Yearly Archives: 2011
Displacement Activity, Minsky Moment, Abreaction
Still no great hurry to grasp the nettle in the Eurozone (nor in the US), but the moment can’t be postponed for much longer
Read more...Pain in Maine
By Richard Smith You won’t be hearing much from Yves today: Traceroute has started… traceroute to vroo.pair.com (209.68.1.136), 64 hops max, 52 byte packets 1 192.168.1.1 (192.168.1.1) 5.882 ms 0.760 ms 0.631 ms 2 yves.tearing.hair.out (yves.tearing.hair.out) 8.501 ms 15.333 ms 9.936 ms 3 te-9-4-ur01.brunswick.me.boston.comcast.net (68.87.36.53) 9.966 ms 10.767 ms 9.605 ms 4 te-0-7-0-2-sur01.brunswick.me.boston.comcast.net (68.85.162.61) 10.250 ms […]
Read more...Matt Stoller: Power Politics – What Eric Schneiderman Reveals About Obama
By Matt Stoller, a fellow at the Roosevelt Institute. He is the former Senior Policy Advisor to Rep. Alan Grayson. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller
A lot of people have asked why New York Attorney General Eric Schneiderman is going after the banks as aggressively as he is. It’s almost unbelievable that one lone elected official, who happens to have powerful legal tools at his disposal, is doing something that no one with any serious degree of power has done. So what is the secret? What kind of machinations is he undertaking that no one else has been able to do?
Read more...Antidote du Jour
The Wages of Destroying Labor Bargaining Power: Nearly 30% of Job Losses Due to Management Cutting Pie in Favor of Capital
Yves here. This short piece by Robert Gordon is important because it seeks to quantify the impact of a phenomenon that economists have noticed a bit late in the game: that the benefits of GDP growth, which used to go mainly to labor (via increased hiring and better wages) now benefit capitalists fare more than ordinary workers. The shift towards increases in GDP favoring corporate profits at the expense of labor became pronounced in the weak Bush expansion (we commented on it in a 2005 article) and Gordon’s effort to try to translate that into the impact on unemployment levels is a useful step forward in the debate.
By Robert Gordon, Professor in the Social Sciences and Professor of Economics at Northwestern University. Cross posted from VoxEU
The US is missing millions of jobs. This column argues that the total is 10.4 million. It claims that 3 million of these can be traced to the weakened bargaining position of labour and the growing assertiveness of management in slashing costs to maintain share prices. Moreover, this employment gap is not shrinking because of the ‘double hangover’ effect—an excess housing supply and besieged consumers unwilling to spend.
Read more...Link 8/27/11
Mike Wallace 1959 Interview of Ayn Rand
I found this interview intriguing for two reasons. First, I must confess to not realizing that Rand’s philosophy was rooted in the counterfactual belief that people are rational. Every social science (ironically, save mainstream economics) puts human irrationality and inconsistency front and center. Nobel prize winner Herbert Simon studied how woefully limited human cognitive capacities. More Nobels have been awarded for behavioral economics, which (among other things) has catalogued numerous cognitive biases.
Second, the questions that Wallace raises with Rand illustrate how much social values have changed in 50 years.
Read more...Summer Rerun: Quelle Surprise! Bank Stress Tests Producing Expected Results!
Yves here. It’s interesting to note that the point of the stress test exercise was to build confidence in the banks so they could raise equity at not massively dilutive prices and rebuild their balance sheets. But the Administration appeared to believe its own PR and relented on pushing the banks to raise capital levels (if you doubt me, look at how much walked out the door in record 2009 and 2010 bonuses).
This post first appeared on April 9, 2009
Should this even qualify as news? From the New York Times:
For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation’s biggest banks to determine how those institutions would hold up if the recession deepened.
What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.
That is the good news. The bad news is that many of the largest American lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government. After receiving many millions, and in some cases, many billions of taxpayer dollars, banks still need more capital, these officials say.
The whole point of this charade exercise was to show the big banks weren’t terminal but still needed dough, and I am sure it will prove to be lots of dough before we are done.
Links 8/26/11
What is Debt? – An Interview with Economic Anthropologist David Graeber
David Graeber currently holds the position of Reader in Social Anthropology at Goldsmiths University London. Prior to this he was an associate professor of anthropology at Yale University. He is the author of ‘Debt: The First 5,000 Years’ which is available from Amazon.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
Philip Pilkington: Let’s begin. Most economists claim that money was invented to replace the barter system. But you’ve found something quite different, am I correct?
Read more...State Officials Starting to Question Securitization Fail, Whether States Should Tax RMBS
This letter (hat tip Daniel Pennell) by Virginia delegate Bob Marshall is another indicator that mortgage backed securitization issues are not going away any time soon. Notice that the questions are sophisticated and show familiarity with recent litigation.
And look at question 10. I’ve been wondering when cash strapped states might look to the apparent failure of mortgage securitizations to adhere to REMIC rules as a possible trigger for tax assessments.
Read more...How Chase Ruined Lives of People Who Paid Off Their Mortgages
Matt Taibbi, in giving a well deserved thrashing to the banking industry’s Tokyo Rose, aka New York Fed director Kathryn Wylde, said:
[S]tealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money.
Once you read the allegations in the cases included in this post, I strongly suspect you will agree that the “ruining lives” in the headline is not an exaggeration. And as important, these two cases, with very similar fact sets, also suggest that these abuses are not mere “mistakes”. These are clearly well established practices that Chase can’t be bothered to clean up, since cleaning them up costs money and letting them continue is more profitable.
Read more...JP Morgan is Foreclosing on the US Treasury
I am not making this up. Hat tip reader Deontos.
Here is the high level story: JP Morgan Chase and Northwest Trust foreclosed on a property in Hillsboro, Oregon. Treasury (more accurately, the IRS) has a tax lien on the property.
Read more...On the Buffett Purchase of BofA Preferred
Bank of America’s stock is now up 11.6% on the leak that the Charlotte bank is selling $5 billion of 6% cumulative perpetual preferred and in the money warrants ($7.14 strike price), again $5 billion in total
This is an admission of weakness, not strength. Bank of America had maintained it didn’t need equity as recently as yesterday and of course before that too, then does a sweetheart deal to build confidence (FT Alphaville has a nice summary of the terms, hat tip Richard Smith).
Read more...