Links 12/15/09

In Pictures: Maturing meerkats BBC. A nice selection.

Japan’s Recovery Too Weak to Spur Domestic Demand, Tankan Shows Bloomberg (hat tip DoctoRx)

Room for Debate New York Times. Bill Black, Ed Harrison, and yours truly, among others.

Larry Summers Would Remind Banks They Owe Us; Cantor Says Banks Too Regulated FireDogLake (hat tip reader John D)

Final Thoughts on the Bernanke Nomination and AIG Chris Whalen (hat tip reader Joseph M)

The Bankers Summit and Some Significant No-Shows Jesse

Lieberman’s Offer to You: Nothing Matthew Yglesias

Thoughts on TARP Repayment Calculated Risk. This is one of those very rare times when I do not agree with CR. Capital raising and repaying the TARP are two separate actions. And as we pointed out, Chris Whalen said BofA should have been encouraged to sell stock now, but not allowed to repay the TARP until at least mid 2010. With Citi and Wells, the case for delay is even clearer. But while Whalen thinks the banks are not in the clear yet, the banks themselves have no such compunctions. Of course, a 50% bonus surtax might have thrown an interesting spanner into this dynamic…

World’s Top Polluter Emerges as Green-Technology Leader Wall Street Journal

How To Make The World’s Easiest $1 Billion Clusterstock (hat tip reader Cullpepper). From last week, apologies for being tardy, but this is fun and pointedly accurate.

AIG Chief: Key Staff Suffer Financially Wall Street Journal. So? That’s what happens to employees of companies that go bust.

Prohibition Along the Northern Vermont Border Vermonter (hat tip reader John L)

The disaster of “Chimerica” – Can both sides be losers? China Hush (hat tip reader Kendall). Presents a Chinese point of view on the current strained relationship

Antidote du jour:


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    1. DownSouth


      Thanks for the photos. They give new meaning to some of the images conjured up by Upton Sinclair in The Jungle, no?

      As to a neo-imperialist like Niall Ferguson, what can one expect? Peel off the layers of polish and at the core one finds just another Max Boot.

      Americans, in their insatiable desire for cheap consumer goods, exported some of the more unseemly aspects of their consumerist culture–the underlying destruction and misery necessary to support that lifestyle. Modern-day China offers a mirror image to Sinclair’s Chicago of 100 years ago. I suppose that’s the price that must be paid for “growth,” whether it be in today’s China or yesterday’s United States.

      Oh well. Out of sight, out of mind, no?

  1. attempter

    I agree that Calc Risk is making things up here. All the evidence of action, and even some spoken evidence, as in the case of some of the AIG idiots, proves that these persons are motivated primarily by the desire to loot on a personal basis in the form of “bonuses”.

    Meanwhile there’s no evidence that any of them care about the long term balance sheet health of these entities.

    I don’t see why rushing to pay off the TARP would help make one look stable to investors, for the sake of better raising capital. Does anyone outside the MSM actually believe any part of the Treasury’s imprimatur, like for example accepting TARP repayments?

    I think anyone willing to invest must be willing to make that bet without reference to the state of the TARP, except to the extent they think there really is some executive or trader “talent” ready to fly the coup if their extortion demands for “bonuses” aren’t met.

  2. DoctoRx

    CR supported the reappointment of Bernanke. Also, if memory serves me well, he unlike Mish, Roubini, David Rosenberg, ITulip and others did not foresee the looming systemic crisis as late as the summer of 2008. Unlike Yves, he mostly keeps his opinions to himself, so while he runs a truly wonderful blog, he provides too few opinions to allow readers to judge his POVs.

  3. Independent Accountant

    I read CR’s piece and thought it nonsense. Big banks are run not to maximize shareholder returns, but their senior officers compensation. It’s been obvious for years. Citigroup’s buying Old Lane for $800 million, then shutting it down a year later, leaving Vikram Pandit (VP) $165 million richer was a ploy to conceal VP’s “sign-on bonus”. I would be shocked VP wasn’t indicted for securities fraud if not for the SDNY US attorney’s office only indicting nobodies. So it goes.


  4. charcad


    “with all due respect” as the saying goes, why are you so fixated on the British 50% bankers’ bonus surtax? This seems as theatrical to me as anything else that’s been done. How much will Perfidious Albion actually collect here? The Evil City of London financiers are already changing their permanent mailing addresses to their Swiss chalets down the road from Roman Polanski.

    My expectation is this was designed to collect a few bonus opinion poll points for Gordon Brown, and nothing else. In due course Brown will start publicly wailing about more “Gnomes of Zurich” again, while privately welcoming the Gnomes to long weekends at Chequers.

    “Too big to exist” is a better one paragraph and 15 second mantra. And policy.

    r.e. TARP Repayment. Is there a solid mechanism in place to make sure the “replacement capital” is real money? As opposed to creative book-keeping with off-book transactions as part of the shell shuffle? Even best case the transaction is zero sum. Worst case these banks are releveraging themselves – again – by paying down TARP capital and substituting fictitious “capital”.

    And here comes my problem with 50%. If the corporate officers are willing to gamble tens of billions and put the institutions at risk – again – then why will a 50% surtax on mere tens of millions deter them? None of it was theirs to start with. So what if they “only” get $10 million instead of $20 million? Prices are down for lots of toys, too.

    1. David

      Proof that the financiers are leaving London? I agree Switzerland will benefit, but it’s all a matter of degree. And other Brits might just be happy to see the bankers go and be plutocrats somewhere else.

      1. charcad

        The problem is the Institutions themselves are largely remaining in place. Only the officers are superficially offshoring themselves in response to Gordon Brown’s latest superficiality.

        Goldman Sachs hasn’t changed one bit. And neither did Citi or JP Morgan Chase. I cited an example yesterday of these two banks buying (and undoubtedly securitizing) mortgages in 2008-2009 that never had one payment made by the legal borrowers.

        These instititutions’ culture is incorrigible.

    2. charcad

      p.s. YS.

      Here is exactly what I’m talking about:

      Toy prices are also off 50% and more. For instance, Leona Helmsley’s former 14 bedroom Connecticut country cabin sank from $125 million to $60 million in just one year.

      “50%” (even if really collected) is therefore no deterrent. It leaves the real rewards for fiduciary looting at the same level because of the decline in prices.

      Independent Accountant highlighted the willingness to expend a far higher % of Other Peoples’ Money to facilitate corporate insider looting. $165/$800 = 79.375% in “transaction cost” for Vikram Pandit’s $165 million Citibank bonus. This is already over a 50% increase on your 50%.

  5. David

    The “chimerica” relationship: we’re stuck with each other but the relationship is getting less healthy all the time.

    In codependent human relationships, the cure is a split. Or at least the realization that a split is OK. Then the relationship, if it continues, becomes voluntary again and therefore healthier. That’s my understanding of the psychobabble, informed by having had a codependent relationship with a girlfriend in the past.

    But China wants their all money back (that’s their public line at least) and the US can’t afford to pay very much at all. A aplit of a codependent relationship can be a win-win. The accounting relationships (our gain is their loss) mean that this will be even harder.

  6. MyLessThanPrimeBeef

    Panda 1: You have been illegally eating my bamboo leaves.

    Panda 2: No, I haven’t.

    Panda 1: Yes, you have.

    Panda 2: Really. I didn’t your bamboo leaves…only bamboo flowers.

    Panda 1: You’re lying.

    Panda 2: I am telling you the truth.

    Panda 1: No way! These bamboos bloom once every 60 or 120 years. How can you survive on bamboo flowers?

    Panda 2: It’s true. The rest of the time, I subsist on exporting.

    Panda 1: You’re in exporting business now?

    Panda 2: Yes. After Chairman Mao was outlawed, I threw away my little redbook and became a good capitalist and now, I am trying to earn some foreign reserves.

    Panda 1: I still don’t believe it. Where do you export to?

    Panda 2: Across a great ocean to a place called O’miraca or O’miraco.

    Panda 1: You mean America?

    Panda 2: No, I think it’s called O’miraco. I have been told that many pandas have achieved great financial miracles there. Maybe that’s why it’s called O’miraco.

    Panda 1: You’re lying. Never heard of it. Give me back my bamboo leaves. I am taking you to the Public Security Bureau.

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