Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby [...]]]>

Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Heidi’s bar. Soon she has the largest sales volume for any bar in Detroit .

By providing her customers’ freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi’s gross sales volume increases massively. A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi’s borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don’t really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi’s bar. He so informs Heidi.

Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since, Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Heidi’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi’s bar.

Now, do you understand?

Author Unknown

9 Comments

• At May 7, 2010, me wrote:

  best description ever.

• At May 9, 2010, Martin Hash martinhash.com wrote:

  I sense the outrage towards the people who are trying to do business: Heidi, the banks, Government; but how come only responsible people are held responsible? What about the irresponsible "alcoholics" who started the whole mess? How come there's no condemnation and censure directed at them?! Where are Debtor's Prisons when you need them?

• At May 9, 2010, John democracyforvancouver.org wrote:

  Your point is well taken...

  www.youtube.com/watch?v=-4kwSaJEVGg

• At May 9, 2010, John democracyforvancouver.org wrote:

  

• At May 9, 2010, Martin Hash martinhash.com wrote:

  That’s a beautiful sentiment but “responsibility” has also has empirical and legal ramifications:

  As an engineer, I’m trained to find causes – not determine blame.

  As an attorney, I’m trained to determine blame – not find causes.

  Of the two, the engineer approach is more practical and the attorney approach is more satisfying. The cause of the economic meltdown was deregulation (during the Clinton years). As a liberal Democrat, the solution is clear: re-regulate. Determining blame is a purely selfish pursuit – it does not benefit society but moral outrage feels soooo good.

• At May 9, 2010, John democracyforvancouver.org wrote:

  My son bought a house in Tucson a couple years ago. He has lots of "negative equity". But I will never advise him to "walk away" because of the market value of his home. The economist Dean Baker recommends people abandon their homes because of his belief that it will cost thousands more to own rather than rent over the next 5-7 years. He misses completely the concept that there is an ethical component to the decision to default on one's mortgage obligation. In addition if you purchased a stock in 2008 and watched it go down by 60% or more last year, would it have been a smart move to sell the stock a year ago? No. No one knows for sure what housing prices will be in 5 to 7 years.

  I would not call the mortgage lenders, the Wall St firms and the government the responsible people though. Unless you mean "responsible" in the sense of they created the mess along with the complicity of the alcoholics.

• At May 9, 2010, John democracyforvancouver.org wrote:

  Agreed but will our well greased politicians find the will to re-regulate?

• At May 22, 2010, Martin Hash martinhash.com wrote:

  They did it! Regulation of the banking system again - whew.

  The Obama administration is getting some big wins... Immigration reform next?

• At May 22, 2010, John democracyforvancouver.org wrote:

  Obama needs to delay immigration until his second term (if there is one). That is an issue that cannot be fixed without alienating so many people that there will be no way to get re-elected.

  The financial regulation bill is a start. But the core problem of "too big to fail" has not been addressed adequately and it seems there are lots of exemptions in the bill. That could end up meaning the bill has no teeth when it comes to changing Wall Street's behavior. We will see.

  Congress is scared that if they do not start fixing things quickly we will have another economic meltdown and that will hurt them big time in November..

  It does seem that Obama is accomplishing enough right now to turn around the Ds in the mid-terms although his track record for pumping up individual candidates is dismal. But just like a couple of months has turned things around for the Ds, it is still a long time politically speaking until November.

  On a different subject, bet there is an enormous amount of Palm Beach Florida beachfront property going up for sale at a bargain price right now. But if you wait a little while you might be able to buy it from a bank at fire sale prices if you do not mind wearing rubber boots when you go for a swim.

  You have to feel empathy for the President. He has been dealing with multiple crises none of which were of his own making.

[...]]]>

www.youtube.com/watch?v=w-oPdoT0H1A

Download audio file (Sirota_Chomsky_Interview.mp3)

Visit msnbc.com for breaking news, world news, and news about the economy

Obama gets Nobel Peace prize, turns around and escalates an unnecessary occupation of Afghanistan.

Now Bernanke is Time Magazine’s Person of the Year after caving to Wall Street investment banks and AIG by bailing them [...]]]>

Visit msnbc.com for breaking news, world news, and news about the economy

Obama gets Nobel Peace prize, turns around and escalates an unnecessary occupation of Afghanistan.

Now Bernanke is Time Magazine’s Person of the Year after caving to Wall Street investment banks and AIG by bailing them out rather than busting them up.

What a new world order it is indeed when people are rewarded for making huge, costly mistakes.  Bernie Sanders must be very disappointed as should be all of us.

www.youtube.com/watch?v=O3tTlb0s6Bs

Bernie may be right but like many in our government, Bernanke has a job for life no matter what he does or fails to do.  He has about as much chance of being fired as single payer legislation getting passed by Congress.  The Federal Reserve, like the Pentagon, is another shadow government.  The people behind the curtains are [...]]]>

www.youtube.com/watch?v=O3tTlb0s6Bs

Bernie may be right but like many in our government, Bernanke has a job for life no matter what he does or fails to do.  He has about as much chance of being fired as single payer legislation getting passed by Congress.  The Federal Reserve, like the Pentagon, is another shadow government.  The people behind the curtains are calling the shots.  If you screw up these days you get promoted, not fired.  Besides, Greenspan set up the house of cards for Bernanke as did Bush for Obama.

What we need is a government that is accountable to the people and that properly regulates the economy.  Bernanke is just another symptom rather than a cause.

www.youtube.com/watch?v=B0cf5If3cNg

Bail out the rich.  Fail to regulate corporations.  Allow unconstrained corporate compensation agreements.  Do not facilitate unionization of workers.  Allow big corporations to control the media.  Make free trade more important than our manufacturing industries.  Ignore environmental priorities.  Keep taxes low.  Deficit spend on the military.  Constrain health care and infrastructure expenditures.

And expect things to get better.

Newspapers are dead.  I mean the kind that get ink on your hands.  How do I know newspapers are dead?  Because I started reading newspapers when I was 9 years old.  I loved the NY Herald Tribune.   Unfortunately The Herald shut down a couple of years later and I was forced to become a New York Times reader which was much more dry [...]]]>

Newspapers are dead.  I mean the kind that get ink on your hands.  How do I know newspapers are dead?  Because I started reading newspapers when I was 9 years old.  I loved the NY Herald Tribune.   Unfortunately The Herald shut down a couple of years later and I was forced to become a New York Times reader which was much more dry and boring.  But I continued to read newspaper(s) every day for 40 years.  And I haven’t read a (newsprint) newspaper for the last 5 years.  That is why I know they are dead.  They are going the way of music CDs.  Remember them?

Rob Kall over on Huffpo has a great article about how the Feds could design a bailout plan for journalists rather than newspapers and generate a whole new paradigm for the news business and perhaps our economy in general.  According to Kall, rather than the top-down approach being used to bailout banks and car-makers, the Feds should take lessons from Google and other new, inventive companies.  Use a bottom-up approach to revive the news business:

The new American business model, the one that has proven to be fabulously successful even in these tough times, is based on bottom-up approaches. Google, Amazon, Facebook, Myspace, Twitter, to name a few, are all based on inviting the crowd into the business mix. Transparency is a big part of the new corporation and so is open sourcing of information — that means giving things away free.

I’m a firm believer that a strong media, and that means strong investigative journalism, is essential for democracy and efficient operation of both government and corporations. Investigative journalism digs and exposes. That’s an incredibly valuable function. It’s so valuable, it’s worth investing in … with the expectation of solid returns on that investment.

I say, instead of taking a top down approach and giving huge chunks of money to a handful of failing newspapers, (the same approach that was not very effective, in the long run, in dealing with the bank liquidity crisis), have government fund journalism and journalists. Take a bottom up approach and give the money to tens of thousands of journalists — writers and photographers and videographers. That will take huge financial pressure off the newspapers, give them a lot more content they can use, and help expand the growing blogosphere, where content is usually free and millions of people are operating small businesses with the potential to grow. Small business is where the most job creation has always flourished and small businesses are not too big to die.

Part of the reason the newspaper business is in trouble (besides the internet effect) is the same reason the banks are in trouble.  When you have monopolization of an industry, inevitably competition and innovation decline.  Without competition and innovation, it is difficult to put out a good product or service over time.  The organization gets lazy and uncreative since there is no imperative to be better than the competitor down the street.

The modern day mega-corporations are the entities that are too large to ultimately NOT fail.  If our government does not end up breaking them up under anti-trust laws, they will eventually fall from their own bureaucratic inefficiencies anyway.  The latter result though will probably cause much more harm to “we the people” than the former.

So let’s start breaking up the “too big to fail” oligopolies before these babies get thrown out with the bathwater.  And let’s start bailing out the the bottom rather than the top and create a new business climate that rewards innovation rather than monopolization.

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• Creating the Desire for News (conversationagent.com)

5 Comments

• At October 8, 2009, LewWaters rightinaleftworld.blogspot.com wrote:

  Believe it or not, John, I mostly agree with your thoughts here.

  Okay, when you get up off the floor we can continue ;-)

  Seriously, the print media especially should be more localized and actually cover news, both sides if political without favor to either, except maybe editorials.

  Issues of importance to our community remain ignored while we read of sensationalized accounts of hearings we have no control over.

  For example, did the Columbian cover Brian Baird's recent no vote on a bill that included funding for two Chehalis River Basin flood control projects within the 3rd Congressional District because he didn't have time to read them? I don't subscribe any longer, but i didn't see anything in the online site.

  While he lists it as taking a stand on his 72-hour proposal, many wonder why he didn't take the stand on the Stimulus Bail-Out Bill or Cap & Trade, which he also did not read and were for Billions of more dollars.

  Democrat or Republcian and however we may feel about his action, shouldn't readers within the southern portion of the 3rd District have the opportunity to know about this too, with the election so close?

• At October 10, 2009, John democracyforvancouver.org wrote:

  Lew,

  Thanks for agreeing with me on this.

  I remember a time when government actually tried at least to help people. It seems ever since greed became good and taxes became bad, our government has become, as Reagan liked to say, "the problem".

• At October 10, 2009, Lew Waters rightinaleftworld.blogspot.com wrote:

  We can't and don't need to disagree on everything, John. We can have our differences, but in the end, we are both Americans who want only what is best for all of us.

  Your words point out what many others don't fully realize about most conservatives. We are not anti-government or anti-taxes, just where they become excessive to the point of doing harm.

  The greed seems to be shared across the spectrum also. Instead of seeking balance and what is best for the country, partisanship gets in the way and and individuals seem to do more for personal wealth than good for the country. Examples, Randy 'Duke' Cunningham and William Jefferson.

  And then there are those like Michael Moore, who readily condemns capitalism, but draws million of dollars doing it.

  We will continue to disagree on many things, mostly how to achieve a shared goal, but where we can agree, we will mutually state so.

• At October 10, 2009, John democracyforvancouver.org wrote:

  Since you brought him up, I especially agree with the last line of this quote below from a Michael Moore piece yesterday. Moore earns millions of dollars and also tries to do good in the world. There are many others I can think of that earn millions of dollars and do great harm in the world. Bet he would also favor a tax increase on the wealthy (himself). I have not seen Moore's latest documentary, but I would guess he still favors capitalism, just not the unregulated, "robber baron" type of capitalism which has been prevalent since the baby boomers came of age

  We are weary, weary of war. The trillions that will have gone to these two wars have helped to bankrupt us as a nation -- financially and morally. To think of all the good we could have done with all that money! Two months of the War in Iraq would pay for all the wells that need to be dug in the Third World for drinking water! Obama is moving too slow for most of us -- but he needs to know we are with him and we stand beside him as he attempts to turn eight years of sheer madness around. Who could do that in nine months? Superman? Thor? Mitch McConnell?

  Instead of waiting to see what the president is going to do, we all need to be pro-active and push the agenda that we want to see enacted. What keeps us from forming the same local groups we put together to get out the vote last November? C'mon! We're the majority now -- the majority by a significant margin! We call the shots -- and we need to tell this wimpy Congress to get busy and do what we say -- or else.

  All I ask of those who voted for Obama is to not pile on him too quickly. Yes, make your voice heard (his phone number is 202-456-1414). But don't abandon the best hope we've had in our lifetime for change. And for God's sake, don't head to bummerville if he says or does something we don't like. Do you ever see Republicans behave that way? I mean, the Right had 20 years of Republican presidents and they still couldn't get prayer in the public schools, or outlaw abortion, or initiate a flat tax or put our Social Security into the stock market. They did a lot of damage, no doubt about that, but on the key issues that the Christian Right fought for, they came up nearly empty handed. No wonder they've been driven crazy lately. They'll never have it as good again as they've had it since Reagan took office.

  But -- do you ever see them looking all gloomy and defeated? No! They keep on fighting! Every day. Our side? At the first sign of wavering, we just pack up our toys and go home.

  So, at least for this weekend, let us celebrate what people elsewhere are celebrating -- that America now has a sane and smart man in the White House, a man who truly wants a world at peace for his two daughters.

  Many, for the past couple days (yes, myself included), have grumbled, "What has he done to earn this prize?" How 'bout this:

  The simple fact that he was elected was reason enough for him to be the recipient of this year's Nobel Peace Prize.

  I have tried very hard to not be too critical of Obama, there are enough of us already doing that. And he also has worked tirelessly to advance his agenda against a media noise machine that is mostly out to help him fail. It is still a wonderful experience to be able to watch our President without turning him off after 60 seconds in anger, disgust and/or disappointment. Nixon's televised talks to the nation were great and important even if you didn't agree with him. So it is also with President Obama.

  Great presidents are not great the minute they step into the Oval Office. They rise up to the task that is handed to them over time.

• At October 10, 2009, Lew Waters rightinaleftworld.blogspot.com wrote:

  John, I don't know just what "good" Michael Moore has done with his faux documentaries and amassed wealth, often twisting the truth, but I'll take your word that he has done some, if you say so.

  To me, someone of wealth doing good would be like former Price Is Right Host, Bob Barker, giving $3 Million of his money to help fund a new hospital for our wounded recently did.

  Then again, money isn't always the only thing people can do that is good.

  I would like to ask you about one thing in your words I find troubling, "I have tried very hard to not be too critical of Obama."

  Why? We were often critical of President Bush as we should be when they need criticized. Obama is no different.

  The simple fact of being elected is not proper for awarding the Nobel Prize, as that is not the requirements laid out by Alfred Nobel in his will.

  Most troubling to me from attitudes as that coming from European nations, is all the fuss over his race. When do they elect a Black person to their governments?

  I am especially bothered that it has been nearly a month and a half since General McChrystal requested reinforcements for Afghanistan, the war Obama himself says "we must not lose," and no decisions has been made.

  In the mean time we have Troops fighting with morale declining rapidly and Obama sending out indicators of including the Taliban in going after Al Qaeda. Does he not know that it was the Taliban who allowed Al Qaeda to operate and train from Afghanistan in the first place?

  Since McChrystal made his request over 50 Troops have died. He claimed six months ago he had a strategy for winning in Afghanistan that was being implemented then. And now, he says he must review that before deciding?

  You also said, "media noise machine that is mostly out to help him fail."

  You're going to have to show me that as all I see is a media fawning all over him.

  You also said, "Great presidents are not great the minute they step into the Oval Office. They rise up to the task that is handed to them over time."

  Actually, it is history that makes one a great, good, mediocre or poor president.

  I know you disagree, but Bush did rise up where others did not and took the fight back to the terrorists after attacking us over 3 decades. He took bold stands and did not waver under public pressure, which was often whipped up by the very ones demanding he do something after 911.

  No, he will not be judged as a great president, but I am fully confident that after we are gone, historians will look back and see just what he was handed and how he handled it and will judge him a lot more fairly than we do today.

  Likewise with Obama. But, if doesn't do more than just make speeches and soon, he runs the risk of being down at the level of Jimmy Carter.

  The worst thing the leadership of your party is doing is trying to paint any disagreement with him as "racist." The term is getting so over used it is losing its meaning and I fear that true racism will end up being ignored in the days ahead.

  Sorry, but I don't see Obama rising to any task just yet. I hope he does soon, for the sake of our country.

Sadly, we didn’t get the pony, despite the horseshit rhetoric. What we got was one of the worst recessions in history, with job losses outdoing all previous downturns save for the Great Depression itself.

For the first time [...]]]>
Remember when the Bush Administration promised us that peace, prosperity and a pony for each and every American would result from their massive tax cuts?

Sadly, we didn’t get the pony, despite the horseshit rhetoric. What we got was one of the worst recessions in history, with job losses outdoing all previous downturns save for the Great Depression itself.

For the first time on record, middle class families lost real income, despite strong increases in U.S. Gross Domestic Product (no doubt helped along by not only the tax cuts, but by Bush’s two pet wars, 9/11 and Katrina).

While real wages of the middle and lower income brackets fell, corporate profits and executive pay climbed into the stratosphere. So while you may have been fucked, Dick Cheney, Jack Welch, William McGuire and Lee Raymond thank you very kindly for supporting the rise of a new American oligarchy.

The Republicans have had their Bush tax cuts decade to prove that lower taxrates for the top income earners would have trickle down benefits to the rest of us: new technologies, job growth, and the promise that you, too, could someday be a millionaire – if only your Powerball numbers would hit.

They had their chance – and now it’s our turn. The Bush tax cuts cost the U.S. Treasury about $1.35 trillion. I say we not only cancel those cuts, but roll them back double. Just for ten years, mind you – and then they can sunset just like Bush’s tax cuts will next year.

The top marginal tax rate under this plan would still be far lower than the top rate of 91% effective during the Eisenhower administration. And yet, look what we could buy with 2 x $1.35 trillion:

We could fully fund the most generous universal healthcare plan that the House Progressive Caucus could dream up, and still only use up half of the Treasury’s new income.

We could pay to educate 100,000 new doctors to care for all of the citizens who could now afford to indulge in the luxury of preventative healthcare.

To make sure those students are prepared to take on the challenge of med school, we could increase the budget of the Department of Education by 25 percent, fully fund Head Start for a decade, hire 100,000 new teachers, build or rehabilitate 10,000 schools, and offer full-ride college scholarships for the top one million students in the country for each of the ten years our temporary tax surcharge is in effect.

Additionally, we could re-train up to 2 million workers displaced by NAFTA and the near collapse of the auto industry, and fully fund the GI bill for up to half a million soldiers returning from Iraq and Afghanistan.

To make sure this surtax is green, we could renew the Cash for Clunkers program at $1 billion a year for 10 years, taking 2 million inefficient, planet-heating vehicles off U.S. roads by the end of the decade. And to improve the outlook for U.S. health, technology and business for decades to come, we could double the budgets of the National Institutes of Health, the National Science Foundation and the FDA, while simultaneously getting the Food & Drug Administration off the teat of Big Pharma.

And, just to bring the GOP along for the ride, we could hire 100,000 cops.

Don’t believe all this is possible with such a modest tax increase on our benevolent masters? Just look at the numbers:

Of course, the one downside would be that Americans may not want to see the surtax sunset after 10 years, what with the national debt being paid off thanks to the additional tax revenues generated by our newfound prosperity, and our population living longer, healthier and more fulfilled lives.

But that seems like a small price to pay.

And to think, out of 300+ million Americans, just 535 stand in the way.

It’s the best of times for Goldman Sachs, and the worst of times for the rest of us.

Ironic that this news would break on Bastille Day:

Goldman Sachs’ profits for the second quarter smashed Wall Street estimates and are likely to trigger a windfall for bankers.

The bank, long considered the most prestigious and profitable on Wall Street, recorded [...]]]>

It’s the best of times for Goldman Sachs, and the worst of times for the rest of us.

Ironic that this news would break on Bastille Day:

Goldman Sachs’ profits for the second quarter smashed Wall Street estimates and are likely to trigger a windfall for bankers.

The bank, long considered the most prestigious and profitable on Wall Street, recorded net profits of $3.44bn in the last three months, up from $2.1bn in the same period in 2008.
…
Goldman, led by Lloyd Blankfein, has already repaid the $10bn it borrowed from the US Government last year, liberating it from restrictions on pay imposed on those institutions which have relied on taxpayers’ cash.
…
Mr Viniar said that the company had benefited from the loss of some of its competitors in the investment banking business. “There is definitely less competition out there,” he said, adding that there is also less risk capital available.

“Goldman’s got a sweet spot in here, they were the go-to players,” Peter Sorrentino, a fund manager at Huntington Asset Advisors, told Bloomberg News. “For the time being, they’ve got kind of an open playing field all to themselves.”

Goldman Sachs CEO Hank Paulson guaranteed that open field when he refused to lend a hand to Lehman Brothers, causing panic after money markets “broke the buck” and leading to the credit crisis we’re still enjoying today.

If you haven’t been reading Matt Taibbi in Rolling Stone on the unholy alliance between Goldman Sachs, the Fed, the U.S. Treasury and the World Bank, you’re probably not seething with fury right now about Goldman playing Midas while the average American fights to keep his/her head above water. The word corruption doesn’t even cover it, unless it’s in the sense of the raped and battered body of our democracy putrefying beneath the overladen banquet table at which Goldman alums suck the marrow from the bones of taxpayers and pensioners:

By now, most of us know the major players. As George Bush’s last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton’s former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup – which in turn got a $300 billion taxpayer bailout from Paulson. There’s John Thain, the rear end in a top hat chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain’s sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden parachute payments as his bank was self-destructing. There’s Joshua Bolten, Bush’s chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York – which, incidentally, is now in charge of overseeing Goldman…

Taibbi’s reporting on this is stunning and sickening, and despite every attempt of Golmanites to make their business too complicated for the layman to understand, Taibbi makes it clear that what we’re talking about are, at base, the oldest of crimes: Fraud. Theft. Insider trading.

Our problem is that Goldman has become so enmeshed in every level of government that our representatives in Congress, our executive branch, and our justice system (headed by corporate leg-humper John Roberts) feel a much greater affinity for the Goldman Masters of the Universe than they do for the average American taxpayer. (This happens at the local level, as well: Hank Paulson’s son, Merritt Paulson, is very busy right now jerking Portland around, threatening to pull his AAA Portland Beavers from the city if we don’t build him a new stadium, freeing up PGE Park for his major league soccer franchise.)

We may not be ready to storm the Bastille, but honestly, I don’t know what else will move them.

3 Comments

• At July 14, 2009, John democracyforvancouver.org wrote:

  The wonders never cease of deregulation and free market pablum. And the regressive Righties are afraid of socialism? How do you like what we actually have now, oligopoly and pauperism?

• At July 16, 2009, John democracyforvancouver.org wrote:

  And here comes Cenk Uygur on the subject of "too big to fail" Goldman Sacks.

• At July 18, 2009, Angie in WA State dailykos.com wrote:

  Guess it's time to add "banksta gangsta" to our current patois de lingua.

[W]e’re about where Germany was before World War II where they became a social democracy. You still had votes but the votes were just power grabs like you see in Iran, and other places in South America, like Chavez is running down in Venezuela. People become more dependent on the government so that they’re easy [...]]]> Jim DeMint may be a ridiculous asshole:

But Obama had better kick Larry Summers & Co. under the bus while he has the chance, or it will be Mourning in America all over again:

It’s not the socialist part I’m worried about, Sen. DeMint. It’s the rabid, xenophobic, blame-shifting fascism that seems to rear its ugly head every time we have an economic downturn in this country.

I don’t remember Hitler or Goebbels (or Reagan) being all that concerned about universal health care or labor union rights.

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July 8 (Bloomberg) — Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind, said two people familiar with the sale.

Morgan Stanley is selling $87.1 million of securities that it expects to receive [...]]]> I tried to post on this yesterday, but Li’l Kim clogged my intertoobz:

July 8 (Bloomberg) — Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind, said two people familiar with the sale.

Morgan Stanley is selling $87.1 million of securities that it expects to receive top AAA ratings and $42.9 million of notes graded Baa2, the second-lowest investment grade by Moody’s Investors Service, according to marketing documents obtained by Bloomberg News. The bonds were created from Greywolf CLO I Ltd., a CDO arranged in January 2007 by Goldman Sachs Group Inc. and managed by Greywolf Capital Management LP, an investment firm based in Purchase, New York.

Two years after the credit markets began to seize up, costing the world’s biggest financial institutions $1.47 trillion in writedowns and losses, banks are again taking so-called structured finance securities and turning them into new debt investments with top credit ratings. While the Morgan Stanley deal is the first to involve CDOs of loans, banks have been doing the same with commercial mortgage-backed securities in recent weeks.

A lot of banks and insurers “cannot buy anything but AAA,” said Sylvain Raynes, a principal at R&R Consulting in New York and co-author of “Elements of Structured Finance,” which is due to be published in November by Oxford University Press. “You’re manufacturing AAA out of not AAA, therefore allowing those people who have AAA written on their forehead to buy.”
…
Structured finance securities fueled the writedowns and losses at the world’s biggest financial institutions since the start of 2007, helping to plunge the U.S. economy into the worst recession since the 1930s. Finance companies have been forced to raise $1.27 trillion in capital, according to data compiled by Bloomberg.
…
Banks are using re-REMICs to protect against losses on residential-mortgage securities during the worst housing slump since the Great Depression.

About $27 billion of home-loan bond Re-REMICs have been issued this year, up from $17 billion for all 2008, according to a June 12 report by Bank of America Merrill Lynch. Re-REMIC stands for “resecuritizations of real estate mortgage investment conduits,” the formal name of mortgage bonds.

‘Make Magic’

The strategy is increasingly being used for commercial mortgage debt.
…
“Somebody does something and it seems to make magic, and the other guy says ‘Hey, let’s do that, too,’” Raynes said.

New York-based Goldman Sachs plans to sell $216.9 million of repackaged commercial mortgage debt, according to people familiar with the sale who declined to be identified because terms aren’t public. The re-REMIC is being carved out of four bonds sold in 2006, said the people. Michael DuVally, a Goldman Sachs spokesman, said he couldn’t comment.

Anyone in the Obama Admin care to comment on this? Larry Summers? Little Timmy? Anybody?

Jesus Christ on a Hermes-covered throw pillow: Do they never learn? Or care? Or get sent to a fucking mental ward?

h/t atrios

1 Comments

• At July 9, 2009, Real Estate Content Guy the-marketpulse.com wrote:

  Your photo is hilarious! Guess what...the rating agencies are the ones that determine AAA rating quality--so what if they change their mind--who is the checker?

  Anyhow, for those who like to write about the real estate tabockle, I just whipped up this data aggregation website that allows you to create some cool content for your real estate related website. Check it out, and build some of your own customized real estate data & information. Let me know what you think.

NEAR MULTNOMAH FALLS, Ore. — Interstate 84 heading east into the Columbia River Gorge was going to be closed six to eight hours as crews worked to clean a massive spill after a truck tipped, according to state officials.

The truck tipped over about seven miles east of Multnomah Falls, closing all lanes heading east, ODOT said. … The truck [...]]]> without a second stimulus:

Why is it that you have to turn on a comedienne these days to hear advocacy for progressive values that the majority of Americans want.  As Maher says:

Cutting the Military Budget Gun Control Gay Marriage Higher Taxes on the Rich Universal Health Care Legalizing Pot Steep, Direct Taxing of Polluters.

These aren’t radical ideas.  [...]]]> to or about us, that is.

Why is it that you have to turn on a comedienne these days to hear advocacy for progressive values that the majority of Americans want.  As Maher says:

Cutting the Military Budget
Gun Control
Gay Marriage
Higher Taxes on the Rich
Universal Health Care
Legalizing Pot
Steep, Direct Taxing of Polluters.

These aren’t radical ideas.  The majority of Americans are either already for them or would be if they were properly argued and defended… Democrats are the new Republicans.

With all the brainwashing and bullshit that is spewed from the major media, it is amazing that most of us Americans support these things.  But if there is no one hearing the tree fall in the forest, is it really making a noise?

I’ve worked for the same small company for the last 14 years. We have 5 employees, one of whom -- the President -- is 81 years old and finally capitulated to socialism by joining Medicare last year. So only 4 of us are on the company-provided healthcare plan.

I’m pretty lucky: my employer [...]]]>
And why we really need a public option -- NOW:

I’ve worked for the same small company for the last 14 years. We have 5 employees, one of whom -- the President -- is 81 years old and finally capitulated to socialism by joining Medicare last year. So only 4 of us are on the company-provided healthcare plan.

I’m pretty lucky: my employer pays for 100% of the premiums, and we have medical and dental. We have gone from a co-pay only, no deductible plan to first $250 deductible (last year) and $500 deductible (this year), because the cost of premiums without those deductibles was exorbitant.

Here’s the problem: I desperately want to leave this job, for a variety of reasons, but without a healthcare-providing job in hand, I can’t.

But even if I don’t, we’re probably going to drop health insurance coverage here all together within 5 years. My employers would have dropped it this year -- and just upped employee pay for each to get their own -- except for my explaining to the Vice President (the President’s wife, who’s 59), that she would find it impossible to get healthcare coverage on the open market, given her myriad health problems. So in 61 months, when she’s eligible for Medicare, all bets are off.

I must have healthcare coverage to survive, both literally and practically. In addition to my degenerative hip disease, which will require a dual hip replacement sometime in the not-too-distant future and which requires me to take daily pain meds ($235/mo without insurance), I suffer from chronic migraines -- a hereditary condition passed from grandfather to mother to me, and now, unfortunately, to my 10-year-old son -- which also require daily as well as episodic medications (+/- $400/mo without insurance); and, as of April, I have melanoma, which no insurance company would touch on the open market. The melanoma requires no medication, but it has so far necessitated eight minor-to-moderate outpatient surgeries, and in the months and years to come will require skin checks every three months by a dermatologist, and innumerable biopsies to rule out a recurrence of the disease.

Without the question of medical coverage, I would have left my bad employment situation years ago; and with the new addition of melanoma, I cannot leave this now intolerable situation without having another job in hand -- almost impossible in the current marketplace.

The joke is that in today’s USA, I am one of the lucky ones. While I may have limited choices, I do have healthcare coverage and a job. For those with neither, life is an unmitigated hell of choosing between prescriptions and food, or giving up entirely because the battle is too exhausting.

And for those who say that publicly funded healthcare would lead to rationing, please explain to me how the fact that I have spent the last 4 months waiting for an appointment to my local pain clinic because only one physician there takes my particular insurance is not rationing. Or how it is not rationing for my insurance company to allow my only 6 doses of abortive migraine medication for month when I may need 12-15 doses?

We have healthcare rationing in this country, but it is rationing care on the basis of preserving the insurance company’s profits rather than on treating the most urgent medical crises first. It is red-lining pretending to be triage.

Yes, there will be up-front costs to providing healthcare to everyone, but those costs per-capita will be minimal (and reasonable) when compared to the social and economic costs of 50 million Americans going without care, and employers like mine having to absorb 20%-40% premium increases, year upon year, making them less competitive and innovative, and less productive within the overall economy because insurance costs eat up any budget for capital improvements or equipment purchases.

I don’t know what it’s going to take to shake up our bought-and-paid for Senate and get a plan that actually eliminates health insurance as a class wedge in this country (while not incidentally improving our infant mortality and overall morbidity and mortality statistics). But I will be contacting my Senators and Congressman to tell them my story.

Will you?

2 Comments

• At June 22, 2009, John democracyforvancouver.org wrote:

  I personally knew someone that also had breast cancer (like Robin in this video) and had an individual policy (and ironically was a nurse like Robin). Her policy covered the treatment and then they immediately canceled her policy. She was forced to obtain coverage from the state under a program for people that could not obtain coverage elsewhere.

  What good is insurance if they will only cover you until you have a major illness? The purpose of insurance is to spread the risk and cost among everyone. This is another massive government failure to properly regulate an industry.

  www.youtube.com/watch?v=fEj-Mi7D_1o

• At June 23, 2009, Michael wrote:

  Missy: I know that this does not address the entire point of the post, but is seems to me that your current employer is keeping you there by offering you more than anyone else in the open market will.

  You have a complex medical situation, and I'm sorry for that. But the first part of your post is a little like me complaining that my current job's salary is holding me prisoner. I could never make my mortgage payments on what competitors would offer me. My quality of life would nosedive if I quit.

  As would yours. But I don't think it would be impossible for you to get coverage if you left, but it would leave you with less - maybe much less - to spend on other things. Bad news, but ... that's how employers keep us.

  Best of luck ... for what it's worth, I bet you will get your public option.