The fun never stops around here. Yesterday, we noted the rampant conflict of interest that Summers works under. The latest brick thrown thru the glass that was Larry Summers reputation: His oversight of the Harvard endowment:

“Back in 2002, a new employee of Harvard University’s endowment manager named Iris Mack wrote a letter to the school’s president, Lawrence Summers, that would ultimately get her fired.

In the letter, dated May 12 of that year, Mack told Summers that she was “deeply troubled and surprised” by things she had seen in her new job as a quantitative analyst at Harvard Management Co.

She would go on to say, in later e-mails and conversations, that she felt the endowment was taking on too much risk in derivatives investments, and that she suspected some of her colleagues were engaging in insider trading, according to a separate letter written by her lawyer that summarized the correspondence.

On July 2 Mack was fired. But six years later, the kinds of investments she allegedly warned about did blow up on Harvard. The endowment plunged 22 percent last summer, in part due to the collapse of the credit markets. As a result, the school is cutting costs and under criticism that it took on too much risk in its investment portfolio.”

As bad as that is, it gets worse: Despite of the confidential nature of the letter, Summers apparently forwarded the letter to her boss. She was fired soon after

Harvard’s endowment is down 40% since late 2007 — and that’s not counting its private equity investments, some of which are being shopped at 40 – 60% off listed value.

As far as Harvard is concerned, Larry Summers seems to be the gift that keeps on giving . . .

>

Previously:
Harvard: Not So Smart After All (December 2008)

http://www.ritholtz.com/blog/2008/12/harvard-not-so-smart-after-all/

Source:
Ex-employee says she warned Harvard of risky moves
Endowment staffer fired after letter to president
Beth Healy
Boston Globe, April 3, 2009

http://www.boston.com/business/articles/2009/04/03/ex_employee_says_she_warned_harvard_of_risky_moves/

Category: Bailouts, Derivatives, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

64 Responses to “Larry Summers: Wrong Man for the Job, Part II”

  1. Scott F says:

    Its no surprise. He is quite the political hack.

  2. Judas says:

    Its ugly but true:

    Obama = Bush

  3. all the more Timber to understand, the construction of, the old adage: “You’re better off in New Haven.”

  4. Kurt Osis says:

    This is ridiculous. What F’d up Harvard’s portfolio was a massive over waiting to emerging markets, attempting to replicate the Swensen model. Were they taking too much risk? Yes, but like Keynes’ prudent banker, they failed in the conventional way, not recognizing the existence of liquidity risk and the need to fund Havard University’s obligations. Its the same story at almost every major endowed university.

  5. franklin411 says:

    The endowment’s 5 year annualized rate of return is 17.6%.

    The so-called “blow up” last summer resulted in a FY 2008 return of “only” 8.6% in a year when the S+P 500 returned a NEGATIVE 13.1.%

    Barry, this “brick” is made out of marshmallows!

    http://www.news.harvard.edu/gazette/2008/09.18/99-endowment.html

    ~~~

    BR: Look at the process, rather than the results. The risk managers at AIG, Merrill, Citi and Countrywide all pointed to great trailing returns, while ignoring the risk management process. They, like you, cherry picked one particular time span.

    The bottom line is when Summers was informed about excess risk, he handled it inappropriately.

  6. Kurt Osis says:

    @franklin411

    To be fair. ’08 FY ended in June for Harvard. most of the market losses were in the second half.

  7. torott says:

    I’m convinced that the old republic is long been dead. Long live the Republic of Bankers. Let’s just change the name of our country and get it over with. At least that would create jobs for folks to go out and change all the signs and maps.

  8. techy says:

    my sympathies with the man….I hope he will survive this onslaught.

    or maybe nobody gives a rat’s ass to bloggers who have nothing better but to rant and whine, since they are not part of the action. How did bush can get re-elected twice based on his stellar performance the previous 4 years?? where was the media….or the bloggers???

    now we are setting the gold standard….

    * it is sin to make money
    * it is sin to make mistakes with derivatives (not to mention that every smart kid was doing that the last 10 years or so….)

    i still think all this heat is just the mole hill…..and a pain in the butt for Obama…if he is really trying his best to keep the shit from engulfing the world…. but as far as i know…every politician is smart enough to not take things too personally.

    what can i say…..humans have small brain. do i need to remind you people about the bigger issues:

    1. management of corporations have been raping shareholders since the the last 10-15 years……WTF has anyone done about that

    2. Religion decides 30% of the votes in this country……i am always surprised that a liberal even has a chance….because that 30% also has the 5% from rich and powerful.(you just hope that economic hardship will not make another 5% to embrace religion….this country will be subject to papal rule)

    3. a person like sarah palin with the brain of a rock, can be the most popular person in republican party…..more popular than McCain

    4.wages of middle class has stagnated the last 10 years…because corporations have been busy cutting cost at the expense of america, welcome to free market….it maybe your time to get raped.

    5. The opposition cares more about winning the next election, even if it means bringing down the country.

    BTW a smart person does not waste his time discussing these things…..he works to make sure he becomes part of the elite who will always control the system….i am sure we all are just killing our time here :)

  9. Pat Shuff says:

    El-Erian is nearer the vicinity than Summers.

  10. MRegan says:

    What I got from that news story was abuse of power. Collectively, we are unwilling to countenance what the rampant abuse of power in our society means.
    To put it simply in the case of Summers having Mack fired, we see an American who holds(was holding) real power, stifle discourse to ensure the continuance of risky behavior, a behavior he undoubtedly benefitted from in some manner. And frankly, I don’t care about return, hell a whorehouse can have excellent ROI. What you do matters.
    I have got to tell you Connecticutters out there that you had better get down on your knees and pray to Mammon that no one ever figures out a way to explain to the hoi polloi just what has been done. And if the guys that fill the ranks of Xe and Triple Canopy ever get a yen to go Seljuk or freelance like the Zeta guys on the border, they will probably be looking for the meaty parts. Some of the smart ones are probably already gaming things out. Now, go play a round of golf or something.

  11. franklin411 says:

    @Kurt
    Gotcha, but Harvard seems to have outperformed the market in the post-June 2008 period as well. I don’t know anyone who didn’t get their face melted in September/October.

    And Barry,
    Really, this hate for Summers/Geithner is unhealthy. You’re missing the forest for the bricks, so to say. This strikes me as vastly more important than either of the articles about Summers you chose to focus on over the last two days. We need cramdown legislation, but the banking industry has succeeded in filibustering it by drawing on Demican Senators from the Midwest.

    [BR: I have no personal feelings towards either man. I am disappointed in the selection of Summers, and horrified with Geithner’s adapting much of Hank Paulson’s strategy.]

    ~~~
    Loan modifications result in higher payments
    April 3 2009
    LA Times

    WASHINGTON — Though lenders are boosting their attempts to curb record-high home foreclosures, fewer than half of loan modifications made at the end of last year actually reduced borrowers’ payments by more than 10 percent, data released today show.

    The report, based on an analysis of nearly 35 million loans worth more than $6 trillion, was published by the federal Office of theComptroller of the Currency and the Office of Thrift Supervision. It provides the most detailed and broad analysis to date of efforts to stem the foreclosure crisis, which President Barack Obama is trying to combat with a $75 billionplan to promote loan modifications.

    The report helps explain why many loans are falling back into default after being modified. Many borrowers and consumer groups contend that the modifications offered by the lending industry aren’t very generous, despite more than a year of public prodding from regulators.

    For instance, nearly one in four loan modifications in the fourth quarter actually resulted in increased monthly payments.

    Unbelievable. What was the point of all this?

    –Lauren Beale

    http://latimesblogs.latimes.com/laland/2009/04/loan-mods-result-in-high-payments.html

  12. Marcus Aurelius says:

    Judas:

    While there may be some continuity of personnel and power structure during this financial meltdown, Obama does not equal Bush. Gitmo and torture as a matter of policy, extraordinary rendition, non-compete contracts, religion-based political decision-making and hiring, and hopefully, general graft and corruption are not hallmarks – so far – of the Obama administration. Geithner, Summers, Bernanke are causes for concern, and should probably be kept out of the process of solving the problems they helped create, but their presence does not make Bush and Obama equivalents.

    I have a feeling that there are no lesser evils when it comes to fixing our broken financial system. Obama is damned if he does, and damned if he doesn’t. He was born (elected) between a rock and a hard place.

  13. Scott F says:

    You are missing the “Big Picture”

    The guys running the bailouts 1) helped contribute to its formation; 2) are not very good at their jobs, past and present.

  14. Marcus Aurelius says:

    echy Says:

    “now we are setting the gold standard….

    * it is sin to make money
    * it is sin to make mistakes with derivatives (not to mention that every smart kid was doing that the last 10 years or so….)”
    _________

    It’s not a sin to make money. Greed, on the other hand, has always been classified as a sin (at least, until Ayn Rand said it was a virtue, and falsely validated the actions of the spoiled children among us). We are reaping the rewards of unbridled greed. There’s a reason for the historical (cultural and religious) warnings against greed (and usury). Old sayings don’t get old for no reason. (“neither a borrower nor a lender be.” comes to mind).

    Making mistakes is also not a sin. OTOH, being reckless and claiming ignorance when people get hurt is. Do you honestly mean to argue that all of the “smart kids” never saw or contemplated the potential harmful results of their actions? maybe “smart” wasn’t the best choice of words.

  15. MA,

    peel away the slogans, the continuity is uninterrupted, see:
    http://www.youtube.com/results?search_type=&search_query=the+obama+deception&aq=f

    for a pictoral presentation..

    and this, posted on nearby thread, smells of the same vintage:

    W.H. team discloses TARP firm ties
    By KENNETH P. VOGEL | 4/3/09 10:49 PM EDT

    Lawrence Summers, a top economic adviser to President Barack Obama, pulled in more than $2.7 million in speaking fees paid by firms at the heart of the financial crisis, including Citigroup, Goldman Sachs, JPMorgan, Merrill Lynch, Bank of America Corp. and the now-defunct Lehman Brothers.

    He pulled in another $5.2 million from D.E. Shaw, a hedge fund for which he served as managing director from October 2006 until joining the administration.

    Those are among the associations detailed in personal financial disclosure statements released Friday. Thomas E. Donilon, Obama’s deputy national security adviser, was paid $3.9 million by the power law firm O’Melveny & Myers to represent clients including two firms that receieved federal bailout funds: Citigroup and Goldman Sachs. He also disclosed that he’s a member of the Trilateral Commission and sits on the steering committee of the supersecret Bilderberg group. Both groups are favorite targets of conspiracy theorists.

    And White House Counsel Greg Craig earned $1.7 million in private practice representing an exiled Bolivian president, a Panamanian lawmaker wanted by the U.S. government for allegedly murdering a U.S. soldier and a tech billionaire accused of securities fraud and various sensational drug and sex crimes.

    Those are among the associations detailed in personal financial disclosure statements released Friday night by the White House.

    *snip*

    http://www.politico.com/news/stories/0409/20889.html

  16. DL says:

    To the lay pubic, the thing Summers did that caused the greatest controversy was his statement that men’s and women’s brains are wired differently when it comes to math and science

    http://www.boston.com/news/education/higher/articles/2005/01/19/harvard_womens_group_rips_summers/

    Despite the controversy, he was actually right about THAT.

  17. Harvard’s endowment capital is deployed across 12 (non-cash) asset classes, including Hedge Funds, VC/PE investments, and commodities.

    Comparing the performance of the endowment against the S&P500 is terribly naive.

    See this:
    http://www.hmc.harvard.edu/investment_philosophy/policy_portfolio.php

  18. Marcus Aurelius says:

    MEH:

    Not that there’s not still graft and corruption in high places – one can’t swing a dead cat without hitting a criminal. My point is that they were far above the norm ant institutionalized during Bushco. That’s also why I am constantly calling for more law enforcement. More importantly, those elements of my comment that follow:

    “Gitmo and torture as a matter of policy, extraordinary rendition, non-compete contracts, religion-based political decision-making and hiring, and hopefully, general graft and corruption are not hallmarks – so far – of the Obama administration.” . . .

    . . . cannot be discounted when comparing the two administrations.

    I’ll also add the Bushco concept of the “Unitary Executive” and signing statements that place the President above the law to my list of big differences between the two.

  19. Pat Shuff says:

    DL Says: Despite the controversy, he was actually right about THAT.

    He should have just said women are denser than men and get Watsoned anyway.

    “Females have the same amount of functional neural tissue as males but there is a greater
    “packing density” of the neurons in the female brain. In the cortical regions most directly related to cognitive ability, the autopsied brains of adult women possessed, on average, about 11 percent more neurons per unit volume than were found in the brains of adult men. The males and females were virtually equated on the Wechsler Full Scale IQ (112.3 and 110.6, respectively.) The male brains were about 12.5 percent heavier than the female brains. Hence the greater neuronal packing density in the female brain nearly balances the larger size of the male brain.”

    Biological Correlates of g; pg 149
    The g Factor; Arthur R. Jensen; 1998

  20. DeDude says:

    Franklin411

    >>Unbelievable. What was the point of all this?<<

    I am not sure but I heard somewhere that many of the modified loans have converted loans from the type that you can walk away from (and just hand over the keys), to loans that you are stuck with even if you give the keys to the bank. If that is true then that was the point.

  21. MA,

    I hear you re: “I’ll also add the Bushco concept of the “Unitary Executive” and signing statements that place the President above the law to my list of big differences between the two.”

    though, where is the Fact that 44 has upended any of those precedents? including the other ones you delineated..

    even the trumpeted “Closing of Gitmo”, amounted to little more than, yet, more MSM-estilio HS.

    this article:
    The Smooth Criminal Transition from Bush/Cheney to Obama
    Corrupt new administration deepens and expands systemic criminalization and war agenda
    Larry Chin
    http://www.uruknet.de/?p=m53147&hd=&size=1&l=e

    while not being “All the News, that’s fit to Print.” is, nonetheless, and sadly so, much more the case, than not.

  22. Kurt Osis says:

    @franklin411:

    1) Barry makes my point. they aren’t an equity only fund, therefore your bench mark is flawed.

    2) plenty of people didn’t get their face ripped off. You just needed to not have a long bias. Assets don’t only go up. they don’t go up most of the time. There’s no excuse for having a long bias. And that problem is far more pervasive and insidious than simply having too much derivative exposure and/or insider trading.

  23. Charlatan says:

    FYI, one of the people who supported the Summers choice and thought that he should be given as much say as possible in the new administration was Jim Cramer: “Why Not Larry Summers for Fed Chief? By Jim Cramer RealMoney Columnist 11/21/2008 6:17 PM EST. How about this: Ben Bernanke, who is supposed to serve until January of 2010, decides to resign as Fed chief, and Larry Summers takes his place. Then we would have the best of both worlds — no Bernanke, and a no-nonsense Fed chief who recognized a year ago that it was deflation we were battling, and he understood house price depreciation had to be stemmed. He saw and got it all.” Cramer likes to portray himself as a sort of investor advocate — an outsider who calls Wall Street out. In reality, he’s been in favor of the “let’s keep this rigged” crowd as much as anyone.

  24. Kurt Osis says:

    @ Charlatan:

    Cramer loves a rigged market. Uptick rule. not liking inverse ETFs. ect ect. he wants the market rigged so it only goes up.

  25. techy says:

    we are all assuming that Obama relies on Geithner and summers for most of his actions/policies.

    what if he has a group of advisors…and geithner and summers are just a face to fill the two spots needed in office.

    what if this endless witchhunt is waste of precious energy which can be spent on figthing the bigger fire.

    where the f**k do we find the perfect smart man….who is also not greedy??

    the goal of most human is to amass as much wealth as possible, and most will adopt any means if it will not look risky(within legal framework)….i dont see how summers has done anything so wrong???

    i am afraid that we keep on nitpicking about the firefighters integrity while the house is on fire…

    I am sure most people with some money….if put under microscope will look imperfect…

    so why not hold the guns unless we find him doing corrupt things being in office.

    BTW i think even krugman does not have confirmed information about the financial bombs that are getting defused……

    and why should i trust these dudes calling out geithner and summers…with minor things as far as i see….what if they have some other axe to grind??

    its like republicans dream come true………..Obama keeps busy with the appointments of his team for the next four years…..and they will get back that seat of power….

  26. DeD,

    here’s a facet of what you’re discerning:
    Lenders Gear Up to Offer Mortgage Loan Modifications with a Catch… No Mortgage Loan Document Audit Legal Recourse

    Borrowers will be facing a veritable landslide of Loan Modification offers from lenders with waiver of rights clauses, according to some Florida real estate attorneys. With mortgage loan document audits fast becoming the favorite tool of Loan modification companies and attorney throughout the nation, the lenders are attempting to pare their losses. Mortgage loan document audit firms like Florida based MitiGroup, LLC have seen their business grow in the past month from loan mod companies.

    Boca Raton, FL, December 24, 2008 –(PR.com)– In light of the upcoming Obama inaugural, many industry insiders expect loan modifications to turn into a proactive lender offering—where the borrower will be, in effect, “chosen” to receive a loan modification based on criteria such as occupancy status and payment history. There is already empirical evidence that some of the lenders will utilize legal verbiage that will protect their interests—as contemplations for a loan mod—to limit the recourse a borrower can have regarding the original loan. With mortgage loan document audits fast becoming the favorite tool of loan modification companies and attorney throughout the nation, the lenders are attempting to pare their losses. Said one prominent Florida attorney specializing in defending homeowners by filing TILA and RESPA lawsuits, who requested they not use his name,

    “…the lenders are nervous. They stand to see a wave of lawsuits related to understated TILA disclosures and RESPA violations, which can be somewhat easily detected through mortgage loan auditors using the same compliance software the lenders use…”
    http://www.pr.com/press-release/123522

    and, as per usual, Mr. Mortgage is on top of it:
    “Home owners! Accepting this ’solution’ means you:

    acknowledge the full debt regardless of the value of the home;
    waive all rights to fraudulent or predatory lending claims in the future;
    turn your loan into a full recourse loan that could follow you for life even if you choose foreclosure down the road;
    remain underwater, full-leveraged, renter for the rest of your life (in most cases);
    will save no money at 38% housing debt-to-income ratio plus all other debts;
    may not discharge any of this mortgage debt through any bankruptcy even after foreclosure; ”

    http://mrmortgage.ml-implode.com/2008/12/17/fanniefreddie-come-get-your-loan-mod-pay-for-life/
    Mr. Mortgage is, truly, one of the Best..

  27. techy,

    it isn’t about “Firefighters” hosing down the Flames, it a Question as to whether these peep are the Arsonists, that, also, happen to be Long ‘Fire Insurance’..

  28. Outlier says:

    This is all very interesting. 28 comments in 2 hours on a sunday morning, post above has 0 in an hour. Some of the comments have the very distinct ring of a professional defense. Similar stuff popped up on Kedrosky’s blog.

    Summers has apparently consolidated an awful lot of power very quickly in this administration. The dirt leaking on him is all basically old news, stashed ammunition as you will. Long knives seem to be in the vicinity of his back, but he’s got people watching is back too. Question is whether it’s the administration setting him up as the fall guy (he could go without nearly the fallout that firing Geithner would,) or is someone with less power and/or outside the administration trying to take him out?

  29. techy says:

    Outlier..

    finally a good thought..

    who the F**k cares about Geithner and Summers…..Obama administration will use them as the face….and lose them when things dont go well…

    but WTF will you people do, if this team ends up being lucky and things do work out??

  30. MRegan says:

    MH-

    The whole mortgage for life game is an interesting one. Back in the 70s in an African-American community outside of Chicago- Maywood?- it was reveald that usurers had locked unsophisticated borrowers into unbelievable mortgages that literally could never be paid off. A Jesuit activist got involved and helped a lot of people obtain normal mortgages. His brother was a professor I had back when not having a zit was a big fashion statement. I can’t recall all the details, but what you are pointing to in your comment sounds like an awful echo of another time’s scam. The money games are all the same. The only thing that varies is stupidity.

    On topic- I don’t care if Summers earned a ton of money. I care that he is not a man capable of governing himself. I care that he believes that he may exercise power guided by the same fundamental philosophy which moves a bilious satrap. That his will to power is more valuable than truth. His eyes betray him and he knows it. Watch him next time he is on television. Food has no taste in his mouth and his only pleasure now is revelling in his own crapulosity. A fiend, a fool, a man who wants to make a deal with the craythur.

  31. km4 says:

    > torott Says:at 11:24 am
    I’m convinced that the old republic is long been dead. Long live the Republic of Bankers.

    Yup, the US oligarch bankers at its peak made 41% of domestic American profits, more than double the rate of two decades ago. Then the US Banking oligarchy f*cked up yet still get’s bailed out by US government on back of Americans taxpayers.

    Hey Obama is this the new change you repeatedly espouse ?

    I always just come back to this superb piece by Simon Johnson because he conveys what needs to happen i.e. unless we break the financial oligarchy that is blocking essential reform it’s Long live the Republic of Bankers

    The Quiet Coup
    http://www.theatlantic.com/doc/print/200905/imf-advice

    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.

    IMO USA in addition to having most advanced economy and military also has the most advanced oligarchy so if the Obama admin doesn’t play harder ball with Wall St Banking oligarchy on our way to becoming the world’s largest Banana Republic.

    Wake up Obama !

  32. techy says:

    Mark:

    so you are saying that this team is the arsonist??

    i thought i took around 20-30 years to build this big fire…

    my world view says that

    1. Wealth is the ultimate result everyone wants….everyone primary goal is wealth…then other things.

    2. politicians are all dis-honest….because people still vote based on religion and people are stupid.

    3. everyone has to make money….take care of self interest….there is no reward for being the messaih…except maybe if you are unlucky you will be crucified…this law also applies to politicians, presidents, public officials….stop being hypocrates.

    4. you can only choose the least evil….there is no such thing as good public officials(remember they need to also become wealthy….if you are smart, you have to follow rule number 1)

    if you want to change all this….and remove corruption from public office….you need smart voters……good luck with that.

    human brain has not evolved so much as to make democracy beautiful….yes it works (but so does communism as evidenced in china)

    root cause of problems in any system is the “human element”.

    including the whining bunch who keeps complaining about the mole hills while being powerless when the mountain of misery was being erected in the last eight years.

  33. MR–

    w/this: crapulosity , what’s up? are you going w/ a drunkard looking to deal with the distilled?

    a Clintoon-esque making Falstaff look like a Puritan?

    though, in keeping: “The crisis of our time is a crisis of intellectual integrity. We are suffering a deluge, in which common sense is drowned by the career logic of millions of nonentities. They are nonentities because they are careerists, because they have put something trivial above what is non-trivial. Their indifference to truth is seen in their daily compromises, their evasions, their manipulations of each other. They have become accustomed to subtle distortions, euphemisms and rationalizations. “I have to make a living,” says the salesman. “I have to win votes,” says the politician. “I have to raise my ratings,” says the television personality. “I have to keep my job,” says the employee.

    Quite naturally, ducking and weaving through reality is sometimes required for survival – or so we think. But survival is easier than we imagine, and the truth is more important than the supposed glory of a chosen career path. To become a collaborator against the truth, to participate in a regime of self-deception, should not have been normalized. We censor ourselves because we don’t want to be unpopular. We don’t want to offend our “superiors.” But the salvation of a country – of any country – usually boils down to the willingness of one respected figure taking an unpopular stand, or one subordinate risking the wrath of his superior.”…
    http://www.financialsense.com/stormwatch/geo/pastanalysis/2009/0327.html

    Nyquist’s stuff is some of the Best..

  34. techy,

    how do you reconcile:

    “i thought it took around 20-30 years to build this big fire…”
    and:
    “when the mountain of misery was being erected in the last eight years.”

    also, what does this: “including the whining bunch who keeps complaining about the mole hills while being powerless when the mountain of misery was being erected in the last eight years.”

    even mean?

    and to your Q:, the frame of your analogy imposes limits, w/in those limits, yes. they are, certainly, not the ‘firefighters’ many of their enablers make them out to be..

  35. Mannwich says:

    If one is in the protected, “inner circle” of cronies, life is great in this country. Outside looking in? Not so much.

  36. Mannwich says:

    @techy: I really don’t think it’s too much to ask for there to be at least a semblance of a level playing field (or least one that’s not entirely gamed for the few insiders), but maybe you’re OK with that. I’m not. If this continues, there will continue to be many, many problems in this country and the world. Your cynical solution appears to be: “if you can’t beat ‘em, join ‘em”. Call me crazy, but I’m demanding a little more than that from myself and my fellow citizens.

    By the way, is “techy” really “otto”? He’s been conspicuously absent lately. Just wondering.

  37. Darkness says:

    Oh, come on, I’m sure Summers, knowing women suck at mach, could not give her opinion any credence. Also probably figured they made a mistake in hiring her for her gender anyway. Two birds, one stone.

  38. Mannwich says:

    Hoffer said: “The crisis of our time is a crisis of intellectual integrity. We are suffering a deluge, in which common sense is drowned by the career logic of millions of nonentities. They are nonentities because they are careerists, because they have put something trivial above what is non-trivial. Their indifference to truth is seen in their daily compromises, their evasions, their manipulations of each other. They have become accustomed to subtle distortions, euphemisms and rationalizations. “I have to make a living,” says the salesman. “I have to win votes,” says the politician. “I have to raise my ratings,” says the television personality. “I have to keep my job,” says the employee.

    Quite naturally, ducking and weaving through reality is sometimes required for survival – or so we think. But survival is easier than we imagine, and the truth is more important than the supposed glory of a chosen career path. To become a collaborator against the truth, to participate in a regime of self-deception, should not have been normalized. We censor ourselves because we don’t want to be unpopular. We don’t want to offend our “superiors.” But the salvation of a country – of any country – usually boils down to the willingness of one respected figure taking an unpopular stand, or one subordinate risking the wrath of his superior.”…

    Nice quote, Hoffer. About sums it up for me. If we continue on this path, it’s a train wreck waiting to happen. No, it hasn’t happened yet, but it will if we continue onward as-is……

  39. DoctoRx says:

    Good for Judas 10:48 (re the banksters, of course, not social policy).

    To BR: Timothy Geithner has no independent strategy. All he has are recommendations to Barack Obama. Thus your response to franklin411 @ 11:37 AM appears at best incomplete:

    [BR: I have no personal feelings towards either man. I am disappointed in the selection of Summers, and horrified with Geithner's adapting much of Hank Paulson's strategy.]

    When will you finally say that you are horrified that Obama has adapted ( unless you meant ‘adopted’) much of Bush’s strategy?

    (Barack Obama’s supporters certainly don’t claim what they claimed about “W”, which was that he was a dumb ignorant tool.)

    Something about the buck stops where . . . ?

  40. I cant argue with the good doctor.

    (But I am giving the benefit of the doubt to a new and green President)

  41. Mannie,

    though, to be clear, it’s from J.R. Nyquist’s piece that I posted the link of..

    but, past that, yes, to me, as well, it’s the Fact of the matter.

    the type of S***, like ‘techy’, above@ April 5th, 2009 at 2:13 pm, lays out–simply, a gross rationalization of incomplete understanding/relativism, is, exactly, the type of escapist dreamery that has fueled this surreal tragi-comedy–Epic, indeed..

  42. DeDude says:

    Mark @ 1:09

    Thank you for good information and links (and debate)

    I knew a lot of this modification stuff had to be a sham to ensure that it is regular people not big banks that take the hit. When enough of these modifications to “help” the “irresponsible” home-owners have been done, they can come with all the accounting rules they want. The writeoffs does not have to be done until the estate of the “hooked-for-life” home-“owner” has been resolved. Great way to “solve” a problem of insolvency, and heck they may even recover the loss.

  43. techy says:

    Mark..

    one more thing….. the voice being raised on this forum is a minority….its like 10%, so the message is these opinions dont count.

    and anyone who gets emotional about being idealist…..i hope you dont do that in your career life, i will feel sorry for your family.

    Mannwich :

    no i am just techy…been here since two years as techy.

    Mannwich Says:
    April 5th, 2009 at 2:32 pm
    @techy: I really don’t think it’s too much to ask for there to be at least a semblance of a level playing field (or least one that’s not entirely gamed for the few insiders), but maybe you’re OK with that. I’m not. If this continues, there will continue to be many, many problems in this country and the world. Your cynical solution appears to be: “if you can’t beat ‘em, join ‘em”. Call me crazy, but I’m demanding a little more than that from myself and my fellow citizens.

    ————

    revolution is not possible…..so why get emotional and hope for a ideal world….when i can clearly see that 80% of the population is clueless about the quality of life.

    where were you guys the last 10 years, when the bankers raped this country….and took their billion dollar loot in the form of bonuses??

    whom do you want to beat?? the people of the world?? (I am from india rural india, been to australia….immigrated to USA….have seen too much shit in human beings and come to conclusion…that the world is beautiful, sans humans)

    ~35% of the people in USA with mandatory school education think that bible is to be used to make laws
    ~80% think news is boring and depressing….and people/celebrity magazine is interesting.
    ~80% think slaving to their job so that they can buy shiny stuff is a happy life.
    ~50% think fox/msnbc is fair and balanced
    ~98% think selfish greed is the only way (take care of one self even if it leads to collateral damange in society)
    ~99% think wealth is a must trophy of a winner

    sorry sir….too much stupidity to Fix….and the sad thing is we are not evolving to become smarter and healthier anymore…..because everyone has the right to breed….and if you have not noticed the bottom of the society breeds more than the top.

  44. dunnage says:

    Summers is a bought player.

  45. dunnage says:

    And so we are left with Krugman, while writing of the “natural rate” … figures he himself is a liberal. The neutron bomb was modeled on Harvard and Princeton.

  46. Mannwich says:

    @techy: I worked in the financial services biz from 2000 – 2006 and decided to leave because I simply couldn’t stomach it anymore. In fact, I left the biz on TWO occasions, once in ’02 and worked as a bartender in Lake Tahoe before I got married, went back to NYC and Wall Street, and then left again in ’06. I took a big risk doing that but I don’t intend to go back to any job in Corporate America if I can avoid it or until it materially changes its ways and culture (and I’m not holding my breath). That was my own personal “revolution” and something I could control. I now make less money (mostly this year and last because of the economy) than I did then but am much more at peace with myself. If more of us did the same or something similar (at least stood up for SOMETHING of principle), then maybe a peaceful “revolution” is possible, no? Look, i can be just as cynical as you (I’m sure more so in many instances), but I prefer to think that if we all stood up for something of principle once in a while, we can make this world a better place (cue the song: “Kumbaya”). Of course, many of us have kids to support/raise and thus have a different level of responsibility that I don’t have, and I empathize with that. However, I prefer to be in the crowd that “walks” to something else and not merely “join ‘em if you can’t beat ‘em.” Sorry, that’s the way it is for me.

  47. Mannwich says:

    @techy: By the way, I do agree with much of what you assert, especially about the mass stupidity, vapidity, uber-materialism, and anti-intellectualism/lazy thinking in this country but maybe we’re at a tipping point and people are finally waking up….a little? Maybe?

  48. paulyarbles says:

    Somebody up there sez: “BTW a smart person does not waste his time discussing these things…..he works to make sure he becomes part of the elite who will always control the system”

    Why assume that being a part of the elite makes one happier than being one of the ‘time wasters’ on this board? The irrational drives that rule our behavior to a large degree don’t necessarily bring happiness in the long run.

    I for one would much rather be where I am, then be a super rich over-worked swindler like, say, Robert “HELP ENRON!” Rubin or a rich foolish miserable over-worked dissembler like Larry “How can I continue to be sooooo wrong about every f*cking thing and still stay on top” Summers. I think many here would also rather be where they are.

    The fact that so many are defending the positions of these and similar losers is disgusting. However, following the example of Elvis Costello, I now just try to be amused.

  49. Mannie,

    you can hear it in your tone that it’s working for you..

    techy,

    w/ this: “and anyone who gets emotional about being idealist…..i hope you dont do that in your career life, i will feel sorry for your family.” showing how little you know.

    You might find, if you ever gave it opportunity, that Emerson’s admonition: “To thy ownself, be True.”
    Works.

    I know that Engineering, certainly, rewards elegant simplicity, and, it isn’t, merely, Synchronicity that I happen to find myself in that Field.

    And, for all your sick Mooing about: “Revolution is not possible”, you should learn from History. The Majority never Leads anything.

  50. techy says:

    if it makes any difference….i am from india hence financial independence was my number one goal….hence i saved a lot in the last five years of prosperity…but still not enough money to pay for necessities…

    but i have enough to go back to india and not have to work for someone else again..

    i hate working in a job just to pay the bills….but i work to make sure i dont keep doing it for life.

    manny…i decided not to have kids….called as “more baggage to carry” while being slaved to corporate america….and i am glad to have taken that decision…i see my friends in india pay upto 40% of their income towards their kids schooling.

    sorry guys i dont beleive in dreams…..i am a realist(branded pessimist by the optimist population)….i know a bullshit when i see one…….I dont see the population waking up yet not till we get to 20-25% unemployment……..but by then it is will be too late.

    though i would like to confess that i was pleasantly surprised that Obama was elected….compared to the other choice..

    but when you give it a thought….Obama had to fight so hard with a ton of help from bad economy…to get here…….and who were his opponents: Desperate McCain….and Dumb as a rock Palin.

    if you want to see why “Revolution is a low probability event” you need to go visit india….where almost a billion toil their life for nothing but miserable life by any standards.

    people are too busy with their life……….to even think that things are not right. and thinking hurts their brain and they choose to focus on paris hilton and angelina joli.

  51. Transor Z says:

    The allegations levelled by Mack would never happen in a SOX-compliant organization. Under SOX, whistleblowers have a direct line to the Board’s ethics committee and would never be retaliated against.

    Okay, so I didn’t type that with a straight face.

  52. danm says:

    people are too busy with their life……….to even think that things are not right. and thinking hurts their brain and they choose to focus on paris hilton and angelina joli.
    —————-

    Maybe you’re mixing up India and the USA.

    When you’ve never had much, you don’t know what you are missing. That may be the case in India but in the US many people are about to realize how much will be taken from them. And I don’t think you can comapre the coming reaction to that of Indians.

  53. drollere says:

    my basic philosophy is that moralism clouds investment judgments. how many of you all are invested in tobacco, alcohol and coal?

    there are certain facts given on a human playing field: it’s not level, the bigger players are the most likely to be bought and sold, the fix is in, the profits come from the side bets, not the table bets, there’s always an angle, if you can fake sincerity you’ve got it made, etc.

    i’m a little taken aback by the thrashing around about summers. is this a jury pool, or a colloquy of angels, or a pub of cynics? the only question worth debating is, what’s the probability that he’s bought and, assuming he is or he isn’t bought, what are the outcomes to investment decisions?

    there’s also the nice point that being bought doesn’t necessarily mean you were ever sold. assume he is really as pure as driven snow — then you have greenspan. and what does that get you? motive doesn’t matter in a world of prejudice and illusion. and surely, politics is the realm of prejudice and illusion.

    the only thing that matters is — what does reality have to say? if i think the economy and the markets will reward the villain, then i’m betting on the villain, every time.

    keep your eye on the ball.

  54. drollere,

    that’s very interesting, I had a # of conversations, over the weekend, where it was concluded that it would be wise to more heavily weight the Poli-Sci-side v. the Fi-side–moreso, now, than before, in this Poli-Sci-Fi pachinko parlor that masquerades as our ‘Economy’..

  55. usphoenix says:

    @chacona Thanks for the links.

    Fascinating. What few words were attributed to Summers suggest to me that he knew far more than he was telling, and had beneficial memory lapses.

    Well, they were all knee deep in hedge funds. Hoe could their not be conflicts of interest on everyone’s part.

    Just another day in the life of Summers. Tell me again why he’s on staff?

  56. jrnbj says:

    @Chacona
    thanks for the links…….surely there must be someone out there–unknown, but honest–that could be in Summers job. Summers has supped at the trough long enough.

  57. Greg0658 says:

    Mark E Hoffer Says: April 5th, 2009 at 1:09 pm
    “Lenders Gear Up to Offer Mortgage Loan Modifications with a Catch… No Mortgage Loan Document Audit Legal Recourse

    Borrowers will be facing a veritable landslide of Loan Modification offers from lenders with waiver of rights clauses, according to some Florida real estate attorneys. With mortgage loan document audits fast becoming the favorite tool of Loan modification companies and attorney throughout the nation, the lenders are attempting to pare their losses. Mortgage loan document audit firms like Florida based MitiGroup, LLC have seen their business grow in the past month from loan mod companies ……..”

    Since I’m furious with CNBC for cutting the feed from the news conference happening right now and since I can’t find a reference “geithner holder mortgage minutes ago” on Google I thought I would make one.

    Stop regurgitating (edit’g) this stuff and front running info Kudlow. We got to see the Geither statement and when Holder steps up with the meat and potatoes .. wouldn’t this be more interesting!

  58. Greg0658 says:

    ps – I also visited NPR dotorg and Whitehouse dotgov :-(

  59. Greg0658 says:

    first up:
    http://money.cnn.com/2009/04/06/news/economy/housing_scams/?section=money_topstories

    we can NOT allow monopolies in information .. or elsewhere

  60. Greg0658 says:

    I have been pondering this refi development.
    On one hand we cant be allowing massive fraud of sign’g for more than the individual can ever afford and home hopping. On the other hand the concept of when you sign on the line you own it till its paid for .. even after the bank has reposed the property? If true (and why I was so interested / as many would be imo) there MUST be a mechanism to release the initial sign on the line borrower once the reposed property is once again in private hands. BUT how would that be worded .. a bank (owner) could sell the property at a substantial loss to a friend knowing this deadbeat(a term) is on the hook thru wage garnishments until the losses are paid in full. Not very equally capitalistic. But these are not EQUAL times.

  61. Greg0658 says:

    sorry for turning this thread into a twitter of CNBC (if you build it they will come)(because its A,B or C)
    AOLs Steven Case “Revolution Money”. I was a cyber jetsetter once (I guess still am) “Oligopoly”as an early AOL customer (inwestor) was totallllyyy (in a Valleyboy tone) turned off by them using my monthly subscription to buy Time Warner to then F_itup. Thats ok .. I kinda dont approve of oligopolies. Whats the next big thing? Hey Donny – I think its / come in – drop a dime / non alcohol / non tube / non workout / recreation establishments. Sorta Chucky Cheessey.

  62. Moss says:

    On a positive note:
    New York Atty. Gen. Andrew Cuomo today charged money manager J. Ezra Merkin with civil fraud in the Bernie Madoff Ponzi scheme, alleging that Merkin funneled more than $2.4 billion in clients’ funds to Madoff while ignoring “glaring red flags.”

    Moral of all this:
    Learn how to NOT be a sucker. Verify then trust.