This is weird: On Wednesday, May 20, (Recall Why TARP Funds Were Necessary) I wrote the following:

“Lastly, I would like to see a bi-partisan, Blue Ribbon panel put together analyzing why this occurred. Put an Elizabeth Warren or a Paul Volcker in charge, and give them 6 months to create a comprehension assessment of what went wrong, along with recommendations on how to fix it.”

That night, I read in the NYT The Caucus:

“President Obama on Wednesday signed legislation aimed at curbing financial fraud in the mortgage and other industries, including a provision that created an independent panel to investigate the root causes of the nation’s economic downturn.

That was obviously in the works for a long time . . . but the coincidental timing was sure funny.

Now, let us see who gets put on this panel, and who chairs it.

Commission Legislation:

SEC. 5. FINANCIAL CRISIS INQUIRY COMMISSION.
(a) Establishment Of Commission.—There is established in the legislative branch the Financial Crisis Inquiry Commission (in this section referred to as the “Commission”) to examine the causes, domestic and global, of the current financial and economic crisis in the United States.

(b) Composition Of The Commission.—

(1) MEMBERS.—The Commission shall be composed of 10 members, of whom—

(A) 3 members shall be appointed by the majority leader of the Senate, in consultation with relevant Committees;

(B) 3 members shall be appointed by the Speaker of the House of Representatives, in consultation with relevant Committees;

(C) 2 members shall be appointed by the minority leader of the Senate, in consultation with relevant Committees; and

(D) 2 members shall be appointed by the minority leader of the House of Representatives, in consultation with relevant Committees.

(2) QUALIFICATIONS; LIMITATION.—

(A) IN GENERAL.—It is the sense of the Congress that individuals appointed to the Commission should be prominent United States citizens with national recognition and significant depth of experience in such fields as banking, regulation of markets, taxation, finance, economics, consumer protection, and housing.

(B) LIMITATION.—No person who is a member of Congress or an officer or employee of the Federal Government or any State or local government may serve as a member of the Commission.

(3) CHAIRPERSON; VICE CHAIRPERSON.—

(A) IN GENERAL.—Subject to the requirements of subparagraph (B), the Chairperson of the Commission shall be selected jointly by the Majority Leader of the Senate and the Speaker of the House of Representatives, and the Vice Chairperson shall be selected jointly by the Minority Leader of the Senate and the Minority Leader of the House of Representatives.

(B) POLITICAL PARTY AFFILIATION.—The Chairperson and Vice Chairperson of the Commission may not be from the same political party.

Source:
SEC. 5. FINANCIAL CRISIS INQUIRY COMMISSION

http://thomas.loc.gov/home/gpoxmlc111/s386_eah.xml

Category: Bailouts, Blog Spotlight, Credit

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.

87 Responses to “Financial Crisis Inquiry Commission”

  1. Cursive says:

    If this independent panel comes to fruition, it would be a truer sign of mustard seeds or green shoots than anything so far. Congratulations to President Obama. Now, let’s hope it happens and happens with the right people and the right authority, i.e. the Pecora Commission.

  2. Byno says:

    “investigate the root causes of the nation’s economic downturn.”

    Sounds like a waste of time and resources to me. One word: Leverage. My check, please.

    I was talking to an MD at BofA six months ago in Manhattan, and he made what I thought was an incredibly thoughtful, somewhat ironic suggestion, especially considering that leverage is what paid his seven figure bonuses the last few years. His idea: instead of rewarding homeowners who take on increasing debt via their homes with tax write-offs on the interest, make the principal payments tax deductible instead. I’d throw in making car loan and credit card principal payments tax deductible for a year or two.

    Unwinding the use of leverage should be a major public policy goal for any political administration, regardless of inclination. Shifting tax breaks from risk-taking to fiscal-discipline-rewarding behaviors in the area of home buying, in addition to rewarding financial sobriety while we’re in the midst of this huge bailout, would be a dramatic step in the right direction for the long-term health of the country.

    ~~~

    BR: Leverage was no doubt one issue, but it was not the only issue — far from it . . .

  3. Mike in Nola says:

    The commission will, no doubt, be packed with “safe” choices. While I wasn’t an ardent supporter, I had hoped Obama would actually live up to some promises. But, it’s the same old same old: GS running the finances and health care reform overseen by health care insurers.

    If he really wanted some action, his choice should be Elliot Spitzer.

  4. Bruce in Tn says:

    In some ways what is being done here seems almost anti-democratic party policy. We are taking toxic assests from business and distributing them into the federal government. Some arms of the business world are getting a “get out of jail/bankruptcy” Monopoly pass from the taxpayer that the taxpayer/voter will never escape from. You can perfume it up with intense little speeches all you want, but the end result is a tremendous back-end loading we won’t escape from.

    It you were buying a mutual fund, and you read that when you sold it you would pay a, say,50% back end load, you wouldn’t do it. REALLY, why is this much different?

    And as a corollary to that, why would the congress do it, even if you think the president and his staff are overwhelmed?

  5. Bruce in Tn says:

    spell check…was off.

  6. simoncast says:

    If he were still alive I would put Richard Feynman to chair the investigation. Otherwise probably an renowned real engineer. I would avoid anyone with recent links or involvement in the financial industry. This is a time for the orthodoxy to be challenged and I think most if not all of the finance industry won’t be able to do that.

  7. Byno says:

    Barry said Leverage was no doubt one issue, but it was not the only issue — far from it . . .

    So, NINJA loans didn’t boil down to leverage?
    Subprime, at root, is not a question of leverage?
    Double defaults in the CDS markets didn’t stem from leverage?
    America’s negative savings rate, fueled by credit cards and home-as-ATM isn’t leverage?
    Etc. Ad Nauseum

    I realize that Glass-Steagall, incompetence at Moody’s and S&P and good-old-fashioned greed are also blameworthy culprits, but Easy Money is the root of all leverage.

    ~~~

    BR: Consider:

    • Abdication of lending standards — not verifying income or payment history of mortgage applicants?
    • Real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what? (FRAUD)
    • Automated underwriting (AU) systems that emphasized speed rather than accuracy
    • Moody’s, S&Ps and Fitch payola — getting big fees to rate junk paper as Triple AAA?
    • Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn’t have been
    • Not verifying check credit scores, assets or income when writing mortgages?
    • Derivatives exempt from reporting, reserves, exchange requirements, etc.
    • Irresponsibly low interest rates
    • 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision;

  8. some_guy_in_a_cube says:

    Expect the guilty to be charged, convicted and locked away for life, no matter how powerful or politically connected or how many times Maria Bartiromo has fawned over them in a CNBC interview.

    Oh never mind, that would only happen in a functioning democracy.

  9. snapshot says:

    http://bloomberg.com/apps/news?pid=20601087&sid=a4NFHN80_Qpo&refer=home

    from Bloomberg:

    “Congress Weighs O’Connor, Volcker, Levitt to Investigate Crisis”
    I remember posting this early in May…No recent articles on the matter though.

  10. call me ahab says:

    Mike on NOLA Says:

    “If he really wanted some action, his choice should be Elliot Spitzer.”

    I’ll second that

    Byno Says:

    “I’d throw in making car loan and credit card principal payments tax deductible for a year or two . . . Unwinding the use of leverage should be a major public policy goal for any political administration, regardless of inclination.”

    I couldn’t agree more- however this is deflationary policy prescription- the goal of any admin will be to get Americans spending- not saving and paying off debt

  11. cvienne says:

    It reads

    (1) MEMBERS.—The Commission shall be composed of 10 members, of whom—

    (A) 3 members shall be appointed by the majority leader of the Senate, in consultation with relevant Committees;

    (B) 3 members shall be appointed by the Speaker of the House of Representatives, in consultation with relevant Committees;

    (C) 2 members shall be appointed by the minority leader of the Senate, in consultation with relevant Committees; and

    (D) 2 members shall be appointed by the minority leader of the House of Representatives, in consultation with relevant Committees.

    (2) QUALIFICATIONS; LIMITATION.—

    (A) IN GENERAL.—It is the sense of the Congress that individuals appointed to the Commission should be prominent United States citizens with national recognition and significant depth of experience in such fields as banking, regulation of markets, taxation, finance, economics, consumer protection, and housing.

    (B) LIMITATION.—No person who is a member of Congress or an officer or employee of the Federal Government or any State or local government may serve as a member of the Commission.

    (3) CHAIRPERSON; VICE CHAIRPERSON.—

    (A) IN GENERAL.—Subject to the requirements of subparagraph (B), the Chairperson of the Commission shall be selected jointly by the Majority Leader of the Senate and the Speaker of the House of Representatives, and the Vice Chairperson shall be selected jointly by the Minority Leader of the Senate and the Minority Leader of the House of Representatives.

    Great: So Reid & Pelosi select 6 out of the 10 people to discover it was a all a RIGHT WING CONSPIRACY…Mitch McConnell & John Boehner select 4 out of the 10 to discover it was all Dodd’s fault and try to otherwise target DEMS who took campaign money from Fannie, Freddie, & uncle Tony…

    The ‘findings’ wrap up about a month before ‘middies’ in November ’10, Dems win 6-4 (on the panel), so nothing changes and we’re back where we started…

    Actually, we won’t exactly be back where we started…Copy the figures from the DEBT CLOCK page today, then copy them on the day when the findings are released…You’ll see A LOT will have changed while they play out their inquiry commission game…

  12. snapshot says:

    Somewhere, Elizabeth Warren stated that the systematic unraveling of the fabric put in place to safeguard against systemic risk is the main culprit. Maybe it was on The Daily Show. One thread after another removed until the self-regulation model was in place.

    Subpoena power – That is more than Elizabeth Warren was ever granted.

  13. I can’t seem to find an exact reference, though, IIRC the Taxpayer was billed U$D~175 MM to ‘investigate’ NASA’s Challenger incident..
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=cost+of+NASA+Challenger+investigation

    should be interesting to see the Budget of this proposed ‘investigation’..

  14. Cursive says:

    @ Byno 9:06

    That is a brilliant idea.

    @cvienne

    …abandon all hope…

  15. Cursive says:

    Anyone not convinced that we are not currently in a deflationary period, check out Mish this morning:

    http://globaleconomicanalysis.blogspot.com/2009/05/deflation-hits-direct-mail-industry.html

    The Postal Service proposes to implement a Standard Mail Volume Incentive Pricing Program (also known as the “Summer Sale”). The current state of the economy has forced businesses, particularly Postal Service customers, to pull back on important investments necessary for ensuring their continued prosperity. The precipitous decline in the use of Standard Mail for marketing products and services is an illustrative example of the unwanted choices many postal customers have had to make because of the economy.

  16. and, if peep would be so kind, stop abusing this Word:
    http://www.thefreedictionary.com/incompetent

    you know, it, like many other Words, actually, have Definitions..

  17. call me ahab says:

    Wow- check this out- ominous to say the least

    http://jessescrossroadscafe.blogspot.com/

  18. Marcus Aurelius says:

    My All-Star team to root out corruption and criminality:

    Dennis Kucinich, Ron Paul, Andrew Cuomo, Eliot Spitzer, Helen Thomas or Rachel Maddow (to keep things honest), Alan Grayson, Sandra Day O’Connor, Ralph Nader (love him or hate him, he has integrity), Jesse Ventura (to protect the others and bust the heads of anyone who should try to derail the investigation), Phil Gramm (whipping boy/insider info.).

    I’m feeling eclectic.

  19. call me ahab says:

    Naked Capitalism- appears to have the same article posted from the link above

  20. cvienne says:

    @Cursive

    Now look at your argument…

    http://www.ritholtz.com/blog/2009/05/financial-crisis-inquiry-commission/#comment-175421

    …and then go take a look at the $TRAN chart…

    It is right at the point of “failing” to get through resistance to the upside (which extends back as far as 1998)…

    This would be it’s third attempt & failure (each time weaker)…

    Things are breaking down my friends…batten down…

  21. cvienne says:

    …a failure here takes the $TRAN down to the 2000 level (March ’03 levels)…After that support, you’re looking at ’94 levels, and ’90 levels)

  22. cvienne says:

    So what’s ironic about that (if we go back to 1990 levels), you could basically say that Japan suffered it’s lost two decades…

    Instead, the US inflated 3 subsequent asset bubbles, and we are only on the “front end” of correcting something that never got corrected in our own markets in 1990…

  23. call me ahab says:

    MA-

    great list- except Maddow

  24. Marcus Aurelius says:

    Cursive:

    Yes, we’re in a deflationary period, but it will change to inflation sooner and more quickly than anyone expects. Fiat currencies are inflationary by nature, we’ve already created the ‘money’ (first in credit, now by QE), deflation will strangle us (and we will come up for air, because we can), we must fund both the debt and the continuation of our monetary system (we won’t capitulate to a new reserve currency without flooding the world with dollars), and the rest of the world will reject those dollars.

    When? Who knows. We do know that catastrophes are typically sudden.

  25. cvienne says:

    What I’m saying (in S&P terms) is that the 1987 crash “should” have taken the S&P down to around the 185 level…Assuming “slow recovery”…The S&P should have been around 200 in 1990…

    From 1990 to today…assuming growth…but not “debt feuled” growth…We “should” be around 400 on the S&P today…

    All the area ABOVE that line on an area graph reflects the effects of the BUBBLE

  26. snapshot says:

    http://www.huffingtonpost.com/2009/05/22/geithners-incredible-new_n_206675.html

    “Geithner’s “Incredible” New Justification for Recycling Bailout Money”

    Well – BR – We really are a “Bailout Nation.” Geithner seems to feel that $700B can be used over and over again. When does it get paid back to taxpayers?

    Same subject was discussed at “The Hearing” yesterday.

    It appears the TARP language “outstanding at any time” can be left up to interpretation.

  27. OT:

    cvienne,

    that vignette I was relating, to you, about JN, has been sticking in my mind..

    see: JACK NICKLAUS

    Jack Nicklaus won 73 PGA Tour events in his career. Only one golfer won more. But in the majors, how do other golfers stack up against Nicklaus? They don’t.

    Nicklaus won 18 professional majors – twice as many as all but one other golfer. He finished second 19 more times, and third nine times. In all, Nicklaus posted 48 Top 3 finishes, 56 Top 5 finishes and 73 Top 10 finishes.
    http://www.golflegends.org/jack-nicklaus.php

    19 2nds in ‘Majors’, not “U.S. Open(s)”
    ~~
    also, w/this: http://www.nicklaus.com/nicklaus_news/news040606.php –I thought was worth reading..
    JN: “Well, you know, here I go with golf ball again. With the golf ball, they only need about five clubs. And so if he wants to add another driver, he’s got plenty of space in there because he’s not going to use a lot of them.”
    should give you insight into why the 1 is still in the bag..it, really, doesn’y cost anything, and the kids get a chance to learn something..

  28. Blue ribbon panel?

    Appoint Ron Paul and give him a guillotine <——(Shocked! I spelled that right on the first go!)

    You government guys always take the expensive route

  29. call me ahab says:

    thanks cvienne-

    appears $tran setting up to go lower

  30. drollere says:

    @ call me ahab 9:36: mon ami jesse l’americain s’amuse avec la prévision d’une faillite qui en effet n’existe point.

    obama on c-span was speaking to the issue of health care reform. he said the government has run out of money to throw at government programs in general and health care in particular. the government has run out of money is not because the united states is insolvent or bankrupt, but because congress lacks the “political capital” to run up still larger deficits. “we’ve run out of money” = “our constituents won’t stand for it.”

    i thought i saw film of the inaugural meeting of the commission here referred to on thursday or friday. volcker was at the table and either his white house commission is taking over the responsibilities of this fault finding commission, or he is chairing this new commission and his old white house commission jointly. volcker did not seem especially honored or pleased, despite obama’s smiles and take charge body language.

  31. cvienne says:

    @MEH

    I once took $50 bucks off a guy that I bet I could beat him with only a 7-iron playing “lefthanded”…

    I shot 79…He shot 84…

    Little did he know that I am “ambidexterous”, but put that aside…I only had a 7-ron!

    Something that most “high-handicap” golfers don’t realize is that they likely hit a 3-wood as far as they hit a driver (because of the “lift-coefficient” and spin rate on the ball based on average joe swing speeds)…

    If you want to lower your score, carry 4-5 wedges and learn how to use them…Buy every Dave Pelz book you can find and do the drills…It’s the thing that got me from shooting 75′s to shooting 71′s…

    I generally hit the ball all over the parking lot…but I can get “up & down” from a picnic basket…

    That time I shot 71-71 at the US Amateur qualifier, I think I only hit 8-9 greens in regulation (TOTAL – in two rounds)…

  32. usphoenix says:

    @simoncast: Feynman. Clone? Great choice. Some may not remember that if it had not been for him unexpectedly dropping a stick of sealant in a glass of ice water during a meeting, the Challenger investigation would have been a $175M cover-up.

    Does the investigation need “bull-dog” pursuers like (Spitzer)? Or economists like Simon Johnson or Stiglitz?

    I’m guessing they need one person that once was/ or still is an insider that knows where to find the skeletons and how to smoke them out.

    Also people whose business careers are winding down and will not suffer too much from the blackballing they will receive.

    Hey, there might be a savant clerk at GS that knows more than she’s telling. Don’t forget those little microphones and cameras. Companies have a bizarre habit of maintaining incriminating evidence. You just have to find it.

    I suspect Grayson may have some excellent sources that can be brought to bear.

    But I’m still not optimistic. We’re done.

  33. Cursive says:

    @ cvienne

    I’m with you on $TRAN and S&P 500 fair value of 400-ish. We look to be headed for a fall as Summer starts. Will we see a 4 handle on the SPX? If so, when? Much speculation about that now. Yamada called for it before, not sure where she stands now or when she would expect to see it. Timing is everything.

  34. cvienne says:

    @ahab

    That $TRAN looks down right scary (and ‘imminent’ for that matter)…It has 2000 written all over it…

  35. cvienne says:

    @Cursive

    I haven’t heard from Yamada during this bear market rally, but as far as I know she hasn’t changed her position one IOTA…

  36. Cursive says:

    @ahab 9:46

    Reading more Mish this morning. If BR posted this quote from Chris Whalen on this site, I missed it. And this is the first time in this whole mess that I think I’ve heard this thought uttered:

    http://globaleconomicanalysis.blogspot.com/2009/05/feds-vice-chairman-admits-fed-has-no.html

    Speaking on the Maiden Lane assets:

    “The numbers basically confirm that Treasury is going to have to take some TARP money and reimburse the Fed,” said Whalen, whose financial-services research company analyzes banks for investors. “It is essentially up to the Treasury to get the Fed out of this.”

    ~~~

    BR: I posted the Kohn speech

  37. cvienne says:

    @Cursive

    Yes I DO think we’ll see a “4″ handle (and I think it will be this year)…

    Ironically, that was my call at the beginning of this year…When the market got supported in March @666, I wasn’t surprised (however – I’d expected to see 600 on THAT wave)…

    In April, I started to WAIVER a little, thinking we might do a RE-TEST down to 700 – 666, but that the market might actually hold and not go lower…

    Now I’m FULLY back in the camp that we’re going into the “4″‘s…The reason:

    1. Policy response from the Administration will CAUSE that to happed.
    2. The duration of this recent rally (it has gone on long enough to REALLY suck people in)…The further the market goes up right now, the harder we’ll fall…

  38. Cursive says:

    @cvienne

    I don’t think CNBC will let Yamada on Squawkbox becuase she might put a Vader-like choke hold on Kernan’s caratoid artery.

  39. Cursive says:

    @ cvienne

    I agree with you for the same reasons. I’m just not sure it happens this year. All of the EW people are waiting for “P3″ and from the little I’ve read, it could start this year.

  40. km4 says:

    BBC NEWS | World Bank warns of social unrest
    http://bit.ly/vLDHB

    The head of the World Bank has warned that the global economic crisis could lead to serious social upheaval.

    “If we do no take measures, there is a risk of a serious human and social crisis with very serious political implications,” Robert Zoellick said.

    He pointed to Eastern Europe, which faces the “tricky situation” of fast-shrinking economies and protests.

    Mr Zoellick suggested governments should start preparing for high levels of unemployment.

    ************************************

    Gee how come no mention of Amercia where U6 may be headed to 20 – 25% with a double dip deeper recession ?

    1. Only happy talk on America MSM
    2. We put drugs in drinking water
    3. Americans today are generally fat, lazy and complacent
    4. The Obama the prophet e.g. he hopes for `leaner, meaner’ GM and Chrysler after billions of $ in gov bailout
    5. The 19 too big to fail banks have got trillions of TARP and will reinstitute the financial ponzi schemes that now drive much of the America economy
    6. Americans love to dream

  41. Cursive says:

    @ drollere

    I agree to the extent that this “crisis” has been global in nature and the U.S. is relatively better than the ROW. However, I still worry that if we continue to chose policies which exacerbate our problems, that it will leave the door open for other nations to gain global leadership. So, I do see the risk documented in that link to be valid if the global tables turn. That doesn’t look likely at the moment, but who knows?

  42. Cursive says:

    @MA 10:18

    I’m in the deflation for the long run camp. I don’t view it as a currency phenomenon, I view it from the level of economic activity. There is just too much excess capacity that has to be worked off. Debt will be unwound by a combination of payback and default. A larger money supply would help that problem, but the amount of “shadow” money created over the last 15 years is too great.

  43. John from Concord says:

    @km4: Because they’re going to get it a whole lot worse than the US will. Watch and see.

  44. km4 says:

    @ John from Concord yes it will be worse in eastern Europe and other places but it’s going to be plenty bad in America as well. Watch and see !

  45. cvienne says:

    @km4

    Events such as the ones you refer to have been the incubators of FACISM throughout history…

  46. ben22 says:

    I have to say I’m skeptical about this actually being able to accomplish anything.

    Off Topic:

    I watched Wall Street this morning. Amazing how so much of that movie applies to today.

  47. “Excess Capacity” can be a Fatal canard.

    Manufacturing Plants need to be fed. None make their own Raw Materials.
    ~~
    cvienne,

    I hear you on that one-club trick. it’s, also, a great way to practice, though, I haven’t found a taker for a bet like that in years–though, not LH–that cat must have been a real pidgeon..
    Also, of course, the short game is where it’s at. x2 .. I’ll go w/ 3 wedges, on occasion, but, that 4-5 W gag, always struck me as Mad Ave. stew..

  48. cvienne says:

    Ironically, it will not be the “voices” on this blog, or the “teaparties” around the country which will tip this country over into anarchy…

    Instead, it will be the day that the government puts a STOP PAYMENT on all the pension checks, welfare checks, and all that category of things that keep the “merry-g0-round” gears greased…

    The day “sugar daddy” tells you he’s broke…expect a coniption fit from the fat bratty kid…

  49. ben22 says:

    Maybe I have such a bad taste in my mouth from all of this but it seems like Barry and Byno already pretty much put everything on the table in terms of causes. Was there really that much more to it?

    I wonder, if it’s really just as Mark described above, a nice way to spend more money, all in the name of “identifying the problems” so we don’t make them again. please.

    Byno,

    Those are some very interesting comments on tax deduction ideas. I wonder though if they would come along with increasing in the marginal brackets, basically making the deduction a wash for those responsible. After all, it’s the responsible people that have to pay for all of this in the end right?

  50. cvienne says:

    @MEH

    It was actually BECAUSE I do a lot of “short game” work that I felt confident betting the guy…I looked at the guy and thought to myself…”Eh this guy can PROBABLY shoot an 80 – but he’ll “choke” and shoot an 85″…

    So all I had to think to myself was “can I shoot an 85 lefthanded with a 7-iron?”…

    Answer: I knew I wasn’t going to hit 15-18 greens in regulation, but I figured I could hit 10…there were 5 par 3′s on the course (all within 1 club and a half of 7 iron distance – which I could choke down or muscle up on)…There were 3 par 5′s that I could EASILY reach in three shots (and moreover set myself up for PERFECT 7-iron distance on the third shot)…The greens weren’t stimping particularly fast (so it was EASIER to lag puts even though I was putting with the back end of a 7-iron)…I wasn’t worried about bunkers because I practice opening up the blade & hitting mid irons out of greenside bunkers…We were playing “preferred” lies…

    Anyway – all I really had to worry about was getting “up & down” from the 10 par fours…Which I managed to on 3…

    You “think’ your way around a golf course my friend :-)…

  51. km4 says:

    cvienne @ 11:14
    Yup !

    Continued Job losses up in 44 states as recession drags on
    http://bit.ly/V0G4P

    WASHINGTON – All but six states lost jobs in April and double-digit unemployment persisted in every corner of the country as companies squeezed by the recession slashed payrolls.

    Federal Reserve Chairman Ben Bernanke has said he expects the economy to begin growing again later this year, but the recovery is expected to be slow, with companies in no rush to hire. The Fed projects unemployment will stay high well into 2011.

    **************************

    So no social unrest in America ?

    LOL !

  52. call me ahab says:

    b22-

    agreed- Wall Street a good movie- the most absurd thing in that movie though which was brought out by Rolf Potts in his book Vagabonding- excellent read by he way-

    http://www.vagabonding.net/

    was when Charlie Sheen’s character said he wanted to make loads of money so he could buy a motorcycle and travel across China (paraphrasing)-

    the reason that is absurd- is because any American- even one with very modest means- can do that- it takes very little money to travel- especially in China-

    unless 4 star hotels are a requisite

  53. ben22 says:

    km4,

    not only will companies be slow to hire, the banks have basically no incentive to lend. So as credit contracts, the credit deflation will continue (it has hardly even started yet).

    Soon this current wave of optimism will flip and the fools rushing into the market are going to take a beating.

  54. Myr says:

    Explosive credit creation relative to GDP is *THE* root cause of our problems. There are many, many causes of the excessive credit creation, but all roads lead back to credit and leverage.

  55. cvienne says:

    @ben22

    What isn’t even reflected in the numbers that the Labor Dept puts out is how much the American economy has thrived on “service sector” activity…

    Forget about “job cuts”…Think about all the individual small businesses out there (read: one person with their own private business that outsourced for larger business)…THAT is where the knees are going to get cut out of our economy…THAT is real commerce that has been obliterated (yet is not even reflected in the statistics)…

    Any Joe or Jane could have gone to the SBA and gotten themselves $15,000 start up capital over the past 15 years or so…Now? Forget about it!

    There is a FLOOD of qualified workers out there…

    1. People who lost their jobs after 2000, but then “started-up” on their own
    2. People getting FIRED now
    3. New college grads coming out (like Ellis Island immigrants)

    I hope Big “O” has enough jobs for them all…

  56. ben22 says:

    ahab,

    I prefer Wall Street over Boiler Room but my favorite similar movie is Glenn Gary Glenn Ross even though it’s not really about the stock market.

    Also, thanks for that link. I’d like to do something like that someday.

  57. cvienne says:

    @ben22

    “Glenn Gary Glenn Ross” is a classic!

  58. ben22 says:

    cvienne,

    your comment about SBA loans hits real close to home for me. Been there, tried that.

  59. I’ll bet the data boys are just sweating it out until August rolls around. Then they can start comparing much better YOY numbers. Prepare for a propaganda blitz like you have never seen before going into the fall.

    That is assuming Atlanta isn’t burning by that time of course

  60. ben22 says:

    common man,

    you read my mind on that one. I was just thinking about that last night. We’ve got some nasty quarters coming up for YoY comparisons. Get ready for the “better than expected” talk like we have never seen before.

    What happens when the #’s are worse YoY?

  61. km4 says:

    @How the Common Man Sees It Says and ben22:
    Affirmative i.e. get ready for ‘financial happy talk PR blitz’ by Obama admin and MSM

  62. cvienne says:

    @ben22

    Re: SBA

    The bottom line synthesis is this…

    2003-2007 was always portrayed as being a “jobless recovery”…Technically, it was because the “jobs” were not jobs that were “statistically” reported…

    - In 2000 you lose your job at your internet dot.com…
    - You go to SBA and get $15,000 in loans to SELL your “services” to companies who still need the output but can’t sustain the payroll.
    - You have a modest amount of success and keep buying your Starbucks lattes & iphones…
    - The “luckier” of you own homes, and the “equity” of those homes is increasing…
    - 2007 comes
    - House prices finally crack (but now you are leveraged from equity withdrawls – your mortgage resets – and you are soon underwater)
    - The companies who were paying you for your SERVICES suspend further expenditures.
    - The same companies, unload MORE workers from the remaining payroll (dumping more people LIKE YOU onto the SERVICE SECTOR market)…

    If there are ‘green shoots’ to this economy, they come with the expectation that the cycle will repeat itself (2000 – 2007)…

    Only this time…

    - Banks aren’t lending anymore
    - Taxes are likely to be RAISED not CUT
    - We can’t fool ourselves into believing that China will pick up the slack with double digit growth
    - People are levered to the hilt
    - There is no more equity in the house to live off of

    Time to “suck it up” people…

  63. ben22 says:

    Barry,

    How do you let this TRASH on your blog (see comment above)

    Not only is the link within that one full of pictures of Kudlow, Greenspan, Maria Bartiromo and Bush but there is this little gem in there as well:

    Paul Kurgman and Iran’s Mahmoud Ahmadinejad have a lot in common; namely a desire to see the US economy fail, as well facial features.

    If Ned is so inclined to bet on the S&P at 1,500 in 2-3 years I hope he is all in on margin. I will gladly take his money.

  64. cvienne says:

    Re:

    Click Here Experts Predict Huge Bull Market; S&P Could Retest 1500 within 2-3 Years « My Econ Page Says:

    Think about what the CHART would look like if that were the case (S&P 1500)…It would look like a “triple top” (therefore it would be likely to go UP exponentially from that, perhaps 3,000)…

    So why not just say the S&P is going to 3,000 if you think 1,500 is possible?

    That’s A LOT of ipods!

  65. cvienne says:

    What people like FRANKLIN (and the dude who made the S&P 1500 call) never stop to consider is the following:

    The world has 6 billion people in it…

    In order for the VALUATIONS in the world industrial complex to come into line with that, you’d need WORLD CONSUMPTION on a MASSIVE SCALE…

    It could happen, but to do so would SERIOUSLY impact a world energy infrastructure that is not equipped to deal with it (nor will be for at least 30 years notwithstanding ANY effort to produce alternatives)…

    So if you want GROWTH like that to occur (within the term of Big “O”‘s tenure – so you can all pat yourselves on the back and say you were right all along), you’d have to do so at the expense of ACCELERATING the impacts of golbal warming, and risking the worlds future that way…

    So pick your poison…

    Would you PREFER to address “consumption” and resolve global warming?

    or

    Do you want an economic recovery RIGHT HERE RIGHT NOW, and ‘pooh-pooh’ the idea of global warming?

    Aaah…The ‘conundrum’ of having an office ABOVE that of a community organizer…

  66. @ ben22

    What happens when the #’s are worse YoY?

    Another black swan?

    I can’t wait to hear Obama say DOH!

  67. km4 says:

    > Another black swan?

    THE INCREASING FREQUENCY OF BLACK SWANS
    http://bit.ly/36yDue

    His and my second claim, and one that is harder to prove, is that there are reasons to believe that changes to the underlying global system have made these events much more likely (most worrisome, more prone to negative black swans)

    Both Taleb and I conclude that the best way to deal with this risk is to simplify our global economic system. Taleb recommends that we turn back the clock to a simpler time. In contrast, I recommend that we organically evolve into a more efficient decentralized system.

  68. Steve Barry says:

    This is even weirder…I first proposed it last summer…

    Steve Barry Says:

    August 22nd, 2008 at 9:47 am
    Very intelligent analysis…root cause has to be moral hazard, fostered by central banks low interest rate, low regulation policies IMO.

    What is the answer? I again propose an Economic Crisis Dream Team (ECDT – as someone helped me name my pet idea) to work through the solutions…Volcker, Shiller, Stiglitz, Roubini, Bogle and Barry to host and moderate. Since it ain’t exactly happening at rapid speed, here’s my answer. In a global economy, a more global-centric monetary policy and regulation is necessary. You can’t change everything overnight, so an evolution plan should be developed. An idealistic ULTIMATE goal, years away, would be one global currency and global regulatory body with representation from countries like an economic Congress.

  69. cvienne says:

    @km4

    “there are reasons to believe that changes to the underlying global system have made these events much more likely”

    In physics, as one approaches a BLACK HOLE there is a notion that time “speeds up” (but that is only relative to outside observers not affected by the BLACK HOLE)…

    However, as far as you’re concerned inside the space ship, time will
    still work normally, and your clock will still tick once a second.
    After all, you and the clock will share a frame of reference, so as
    far as you’re concerned, time will still be working normally. However,
    looking back out at the rest of the universe you would see their time
    speed up incredibly or even infinitely fast.

    Of course, the gravity would tear you and your ship apart long before
    any question of you stopping in time would come up, but that’s neither
    here nor there.

  70. ben22 says:

    Steve,

    I remember reading what you posted there. I know it’s baseball season man, but you should post more. Always valuable.

    The march towards a one world currency will eventually come true IMHO. It will be done in the name of safety and regulation.

  71. cvienne says:

    @Steve Barry

    Seidman would have been good…too bad he’s no longer available :-(…

  72. Steve Barry says:

    @cvienne:

    Good point about Seidman…I suggested him at the time as well for a roundtable…Volcker is the only one probably with the political capital to be named to an official government panel.

    Steve Barry Says:

    July 24th, 2008 at 7:03 pm
    Great quote…now let’s do something about it. Host a live issues roundtable on your blog…you mediate…with anti-clueless dolts such as Volcker, Roubini, Bogle, Shiller, maybe Bill Seidman…other nominees? Otherwise we may as well give up. No way our politicians can get us out of this on their own. When the roundtable is done, call Kudlow and go on his show to promote it. Even get his buy in on some points if possible. C’mon Barry…you can pull it off. Whatever you want me to do, you have my email.

  73. Bruce in Tn says:

    http://www.nytimes.com/2009/05/24/business/24every.html

    Decline and Fall: A View From 2089

    Once again, poor old Ben Stein writes an article…I gather that we have once again flipped-flopped to the “I told you the sky if falling” mode.

    Well, Ben 22, it does seem all Bens think alike…..

    :)

  74. cvienne says:

    @Bruce in Tn

    Not necessarily “all” alike…Ben Stein was on FOX yesterday…he recommended a “buy” on BAC…

    I guess it was just for a “trade”…

  75. DL says:

    “Put an Elizabeth Warren or a Paul Volcker in charge, and give them 6 months to create … recommendations on how to fix it.”

    Volcker’s impartiality can be counted on only to the extent that it does not undermine the interests of Obama’s political constituents.

  76. ben22 says:

    BRUCE!

    That’s the worst insult I’ve gotten all year man! Take that back.

  77. Todd says:

    I did see some green shoots sighting yesterday. Local police directing traffic at a Garage sale event. Apparently demand was so great for these goods that neighborhood traffic capacity was overwhelmed and spilled out onto a major thoroughfare. ;)

  78. Moss says:

    From Wikipedia:

    In 1939 Ferdinand Pecora published a memoir that recounted details of the investigations, Wall Street Under Oath. Pecora wrote: “Bitterly hostile was Wall Street to the enactment of the regulatory legislation.” As to disclosure rules, he stated that “Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker’s stoutest allies.”

    I suggest that each member of this panel be required to read the book.

  79. Moss says:

    I would add one more thing to the cause ‘list’ that needs to flushed out.

    Impact of Lobbying on Congress by financial organizations.

  80. thetanman says:

    The system is incapable of self reform. Has been for a long time.

  81. greg says:

    BR… the rules have always been in place, they just weren’t followed. What possible good can come from any enquiry? The simple facts are these…the failure to follow procedures which are already in place lays at the feet of the CEO and the Board members, period. Yet we have not seen any action taken to date on either of these entities.
    Real Estate Agents and Mortgage Writers using the same appraisers? The Bank should be the only one picking the appraiser. Why would a real estate agent or a mortgage writer pick an appraiser?
    Not verifying credit scores? The bank orders the credit score.
    Abdication of lending standards? the Bank sets the lending standards.
    Low interest rates? What has that got to do with anything?
    I think it’s time we stopped using excuses for the misdeeds of those who created this mess. The simple fact is, that we had at the top, the very weakest of executives that we could possibly have put together, and yet we still have managed to find a place in society for these people, as evidenced by Dick Fulds recent venture back into the working world. Until we are willing to call a spade a friggin shovel, we shall not easily recover and move on from this period of history.
    We seriously need a Joseph Welch moment at this point in history BR. Have these CEO’s and Board members at long last, no sense of decency? We as a people are seriously done with them.

  82. jdjd says:

    Who would you appoint to this panel?

    My choices: Paul Volcker, Elizabeth Warren, Barry Eichengren, Warren Buffet

  83. Simon says:

    There is also an important macro-economic cause in relaton to china. There would not have been the option to lower interest rates for as long as they were low for without funding from China.

    Greenspan had a reasonably stark choice. Either lower interest rates and keep them low or have unemployment rise to ..uncomfortable levels…??

    After all America sent a lot of its productive enterprise overseas. In the wake the dotcom bust what else could have happened?

    Unfortunately the can is now made of material sufficently dense tha it can no longer be kicked down the road. America now has a very sore foot.

  84. carping demon says:

    “km4 Says: “@12:35″

    > Another black swan?

    THE INCREASING FREQUENCY OF BLACK SWANS
    http://bit.ly/36yDue

    I don’t know how to make links work in Typepad, but that’s John Robb at >http://globalguerrillas.typepad.com&lt; and you should listen to him. It is foolish to adopt mathematics from physical systems when the maths describe boundaries where the real world (that’s the world which is there whether you think about it or not,) actually changes abrubtly and use them as anologies for Economic social behavior, which is real only when you think about it, with your filtched functions and pilfered polynomials and deviated standards and rational equilibriums. Keep Listening. There are people out there who’ve spent the last 70 years thinking about this and you need to hear them.

  85. Zenster says:

    Sorry about the late post over the holiday but I have to register a strong vote for Elizabeth Warren. She has demonstrated the rare capability & courage to cut through the intentional obfuscation of TPTB & communicate her findings & conclusions in understanable language. She communicates effectively not only to Congress but also, and perhaps more importantly, directly to the American people through numerous appearances on the TV talk circuit. She combines these unusual capabilities with a long term continuing concrn for the welfare of the middle class. Go for it Barry. If not you, who?

  86. Zenster says:

    Sorry about the late post over the holiday but I have to register a strong vote for Elizabeth Warren. She has demonstrated the rare capability & courage to cut through the intentional obfuscation of TPTB & communicate her findings & conclusions in understanable language. She communicates effectively not only to Congress but also, and perhaps more importantly, directly to the American people through numerous appearances on the TV talk circuit. She combines these unusual capabilities with a long term continuing concern for the welfare of the middle class. Go for it Barry! If not you, who?