms or lobbying organizations.
The Seven Stages of Hoocoodanode:
1.Quiet attention, learning.
3.Calling attention to inconsistencies.
4.Blaming systemic deficiencies.
5.Blaming the system.
6.Acceptance of "features not bugs."
I wonder if I could get a new handle - "DoomGlumBoomBubbleBoy"?
Nah, I'll stick with this one, I always liked that picture, I just wish they had used the chain saw on each other instead of the regulations and then the taxpayers.
2.Don't forget the re-bar.
1 Amass concrete
2 Don't forget the re-bar.
3. YouTube - Don't Fear The Reaper
Wisdom Speaker :
Rob Dawg wrote:
The Seven Stages of Hoocoodanode:
Quiet attention, learning.
Calling attention to inconsistencies.
Blaming systemic deficiencies.
Blaming the system.
Acceptance of "features not bugs."
Dawg grant me the Serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to put up with this crazy half-baked system when there's no hope left?
I would argue that these developing bubbles greatly improve the odds for the democrats in November... and they know it.
I've wondered if the current bubble is Wall St. gamed to get a better deal on the financial regulation bill.
In other words, the bill will end up being softer as a result of broad-based good cheer. Imagine you're a lobbyist for a big bank - the higher the market goes, the easier your job in convincing Congress that things are getting better and that banks have learned their lessons.
Alternatively, imagine if the banks and hedge funds step in front of the crazy valuation train and aggressively short the market. The market could crash. The public would be screaming and demanding change. Congress would then be politically painted into a corner and be forced to pass a harsher bill.
Rising markets --> Gentle bill.
Falling markets --> Harsher bill.
Cynicism R Us.
Who gets nominated as "The Mule"?
Greenspan has the looks...
Who gets nominated as "The Mule"?
Skittles the Unicorn:
Looking at that photo it struck me that, whilst those boys may be a bit porky, they had the lean and hungry look of sharks smelling blood.
How the Common Man Sees It :
Remember that book that ends with the kid pointing out that the emperor has no clothes? What happens after the last page?
That’s easy. The secret service come out and beat the kid senseless. Then they taser him until he’s comatose
7.9 million homeowners (10.2% of those with mortgages) arent making house payments so they can buy trinkets from china...& that makes you optimistic?
In June 2007, the subprime-backed CDO market began to collapse for good. And, again, the banks suddenly couldn’t figure out how much their clients’ CDS were worth, so they could avoid sending them collateral. “Goldman was newly unable, or unwilling, to determine the value of those positions, and so could not say how much collateral should be shifted back and forth” (p. 195). Between June 15 and June 20, Michael Burry could not get ahold of his Goldman Sachs salesperson, who finally claimed that Goldman had had a “systems failure” — which was what Morgan Stanley and Bank of America also claimed. According to Burry, the only reason why the banks finally started marking his positions accurately was that they were getting in on the same trade.
This also happened between the dealers. At one point Greg Lippmann at Deutsche Bank, who had shorted the market, said to his counterpart at Morgan Stanley, who insisted that subprime CDOs were still worth 95 cents on the dollar: “I’ll make you a market. They are 70-77. You have three choices. You can sell them back to me at 70. You can buy some more at 77. Or you can give me my f—ing $1.2 billion” (the collateral owed) (p. 213).
April 07, 2010 | PrudentBear
Botox (botulinum toxin), a highly toxic neuro-toxic protein produced by Clostridium Botulinum, is commonly used in cosmetic procedures to improve a person’s appearance by removing facial lines and other signs of ageing. The effect is temporary and can have significant side effects.
The global economy is currently taking the “botox” cure. A flood of money from central banks and governments – “financial botox” – has temporarily covered up unresolved and deep-seated problems.
The Republican Strategy on Financial Reform: Make Democrats Look Like Patsies for the Street, by Robert Reich: Senate Republicans today debuted their new strategy for financial reform: Refuse to cooperate with Democrats on grounds that the Dems are too willing to give Wall Street what it wants.
I’m not making this up.
... ... ...
Let’s be clear: The Dodd bill doesn’t go nearly far enough... But the Street thinks the Dodd bill goes way too far... Republicans figure they can accommodate the Street by refusing to give the Dems the votes they need unless the Dems agree to weaken the bill — while Republicans simultaneously tell the public they’re strengthening the bill and reducing the likelihood of future bailouts.
It’s a bizarre balancing act for the Republicans, reflecting the two opposing constituencies they have to appease — big business and Wall Street, on the one hand, and the emerging Tea Partiers, on the other. The Tea Partiers hate the Wall Street bailout as much as the left does. ...
...politics had an important affect on economic policy, but now the economics profession – as a whole – tries to pretend that it is strictly a mathematical and technical art form.
And as I documented last October, economists are trained to ignore – and central bankers and regulators rewarded to the extent that they ignore – the real world.Skippy:
Put to music ala 80s
Sweat my youth away
With the rules we have to play
Speeding through your magazine
Pistol, pavement, no T.V.
Talk and talk
No time, night time
Here comes the daylight, here comes my job
Uptown in the penthouse or downtown with the mob
Here comes the night time, here comes my role
Goodbye to the pavement, hello to my soul
Now here comes my job
Credit, bleeding with the mob
Dreams become ideals
No one knows the way I feel
Love to love
Daytime, right time
All my life
Feel safe in the crowd
An no one admits they’re crying aloud
My career fits like a glove
Knowing no orders can come from above
Work and work
Full time, part time
Anytime at all
As you face the wall
God make it this time or never at all
Before your chance has gone
Captain this lead role and you’ll be the one
Shine and shine
This time, my time
Make me free at last
Amazing and scary. In consequence there could be a Milken-Rahm/Obama link then.
So organised crime is running the government of the US.
That’s an inappropriately pessimistic view of affairs, Thomasina. Consider the much sunnier converse: the United States Government finally found a way to control organized crime.
"Democrats" tax and spend. "Republicans" borrow and spend.
April 10, 2010 | naked capitalism
ray l love:
If only those Germans and those Chinese would stop producing so much stuff. Those Germans with their efficiency and their worker’s being treated so fairly — and those Chinese making so much progress on poverty. Why is it so difficult for some peoples to learn the importance of shirking responsibility and that of living on debt.
Eventually, these ‘productive’ nations will begin to understand that healthy economies succeed because they allow their financial services sectors to do the heavy lifting.
These days, the idea of retirement seems like either a bad joke or a utopian fantasy.
Bespoke Investment Group
A few weeks ago we noted that we had just received a big delivery of an item we had made. Without further ado, behold Collapse! -- The Commemorative Game of the Financial Crisis.
Collapse! is a commemorative game that takes a light hearted approach to the very serious events of the financial crisis. The game allows players to relive the tension, anxiety, and second guessing characterized by this crazy period in history. As the global financial system began to crumble in 2007, it became frighteningly apparent just how precarious its foundation had been all along. While the bankruptcy of Lehman is often cited as the cause of the collapse, the reality is that under a different sequence of events, the pressures would have built up differently, causing something or someone else to bear the blame. There was no one cause. Instead, a thick web of diverse but interconnected culprits was revealed, with each playing their own important role.
In the game of Collapse!, each of the 54 blocks represents one of the factors or events that helped create the crisis or hasten its escalation. What better way to relive the financial turmoil than to grab some family or friends and try to build your own financial fortress that's too big to fail! After stacking the blocks (the included instructions provide a useful frame), players take turns pulling them out one by one until the entire structure collapses! Read the phrase on the block that caused the Collapse! and reminisce about the "bad old days."
Mish's Global Economic Trend Analysis
Thurston Thisterthithington III:
“As much as I hate to admit it, this will validate the Bernanke/Paulson/Geithner response to our little shitstorm. OTOH, they caused the problem, profited from it on both sides of the deal (and maybe some sides we aren't even aware of), and, in truth, only made matters worse — offseting the due date for economic oblivion in the US by an indeterminate period of time. They should be hung in public (on the National Mall, right in front of the Fed) for their chicanery.
(on the National Mall, right in front of the Fed) for their chicanery. TT III
At least demolish the Fed before their eyes first.
“Thurston/FatBeard, that's actually a good idea. Blow up the Fed and then hang the miscreants. Unfortunately, the police state we live in would never permit true justice to occur.
“If only bad ideas could be dealt with so simply. But they can't. As "V" said, ideas are bulletproof. That applies to bad ones too.
Corporate governance is groupthink, if not worse, in the US
April 9, 2010 | The Baseline Scenario
Alan Greenspan was convinced the markets self-regulate. I believe it was Herbert Hoover who said: “The only problem with capitalism is the greedy capitalists.”. I suspect that Hoover’s sentiment is closer to the reality than Greenspans’s as we have seen in the last two decades.
Here’s a banking data point in the context of that model-breaking, crisis-forgetting, junk-crazy, dash-for-trash.
The Baseline Scenario
...competence in the financial sector should be measured not in usefulness or finding a need and filling it, but in enrichment the professionals.
Nobody can ever just accept responsibility. There’s always some kind of slimy caveat, like the fraudulent, “everyone’s guilty.”
A defender of free financial markets would never ever imposed on the markets, the way it was done in the regulations, the opinions of some few credit rating agencies.
I agree with you and Simon 99% of finance is pure rent: a tax on the real economy to fund nefarious gluttons.
As I hear it Greenspan has not given up on either Ayn Rand or free-market economics. He has only suddenly realized that there is a cadre of scoundrels, schemers, opportunists and downright crooks attracted to a regulation-free culture, and that the market system, ironically, is not too big to fail.
He’s a bad man who should be in prison with bubba, with NO soap on a rope.
In summary, it is encouraging to find that, despite the rapid growth of mortgage debt, only a small fraction of households across the country have loan-to-value ratios greater than 90 percent. Thus, the vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices.
"Bernanke is on a tight rope walking, trying to keep his balance, only it's the end of March fast approaching and all of a sudden, the rope has grease on it." © Seamus 2010
... Max Abelson got some investment bankers who used to work at Lehman to say what they really think about ordinary people:
... ... ...
“Yappers who don’t know anything.”
Well, the commercial bankers are not taking this lying down. They are out trying to prove that they can be just as offensive.
Speaking of the proposed Consumer Financial Protection Agency, bank president Robert Braswell had this to say, according to the News & Record of Greensboro:
“The consequences to the consumer will be equal or worse than what they’re trying to legislate away,” said Robert Braswell, president of Greensboro-based Carolina Bank. . . .
Banks, he said, will pass on added costs to consumers or stop offering some services, such as free checking. Braswell said when he has been on lobbying trips to Washington on behalf of bankers groups, congressmen and congressional staffers did not seem receptive to points made by those in the industry.
“There is no consideration to (whether it’s duplicative); there’s no consideration as to cost,” he said. “Those who are behind this legislation are absolutely ill-informed and under-educated . . . They refuse to consult with anyone who does possess the requisite knowledge.”
This isn’t even worth a point-by-point rebuttal. Insofar as the CFPA is duplicative, it duplicates powers that existing regulators didn’t use; and it also extends consumer protection to the nonbanks, which were not regulated at all. If free checking only exists because banks are gouging other customers, then free checking shouldn’t exist. Oh, and Tim Geithner, Michael Barr, and Elizabeth Warren are “under-educated”? I guess I am, too.
I would be encouraged by Braswell’s claim that congressmen and their staffers are not receptive to points made by the industry . . . except that it’s not true. Anyone who knows what is going on in Washington knows that the bank lobbyists have been punching holes in the legislation successfully for the past seven months. Maybe they’re not receptive to Braswell, but there are plenty of industry spokespeople doing a much better job — and not talking about it in public.Russ:
“Ill-informed and under-educated” is very true. He meant that in an ideological sense, that even though the people have been brainwashed enough that they let these horse thieves who were caught red-handed not only avoid the noose and go free but continue their crimes, their brainwashing hasn’t been sufficient to save the criminals the hassle of having to lobby against minor nuisances like a “CFPA” (which even in its strongest possible incarnation would still be just nibbling at the fringes of the problem).
I agree that the people are ill-informed and under-educated, for the reverse reason. If they truly understood the nature of these rackets, of how the FIRE rackets are completely useless and completely malevolent, how they do nothing but cause monumental social, economic, and political destruction (not to mention how swine like those quoted here sadistically enjoy the crimes they commit and the massive harm they inflict): If the people were better educated about this, if they could overcome their brainwashing, they would simply eradicate this parasite.
The Big PictureHow are shareholders hoodwinked so thoroughly? I can describe the legal corporate theft by insiders in 5 simple steps. The scam goes something like this:
Five Steps to Shareholder Wealth Transfer
1. The Board of Directors, usually cronies of the CEO (often hand picked by him) forms a compensation committee. To appear “objective,” the committee hires an outside compensation consultant.
2. The compensation consultants are themselves well paid whores, who rather than turning tricks outside the Holland tunnel, offer up absurdly generous comp package. They deliver what they are paid to: They provide cover for the boards to make an otherwise indefensible giveaway of shareholder monies in the form of cash and stock options. It is typically called “Pay for Performance,” but that is a horrific misnomer, as we see in step #3. The comp committee approves the consultants’ nonsense, forwards it to the Board, who rubber stamps it.
3. Here’s where things get interesting: If the stock price rallies, the exec can exercise and cash out, risk free. If the stock price falls, the exec requests a new round of options — or even easier, asks for a repricing of the old ones.
4. After the options are repriced, the exec simply waits. Whether the market rallies or falls . . . you simply go back to step three. Repeat until stock options are in the money. There is no risk or outlay of cash on the part of execs.
5. True “performance” is not a factor. Stock prices can rally for a vast range of reasons having nothing whatsoever to do with management or CEO performance. The market can rally, a sector can come into favor, or even when the Fed can cut rates.
Apr 01. 2010 | FT AlphavilleNot an April fool’s joke: actor John Malkovich was a client of Bernard Madoff’s, and on Thursday, he sued the Ponzi schemer’s estate to recoup his investments.
(For what it’s worth, other Hollywood Madoff losers include Steven Spielberg, Kevin Bacon and Zsa Zsa Gabor)
According to a Reuters report, the renowned character actor is seeking to recover $2.23m from the liquidation of Madoff’s securities firm.
The United States government's total revenue for February was US$107 billion, and expenditures were $328 billion. Yikes!!! Even an idiot can work out that that gap is not healthy, and extrapolated over the next several years and translated into normal English it means one thing - we're freaking doomed!!! (Apr 1, '10)
Keep in mind the UST raised $333 billion in net debt in March, as we pointed out yesterday. Grant also discusses the Coinage Act of 1792, whose section 19 stipulates "that the penalty for anyone who would debase the coinage of the US, is death." By that logic, a firing squad may soon need to be sequestered to Washington.
In a last-ditch attempt to get Greece to fix its public finances, German Chancellor Angela Merkel has turned to the wayward country’s cultural heritage for ideas.
In a somewhat bizarre move, the Chancellor launched yesterday the so-called “Lysistrata Initiative”, named after Aristophanes’ eponymous play, which calls on the women of Greece to withhold sexual privileges from their partners until they file their tax returns.
The call comes on the heels of a European Council report showing Germany, along with Finland, trailing far behind France, Italy, Greece and Spain (or the FIGS) in the eurozone rankings for sexual activity.
“German taxpayers cannot be asked to finance the unrestrained lives of the Greeks” said an exasperated Ms Merkel.
In a surprise announcement earlier this morning, Time Magazine brought forward its annual “Man of the Year” award – and conferred this honor on Lloyd Blankfein, CEO of Goldman Sachs. April 1st apparently is at least 7 months earlier than anyone else has ever won this award, since it began in 1927.
As the award has previously been conferred on controversial figures (including Joseph Stalin in 1942 and Mrs. Simpson in 1936), Time also saw fit to issue a statement clarifying Mr. Blankfein’s merits,
“[Goldman is] very important. [They] help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle. [They] have a social purpose.”
A spokesperson for Goldman responded quickly,
“It was always clear to us that had [Lloyd not won], it would have been quite disruptive to the world’s financial markets. We would have had to spend money, other people would have had to replace transactions as well. Generally for us, volatility is good for our trading business, however it would not have been good for the financial markets as a whole, so it would not have been good for our business…We would not have been affected directly by our exposure to [him], but the world’s financial system would have been affected…there would have been no losses vis a vis our credit exposure.”
Now it seems the Nobel Peace Prize Committee feels pressed to follow suit. Their statement just released in Oslo begins,
“The Norwegian Nobel Committee has decided that the Nobel Peace Prize for  is to be awarded to President [Lloyd Blankfein] for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples. The Committee has attached special importance to [Blankfein]’s vision of and work for a world without [credit derivatives].”
There may be more to this story. According to the website Market News Video, “Goldman recently upgraded Norway-based oil and gas company Statoil (STO) from neutral to buy, and even put the stock it on its conviction buy list”. And Goldman has long predicted that oil prices would hit $200 per barrel – a forecast that has greatly helped buoy Norway’s public finances and restrain pressures to join the eurozone.
In a conference call, David Viniar (Goldman’s CFO) scoffed at the idea of a connection between the firm’s market activities and Mr. Blankfein’s recent slew of prizes,
“We had no material exposure to [Norway].”
Mr.Viniar further remarked, somewhat enigmatically,
“We also have taxpayer money at GS and it’s our responsibility not to lose it.”
He did not, however, clarify to which country’s taxpayers he was referring – nor how exactly Goldman got its hands on their money.
Meanwhile, there are persistent unconfirmed rumors that Mr. Blankfein is the front-runner to win the Pillsbury Bake-Off.
This would be controversial, as we are still 10 days away from the competition itself and Mr. Blankfein is not one of the named finalists.
Still, Mr. Blankfein did recently win the Financial Times 2009 Person of the Year award – despite also being at the same time “a keen judge for the Financial Times and Goldman Sachs Business Book of the Year Award.”
In fall 2009 Mr. Blankfein had seemed to commit to stop fixing the results of various kinds of competitions that are widely believed to be free and fair – like the stock market:
“We participated in things that were clearly wrong and have reason to regret. We apologize.”
But there may be divergent views within Mr. Blankfein’s own senior management team. David Viniar, for one, is holding to a harder line.With regard to what happened in the basketball gold medal game at the Vancouver Olympics, he was quite firm:Rickk
“There’s no guilt whatsoever.”
Dr. Blankfein or: How I Learned to Stop Worrying & Love Goldman Sachs – excerpts
April 1, 2010
“The Financial Crisis was a Hoax. The global casino is open again.
No worries! You actually believed there was a problem when Paulson and Bernanke threatened Congress last year with Martial Law; to blast the U.S. economy back to the 16th century; to crash the market unless ransom was paid requiring each American to fork over $100,000, give or take, in impossible-to-payback future loans today to add to the hundreds of thousands of dollars each American already owes forever?
HAHAHA. It’s all good, bro. Goldman Sachs and the other cruel sisters of syphilitic lending are reporting huge profits and bonuses….All efforts to remove the investment banking tapeworm from our collective colon have failed, but that’s a good thing. We poked the monster….and made it angrier and greedier in ways never thought possible and daddy’s feeling fine. Ain’t no audit going on at the Fed, bud. I’m so happy I could just plotz. You’re gonna LOVE what happens next. Insatiable greed meets infinite moral hazard when Goldman eats the Fed.
High Frequency Trading (HFT) aka ‘flash trading’ will continue to grow exponentially. Trading will become so fast, time itself will have a public offering after Microsoft secures a patent on it and trading time futures will catapult traders backwards and forwards through time until they need bailouts on debts they have not yet incurred.
Cloning time traders will get Congressional approval confusing the boundary between time and money further causing Warren Buffet to pass a kidney stone that looks exactly like Larry Ellison. Time Bandits will steal the DNA of time trading clones and sell the proprietary code to a Japanese housewife who will use it to crash the Icelandic Krona (again) because she thinks she’s over paying for a plate of sushi in Reykjavik.
Thanks Lloyd Blankfein, current CEO of Goldman Sachs and future President of the United States. We are eternally in your debt.”
“I’ve got it, its mine and fuck you if you think you can change any of this. I own your ass, your house, your town and your government.”
You can take the little Jamie out of Queens,
but you can’t take the Queen out of little Jamie.
“fact is that some businesses require size in order to make necessary investments, take ‘extraordinary risks’ and provide vital support globally”
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