Simon Johnson is one of those rare economists who knows how to talk about economics in Plain English. He has a breathtakingly strong resume. He does not have any particular political axe to grind. And he pulls no punches. He draws the line of direct relationship between the reckless bankers, the complicit governments, and the miseries created by both on the ground around the world.
OS just encountered this recent address of Johnson, and it is well worth a few minutes spent viewing. He points out, for instance, that Citigroup has blown up three times in the past thirty years, each time rescued by the public sector in one way or another.
Johnson really gets going in his summation at about the 8:00 mark.
Showing posts with label Bank Failures. Show all posts
Showing posts with label Bank Failures. Show all posts
Tuesday, April 12, 2011
Saturday, November 27, 2010
The Euro: The Worst Idea Of The Past Fifty Years
The serious bloggers and thinkers, like Mish and Calculated Risk, and Bloomberg, etc. are all over this one, so you don't need to hear much about this from OS.
Financial Times has a good article summarizing the inevitable posturing and stupidity that precedes the really bad stuff happening.
They're all prickly and stuff about being quoted, so best to go there yerself.
Ireland is about to be enslaved by the banksters, 'cuz the taxpayers had to bail out the banksters a couple of years ago, 'cuz the banksters were acting like yer worst nephew with a meth habit and keys to the Porsche, and wrapped it 'round a telephone pole.
The Spanish and Portugese aren't far behind. The UK is getting hammered, and they're not even on the Euro.
There's something wrong with this picture. It's like the gorilla in the room no one wants to talk about.
The Euro is not so much a currency as a huge anvil attached to the ankles of every man, woman, and child from the Polish border to the west coast of the Emerald Isles.
That ten-year-old kid playing soccer in Dresden or rugby in Cork is gonna be stuck with the debts generated because a thirty-something banker in Barcelona rolls the dice on one more condo development on the Costa del Sol or sovereign debt offering from Athens. All profits are privatized, all risks are laid off onto the society at large.
Sweet. Where does OS go to sign up for that arrangement? (Just kidding...)
This will end in tears, ya'll, if we're lucky.
Only one question: Who's making money off this?
Financial Times has a good article summarizing the inevitable posturing and stupidity that precedes the really bad stuff happening.
They're all prickly and stuff about being quoted, so best to go there yerself.
Ireland is about to be enslaved by the banksters, 'cuz the taxpayers had to bail out the banksters a couple of years ago, 'cuz the banksters were acting like yer worst nephew with a meth habit and keys to the Porsche, and wrapped it 'round a telephone pole.
The Spanish and Portugese aren't far behind. The UK is getting hammered, and they're not even on the Euro.
There's something wrong with this picture. It's like the gorilla in the room no one wants to talk about.
The Euro is not so much a currency as a huge anvil attached to the ankles of every man, woman, and child from the Polish border to the west coast of the Emerald Isles.
That ten-year-old kid playing soccer in Dresden or rugby in Cork is gonna be stuck with the debts generated because a thirty-something banker in Barcelona rolls the dice on one more condo development on the Costa del Sol or sovereign debt offering from Athens. All profits are privatized, all risks are laid off onto the society at large.
Sweet. Where does OS go to sign up for that arrangement? (Just kidding...)
This will end in tears, ya'll, if we're lucky.
Only one question: Who's making money off this?
Saturday, March 6, 2010
Time To Walk Away?
(Narrator's voice): Let me tell you a story...
A well-meaning family of modest means buys a house in a Midwestern city about seven years ago. It's in a less-than-nice neighborhood, let us say politely. But, it once was lovely and stable(before WWII blew the culture up), and showed real promise of coming back. After all, the banks were lending, and if enough urban homesteader types like these folks were to show up, people with classic middle-class values, they might create a momentum and bring the place back. The bank owned it, and were glad to have it as a paying asset. The family went through a pretty stringent qualification, if memory serves. It was not a 'liar loan', at least not from the family's point of view.
The well-meaning family moved in, happily. And steadily brought the big old house back to life, but refied along the way to cover the costs of major roof repairs, installation of a central climate control system, and some structural work that needed doing. They also bought a little frame house around the corner, renovated it, and the eldest son lived there until he married and moved away. It's a rental now.
These folks tried, as imperfect as they were. Really worked at both improving their own lot and the lives around them. One family member still runs a Saturday version of 'Sunday School', to see if some improvement can be made in a few lives, to open the door to the outside world to a few kids, many of whom have never seen much of the rest of the city.
The neighborhood did not 'come back'. The drug trade is more embedded than ever, with its handmaiden prostitution in open practice on the streets. It's as if the city administration has nearly abandoned these blocks, as the streets deteriorate, police coverage seems scarce. I've urged that someone get a carry permit, and carry, just for safety's sake. Falling on deaf ears, of course.
Because of the refi, done at the height of The Bubble, they owe about 90k on the house. Not much equity. $1200 payments, probably including taxes and insurance, faithfully paid each and every month. A look at their zip code on Google Real Estate shows them as a tiny island of solvency in a sea of foreclosures. Abandoned industrial property nearby not likely to ever reopen. Empty CRE not likely to be occupied anytime soon. Lots of boarded-up houses all around them.
[end of narration...]
Is it time to walk away? No villains here. Everyone, bank and family, gave it their best shot. How do they get out without being hounded by the bank, and having to file a BK? It's becoming a matter of physical safety now. In the end, better bankrupt than suffering a gunshot wound. But that's a really low-class set of choices to make.
OS thinks the best solution is: The owners hand the bank the keys, the bank hands the deed to the city, the city razes the house, and zones the lot 'commercial'. Maybe, in 2020, the economic tide has turned, and the area does come back. It's a corner lot, maybe a place for a green-grocer to located. Easier to sell it if it's an empty lot.
At least that way, the city doesn't have a crack house on their hands.
This blog gets some visitors who know about these things. Any ideas?
A well-meaning family of modest means buys a house in a Midwestern city about seven years ago. It's in a less-than-nice neighborhood, let us say politely. But, it once was lovely and stable(before WWII blew the culture up), and showed real promise of coming back. After all, the banks were lending, and if enough urban homesteader types like these folks were to show up, people with classic middle-class values, they might create a momentum and bring the place back. The bank owned it, and were glad to have it as a paying asset. The family went through a pretty stringent qualification, if memory serves. It was not a 'liar loan', at least not from the family's point of view.
The well-meaning family moved in, happily. And steadily brought the big old house back to life, but refied along the way to cover the costs of major roof repairs, installation of a central climate control system, and some structural work that needed doing. They also bought a little frame house around the corner, renovated it, and the eldest son lived there until he married and moved away. It's a rental now.
These folks tried, as imperfect as they were. Really worked at both improving their own lot and the lives around them. One family member still runs a Saturday version of 'Sunday School', to see if some improvement can be made in a few lives, to open the door to the outside world to a few kids, many of whom have never seen much of the rest of the city.
The neighborhood did not 'come back'. The drug trade is more embedded than ever, with its handmaiden prostitution in open practice on the streets. It's as if the city administration has nearly abandoned these blocks, as the streets deteriorate, police coverage seems scarce. I've urged that someone get a carry permit, and carry, just for safety's sake. Falling on deaf ears, of course.
Because of the refi, done at the height of The Bubble, they owe about 90k on the house. Not much equity. $1200 payments, probably including taxes and insurance, faithfully paid each and every month. A look at their zip code on Google Real Estate shows them as a tiny island of solvency in a sea of foreclosures. Abandoned industrial property nearby not likely to ever reopen. Empty CRE not likely to be occupied anytime soon. Lots of boarded-up houses all around them.
[end of narration...]
Is it time to walk away? No villains here. Everyone, bank and family, gave it their best shot. How do they get out without being hounded by the bank, and having to file a BK? It's becoming a matter of physical safety now. In the end, better bankrupt than suffering a gunshot wound. But that's a really low-class set of choices to make.
OS thinks the best solution is: The owners hand the bank the keys, the bank hands the deed to the city, the city razes the house, and zones the lot 'commercial'. Maybe, in 2020, the economic tide has turned, and the area does come back. It's a corner lot, maybe a place for a green-grocer to located. Easier to sell it if it's an empty lot.
At least that way, the city doesn't have a crack house on their hands.
This blog gets some visitors who know about these things. Any ideas?
Saturday, February 20, 2010
Bulldozing The House, And Leaving It To The Bank
HT to Calculated Risk.
Well, this guy didn't fly a plane into the bank and murder employees.
Still, it did take some chutzpah to take a bulldozer to one's own house before the bank seized it.
If the land was worth, say 50K, then this guy just blew a 300K hole into the local bank's balance sheet.
No 'extend and pretend', if the house no longer exists! And since it was bulldozed for the cameras, and the story is broadcast, no way to spin those facts away, either.
Undoubtedly, the bank may attempt to sue or prosecute over this, but do they really wish to be subject to discovery and have to try the cases in front of a small-town Ohio jury? What might come to light that would be of interest to the bank inspectors? Will they give twelve citizens the opportunity to draw their own knives on the bank, all completely legally? And endure the press coverage of the trial and subsequent jury nullification? And watch customers take their business down the street?
News travels fast in small towns!
Cheaper to hire a cleanup crew, and quietly haul the remains away, upon reflection.
The anger is building out there. Murder is not an option.
Creativity, however, can be highly effective.
Well, this guy didn't fly a plane into the bank and murder employees.
Still, it did take some chutzpah to take a bulldozer to one's own house before the bank seized it.
If the land was worth, say 50K, then this guy just blew a 300K hole into the local bank's balance sheet.
No 'extend and pretend', if the house no longer exists! And since it was bulldozed for the cameras, and the story is broadcast, no way to spin those facts away, either.
Undoubtedly, the bank may attempt to sue or prosecute over this, but do they really wish to be subject to discovery and have to try the cases in front of a small-town Ohio jury? What might come to light that would be of interest to the bank inspectors? Will they give twelve citizens the opportunity to draw their own knives on the bank, all completely legally? And endure the press coverage of the trial and subsequent jury nullification? And watch customers take their business down the street?
News travels fast in small towns!
Cheaper to hire a cleanup crew, and quietly haul the remains away, upon reflection.
The anger is building out there. Murder is not an option.
Creativity, however, can be highly effective.
Wednesday, January 13, 2010
The Bank That Couldn't Foreclose Straight: Bank of America, But Are We Surprised?
You know, if you're going to seize a house in a foreclosure, change the locks, cut off the power and water, etc....you just might want to check to make certain you're at the correct ***!!!** ADDRESS!
This story is a real nightmare.
From the 10 January Galveston News:
GALVESTON — A West End property owner is suing Bank of America Corp., asserting its agents mistakenly seized a vacation house he owns free and clear, then changed the locks and shut the power off, resulting in the smelly spoiling of about 75 pounds of salmon and halibut from an Alaska fishing trip and other damages.
Dr. Alan Schroit filed the lawsuit Monday in the 122nd State District Court in Galveston against the bank with which he has neither a relationship nor a mortgage.
*******
OhpleezeOhpleezeOhpleeze let this case make it to a jury!!!
Wonder what a jury of twelve Texans in Ron Paul's district will do to Bank of America in this situation? Punitive damages, anyone?
Too Big To Fail actually means Too Big To Be In Business.
This story is a real nightmare.
From the 10 January Galveston News:
GALVESTON — A West End property owner is suing Bank of America Corp., asserting its agents mistakenly seized a vacation house he owns free and clear, then changed the locks and shut the power off, resulting in the smelly spoiling of about 75 pounds of salmon and halibut from an Alaska fishing trip and other damages.
Dr. Alan Schroit filed the lawsuit Monday in the 122nd State District Court in Galveston against the bank with which he has neither a relationship nor a mortgage.
*******
OhpleezeOhpleezeOhpleeze let this case make it to a jury!!!
Wonder what a jury of twelve Texans in Ron Paul's district will do to Bank of America in this situation? Punitive damages, anyone?
Too Big To Fail actually means Too Big To Be In Business.
Thursday, October 1, 2009
Jonah And The Banksters
Matthew Goldstein at Seeking Alpha shares this tidbit of news:
In the second quarter of this year, the notional value of derivatives contracts at JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C) increased by $1.92 trillion, to $191 trillion. Shockingly, Citi is responsible for most of that gain from the end of the first quarter.
Overall, the total dollar value of outstanding derivatives transactions at the top 25 U.S. commercial banks was $203 trillion, according to the Office of the Comptroller of the Currency, meaning that the nation’s four biggest banks account for 94 percent of the industry’s total exposure to derivatives.
Now the concentration of derivatives at a handful of banks isn’t new. It’s even to be expected, bank regulators say.
In the second quarter of this year, the notional value of derivatives contracts at JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C) increased by $1.92 trillion, to $191 trillion. Shockingly, Citi is responsible for most of that gain from the end of the first quarter.
Overall, the total dollar value of outstanding derivatives transactions at the top 25 U.S. commercial banks was $203 trillion, according to the Office of the Comptroller of the Currency, meaning that the nation’s four biggest banks account for 94 percent of the industry’s total exposure to derivatives.
Now the concentration of derivatives at a handful of banks isn’t new. It’s even to be expected, bank regulators say.
The OCC, in its quarterly derivatives report, routinely notes that the Big Four “have the resources needed to be able to operate this business in a safe and sound manner.” In other words, the biggest banks are best suited to handle all these derivatives contracts because they’ve been doing it for so long.
Well, yes, one could make a breathtakingly stupid statement like that--the OCC, I mean, not Mr. Goldstein--if one lives with the assumption that no matter how reckless the behaviour of these firms, the taxpayer can always be shaken down if something goes awry.
One year ago today, we were being told by The People Who Know About Such Things that massive exposure to derivatives by these huge institutions had nearly brought the world to its knees.
Today, we are told by the same people that all is well and boys will be boys. Let them play in their sandbox. What could possibly go wrong?
I keep thinking, 'My unborn grandchildren will be paying for this...my unborn grandchildren will be paying for this... '
This week, the light dawned on my poor brain: My unborn grandchildren can't vote, or consume, or invest, or do anything to aggrandize the power and wealth of either the politicians or the banksters.
Their unborn grandchildren will inherit wealth, one way or another, so all is fine and good.
Their unborn grandchildren will inherit wealth, one way or another, so all is fine and good.
And, if this world is really all there is--this life in which we work, play, live, die--is really all there is, and then we die and cease to exist...then what should they care about anyone's grandchildren, born or unborn. Those 'unborns' can shift for themselves, thank you very much.
We don't just have an ethical problem in this fair country. At heart, we may have a theological problem. The culture shapes the economy...
The story of Jonah is not about the guy in the belly of the big fish, so much as it is about how the Almighty spared a society that had lost its moral compass. The guy the fish coughed up on the shore had informed them that The End was at hand, unless they changed their ways.
Which they did, for a while.
The Wiki article seems to be well-written, and gives good resources if one is interested. Until well into the 19th Century, the location of the site of this city was unknown, not a trace left behind. The most evocative line in the article is delivered in deadpan academic style: Many unburied skeletons were found by the archaeologists at the site.
Friday, August 7, 2009
It's Friday!
It's Friday, when we all settle in for the weekend, and the bank examiners swoop down on the next group of failed banks.
Calculated Risk features 'BFF', or 'Bank Failure Friday' weekly. We're at 69 and counting, with the readers participating in a game of 'how many and which ones'.
Calculated Risk features 'BFF', or 'Bank Failure Friday' weekly. We're at 69 and counting, with the readers participating in a game of 'how many and which ones'.
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