Broad Oak Blog: Banks' Final Grab: The Land

So eloquently stated, that no comment from here is needed.

Imagine what Thomas Jefferson and Andrew Jackson would say, if they could see how in the Land of the Free a tiny elite not only owns most of the cash, bonds and shares, but now aspires to seize the real estate. America is approaching a peak of wealth inequality and mass servitude comparable to the condition of England in the eighteenth century, but without the hopes offered by the Industrial Revolution.

Simon Johnson: Private Gain, Public Loss--The Real Cost Of Too-Big-To-Fail

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.

Denninger Shares A Win For The Good Guys

Remember OS's previous screed about heeding the commandments about not lying and stealing?

Well, Denninger shares one refreshing episode in which a judge realizes that a bank and its law firm were attempting to steal a home from a family through foreclosure by lying to his court, and attempting to use his court as the means to commit fraud.

The judge, blessedly, was not amused.

Now, the question remains: Why aren't disbarment proceedings underway? Why isn't law firm under scrutiny by the Florida Attorney General, to see how many times they got away with this before being caught? Why hasn't one lawyer or banker been cuffed, perp-walked for the cameras, had his prints and mug shots taken, and been forced to cool his heels before making high bail?

Denninger's correct in this one point: Until that happens on a regular basis, the fraud will continue.

Note To The Local School Board

If some sweet-talking banker from J.P. Morgan, or one o' dem' udder NooohYork banks comes callin' with some sweet-sounding scheme to save us a bunch-a-money:

Tell him 'Hell-No!', and call the cops.

The Denver School board didn't, and they are in a mess.

From the New York Times Business section:

Since it struck the deal, the school system has paid $115 million in interest and other fees, at least $25 million more than it originally anticipated.

To avoid mounting expenses, the Denver schools are looking to renegotiate the deal. But to unwind it all, the schools would have to pay the banks $81 million in termination fees, or about 19 percent of its $420 million payroll.

Broke, USA

On the way to somewhere else, OS found this excerpt of the new book Broke, USA, by Gary Rivlin.

He's still wiping tears from his eyes, reading how these people smilingly charge 391 percent interest to lend money to poor people, with credit lines supplied to their businesses by major banks.

OS once had the misfortune of knowing someone who was a financier of these operations, from a private hedge fund he now suspects was being used to launder cash for, let us say, businessmen in the 'pharmaceutical trade'. It was a frightening experience, as OS was baffled to be in the presence of a person who essentially had managed to remove any trace of conscience from his soul, while appearing totally respectable. The smell of sulfur lingers in the memory, to this day.

There must be a Hell somewhere, in some form, to accommodate the souls of these people in the afterlife. 

The Millenial Business Plan: Secretly Insure Your Neighbor's House, Then Burn That Sucker Down

This bit of insight from the New York Times:  The banks that helped Greece hide its debts also bet that it would default on the debts they helped hide.

As one insider describes it:  Imagine you are able to take out fire insurance on your neighbor's house.  It gives you profound incentive to burn it down at some point in the future.

Damn! I wish I'da thought of that one! I wuz raised to think that sort of behavior was, well, fraudulent and harmful to my neighbors. Sunday School teachers kept drilling that 'Golden Rule' thang into my head. Little did I suspect, it's actually a business plan! And it works! And it's legal!

Damn!

Invest in premiums, gasoline, and matches...all you need is a compliant insurance agent (with whom you share the proceeds). Write the policy, pay the premiums, bide your time, wait until the owner is on vacation.

Hold a house barbecue.

Collect the payoff.

Now, in the spirit of Bill (It's the economy, stupid!) Clinton, we'll just waive any discussion of ethics.

Ethics, Shmethics. It's about making money, honey.

(Of course, this makes me wonder if someone's insured MY house! Maybe I should put off that vacation, after all...)

Simon Johnson Weighs In On 'Move Your Money'

Simon Johnson, former chief economist of the International Monetary Fund, is a professor at the MIT Sloan School of Management, a senior fellow at the Peterson Institute for International Economics, and a member of the CBO’s Panel of Economic Advisers.  He is a co-founder of The Baseline Scenario.

In other words, Simon Johnson is not some angry middle-aged guy living with his gun collection and Confederate flag in his mom's basement. He's not AstroTurf, as the White House and Miss Nancy would wish to characterize anyone who dares to disagree with them.

Simon Johnson says it's time to take your deposits and run from the big banks. And he tells us why, with an insightful look into our history.

But his real conclusion is the most insightful of all:  It's time to move your politicians.

I have no doubt, that somewhere in the bowels of the White House, Simon's picture graces a dartboard. 

Boys Will Be Boys--But Should They Run Banks?

Robert Peston lends his usual wry wit to the ongoing debate about how best to go forward from the smoldering ruins created by the latest financial bubble.

He observes that all of the geniuses that created the mess are men, and wonders out loud if that is part of the problem.

He may have a point.

Take Kuhlifornia, for instance--please, take it!

But there is a glimmer of hope, in that Meg Whitman, who led eBay to such success during her tenure, is considering a run for the governorship.

Peston observes: ...in my experience - men are more prone than women to simply run like a train at the goal, and never mind who's flattened along the way.

I'm not certain the issue is gender so much as it is about approach to the education of boys.

Yet one more argument against the obsession with football(US) or rugby(UK) at school.

If, instead, these boys were handed an orchestral instrument, a set of golf clubs, and a schedule that began with singing in choir every morning, they might learn:

1. That the process of learning a skill well requires humility, patience, and the willingness to be taught, and

2. That real success often involves cooperative effort in pursuit of a objective and higher common goal--i.e., a moving performance of a Tallis motet.

What if our future titans of business were trained in this fashion?

(I've seen it happen, and the results are impressive. But those boys tend not to end up in banking, because they weren't on the football team. It's a chicken and egg sort of quandry.)

Add in daily swimming or cross-country running for physical exercise; and make the boys carry their own clubs on the course(and caddy for the grown-ups), and they'll get plenty of exercise.

And they won't need knee surgery in their early 40's...

So, young mothers, when that invitation to 'try out' for PeeWee League football arrives in Junior's school bag: Shred it, and find the nearest children's choir program immediately.

You'll thank me later...