click for embarrassing video
Neal Barofsky couldn’t get a word in edgewise this morning on CNBC as Becky Quick and Steve Liesman cut him off repeatedly. Barofsky won’t have that problem at The Big Picture Conference on October 10, 2012 in New York where he’ll have plenty of time to make the point he eventually got across in the clip above and in his book, Bailout, that TARP failed by design and execution to meet the stated goals upon which it was passed.
Wall Street seems to think this criticism means Barofsky would have preferred to see the banking system go down in flames. Nothing could be further from the truth. But, as he explains, the housing market remains a central impediment to a broader economic recovery.
Category: Bailouts, Markets, Really, really bad calls, Television
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.
Would banks have lost as much had they taken a haircut as they lost through the effects of their own foreclosure firesale?
Houses lost 30-50% of their value based on the market, which means banks lost a similar amount on the foreclosed properties.
If banks had negotiated principal reductions with their debtors, they might have lost less than that, and there would not have been a housing crisis.
Also, not sure why this comes to mind, but has anyone noticed how very very short and small Rick Santelli is?
Power Reveals.
http://www.youtube.com/watch?v=joNzRzZhR2Y
What CNBC engages in is not journalism but showmanship. Maria Bartiromo engaged in very similar conduct a few weeks ago when interviewing Eliot Spitzer. It’s hard to take CNBC seriously as anything other than a p.r. machine for the big banks
Wall Street seems to think this criticism means Barofsky would have preferred to see the banking system go down in flames.
Just like Keynes wanted to save Capitalism, despite the Wall Street types of the time accusing him of the same behavior. Are the kings of Wall Street, and their flunkies like CNBC, that far gone down the rabbitt hole?
ConscienceofaConservative:
CNBC has always had their lips planted firmly on Wall Street’s ass. I mean the looters and robbers like Goldie or Willard, not the upstanding people like BR. And it’s been 6+ years ago since the Money Honey stabbed Ben Bernanke in the back.
The idea that ” the housing market remains a central impediment to a broader economic recovery” is contra factual. The idea is that if homeowners had less debt and/or fewer were underwater they might spend more thereby helping the economy. It’s sounds logical but is poorly rooted in the available data.
Check out Personal Saving Rate (PSAVERT) over at FRED (http://research.stlouisfed.org/fred2/series/PSAVERT?cid=112). The last data point is 4.4%. While that’s higher than the low point of 1.0% in April of 2005, it’s far below any date from 1959 to 1998.
In other words, personal savings are still deeply depressed by historical standards, not inflated. A quick look at the graph shows that personal savings fall in response to asset bubbles and rise in recessions (in spite of a presumably diminished capacity to save). Using the personal savings rate as a metric, asset prices would still appear to be inflated because savings are still so low.
So why the harping on the need to “fix” housing to boost savings and (further) depress savings? Because America’s economy is (still) addicted to bubbles and incapable of any semblance of prosperity unless consumers are borrowing to the hilt (sustained by the delusion of ever rising asset bubbles).
Why? Because America has a deeply entrenched trade deficit and massive ongoing debt accumulation (in one or more sectors) is needed to finance the trade deficit.
I appreciate that this it not the C.W. and pointing out that the trade deficit might be a significant root cause of our woes isn’t PC. However, let me appeal to authority. As it turns out… My entire argument is derived from Krugman (and others). Check out “The Return Of Secular Stagnation” (http://krugman.blogs.nytimes.com/2011/11/08/the-return-of-secular-stagnation/). I quote
“Waldman goes on to suggest that high income inequality is what’s driving this — he has a little parable involving bakers and bread that ultimately comes down to the rich being satiated while the poor cannot afford to buy.
OK, I like little parables. But I have a problem with this one, for one simple reason: any such story, basically an underconsumptionist story, would seem to depend on the notion that rising inequality has led to rising savings. And you just don’t see that. Here’s private saving as a share of GDP:
Obviously it jumped up after the housing bust, but until then it was actually declining, and even now it’s below historic highs. I just don’t see how to make the underconsumption story work.
But then the question is, why do we find it so hard to achieve full employment even with saving somewhat low by historical standards. And the answer seems clear: it’s the trade deficit. America in the 70s and 80s could have high savings, not hugely strong investment, but still have full employment because trade deficits weren’t as large compared with the economy as they are now.
And this in turn means that the savings glut possibly making the natural real rate negative is actually originating abroad, not at home.
Do you sort of see why I’m a hawk on China policy?”
It’s funny that after the economy crashed, the Bush/Cheney folks started blaming it all on “global imbalances”. They were right of course. However, given their intense support for runaway trade deficits in the years leading up to the crash they had (and have) zero credibility.
It’s also funny that Ezra Klein falls for the “broken housing / broken economy”. Of course, EZ doesn’t appear to have any background in economics whatsoever.
Whatever Rick Santelli’s physical height, Bartiromaria and QuickiBecky could stand on each others’ shoulders and not reach his mental knees. Their eminence-frontrunning criticism is easier seen as schoolyard “la-la-la-la-la-la” drown-out noises. Independent thinking is reserved for their servant choices.
along similar lines, as above..
“Steve Liesman”
“lies”-man, a perfect Character for the Charade that CNBS has become..
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note: an Author, creating such a Name, for his/her Novel/Script/Screenplay, would never ‘get away with it’..
If you would like to see a proper TV interview of Neil Barofsky , check out the interview conducted by Canada’s BNN TV a few weeks back. At least on that network he gets a fair shake and some respectful treatment by the program’s hosts instead of the thoroughly disgusting attack dog interview conducted on CNBC , yesterday. Compare the difference,it’s amazing:
http://watch.bnn.ca/market-sense/august-2012/market-sense-august-2-2012/#clip733184