[reeftool]

Republicans only want things "paid for" when the Democrats are doing the spending.

[GeneV]

Republicans only want things "paid for" when the Democrats are doing the spending.

In fairness, that description applies to just about everyone.

[Nesster]

Jeff, your quotes from the roaring 20s are scary as hell. Of course you've read right here that the New Deal was responsible for making the Depression longer and deeper. The true version of events was this: supply side economics demonstrably worked, producing sustained growth. The problem came when an inevitable market correction happened, when government needed to cut taxes further, curtail spending on social programs, increase it on the military, and otherwise encourage business investment. Hoover did not take it far enough. Once the socialist FDR had done his damage, the only thing that got us going again was WW II. This is why the Bush tax cut and not one but two wars are absolutely the right economic policies; the only thing missing was cutting social programs and entitlements, and getting the government out of business' way. Unfortunately, we elected another socialist...

[jeffkrol]

Yes it's only a blog, but I found it so useful.....
Dodd-Frank Wall Street Reform Bill Amended To Eliminate $19 Billion Bank Tax (You Will Cover CostInstead) - Home - The Daily Bail

Finreg ran into trouble because Robert Byrd died, and 3 Republicans, most notably Scott Brown announced intent to vote 'no' because of $19 billion in bank fees that were attached to the legislation literally in the final hour.

What's the big deal about a tiny $19 billion in total bank taxes to be collected from the 100 largest banks over a ten year period?

First, the $19 billion is needed to pay for implementation of the bill itself -- those are the assumed costs over 10 years, and the banks were (and should be) expected to pay since, you know, they are the ones who caused the freaking crisis in the first place. Now onto the objections from Brown, Collins and Snowe -- beholden to and captured by the banking industry, they don't feel the banks should have to pay this relatively small annual tax.

Not too surprisingly then, Dodd and Frank re-convened the conference committee this afternoon to find an alternative funding mechanism for the $19 billion in expected costs. And guess who was chosen to pay for the bill -- you were.

Dodd and Frank substituted TARP funds for the bank tax. So taxpayer funds originally intended to buy troubled assets from banks will now be used to cover the costs of regulating the TBTF banks that caused the crisis.

It's a super-galactic circle jerk where the taxpayer pays for everything, the banks nothing, and we're just supposed to smile, while they cash million dollar bonuses with our money.

If we can't get banks to pay $19 billion, we have absolutely zero chance of ever solving our long-term fiscal challenges.

To make George happy........
http://dailybail.com/home/say-what-james-howard-kunstler-goes-off-on-obamas-cozy-relat.html

Earth to President Obama: there isn't going to be a next time. This time was enough to git 'er done. Wall Street - in particular the biggest "banks" - packaged up and sold enough swindles to unwind 2500 years of western civilization.

You simply cannot imagine the amount of bad financial paper out there right now in every vault and portfolio on the planet. Enough, really, to sink any company even pretending to trade in things more abstract than a mud brick or an hour of labor.

What's more, the cross-collateralized obligations between them are so vast and intricate that all the standing timber in North America could not be fashioned into enough pick-up sticks to represent the hideous death-dealing tangle of frauds waiting for the wing-beat of a single black swan to come crashing down.

Even I'm not this pessimistic.........

There isn't enough money left in the known reaches of the universe to pay off the outstanding claims. In fact, not even close. Everything that proceeds from this fiasco will be in service of impoverishing most of the population and, incidentally, probably bringing down governments and, with them, convenient social usufructs such as due process of law and civil order. What remains - what you're watching right now on CNN or Fox - is just a representation of the former structures of civilized life

http://kunstler.com/blog/2010/06/say-what.html

but keep your chin up there is still no single payer health care system........

---

Last edited by jeffkrol; 07-01-2010 at 11:56 AM.

[Nesster]

They are still working out the Lehman contracts...

The only way to really solve this (not that anyone involved really wants to): everyone antes up their contracts to a central party. This central party then offsets and nets all the contracts in a round robin until all you have left are the true net bets. (This is done regularily by the clearing houses to unwind delivery fails etc.)

The investment banks shoud come out of this process roughly even: that is if they were even marginally competent in what they do (hedging). AIG I'm not so sure about...

The thing is I sold you some and Harry the opposite, and then you hedged yours vs. Sally and Sally vs. Harry and Harry with Joe, and so on, each time adding 24-30x leverage, so very quickly the face value of these contracts skyrockets. But unwound, the original bet may have been $10mm.

[jeffkrol]

They are still working out the Lehman contracts...

The only way to really solve this (not that anyone involved really wants to): everyone antes up their contracts to a central party. This central party then offsets and nets all the contracts in a round robin until all you have left are the true net bets. (This is done regularily by the clearing houses to unwind delivery fails etc.)

The investment banks shoud come out of this process roughly even: that is if they were even marginally competent in what they do (hedging). AIG I'm not so sure about...

The thing is I sold you some and Harry the opposite, and then you hedged yours vs. Sally and Sally vs. Harry and Harry with Joe, and so on, each time adding 24-30x leverage, so very quickly the face value of these contracts skyrockets. But unwound, the original bet may have been $10mm.

Maybe that batering with chickens thing is not such a bad idea...

[Nesster]

And there's more...
Treasury’s ‘Point Man’ on AIG Bailout That Benefited Goldman, Owned Goldman Stock - ProPublica

Deep in an article today on the government's bailout of AIG, The New York Times cites sources saying that the Treasury Department's "point man" on AIG, Don Jester, was a former Goldman Sachs employee who owned stock in the bank even as he was making decisions [1] on the bailout that ultimately channeled billions of taxpayer dollars to Goldman.

Owning stock in a company an official oversees typically is verboten, but because Jester was working as an outside contractor rather than an official employee, he was exempt from conflict-of interest rules [2].

Goldman Sachs stood to benefit from the AIG bailout because Goldman had roughly $20 billion in insurance-like credit-default swaps with AIG -- essentially bets by the investment bank that the housing market would go south. But if AIG collapsed, Goldman wouldn't be able to collect on the bets. When the government instead bailed out AIG, taxpayers paid out the swaps at full face value, and Goldman Sachs got $12.9 billion [3] -- more than any other of AIG's customers.

Jester was Goldman's deputy CFO when he left the firm in 2005. And here's what the Times says [1] about his investments in Goldman:

Mr. Jester, according to several people with knowledge of his financial holdings, still owned Goldman stock while overseeing Treasury's response to the A.I.G. crisis.

We contacted Jester this morning to comment on the story and confirm the stock ownership; we'll post an update when we get a response. His spokesperson, Michelle Davis, told the Times that Jester followed what the paper paraphrases as an "ethics plan to avoid conflict with all of his stock holdings." (According to a federal database search, Jester received $30,000 [4] for six months consulting at the Treasury Department.)

Earlier this year, a Times op-ed online dubbed Jester one of the "mystery men" [5] of the financial crisis and noted that Jester was at the center of the Treasury Department's response to AIG's impending collapse. During the chaotic two months in the fall of 2008, Timothy Geithner, then the head of the Federal Reserve Bank of New York, spoke on the phone with Jester 103 times -- more than other person aside from then-Treasury Secretary Henry Pauslon. Jester relocated to AIG's offices for a period of time, the paper reported.

The government's decision to have AIG pay out Goldman and others bets at full value has been controversial. The Times said while several of the Federal Reserve Bank of New York's outside advisors recommended it force banks to take losses on their bets with AIG, Jester advocated for full repayment:

According to the documents, Mr. Jester opposed bailout structures that required the banks to return cash to A.I.G. Nothing in the documents indicates that Mr. Jester advocated forcing Goldman and the other banks to accept a discount on the deals.

As an example of the advice against paying full value for the deals, the Times cited a presentation from an advisor [6] to the New York Fed, which outlined five reasons banks should agree to concessions. The Federal Reserve Bank of New York defended its decisions to the Times:

"This was not about the banks," said Sarah J. Dahlgren, a senior vice president for the New York Fed who oversees A.I.G. "This was about stabilizing the system by preventing the disorderly collapse of A.I.G. and the potentially devastating consequences of that event for the U.S. and global economies."

Apart from getting DAn Jester's name wrong, this of course is troubling. Jester made MD in 2000, which means he likely was an employee prior to Goldman going public. (This was a bonanza for the employees who were there at the time.) And as MD and CFO he'd certainly have a large pile of stock.

[Ratmagiclady]

Republicans only want things "paid for" when the Democrats are doing the spending.

Not only that, but they'll spend trillions 'off-budget' on a war while claiming we can't afford the arts, ...then turn around and be 'budget hawks' when someone acknowledges that war costs money. Money which we pay to corporations.

Maybe if we spent a little on arts and education instead of convincing people knowledge is arbitrary and political by fending off 'Creationists,' ... People would be able to grow a useful neuron and buy a clue.

[jeffkrol]

And there's more...
Treasury’s ‘Point Man’ on AIG Bailout That Benefited Goldman, Owned Goldman Stock - ProPublica



Apart from getting DAn Jester's name wrong, this of course is troubling. Jester made MD in 2000, which means he likely was an employee prior to Goldman going public. (This was a bonanza for the employees who were there at the time.) And as MD and CFO he'd certainly have a large pile of stock.

Were were just s@rewed weren't we......... and not pleasantly either