Open Thread: Financial Chicanery 101: Video of Two Sunday Shows
Since I've posted this I've come on another major piece on what's happening with the banks. New also a discussion of the implications of the ongoing Oligarchic Coup in the U.S. (with comparisons to Russia after the fall of the Soviet Union.). I am including it at the bottom of this thread. Please also take a look at Kuttner's latest, cited at length in my comment. carol.
Paul Krugman interviewed on This Week with George Stephanopoulis.
Meanwhile back at the ranch it seems that while the banks are too big to fail, Not true of the auto big three. They appear to be on the chopping block. See Naked Capitalism, Auto Company Plans Rejected by Task Force.
And David Sirota's commentary on Progressive Breakfast, Why Not Bank CEOs?
And here's another one from Naked Capitalism, The Banks Were Profitable in January and February Thanks to ... AIG. After some technical explanation of what's been going on the author provides an explanation for the layman, comparing the way AIG has been functioning to the operations of a shady used car lot. Here's a bit of the explanation:
For those to whom this is merely a lot of mumbo-jumbo, let me explain in layman's terms:
AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.
In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).
What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were 1) one-time in nature due to wholesale unwinds of AIG portfolios, 2) entirely at the expense of AIG, and thus taxpayers, 3) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, 4) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.
For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this "one time profit", which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers' money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.
Here is the introduction to the Quiet Coup by Simon Johnson from the Atlantic.
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
Is Barack Obama the new Herbert Hoover asks Edward Harrison.. His answer is Yes.
Edward Harrison here. For months now, we have been hearing the Obama - FDR comparisons, all suggesting that Barack Obama is a modern day Franklin Delano Roosevelt, with the opportunity to lead us out of Depression with a new New Deal. I have some serious problems with this comparison. In my view, a comparison between Barack Obama and Herbert Hoover is more apt.
Let's look back at the Depression for a second. Now, if you recall, Herbert Hoover became president in March 1929 when signs of a slowing economy were evident. By August 1929 recession hit.