Links 3/23/09

Fossil hints at fuzzy dinosaurs BBC

Lower air pollution equals longer life Blorge

QE and the Bond Market John Jansen

AIG versus America Bruce Krasting

At A.I.G., the Brand Is Tarnished New York Times

No Rational Explanation for the Post-EIA Reaction Stephen Schork (hat tip reader Michael)

Why lingerie is wearing well in recession Financial Times

Strike faster on death-wish finance Clive Crook, Financial Times

Ben Stein Watch: March 22, 2009 Felix Salmon

Did China experiencing January hot money outflows? Michael Pettis. I’m late to this, but still worth reading.

27 Visualizations and Infographics to Understand the Financial Crisis FlowingData (hat tip reader Carrick)

Oversupply plagues China’s property market FinanceAsia (hat tip reader Michael)

Financial Policy Despair Paul Krugman

The first votes are in Jim Hamilton, Econbrowser

Antidote du jour:

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  1. Anonymous

    On of the graphics in the “27 Visualizations” link shows a representation of the losses by banking entities.

    GS is about on par with Merril Lynch..

    I wonder what the graphic would look like is GS hadn’t of had the benefit or rewritten tax laws, AIG counterparty payments, and straight-up bailout money.

  2. Anonymous

    The proposition is that lower air pollution extends life expectancy is unremarkable. It does however suggest that governments world wide might seek to increase air pollution as a means of lowering life expectancy.

  3. Anonymous

    general gripe…

    We’re not going to get anywhere in this crime scene mop-up, until we recognize that most of these “losses,” are more akin delusions of grandeur than destroyed wealth. Imaginary profits that never materialized.. They’re acting like a hurricane destroyed the town, when in reality no one lived there.

    What’s it going to take to get the stakeholding parties to get real and accept that this was a bubble. Maybe a President that has a pair?

    If its just that his hands are tied, rather than there being a lack of insight or political will.. then what is it that he bound by?

  4. Anonymous

    A nice quote lifted from the Huffington Post discussion of Matt Taibbi’s Rolling Stone article — simple and on the topic of fraud investigations..

    “What Goldman and the other Big Banks did:

    1. Sell a defective product: Manufacture/Sell a “Sure Fail” Mortgage or buy from a broker!
    2. Make a “SURE FAIL” Derivative out of parts of a bunch of “SURE FAIL” Mortgages!
    3. Buy insurance: Bet repeatedly that the defective product will fail!
    4. Wait and Collect the Insurance on the Failure!

    Not only is this a form of “Generated Insider Trading” but it violates the Laws governing Defective Products.

    DEFECTIVE PRODUCT – A product is unreasonably dangerous to the user, when it has a propensity for causing harm beyond that which would be contemplated by the ordinary user having knowledge of the product’s use.

    Product liability law governs the manufacturers and sellers for damages caused by dangerous products. The goal of laws are to help protect consumers from dangerous products, while holding manufacturers and sellers responsible for putting into the marketplace products that they knew or should have known were dangerous. Product liability extends defects in real estate loans.

    GROUNDS for Prosecution:

    Product is dangerous when used as intended.

    Manufacturer: required to make a product which is free from dangerous conditions.

    Marketing Defects: A marketing defect involves such issues as inadequate warning labels or instructions, which, for example, prevent a user from recognizing a defect in the product, or from being aware of how to safely use or apply the product.”

  5. Anonymous

    Anon 6:43 continued..

    “Bernanke-Bush-Paulson-Obama-Geithner policy pursued by US, amounts to a $10 trillion (Fed/Treasury) bail out of world derivatives bubble on backs of taxpayers, can make Economy worse, and must therefore be rejected. Krugman is right: “zombie ideas” rule Obama’s Washington.

    The $1.15 quadrillion financial engineering derivatives bubble is comparable to black holes with gravity sucking in all matter. Derivatives can consume all wealth/money in the world, and still be bankrupt. They can only be dealt with by a quick freeze followed by their extinction and permanent illegality.

    Derivatives are fictitious capital, instruments created that destroy production. In 1931-2, fictitious capital appeared as $Tens Billions of reparations imposed on Germany, plus war debts owed by Britain/France to US. These debts strangled world production and world trade. Bankers/statesmen tried desperately to maintain these debt structures. President Hoover”s Moratorium of 1931-1932 temporary froze all payments. The Lausanne Conference of June 1932 was the last chance to wipe out the debt permanently, failed to act, and passed the buck. By the end of 1932, there was near-universal default on reparations/war debts, and by January 1933, Hit1er seized power.

    We urge the London G-20 to defend world civilization against derivatives. It is time to lift the crushing weight of derivatives from the backs of humanity before the world economy and major nations collapse into irreversible chaos/war, as seen during the 1930s and 1940s.

  6. Anonymous

    Let me sell you a rose. I don’t have it yet, but I will come spring. Ok. Great!

    Oh, you’re buying insurance which covers you’re debt for my rose. Sure!

    Who are these 20 other folks who have bought the same insurance on our rose? Just friends. Ok. Great!

    Sorry, rains flooded out my rose garden. No, rose. But you and your 20 friends now have $21 between you to get another rose. Oh, the insurance company was overextended and can’t pay you or your 20 friends.

    Too bad. If its dryer in April I may have a rose for you then.

    Freeze the derivatives as Webster Tarpley suggests. Void them all and make all such secondary products illegal. The resulting mess may be easier to clean up than what we have now because there would be fewer players continuing to make messes while we are cleaning up.

  7. Anonymous

    …and why isn’t he too embarrassed to speak now?

    I recall him proclaiming the subprime crisis to be an overhyped bump. He also said that following science to its logical conclusion can only lead you to murder. He needs to stick to pop culture entertainment and stay off the OpEd pages.

  8. Timo

    Solutions can be easily found for this mess (Swedish model, prosecutions, banning and nullifying at least part of the derivatives, tough rules and adequate enforcing of those rules etc etc) but the core problem is not the lack of answers but the American plutocracy itself.

    The American elite is unable to react the right way to this mammoth crisis. Those pammered little assholes still think the old ways of doing business will save them, just give them a little bit of that “government” money…

    The right way would mean going after the rich crooks, their own “kind” of privileged people. Big dust up but they are not going to do that unless the “little” people really start coming after them big time.

    That is why this crisis will continue worsening after throwing all the good money after bad fails to deliver anything meaninful. And then, all hell will break loose, probably even worse than after collapse of USSR. Plenty of guns, plenty of desperate and poor people, plenty of war veterans or other “security” experts.

  9. Anonymous

    Is Joseph Cassano Responsible For The Depression?

    Joseph Cassano of AIG could not have done it without the rating agencies we all relied upon for prudent investing of our savings.

    See The American Prospect article:

    The rating agencies were set loose on the public and paid by iBanks '[securities issuers] after 1970; prior to 1970 they had been paid by investors.'

    That's only common sense: being paid by the same people you are rating is fraudulent on its face. Yet it has been going on for more than 3 decades with the FED now perpetuating the system by MASSIVELY REWARDING them […Fitch, Moody's, or Standard & Poor's] rather than criminally charging them for their fraud.

    Apparently Paulson was given the power to confer immunity upon anyone he chose to give taxpayer money to?

    No wonder people are confused. It isn't sophisticated. It isn't mysterious. If the banksters hadn't destroyed honest production with their self-regulating leveraged real value money confiscating M&A deals that depended on massive firing along with the total destruction of TV and newspaper journalism, these games would have been revealed in time to resist them.

    This result is hard for people to to understand only because its all so Alice-in-Wonderland.

    Apparently, all Paulson had to do to confer immunity was to confer taxpayer dollars and like magic you have received a reprieve retroactively. You have been annointed -you are now free to do whatever you wish with the money. Just don’t forget to be nice to Robert Rubin’s kid of course who’s running a hedge fund and all the obvious quid pro quo. You know what to do.

    Were these powers of automatic immunity from the law transferable to Timmy and Ben and Neal Kashkari and ?

    Surely Goldman Sachs having just passed $12B of taxpayer money to AIG, knows the value of the toxic assets they just bailed themselves out of with their own creation: TARP/TAXPAYER money.

    The investment bankers [securities issusers] have now appointed themselves to cure the results of the fraud for which they have been paid handsomely [Paulson more than $500,000,000] with all the taxpayer money that remains.

    AIG BONUSES, although a relatively small amount of money, is evidence that the fraudsters are being boldly supported by their partners in crime, particularly Goldman Sachs, and that Goldman has gamed the system to the point that the American people have NO representation, forgetting of course stupidly.

    Congress and the president are reduced [having willingly reduced themselves] to shouting about a hill of beans instead of behaving like leaders and encouraging/allowing the real free market to shrink the size and power of the financial sector which will happen anyway, but hopefully without bloodshed.

    The way these characters are going about it they are brazenly courting violence. Maybe they think their money can support them on a different planet. There are food preparers in those fancy restaurants with very sharp knives.

    At 40% of the economy the finance sector needs to be divided into a community-based public service industry with strong and vibrant middle management so that every citizen has a banker and financial adviser that can again act as mediator between the naturally avaricious industry of financial wheeling and dealing and the real needs of real people for honest employment with reasonable influence over their own finances with the help of advisers over whose remuneration and employment they have influence.

    We can do that. And not by punitive taxes on wages. That is silly on the part of congressmen and the president with the cooperation of the mainstream media freaks.

    Citizens will and should demonstrate wherever and whenever they can muster the support to do so.


  10. Timo

    “The investment bankers [securities issusers] have now appointed themselves to cure the results of the fraud for which they have been paid handsomely [Paulson more than $500,000,000] with all the taxpayer money that remains.”

    Exactly. Anger is building out there but it won’t probably result into anything, good or bad…yet.

    The biggest recent surprise was the huge dollar depreciation against euro last week. That might signal things to come aka dollar crashing.

    It all comes down to transparency of markets and this far eurozone could be winning even if the fundamentals point to possible large future losses because of Eastern Europe exposure and global recession.

    Who you gonna trust during bad times, American (mostly financial) companies trying to hide all the time the actual losses with accounting gimmicks and whatever or European ones whom in most cases promptly declare the actual losses and move on? Not to even mention the laughable unemployment and GDP statistics coming out from US goverment.

    One example, where did the Aabar Investments (Dubai) group just put their money…?

  11. lineup32

    Re: QE & bond mkt:

    from comments:
    "Essentially the Treasury market becomes buy and hold to maturity — and you don’t need lots of traders or PMs to do that (or bond blogs)

    As for pension funds… HA! I would love to hear how anyone thinks they can defease 7% liabilities with a bond that yields half of that. Unless you have a liquid market, active trading isn’t going to make up the other 4-5%."

    The news is slowly leaking out that
    the ship is taking on water and the pumps have stopped working.

  12. Anonymous

    I am back from spending 7-9AM this morning holding up my NO BAILOUT sign for the north bound traffic on Interstate 5. It made me feel better and I would have to report that the public is waking up to the fact that they are getting screwed.

    I first held up my sign there in early September and the reception was small and mixed, yes a few fingers. Today there were NO fingers and about a 5-10 percent response rate overall with a 40-50 percent response rate from truckers.

    We need to figure out how to do an effective Argentina kettle clamor in the US.

    Lets get out there and be heard folks. This textual white noise only gets us so far.


  13. Anonymous

    With the taxpaper putting up 93 out of a 100 dollars has anyone explored the idea of holders of Citi stock or options creating a SIV that bids on Citi junk assets to get a short term gain on the stock?

  14. MyLessThanPrimeBeef

    Regarding the article about oversupply of properties in China, is that ego speaking when the person was quoted to say her compnay wanted to buy all of the buildings they had identified in the centers of Beijing and Shanghai?

    Another question: Why does ego always say it’s egoless? Self-hate? Inferiority complex? You’re ego. Be proud of it. You should even get a little cocky about who you are.

  15. Cat

    [the public is waking up to the fact that they are getting screwed]

    PHistorian: Fine. But what avenue for relief is available to the public? Letters to the editor? Letters to Congress? A “rogues gallery” bus tour of the Hamptons? We are a domesticated bunch, unaccustomed to doing anything risky. I cannot see mild mannered citizens taking to the streets, not in this century anyway.

    It’s like waking up after a party and finding yourself in a Mexican jail cell; you don’t know how you got there, the guy holding the key isn’t on your side, and it’s going to cost you a fortune just to get out and even begin living your life normally. And when you are freed, the legal and representative systems are not going to be sympathetic to your story. So what do you do? Write a letter? Probably you walk away feeling lucky to be alive at all, and stay away from those sorts of parties in future. Right?

    We are up against a state and a financial system hostile to our basic definitions of justice and fairness. This hostility is expressed in the creation and maintenance of imbalances that serve a small portion of the population that is wealthy. There is no practical way to reverse this that doesn’t involve starting over from scratch. Solving the current set of monetary problems does not solve the underlying problem of imbalance, and every thinking person understands this. “Starting over” was last discussed 240 years ago in this country by a handful of wealthy white merchants and landholders who wanted to create a way of governance that gave them more direct influence in how they did business. Great, mission accomplished.

    Now what?


  16. Anonymous

    from an FT article March 16, 2009 “Beleaguered hotel industry dreams of sunnier times ahead”

    Perhaps this is what Bernanke et al expects to bai them all out:

    “However difficult it may be this year to find any customers, and however long prices may fall in the short-term, travel forecaster say the medium term and long term scenarios are of globalization creating a new and substantial wave of travelers, particularly in emerging markets such as India and China. There will be 1bn entering the middle classes in the global economy”, said Mr. van Paasschen. “Our least worry is selling these rooms.”

    They need us with a billion consumers coming on line. These guys at the fed and Treasury and Wall Street are big thinkers.

    They don’t need no constitoostion.


  17. Timo

    “Now what?”

    Good question. I remember back in the 90’s reading about one American commenting those “stalinist grandmothers” demonstrating at Moscow from time to time that they just don’t get it.

    Well, guess what. You are one of those grandmothers now but at the other end of the spectrum. Old ways of doing things are just that…old. It is going to be really painful adjustment and many will hang on to the old ways as long as they can.

  18. Anonymous


    A comment on your site’s functionality – (intended to be helpful) – it may be my DSL connection or my computer but recently the headline section (e.g. * Links 3/23/09 – March-23-09
    * Fed Rescue Programs: No Exit? – March-23-09
    * Guest Post: Why Does Failure Merit Reward? – March-23-09
    * Guest Post: Geithner’s Faustian bargain, the general interest, Jean-Jacques Rousseau and Uncle Sam’s lost inner compass – March-22-09
    * Guest Post: Is Obama Running Interference to Protect Bankers’ Pay? – March-22-09 )

    is very very slow to load – such that for the first 10 or 15 seconds all that appears is your header and the links section, which to a new visitor may be mistaken for the totality of your content.

    this is not a complaint just an observation

  19. john bougearel

    On the BBC headline about fuzzy dinosaur fossils discovered, I just found a new book called “Our Inner Fish.” It is quite a fun read.

  20. Juan

    Cat: I cannot see mild mannered citizens taking to the streets, not in this century anyway.

    Pre-revolutionary conditions:

    -economic crisis? Yes
    -established political order losing legitimacy? Yes
    -repositioning of elite? Yes, but so far, slowly.
    -social polarization, haves/have nots? Yes.
    -unpopular war(s)? Yes

    Revolution is an overused word but in the sense at hand should be thought of as not only political but social… tectonic movement may not be evident on the surface until the period of actual, ‘surprising’, eruption. Nor, given the intersecting of revolutionary and counter-revolutionary forces, is it all so possible to foresee which ways ‘the lava’ flows and its ‘final’ shape.

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