Category Archives: Politics

Why Robert Khuzami Would Be a Terrible Choice to Head the SEC

Given that the Obama Administration appears to think that missing-in-action Attorney General Eric Holder has been doing a fine job, it probably isn’t surprising to see the SEC’s head of enforcement, Robert Khuzami, included on a short list of names rumored to be under consideration to head of the agency.

But if the object is to prove that regulators can’t regulate and it’s too hard to enforce securities laws, then Khuzami’s your man.

Spain About to Whack Hapless Smaller Savers Conned into Buying Bank Preference Shares as a Condition of its Bank Rescue

Yves here. We’ve flagged in earlier posts how the Spanish banking crisis had the potential to become destabilizing politically, as if Spain wasn’t already at considerable risk of upheaval. Spanish depositors were pushed to convert their deposits into preference shares, which they were told were just as safe. That of course was never true.

This was a simple desperation move by the banks to save their own skins, customers be damned, by raising equity from the most unsophisticated source to which they had access. And now that that gambit failed, these shareholders are due to have those investments wiped out unless the Spanish authorities can cut a deal to spare them. The conditions of a bank rescue, which Spain did try to resist, was to have equity holders wiped out, or at least haircut. And that plan is now about to be set in motion. Having losses imposed on small savers who were in many cases conned by their own bank to buy these preference shares is going to do serious harm as well as further delegitimate the government.

Obama Calls on Citizens to Ask Congress to Slit Their Throats

If this weren’t so terrible, it would be funny.

9 Greedy CEOs Trying to Shred the Safety Net While Pigging Out on Corporate Welfare

By Lynn Parramore, a senior editor at Alternet. Cross posted from Alternet

A gang of brazen CEOs has joined forces to promote economically disastrous and socially irresponsible austerity policies. Many of those same CEOs were bailed out by the American taxpayer after a Wall Street-driven financial crash. Instead of a thank-you, they are showing their appreciation in the form of a coordinated effort to rob Americans of hard-earned retirements, decent medical care and relief for the poorest.

Escalating Delinquency Rates Make Student Loans Look Like the New Subprime

ow that student loans are undeniably in bubble territory, the officialdom is starting to wake up and take notice.

Marshall Auerback: Bank of Canada Governor is Wrong on Too Big To Fail and Wrong on Canada’s Banking System

Yves here. It was very telling, and disappointing, to find out that the Governor of the Bank of England in waiting, Mark Carney, has been critical of the ideas of Andrew Haldane, the executive director of financial stability of the Bank. Haldane has the goods on major banks, and has come up with both colorful and insightful critiques as well as creative solutions. It now becomes clear why George Osborne made this surprising pick: Carney sees nothing wrong with large, universal banks, while the departing Governor, Mervyn King, Haldane, and the head of the soon-to-be-disbanded FSA, Adair Turner, were unified in their desire to cut the mega-banks down to size.

By Marshall Auerback, a portfolio strategist, fellow with the Economists for Peace and Security, and a research associate for the Levy Institute. Cross posted from New Economic Perspectives

As a Canadian, perhaps I should feel a surge of patriotic pride now that Mark Carney has been designated the new head of the Bank of England – quite a step up for the current governor of the Bank of Canada. That said, his recent attack on the Bank of England’s Andy Haldane in a Euromoney interview last month, does give one some cause for concern, particularly as it evinces the usual complacency that most Canadians seem to feel about the basic soundness of their own banking system, which essentially upholds the universal banking model as a viable one.

The 0.1% Circles the Wagons: Buffett Pumps for Dimon as Treasury Secretary

Well, given that our current Treasury secretary was forgiven for being a tax cheat (Turbo Timmy never did settle up for his underpaid taxes that were beyond the IRS statute of limitations), there is a certain logic in upping the ante with his replacement. Having a Treasury secretary who is a slam-dunk case for criminal Sarbanes-Oxley violations (see here and here) as well as running a bank where the auditors signaled the worst level of accounting failure short of signaling “going concern” worries is par for the course for the ever-risinng level of corruption among what passes for our elites.

Marshall Auerback: Even a Deal on the Budget is Bad for the American Economy

Yves here. One of the frustrating aspects of the Great Catfood Debate is that it boils down to not whether, but how much, catfood you get in your future. Marshall Auerback explains why any of the proposed outcomes to the budget negotiations will slow growth and possibly produce a recession.

Tens of Thousands of Egyptians Protest Morsi’s Power Grab

This Real News Network interview with Hamid Dabashi discusses the drivers and ramifications of Mohammed Morsi’s usurpation of democratic checks on the president.

The Greek Resistance

This Aljazeera video seeks to understand how Germans and Greeks view each other in light of the way the Trokia is breaking Greece as an example to other periphery countries (yes, Greece would have had adjustment problems regardless, but they are being made far worse by the measures taken to avoid exposing the insolvency of French and German banks). It covers how the crisis has rekindled lingering hostilities. It also sheds new light on the pre-crisis economic relationship between Germany and Greece, including corrupt deals between the Greek government and German arms-makers. It also treats austerian thinking with more dignity than it deserves, but that is a secondary theme of this show.

Ceasefire: Egypt Manages the Crisis; More US Arms for Israel

This Real News Network video looks at the ceasefire just announced between Israel and the Palestinians and argues that despite the deaths and damage incurred in Gaza, that the Israelis did not come out terribly well in the terms of the deal.

Yes, Virginia, the IRS Does Not Treat the Connected Like the Rest of Us (REMIC Edition)

We’ve written at some length about the failure of the IRS to go after what look like slam-dunk violations of the rules governing the tax treatment of mortgage-backed securities. Apparently the noise has been made about the failure to pursue REMIC violations, the latest by two law professors in a journal article, has roused the IRS from its official somnolence.