Links 3/14/09

Monkey ‘kills cruel owner with coconut thrown from tree’ Telegraph (hat tip reader Steve). Workers of the world, unite…..

See You Later, Regulator Susan Lee, Forbes

The great escape Peter Morici Asia Times (hat tip reader Crocodile Chuck). The occasional detail is off (his story of deregulation, for instance), but nevertheless has a lot of good material.

A Plan B for global finance Dani Rodrik, Economist (hat tip Mark Thoma)

Thoughts on Walking Away From Your Home Loan New York Times. Zeitgeist watch

The Benefits of Forced Debt for Equity Recapitalizations Greg Weston

U.S. Insists China Fears Over Debt Unfounded Wall Street Journal. Gee, isn’t that what all pre-bankrupts say?

Regulator: Before Banks Collapsed, They Pleaded With Feds To Let Them Fudge Their Books Huffington Post (hat tip reader Carrick)

A need to reconnect Financial Times. A very uninspired title for a very good piece on the future of the “maximize shareholder value” construct

Swiss agree to relax bank secrecy rules Financial Times. So now what is left, Isle of Man and Monaco? And you need to be a resident of Monaco (I think) to get the bennies.

Talking Economic Accountability with Rob Johnson firedoglake. Note we were also in this series.

Antidote du jour (hat tip reader Greg):

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  1. Anonymous

    From the WSJ article about the US denying to China their treasury obligations are unsafe:

    “Mr. Obama intends to return the country to fiscal prudence once the crisis passes.”

    I always wondered when they planned to get around to having fiscal prudence again!

  2. Richard Kline

    Mugsy: “What a crock.”

    Bugsy: “I swear, when I’m nineteen in cat years, I’m gonna just scratch yer eyes, out Big Guy; you better just watch it.”

  3. Anonymous

    Nothing amusing about the abuse of that monkey. And nothing particularly sad about the death of his alleged “owner”.

  4. Anonymous

    “Mr Welch argues that focusing solely on quarterly profit increases was “the dumbest idea in the world”. “Shareholder value is a result, not a strategy,” he says. “Your main constituencies are your employees, your customers and your products.”

    In other words, stock price is not the ‘purpose’ of the business.

    Business schools have been teaching that shareholder value comes first since the 1980s.

    And, I believe, CFO responsibility to shareholder value became the law. (the excuse for perpetuating the university teaching against all common sense)

    The debate for regulation of stock options for compensation and violation of insider rules has begun. That’s my hope. For without it, now that gov is in on it (Citi exec insider gains on leaked info openly), the destruction of trust of America and its markets can only gain momentum with consequences for everyone, not just shareholders.

    Welch’s statement could also mean we can look forward to the end of Congressional posturing about caps on compensation and get on with real regulation of stock options to eliminate short term incentives at the expense of economic stability and real value to consumers and workers.

    Stock options for executive compensation is a conflict of interest and incentive for the legal looting as well as the 500X disparity in executive pay that has taken place the last couple of decades.


    Apology for posting this twice -I put it in the wrong ‘comment’ space.

  5. Anonymous

    I would now like to petition that
    Brother Khan serve as Fed chief
    and Santino be considered as
    chairman of the SEC. Coconuts and
    stones seem reasonable regulatory

  6. Don

    “Regulator: Before Banks Collapsed, They Pleaded With Feds To Let Them Fudge Their Books “

    When I read this post, I didn’t see that it was such a big deal. I was shocked that they asked.

    Don the libertarian Democrat

  7. MyLessThanPrimeBeef

    Richard Kline, LOL.

    Yes, we only hurt those we ‘love.’

    The bigger meaning is clear from reader Greg though: the two kitties, John and Mary, represent a pair of underwater ‘mug-owners’ who the Big Brother, the state, wishes to keep enslaved.

  8. IF

    The Asia Times article mentions one consequence of the crisis, that I feel is central.

    “However, the sense of betrayal among ordinary people engendered by the great escape of bankers’ fortunes may fray faith in honest work far beyond measure. Economists may not like to talk about this, because they can’t reduce it to a number; however, the disruption of national confidence in markets and capitalism propagated by the escape of bankers’ fortunes may prove to the worst legacy created by the current Wall Street morass. “

    Once people stop believing in the system, stop believing in correlation between work and success, one has a situation economically similar to the socialist countries in the 80s. This does not mean “politically” similar. (One should watch that part carefully though.)

  9. IF

    Monkey: there is no indication that the monkey did anything he was not ordered to do. The widow might claim otherwise, but I have trust in the monkey’s statements.

    Yves: your Antidote sometimes does not show up for me. Kind of random.

  10. JP

    Yves: your Antidote sometimes does not show up for me. Kind of random.

    And I thought it was just a Zen antidote today.

  11. DB

    Yves: thanks so much for your time and hard work spent on this blog. It’s been such a fantastic resource for me and has become my one “can’t miss” blog, for the . I think the guest posts are also a great addition, and as long as Leo Kolivakis continues to bold-face his most pointed paragraphs, I have no complaint about the size or frequency of his contributions re: pensions.

    In case you haven’t seen it, Kenneth Rogoff was this week’s guest on NOW On PBS. He does a 20-minute interview about the upcoming G20 summit, how long the recession will last (4-5 years to get to where we started), the total bill (2+ trillion to stabilize the financial sector and 8-9 trillion in total debt: recapitalization, stimulus, and lost tax revenue), and the role of the IMF in the crisis, among other things. Take a look:

  12. Anonymous

    How do you guys like this:

    “Receivership of Chase/Citi/Wells/BOA+ GS. Well, Chase & GS might still be above water -put they are the pluses to the other minuses (which will include Fannie/Freddie/AIG). Plus GS has to pay on 2 counts -Counterparty to AIG & they created a large part of this mess. New banks that failed will be absorbed into one of these entities.

    Stockholders wipe out. Bondholder saved. All of the corporations once out of receivership – will become Mutual Corporations -they will become the Financial Utilities.

    They will all become centrifuges to sort & cancel out CDS/MBS, etc.

    Housing -all mortgages in trouble -one refinance attmept as per FDIC protocol -if not the short sale/ if not then foreclosure -with title transfer to HUD for residential and Commerce Dept for CRE. HUD will transfer title (for low/middle income rental housing with some with laddered selling allowance in 5-15 yrs) to local housing authorities & charities with strong supervision, some grant money & Line of Credit for supplies of purchase thru the General Services Administration (Fed Gov't Landlord agency). Same for Commerce Dept. – Using the CRE with the Small Bus Adm. & local authorities to create local/regional/small business incubators. -which the CRE can provide free/low cost start up physical presence -Think equivalent of subsidize housing for small business.)

    Transfer of wealth back to the little guy – Financial Stabilization -> All of the above banks would do as follow -> Lower all present loan fees & percentage to single digits -based on risk. Pay more on savings accts. Create an account like are popular in Europe -Ing Direct has them here under the Electric Orange. Essentially an electronic payment acct with a line of credit. If your positive you earn interest & if negative you pay a very low/decent interest. Allow people to roll over the car loans/Line of Equity/Credit Cards/Mortgages into this account. Will required direct deposit of income & cancellation of loans/loan accts transfer into it, as well as new loans can only be taken out thru the bank & properly qualify – Or high penalties & expulsion from program apply. (think of a non-legal system way of modified bankruptcy, minus all the fees & high interest. If persons are compliant frees up capital for qualified people + does not penalize & put into a corner & in fact incetivise those that are in the margin.

    Of course it would never happen – Because "the banking system once to have the cake and eat it too" & our legilsators are sold out. No politician would have the balls to do something like this. Specially kill Goldman Sachs.

  13. gordon

    Susan Lee’s piece in Forbes (“See You Later, Regulator”) indicates that Congressman Frank wants “one big regulator” nationally. She makes the obivous inference that such a unitary and exclusive regulator will require a superman to be in charge, but doesn’t draw the equally obvious conclusion that several regulators with overlapping jurisdictions are a much better proposition. There is then a chance that an honest person will be in charge of at least one of them most of the time.

    And IF notes that the Asia Times is worried that faith in honest work may be frayed by the spectacle of most thieves getting away with it. I can only say that if a bright, energetic young person asked me earnestly for career advice, I would have no hesitation is recommending crime. Or possibly Business Studies.

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