Staggering Impunity

May 23rd, 2012

Charles Ferguson, the director of Inside Job and author of the soon to be released examination of the 2008 collapse, Predator Nation, wants to know where the hell the prosecutions for rampant criminal activity are:

"Almost all the prospectuses and sales material on mortgage-backed securities sold from 2005 through 2007 were a compound of falsehoods. But it starts even earlier in the food chain. We also know that mortgage originators committed securities fraud when they misrepresented the characteristics of loan pools, and the nature and extent of their due diligence with regard to them, when they sold pools to securitizers (and accepted financing from them). Most or all of the securitizers (meaning nearly all the investment banks and major banking conglomerates) then committed securities fraud when they misrepresented the characteristics of the loans backing their CDOs, the characteristics of the resulting mortgage-backed securities, and the nature and results of their due diligence in the process of creating those securities. The securitizers also committed securities fraud when they made similar misrepresentations to the insurers of, and sellers of credit default swap (CDS) protection on, those securities."

The utter lack of consequences for this illegality and, worse, the excuse-making by conservatives that the downturn was somehow a "glitch" in legitimate capitalism very nearly ensure another crisis. Possibly quite soon.

"In some cases, we already have clear evidence of senior executive knowledge of and involvement in these frauds. For example, quarterly presentations to investors are nearly always made by the CEO or CFO of the firm; if lies were told in those presentations, or if material facts were omitted, the responsibility lies with senior management. In some other cases, such as Bear Stearns, we already have evidence from civil lawsuits that very senior executives were directly involved in constructing and selling securities whose prospectuses contained lies and omissions."

And yet, not one CEO or CFO involved has been charged with so much as a misdemeanor. It's long past time we admitted that these are not titans; they are simply extremely ambitious thieves.

Another Market View

Sept 26th, 2011

Earlier, we posted the BBC interview with American stock trader and analyst, Alessio Rastani. His pronouncement was basically that the sky will soon be falling and the grounds wil shake. Seriously. Here's a somewhat less alarmist (although not by much) report from Europe via PBS.

Watch the full episode. See more PBS NewsHour.

"Robo-Signing" More Widespread Than Previously Thought

Sept 2nd, 2011

We still haven't really gotten to the bottom of the housing collapse. Pallavi Gogoi reports for AP:

"Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as "robo-signing," led the nation's largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide last fall."

Read more HERE

No Recovery

Aug 24th, 2011

If one accepts the narrow and long held academic definitions of the words "recession" and depression," then technically we are in a recovery. Which makes those 20th Century meanings quite absurd. Job creation is not much different now than it was 10 years ago. That is to say, for a full decade we have have failed to add even enough jobs monthly to accommodate new entrants to the workforce, much less return to employment the millions whose positions were lost during the "height" of the crisis in late 2008 and early 2009.

As Roubini pointed out last week, the crisis is actually structural:

"We thought that markets worked. They're not working."

Over at TNR, Richard A. Posner basically agrees with both points:

"If the notion that we are merely living through the after effects of a mere "recession" that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions."

We live in an era within which rational public sector solutions are not only the only real hope for a transformative remedy but are also politically impossible due to the fanatical opposition of a Randian and Misesian Republican Party.

In short, we're screwed.

GOP Sabotaging America, Ctd...

July 26th, 2011

You can call Trump a clown all you want. But he's a dangerous clown. Also, he has openly iterated what I think a lot of the "stop-Obama-at-all-costs" crowd is actually thinking. They are more than willing to destroy America in order to "save" it.

From McClatchy:

"Donald Trump has some advice for the Republican Party. The New York real estate tycoon went on "Fox & Friends" Monday morning and told the hosts that if the GOP wants to ensure that President Barack Obama isn't re-elected, all it has to do is not make any deals with Democrats and default on Aug. 2.

Trump seems to think that using the country's sparkling AAA credit rating as a sacrificial lamb and letting the nation default would damage Obama, who has been willing to put everything including entitlements on the table, more than it would hurt Republicans, who have refused to raise revenues on the richest Americans and companies during the debt ceiling negotiations.

"When it comes time to default, they're not going to remember any of the Republicans' names. They are going to remember in history books one name, and that's Obama," Trump said.

The billionaire doesn't seem at all concerned about the damage such an unprecedented U.S. default could do to Wall Street and other financial markets. Trump's casual approach is not shared by financial experts.

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said that if Congress can't get it together, the results could be tragic as banks would slow down on lending and investors might pull their money out of the market.

"If we got to a crush point where we couldn't come to a deal, that would wipe out the financial sector," Baker said."

Taibbi Likens Wall Street To Russian Oligarchy

Jan 7th, 2011


Pretty amazing stuff:
"Question: How did your work in Moscow help you uncover hypocrisy in America? 

Matt Taibbi: One of the reasons I was so attracted to this Wall Street story was when I first started looking at it in the summer of 2008, I was continually struck by how much it reminded me of a lot of the dynamic that I had seen covering the Russian government and the Russian state where there was this oligarchical system that they had over there.  There were a very tiny collection of super-connected industrial figures, these oligarchs.  They were bankers mostly. And there was this circular process of government gives tons of money to banker; banker then scams the public and returns money to politicians who in turn keep giving money back to the bankers. And that whole circular process is very similar to what is going on here in the States now where we have a small group of very, very politically connected banks who give massive campaign contributions to both parties and they’re rewarded with selective regulation and bailouts and then the money comes back again.  I think if I hadn’t seen that in the more crude form that you see in Russia where—stuff is just right out in the open in Russia sometimes; they don’t even really hide it—if I hadn’t seen that it would have been harder for me to see this story.

Recorded on November 22, 2010
Interviewed by Andrew Dermont
Directed by Jonathan Fowler
Produced by Elizabeth Rodd"