The New York City General Assembly website has a section for a recently-formed Alternative Banking group, which has started meeting on Sundays from 3:00 to 5:00 PM. You can read the notes from last week’s session here.
Read more...This site has had plenty of company in expressing doubts about the latest episode in the continuing “save the banks, devil take the hindmost” Eurodrama. The same issues came up over and over: too small size of rescue fund, heavy reliance on smoke and gimmickry to get it even to that size, insufficient relief to the Greek economy (the haircuts will apply to only a portion of the bonds), no assurance that enough banks will go along with the “voluntary” rescue, and way way too many details left to be sorted out.
But it is a particularly bad sign to see disagreement within the officialdom about the just-annnounced deal.
Read more...The mortgage securitization industry has just had a new major front open on its battle with those who are less than happy with the way it has run roughshod over the law. While there are a significant number of court rulings questioning foreclosures in the name of MERS or other practices commonly associated with the use of MERS (for instance, in Oregon, its violation of recording requirements mandated at the state level), no major regulator or public official (beyond county registers of deeds) has gone after MERS in a serious way (New York’s AG has opened an investigation, but it has not led to any litigation).
This has changed with the Delaware attorney general Beau Biden’s filing.
Read more...Most readers by now no doubt have heard about the aggressive police crackdown at Occupy Oakland on Tuesday, in which police critically wounded Iraq war vet Scott Olsen while using tear gas, rubber bullets, and flash grenades to clear Frank H. Ogawa Plaza. The footage right before the tear gassing began does not show any signs of provocation by the protestors, but other reports say that a small group which most believe were anarchists rather than OWS members, had engaged in aggressive actions earlier.
Like many of the police efforts to rein in Occupations, this one seems to have backfired.
Read more...When failure is too painful to contemplate, any halting motion in something resembling the right direction will be hailed as success.
Eurozone leaders had a session well into the night and announced a sketchy deal that dealt with one major stumbling block, which was getting a deep enough “voluntary” haircut on Greek debt. Government officials regarded it as key that any debt restructuring be voluntary, since no one wanted to trigger payouts on credit default swaps written on Greek debt (a default or forced restructuring would be deemed a credit event and allow CDS holders to cash in their insurance policies, and that could trigger a bigger rout). The banks were unwilling to accept the 60% haircut sought by the Eurocrats, but agreed to a 50% reduction.
Read more...By Paul de Grauwe, Professor of international economics, University of Leuven, member of the Group of Economic Policy Analysis, advising the EU Commission President Manuel Barroso, and former member of the Belgian parliament. Cross-posted from VoxEU.
The Eurozone crisis plays on to a familiar tune. Finance ministers meet on the weekend only for markets to dismiss their efforts the following Monday. This column argues that Europe’s leaders have lost touch, that the ECB has the firepower but is not prepared to use it, and that the outcome of all this is depressingly clear: Defeat by the financial markets.
Read more...Cross-posted from Credit Writedowns Today is the big European summit. Expectations are low because European politics have become messy. At the beginning of September I wrote about European political dysfunction: Clearly, [Former ECB Chief Economist Juergen] Stark sees the monetisation path the ECB is on as not at all compatible with the ECB’s mandate. Separately, […]
Read more...I suppose we poor suffering ordinary citizens should be pleased to see any prosecutions directed at those at the top of the food chain. The Wall Street Journal reports that the former head of McKinsey, Rajat Gupta, is facing criminal charges in the Galleon insider trading case. It’s such a rare event for a business figure of the stature of Gutpa to be charged (he was on the boards of Goldman and the Gates Foundation) that it is now the lead story on the New York Times front page.
But that is what is wrong with this picture.
Read more...Since we’ve been big fans of New York Attorney General Eric Schneiderman’s investigation of mortgage abuses, we thought readers might like to see this interview on the Rachel Maddow.
Read more...I’d heard about a week ago that the Administration was readying the Mother of All Homeowner Rescues, to be administered via Fannie and Freddie. Given that Team Obama has never done shock and awe on the financial front, and the Bush Administration engaged in it only on behalf of banks, I was plenty skeptical.
The program revealed on Monday is true to form: greatly underpowered and more likely to benefit banks than homeowners.
Read more...A quick tutorial from Steve Keen at OccupySydney, via @Ian_Fraser
Read more...It’s one thing to fail to recall relevant events that are genuinely historical, quite another to refuse to learn from recent failed experiments.
Remember Hank Paulson’s bazooka? The Treasury secretary, in pitching Congress to give him authority to lend and provide equity to Fannie and Freddie, argued, “If you have a bazooka in your pocket and people know it, you probably won’t have to use it.”
but the Treasury’s new powers did not do the trick. Less than two months later, Treasury and OFHEO put the GSEs into conservatorship.
If the latest rumors prove to be accurate, the latest Eurozone machinations make Paulson look good.
Read more...By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)
This four part paper deals with a key element of derivative market reform – the CCP (Central Counter Party). The first part looked at the idea behind the CCP. This second part looks at the design of the CCP.
The key element of derivative market reform is a central clearinghouse, the central counter party (“CCP”). Under the proposal, standardised derivative transactions must be cleared through the CCP that will guarantee performance.
The design of the CCP provides an insight into the complex interests of different groups affected and the lobbying process shaping the regulations.
Read more...By Marshall Auerback, a portfolio strategist and hedge fund manager, and Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge and a research associate of The Levy Economics Institute
Historically, Greeks have been very good at constructing myths. The rest of the world? Not so great, if the current burst of commentary on the country is anything to go by. Reading the press, one gets the impression of a bunch of lazy Mediterranean scroungers, enjoying one of the highest standards of living in Europe while making the frugal Germans pick up the tab. This is a nonsensical propaganda. As if Greece is the only country ever to cook its books in the European Union! Rather, the heart of the problem is in the antiquated revenue system that supports that state, which results in a budget shortfall consistently about 10% of GDP. The top 20% of the income distribution in Greece pay virtually no taxes at all, the product of a corrupt bargain reached during the days of the junta between the military and Greece’s wealthiest plutocrats. No wonder there is a fiscal crisis!
So it’s not a problem of Greek profligates, or an overly generous welfare state, both of which suggest that the standard IMF style remedies being proposed here are bound to fail, as they are doing right now. In fact, given the non-stop austerity being imposed on Athens (which simply has the effect of deflating the economy further and thereby reducing the ability of the Greeks to hit the fiscal targets imposed on them), the Greeks really are getting close to the point where they may well default and shift the problem back to those imposing the austerity.
Read more...As much as I like to think I have a reasonably active imagination, it never ceases to amaze me how a bad situation can easily become worse.
Readers probably know the European authorities have been stunningly late to wake up to the fact that EU banks are undercapitalized, apparently being the only ones to believe their PR exercise known as a stress test. The banks’ options would seem to be limited. One is to raise more equity, which is kinda difficult now since no one is terribly keen about banks in general, and the ones in most need of more capital are the least attractive. Second is to let existing loans roll off. The authorities don’t like that idea, since less lending will increase downward economic pressures. And since bank CEO pay is correlated with size of institution, the banksters aren’t too keen about that either. Third is to cut pay to help accelerate earning their way out. You can guess how likely that is to happen. Last is to suffer state-assisted recapitalization, which under EU rules, would be a draconian exercise.
But never fear, the financiers have an “innovative” way around this problem. And this innovation is a remarkably destructive idea. From the Financial Times:
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