Links 5/22/09

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Rare white seal caught on camera BBC

Cattle Rustling Increases As Economy Gets Worse Boom2Bust

The Road to Bankruptcy Megan McArdle (hat tip reader Scott C)

Private equity consortium wins BankUnited auction Financial Times

Global electricity use forecast to fall Financial Times. Wow.

Bankruptcy surgery revives Chrysler after all Reuters. This article is a Pangloss watch item. It downplays the possibility that a district court might stay the 363 sale based on the objections of Indiana pension funds. A pretty savvy lawyer buddy of mine (top partner at a well regarded firm) said a long time ago “LItigation is a crapshoot, and anyone who tells you otherwise is lying.” Based on that, it might be premature to dismiss the odds of Indiana at least throwing a temporary spanner in the works.

Distinguish between transactional and revolving credit Steve Waldman

Liddy to step down from AIG FT Alphaville

The Crisis and How to Deal with It Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, Robin Wells et al., New York Review of Books

Blue Double Cross Paul Krugman, New York Times

The new global balance: Financial de-globalisation, savings drain, and the US dollar Christian Broda, Piero Ghezzi, and Eduardo Levy-Yeyati, VoxEU, Today’s must read.

Antidote du jour:

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  1. The Ror

    Liddy stepping down from AIG, after pumping Goldman full of cash.

    Cometh the hour, cometh the man!

  2. LeeAnne

    Don't underestimate merger of government and Goldman Sachs:

    The Steven Mnuchin mentioned in the article is a former partner of Goldman Sachs, son of Bob Mnuchin, also former partner of Goldman Sachs with 34 years of GS affiliation beginning with his training in the trading department of GS under Gus Levy beginning in 1957.

    Are we still expected to believe that bonuses and million dollar salaries are necessary to retain 'talent' in the finance industry. Stop it -my head hurts.

    These are TRADERS, not managers, not M&A, not even bankers. These are gamblers in charge, still in charge who, empowered by deregulation leapfrogged legit professional finance company management and investment banking in the corporation pecking order.

    “Regulators have worried that sales of troubled banks to private capital should not look overly generous. Those fear were fed when Chris Flowers, founder of private equity firm JC Flowers, said the investor group that bought IndyMac’s assets had all the upside for the failed California bank, while the government had all the downside. Calls to Mr Flowers were not returned.”

    The deal is the second involving private investors and a failed bank, and comes five months after a consortium acquired IndyMac. Private equity firms have become increasingly interested in acquiring banks, though their participation in such deals had long been limited. Last year, as failures mounted, regulators relaxed the rules about who can buy a bank.

    In early January, a group of private investment firms, including buyout shop J.C. Flowers & Co. and hedge fund Paulson & Co., struck a deal with the Federal Deposit Insurance Corp. to buy failed mortgage lender IndyMac for $13.9 billion. The bank is now controlled by IMB Management Holdings, led by Steven Mnuchin, who is chair and co-chief executive of Dune Capital Management.

  3. LeeAnne

    more on Goldman Sachs’ traders/government merger:

    We the people are paying for the absolute corruption of absolute [finance] power.

  4. Glen

    The Poms won’t release their stress test so as not to scare the market. What’s the European market do? Of course, it rallies! There is some seriously wired movements happening.

  5. wintermute

    “United Sachs of America”

    Easy change for all the stationery. Could start by painting it on Air Force One…

  6. Eric

    That polar bear is going to eat that poor person in the Igloo. How exactly is that an antidote?

  7. mensajd

    “Hey, I just love these things! Crunchy on the outside, soft and chewy inside!”

    Gary Larson

  8. Hugh

    I found the article on the new global balance by Broda, Ghezzi and Levy-Yeyati irritating and stupid.

    First, it states the obvious like the current flight to safety which benefits the dollar. Then it acts like it has made some major discovery that cross border capital flows have collapsed. Gee, I wonder if the concurrent collapse of the paper economy had anything to do with that or the contraction in the world’s real economy and trade.

    Second, they make it sound again like they have tipped on to something important that somewhere down the road the flight to the dollar will reverse. I mean seriously do these guys get paid for this?

    Third, there is the following:

    “limiting the availability of credit, the US will face tougher terms to finance its external imbalance. In our view, these tougher terms, together with the sharp increase in US household savings, could have gone a long way towards unwinding the global imbalances in a non-traumatic way. However, that would have entailed passive fiscal and monetary policies and a politically unpalatable economic contraction”

    How is it that sticking it to ordinary Americans is considered “non-traumatic”? The callous arrogance is breathtaking.

    Fourth, they seem to have missed that we are in another oil bubble. Not as big as the previous one but one that on a speculative basis substantially oveprices oil. They miss too that risk-appetite is still out there. It just needs money (which the banks are getting from the Treasury and Fed) and opportunities, like the oil market. So what we are looking at is not a move to a more stable economic system but a return to bubblenomics.

    Fifth, I just don’t think they get that the world is sliding into depression and that their analysis ignores this and that their prescriptions would likely make such a depression worse not better.

    Like I said, people who sell this schlock irritate me no end.
    Not to mention that their total analysis is wrong.

  9. LeeAnne

    more IndyMac Goldman FDIC US Government :

    “The deal would be a coup for Dune Capital, founded in 2004 by Steven Mnuchin and Daniel Neidich, two former partners at Goldman Sachs, because they would pick up a well-known banking brand on the cheap.”

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