Its Friday afternoon — last linkfest of the week!

Dismantling the Temple, Fixing the Fed (The Nation)

What went wrong with economics (Economist)

Audit Interview: James L. Bothwell The author of a definitive ‘94 GAO derivatives report talks about industry pushback and financial-press complacency (CJR)

Security Savings Bank: Why a bank’s own executives were ignored when they brought financial irregularities to the OTS (their primary regulator) as “religious right” connections were used to fend off regulation  (Bank Implode)

•A GS 2-fer:

-The Joy of Sachs (Krugman)
-The real price of Goldman’s giganto-profits (Taibbi)

Curb Your Enthusiasm (Barron’s)

AIG’s European Derivatives May Take Decades to Expire (Bloomberg)

This Recovery Will Be Very, Very Painful (Atlantic)

Barney Frank’s Plan to Legalize Marijuana (Esquire)

Messing With a Successful Comic Formula (WSJ)

The “To Do” list of Goldman Sachs’ Global Head of Corporate Communications (Amusing)

Gimme some good links I missed for the weekend!

I’m off to see one of the last surviving Beatles at the new Citi Field . . .

Category: Financial Press, 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.

29 Responses to “Friday Readings”

  1. Some front page news I omitted

    • Paulson Counters His Critics (NYT)
    http://www.nytimes.com/2009/07/17/business/17paulson.html

    • CIT, Clients Scramble to Secure Lifelines (WSJ)
    http://online.wsj.com/article/SB124779123756354885.html

    • The Fourth Explosions in the Sky on the 4th of July
    http://weightshift.com/memo/the-fourth

  2. bruerr says:

    Krugman’s op-ed is the standout imo. Not getting enough attention. Begins to peel back the layers, and cut down the myth of how “good” GS is from economy. (IE: Not good for America.) Have to agree.

  3. leftback says:

    No minnow banks this Friday, looks like Corus and Guaranty are both goners.
    http://www.calculatedriskblog.com/2009/07/bloomberg-regulators-poised-to-seize.html

    CIT seeks DIP financing:
    http://www.calculatedriskblog.com/2009/07/report-cit-in-talks-for-dip-financing.html

    CR also has detail on the GE legerdemain, long post on the conference call.

  4. shakazulu says:

    Almost fell out of my chair when I saw Repersentaive Mike Ross’ recent work on the health legislation. Found the link at urbansurvival (not quite sure what to think about the site). I am admittedly not up to speed on the current status but IMO if this is not just lip service and he is being genuine then I am beginning to regain a small bit of faith in at least some of our elected officials.

    Also, BR I applaud your ability to navigate publishing your book, especially after seeing the recent Tech Ticker vid on ratings agencies. Have a great weekend.

  5. Roger Bigod says:

    A festival of cynicism, negativity and general Bad Attitude. Thank you, Barry, for maintaining your high standards.

  6. bruerr says:

    @Roger Bigod Says: “A festival of cynicism, negativity and general Bad Attitude…”

    Back at ya Bigod… What is that a reflection/projection of what is in your spirit? Oh, you want us to follow the corruption and manipulation of the market this week? What you might call “high standards.”

    Wouldn’t you rather be kissing J.Dimon’s ring hand? “High standards” trying to defeat regulation of the derivatives markets he has been managing these last 4 or 5 years?

    He is bitter Barry – because a lot of the constructive criticism is accurate. Don’t pay him any mind.

  7. Mike in Nola says:

    Paulson never uses email. Smart guy.

    Earl Long (Huey’s brother) said something to the effect of never write what you can phone, never phone what you can say face-to-face, never say what you can nod.

    http://ftalphaville.ft.com/blog/2009/07/17/62601/whats-email/?source=rss

    D-Day in Latvia
    The collapse of some of the debtor countries could be the next trigger in the banking crises. Spain is deteriorating rapidly also.
    http://ftalphaville.ft.com/blog/2009/07/17/62586/d-day-in-latvia/?source=rss

    China
    Michael Pettis isn’t impressed. Thinks the China bubble blowing can only go on another year at most.
    http://mpettis.com/2009/07/i-wasn%e2%80%99t-impressed-by-china%e2%80%99s-high-reserve-and-gdp-growth-numbers/

    Why can’t China can’t sell its own bonds?
    http://www.bloomberg.com/apps/news?pid=20601087&sid=agcUK8zq8tvY

  8. bruerr says:

    @Roger Bigod Says: “A festival of cynicism, negativity and general
    Bad Attitude…”

    Back at ya Bigod… What is that a reflection/projection of what is in
    your spirit? It is front page news. You cannot attribute that to Barry.

    Its whats going on in the economy.

  9. OkieLawyer says:

    Goldman Bites the Hand That Feeds It

    Here is a quote:

    What you probably don’t know is that Goldman, flush with cash and profits, is squabbling with the Treasury about how much it should pay taxpayers to buy back the stock purchase warrants it gave the government as part of the TARP deal. Talk about tacky.

  10. emmanuel117 says:

    The Securities Saving Bank article is hilarious. Phil Klein AND John Ashcroft?

    lol

  11. The Curmudgeon says:

    Taibbi’s piece is an excellent rant, especially along w/ Krugman’s more sedate, cerebral piece (but Taibbi actually quotes more facts than Krugman, who kinda just talks around them).

    This is all so 2007 again. I betcha 2010 will look something like 2008, except without as far to fall. We’re a lot closer to zero now than we were in 2007, from an article in July of 2007 in the NYT:

    Top Lender Sees Mortgage Woes for ‘Good’ Risks

    Published: July 25, 2007
    Countrywide Financial, the nation’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.

    The news from Countrywide, widely seen as a bellwether for the mortgage market, initiated a sell-off in the stock market, which is at its most volatile in more than a year. The Standard & Poor’s 500-stock index fell 30.53 points, or 2 percent, to 1,511.04, its biggest one-day drop in nearly five months. The dollar dropped to a new low against the euro, edging closer to $1.40 to 1 euro. Stocks opened sharply lower in Japan this morning.

    The slumping housing market has become the biggest worry for the stock market, which just four days ago set records, because of its potential impact on the broader economy and financial system.

    http://www.nytimes.com/2007/07/25/business/25lend.html?scp=3&sq=2007%20business%20risk%20mortgage&st=cse

    ~It seems like yesterday that Countrywide ruled the headlines, and now they only exist as a $700 million or so loss on Bank of America’s quarterly earnings:

    The home loan and insurance unit lost $725 million, even as revenue tripled, on credit costs and expenses to help homeowners modify their loans. The bank sees signs that some loan losses may abate, with late payments flattening and home prices stabilizing in California’s hardest hit markets, Lewis said. Card services swung to a loss, and the new federal law curbing interest rates and fees may slice revenue, the bank said.

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aurMTBzvd9dU

  12. Moss says:

    All excellent stuff but I found the tale of Security Savings Bank to be a microcosm of what went on in the broader financial and political spheres.

  13. constantnormal says:

    A bit late, but this was linked to Wednesday from Dave Fry’s ETF blog …

    http://sprott.com/Docs/marketsataglance/June_2009.pdf

  14. Mike in Nola says:

    No FDIC takeover of Corus. Only First Piedmont Bank in GA. At least as of 4:56pm CDT.
    http://www.fdic.gov/

    Maybe they do it by time zone.

  15. CapitalistCanuck says:

    Just curious if anyone is willing to make any calls for next week?

  16. Roger Bigod says:

    You guys are as irony-deprived as a Republican Senator whining about deficits. Just for the record, I think cynicism, negativity and Bad Attitude are wonderful. Especially Bad Attitude.

  17. Time for the disquieting soapbox:

    I don’t have a link but I do have a thought for you. We all know that communists had a lot of things backwards. Last night I was thinking about something they had really backwards. One of their sayings was religion is the opiate of the people. I got to thinking about that. Most people accept that thought straight up without even considering the source. If you realize that religion actually does good for people in many ways then it can’t really be called a quieting opiate. So I was thinking that since communism is usually a distraction from what is really going on (like plunder) what could possibly be the opiate of the people? Think about this phrase:

    Government is the opiate of the people.

    When you start to think on it you’ll begin to understand how true that statement is. Look at the U.S. The American people are going through the one of the worst economic fleecings in world history. They should be rioting in the streets right now as their kids futures are being stolen by banksters and politicians yet they aren’t. Why aren’t they? The opiate. They are contentedly sitting in their homes and not rising up because of all the promises that government has made them. I’ll bet if you ask the people to a man they will tell you they don’t believe that they will get any net benefit from the largess that has been stolen from them and handed back at pennies on the dollar yet they, as a group effectively do nothing. Why?

    Because government is the opiate of the people. Not religion

  18. Mike in Nola says:

    Roger Bigod:

    Who you accusing of not having a bad attitude?

  19. shakazulu says:

    @ Common Man,

    Not saying that I plan on rioting anytime soon but I do want to thank you for reminding me of both what is really important in life as well as the folly of my own ways. Amazing post.

  20. AmenRa says:

    In the post “Responsible Versus Irresponsible Central Banking” McHugh has a link to an article about William White. The article is about the time he was the Chief Economist of the Bank for International Settlements. In it White had described exactly what we are going through now back in 2004. He believes that Central Banks should work to prevent bubbles and not wait for them to burst (aka anti Greenspan). Here’s the link from the post:

    http://www.spiegel.de/international/business/0,1518,635051,00.html

  21. jc says:

    Mike Nola, 4 banks now, they roll west with the setting sun, 2 banks in CA and one in ND added. FDIC picked up all 4 banks – looks like they could find other banks to pick them up, is this a new phase in the crisis?

  22. jc says:

    Saturday, July 18, 2009

    BANKING

    Regulators Shut Banks In California, Georgia

    Regulators on Friday shut two banks in California and two smaller banks in Georgia and South Dakota, boosting to 57 the number of federally insured banks to fail this year.

    The Federal Deposit Insurance Corp. was appointed receiver of the four banks. The two biggest were from California: Temecula Valley Bank, with $1.5 billion in assets and deposits of about $1.3 billion, and Vineyard Bank, with assets of $1.9 billion and $1.6 billion in deposits. The other two banks were First Piedmont Bank of Georgia and BankFirst of South Dakota.

    The cost of the four failures to the federal deposit insurance fund is estimated at $1.09 billion.

  23. jc says:

    Only tough nuts left? This is the first time I remember FDIC taking on all the failed banks without being able to find a buyer.

  24. jc says:

    Alabama Hardware Distributor Blames CIT Woes for Its Bankruptcy

    By Steven Church and William Rochelle

    July 18 (Bloomberg) — A hardware distributor in Alabama became the first company to blame the troubles of commercial lender CIT Group Inc. for its bankruptcy yesterday when it filed for protection from creditors.

    Moore-Handley Inc., which supplies tools and other items to hardware stores and home centers, said in court papers that it was forced into Chapter 11 because it had trouble getting cash from CIT, its lender.

    The company has tried to negotiate with CIT, though “the federal government’s recent decision not to support CIT’s reorganization has thrown CIT into disarray and casts substantial doubt on CIT’s ability to continue to fund the Debtor’s working capital requirements,” Moore-Handley said in documents filed in U.S. Bankruptcy Court in Birmingham, Alabama.

    CIT has reported $3 billion of losses in the past eight quarters and has been in talks with lenders about funding its own possible bankruptcy, according to people with knowledge of the matter. CIT may need as much as $6 billion to avoid filing for bankruptcy protection after the U.S. wouldn’t give the firm a second bailout, according to CreditSights Inc.

  25. jc says:

    Between the GM & Chrysler auto dealer shutdowns and a hard landing by CIT it looks like their could be a fresh wave of job losses at small employers across the nation. NOT TBTF is very pertinent to these employers.

  26. “Baxter are nothing if not prepared for this ‘swine flu’ outbreak if the wording in this 2008 US patent application is anything to go by…”
    http://www.theoneclickgroup.co.uk/news.php?start=2760&end=2780&view=yes&id=3581#newspost

    “A SMALL, publicly owned hospital in the US state of Missouri has launched a class action lawsuit against Australia’s biggest health-care company, CSL, and its main rival, Baxter International, claiming a conspiracy to fix the prices of life-saving blood plasma products.

    Lawyers for Pemiscot Memorial Hospital, which services several counties in south-east Missouri, allege CSL and Baxter had illegal agreements to restrict supply and push up prices through co-ordinating their individual output…”
    http://business.theage.com.au/business/us-hospital-sues-csl-for-price-fixing-20090717-doas.html

  27. “…Klein, 64, was a retired AT&T communications technician in December 2005, when he read the New York Times story that blew the lid off the Bush administration’s warrantless wiretapping program. Secretly authorized in 2002, the program lets the U.S. National Security Agency (NSA) monitor telephone conversations and e-mail messages of people inside the U.S. to identify suspected terrorists. Klein knew right away that he had proof — documents from his time at AT&T — that could provide a snapshot of how the program was siphoning data off of the AT&T network in San Francisco.

    Amazingly, however, nobody wanted to hear his story. In his book he talks about meetings with reporters and privacy groups that went nowhere until a fateful January 20, 2006, meeting with Kevin Bankston of the Electronic Frontier Foundation (EFF). Bankston was preparing a lawsuit that he hoped would put a stop to the wiretap program, and Klein was just the kind of witness the EFF was looking for.

    With the EFF on board, Klein was briefly a media celebrity — the man who had the guts to expose the NSA’s secret wiretapping program. In his book he provides the documents and the stories that illustrate how all of this transpired…”
    http://www.computerworld.com/s/article/9135645/The_NSA_wiretapping_story_nobody_wanted
    ~~
    “The last time the government embarked on a major vaccine campaign against a new swine flu, thousands filed claims contending they suffered side effects from the shots. This time, the government has already taken steps to head that off.

    Vaccine makers and federal officials will be immune from lawsuits that result from any new swine flu vaccine, under a document signed by Secretary of Health and Human Services Kathleen Sebelius, government health officials said Friday.

    Since the 1980s, the government has protected vaccine makers against lawsuits over the use of childhood vaccines. Instead, a federal court handles claims and decides who will be paid from a special fund.

    The document signed by Sebelius last month grants immunity to those making a swine flu vaccine, under the provisions of a 2006 law for public health emergencies. It allows for a compensation fund, if needed…”
    http://cryptogon.com/?p=9960 w/vid. clip..

  28. bergsten says:

    “Jury Summons Leaves Residents in Dark”

    “Alameda County residents received ordering them to appear for jury duty was clear: Those who skirt their civic duty will face “a fine, a jail term or both.”

    But it left out a key bit of information — what day to report.

    That omission left Brahme and many others grabbing their phones this week, only to be put on hold “for an eternity” as they tried to find out when they had to show up in court.”

    But that’s not even the best part…

    “Brighton said about 18,000 summons were mailed last week without the reporting “date because of a computer error by the county’s mailing vendor, Corporate Express. The company, which is owned by Staples, mailed corrected summons Tuesday at no charge to the county, he added. “”

    18,000 jury notices for a single week?? The population of Alameda county is about 1.5 million. That’s a whole lot of potential Jurors for a single week.

    http://www.contracostatimes.com/search/ci_12861480?IADID=Search-www.contracostatimes.com-www.contracostatimes.com&nclick_check=1