Nouriel Roubini's Global EconoMonitor

RGE Monitor – Weekly Roundup

Check out all the great contributions that were published during the past week on RGE’s Nouriel Roubini’s Global EconoMonitor, RGE Analyst’s EconoMonitor, Finance & Markets Monitor, Peterson Institute for International Economics Monitor, Global Macro EconoMonitor, U.S. EconoMonitor, Emerging Markets Monitor, Asia EconoMonitor, Latin America EconoMonitor and Europe EconoMonitor.

On Nouriel Roubini’s Global EconoMonitor, Nouriel provides detailed analysis on how the weakness of the dollar along with near-zero interest rates and quantitative easing are fueling a correlated bubble across global asset classes, which is getting bigger by the day.  Nouriel provides a number of reasons for why and how these carry trades can unravel and cautions policy makers that the bigger the bubble the bigger the crash.  Please read Mother of all Carry Trades Faces an Inevitable Bust.

Don’t miss Nouriel’s CNBC Interview Discussing Carry Trades and Asset Bubbles.


On the RGE Analyst’s EconoMonitor, Arpitha Bykere and Elisa Parisi-Capone analyze the administration’s policies on regulatory reform, housing sector programs and fiscal stimulus. They also highlight the challenges for President Obama going forward, including addressing the fiscal deficit and entitlement burden and passing the healthcare legislation.   Please read One Year after Obama’s Election: Regulatory and Fiscal Challenges.

In Too-Big-To-Fail: Regulatory Reforms of Systemically Important Institutions, Elisa Parisi-Capone considers the initiatives currently on the table to deal with the too-big-to-fail problem. The options range from break-up—which is the one favored by Nouriel Roubini—to stricter regulation and setting the right incentives. While the debate goes on among regulators and academics, the European Competition authority has taken action and ordered the divestment of significant parts of ING, RBS and Lloyds since their bailout packages were deemed to have given them an unfair advantage under State Aid rules.

In Nigerian Oil: Delta Ceasefire, Political Bottlenecks, Lee Hudson Teslik examines what the Delta peace initiative and Nigeria’s push for oil industry regulatory reform will mean for Nigerian output and for international oil companies operating in the country.


On the Finance & Markets Monitor, Rick Bookstaber debates whether innovation promotes economic growth and considers the impact of financial innovation over the past 10-15 years arguing that “just because we are able to take some cash flow and turn it into an instrument doesn’t mean we should.”  Please read Does Financial Innovation Promote Economic Growth?

In Please, Listen to the Lady! Daniel Alpert notes that Sheila Bair, Chairwoman of the FDIC, continues to prove that she has the best interest of the country and the banking system at heart as she advocates for important reforms like funding the proposed resolution fund during fat times.

In How Goldman Bet on a Housing Crash, Barry Ritholtz points out the obvious conflicts of interest in the practice of financial companies that decide to market a financial product, which they consider to be a loser, to unsuspecting customers without sharing their real opinion of the product.  But is it criminal?

Also on the Finance & Markets Monitor:

The Cruel Basic Mathethematics of Losses by Barry Ritholtz

Uh-Oh: Economists Say Recovery, Market Gains Solid by Barry Ritholtz

Wood Warns of Correction, Says “Key Variable in the West is Government Policy” by Edward Harrison

The Return of Mixed Results by James Picerno


On the Peterson Institute for International Economics Monitor, Michael Mussa, a former student and professor at the University of Chicago, sits down with Steve Weisman and assesses the influence – for good and for ill – of economics as espoused at the University of Chicago.  Please read Is the “Chicago School” to Blame in the Economic Crisis?

In Latvia, Lithuania, and the IMF, Anders Aslund compares how the financial crisis has been handled by these countries, which appear to be facing very similar conundrums.


On the Global Macro EconoMonitor, Mark Thoma presents a piece by Mikhail Gorbachev who claims that the global crisis was necessary to recognize the organic defects of the present model of western development, which he believes was imposed on the rest of the world as the only one possible, and pushes for drastic democratic reform.  Thoma adds that the failure of the market-based development model as well as the success of countries with different development models like China has undermined the faith in traditional market-based development strategies.  See The Berlin Wall Had to Fall, But Today’s World is No Fairer.

In Do Smart, Hard-Working People Deserve to Make More Money? James Kwak recognizes that financial success often depends on luck and chance and questions why the unlucky deserve less.

In Sustainable Growth? Tim Duy argues that while the GDP report confirms that the recession has come to an end, the drivers of the boost are potentially unsustainable, and thus he isn’t breathing easy yet.

In The Hubris of Economics, Barry Ritholtz provides a rational look at some of the problems with the field of economics.


On the U.S. EconoMonitor, Robert Reich points out that if the goal is to help the most Americans in a time of need, perhaps our priorities need to be refocused.  Read Health Care Reform is Critically Important, But Getting Americans Back to Work is More So.

In Another Crack in Republic’s Foundations: Not the Size of the Debt, But When it’s Due,  Fabius Maximus shrewdly explains the different scenarios that are possible with regards to short-term and long-term bonds, and how the former makes the solvency of the government that much more vulnerable.

In Roubini Predicts “Mother of All Carry Trade Unwinds”, Yves Smith pushes the conversation on how the weak dollar is the funding currency for risky carry trades that are blowing asset bubbles.

Also on the U.S. EconoMonitor:

Bullish Data, Recoveries, Crashes and the Psychology of Forecasting Redux by Edward Harrison

Five Myths About Our Land of Opportunity by Mark Thoma

On Revisions and on Conditioning by Menzie Chinn

Tax Cuts and Recoveries by Mark Thoma

How Obama Can Convince Congress to Enact a Larger Stimulus, and Why He Must by Robert Reich


On the Emerging Markets Monitor, Michael Pettis is still negative about global imbalances despite positive GDP numbers coming out of the U.S. because he sees the drivers of growth to be unsustainable.  He argues that rebalancing is going to happen one way or another, but pushes for less Chinese investment in infrastructure and more distribution of wealth to Chinese households, because it is consumption growth that powers economies over the long term.  Please read What Rebalancing of Chinese and American Consumption?


On the Asia EconoMonitor, Anoop Singh examines how it is that Asia has rebounded sooner and more strongly than the rest of the globe from the economic slump when the region is so heavily dependent on exports for its growth.  See The Puzzle of Asia’s Rapid Rebound.

In Looking back at Indira Gandhi, Ajay Shah presents a piece that takes a look at recent history and provides 5 lessons for today’s Congress in India.


On the Europe EconoMonitor, Simon Johnson reports that pressure from the EU and voices within the Bank of England have pushed the government to begin a process to restructure the banking system.  See Britain To Break Up Biggest Banks.

In Trouble in Ireland as Fitch Cuts Debt Two Notches to AA- and Deficits Soar, as the news gets progressively worse out of Ireland, Edward Harrison asks again whether Ireland is the next Iceland.

231 Responses to “RGE Monitor – Weekly Roundup”

GuestNovember 6th, 2009 at 8:40 am

Recession hits young people particularly hard, knocking them off course for years to comeNovember 5, 2009All of us are keenly aware of the immediate struggles we face because of the current economic downturn. I’m sure many of your families are facing excruciating choices that, even a few years ago, would have been unimaginable.But what may be less appreciated is the long-term impact of this crisis on our economy, on our fiscal situation and on our future.So, as we move from rescuing the economy to rebuilding it, it’s essential that we keep these long-term effects in mind because only by addressing them can we succeed in building a new foundation for stable economic growth.A new body of social science literature demonstrates that an economic downturn has a long-term impact on workers and their families. Consider the effect of what economists call an “exogenous labor shock” but normal people call a “lay-off” on the life course not of those laid off … but on their children.A range of studies have found that having a parent experience unemployment is significantly associated with whether you graduate from high school, whether you go to college, whether you get a job after college, and how much you get paid in that job. And the effect is persistent with higher high school dropout rates and lower college enrollment rates evident even years later.Reflecting this, the children of workers who were once laid off have lower average wages as adults even decades later than those whose parents never experienced such setbacks.And even if you or your parent didn’t experience a layoff, the long-term repercussions of a recession are evident.In other words, the impact extends to those not directly affected by unemployment by those entering the workforce for the first time … the rising generation of workers. The adverse effect of entering the labor force during an economic downturn imposes a drag on career earnings that goes far beyond the duration of the recession itself.One recent study, for example, found that graduating during a period of high unemployment leads to depressed initial wages roughly 6 percent on average for every 1 percentage point increase in unemployment. This negative wage effect declines only slowly over time: to 5 percent after five years, 4 percent after 10 years, and 3 percent even 15 years after graduation.Remember, that’s for each percentage point increase in the unemployment rate. When most of today’s seniors entered NYU, the unemployment rate was about 5 percentage points lower than it is today.You can do the math.Another way of looking at it: when one compares the wages earned by the class of 1982 (a peak unemployment year) with the wages of the class of 1988 (a peak employment year) over the first 20 years of a career, the difference on a net present value basis averages $100,000.The evidence thus suggests that the recession hits young people particularly hard, knocking them off course for years to come.Now, for the students in the audience, if I haven’t totally depressed you let me highlight one bright spot.Researchers also have found that so-called “recession graduates” are slightly more likely to go on to college or graduate school than counterparts in a boom year. In fact, the data suggest that community college enrollment has recently surged, pushing the overall college enrollment rate to record levels.And this is good news because the evidence is clear: the more you learn, the more you earn.The bottom line is that the administration and Congress did the right thing in forcefully responding to the current downturn: mitigating the depth and duration of the recession will help to lessen the extent to which its effects reverberate in the years ahead.The other lesson is that we need to invest in the education and skills of the youngest members of our workforce making sure that they do not slip off that crucial first rung of the career ladder and are able to quickly climb it as the economy recovers.That is why the administration has taken a number of steps to open the doors of college to more Americans.To make college more affordable, we passed into law the American Opportunity Tax Credit that provides a $4,000 tax credit for college students. And in July, the president announced the American Graduation Initiative that will devote $12 billion over the next decade to support community colleges as well as innovative strategies to help students complete college.Not only did we increase the size of Pell grants and expand the Perkins loan programs to help lower-income students, but we also have undertaken a potentially more important task: simplifying the dreaded FAFSA or federal student aid application: A form more complex than a tax return and a huge obstacle for many worthy students applying for aid and hoping to attend college.To get a sense of how big a barrier this application is, consider a recent H&R Block randomized experiment in which low- and moderate-income high school seniors were provided a modest amount of help in filling out the forms.The students who were helped were almost 30 percent more likely to attend college and receive a Pell Grant the next year than a statistically comparable control group.It’s a stunning result.In addition to these direct efforts, we also helped schools indirectly by providing $140 billion in the Recovery Act in state fiscal relief. This infusion of funds works to counteract not just the revenue lost because of this current downturn but also the long-running trend of rising costs crowding out state investment in higher education.The interplay among squeezed budgets, higher college tuition rates, cuts in services, and the effects this has on young people’s earnings, as well as economic growth, is just one manifestation of the long-term effects of fiscal strain.And that takes me to another consequence of the financial and economic meltdown that we have experienced and that’s the impact it has had on our fiscal situation.Just a few weeks ago, the administration released the year-end statement of the federal government a final accounting of what we took in and what we spent for fiscal year 2009, which ended in September.The results were not a surprise, but they were still sobering: the deficit for last fiscal year was $1.4 trillion, or 10 percent of our economy.Next year’s deficit is expected to be about the same size, and current projections show $9 trillion in deficits over the next 10 years, averaging about 5 percent of GDP.Deficits of this size are serious and ultimately unsustainable.So how did we get here?Of the $9 trillion in deficits projected over the coming decade, nearly $5 trillion comes as a result of failing to pay in the past for just two policies the 2001 and 2003 tax cuts and the creation of a Medicare prescription drug benefit.The cost of the tax cuts will total about $4 trillion over the next decade, including the additional interest on the debt the federal government will have to pay since the tax cuts were deficit financed. The Medicare prescription drug bill will add about an additional $700 billion to the deficit bringing us to about $5 trillion total for the cost of just these two policies.In addition, roughly $3.5 trillion can be attributed to automatic economic stabilizers.As the economy enters recession, certain spending programs, such as unemployment insurance and food stamps, automatically increase and revenues tend to decline. Although this helps to ameliorate the economic downturn by stimulating demand, it also leads to higher deficits.Finally, there is the Recovery Act which accounts for just 10 percent of the entire deficit over the next decade.All told, the entire $9 trillion deficit reflects the failure to pay for policies in the past and the cost of the worst economic downturn since the Great Depression and the steps we had to take to combat it.Now, assigning blame never solves a problem, but it is important to understand that we didn’t get where we are merely as a result of bad luck.It was the result of decisions – conscious, but unfortunate – and it will take deliberate action for us to work our way out of this situation.,0,262198,full.story

GuestNovember 6th, 2009 at 10:33 pm

What I don’t understand is, trillions have been spent on unproductive and failed resources, why doesn’t the govt instead just directly invest in productive resources and privatize it after some time, thus providing employment to new graduates and the unemployed.

SoftwarengineerNovember 8th, 2009 at 5:03 pm

Call Me Socialistic or Anti-GlobalismMy answer to the economic mess for the next generation is:1. America invents new technology2. Instead of giving new technology to our CEOs chewing fat cigars, that will insource/outsource slave labor to replace Americans, how about make the production a “Buy American” stimulus contract?Got a better idea for America’s youth?

GuestNovember 8th, 2009 at 9:26 am

stupid article. you cant make education affordable by government subsidy, because education cost will just rock up and become burden for all American. You need to to stop government subsidy to force university and college to trim unnecessary cost to trim down education cost for all American.

GuestNovember 8th, 2009 at 9:30 am

the deficit reflect only one thing which this article gets wrong entirely. the government expense has gone BIGGER!!! time to shrink size of government!!! and stop all non sense talk of more TAX, OBAMA TAX, PELOSI TAX, GEITHNER TAX, TAX this and that.

The AlarmistNovember 9th, 2009 at 3:11 am

Gee, that’s nice, but when you think about it, a lot of this ‘education’ is pointless or, better put, redundant, as it is merely covering the ground that should have been covered in an earlier part of the student’s education. We all know the primary schools are failing our children, and many students are being passed along and many more are being given gold stars for achievements that in an earlier time would have passed for merely adequate. There also seems to be ample evidence to suggest that a lot of the secondary and post-secondary education in the US is not up to standards that would have been in place a mere 20 years ago.Having recently assessed recent graduates now taking up new positions, I found it shocking to come across my junior colleagues in the US who were less than two years out of college but still suggested that they should be running the show, despite the fact that it was pointed out to them that they seem to have an inability to string together complete sentences with polysyllabic words that incorporate actual facts and are not derivative of what was read just that morning on Wikipedia.Go ahead and throw more money into that rat hole. The dollar isn’t worth so much these days, so I guess it won’t be missed.Wouldn’t it be cheaper and more valuable to simply insist on higher standards of performance by the students instead of thinking you can drum a higher caliber of education into their heads with more money?

MM CANovember 6th, 2009 at 8:50 am

NO JOBS!The “Real” Unemployment Rate Is 17.5%Joe Weisenthal|Nov. 6, 2009, 8:39 AM | 451 |7The doomiest among you are obsessed with U-6, also known as The Real Unemployment Rate, because it measures discouraged workers who aren’t actually looking for work.Anyway, that number soared to 17.5% from 17% last month. That’s a huge month-over-month jump.

GuestNovember 6th, 2009 at 8:57 am

Unemployment in U.S. Jumps to 10.2%, Payrolls Fall (Update3) Share Business ExchangeTwitterFacebook| Email | Print | A A ABy Timothy R. HomanNov. 6 (Bloomberg) — The unemployment rate in the U.S. soared to a 26-year high of 10.2 percent in October and employers cut more jobs than forecast, underscoring why Federal Reserve policy makers say interest rates will remain near zero.Payrolls fell by 190,000 workers last month, compared with a 175,000 drop anticipated by the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate gained from 9.8 percent in September and exceeded 10 percent for the first time since 1983.

11b40November 6th, 2009 at 4:38 pm

….and our march down the long road of absolute insanity continues. First it’s cash for foreign clunkers, now cash for foreign jobs.American Wind Power,Made In China?Have you heard this stunning news? Our stimulus money is paying to send green jobs to China. With unemployment in America just having surpassed 10%, that is economic malpractice.A planned $1.5 billion dollar Texas wind farm — seeking financing with US stimulus money — will create only 30 permanent jobs here, but 2000 jobs in China manufacturing wind turbines.1Sen. Chuck Schumer is pressing Energy Secretary Steven Chu to take action. Yesterday he sent Dr. Chu a letter saying, “I urge you to reject any request for stimulus money unless the high‐value components, including the wind turbines, are manufactured in the United States.”It is imperative for our economy to support Schumer and call on the Energy Department to direct American stimulus money towards creating American green jobs.This is about more than one pending project. Sen. Schumer notes: “… 84 percent of the $1.05 billion in clean‐energy grants distributed by the U.S. government since September 1st have gone to foreign wind companies. … Our U.S. wind industry … is fully capable of providing [wind turbines] and other high‐value components…”China has every right to use its funds to stimulate its own green economy, and thankfully it is. But it makes no sense to use American stimulus money to create jobs overseas when we can do the job and we’ve lost millions of jobs in the last two years.We have the technology, the skills, and the labor to build a sustainable clean energy economy. But we need robust public investment and a commitment to American manufacturing.We’ve spent billions bailing out Wall Street bankers. It is inconceivable that we will now spend millions to subsidize new energy jobs in China.It’s time for a strategy to invest in jobs at home, and to lead the green industrial revolution. We can have it, if we demand it.Robert L. Borosage, Co-directorCampaign for America’s Future”Wall Street Journal, 10/30/09, “Chinese-Made Turbines to Fill U.S. Wind Farm”

GuestNovember 8th, 2009 at 9:33 am

Obama+Pelosi-nomic, do you really think can save USA economy. As we blog here now, those two and democrats clowns passed HealthCare Bill to rack up the government expense that taxpayer can afford.

GuestNovember 6th, 2009 at 8:53 am

Roubini Says Bank Mergers May Create ‘Bigger Monster’ (Update1) Share Business ExchangeTwitterFacebook| Email | Print | A A ABy Ian Guider and Louisa FahyNov. 5 (Bloomberg) — Nouriel Roubini, the New York University professor who predicted the financial crisis in 2006, said mergers between U.S. banks may create institutions that pose too great a risk to financial stability.“We had a too-big-to-fail problem in the past, but now- the-too-big-to-fail problem has become bigger,” Roubini, chairman of New York-based Roubini Global Economics, said at an event in Dublin today. “We are creating a bigger monster.”Roubini said there’s been “massive consolidation” among U.S. banks after a series of mergers during the worst economic crisis since the Great Depression. Bank of America Corp., purchased Merrill Lynch & Co and Countrywide Financial Corp, while Wells Fargo & Co. took over Wachovia Corp. last year.“We have no way to deal with insolvency in an orderly way,” Roubini said during a panel discussion at a conference on financial services. “If a financial institution is too big to fail, it’s too big. If it’s too big, we should break it up.”Roubini predicted in July 2006 the financial crisis that spurred more than $1.6 trillion of credit losses and asset writedowns at global financial companies.He said “financial supermarkets” combining commercial banking, investment banking, insurance and asset management have proved a “disaster”, citing Citigroup Inc., which has received $45 billion from the U.S. government.“Banks should be banks, providing credit to the real economy,” he said. “Investment banks should be involved in what broker-dealers do and that is underwriting. There is no reason why a shareholder should be taking a bundled risk.”To contact the reporter on this story: Ian Guider in Dublin at; Louisa Fahy at

PeteCANovember 6th, 2009 at 10:34 am

Yep. But it’s noticeable that while gold has hit a new high, the mining stocks ($HUI) have not done that. At least not yet. It’s possible that HUI could go higher … it’s also possible that it is forming a head-and-shouldrs pattern. Watch and find out.PeteCA

GuestNovember 6th, 2009 at 9:13 am

Wake up AVG JOE AMERICAN… you are losing your jobs, your houses, your savings, your health insurance, your cars, your educational system, your manufacturing base and on and on…..The 25 Billion Dollar Secret: The NY Fed, Goldman & The AIG Cover-Up (GS, AIG)The Daily Bail|Nov. 6, 2009, 5:19 AM | 2,037 |25(This guest post originally appeared at the author’s blog)Why did the Federal Reserve Bank of New York (FRBNY), whose Chairman was Stephen Friedman (a Goldman Sachs board member who resigned from the New York Fed earlier this year when it was revealed that he had made $5 million by purchasing shares in GS with the knowledge that AIG would be paying counterparties at par and that Goldman would be getting a $13 billion windfall — when no one else had this information) and whose President was none other than current Treasury Secretary Tim Geithner, why did this New York Fed choose to pay AIG’s counterparties 100 cents on the dollar when AIG itself had been negotiating for steep haircuts with claimants, AND why did they then pressure AIG executives to keep quiet about the decision even discouraging AIG from disclosing the ‘par-payments’ to its shareholders in required SEC filings?We’ll leave the decision itself (which was fraudulent, and borderline criminal, and the reasoning given – a complete joke), for another post and focus on the cover-up. For starters, it riled up Congressman Darrell Issa who fired off an angry letter last Friday to AIG management and the New York Fed, demanding the following from both:All records and communications referring or relating to the FRBNY’s negotiations with AIG’s CDS counterparties, including but not limited to:Emails, phone logs and meeting notes of the following people: Timothy Geithner, Stephen Friedman, Tom Baxter, and Sarah Dahlgren;Term sheets, including drafts, relating to AIG’s payments to its CDS counterparties;Emails, phone logs and meeting notes referring or relating to public disclosure of AIG’s payments to its CDS counterparties including disclosure to the SEC.Issa continues in his letter:It is also disturbing that, at the time this secret deal was made, FRBNY Chairman Stephen Friedman, a member of the board of Goldman Sachs, purchased more than 50,000 shares of Goldman Sachs before knowledge of the FRBNY’s bailout of Goldman Sachs and other AIG counterparties became public knowledge. According to news reports, this transaction has earned Mr. Friedman over $5 million in profit.Finally, according to one AIG executive quoted in news reports, the FRBNY may have attempted to manage public disclosure of its decision to pay AIG’s counterparties at par by pressuring the company not to file pertinent documents with the U.S. Securities and Exchange Commission (“SEC”):They’d tell us that they don’t think that this or that should be disclosed. They’d say, “Don’t you think your counterparties will be concerned?” It was much more about protecting the Fed.These allegations raise serious questions about the transparency, accountability and wisdom of the FRBNY’s actions. The American people have a right to know the full details behind the FRBNY’s decision to stop negotiations with AIG’s counterparties and pay them billions of dollars of taxpayer money.To assist the Committee with its investigation of this matter, please provide all relevant information no later than close of business on Friday, November 13, 2009.—-It’s not difficult to understand what happened, and it most certainly was not a coincidental result of independent decisions made during the heat of the crisis. We’ve actually known it was the Fed for awhile. Ever since House testimony from AIG CEO Ed Liddy confirming that “The Fed made us do it.” The problem at the time was that we didn’t know which Fed?Now we know: Geithner and Friedman interceded on behalf of Goldman and Wall Street (Merrill received $6.2 billion, Societe General – a whopping $16.5 billion) to deliver a stealth bailout, one that wouldn’t need Congressional approval, and even better wouldn’t require the counterparties to pay any of it back NOR would it require that they issue shares, warrants or any other instrument to AIG (taxpayers) in return for more than $32 billion in free money.As example, Lehman counterparties got 11 cents. AIG creditors in bankruptcy court might have gotten 25 cents, if they were lucky given the state of the asset markets at the time. AIG itself was negotiating for 50 cents, but your friend and steward of your currency, Treasury Secretary Turbo-Tax, and his boss Stephen Friedman thought 100 would be the best number for everyone involved (except you), leading to a windfall for AIG counterparties of at least $16 billion. In real terms, anything over 25 cents was a gift and thus the real giveaway was somewhere in the range of $25 billion, notwithstanding the author’s calculations. And if that weren’t enough, then Geithner and Friedman succeeded in covering up their secret for 9 months, until Bloomberg through dogged effort and FOIA determination finally got the scoop. Read the following passage from Bloomberg carefully:Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.Edward Grebeck, CEO of Stamford, Connecticut-based debt consulting firm Tempus Advisors, says the most serious breach by the government was to keep the process of approving the bank payments secret. “It’s inexcusable,” says Grebeck, who teaches a course on CDSs at New York University. “Everybody should be privy to the negotiations that went on. We can’t have bailouts like this happening behind closed doors.”Secret DeliberationsThe deliberations of the New York Fed are not made public. In this case, even the identities of the AIG counterparties weren’t disclosed until March 2009, when U.S. Senator Christopher Dodd, head of the Senate Finance Committee, demanded they be made public. Bloomberg News has filed a Freedom of Information Act request seeking copies of the term sheets related to AIG’s counterparty payments, along with e-mails and the logs of phone calls and meetings among Geithner, Friedman and other New York Fed and AIG officials. The request is pending.The Federal Reserve has been reluctant to publish information on its efforts to stabilize the financial system since the crisis began. The Fed has loaned more than $2 trillion, yet it refuses to name the recipients of the loans, or cite the amount they borrowed, saying that doing so may set off a run by depositors and unsettle shareholders.Bloomberg LP, the parent of Bloomberg News, sued in November 2008 under the Freedom of Information Act for disclosure of details about 11 Fed lending programs. In August, Manhattan Chief U.S. District Judge Loretta Preska ruled in Bloomberg’s favor, saying the central bank had to provide details of the loans. The Fed has appealed to the Second Circuit Court of Appeals, and the data remain secret while the appeal proceeds.‘Cataclysmic Financial Crisis’Information on the borrowers is “central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression,” attorneys for Bloomberg said in the Nov. 7 suit.Questions about the New York Fed transactions may be answered by Neil Barofsky, inspector general for the Troubled Asset Relief Program, or TARP. He is working on a report, which may be released next month, on whether AIG overpaid the banks. TARP is the vehicle through which the Treasury invested more than $200 billion in some 600 U.S. financial institutions.William Poole, a former president of the Federal Reserve Bank of St. Louis, defends the New York Fed’s action. The financial system had suffered through months of crisis at the time, he says. The investment bank Bear Stearns Cos. had been swallowed by JPMorgan; mortgage packagers Fannie Mae and Freddie Mac had been taken over by the government; and the day before AIG was rescued, Lehman Brothers Holdings Inc. had filed for bankruptcy.‘Enough Trouble’“I think the Federal Reserve was trying to stop the spread of fear in the market,” Poole says. “The market was having enough trouble dealing with Lehman. If you add, on top of that, AIG paying off some fraction of its liabilities, a system which is already substantially frozen would freeze rock-solid.”Still, officials at AIG object to the secrecy that surrounded the transactions. One top AIG executive who asked not to be identified says he was pressured by New York Fed officials not to file documents with the U.S. Securities and Exchange Commission that would divulge details. “They’d tell us that they don’t think that this or that should be disclosed,” the executive says. “They’d say, ‘Don’t you think your counterparties will be concerned?’ It was much more about protecting the Fed.”‘An Outrage’Friedman’s role remains controversial. In December 2008, weeks after the payments to the banks were authorized in November, Friedman bought 37,300 shares of Goldman stock at $80.78 a share, according to SEC filings. On Jan. 22, he bought 15,300 more at $66.61. Both purchases took place before the payments to Goldman Sachs were publicly disclosed under pressure from Senator Dodd in March. On Oct. 26, Goldman Sachs stock closed at $179.37 a share, meaning Friedman had paper profits of $5.4 million.Jerry Jordan, former president of the Federal Reserve Bank of Cleveland, says Friedman should have resigned from the New York Fed as soon as it became clear that Goldman stood to benefit from its actions. “It’s an outrage,” Jordan says. “He needed to either resign from the Fed board or from Goldman and proceed to sell his stock.”98,600 Goldman SharesFriedman remains a member of Goldman’s board and held a total of 98,600 shares of the firm’s stock as of Jan. 22.Vickrey says that one reason the New York Fed should have insisted on discounted payments for AIG’s CDSs is that the banks likely had hedges against their insured CDOs or had already written down their value. On March 20, Goldman Sachs CFO David Viniar said in a conference call with investors that Goldman was protected. “We limited our overall credit exposure to AIG through a combination of collateral and market hedges,” Viniar said. “There would have been no credit losses if AIG had failed.”In any event, former St. Louis Fed President Poole says the entire process should have been public and transparent. “There should be a high bar against not disclosing,” Poole says. “The taxpayer has every right to understand in detail what happened.”Read the rest of the article HERESo even Fed voting member and counterparty-negotiation apologist, William Poole decries the secrecy. And he was likely not aware of the par-payment cover-up since Friedman and Geithner kept it all within the New York Fed family.In any other time, a sitting Treasury Secretary who interceded on behalf of Wall Street to screw taxpayers out of tens of billions, would not be sitting long. But Democrats control both the House and Senate, so there are no investiagtions (Issa’s letter aside). Traditional media is content not to rock the boat for President Banks Obama lest they be shunned by their peers, and ultimately, 99% of TV and print journalists don’t understand the issues well enough to complain with any conviciton, especially against the merry backdrop of the Dow rising and their deflated 401ks beginning to show life.It’s the exact same set of circumstances that allowed Paulson to cram TARP down our throats last fall; Congressional members and the journalists who cover them are too ill-informed about finance to have confidence in taking a critical position against the rampant fear-mongering that ultimately got the bill passed (see this Kanjorski clip).They fall prey to fear and weakly submit to duplicitous hyperbole (Paulson threatening martial law and blood in the streets), when they should instead be consulting with the objective, critical voices who foresaw the crisis and were prepared with alternative solutions when it finally came (Stiglitz said instead of TARP, create new banks).A pox on Congress, President Banks Obama, Bush, Paulson, Friedman, Bernanke and Geithner (plus Greenspan and Rubin). You may have gotten away with it for now, but I would wager there are a few million of us, roughly, who do understand everything that went down last Fall, and we’re not amused. We’re not just going to let this one pass, and we will not stop filling the vast interweb with the truth (and our distaste and vitriol for your wretched souls) day after day, week after week, all over message boards and finance blogs, until justice is served.We can wait you out. I’ve seen traders hold a grudge against a stock for decades. How long do you think we can wait given the generational rape you have inflicted upon families?For the guilty, your day will come.And until then, good luck with your reputations.

MarkNovember 6th, 2009 at 9:57 am

The pile-on (blatant “screw you!” to the general population) continues:Banks’ H1N1 Flu Vaccines Stir Outrage

Wall Street bankers once again are the target of populist outrage, this time over the news that Goldman Sachs (GS), Citigroup (C), JPMorgan Chase (JPM), and others are receiving limited doses of the H1N1 swine flu vaccine.Following a Nov. 2 story on, and its subsequent pickup on NBC’s Today Show and other media outlets, politicians, lobbyists, and bloggers launched blistering attacks against New York City health officials, the White House, the U.S. Centers for Disease Control & Prevention (CDC), and, of course, the “fat cat bankers” themselves.”It’s obscene that Wall Street bankers think they are entitled to private shipments of H1N1 vaccinations while health-care workers, pregnant women, and other at-risk Americans are either waiting in line for hours or getting turned away because of shortages,” said Secretary-Treasurer Anna Burger of the Service Employees International Union, or SEIU, in a press release. The SEIU—the largest union of health-care workers in the country, with more than 2 million members—is calling for banks and corporations to donate their vaccine doses to local hospitals.

Of course, I’d use caution that this could be a ploy to get the average person begging for the vaccine!

blindmanNovember 7th, 2009 at 2:05 pm

mark,transparent pharma psyop. correct!if it was a bag of poop and the people weretold it is reserved for the overlords, thenthe people will demand it for themselves andtheir children,then goldman can give their supply away tocharity. connections here are transparent.

GuestNovember 6th, 2009 at 10:39 pm

We all know who runs the United States– Goldman Sachs. It is the chosen company of the goverment, and not only too-big-to-fail, but also too-big-to-make-any-loss on any type of risk they assume.

Pecos BankerNovember 7th, 2009 at 2:11 am

I think you hit the nail on the head when you said “99% of TV and print journalists don’t understand the issues well enough to complain with any conviciton, especially against the merry backdrop of the Dow rising and their deflated 401ks beginning to show life.”That could very well be one of the central reasons for pumping up the stock market. To give potentially unruly 401K holders a reason to not rock the boat, among other things.Have you heard the latest on Obama care? Evidently we will be forced to pay premiums and copays that represent 20% of our gross wages. No doubt there’s an evil banker angle in this somewhere!

MM CANovember 6th, 2009 at 9:18 am

So my Big employer is being told health premiums will rise on average from costing them 14k in 2009 to 18k per employee in 2010. also they are being told to prepare to tax all employees on that cost. So for most that means you will be paying another 3-5K in TAXES depending on your braket. Just not my employer either, but I’m hearing form other people that are hearing the same thing…. I’m sure they will also pass on the actual cost in the form of higher contributions also… so prepare for a huge pay cut in 2010… No Bonuses for any of you…Bend over, They are far from done Sodomizing AVERAGE JOE AMERICAN…

GuestNovember 8th, 2009 at 9:39 am

moron, health premium gone up not because insurance just love to up them. health premium gone up because doctors and hospital up the health care cost. Blame the doctors and hospital, but dont just blame insurance companies. that doesnt solve root of the problem.

GuestNovember 9th, 2009 at 8:46 pm


CaponeNovember 6th, 2009 at 10:29 am

This headline below is fantastic. Wall street is officially run by professional gamblers. Quick give them access to the US government, I mean taxpayer, I mean US government unlimited line of credit – literally trillions to cover their bad bets so they can play more. Or shall we say give them access to the magic window where you can drop off a pile of sh _ _ and the government will perform a financial miracle and give you good money.Those debt-strapped consumers, you know the engine of the consumption based GDP, whose plight contributes directly to the bad loans held by the banks, give them a couple of mini tax credits, high interest rates and zero access to credit. Do not make the consumers whole which subsequently feeds up to the sh _ _ loans held by the banks. THAT WOULD MAKE TOO MUCH SENSE! as in $.01 as in the right thing to do!Preserve the broken banking system, bail out the banks and allow the consumers to be squeezed to death.”””Bear Stearns Casualty Turns Poker Pro With $8.55 Million Chance Share Business ExchangeTwitterFacebook| Email | Print | A A ABy Mason LevinsonNov. 6 (Bloomberg) — The collapse of Bear Stearns Cos. left executive Steven Begleiter without much of a plan, so he took his poker pot and went to Vegas.”””

The AlarmistNovember 9th, 2009 at 3:32 am

You would have learned that from Liars Poker two decades ago, and it was no secret long before then.

PeteCANovember 6th, 2009 at 10:36 am

I commented on this before. The Dow ($INDU) is still doing it’s little flirtation with extreme statistics. But the banking index ($BKX) is not looking healthy. This market can still come down with a good dose of the swine ‘flu.PeteCA

GuestNovember 6th, 2009 at 11:49 am

There are St. Louis Fed updates out today.The monetary base has jumped from $0.8 trillion to $1.9 trillion in the last 24 months.It has jumped from $1.75 trillion to $1.9 trillion in the last few weeks.BOGAMBSL, Board of Governors Monetary Base, Adjusted for Changes in Reserve Requirements

GuestNovember 6th, 2009 at 11:59 am

Continued… The monetary base is currency in circulation and bank reserves.It is the Fed’s tool for tracking money supply growth. But it’s not thecomplete picture. Banks are leaving heavy excess reserves on deposit withthe Fed, rather than lending. Meanwhile M1 and M2 appear to rise for October,year-to-year growth has slowed. October M3 will likely to show a fourthconsecutive month-to-month decline. There have been large declines ininstitutional money funds and large time deposits, which more than haveoffset any growth in M2.So, the Fed is still printing like mad, but the total money supply continuesto shrink over the last four months.

PeteCANovember 6th, 2009 at 12:18 pm

Very good comments. The Fed is continuing to keep the major banks on the IV drip line. Bernanke is feeding dollars into their reserves, and they leave the money sitting at the Fed. This situation implies that there is still a significant problem with off-balance sheet assets, and possible heavy losses in the future.I noticed that the ECB is not following the same policy. They are starting to back off on their support or European banks.PeteCA

GuestNovember 6th, 2009 at 10:44 pm

But the banks keep on selling each other the same assets over higher and higher value with the printed money. If they make free money, we lose….either thru inflation, or unemplyment when another bubble bursts…but the cost has to be passed somewhere..

AnonymousNovember 6th, 2009 at 1:40 pm

I think for certain group of people, those who follow Glenn Beck, Sean Hannity or Rush Limbaugh, whatever Obama does is by definition moronic…

GuestNovember 6th, 2009 at 1:43 pm

Hehe, all republicans and democrats are moronic. left-wing or right-wing trolls are moronic. USA govern by morons.By Guest on 2009-11-06 13:12:20

11bNovember 6th, 2009 at 3:54 pm

You really should give yourself a name on this board. “Guest” is much too simple a moniker for you, so let me suggest you start singing as “Moron”.

GuestNovember 6th, 2009 at 3:52 pm

nothing wrong with, FED target 0% QE forever, WUAHAHAHAHAHAA!!! Obama would love QE policy forever, WUAHAHAHAHAHAAAAAA!!!!

GuestNovember 6th, 2009 at 2:09 pm

This education has reduced us to a nation of morons; we were strangers to our own culture and camp followers of another culture, feeding on leavings and garbage . . . What about our own roots? . . . I am up against the system, the whole method and approach of a system of education which makes us morons, cultural morons, but efficient clerks for all your business and administration offices.R.K.Narayan

GuestNovember 6th, 2009 at 3:47 pm

So, ONE person says it therefore it’s true?All forms of power are corruptive, oppressive, eventually causing collapse.But enough of your childish use of “morons.” If we’re all morons, then why bother being here? As a matter of fact, I believe that you are repeatedly in violation of posting policy here and would ask that you be removed.

Pecos BankerNovember 7th, 2009 at 2:21 am

I think the term “moron” for this guest means “more on top of things than I am.” He may not realize that it actually means idiot. Could be same guest who is hawking Nike, Uggs knock-offs at 40% discount from the legal retail price. (Beware, these folks have been known to send you the left shoe only!) You never know in the blogosphere!

MANovember 6th, 2009 at 1:31 pm

@ Medic, (in response to prior thread)I couldn’t be more on board with you (and the religion of modern economics). It’s what lead to so much of my recent disinterest. The more you learn/know, the more disheartened you become.For some like me… we have lost all faith. …and lost all hope …especially when I wonder if change or justice will ever come.Miss America

GuestNovember 6th, 2009 at 1:37 pm

Rich, don’t despair! I mean, why despair over the failings of an inherently corrupt system? There’s no point at which it ever was good, nor would there ever be a point in which it would be good.Have faith in corrective forces, corrective forces bringing back sanity into our lives. We partied, now it’s time to get back to reality…

11b40November 6th, 2009 at 4:16 pm

The despair comes from many directions.When you spend your life working hard, supporting and nurturing a family, building a business, actively participating in the community, serving your country when called, and generally being a good citizen, it is disheartening to watch the country you love with all your heart crumble around you.When you find that all the values you cherished are treated like rubbish by barbarians and gargoyles of the worst kind, and you are being sent the bill for the rape and pillage, well, that is a little disheartening, too.I fully understand MM CA’s point. The more you learn, the more hopeless this thing seems. If you have spent much time in 3rd world countries or in Europe after WW2, you know how it felt to come home to America. But, when you realize that the America you love no longer exists, despair is a well chosen word for the feeling.When you see your kids and grandkids struggling, and you realize they will bear the brunt of our folly, the dark mood comes creeping in & when you realize their living standrds on average may never equal the standards they grew up with, there comes that feling again.When you see a rotting, corrupt government that makes you think of some some vile, hopeless backwater 3rd world dictatorship but realize it is what passes for leadership here, that is a little bit discouraging.Geeez. What crap. It’s after 5:00 & I think I hear a cocktail calling my name.Independent Contractor

GuestNovember 6th, 2009 at 4:53 pm

Why despair ?It’s not that the America you loved no longer exists…It’s that the America you loved was always an illusion, a nation of fake prosperity bought with easy credit.It’s 30 years ago that Americans should have asked themselves these questions, what future these policies would create for their children and grandchildren ?But nobody would have paid any attention. Reagan and Thatcher were heroes.Now, it’s a bit too late.

GuestNovember 6th, 2009 at 6:10 pm

30 years ago the US was in a deep recession. Interest rates were (or soon were to be) sky high.The fallacy is that once upon a time things were good here in the US.It’s getting worse because resources are depleting. And, it’s always been about the rich elite controlling/exploiting resources (without concern over the the sustaining environment).

GuestNovember 6th, 2009 at 9:15 pm

“It’s not that the America you loved no longer exists…It’s that the America you loved was always an illusion, a nation of fake prosperity bought with easy credit.”Well said! Also lower taxes and more government spending.Perhaps at this point Ron Paul should be listend to. Will Obama bring troops home and cut military spending? I haven’t heard any economist discuss this.hlowe

Pecos BankerNovember 7th, 2009 at 2:58 am

Amen to that MA! I read this blog and Zerohedge every day, and it always seems like the few who are honest are out-numbered and out-gunned by those who are pulling for the elite. So where do we go from here? Is some Mussolini going to come riding in on a white horse?I think we are all in a state of shock. I thought I could avoid this by reading Naomi Klein’s “Disaster Capitalism”. Forewarned is forearmed. But alas, I’m finding that my daily blog reading has gotten the better of me, and things seem hopeless, as you say. We the people are getting crushed by a steamroller. What about all those happy-go-lucky, head-in-the-sand types we all know, who still have jobs and seem prosperous? What happens when this tsunami of despair hits them?What I wish I knew is where we are historically. I can’t see the forest for the trees, with all this myopic but necessary concentration on the economic details. Are we just before WWI, the panic of 1870? We desparately need a historical political-economic perspective to make sense of this. What vast changes will the future bring out of all of this that we can discern, however dimly? What kind of future will our children and grandchildren have? Is war next? The answers to these questions are what we need at this point, but no doubt, the usual hacks and religious fanatics already have those answers ready to shove in our faces.

The AlarmistNovember 9th, 2009 at 3:35 am

Things won’t get better again until we actually start to run out of resources and, our backs to the wall, innovation leads to new sources of development. Conservation is the enemy of progress, IMHO.

GuestNovember 9th, 2009 at 8:52 pm

So, just what is “progress?”Nature is an absolute advocate of conservation.Only those who think that there’s such a thing as “sustainable growth” would label conservation as being bad…And for those thinking that technology is going to save us, ah, yeah, right… All it’s good for is creating smaller and smaller lifeboats for the elites.

GuestNovember 6th, 2009 at 3:20 pm

November 6, 2009 Peter SchiffLousy Jobs, In Such Small PortionsTwo dissatisfied customers comment about a restaurant. One says, “The food here is terrible.” The other replies, “I know, and such small portions!” In many ways, they could be describing our current employment picture. Not only are the portions shrinking, but the jobs themselves are steadily losing quality.Today’s release of the October jobs report showed the loss of another 190,000 jobs had pushed the official unemployment rate to 10.2%, only the second time since the Great Depression that unemployment was quoted in double digits (factoring in workers who had given up job hunting altogether or have settled for part-time work would push that rate to 17.5%). That didn’t stop Wall Street pundits from trying to fashion a silk purse of this sow’s ear. The ‘green shoots’ crowd focused on the slowing pace of job losses, the nascent economic ‘recovery’ (even if it is jobless), and the projected improvement in 2010. No mention was even made of the quality of what few jobs were being created.The analysts completely ignored the continued trend of replacing goods-producing jobs with those jobs that require production from other sources. For example, we lost 61,000 manufacturing jobs last month, but added 45,000 jobs in education and health services. In particular, the addition of health workers is nothing to celebrate. Just as a family’s economic position is not improved by higher medical bills, the country as a whole does not benefit from increased health-care spending. Until this trend reverses, our unbalanced economy will not regain its stability, a real recovery will never take hold, and the overall job outlook will get much bleaker.By spending trillions of dollars of borrowed money, President Obama hopes to engineer a recovery and create jobs. However, he has only succeeded in digging America into an even deeper hole than the one he inherited from his predecessor. He believes that if we can simply push up spending to levels seen during the “good times,” then those favorable economic conditions will return. The reality, of course, was that those good years came with a heavy price-tag that we have barely begun to pay.In a press conference today, the President claimed that the latest extension of unemployment benefits will not only help the unemployed, but the overall economy as recipients spend the money. If spending government-granted money really were a benefit to the economy, why not simply increase the amounts endlessly? Why limit the benefits to the unemployed? Let’s make this recovery a real barn burner: send out million-dollar checks to everyone! Of course, what Obama and his economic advisors do not understand is that money spent by recipients of unemployment benefits is money not spent or invested by taxpayers. It’s a transfer of wealth, not a creation on new wealth.In addition, policymakers are also struggling with diminishing returns on ultra-low interest rates. No matter how much monetary alcohol the Fed tries to pour down consumers’ throats, the swill simply will not go down anymore. Consumers have already had enough and are trying to sober up – by refusing to spend irrationally. The excess liquidity simply weakens the dollar and spills over into other pools, such as goods prices, money metals, commodities, and investment assets.During the boom, we spent money we did not have to buy things we did not produce and could not afford. As a result, we are now deeply in debt and must sharply reduce our spending to replenish our savings. By focusing solely on consumer spending, the Administration is neglecting the capital investments necessary to improve our infrastructure and productive capacity.To generate legitimate economic growth and meaningful jobs, we must reverse the trends that brought us down. Consumers may have led us into this recession, but they can’t lead us out. The road to recovery is a one-way street, and it’s paved with savings, capital investment, and production. It’s not an easy road, but we must follow it to ensure our future prosperity.As a first step, our politicians must stop pushing us backward. Rather than imposing more market-distorting regulations, we should repeal those most responsible for inefficient resource allocation. Rather than creating new moral hazards, we should withdraw guarantees for large financial institutions and irresponsible consumers. Rather than continuing the Greenspan policy of keeping interest rates too low, we should let them rise. Rather than trying to prop up asset prices, we should let them fall to market levels. Rather than increasing the burden of bureaucracy on the economy, we should look for ways to lighten the load. Rather than encouraging people to borrow and spend, we should reward those who save and produce.Until we acknowledge these fundamental errors, more of our citizens will lose their jobs. As those that stay employed are funneled into unproductive industries like the federal bureaucracy, the country will sink further into stagnation. Worse still, everyone taking jobs in these sectors will be laid off in the next phase of the crisis – and will have lost this opportunity to build practical skills for the new economy.

Pecos BankerNovember 7th, 2009 at 2:26 am

That restaurant joke is from Woody Allen’s “Annie Hall”, just to give credit where credit is due.

GuestNovember 6th, 2009 at 3:34 pm

Capitalism is a dying and doomed system! But it won’t die of its own accord. It must be destroyed by the revolutionary action of the masses and replaced by a different and higher form of organizing society. It contributed to the development of society at one time, but it has long since outlived its usefulness. It is now standing in the way of future development – and actually holding it back.If you think it can be reformed, wait until wealth gets concentrated even further.

GuestNovember 6th, 2009 at 3:52 pm

Capitalism is a dying and doomed system! But it won’t die of its own accord.Whether it’s “capitalism” or something else, ANYTHING that doesn’t adhere to sustainability (grounded in the reality that there can be no sustained growth) WILL fail, sooner or later. All bad systems fail (something that the commie haters just couldn’t get through their heads, which allowed the full infestation and corruption of the US to occur as a result).

Pecos BankerNovember 7th, 2009 at 2:32 am

Spoken like a true-believer Marxist. However, the real problem with capitalism is that it is wasteful of resources. With those diminishing, perhaps some other system is in order, but those changes historically come at great cost. Perhaps in time the green dictatorship of the elite and the crushing of everyone else will save the planet. ‘Spose that’s what they have in mind, these wealthy Masons who run the West?

The AlarmistNovember 9th, 2009 at 3:37 am

Rubbish. Capitalism is a far more efficient use of resources. Just look at the state of Eastern Europe at the time of the fall of the wall to see how well ‘enlightened’ central planning of resource usage worked. You might also compare and contrast the impact to the health of the environment between east and west.

GuestNovember 9th, 2009 at 8:56 pm

And this is why the speed at which we will hit the brick wall is increasing! Capitalism will build the rope by which it will hang itself. It builds in such incentives for greed that it guarantees failure.There were those willing to fight to the end for communism and there’s those who are willing to fight to the end for capitalism. It’ll be the same basic result- collapse.

GuestNovember 6th, 2009 at 3:59 pm

Must be getting nervous…Reed Says ‘I’m Sorry’ for Role in Creating Citigroup

John S. Reed, who helped engineer the merger that created Citigroup Inc., apologized for his role in building a company that has taken $45 billion in direct U.S. aid and said banks that big should be divided into separate parts.“I’m sorry,” Reed, 70, said in an interview yesterday. “These are people I love and care about. You could imagine emotionally it’s not easy to see what’s happened.”…Congress’ overhaul of U.S. financial regulations should include ordering banks to hold more capital, ensuring executives’ compensation is aligned with long-term profitability and banning firms that take deposits from also engaging in equities and fixed-income trading, Reed said.“I would compartmentalize the industry for the same reason you compartmentalize ships,” Reed said in the interview in his office on Park Avenue in New York. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking you’d have consumer banking separate from trading bonds and equity.”Glass-Steagall RepealLawmakers were wrong to repeal the Depression-era Glass- Steagall Act in 1999, Reed said. At the time, he supported overturn of the law, which required the separation of institutions that engaged in traditional customer banking services from those involved in capital markets.“We learn from our mistakes,” said Reed, who wrote an Oct. 21 letter to the editor of the New York Times endorsing a division of banking activities. “When you’re running a company, you do what you think is right for the stockholders. Right now I’m looking at this as a citizen.”

The instituted a criminal practice and are now saying- “oops, we’re sorry [please don’t lynch us]”?Oh well, the first part of coming clean is to admit that you were/have a problem…

11b40November 6th, 2009 at 4:22 pm

Yeah, well where are the bills in Congress to bring back Glass-Stegall? Maybe I missed it, but I have not heard one single suggestion from either Democrat or Republican to bust up this problem. It is as obvious as the nose on your face that is what must be done, but we are ruled by bankers. They will never allow this to happen so long as they can keep buying Congress and placing their chosen henchmen in control of the levers of power.Independent Contractor

The AlarmistNovember 9th, 2009 at 6:36 am

Reed pocketed something like $23M in pay and bonuses and from Citigroup from 1997 to 1999 and a $5M retirement bonus in 2000 … will he be returning all that to the screwed shareholders or taxpayers?

MANovember 6th, 2009 at 3:59 pm

Now that we are at 10.2% unemployment… Does it mean we have to issue new stress tests for the banks? …or does it mean that all the banks that were tested are now failing due to not meeting the “worst case scenario of 10% unemployment”… let alone unemployment that is higher then 10%…Can someone more familiar with the Bank/Stress tests comment on this, in relation to the fact that we are now above that worst case scenario. (or at least what I was led to believe was the worst case scenario)All the best,Miss America

MM CANovember 6th, 2009 at 4:05 pm

The banks are INSOLVENT and anyone who knows anything abotu balance sheets knows this. Obama, Giethner, Bernanke, Congress, Wall street, summers, et al, all know this… No one wants to go back to stress resluts or discusion, because how woudl they explain thier worst case scenarios now?Its’ only a matter of time before the Big Banks Fail!

GuestNovember 6th, 2009 at 5:12 pm

If the banks admitted they were INSOLVENT, how could they possibly pay such huge bonuses to their executives, traders, etc… ?As long as those morons, the American tax payers, keep paying the bills, what incentive would the bankers have to change anything ?

Pecos BankerNovember 7th, 2009 at 3:15 am

Reggie Middleton would be the person to ask. Check out his blog. Then get back to us with the answer (just kidding).

CitizenNovember 6th, 2009 at 4:16 pm

Civil War In Corporate America: Banks Battling The Chamber On Accounting Rulesdigg Huffpost – Civil War In Corporate America: Banks Battling The Chamber On Accounting Rules stumble reddit del.ico.usFirst Posted: 11- 5-09 05:59 PM | Updated: 11- 6-09 04:05 PMAmid the ongoing financial regulation overhaul, the banking industry is hoping to pull off a quiet power grab that has eluded its grasp since the Great Depression, by stripping the independence of the board that sets financial accounting standards.The move could effectively let banks set their own accounting standards in rough economic times.Astonishingly, at a time when the public is crying out for greater regulation to limit excessive risk-taking by financial institutions, the banks are trying to get Congress to agree that the next time there’s a big downturn, they should have the ability to alter their accounting standards — essentially, fudge the numbers — so that the public and investors won’t be able to tell how insolvent they really are. By ignoring their declining asset values, they can avoid the standard requirement of raising more capital.The mechanism is contained in an amendment set to be introduced in mid-November by Rep. Ed Perlmutter (D-Colo.) that would move final authority over the Financial Accounting Standards Board (FASB) from the Securities and Exchange Commission to a new body, a so-called “oversight” board, that would include the officials charged with managing systemic risks to the financial markets.[UPDATED: Scroll down for the legislative language, which surfaced Friday and goes even further than suspected.]These regulators would have the authority to override FASB’s accounting guidelines by taking into account economic conditions.The move is so radical that it has split corporate America. The bankers and members of Congress who support it have earned themselves an unlikely enemy: the U.S. Chamber of Commerce.A typical business or investor, after all, prefers honest, independent accounting, because they buy and sell real things based on real value.”Washington isn’t thinking straight,” said Josh Rosner, managing director of Graham, Fischer & Co, a New York-based financial analyst who advises regulators and institutional investors. “Financial statements are for the benefit of investors.”Indeed, allowing banks to alter accounting standards when they run into trouble is incentive to take more risk and, in essence, institutionalizes fraud. The regulators would now be under enormous political pressure — and sometimes under direct orders — to allow banks to remain in business long after they’ve become insolvent, in the hopes that things will turn around and they’ll grow again.And rather than stabilize the system, removing accounting independence destabilizes it in the long run, as investors and other banks have little confidence in the veracity of financial statements.Perlmutter told the Huffington Post that under his proposal, the FASB “would stay with the SEC, but in instances where an accounting procedure or a way it’s being implemented poses a threat to the financial system by exaggerating what’s going on — is pro-cyclical to a point that it, too, threatens the system — then the financial regulator, the systemic regulator, could look in to it.”For virtually every situation you can think of, there’s no change, but [there would be a change] in the event that there’s a threat to the system, like the dysfunctional market we had from October through March, and that the accounting procedures just didn’t fit for a system where there was no market,” Perlmutter said.Leslie Oliver, a spokeswoman for Perlmutter, said backers of the amendment haven’t been surprised at the opposition from certain sectors of corporate America.”That’s understandable for a company that has tangible assets,” she said. Perlmutter said he has yet to hear directly from the Chamber.That the banking industry finds itself in opposition to large sectors of the business community is evidence that a historic power struggle for control of the economy is underway.The issue is stirring up the House Financial Services Committee. “It’s caused a great deal of controversy,” said committee chairman Barney Frank (D-Mass.). Frank has yet to take a position, he said, waiting until Perlmutter finishes meeting with members of the committee. “I told him I would wait until he finishes his conversations,” Frank told HuffPost.FASB is fighting to keep its independence. “The amendment that’s being considered represents a shift that threatens to fundamentally challenge the objectives of financial accounting and politicize the process and harm financial system,” said FASB spokesman Neal McGarity. “The mission of bank regulators is to ensure the safety and soundness of the banking system. We have a different mandate. That’s why this is of considerable concern.”A powerful subcommittee chairman already opposes it. “I’m for keeping the independent FASB and I see no reason to change it,” Rep. Paul Kanjorski told HuffPost.The Chamber joined with investors and auditors in opposing the Perlmutter amendment.From a letter sent to top committee members by representatives of the Center For Audit Quality; the Chamber of Commerce; and the Council of Institutional Investors:”By placing the FASB under the jurisdiction of a structure charged with managing systemic risks to the financial markets, accounting rules will be viewed though the narrow lens of a few large companies from specific industries, rather than considerate of the applicability of financial reporting policies to over 15,000 public companies. Such a narrow focus can skew standards such that it makes understanding of transactions that businesses engage in on a daily basis more difficult and undermine the confidence of investors. We believe that the SEC has been and continues to be best suited to provide the oversight of the FASB for such a broad and diverse economy.”The American Bankers Association stands on the other side. “A Systemic Risk Oversight Council could not possibly do its job if does not have oversight authority over accounting rulemaking,” top bank lobbyist Ed Yingling testified before the committee on October 29. “This is a major deficiency in the draft legislation. Accounting policies are increasingly and profoundly influencing financial policy and the basic structure of our financial system. Thus, accounting standards must now be part of any systemic risk calculation. To do anything less creates the potential to undermine any action taken to address a systemic risk. The Financial Accounting Standards Board should continue to function as it does today, but it should no longer report only to the Securities and Exchange Commission (SEC). The SEC’s view is simply too narrow. Accounting policies contributed to the crisis, as has now been well documented, and yet the SEC is not charged with considering systemic and structural effects.”Yingling said the ABA “strongly supported” the approach taken by Perlmutter. “We thank Representatives Perlmutter and [Frank] Lucas [R-Okla.] for their foresight and leadership on this critical issue.”While the big banks would be pleased by the change, Frank said, the major push has come from community banks. Perlmutter said that his amendment was one of the community bankers’ highest priorities.Community banks are a popular and powerful political force in Congress. They didn’t heavily trade the exotic products that nearly brought down the global economy; they received little in the way of bailout money; they don’t give multi-billion-dollar bonuses; they tend to take more responsibility for loans that they issue; and they’re generally respected members of the local community.”Many members of the committee are supportive of community banks,” said Rep. Maxine Waters (D-Calif.), one of the most progressive members of the committee and a subcommittee chair. “The big banks have been such an outrageous, scandalous story about how they operate and what they have done that we tend to want to support the community banks in whatever they ask us to do.”Waters told HuffPost she supports Perlmutter’s amendment.And winning the support of community bankers is in essence a necessary condition for Democrats who want to pass reform legislation through the Financial Services Committee. The Perlmutter amendment could be a way to win community banks over to the idea of a systemic regulator, a priority of the administration.But working to loosen accounting rules could come back to hurt the Democratic Party: When the system goes down again, voters will want to know why.When HuffPost asked Frank if Wall Street was pushing Perlmutter’s measure, he responded emphatically.”You have this caricature in your heads. You literally don’t understand the way the world works,” he said. “It’s the community banks, the credit unions, who are driving this…Seriously, the community banks have the political clout here. Not the Wall Street banks.”Frank said the ABA was likely pushing for the amendment to win favor with community banks in its rivalry with the Independent Community Bankers of America.Perlmutter agreed. “It’s the community banks I’ve been working with. I’m not hearing it from the Wall Street guys,” he said.While the ABA has traditionally been associated with large Wall Street banks, it also represents small banks and is attempting to expand its membership by signing up more community bankers.It works well for the big banks when their interests are aligned with the little ones, as is the case here. When their interests are not aligned, the little banks often win. Community banks, for instance, won an exemption from examinations — though not the rules — related to the Consumer Financial Protection Agency.The ICBA wants to use its clout and the distrust of the big banks to move Perlmutter’s amendment even further in their direction. “We’re not buying and selling all the time. We hold a lot of things for the long term…. So we’d like to build in some additional sensitivity to community banks so would like to make that more explicit,” Steve Verdier, an ICBA senior vice president, told HuffPost. “We’re going to get in touch with [Perlmutter] to see if there are more things that can be done to tweak it in our direction.”Much of the debate around the amendment comes down to what is called the mark-to-market accounting requirement. Banks — both big and small — have long sought to avoid marking their assets down to market prices when those market prices are too low. Marking down the assets requires the bank to take a loss on its books, which then requires it to raise more capital by selling off assets at low prices. Banks claimed that in the fall, the market had frozen and that they couldn’t sell assets. Another way of putting it is that the market price was lower than they wanted to accept.Regardless, forced selling at low prices creates a downward spiral that banks and the GOP blame for the financial crisis last fall. The GOP called for a study of the effect of mark-to-market accounting on the economic collapse as part of the bailout. That report found the accounting practice did not cause the collapse. Either way, the banks hope to avoid that cycle when the commercial real estate market collapses and they find themselves with bad loans again.”It’s about easing the pressure to reduce the value of their assets in community banks, so they don’t have to raise more capital,” Frank said.Asking accountants to change standards based on economic conditions could very well make their heads explode, however. It’s not their job, they say, to keep the system from collapsing. It’s their job to give honest numbers. If a company is bankrupt, it’s bankrupt.”Accounting standards are not policy,” remarked one person involved in the fight.But they have become policy. In the spring, Kanjorski’s subcommittee hauled the head of FASB in for a hearing and demanded the number-crunchers change their mark-to-market standards within three weeks or Congress would do it for them. FASB’s head pushed back during the hearing, saying that banks who called him asking for such a change were usually bankrupt fairly quickly.”They practically dragged him into the hallway and beat him to death,” said Rep. Brad Miller (D-N.C.), a committee member skeptical of the Perlmutter amendment.Three weeks later, they eased their accounting rules. But it wasn’t simple for the banks. Even with the intense congressional pressure, the change only sneaked by by a single vote and created tension on a board accustomed to a freedom from politics. The Perlmutter amendment would make such a battle unnecessary for the banks.”There are a lot of banks that are in a lot of trouble and have a lot of exposure to commercial real estate,” Miller said. “You can’t fix that with accounting.”Rep. Alan Grayson (D-Fla.) fought a lonely battle last spring to stave off the loosening of the accounting rules and opposes this more dramatic shift, as well. Banks may have good reason to want to overstate the value of their assets, he said, and it may work for a time. But an economy can’t be run indefinitely on imaginary numbers. “I enjoy reading fiction, but not in financial statements,” he said.UPDATE: HuffPost obtained a copy of the amendment language that is circulating among lobbyists. Perlmutter’s spokeswoman confirmed its authenticity.The amendment would empower the council overseeing FASB to “recommend to the SEC, either publicly or privately to take such action as is necessary, including but not limited to suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate.”If the SEC doesn’t follow the “recommendation,” according to section (c) of the amendment, the council can order it to do so.In other words, for the sake of financial stability, bank regulators could secretly order the “elimination” of accounting standards.SEC. 1103. PRUDENTIAL OVERSIGHT OF ACCOUNTING PRINCIPLES AND STANDARDS THAT POSE SYSTEMIC RISKS.(a) IN GENERAL.–In the event that any member of the Council believes that an accounting principle, standard or procedure threatens the stability of the United States financial system or companies, as a whole, then the Council shall investigate and by a majority vote, determine whether any corrective action, emergency or otherwise, is necessary to prevent or mitigate any adverse effects from such principle, standard or procedure. In the event that the Council determines that corrective action is necessary then, the Council shall recommend to the SEC, either publicly or privately to take such action as is necessary, including but not limited to suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate.(b) ADOPTION OF COUNCIL RECOMMENDATIONS BY SECURITIES AND EXCHANGE COMMISSION.–the Securities and Exchange Commission shall ensure that the prudential standards recommended by the Council are implemented within 60 days of the Council’s recommendation or within such other time period specified by the Council.(c) FAILURE TO ADOPT STANDARDS.–If the Securities and Exchange Commission fails to ensure that the prudential standards recommended by the Council are implemented within the time period specified in paragraph (b), the Council is authorized to direct that any recommendations issued pursuant to paragraph (a) be implemented for the purposes of generally accepted accounting principles.”Read more at:

GuestNovember 6th, 2009 at 4:50 pm

Rep. Alan Grayson (D-Fla.) fought a lonely battle last spring to stave off the loosening of the accounting rules and opposes this more dramatic shift, as well. Banks may have good reason to want to overstate the value of their assets, he said, and it may work for a time. But an economy can’t be run indefinitely on imaginary numbers. “I enjoy reading fiction, but not in financial statements,” he said. Emphasis added.Exactly!By dodging all of this the financial institutions are just ensuing their eventual demise/collapse.

MichelleNovember 7th, 2009 at 5:27 am

I posted here a while back that accounting changes would occur and sure enough here it is. Imagine what a 10% asset writeup would do for a bank’s balance sheet? Now couple this with the FDIC’s newly issued guidance on commercial real estate loan workouts, and we have a recipe for more of what got us here in the first place. Should get interesting, more mark-to-make believe.

G. human-reptile...November 7th, 2009 at 6:51 am Chessboard: War Between India and China?by Mahdi Darius Nazemroaya.” Vedicists (one of the proper names for Hindus) and Muslims, as well as several other religions lived together in relative peace until the the start of British involvement in India. [23] The animosity between Pakistan and India is a synthetic construct where local elites and foreign powers worked together, not only to divide territory, but to control local groups that have lived together for hundreds of years by alienating them from one another.Why a “Clash of Civilizations” in Eurasia?By extension of the utilization of the “Clash of Civilizations” notion, which predates Samuel P. Huntington, India and Vedicism are depicted as enemies by the Pakistani elites as a means of domestic distraction and to direct internal tensions about social inequality and injustice towards an outside source. The outside enemy, the “other,” has always been used domestically to distract subject populations by local leaders. In the case of the Indian sub-continent certain native circles have jointly invested in continuing the British policy of localized conflict as a means of monopoly.” ……and then there is….

GuestNovember 9th, 2009 at 9:17 pm

Same thing has been happening in Iraq and Afghanistan. The division comes by way of bribes by the invading forces (US); they make livelihoods nearly impossible such that people can only survive by taking the dole.And there was the Iraq/Iran war…

read this on veterans day , the entire piece at the link death, our future. by choiceNovember 7th, 2009 at 7:16 am

Date Posted June 02, 2009News Title War Is Sinby Chris Hedges. crisis faced by combat veterans returning from war is not simply a profound struggle with trauma and alienation. It is often, for those who can slice through the suffering to self-awareness, an existential crisis. War exposes the lies we tell ourselves about ourselves. It rips open the hypocrisy of our religions and secular institutions. Those who return from war have learned something which is often incomprehensible to those who have stayed home. We are not a virtuous nation. God and fate have not blessed us above others. Victory is not assured. War is neither glorious nor noble. And we carry within us the capacity for evil we ascribe to those we fight.Those who return to speak this truth, such as members of Iraq Veterans Against the War, are our contemporary prophets. But like all prophets they are condemned and ignored for their courage. They struggle, in a culture awash in lies, to tell what few have the fortitude to digest. They know that what we are taught in school, in worship, by the press, through the entertainment industry and at home, that the melding of the state’s rhetoric with the rhetoric of religion, is empty and false.The words these prophets speak are painful. We, as a nation, prefer to listen to those who speak from the patriotic script. We prefer to hear ourselves exalted. If veterans speak of terrible wounds visible and invisible, of lies told to make them kill, of evil committed in our name, we fill our ears with wax. Not our boys, we say, not them, bred in our homes, endowed with goodness and decency. For if it is easy for them to murder, what about us? And so it is simpler and more comfortable not to hear. We do not listen to the angry words that cascade forth from their lips, wishing only that they would calm down, be reasonable, get some help, and go away. We, the deformed, brand our prophets as madmen. We cast them into the desert. And this is why so many veterans are estranged and enraged. This is why so many succumb to suicide or addictions…..War is always about betrayal. It is about betrayal of the young by the old, of cynics by idealists, and of soldiers and Marines by politicians. Society’s institutions, including our religious institutions, which mold us into compliant citizens, are unmasked. This betrayal is so deep that many never find their way back to faith in the nation or in any god. They nurse a self-destructive anger and resentment, understandable and justified, but also crippling. Ask a combat veteran struggling to piece his or her life together about God and watch the raw vitriol and pain pour out. They have seen into the corrupt heart of America, into the emptiness of its most sacred institutions, into our staggering hypocrisy, and those of us who refuse to heed their words become complicit in the evil they denounce.

read this on veterans day , the entire piece at the link death, our future. by choiceNovember 7th, 2009 at 7:27 am

The young soldiers and Marines do not plan or organize the war. They do not seek to justify it or explain its causes. They are taught to believe. The symbols of the nation and religion are interwoven. The will of God becomes the will of the nation. This trust is forever shattered for many in war. Soldiers in combat see the myth used to send them to war implode. They see that war is not clean or neat or noble, but venal and frightening. They see into war’s essence, which is death.

Pecos BankerNovember 8th, 2009 at 1:10 am

Thanks for these heartfelt posts, too long to name. I think as things get worse for all and sundry, there will be more and more posts that come from the heart. But right now, it’s all about denial.

GuestNovember 8th, 2009 at 2:37 am

BRING THEM HOME!Anyone who has a lick of intelligence or conscience knows that our young men and women shouldn’t be sacrificing their souls for the expansion of hubris and greed.

read this on veterans day , the entire piece at the link death, our future. by choiceNovember 7th, 2009 at 7:16 am

Date Posted June 02, 2009News Title War Is Sinby Chris Hedges. crisis faced by combat veterans returning from war is not simply a profound struggle with trauma and alienation. It is often, for those who can slice through the suffering to self-awareness, an existential crisis. War exposes the lies we tell ourselves about ourselves. It rips open the hypocrisy of our religions and secular institutions. Those who return from war have learned something which is often incomprehensible to those who have stayed home. We are not a virtuous nation. God and fate have not blessed us above others. Victory is not assured. War is neither glorious nor noble. And we carry within us the capacity for evil we ascribe to those we fight.Those who return to speak this truth, such as members of Iraq Veterans Against the War, are our contemporary prophets. But like all prophets they are condemned and ignored for their courage. They struggle, in a culture awash in lies, to tell what few have the fortitude to digest. They know that what we are taught in school, in worship, by the press, through the entertainment industry and at home, that the melding of the state’s rhetoric with the rhetoric of religion, is empty and false.The words these prophets speak are painful. We, as a nation, prefer to listen to those who speak from the patriotic script. We prefer to hear ourselves exalted. If veterans speak of terrible wounds visible and invisible, of lies told to make them kill, of evil committed in our name, we fill our ears with wax. Not our boys, we say, not them, bred in our homes, endowed with goodness and decency. For if it is easy for them to murder, what about us? And so it is simpler and more comfortable not to hear. We do not listen to the angry words that cascade forth from their lips, wishing only that they would calm down, be reasonable, get some help, and go away. We, the deformed, brand our prophets as madmen. We cast them into the desert. And this is why so many veterans are estranged and enraged. This is why so many succumb to suicide or addictions…..War is always about betrayal. It is about betrayal of the young by the old, of cynics by idealists, and of soldiers and Marines by politicians. Society’s institutions, including our religious institutions, which mold us into compliant citizens, are unmasked. This betrayal is so deep that many never find their way back to faith in the nation or in any god. They nurse a self-destructive anger and resentment, understandable and justified, but also crippling. Ask a combat veteran struggling to piece his or her life together about God and watch the raw vitriol and pain pour out. They have seen into the corrupt heart of America, into the emptiness of its most sacred institutions, into our staggering hypocrisy, and those of us who refuse to heed their words become complicit in the evil they denounce.

read this on veterans day , the entire piece at the link death, our future. by choiceNovember 7th, 2009 at 7:27 am

The young soldiers and Marines do not plan or organize the war. They do not seek to justify it or explain its causes. They are taught to believe. The symbols of the nation and religion are interwoven. The will of God becomes the will of the nation. This trust is forever shattered for many in war. Soldiers in combat see the myth used to send them to war implode. They see that war is not clean or neat or noble, but venal and frightening. They see into war’s essence, which is death.

blindmanNovember 7th, 2009 at 8:29 am 1990 to 2008 the ten largest banks wentfrom owning 10 % to 60 % of assets in u.s..bailouts would seem gratuitous. they alsogained complete ownership of the governmentand all that is decaying with it. currency.two mentalities. one, play a game, learn the rulesand do your best. two, refuse to “play any gamewhere the rules are already determined.”. last link , check out older entries atbottom, a world of good interviews.imo. as advertised , some remarkable minds.

blindmanNovember 7th, 2009 at 8:45 am Myth of the Grand Chessboard: Geopolitics and Imperial Folie de GrandeurIn the Road to 9/11 I summarized the dialectic of open societies: how from their energy they expand, leading to a higher level of more secretive corporations and agencies, which eventually weaken the home country through needless and crushing wars.[4] I am not alone in seeing America in the final stages of this process, which since the Renaissance has brought down Spain, the Netherlands, and Great Britain.Much of what I wrote summarized the thoughts of writers before me like Paul Kennedy and Kevin Phillips. But there is one aspect of the curse of expansion that I underemphasized: how dominance creates megalomanic illusions of insuperable control, and how this illusion in turn is crystallized into a prevailing ideology of dominance. I am surprised that so few, heretofore, have pointed out that from a public point of view these ideologies are delusional, indeed perhaps insane. In this essay I will argue however that what looks demented from a public viewpoint makes sense from the narrower perspective of those profiting from the provision of private entrepreneurial violence and intelligence.The ideology of dominance was expressed for British rulers by Sir Halford Mackinder in 1919: “Who rules East Europe commands the Heartland; Who rules the heartland commands the World Island; Who rules the World Island commands the World.”[5] This sentence, though expressed after the power of Britain had already begun to decline, accurately articulated the anxieties of imperial planners who saw themselves playing “the Great Game,” and who thus in 1809 sacrificed an entire British army of twelve thousand men in the wilderness of Afghanistan….This kind of brash talk is not unique to Brzezinski. Its call for unilateral dominance echoed the 1992 draft DPG (Defense Planning Guidance) prepared for Defense Secretary Cheney by neocons Paul Wolfowitz and Lewis “Scooter” Libby: “We must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role.”[10] It is echoed both in the 2000 PNAC Study, “Rebuilding America’s Defenses,” and the Bush-Cheney National Security Strategy of September 2002 (NSS 2002).[11] And it is epitomized by the megalomanic JCS strategic document Joint Vision 2020, “Full-spectrum dominance means the ability of U.S. forces, operating alone or with allies, to defeat any adversary and control any situation across the range of military operations.”[12]Such overblown rhetoric is out of touch with reality, dangerously delusional, and even arguably insane. It is however useful, even vital, to those corporations who have become accustomed to profiting from the Cold War, and who faced deep cuts in U.S. defense and intelligence spending in the first years after the collapse of the Soviet Union. They are joined by other groups (discussed below) that also have a stake in preserving the dominance mindset in Washington. These include the new purveyors of privatized military services, or what can be called entrepreneurial violence, in response to defense budget cuts.The Real Grand Chessboard: Those Profiting from Enduring ViolenceThe delusional grandiosity of Brzezinski’s rhetoric is inherent above all in the false metaphor of his book title. “Vassals” are not chess pieces to be moved effortlessly by a single hand. They are human beings with minds of their own; and among humans an unjust excess of power is certain to provoke not only resentment but ultimately successful resistance. One can see this easily in Asia, from the evolution of anti-Americanism in Iran to the Hizb-ut-Tahrir (HT) in Central Asia: although still ostensibly nonviolent, HT’s rhetoric is now more and more aggressively anti-American……

blindmanNovember 7th, 2009 at 9:04 am

U.S. Army colonel Andrew Bacevich:the concept of global war as the response to violent Islamic radicalism is flawed. We ought not be in the business of invading and occupying other countries. That’s not going to address the threat. It is, on the other hand, going to bankrupt the country and break the military.[24]…..

blindmanNovember 7th, 2009 at 9:22 am

this seems important too….Another Private Intelligence Contractor or PIC is Science Applications International Corporation (SAIC), an $8 billion corporation involved in defense, intelligence community, and homeland security contracting. In the words of veteran journalists Donald Barlett and James Steele,SAIC has displayed an uncanny ability to thrive in every conceivable political climate. It is the invisible hand behind a huge portion of the national-security state—the one sector of the government whose funds are limitless and whose continued growth is assured every time a politician utters the word “terrorism.” SAIC represents, in other words, a private business that has become a form of permanent government….[SAIC] epitomizes something beyond Eisenhower’s worst nightmare—the “military-industrial-counterterrorism complex.”[35]

GuestNovember 7th, 2009 at 3:41 pm

Almost all the excessive hedge fund de-leveraging is over. Banks have continued to hold 40 to 1 leveraged positions, because they cannot exit them without a major economic recovery without going bankrupt. Our government remains trapped in the same old bubble mentality in its activist control banking and policymaking having issued $1.9 trillion in additional debt over the past year. Banks and government still do not see the warning signals. Any sane businessman who views the continued leverage being used by Fannie, Freddie, Ginnie and the FHA has to cringe in horror, as leverage increases daily without end. We predicted six years ago that the government would end up owning all the mortgages in a bankrupt nationalization process and that is exactly what is happening. Mind you this has been going on worldwide in order to deter financial collapse. Papering over the problem is not a solution. We are starting to see governments worldwide begin to raise interest rates and begin to withdraw loans in order to bring back financial normality. Wait until they discover such well-intentioned moves will cause a relapse in economic and financial activity and they begin to slip back into the morass from which they thought they were ascending. If rates are raised and funds withdrawn from the system the world financial system will fall into depression. They know that, but they are hoping hope against hope they are wrong and that it will work. They do not want it discovered that they created this monstrous problem deliberately.

Pecos BankerNovember 8th, 2009 at 1:31 am

Who are the Illuminists that Bob Chapman refers to in all of his writings? Is this some kind of anti-Semitic code word?

Pecos BankerNovember 8th, 2009 at 3:30 pm

I don’t really know, but I’ve asked who are these Illuminists before and I’ve never had a response to that question. Perhaps it’s just a rhetorical device, or perhaps they’re djinns or something.

blindalien- picean- fallen other type.November 8th, 2009 at 5:29 pm

pb, to take up valuable space in the sphere with thisbut a google search will tell you what you want to know.but… the trick of the illuminati whether “they” existas such or not is that a certain amount of the populationsbrain matter, or mind, is under an influence of “unconscious”origins, hence the term “trance-endence, not change”. theproblem being that people are on automatic pilot with regardsthe essentials in their lives and it is like being in a tranceof someone else’s design. aaannnd it is a social trance/ danceso it turns out that we are all illuminists as we are thehosts and become the vector. that seems to be the trick ofthe illuminati and the reason they are “impossible” to identify,”they” is us!, but no one wants to hear it/face it.?or something akin to the human being is an “impossible bird”. nick lowe, great album btw.

NoviceNovember 9th, 2009 at 1:55 pm

the Illumanists or illuminated ones is a term used by the New Age movement to describe those who work toward uniting the world according to the New Age plan for a global economic system of Sharing- or Democratic Socialism.

GuestNovember 7th, 2009 at 8:11 pm

Another recent Roubini interview.Nouriel Roubini: The Coming Commodities CorrectionCrigger: But does gold still have a role to play in currency, either as a de facto or literal currency standard?Roubini: Well, the central banks are diversifying their foreign reserves, and that’s increasing their demand for gold. China’s doing it; India’s doing it; others are doing it. Gold is going higher in part because of this central bank diversification, and in part because, of course, whenever the dollar weakens, we see an inverse relation within the dollar price of commodities, including gold.But if you ask me, can gold can go towards $1,300, $1,400, $1,500 or $2,000, like many gold bugs say? Well, there’s only two scenarios in which that could happen. First would be a real increase in global inflation, and we don’t see that right now. In most emerging markets and advanced economies there is actual deflation, because there’s glut of supply rather than demand, workers have no pricing power and they cut wages. So in a situation where there’s deflation rather than inflation, why would gold be staying high? It cannot be. It can go up above or below $1,000, but it’s going to move around those levels, and it’s not going to break toward $1,500.The other scenario is Armageddon, another depression, where everybody would buy canned food, guns, ammunition and gold bars and run to a cabin in the mountains. That was the risk after Lehman, but that risk has been severely reduced.So we don’t have Armageddon; we don’t have inflation, so gold can maybe go slightly higher. But those people who delude themselves that gold can go to $1,500 or $2,000 are just talking nonsense. The fundamentals are not justified, and those people are just talking their books.Crigger: Is OPEC still effective at managing oil prices? In the 1970s, they were viewed as this mastermind of pricing; but these days, they seem pretty ineffectual.Roubini: OPEC can manage prices marginally. The only supplier that has excess capacity that can use it to stabilize oil prices is Saudi Arabia. But once oil is above $80 like it is now, ETF demand, options demand, speculative demand, these can easily push it to above $100.I would say that if there were a reason we had the global recession last year, it wasn’t just Lehman or the subprime mortgage problem; it was that when oil went to $145. That was a major, real trade shock negative, and a real disposable-income shock for the U.S., Europe, Japan, China and all the other oil-importing and commodity-importing nations around the world. That kept the world in recession when oil was at $145. Now, I feel that oil at $100 is going to tip the world into a double-dip recession.Crigger: Why?Roubini: Because last year, when oil went to $145, half the world, like emerging markets, was growing very fast. But today, with the global economic collapse, we’re now barely out of the ground. The economy is on its knees, trying to rise. If oil were to go because of nonfundamental reasons toward $100, then I would say oil at $100 would be like a big hammer beating on the head of the global economy. At current levels, oil prices aren’t justified, but they can go higher because of market dynamics and speculation; much higher.Crigger: You’ve come out in favor of position limits for commodities—how would that solve this problem?Roubini: I’m in favor of position limits, because I think this volatility in oil prices is severely damaging the global economy. When oil goes to $145, we have a global recession. When oil goes to $30, nobody invests in new capacity. And these swings in boom and bust in oil prices are extremely damaging to economic growth. It’s time to control it. If we don’t control it, these booms and busts are going to become more severe, more damaging and more risky.Crigger: If we put in place position limits, how would that impact futures-based commodities funds? Would that kill them off, as some have said?Roubini: It might kill them off, but frankly, who cares? I care about the real economy. I care about not having another global recession. If people are speculating on oil, and that pushes oil up to $145 like last year—I’m in favor of limits on that. Who cares about this? Frankly, I couldn’t care less.Crigger: Thanks for your time. Enjoy the conference!More at this site.

GuestNovember 9th, 2009 at 11:42 pm

Does anyone recall whether Roubini spoke about gold not seeing upwards of $1,100 when it was around $925? (which is about the same percentage difference between $1,100 and $1,300)There are no more fundamentals, folks. The game is being restructured, either under control or out of control…

Little SaverNovember 8th, 2009 at 2:05 am

Wow, the leaders get a wake up slap from their own advisors. Perhaps, this will work after the years of futile wake up warnings from all those knowing bloggers and critics. Or will leaders be lobbied again into denial for the umpteenth time?“Some banks became dependent on this assistance and don’t seem to be able to detach themselves from the public support,” FSB Chairman Mario Draghi told reporters today after a G-20 meeting in St. Andrews, Scotland. “Some jurisdictions may continue to support unsustainable business models.”The FSB, a group of regulators charged by global leaders to rewrite global financial rules, said its findings were borne out by the self assessments of 20 global banks given to regulators.

Pecos BankerNovember 8th, 2009 at 3:09 am

The rating agencies are at it again!”The debt situation is irrecoverable,” said Carl Weinberg from High Frequency Economics. “I don’t see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this.”This was taken from Ambrose Evans—-Pritchard’s recent article on the latest coming collapse (Japan): sure to dump your cookies after reading the Telegraph article.

PeterJBNovember 8th, 2009 at 4:16 am

Speaking of “weekly roundups”:McChrystal’s evaluation also indicates that the war will not only escalate within Afghanistan but will also be stepped up inside Pakistan and may even target Iran. is discussing a horrible idea, putting a “transaction tax” on every stock or option purchase or sale. Please consider AFL-CIO, Dems push new Wall Street tax. the resulting credit crunch was ongoing, the Fed “convinced” Congress to allow them to pay interest on member bank reserves held by the Fed. Credit, at near zero rates, is now being extended by the Fed to its “anointed” in exchange for their toxic waste as collateral, which proceeds are then being deposited with the Fed as reserves at a 3% rate of interest instead of being re-loaned, and we’ll give you three guesses as to who gets to pay for this interest on reserves. impressive budgets, the two largest economic stimulus plans to date – those initiated by the governments of the United States and the People’s Republic of China – are doomed to fail deal has $110 million bank loan funded by Bank of America. My friend said the property is worth $30-40 million. What I found interesting, and which confirms that banks are not even close to marking their assets properly, is that my buddy said that B of A is carrying the loan on its books at the full $110 million hum

Little SaverNovember 8th, 2009 at 4:38 am

Another Break in the Wall:Due to an unexpected outbreak of rationality (and perhaps embarrassment), the Treasury department has rejected requests of Goldman Sachs and Berkshire Hathaway to purchase Tax Credits from Fannie Mae.This paper transaction would have provided precisely zero value to the taxpayers, and allowed these firms to add to the piles of bailout monies already received by avoiding billions of dollars in taxes otherwise legally owed. It would have been a license to steal.The sheer arrogance, the colossal gall involved boggles the mind.Too much to be handled by spin and denial.

11b40November 9th, 2009 at 5:51 pm

Get ready for increased railroad subsidies or other forms of taxpayer funded goodies for Mr Buffet.Independent Contractor

GuestNovember 8th, 2009 at 1:48 pm

In a previous thread it was noted that Warren Buffett made a smart move into Burlington NorthernSanta Fe Corporation by trading Berkshire Hathaway stock for hard assets that will hold theirvalue against a weakening Dollar.But there is another upside to this story. Warren Buffett said in a CNBC interview that:“Burlington Northern Santa Fe last year moved a ton of goods 470 miles on one gallon of diesel.It releases far fewer pollutants into the atmosphere, saves enormously on energy consumption,and diminishes highway congestion.”Sounds nice. But the real catch is that oil prices are going back up again. As oil prices climb,hold, and become permanent, Warren will be in the catbird seat accepting government subsidiesto expand infrastructure while he transforms the trucking industry from long haul to local delivery.

GuestNovember 9th, 2009 at 7:01 am

there is only one reason Warren Buffet is betting on Burlington Northern, that is higher fuel cost in the future and railroad being fuel efficient. that mean good transportation will depend on railroad more than ever -> profit.

11b40November 9th, 2009 at 5:55 pm

To be more exact – that would be ‘taxpayer subsidized profit’.Not making a value judgment as to benefit of railroads vs other forms of transport, but rest assurred that a ton of our money will flow into Mr. Buffet’s pockets once again.Independent Contractor

GuestNovember 8th, 2009 at 6:03 pm

ContinuingAEI Subprime VI: Q&Aat Housing Doom:“Well I think at some point we’re going to have a government in power that’s going to make a choice between the American people and our creditors, who are predominantly foreign. And I think that choice will involve letting the dollar depreciate. I don’t think we’ll ever actually repudiate our debts, as long as we can print more dollars. But I think that’s the fundamental political issue that faces our entire society … – Chris Whalen””Nouriel Roubini: I mean, if what we’re going to do is to essentially devalue the real value of our public debt and avoid debt deflation through inflation and debasing our currency (it’s an option), at that point, I think that the creditors of the United States are going to pull the plug.Because if we’re going to the route of high inflation then China, the Gulf States, Brazil, Mexico, Russia, Japan, you name it, they’re not going to go and sit back and take the capital levy of hundreds of billions of dollars on their own dollar assets. And they’re going to run away.Last time around we did it in the ’70s we were a net creditor country and a net lender. We were running current account surpluses. This time around we are the biggest net debtor in the world, to the tune of $3.5 trillion and we’re still borrowing on net half a trillion a year because we have a large current account deficit.So you can try and impose that capital levy, then you have a sudden stop of capital and the dollar collapses, and then you have a spike in interest rates and you have disorderly stagflation again.So it’s too easy to say we’re going to screw our creditors, because those creditors are not going to bend over and say, “I’ll take it.” They’re going to run away, and it’s going to be nasty at that point.[laughter]”hlowe

John WalshNovember 8th, 2009 at 10:43 pm

Roubini in the 2009-11-07 20:11:28 post above, “At current levels, oil prices aren’t justified, but they can go higher because of market dynamics and speculation; much higher.”If this can happen to oil, why not to gold? If oil got to more than twice where it “should” be why couldn’t the same speculative forces double the price of gold?

GuestNovember 9th, 2009 at 6:58 am

moron, have ever occur to you that Roubini be wrong? that all commodity will head higher, including gold under massive global liquidity easing?

John WalshNovember 9th, 2009 at 1:19 pm

Isn’t that something; you post a reasonable comment and the first thing out of an anonymous guest’s mouth is “moron”!

Wild BillNovember 9th, 2009 at 1:25 pm

Don’t let it bother you. I notice whenever a thread becomes old, more posters resort to infantile name-calling, hiding behind the “Guest” moniker. They have nothing to contribute so they dump their inner filth instead. It’s best to ignore them and let them grovel in their own self-loathing. At least that is an emotion that is justifiable in their case.

ChrisLNovember 9th, 2009 at 3:39 am

In Goldman Sachs we trust :“The injunction of Jesus to love others as ourselves is an endorsement of self-interest,” Goldman’s Griffiths said Oct. 20, his voice echoing around the gold-mosaic walls of St. Paul’s Cathedral, whose 365-feet-high dome towers over the City, London’s financial district. “We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all.””I’m doing ‘God’s work’ says Goldman’s Chairman LLoyd Blankfein …We 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. We have a social purpose.“NB : Average pay this recessionary year for the 30,000 staff is expected to be a record $700,000. Top earners will get tens of millions… Not bad for a company that would be bankrupt if the American tax payers hadn’t bailed out AIG.

The AlarmistNovember 9th, 2009 at 6:44 am

No ChrisL, GS wouldn’t be bankrupt without the bailout of AIG. That would have merely dented their bonuses by a few thousands of dollars. They also would have gotten along fine without the $10B of TARP they claim they were forced to take. They might, however, have been out of business if they had not had an unconstrained call on the full faith and credit of the US at the worst of the crisis. But that is OK, because they are apparently doing the Lord’s work ….

Harley QuinnNovember 9th, 2009 at 1:36 pm

When did Goldman Sachs and God merge? Was it a hostile take over? I find the cross is increasingly crowded these days. When it comes to agents with power of attorney, it sure looks as though God spreads his business around. We can tolerate inequality to achieve properity for all, then we can tolerate genocide so that all may live in peace, gluttony so all my be well nourished, homelessness so all may be well housed, ignorance so all may be well educated and people freezing to death in order that they be kept warm. Finally the most critical ingredient in this quest for universal properity is we must be intolerant of rationality so that we can irrationally believe this horse manure.

FEDupNovember 9th, 2009 at 6:40 am ridiculous reason to keep the market rally going:Bloomberg: Stocks, Commodities rally on G-20 stimulus as Dollar retreats-Stocks and commodities RALLIED and the DOLLAR PLUNGED after the Group of 20 nations agreed to maintain measures to boost economic growth and remained SILENT on the US currency’s weakness. Gold advanced to a RECORD.Can we assume the market will continue to rise as the dollar keeps declining or goes to 0???

GuestNovember 10th, 2009 at 7:41 am

yes, of course dollar decline, market will continue to climb. dollar decline doesnt matter to market. only interest rate climb will hurt the market now. remember, Obama, Pelosi, FED, and Treasury want cheap money and weak dollar.

blindmanNovember 9th, 2009 at 7:35 am……….Subprime Prosecution Stops Foreclosures But Lets Goldman Sachs Off Hook05/13/09 11:06 AMRead more at: Attorney General Martha Coakley won a victory against the Goldman Sachs Group Monday, forcing the financial firm to cut a $10 million check to the state and pony up $50 million to help around 700 homeowners pay subprime mortgages….”Clearly, there’s a preference to pursue them criminally because I think that creates deterrence,” he says. “You know, it’s difficult to deter a kid who’s going to rob a 7-11 store for 25 bucks but for people who are purportedly educated, or at least sophisticated, who defraud others, they’re more susceptible to being deterred.”But the most sophisticated they are, the more they can drag out a prosecution. By the time they’re found guilty, half the victims may be out on the street, their homes foreclosed……..comment: doing the landlord’s work. driving up the price of housingand putting people on the street so they can then be sent to war,banished, to kill your foreign competition etc…traditionally, the work of the lord. landlord.

GuestNovember 9th, 2009 at 11:58 pm

driving up the price of housingand putting people on the streetActually, this trick was well exposed by Catherine Austin Fitts. She identified activities in which a mob-like racket (gov & “developers”) would run down neighborhoods (introducing drugs was once such way) to drive prices down and then swoop in and buy up a bunch of property. Result: concentration of more land in fewer hands; homeless people; more jailcare (welfare for the prison and legal industries).

MM CANovember 9th, 2009 at 8:20 am

More BS LIES and Manipulation of Data…. If anyone thinks GDP grew, think again…Economists Seek to Fix a Defect in Data That Overstates the Nation’s GDP VigorLOUIS UCHITELLEPublished: November 8, 2009WASHINGTON — A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation.The shortcomings of the data-gathering system came through loud and clear here Friday and Saturday at a first-of-its-kind gathering of economists from academia and government determined to come up with a more accurate statistical picture.The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.That may help to explain why the recovery from the 2001 recession was a jobless one for many months and why the recovery from this recession is likely to generate few jobs for many months.In addition, more detailed import data would help to explain wage inequality, by linking some low wages more accurately to particular industries exposed to import competition.On another front, many argue that labor productivity is rising faster than the pay of workers who made the greater productivity possible. That argument would be watered down if more accurate data showed that productivity had been overstated.“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.The federal agencies that compile the nation’s statistics increasingly acknowledge that they lack the detailed data needed to calculate the impact of imported goods and services as imports rise from an insignificant 5 percent of all economic activity 35 years ago to more than 12 percent today, not counting petroleum. As a result, many imports are valued as if they were made in the United States and therefore higher in price than their imported counterparts.The problem is particularly acute in manufacturing. Imported components constitute an ever greater share of the computers, autos, appliances and other finished merchandise that roll off assembly lines in the United States — and an ever greater share of all of the nation’s imports.But the statistical system is not yet up to the task of sorting out which components are made here, which are made overseas and the resulting impact on employment. As Lori G. Kletzer, an economist at the University of California, Santa Cruz, put it, “We don’t know what jobs have been offshored.”The same holds for services. An accounting firm in New York with 50 employees outsources some of its functions to less expensive accountants in India: the paperwork on an income tax return, for example. That work comes back to New York by computer transmission and is billed at New York rates, as if it were value added in this country.Grappling with these blind spots, nearly all of the 80 experts at the conference, which was sponsored by the Upjohn Institute and the National Academy of Public Administration, agreed that the statistics now published tend to overstate the strength of the economy. That view was shared by those who attended from the Bureau of Economic Analysis, the Bureau of Labor Statistics and the Federal Reserve, all big players in measuring economic performance.The stated goal, among those at the conference, is to repair the statistics, but that requires several years, lots of money (from Congress) to gather more information about what companies are doing, and whole new procedures for measuring imports. Much of the conference was devoted to an analysis of the gap between existing data and reality, and ways to close that gap.Imports and exports are recorded, of course, as they enter and leave the country. The American trade deficit speaks volumes. But when it comes to who gets what import — particularly which manufacturer gets what component or what metal or what machine — these details are not gathered.Instead, the federal agencies use an import price index, much of it imputed from small samples, that fails to capture just when an auto company switches from a domestically made carburetor to a less expensive Chinese model, and whether that shift is in all of the company’s plants or just those in Michigan.“We can’t pick up the price shift,” Mr. Alterman said. “We are not designed to do that.”

The AlarmistNovember 9th, 2009 at 9:38 am

Carburetors? Aside from perhaps Tata, do they even make cars with carburetors these days? Even my lawn mower is fuel injected.

AnonymousNovember 11th, 2009 at 5:19 am

Do not be so quick to discount the Tata’s. If the Tata Nano is successful they may end up changing how cars are produced everywhere.With Tata Nano – apart from the car itself it’s the engineering philosophy and rework of assembly line concept that are on test.

SoftwarengineerNovember 9th, 2009 at 4:41 pm

Deficits Cure Short Term Ills and Cause Horrifying Long Term ProblemsI hear the G20 has agreed to dig into their savings account to keep the world economies afloat, albeit without any supports for the US dollar. American stocks shot up with the wonderful news, but is it really wonderful?China may have a 8% increase in their GDP, but IMO its all smoke and stimulus mirrors there too. They dig into their savings account until its dried up. China is urging America to control its deficits….LOL….yet, if we did, who’ll buy the Chinese stuff???? The Chinese themselves? LOL, they can barely feed themselves.Who’ll buy the $29K Mercedes subcompacts when they sky-rocket to $60K with dollar devaluation? The Europeans? LOL, they’ll be lucky to still be making Mercedes, if we stop buying them.There were many that predicted inflation with lower dollar rates and guess what, yes, oil is now $80/bbl [and supplies are snow-balling] ….but a little birdy is telling me, remember a stronger dollar a year ago, with $30/bbl oil…..yeah, gas was still $2 something a gallon like today. So what happenned, why didn’t the inflation monster get us by now? Even when oil was $150/bbl, we didn’t see $10/gal gas, inflation adjusted from $30/bbl $2/gal gas…..what the Hades is stopping the inflation monster?Wages, lower wages my friends. The elite don’t want to talk about it, no, they say household incomes rise every year [yeah right, and so does the number living and working in each house].I’ll repeat myself again….RE will never rebound in price unless per capita wages go up and that just ain’t gonna happen my friend.

SoftwarengineerNovember 9th, 2009 at 5:03 pm

The problem is the definitions of recession and GDP. Since a recession ends when GDP begins to grow again, even if it’s from a much-reduced level, then by that measure the recession is likely to have ended when 3rd quarter GDP is announced. Want to end a recession? Easy. Just pour buckets of money into the economy. GDP goes up. The recession ends. Everyone is happy except workers and the families who depend on their incomes which, after deducting them, leaves almost no one.GDP is a very poor measure of the health of our economy. For example, if GDP rises 0.5% while our population rises 1%, everyone has gotten poorer, not richer. Secondly, GDP is totally dependent on how inflation is calculated. Fudge the Consumer Price Index calculation a little and, presto!, you have GDP growth. Finally, most GDP growth is due to a rise in productivity. When wages fail to keep pace with the increase in productivity – and they never do – then increasing GDP actually masks declines in real income.There’s really only one economic measurement necessary to gauge the health of the economy – unemployment. The balance between the supply and demand for labor tells you everything you need to know about the economy. And if the demand for labor is getting slack compared to the supply, the first place we should look for the culprit is our non-petroleum goods trade deficit.

The AlarmistNovember 10th, 2009 at 2:21 am

Nah. As the dollar devalues, RE will go up, just like it did in the 1970’s. You might feel a little richer, but after your weakly indexed taxes and reduced global purchasing power parity, you will be poorer, just like the 1970’s.

SoftwarengineerNovember 10th, 2009 at 11:47 am

I’d Agree With You Alarmist, Except One Sticky PointWe’ve hit the 0% treasury point [we’re pegged out with Greenspan’s method] and RE interest rates can’t come down any more to move your higher priced RE to lower wage Americans.Nope, RE’s gonna go right down with the dollar and American wages.Your only hope is a lower dollar will spur exports and hence, may lift wages up….LOL…the rest of the world suddenly start buy American stuff? IMO, that ain’t gonna happen either, they’re too protectionist.

GuestNovember 10th, 2009 at 5:02 pm

If a weak currency and low wages were the only solution to becoming a leader in Exports, why are Germany and Japan such leaders ?

softwarengineerNovember 11th, 2009 at 12:49 pm

From What I HearThe new youth with low wages in Japan don’t buy Japanese autos, they consider them a luxury item and aren’t helping Toyota or Honda at all, like America did.Zimbabwe…..I thought they just lived hungry in like worthless cardboard shacks, their RE market point, compared to America, is moot. Besides, they haven’t mounted trillions of debt with the rest of the world like America, building a mountain of debt laden overpopulation glueboard homes…..absolutely no comparison IMO.The world can’t afford to let America go into a worse recession/depression, that’s why the dollar goes down, oil goes up, gas supplies go WAY up and prices are somewhat stable anyway. Are ya getting yourself a 50″ plasma for devalued US $500 this Black Friday sale?…LOLI hear stocks went up today, because the smoke and stimulus mirrors Chinese economy will still buy our debt….LOLWho has who’s economic gun to who’s head?

GuestNovember 9th, 2009 at 8:53 am

Elizabeth Warren: We Rescued The Top Of The System, Left The Bottom To Fend For Itself (VIDEO)Huffpost – Elizabeth Warren: We Rescued The Top Of The System, Left The Bottom To Fend For Share Print CommentsElizabeth Warren, the chair of the Congressional Oversight Panel charged with monitoring the bank bailout, was on Morning Joe Friday morning to dig in to the newly released unemployment report. The numbers are bleak — unemployment has surpassed 10 percent for the first time since 1983 — and Warren is not surprised.”Let’s face it,” Warren said, “This is sort of how we went about the rescue — we rescued at the top and we left the bottom to kind of fend for itself — and that’s showing up in the unemployment numbers.”Warren went on to explain that the report is really about the guarantees the Government made to protect banks’ assets while leaving the public out to dry.”Look, it saved the top of the system,” Warren acknowledged. “It helped stabilize it, but not so much for families who are hard hit down on the ground, the real economy.” There’s always the question, Warren explains, about how you save the top — in this case, the public pays for the banks’ guarantees and the top executives benefit. “We said, in effect, at the top, there’s really not any pain in return for taxpayer support. Not so much so when it comes to folks at the bottom. We said wait a year, we’ll get there, we’ll do what we can.”Morning Joe host Joe Scarborough suggested that it was the old “socialize the profits, privatize the gains” scenario, but Warren took it one step further.”The way I think of it is: they say something like ‘Give me your money, investors and I’m going to Las Vegas and put it all on red 22. And if red 22 comes in — woo! we are RICH. If red 22 doesn’t come in, don’t worry because the tax payers will pay you back the money you invested.”Watch it here:Elizabeth Warren, the chair of the Congressional Oversight Panel charged with monitoring the bank bailout, was on Morning Joe Friday morning to dig in to the newly released unemployment report.In her official reports she has continually given kudos to how the situation has been handled.In her public appearance she has continually suggested something sinister and purposely destructive has been going on . She appears to more interested in keeping alive her 30 minutes of fame than in telling the whole truth and nothing but the truth to the American taxpayer.and political games of the Repugnants.Elizabeth knows and has revealed where the money is in a number of interviews and Congressional appearances. The Banksters took it and used it anyway they wanted to because the Congress let Paulson scare them into approving the funds with no strings attached, such as accountability or penalties for not using funds efficiently and effectively.However, I do fault Dr. Warren for not coming right out with the fundamental solutions, which she knows all too well. The problems are wrapped up in the bankers sleight of hand. She knows that the Fed can create debt through its interest rate policies and through its fractional reserve lending system. eliminating both functions from Fed control and returning it to the Federal and State governments takes the International banking cartel out of the profit stream represented by interest payments and allows the Fed and State governments to buy down interest rates without cut throat competition with their commercial banks.She knows this can work because she’s very familiar with the way the State Bank of North Dakota operates. She’s also familiar with the long successful history of debt free currency in this country beginning with the Mass. and Pa. colonies issuance of scrip. And Lincoln’s issuance of interest/debt free Greenbacks, followed by JFK’s $3.4 billion dollar distribution of interest/debt free Silver Certificates in 1963.In her public utterances she misleads progressives with catchy falsehoods, which they eat up like candy, which is what they are.When she writes her reports she gets downright factual:”After a wide-ranging review of TARP and related guarantees, the Panel has not identifiedsignificant flaws in Treasury’s implementation of the programs. To the contrary, the Panel hasnoted a trend towards a more aggressive and commercial stance on the part of Treasury insafeguarding the taxpayers’ money. …” – Elizabeth Warren’s oversight panel’s report on guaranteesAny current trend in play would be more aggressive than initial actions. Any at all. From zero accountability, there is nowhere to go but up. And how can you possibly make a case against the gist of this argument — government’s allegiance to Wall Street vs. its concern for the public? You simply can’t.Given her significant errors in judgment in the past – being a registered Republican, a believer in free markets, and thinking that most bankruptcy filings represented people just trying to shirk responsibility -, I do not trust her instincts, but I think she is capable of smelling out a rat like Ron Paul.I at least give her that.Read more at:

MM CANovember 9th, 2009 at 8:58 am

As California goes so will the rest of the country…. This is the beginning stages of a depression out here…’s only just begun tooReport: Looming foreclosure wave will derail recession recovery in CaliforniaWASHINGTON, D.C.November 6, 2009 5:58am• Nearly every home in Stockton and Modesto may soon be ‘under water’• ‘California is not yet out of the woods’Hold the thought that California might be part of the nation’s recovery from the Great Recession, says the Center for Responsible Lending.It says a tsunami of new foreclosures looms over California, ready to swamp any “green shoots” of an economic recovery.“Indeed, with over one million mortgage foreclosures looming, continuing record levels of unemployment and a worsening state budget that will bring more reductions in state and local services, California is not yet out of the woods,” it says.CRL points to record levels of unemployment, record levels of mortgage delinquencies, and precipitous declines in housing values as precursors to a further deepening of the state’s economy.It says that “defective mortgage products” have left many California homeowners in mortgages that exceed the value of their homes – “under water.”“For California, Deutsche Bank projects that as of Q1 2009, 54.3 percent California homeowners were underwater on their mortgages, and that within two years, 67.9 percent will be under water. Projections for areas like Modesto and Stockton are more extreme with 2011 estimates at nearly 90 percent,” the report says.The much-vaunted loan modification programs touted by the government are more difficult to obtain and less likely to succeed when properties are under water, the report says.“California is also home to the largest share of very risky loans called Payment Option Arms, which the data show are not faring well. Many of those types of loans, made primarily in 2004-2007, will have their payments reset in the next few years, drastically raising mortgage payments for borrowers and leading to a new wave of foreclosures,” the report says.The state is in a “spiral of bad news,” CRL says, that has no upside.“Unemployment-driven defaults are putting further downward pressure on the housing prices and preventing a more robust economic resurgence,” it saysThe Center for Responsible Lending says waiting for Washington’s cavalry to ride in over the horizon is waiting for disaster.“If we are to get the economy on solid footing again, California must adequately address the mortgage crisis by preventing avoidable foreclosures and stabilizing the housing market for the long-term,” it says.It makes two major recommendations for state government action:• Establish a foreclosure process that ensures that mortgage loan servicers carefully review and document their economic alternatives to foreclosures that will keep borrowers in their homes.• Given the large numbers of borrows who are deep underwater, loan servicers should be encouraged to reduce outstanding principal balances in their loan modifications, so that borrowers can begin building equity in their homes.The Center for Responsible Lending describes itself as a nonprofit, nonpartisan research and policy organization “dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices.”DrilldownDownload the report here (california-economic-outlook-11-09.pdf, 538 KB)

The AlarmistNovember 9th, 2009 at 9:47 am

And the answer to this downward spiral is measures like increasing the withholding rate by 10% regardless of the actual tax liability. Coupled with the propensity to refund tax-overpayments with IOUs, this would suggest that essentially all of the wealth the remaining Californians create is subject to state appropriation one way or another.Is it any surprise that property values continue to slump as demand evaporates?

GuestNovember 10th, 2009 at 12:05 am

It’s ALL fiat money! And, it’s NOT ours! Ha ha!It’s the system, doesn’t matter who is asking for what, it’s the system! Adjust here, adjust there, remove regulations, add regulations, it will still screw up! Why? Because that’s the system! It’s what you get when you get wealthy elite controlling things and leading everyone else along as though they have an equal say in things!Representative Democracy, it’s neither!

GuestNovember 10th, 2009 at 7:38 am

I will avoid California, Arizona state muni, any states that cant get its fiscal budget in order. absolute dead money (absolute low reward and HIGH RISK) there.

AnonymousNovember 9th, 2009 at 10:05 am

guess is should have been more specific,it isnt just about the flow of money,but when will this rally /environment / status quo /forced propaganda ENDS..its drivin me nuts, i just cant take this anymore

CaponeNovember 9th, 2009 at 9:31 am

Professor I understand this is not a religious blog. However, based on recent comments made by the Dictator Blankfein this seemed appropriate enough to post. Thanks so much for your service to us all Master Blankfein. I send the same note to the PPT/Goldman futures traders who so cleverly printed “666” for the March lows. They are religious alright…Romans 12:19-21Beloved, never avenge yourselves, but leave itto the wrath of God, for it is written, “Vengeance is mine, I will repay, says the Lord.” 20 To the contrary, “if your enemy is hungry, feed him; if he is thirsty, give him something to drink; for by so doing you will heap burning coals on his head.” 21 Do not be overcome by evil, but overcome evil with good.

GuestNovember 11th, 2009 at 8:23 pm

Not believing in some old white guy in a beard controlling everything.. but some days I sure wish that one existed, as it’s hard believing that all these b*stards are going to get off!

MM CANovember 9th, 2009 at 11:20 am

NO JOBS! and the real unemployment will hit 21-25% as I have been saying for a year.U.S. Joblessness May Reach 13 Percent, Rosenberg SaysBy Vincent Del Giudice and Thomas R. KeeneNov. 9 (Bloomberg) — The U.S. unemployment rate may rise to a post-World War II high of 13 percent in the aftermath of the recession, said David Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto.“This is going to be the mother of all jobless recoveries,” Rosenberg said today in an interview on Bloomberg Radio. “At the beginning of the year, who was calling for unemployment to go up to 10 percent?”Rosenberg said the recession, the deepest since the Great Depression, “is truly secular in nature” and said the economy is “in a post-bubble credit collapse.”A 13 percent unemployment rate would be the highest since monthly records began in January 1948, according to Labor Department data. The previous postwar high was 10.8 percent in December 1982. Yearly records, which began in 1929, show joblessness climbed to almost 25 percent in 1933 during the Great Depression.The rate exceeded 10 percent last month for the first time in more than a quarter century. The Labor Department reported Nov. 6 that unemployment increased to 10.2 percent in October, the highest since 1983, and payrolls dropped by 190,000 workers.Additionally, the so-called under-employment rate, which includes part-time workers who’d prefer a full-time position, and people who want work and have given up looking, reached 17.5 percent last month, the highest level since records began in 1994.

The AlarmistNovember 10th, 2009 at 2:24 am

Mark Steyn said it best: “Give FDR his due … where the rest of the world merely had a depression, FDR gave us the Great Depression.”Have you noticed that, just like the 1930’s, the countries that have taken the most aggressive counter-cyclical financial action (US & UK) seem to be the ones with the slowest recovery?

Winston SmithNovember 10th, 2009 at 9:45 am

“Give FDR his due “the WPA and and the CCC with buildings and power plants and libraries and schools and parks and trails and art works and regulatory agencies and Social Security still in operation 75 years later. He also gave people jobs and led us to win the war against the fascist Nazis.

GuestNovember 10th, 2009 at 4:14 pm

Sure, but for right wing nutcases and other free market ideologues, all this doesn’t count.Remember, for them, government intervention is always bad, whatever it does.So FDR is bad, Reagan is better (allthough all the curves show that inequality and America’s mania for consumption from debt really skyrocketted under Reagan).

The AlarmistNovember 10th, 2009 at 6:40 pm

There is so much sophistry in this analysis that I could pen an entire RGE article.That Soc Sec is ‘still in operation 75 years later’ is a sign of its success is elegantly tortured logic along the lines of saying that a plane that is falling from the sky is still technically in flight. Soc Sec is essentially bankrupt, a fact that will become increasingly apparent as we approach 2018 and the beginning of the net outflow of Soc Sec funds that will mark the beginning of its end.I suppose you could also say he led us to victory, although the preponderance of evidence was that FDR interfered with the successful prosecution of the war on enough occasions that his contribution was to extend it. Give Truman his due, however, since he had to make the hard call to actually end the war, and then he had to muddle through the fact that his predecessor had condemned half the world to domination by Stalin and Mao in the name of a twisted combination of Realpolitik and and undying admiration of the noble socialist experiment.He ‘gave people jobs’ ??? I guess you could say that. It might have gone better if the jobs had been in real value-creating industry rather than planting trees. I will admit I have used some of the roads and libraries, but I have also used libraries endowed by the likes of Carnegie, and let’s not even get me started on the FDR administration’s prosecution of Mellon as he tried to transfer his art collection into a trust that would benefit the National Gallery.But like the Romans, I guess we have our own Pantheon of gods … FDR, Kennedy, Reagan etc.

Winston SmithNovember 11th, 2009 at 1:59 am

@Alarmist who said “It might have gone better if the jobs had been in real value-creating industry rather than planting trees.”But planting trees is valuable. In fact this is precisely what we should be doing today. Planting trees, cleaning our oceans which have islands the size of Texas of plastic waste swirling in whirlpools.cancerous islands that will never breakdown. ingested by fish. I assert that real value is creating a sustainable planet with modern power generation and space age mass transit, clean waters and air, healthy topsoils. That is Value Creating!’gave people jobs’ is lousy twisted english I’ll admit .FDR and his administration created the WPA which employed millions of people making things that would have lasting resonance like the Library you used and the murals on the walls, like the trails and the parks and the buildings and the power plants and the dams, the roads and the rail and the schools.@Alarmist who said “There is so much sophistry in this analysis that I could pen an entire RGE article.That Soc Sec is ‘still in operation 75 years later’ is a sign of its success is elegantly tortured logic… Soc Sec is essentially bankrupt”there are more important things than profit and making money. There is for our elders Social Security. This program has provided 100’s of millions of people survival money that they worked for!!! Does that count for ANYTHING or does everything have to make money? Somethings cannot be measured in PROFITS.@g who said “Sure, but for right wing nutcases and other free market ideologues, all this doesn’t count.Remember, for them, government intervention is always bad, whatever it does.”yeah even like the Clean Air Act and the Clean Water Act they opposed that too. They are in the minority however, let’s keep them that way.I would like to repeat a link to a radio show that I think Blindman posted here. I found it scintillating. An interview with Chris Hedges former journalist for the NY Times and author of -“Empire of Illusions: The End of Literacy and the Triumph of Spectacle”

ChrisLNovember 10th, 2009 at 4:23 pm

The depression was unavoidable. As the comming depression is unavoidable.FDR made it socially tolerable.The US and the UK will be the strongest hit because they have concentrated over the last 30 years the most excesses of financial crony capitalism, consumption from debt, current account deficits, produce nothing, and have a completely overdevelopped parasite Finance, Insurrance and Real Estate sectors that is sucking the bloodline of the rest of the economy…

GuestNovember 10th, 2009 at 7:33 am

FED and Treasury Shot : “I will keep 0% forever and continue Liquidity Easing forever. What you gonna do? I dare you to spank me, wuaHAHAHAHAHAAAAA”

wuaHAHAHAAAA is boring the readers of this blogNovember 10th, 2009 at 5:52 pm

Guest, why do you have to repeat the same pathetic comment three times ?And your obsession with FED keeping rates at 0% and QE forever is becoming really boring : it’s about the 50th time I see this associated with your wuaHAHAHAAAA signature.

The AlarmistNovember 10th, 2009 at 6:42 pm

Oh, you have to remind us of that pesky little problem. Look at it this way … they are the only nation with the courage to over-consume to make up for all of you who so selfishly save and conserve. You would all be mired in deeper poverty but for that.

GuestNovember 10th, 2009 at 12:19 am

They have the money, and they have the votes…November 5 2009: Here’s how to stop the bleeding>

Firing Tim Geithner will not solve the problem either. He may end up as the fall guy somewhere down the line, but he has a ways to go now people start to believe the recovery nonsense the media keep spouting. A ways to go , and a lot more damage to do. Still, if Geithner’s forced out, his place will be filled by the next drone. People talk about Paul Volcker and Elizabeth Warren for the post, but they would be powerless sitting ducks in a bankers pond.The only way to stop the bleeding is to separate money and politics. But the presidents, Senators and Congressmen who have the power to execute that separation have no desire to do so. They owe their very positions to the donations from the very corporations they would need to throw out of Washington. The Legislative and Executive branches of government are in the hands of private capital, without which they wouldn’t be able to win a single election.You would have to appeal to the Judicial branch, the Supreme Court, for a judgment on the legality of a federal republic being ruled by a few special interest groups. But the Supreme Court has long turned into a theater of political nominations. There is no independent court left.Which makes it look like a pretty closed system. You are allowed to participate as onlookers in a Kabuki Theater, while your present and future wealth and happiness are being stolen away from you behind closed doors somewhere far away by shady characters who own their power to the fact that they have their hands on your money.I think people mean well in general who propose firing the most prominent executives, or auditing hidden books filled with multi-trillion frauds and losses. But I don’t think they realize how far we’ve come along this path. I’m quite sure people like Dylan Ratigan and Ron Paul would define the present conundrum as a financial crisis first and foremost, with a side-dish of political issues perhaps, but nothing that couldn’t be solved with a good old fashioned hard fought democratic vote. What democracy would they suggest that vote take place in, though?To even begin to solve the problem and stop the bleeding, you would have to fire the entire government in all its branches. And then start all over with people you can guarantee have never received a penny from the ruling classes. That looks like a steep cliff to climb.

The AlarmistNovember 10th, 2009 at 2:30 am

You can’t separate money from politics … to suggest otherwise ignores the entire history of mankind. Divine right rulers like Louis XIV found it was all about money. Even the Commies had to come across with cash from time to time.

GuestNovember 11th, 2009 at 8:30 pm

And that’s the point, that there’s no solution for the system. But, this doesn’t mean that there is no solution.Eliminate centralized government and the impacts of corruption go with it. Not to say that there wouldn’t be corruption at all, it’s just that it wouldn’t threaten the entire planet.

PeterJBNovember 10th, 2009 at 5:41 am

If anyone here and / or there is really interested in reality: (I doubt it but there you are anyway)”In mathematics, the theory of large numbers includes the phenomenon of exponential growth which occurs when the growth rate of a mathematical function is exponentially proportional to the function’s current value. Such exponential growth is mathematically unsustainable and will eventually implode.” hum

FEDupNovember 10th, 2009 at 11:31 am

agree but our leaders seem only concerned about their next election and service only those who pay for them…so sad.

John WalshNovember 10th, 2009 at 12:48 pm

This quote is actually mathematically wrong. Exponential growth occurs when the growth rate of a mathematical function is proportional to the function’s current value. NOT “exponentially” proportional to the function’s current value. Just nitpicking.dx/dt = Ax => dx/x = Adt => ln(x) = At => x = exp(At).

GuestNovember 10th, 2009 at 4:54 pm

That quote is completely meaningless…Not only, as John Walsh noted, is it mathetically wrong. But also, exponential growth is not “mathematically unsustainable” (that means nothing).It is, maybe, “physically unsustainable”, if we accept that we live in a world of limited resources. But even that ignores the possibility that in the future (in the next century or two) humans might find ways to harvest resources from outside this planet.

Tge AklarnustNovember 10th, 2009 at 6:45 pm

You can raise and infinity to an infinite power and it does not collapse in on itself. It is merely your computing power and imagination that fail you.

GuestNovember 11th, 2009 at 8:32 pm

humans might find ways to harvest resources from outside this planet. Please, don’t make me laugh!More neo-liberal crap-think!

PeteCANovember 10th, 2009 at 2:11 pm

It’s going to be interesting to see when the market finally acknowledges that the pumped-up Dow ($INDU) is really a no-go. Take a look at $BKX. The banking index is correctly looking ahead. US banks are going to get slammed during the first half of 2010 with major losses on comercial real estate loans, PLUS added losses on all those “liars loan” mortgages that were sold a few years ago. Not a happy banking siutation. Definitely not a time when banks are going to start loosening up credit to consumers. All of which leaves the unhappy US consumer with major job losses, higher rates on credit cards, very tight loan standards at banks, and companies (US businesses) that can’t get new credit to hire.Can we say … double-dip recession?PeteCA

The AlarmistNovember 10th, 2009 at 6:47 pm

In the meantime, a number of players are touting S&P500 to 1300 as a possibility … a distinct one since there seem to be no viable income-generating investment opportunities in the real economy.

PeteCANovember 10th, 2009 at 7:23 pm

I guess if people want to do “day trading” with their investments – that’s their business. However, if they do it with their real wealth (or whatever is left) then they will get clobbered sooner or later. The S&P is far above the 200-day moving average. The Fed and its Clone Army are taking a real risk by pumping a new $INDU bubble like this. The “good times” can only last so long.

PeterJBNovember 10th, 2009 at 4:44 pm

Speaking of failure and having lost the plot, and, returning to denial er, again:I could bring up ‘responsibility of office’, but then who cares about that anyway?”Ben Bernanke, the Fed chairman, has continued to fight attempts to carve up the central bank’s empire. Last month he insisted that the Fed’s ability to create effective monetary policy relied heavily on its role as a bank regulator.”Keyword: regulator”In announcing the Bill, Senator Chris Dodd, the committee chairman, called the Fed an “abysmal failure” as a bank regulator. He said that the Fed should return its focus to monetary policy and last-resort lending.”Keyword: abysmal’m all for turning the FedRes building into an international bordello – as previously stated, er, repeatedlyHo hum

The AlarmistNovember 10th, 2009 at 6:48 pm

Dodd is just upset because he couldn’t get any special personal deals, like the ones he got from COuntrywide, out of the Fed.

blindalien- picean- fallen other type.November 10th, 2009 at 7:45 pm Former Economic Hit Man John Perkins Reveals Why the World Financial Markets Imploded—and How to Remake Them..”And we truly have a failed economic system at this point. It’s deep. You know, one of the reasons I wrote Hoodwinked is because I saw a lot of books coming out that deal with what I consider triage. What do you do with AIG? What do you do with General Electric? What do you do about the immediate problems with Wall Street? But the problem is much, much deeper. There’s a cancer beneath all that. And this is this very basics of our current economic system. And we must delve down and root out that cancer and move into something much better.”…..These are farmers who have been driven off their farmlands by oil companies or hydroelectric projects, or they’re fishermen, like the Somali pirates, who can no longer make a living fishing, because their waters have been fished dry or destroyed by nuclear waste from US military vessels. I have not met anyone who wanted to be a terrorist. They’re desperate people. If we want to get rid of terrorism, we must get rid of the root causes, that cancer that is destroying our whole system..But I think we also need another whole new set of laws that says businesses must be—look at being environmentally and socially responsible. For a hundred years after United States became the United States, no corporation was allowed to get a charter unless it could prove that it served the public interest. And charters came up for renewal every ten years or so. They didn’t get a renewal unless they could prove they served the public interest. That all changed with a Supreme Court ruling that made corporations equivalent to individuals in the late 1880s, and then John D. Rockefeller stepped in and really took things—made things go out of hand.But we need to go back to an understanding that corporations are there to serve us. When I went to business school, I was taught that a good CEO takes care of the long-term interests of the corporation—the employees, the customers, the general economy—not just there to make short-term profits. And we really need to get back to that, to an understanding. I think we need laws and rules that say that corporations must be aiming toward creating a sustainable and just and peaceful world. We simply have to do that. These are our main controlling organizations today, and they must be answerable to what’s best in the public interest, not just the interests of a few very wealthy, powerful people……

MM CANovember 10th, 2009 at 9:09 pm

So long Best Buy, jsut liek Cicuit city come the spring. Walmart is predatory and when they have destroyed all the competition they will stick it so far up Average Joe Americans butt, it will come out everyones mouth….F..k Walmart!Wal-Mart’s Mission Is To Destroy Best Buy This Christmas (WMT, BBY)Vince Veneziani|Nov. 10, 2009, 9:30 AM | 2,890 |10PrintTags: Wal-Mart, Retail, Holiday SeasonWith Black Friday fast approaching, retailers are scrambling to offer the best deals possible in order to lure more customers in for the holiday shopping season. Walmart is doing just that, but more aggressively than most of its competitors:Sun Sentinel: The chain’s power to undercut rivals has allowed it to slash prices on toys, books and other holiday items in recent weeks. The latest deals include a $20 Thanksgiving dinner for eight, an HP notebook computer for $298 (normally $448) and a Sharp 52-inch flat-panel television for $898 (normally $1,548).”They put a stake in the ground and said, ‘We will not be beat this holiday season,’ ” said Joe Feldman, a senior retail analyst at Telsey Advisory Group. “Without question, everyone has to look out for Wal-Mart.”Looking at the chart below, from Deutsche Bank, we can see that Walmart (WMT) does beat major competitor Best Buy (BBY) in terms of pricing, even if in some cases it’s just one or two dollars

Winston SmithNovember 11th, 2009 at 2:14 am

“F..k Walmart!”I like your anger mm of Ca! It is well placed for someone who I’ve admired on this blog as a level headed sort. these types of companies are like cancers and I for one never shopped there. Buy local.

GuestNovember 11th, 2009 at 7:08 am

Walked throuh walmart the other day, and I have to say, most of the stuff they sell is nothing but cheap products and junk that usually breaks farily quickly and is made poorly. look close…

blindalien- picean- fallen other type.November 10th, 2009 at 10:40 pm

opinion piece….’ Blind Support of Our Troops and Their Unintended Defense of the Big LieKevin CopenhagenInfowarsNovember 4, 2009….“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.- Joseph Goebbels, Nazi Propaganda MinisterWhy of course the people don’t want war. Why should some poor slob on a farm want to risk his life in a war when the best he can get out of it is to come back to his farm in one piece? Naturally the common people don’t want war neither in Russia, nor in England, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country.-Hermann Goering, President of the Nazi ReichstagIt is precisely this “Islamo-fascist/War on Terror” lie which is propagated by not only right-wing media personalities such as Glenn Beck, Sean Hannity, Rush Limbaugh and Bill O’Reilly among many others, but an increasing amount of left-wing media talking-heads like Chris Matthews, Keith Olbermann and Rachel Maddow as well now that “their guy” is in power. The war is suddenly OK. “Obama is just doing his best to clean up Bush’ mess. There’s only so much he can do, you know.” Yeah, right.Well, my fellow patriotic Americans, it’s not OK.It’s not OK that we went into Iraq, killed over 1.3 million innocent civilians, polluted their soil and water with depleted uranium munitions, displaced millions of other Iraqis, and have turned their country into a third-world cesspool so that we could control their oil. It’s not OK that we went into Afghanistan so that we could re-invigorate the opium trade (which had been all but decimated by the Taliban), keep the black market money flowing to fund the CIA, ISI, MI6, Mossad, etc., and ensure record crops of poppy fields while “our troops” stand guard. Pat Tillman was about to come home and expose it all until he was murdered by his own government…..

Winston SmithNovember 11th, 2009 at 2:20 am

Tell it like it is Blindman. IT IS NOT OKThe cia with their karzai brother paid hireling. the cia did this kind of crap in Vietnam and El Salvador-running drugs. read Gary Webb they took the coke and sold it in LA which was the crack epidemic. nothing has changed. we are basically a crime syndicate and we’re doing it with the blessings of Wall Street. In fact it is Wall street that drives this devastation. it is not OK.

AnonymousNovember 11th, 2009 at 12:17 am

blindman,i think its too late,seeds for the Next War has been planted (actually might have germinated) oil figures were distorted by US pressure, says whistleblowerThe world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.The allegations raise serious questions about the accuracy of the organisation’s latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies

PeterJBNovember 11th, 2009 at 2:36 am

Speaking of Insanity:I believe the most insane set of “Laws” is that which give Corporations the rights of individual people; citizens and otherwise and to boot, grant them rights which do not make them responsible for their actions! And, allow them to manage their affairs for short term profits only, so I agree, this needs to be changed along with regulators regularly dining with these corporate officers – also for short term profits.But then, this is what “leadership” does, and excels at.Where, @ Anon… nothing can be believed today, either whistle-blowers (or counter whistle-blowers, or counter-counter-whistles-blowers) or the whole spectrum of talking heads and any “leadership”, political, bureaucratic, diplomatic, think-tankers and international-institutionalists, and all experts and academics; none, can be believed, a priori, which clearly indicates that the whole system has NO integrity whatsoever, and will experience a systemic collapse accordingly.Ho hum

AnonymousNovember 11th, 2009 at 2:50 am

dear pete,i wasnt trying to justify the authenticity of the story, right or wrong is not of concern,whats to worry then??pick your options (pretend you can choose),a) resource based war??b) economic based war??c) faith based war??well at least they havent resort tod)superior race war vs the rest of those sub-human..(maybe they will, they have to CHANGE Obama 1st though)

PeterJBNovember 11th, 2009 at 3:59 am

@ AnonNothing to worry; something to be curious about; don’t like “pretend”; superior? Hardly – but the meek have inherited the Earth, to be sure; to be sure.No, “leadership” is like a viper with its back to the wall and surrounded, that is to say, f&^king desperate; it is time to beware of this barbarian as insanity is its nature; add, treacherous, cowardly, deceitful deceptive, untrustworthy, unreliable, unstable and many other similar attributes that you may wish to add.To be sure they are interesting times and full of opportunity – but one must be. a priori, sentient and damned careful’ trust no-one!Expectation must be honed to the worst possible scenario which comes with manipulative insanity and desperation. And, even then you will be surprised; Your mileage will vary!Ho hum

Little SaverNovember 11th, 2009 at 2:50 am

Are the goldies seeing this coming their way?The U.S. Lunatic Asylum (i.e., Economy) Is Facing Approximately $15 Trillion In Roll Risk By 2012Zero Hedge recently highlighted the developing risk in the government’s outstanding Treasury portfolio, where nearly 40% of all issues mature within the year. As such the roll risk for the US government is massive, and even the smallest unexpected macro blip would make the rolling/refinancing of roughly $5 trillion in debt very problematic.As a related matter, we estimate that banks that we rate will face maturing debt of about $10 trillion between now and the end of 2015, $7 trillion of which will occur by the end of 2012. a few trillions of the coming deficits, and you have the number 15.Must be a strong economy that will be able to carry this burden, or not? Or is it the dollar holders whom will be offered this privilege?

GuestNovember 11th, 2009 at 3:04 am

Guess, dollar owners are already fleeing towards gold, S&P500, emerging markets, name it…The air coming out of the deflating dollar must go somewhere to inflate something, no? …Strong dollar policy, ha!

GuestNovember 11th, 2009 at 7:08 am

not deflating dollar, massive cheap dollar must go somewhere. and yet no exit strategy!!!! FED and Treasury target 0% quantitative easing forever!!!

FEDupNovember 11th, 2009 at 6:53 am

Market Mania: it just keeps finding every excuse in the book to keep going up-forget about valuations, unemployement, GDP, foreclosures, bank failures-it’s all good for the Mr. Market.Let’s see how far up it can go with a declining dollar and rising oil.

GuestNovember 11th, 2009 at 7:16 am

no worry, as long as we have no exit strategy!!!! FED and Treasury target 0% quantitative easing forever!!! Obama and Pelosi, and Geithner giving out unemployment benefits and free health care for everyone forever!!! state and local government with majority Democrats can keep borrowing via muni bond to balance fiscal budget forever!!! long live American wet dream.

GuestNovember 11th, 2009 at 7:33 am

so if cheap money party is kind of party you enjoy, then what you waiting for? come join the party!!! the party just gotten started and will last forever. so enjoy, what happen in cheap money party stay in cheap money party. =D

ChrisLNovember 11th, 2009 at 11:36 am

What’s so perverse is that as long as unemployement is not declining significatively, the FED won’t be any closer to taking away the punch bowl, and asset markets will keep going up.

GuestNovember 11th, 2009 at 10:31 am

wuaHAHAHAHAAAA, i thought you guys been saying there is no inflation in this deflation environment. now you admit there is inflation??

GuestNovember 11th, 2009 at 7:05 am

Buried in the California Controller’s November analysis is a guest article: Overview of the Commercial Property and Capital Markets with Implications for the State of California by Dr. Randall Zisler. (ht picosec)California: Every Commercial Property Deal From 2005 Onward Is UnderwaterHere are some excerpts:Whereas excessive and imprudent leverage fed the bubble, deleveraging not only popped the bubble, but, in the process, destroyed record amounts of equity and debt. Most deals financed with high leverage from 2005 to the present are under water. The equity is gone and the debt, if it trades at all, trades at a deep discount to face value. Most leveraged equity invested in real estate has evaporated since property prices, if marked to market, have fallen 30% to 50%.

blindalien- picean- fallen other type.November 11th, 2009 at 7:21 am

America The BetrayedWalt Whitman: “Poet of the People”by Richard C CookGlobal Research, November 6, 2009Richard C. Cook.If you want to get an idea of what America once was like, read the poems of Walt Whitman. Whitman was born on Long Island in 1819 and grew up in Brooklyn, N.Y. His family was poor, but even though he left school at the age of 11 he gave himself an education by reading and working in the printing shop of a newspaper until he gradually became a published writer. He worked as a teacher and news reporter and owned his own newspaper by the age of 20.In 1848 Whitman was a delegate to the founding convention of the Free Soil Party. During the Civil War he worked as a nurse in Union military hospitals and held several government jobs, including interviewing Confederate prisoners for pardons. Some of his greatest poems came from his war experiences, including his famous elegy upon the assassination of President Abraham Lincoln, “Oh Captain! My Captain!” His great collection of poems, Leaves of Grass, was self-published. He died a national hero in 1892 in Camden, New Jersey, where thousands of people came to pay their respects.Whitman has always been viewed as a poet of the people, in contrast to the pretentious dandies from academia who have controlled official American culture for much of our history. He wrote of workmen, farmers, sailors, soldiers, lovers, criminals, and prostitutes.In the text of the first edition of Leaves of Grass, he wrote of himself as, “Walt Whitman, an American, one of the roughs, a kosmos, disorderly, fleshly, and sensual, no sentimentalist, no stander above men or women or apart from them, no more modest than immodest.” He had discovered a great secret, one that is known to everyone who is young at heart: that the free individual, always potentially a “kosmos,” stands at a much higher level in the scale of creation than any man-made collective.Thus was Whitman a hero to the Beatniks of the 1950s who tried to rediscover an authentic American voice in the streets and on the roads and highways of this great land. The spirit of Whitman was surely present through the rebellion of the 1960s, when America’s young men and women rose up and fought the Establishment to stop the Vietnam War and bring civil rights to racial minorities.The Establishment fought back with a vengeance and, through the most egregious betrayal in history, reduced the world’s greatest industrial democracy to the pathetic shadow of its former self we are today.The first thing the Establishment did was destroy the industrial job base by shipping millions of good jobs to China and other Third World nations, where slave laborers could be forced to churn out consumer products at a fraction of the cost of similar work done by American workers.Acting through the CIA and organized crime, the Establishment flooded the cities and college campuses with illegal drugs in order to rot the minds and souls of our youth.They dumbed down education to the point where young people who graduate today know little and can do less of a practical nature. Vocational training is dead. A high school graduate is worth virtually nothing in the job market, and many college graduates are semi-literate and self-absorbed, often lacking backbone, skills, or initiative. Some high school and college graduates are even drug addicts or alcoholics.They turned the economy over to thieves from Wall Street and created a military machine that turns youth into murderers and assassins whose job it is to conquer the world for the fat cats of global capital.They ruined the arts, literature, and music through crass commercialization, making it almost impossible for any real original creativity to be produced or communicated. The one bright light in this darkness is the internet, which is being threatened by commercial suppression of freedom of expression by the ambitions of big communications companies. Thank goodness too for the rare creative genius like Michael Moore who has the courage to hold up a mirror to this deeply diseased society.Then they wrecked people’s health with processed food and constant inducements to a sedentary lifestyle while pumping us full of dangerous vaccines and prescription drugs. They drummed it into everyone’s head that we are basically weak, ill, helpless creatures who can only survive by taking pills and making constant trips to doctors, hospitals, and clinics.They induced us to fight over our possessions and freedoms in law courts with the aid of greedy lawyers in front of rapacious judges who have built up the largest prison population in the world.They pulled money and credit out of the inner cities and rural areas leaving those segments of the nation and their populations to rot.The list could go on and on and on.Today we are in the midst of not just a recession but a terminal depression. Getting the banks to lend again so people can buy homes at what are still over-inflated prices or so they might compete with immigrants to get construction jobs through building of more useless office buildings or military bases is not a recovery. The “greening of America” is a myth. There is no resurgence of alternative energy investment or new public infrastructure apart from a few highway projects.American family farming is practically dead and is under a new assault from speculators who are undercutting prices and forcing foreclosures. The local manufacturing sector never came back after the calamitous decline produced by the Paul Volcker recession of 1979-1983, when interest rates were deliberately raised to over 20 percent to kill off family-owned businesses so that global corporations could step in and take over. Since then we had the “Reagan Revolution” when the banks took over the economy, the Clinton bubble of the 1990s which crashed in 2000, and the George W. Bush/Alan Greenspan housing bubble which blew up in 2008. Now Main Street lies shattered and shuttered as a result of the crimes and treacheries of the last 30 years.True, there is a rebellion brewing, including a monetary reform movement that has attacked the power of the Federal Reserve, as well as a few progressive voices that call for a much larger economic “stimulus” than the Obama administration has seen fit to implement.But is there any practical plan on the part of either political party or organized movement to restore America to what it once was–a place where ordinary people could live, work, learn, and flourish? The answer is a resounding “No.” Not a chance. And “Change You Can Believe In” hasn’t changed a thing. All it has done has been to produce another financial bubble, this time using huge amounts of public debt through the sale of U.S. Treasury bonds. Business is not growing and jobs are not coming back. The only thing that has gone up has been the meeting of military recruitment quotas.This latest bubble will fail too, because money created through lending to float the prices of assets is not wealth. Rather wealth consists of goods and services produced by labor applied to natural resources. Those who provide the labor must be recompensed fairly.So what is to be done? The answer is that nothing can or will be done, if by that you mean whether a political savior is going to come along to rescue our nation and its people from destruction.In fact, what they are planning is to continue to throttle and enslave us with a predatory financial establishment and a military policy that is preparing the groundwork for World War III. The war will be fought with American troops against Russia and China, after which China will take over as the world’s policeman while this country disappears from the face of the earth. It’s the ultimate plan of the New World Order, the ones American politicians, financiers, military leaders, and academics bow down to.It is time for each and every individual who values his or her own life along with the creative potential of the human spirit to begin to work with others to create a new nation and world. The government isn’t going to do it for us. Please believe me. This is not a system that can be reformed. It is a system that must be replaced. And it must be replaced by the ordinary working men and women who have been crushed, used, and abused during the past ugly half-century.Americans, get to work. Call your friends and family together today and begin to figure out what to do. Start with 15 minutes of prayer and meditation. You will be shown the way from within yourselves. My own view is that setting up local currency systems, as many communities are now doing, is a good place to start.. g.n. / richard laszlo, systemic stability vs crisis. crisis beingopportunity for learning/teaching/changing among other things. etc…

blindalien- picean- fallen other type.November 11th, 2009 at 8:09 am

g,before long dubai will be in the ocean. that doesn’t bother meat all, in fact, it cheers me up, a form of optimism.the truth is both glorified and castrated by its integrity, the face of hubris, this is what the pessimist warns. dubai isfacing a colossal crisis point of their own making, a sign of the times.

FEDupNovember 11th, 2009 at 8:25 am

Many of those “pessimists” have been screaming about the highjacking of our country by the elite resulting in depressed wages, record unemployment and unsustainable debt-and they have been correct. Perhaps they are actually realists and you are the confused one. As for the comment “then why not end your life”, perhaps you should take a healthy dose of your own medicine rather than making cowardly statements such as that; certainly, a person of your intellect can see my point.

The AlarmistNovember 11th, 2009 at 10:01 am

Because your life would be relatively hazardous without the context a bearish point of view provides … you’d walk off a cliff while enjoying the sunshine from above. And we bears need the affirmation of being able to tell you we told you so. See, we need each other. Scary thought, eh?

blindalien- picean- fallen other type.November 11th, 2009 at 9:35 am good soldier. Massey (3rd Battalion, 7th Marines, Weapons Co. Cap 1- Iraq 2003 U.S. MarineCorps, 1992-2003) is a decorated Marine who is struggling to soothe his conscience afterkilling civilians in the Iraq war. Massey served twelve years in the Marine Corpsworking as a recruiter for a number of years. His actions in the 2003 invasion of Iraq ledto a mental breakdown in the field. He fought for and won an honorable discharge withthe help of Gary Myers, one of the military defense lawyers in the My Lai trials of the1970’s. Massey has written a book, Kill, Kill, Kill, which has been published in France.He is a founding member of Iraq Veterans Against the War….”The corpsman came over and dumped the bodies by the side of the road. I wish I couldtake that day back. I’d give anything. My CO (commanding officer) asked, ‘What’swrong?’ I said, ‘It was a bad day; we killed a lot of innocent civilians.‘ He replied,‘No, today has been a good day.’ I thought to myself, buddy boy, you’re in a world ofshit now..Imagine, being married for eleven years and it’s your anniversary and your spouserolls over and says Happy Anniversary, but there’s something I have to confess to you.I have never loved you. Everything has been a lie. I just used you and by the way, thekids aren’t even yours either. That’s how I felt – betrayed by the Marine Corps.”.comment: “in a world of shit now”, yes, that sums it up. the mental illness, inhumanand inhumane, that we take for executive intelligence and follow as it leads usfurther on into the worlds upon worlds of more and more shit. on this veterans dayi honor jimmy massey not for being a mass murderer, one who took pride in huntingand killing humans, but for facing the beast which is himself and telling the truth.the world of shit tells young men that for each innocent child or whatever theyexecute they are saving hundredsof wall mart shopper, could be mom. this obviously isn’t true butthese kids have grown up with many big lies and have learned the art themselves, as weall have. so jimmy massey has to live with what he knows and so do we all, we encouragedit and made it possible and non of us deserve a nights sleep or a moments rest untilwe honestly face what this man is facing.he is a sick and tortured soul and so are we, in a world of shit, by choice.but then again there appear to be many people who simply have no soul, or non left.that would be the state of leadership and those responsible for continuedsystemic dysfunction and destruction of the essential for the sake of the insignificant.colossal brain damage and mental illness reign supreme yet the cure is at hand, simple andavailable. just stop. embrace peace. it is all anyone really needs. so it shouldbe foundational at the core of a sustainable system but we have placed the capacityto destroy life and value at the heart of our economic system. this may have a placebut it is not at the heart.

blindalien- picean- fallen other type.November 11th, 2009 at 10:48 am

f,and “truth” has depth. on the surface embracing peace isthe obvious essence of community. it makes cooperationpossible, founded in sustainability. underneath that,at depth, is value or riches beyond the imagination,sentience. possibly everything and everything possible.groundE as someone said. from that everything ..even beyondfreedom / responsibility, spirit / mind .. butwithout peace we have nothing “true” to humanity and noadvancement is possible. no progress.?imo.

blindalien- picean- fallen other type.November 11th, 2009 at 9:46 am of Iraq Veteran Receive Mistaken Notice from U.S. Gov’t, Not Condolence Letter They Await From ObamaThe parents of U.S. Army Reserve Specialist Chancellor Keesling, an Iraq war veteran, received a letter yesterday from the VA asking that their son complete his “Post Deployment Adjustment.” The only problem is, Chance Keesling had killed himself in Iraq nearly five months ago. We speak with Chance’s dad, Greg Keesling, who’s still waiting for the letter he’s never received: condolences from President Obama. A longstanding US policy denies presidential condolence letters to the families of soldiers who have committed suicide.

Winston SmithNovember 11th, 2009 at 10:36 am

Stimulus Tracker-86,910 Projects-An Interactive Map

MM CANovember 11th, 2009 at 11:14 am

NO JOBS and Just lots of LIES! I wonder how many people Voted for Oabma on his promise to create 3-4 Million jobs?Massive Exaggeration And Lying Going On Over Jobs Created By StimulusStimulus job boost in state exaggerated, review findsErrors, incomplete data, estimated positions go into federal reportRevere spent $485,500 in stimulus funds to install solar panels on the roof of the Beachmont School and claimed to have created 64 jobs on the project. (Jim Davis/Globe Staff)By Jenn Abelson and Todd WallackGlobe Staff / November 11, 2009Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.Projects claiming to create the most jobsStimulus fund job benefits exaggerated, review findsOutlook darkens on Mass. job picture in ’10The Globe’s finding is based on the federal government’s just-released accounts of stimulus spending at the end of October. It lists the nearly $4 billion in stimulus awards made to an array of Massachusetts government agencies, universities, hospitals, private businesses, and nonprofit organizations, and notes how many jobs each created or saved.But in interviews with recipients, the Globe found that several openly acknowledged creating far fewer jobs than they have been credited for.One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But Bridgewater State spokesman Bryan Baldwin said the college made a mistake and the actual number of new jobs was “almost nothing.’’ Bridgewater has submitted a correction, but it is not yet reflected in the report.In other cases, federal money that recipients already receive annually – subsidies for affordable housing, for example – was reclassified this year as stimulus spending, and the existing jobs already supported by those programs were credited to stimulus spending. Some of these recipients said they did not even know the money they were getting was classified as stimulus funds until September, when federal officials told them they had to file reports.“There were no jobs created. It was just shuffling around of the funds,’’ said Susan Kelly, director of property management for Boston Land Co., which reported retaining 26 jobs with $2.7 million in rental subsidies for its affordable housing developments in Waltham. “It’s hard to figure out if you did the paperwork right. We never asked for this.’’The federal stimulus report for Massachusetts has so many errors, missing data, or estimates instead of actual job counts that it may be impossible to accurately tally how many people have been employed by the massive infusion of federal money. Massachusetts is expected to receive an estimated $1 billion more in stimulus contracts, grants, and loans.The stimulus bill – a $787 billion package of tax breaks, expanded government benefits, and infrastructure improvements – was signed into law in February by President Obama, who said it would create and save jobs by preserving local government services and spurring short- and long-term economic development.To be sure, the legislation has accomplished an important goal: funding public services facing the ax after the recession created gaping shortfalls in state and local government budgets. So Worcester and Lynn, for example, were able to keep police officers targeted for layoffs, schools across the state lost far fewer teachers, and community agencies preserved staff in the face of mounting demands for social services.The president also said the legislation demanded an unprecedented level of accounting from recipients, who report on the uses of the money and the jobs via a massive online system,, the first comprehensive accounting had shortcomings.Recipients said they found the reporting system confusing, leading them to submit information erroneously, and leaving them unable to correct mistakes in their reports. Additionally, the government files are massive and unwieldy. Reports do not distinguish between newly created positions and those that were “retained.’’“We see $15 million construction projects with no jobs, and a $900 shoe sale that created nine jobs. Both are obviously wrong,’’ said Michael Balsam, chief solutions officer for Onvia, a Seattle data company tracking the stimulus spending. “There were a lot of recipients that did not report. Those that did report have some data challenges – wrong data or missing data.’’Cheryl Arvidson, assistant director of communications for the Recovery Accountability and Transparency Board, the federal government’s oversight panel for the stimulus money, acknowledged the problems recipients are having reporting job counts.“Some people are going to be confused. Some people are manually entering data. We figured there would be innocent mistakes,’’ Arvidson said. “We anticipate that as we go forward . . . the data quality will be increasingly improved. We knew there was going to be a shake-out.’’Some of the errors are striking: The community action agency based in Greenfield reported 90 full-time jobs associated with the $245,000 it got for its preschool Head Start program. That averages out to just $2,700 per full-time job. The agency said it used the money to give roughly 150 staffers cost-of-living raises. The figure reported on the federal report was a mistake, a result of a staffer’s misunderstanding of the filing instructions, said executive director Jane Sanders.Several other Head Start agencies also reported using stimulus funds for pay raises and claimed jobs for it.At Bridgewater State, Baldwin said the college mistakenly counted part-time student jobs as full time.Some agencies that received stimulus money reported jobs for work that had not started. The Greater Lawrence Family Health Center reported 30 construction jobs “have been created,’’ even though it hadn’t begun construction on a $1.5 million renovation and expansion. Grant administrator Beth Melnikas said the health center does expect to hire 30 workers.There was often variance among recipients of the same source of funding. Some did not report any positions retained; others did. Some used different methods and got different results.For example, the City of Waltham said a $630,500 solar panel installation on the roof of City Hall created 10 jobs – even though the work had yet to begin. Revere spent $485,500 in stimulus funds to install solar panels on the roof of a city school. Revere’s job count? 64.The city’s project consultants used a different formula than the one the federal government recommended.“If not for this stimulus money, we would not have done the solar panel roof,’’ said Revere Mayor Thomas G. Ambrosino. “A lot went into this.’’Another source of confusion over the job counting is because Congress this year labeled as stimulus initiatives several longstanding programs, such as student work-study and low-income rental subsidies, that it otherwise regularly funds in annual appropriations bills. In some cases Congress increased the funding amount, too, so the stimulus legislation was a vehicle for expanding government support for people in need.Regardless of its label, the recipients treated the funding as business as usual. Only in September, when government officials told them they had to report on their stimulus spending, did they confront the issue of how to account for jobs associated with the money they received.Massachusetts property owners received $75.5 million in rental subsidies from the stimulus bill, for a reported total of 437 jobs. Recipients of 27 of the 87 contracts reported zero jobs. The others, meanwhile, simply reported the number of employees working at the property. If they received two contracts, for a larger property, they reported the employee figure twice.For example, Plumley Village East in Worcester listed 23 jobs for each of its two contracts for a total of 46 jobs, even though it has only 23 employees working throughout the complex.“There was some confusion about what they were really looking for,’’ said Karen Kelleher, general counsel for Community Builders Inc., which runs Plumley Village.Those overstated jobs are going to disappear from future counts. The Obama administration has recently determined the rental subsidies don’t have to be reported under the stimulus bill.One of those property owners, meanwhile, is frustrated by his experience with the legislation. Robert Ercolini manages a 201-unit affordable housing development in Plymouth. After being notified his annual rental subsidies were classified as stimulus spending, Ercolini renewed a request to the US Department of Housing and Urban Development for more than $1 million to fix up the property, reasoning he would be creating jobs by hiring contractors. He was refused.“After HUD denied me money to make needed improvements and actually create jobs,’’ Ercolini said, “it’s really funny to find out in September that I’ve been receiving stimulus funds all along and they want to know how many jobs we’ve saved or created.’’By his count, the answer is: “No jobs.’’Matt Carroll of the Globe Staff contributed to this report. Jenn Abelson can be reached at Todd Wallack can be reached at

wethepeepleNovember 11th, 2009 at 12:29 pm

The Government a.k.a., The State, can no longer comprehend itself. It has become the nightmare leviathan. No human or political party can understand its’ workings or not-workings. The ability to decern its own causes and effects have vanished. It’s growth of size and scope must be retarded and reversed. Its’ blood is taxation, its’ oxygen is inflation. Limit access to those and the State will shrink.

GuestNovember 11th, 2009 at 2:46 pm

if FED and Treasury are monetizing the debt. They can keep low rate forever with cheap money party forever!!! inflation can go up, but will not hurt market until rate go up, but FED and Treasury can keep rate at 0% forever with print press.