Category Archives: Wall Street

>Recession? WHAT Recession?

>It’s always a sunny day for some people!

Hedge-fund manager John Paulson personally netted more than $5 billion in profits in 2010—likely the largest one-year haul in investing history, trumping the nearly $4 billion he made with his “short” bets against subprime mortgages in 2007.

Mr. Paulson’s take, described by investors and people close to investment firm Paulson & Co., shows how profits continue to pile up for elite hedge-fund managers. Appaloosa Management founder David Tepper and Bridgewater Associates chief Ray Dalio each personally made between $2 billion and $3 billion last year, according to investors and people familiar with the situation. James Simons, founder of Renaissance Technologies LLC, also produced profits in that range, say investors in his firm.

By comparison, Goldman Sachs Group Inc., Wall Street’s most profitable investment bank, paid all of its 36,000 employees a total of $8.35 billion last year. James Gorman, chief executive of 76-year-old investment bank Morgan Stanley, is expected to receive compensation of less than $15 million for 2010.

But don’t hate on them, the WSJ reminds us: it’s mostly just paper gains! And heaven forbid we should tax these people at a rate that, say, Ronald Reagan found acceptable. Why should these people pay for our resource wars that make their life of luxury possible? That’s crazy talk!

Ah yes, putting the “gross” in gross profits. There is injustice and inequality in this country, children. And anyone who dares point this out is swiftly put in their place by these self-satisfied, spoiled, amoral assholes.

They are rioting in Egypt and Yemen and Tunisia. Some asshole on Wall Street is probably making a few hundred million off of it, too. That’s just the way it is.

I am reminded that this is our eternal human story, played out a thousand different ways throughout history. It has been ever thus. Read the Bible and you will see our past, present and future laid out before you. The cast of characters has changed but the play remains the same.

Sometimes the oppressed rise up and throw off the yoke that has been placed upon them, sometimes the rich shake a few coins from their coats and the oppressed improve their lot modestly, sometimes human greed surges to the forefront and the oppressed take a step back. And this is how humanity makes its slow, inexorable creep toward enlightenment.

Yes, it’s all for the best.

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Filed under economy, Wall Street

>The Fighter Pilots Of Capitalism

>Apparently the “fighter pilots of capitalism” feel they should be rewarded with fat bonuses for crashing billion dollar jets. And they think it’s totally unfair that the rest of us rubes in flyover country don’t agree with them.

That’s the general viewpoint of the bankers and Wall Street casino jockeys who vent a little spleen at Middle America in this piece (and a big tip of the hat to John Cole at Balloon Juice.) While the Teanut brigade likes to accuse Liberal Hollywood Elites of mocking them and treating them and all they value with disrespect, it’s their capitalist brothers in arms who seem to be looking down their noses at Real America® these days. For example:

“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.

Welcome to the meritocracy! Isn’t class warfare fun?

Here’s another one:

“We’re in a hypercapitalistic society. No one complains when Julia Roberts pulls down $25 million per movie or A-Rod has a $300 million guarantee. We have ex-presidents who cash in on their presidencies. Our whole moral compass has shifted about what’s acceptable or not acceptable. Honestly, you can pick on Wall Street all you want, I don’t think it’s fair. It’s fair to say you ran your companies into the ground, your risk management is flawed—that is perfectly legitimate. You can lay criticism on GM or others. But I don’t think it’s fair to say Wall Street is paid too much.”

Well, actually, people do complain about movie star and athletes’ salaries, all the time. And there are also salary caps in pro sports, and yada yada. But the big answer, as author Gabriel Sherman points out, is if Julia Roberts makes a dud movie, the entire economy doesn’t come crashing down. And let me add: Julia Roberts does not make $25 million a picture, not even close, in fact after after “Duplicity” failed, she was reportedly forced to accept $10 million to make “Eat Pray Love,” also a dud, and one can imagine her asking price will continue to fall until she hits box office gold again. And let’s remember all of the endorsement deals Tiger Woods lost when he turned out to have a little problem with his zipper. Yet this is the very “free hand of the market” salary deal the banksters think they are too good to accept. Think about it, Tea People: even free market capitalists don’t believe in the free hand of the market! How hilarious is that?

Here’s another one:

To Wall Street people who have grown up in the bubble, the meaning of the crisis is only slowly sinking in. They can’t yet grasp the idea of a life lived on less. “Without exception, Wall Street guys have gotten accustomed to not being stuck in the city in August. So it becomes a right to have a summer home within an hour or two commute from Manhattan,” says the Goldman vet. “There’s a cost structure of going with your family on summer vacation that’s not optional. There’s a cost structure of spending $40,000 to send your kids to private school that is not optional. There’s a sense of entitlement, that you need that amount of money just to live, that’s not optional.”

So, these are the people the GOP wants to hand your Social Security over to. Talk about needing a reality check! The problem is one which Brad DeLong explained so beautifully over the weekend. We live in a world of haves and a growing number of have-nots. The have-nots do not have summer homes in the Hamptons and cannot afford to send their kids to private school and do not have housekeepers and personal trainers and aestheticians and country club dues and spring break trips to the Caribbean and a highly-paid accountant to do their taxes and a lawyer to handle their legal troubles. These may feel like the necessities of life for the family of a Wall Street banker but they are not, in fact, the necessities of life in general. You can do your own taxes and clean your own house and send your kids to public school.

And let me add: No one wants to begrudge anyone these things. If you can afford them, great! But when your entire industry only survived because of taxpayer assistance, don’t be surprised to learn your sense of entitlement about such things rubs taxpayers the wrong way. If the rest of the country must tighten its belt, then you can do your part too, buddy. You know. For the duration, and all.

I’m reminded that once upon a time Americans pulled together to do the hard things. Those days, sadly, are gone.

Despite what the National Bureau of Economic Research may say, our economy is not out of the woods yet. And while the banksters are stunned anyone would want to make their casino abide by some rather modest house rules, the rest of the nation is dealing with some much more sobering issues. There are people who have been out of work for over a year now, thanks to you. They aren’t worried about where they’ll “summer,” they are worried about where they’ll live. And a lot of those people went to college, too, Mr. Citibank Executive.

So yeah, people are still pissed, and they don’t want to hear you whining about how hard you have it because I guarantee you that far more people have it far worse and they are just as worthy as you. So if you can’t “suck it in and cope,” then here’s another idea:

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Filed under economy, Wall Street

>Nobody Could Have Anticipated, v. 1,018

>[UPDATE] 2: A perfect example of what Ruth and I talk about when it comes to listening to the wrong people. The same Wall Street assholes who caused this problem continue to perpetuate free market fairy tales and now their widdew feewings are hurt. Aw I have a sad. Wait, I don’t. Fuck off. I’ve already squandered enough of my retirement money listening to you idiots.

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[UPDATE]: Via Atrios is this must-read post from Ruth Calvo about the right’s stranglehold on the nation’s economic policy. Belief in such fairy tales as “trickle down” and the “Laffer curve” and the ability of tax cuts to create jobs and other myths continues in our nation’s business press and Washington, all evidence to the contrary.

Go read the post….

————————–

Really? Really? Ten years of this shit and we’re still hearing the same tired excuses from Washington?

Nobody could have anticipated that Bush and the Republican Party shredded the economy with spending on wars and big tax cuts to the wealthy? (… and deregulation, and the casino mentality on Wall Street, etc. etc.)

Are you fucking serious, Robert Gibbs? Yes, let’s step back to January and February 2009 for a second. Remember all of the phony-baloney Republican hand-wringing over zombie marsh mice?

Remember all of the phony-baloney “pork” Republicans claimed was in the stimulus? If I knew the bill stank in February 2009, why didn’t you? Why didn’t you fight for something better? Something that would really work? Something that wouldn’t put us where we are today, with midterm elections around the corner and people still out of jobs, which means a lot of Democratic Congress Critters may be out of a job. You needed to go big or go home and it looks like you chose go home. Why?

Look, I don’t expect Robert Gibbs or anyone in Washington D.C. to read my shitty little blog but for chrisssakes aren’t you people reading Paul Krugman, the Nobel Prize winner in Economics? Don’t you read the Huffington Post? Don’t you read Matt Yglesias? Or Moody’s economist Mark Zandi, who said even at $900 billion (the final bill was far smaller), the stimulus would be too small?

Who the fuck were you people listening to? John Boehner? Fox News? Rush Limbaugh?

This is why I’m pissed off. When are we going to stop listening to the same people who have been consistently wrong about everything since forever?

When?

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Filed under economic stimulus, rants, Wall Street

>Jim Wallis In Today’s Washington Post

>Progressive Christian Jim Wallis has an excellent column in today’s Washington Post about the false idols of Wall Street. He really addresses a lot of the issues I’ve been talking about for the past several years, especially this part:

More and more people are coming to understand that underlying the economic crisis is a values crisis, and that any economic recovery must be accompanied by a moral recovery. We have been asking the wrong question: When will the financial crisis end? The right question is: How will it change us? This could be a moment to reexamine the ways we measure success, do business and live our lives; a time to renew spiritual values and practices such as simplicity, patience, modesty, family, friendship, rest and Sabbath.

Just a reminder: when liberal Christians use the word “values” and “morals” we aren’t talking about gays and abortion and sex ed in schools–all that below the waistline stuff. We’re talking about broader issues like materialism and isolation and caring for those on the margins of society. We’re talking about heart stuff.

You know, the stuff Jesus talked about.

Just yesterday I was saying our economic measuring stick of constant growth is unnatural. Nothing in nature grows and grows and grows, unless it’s a tumor. Constant growth is a sign of disease, not health. Yet our economic barometers are all focused on the need for constant growth. Little wonder American life is so unhealthy, wrapped up in materialistic exercises like buying bigger and bigger houses to hold more and more stuff, then financing it all with ballooning debt.

Too many Americans live their lives on false promises and air; no wonder as a society we are alienated and retreat into our addictions: food, sex, substance abuse, gambling. These are symptoms of a larger disease in our country, one that is mirrored in our policies and the systems which support our institutions.

Is there a way to set an economic barometer focused on balance, instead?

In December 2008 I asked:

Instead of basing our economy on how much stuff people buy which they don’t need, how about basing the economy on creating jobs? On how many people are working? People need jobs, they don’t need new flat-screen TVs made in Taiwan.

Of course, I don’t think it’s likely our current systems and institutions will be replaced any time soon. But if ever we are to rethink how we do things in this country, now is the time.


And here’s something else I love. I’m sure by now many people have heard of the “Move Your Money” campaign started by the Huffington Post (Mack linked to it the other day). Wallis takes up the rallying cry in his column:

When I recently told a few friends that my wife, Joy, and I had decided to close our little account at Bank of America and move our money to a local bank that has behaved more responsibly, I was amazed at the response. Religious leaders and pastors from around the country called to say that they, too, were ready to take their money out of the big banks that have shown such shameful morality and instead invest according to their values, by putting money into more local and community-based institutions.

So we’ve decided not just to remove our own money, but to invite other Christians, Jews and Muslims to do the same. Already we are hearing reports of whole congregations, groups of churches and faith-based organizations, from California to New York City, deciding to transfer their funds to local banks and credit unions.

The banks say they are “too big to fail.” So let’s make them smaller. We might finally get Wall Street’s attention.

Wow. This is amazing. Just yesterday I wrote that boycotts don’t work, politics doesn’t work, and along comes someone with a movement that people just may be embracing. The universe has seen my cynicism and raised me with a boycott of BofA. I love how this instant karma stuff works! Tell the world something can’t be done and watch it reply with an “Oh yeah? Watch me!” LOL.

I’m going to withhold judgment on the “Move Your Money” thing to see if BofA changes their evil ways. But I admit to being encouraged that the progressive faith community has embraced the idea.

I can already tell it’s going to be an interesting year!

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Filed under economy, religion, Wall Street

>Ben Stein Is An Idiot

>It shouldn’t take a little ol’ blogger from Nashville, Tennessee to explain the obvious to a great, big, important person like Ben Stein. But in yesterday’s New York Times column, Stein said something about the Jon Stewart-Jim Cramer contretemps that was so stunningly stupid, so obviously missing the point, and that same stupidity was repeated by Chris at TV Newser, so I guess I’ll have to point out the obvious.

Stein wrote this:

During the colloquy, Mr. Stewart lambasted Mr. Cramer as failing to anticipate events and inform his audience about those events.

No.

No, no no. Jon Stewart was not criticizing Jim Cramer for failing to anticipate events. He was criticizing Jim Cramer and the rest of the business press for knowing the system is gamed, and not informing the public. For being willing participants in a fraudulent scheme that stacks the deck against average investors–people who have far more at stake and far more to lose than Wall Street bigwigs who basically gamble with other people’s money.

I shouldn’t be shocked that Ben Stein doesn’t get that. He’s part of that gamed system, after all.

Still, we aren’t stupid, Mr. Stein. You, on the other hand, obviously think we are.

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Filed under Ben Stein, CNBC, Jim Cramer, Jon Stewart, Wall Street

>Disarray

>If Democrats acted like this, we’d be seeing another round of headlines like “Democrats In Disarray.”

Republicans, it seems, are just “leaderless”:

So who runs the Republican Party? Apparently nobody. Perhaps the most startling political development was the amazing lack of leadership on the GOP side of the aisle. Let’s run down the list of Republican leaders who attempted to persuade skeptical House Republicans: President Bush, John McCain, Dick Cheney, and John Boehner. (We’d add Newt Gingrich to this list, but no one is quite sure if his last-minute support was actually cover for his behind the scenes whipping against the bill.)

[…]

And then there’s John McCain, who last week decided to insert himself into the process and then (before the bailout failed) took credit for getting wavering House Republicans on board. Perhaps he did get a few wayward House GOPers on board — but it wasn’t enough.

Heh. Funny.

I also don’t understand why Newt Gingrich is acting like he’s still a Congressman. Excuse me, but who asked his opinion anyway? Why is he talking about how he’d “vote for the bill reluctantly”? Why is he calling for Henry Paulson’s resignation?

Among prominent conservatives who publicly assailed the administration’s proposal in recent days was former Republican House Speaker Newt Gingrich. But Mr. Gingrich said in a statement posted on his Web site Monday that he would “reluctantly and sadly” vote for the proposal if he were still in office.

“This bill is not the best proposal for solving the housing crisis. It is not even a good proposal for solving the crisis,” the statement said. “However, it is the only proposal Secretary [Henry] Paulson would support, and his support was essential in this setting.”

Mr. Gingrich then capped his tepid endorsement with a call for Mr. Paulson’s resignation, saying that “having a former chairman of Goldman Sachs preside over disbursing hundreds of billions of dollars to Wall Street is a terrible concept and inevitably will lead to crony capitalism and the appearance of — if not the actual existence of — corruption.”

That’s a great point but has anyone alerted Newt that he no longer holds office? Has anyone alerted the media?

Hey Newt! I’ve got a steaming cup of STFU with your name on it. If I wanted to hear from an ethically-challenged former Congressman I’d call Duke Cunningham.

Seriously, I find this whole thing truly bizarre.

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Filed under Newt Gingrich, Wall Street

>Here He Comes To Save The Day

>And you thought the fundamentals of our economy were strong! Wrong-o, bucko! We’re looking at a Great Depression starting Monday morning unless JohnnyMac saves us all!

Thankfully, John McCain has suspended his campaign for the good of the nation.

If only it were permanently.

Of course, after a week of negotiations and back-and-forth, a deal on the Wall Street bailout plan is pretty much finished:

In a briefing for reporters, Frank said agreement had been reached in several broad areas, among them: creation of an independent oversight board to monitor the Treasury Department’s handling of the bailout and a requirement that the department seek to minimize home foreclosures by slicing the interest rate and even the outstanding loan amount of many of the troubled mortgages it buys.

Frank said at the early afternoon briefing that he and Paulson had also agreed to a Democratic proposal for Washington to get rights to buy stock in the companies whose troubled assets the government buys. That would allow taxpayers to benefit from increases in the companies’ stock prices. But by the end of the day Frank indicated that an obstacle to agreement on such a provision had developed, though he didn’t elaborate.

And:

Meanwhile, Treasury Secretary Henry M. Paulson Jr. had agreed to demands from lawmakers in both parties to limit the pay of executives whose companies benefit from the bailout. The enormous pay packages of some Wall Street executives, coupled with the realization among nonwealthy Americans that the crisis could affect their financial foundations, have created an incendiary issue on Capitol Hill.

So, after a week of negotiations, progress has moved forward without JohnnyMac. McCain didn’t feel the need to be in Washington two days ago–indeed, he hasn’t been in Washington since April–so this “let’s cancel the debate to focus on the economic crisis” is bizarre, to say the least.

Clearly he’s either too chickenshit to show up for a debate on Friday night while his poll numbers are sinking, or he’s trying to sail into town to claim credit for something he had nothing to do with.

And if it’s the latter, well, this wouldn’t be the first time.

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Filed under John McCain, Wall Street

>“Hindsight Is $2020 Billion”

>As usual, Stephen Colbert nails it–including calling bullshit on Mitch McConnell’s flawed “fire in your kitchen” metaphor.

http://www.comedycentral.com/sitewide/video_player/view/default/swf.jhtml

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Filed under The Colbert Report, Wall Street

>McCain’s Economic Advisor To Benefit From Bailout

>Via Josh Marshall: someone in the media should ask Sen. McCain what role his top economic advisor, Phil Gramm, who is both vice chairman of UBS’s US division and a lobbyist for UBS, had in successfully lobbying for a piece of the $700 billion pie:

Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.

On Sunday, the Treasury secretary, Henry M. Paulson Jr., indicated in a series of appearances on morning talk shows that an original proposal introduced on Saturday had been widened. “It’s a distinction without a difference whether it’s a foreign or a U.S. one,” he said in an interview with Fox News.

I repeat: John McCain’s economic advisor will directly benefit from this bailout.

Now that’s what I call mavericky.

Every time McCain mentions his support of the bailout plan it should be noted that his chief economic advisor will benefit. News media: do your job.

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Filed under Phil Gramm, Wall Street

>You Want Us To Do WHAT?

>I am the first to admit that economics is not my forte. But handing a $700 billion blank check to the Bush Administration to dispose of as they wish, no strings attached and no oversight required, strikes me as the stupidest move anyone could make.

I agree with folks like Josh Marshall and Matt Stoller who point out that the discourse feels eerily, tragically, like what happened in the run up to the Iraq War. We’re in a crisis, we have to act now, there’s no time for serious debate or serious information gathering, the Bush Administration is saying TRUST US! and Congress is about to hand another $700 billion over to a bunch of crooks who should never have been trusted with taxpayer funds to begin with.

This is insane. Laughably insane.

Where are the grownups?

Yesterday Paul Krugman sounded the alarm:

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

No deal, indeed. Because it looks like the Treasury is trying to panic Congress into signing off on a blank check. That’s exactly what is happening, and yes, it does feel exactly like the run-up to the Iraq War. And no, the people responsible for the Iraq War and the Hurricane Katrina debacle should not be given a blank check.

We’ve been down this road before. Congress, please do not make the same mistake three times.

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[UPDATE]:

Sound familiar, anyone?

WASHINGTON (Reuters) – U.S. Treasury Secretary Henry Paulson acknowledged on Sunday an emergency rescue plan aimed at stabilizing a financial system in freefall will cost taxpayers money, but argued that costs will not be as high the $700 billion limit of the package.

“The taxpayer is at risk,” he said on “Fox News Sunday” television program, but added, “It would be extraordinary circumstances, highly unlikely, that the cost will be anything like the amount you spend for the assets.”

Yes, and the $60 billion the OMB estimated the Iraq War would cost in 2003 was “the upper end of a hypothetical,” and anyway,

an attack by Saddam Hussein or a terrorist ally “would cripple our economy”

according to President Bush and the morning bobbleheads. Plus, the president’s advisors assured us it “would be a short war”:

“The idea that it’s going to be a long, long, long battle of some kind I think is belied by the fact of what happened in 1990,” [Rumsfeld] said on an Infinity Radio call-in program.

He said the U.S. military is stronger than it was during the Persian Gulf War, while Iraq’s armed forces are weaker.

“Five days or five weeks or five months, but it certainly isn’t going to last any longer than that,” he said.

How does five years sound, asshole?

Yes, this rush to bail out Wall Street feels a lot like the last time the Bush Administration hit the panic button to resolve a crisis and an acquiescent press and scared Congress eagerly fell into line, refusing to ask the hard questions and even play the dreaded “blame game” so we could learn how we got here and how we need to get out.

That turned out so well for us.

Look, everything these people touch turns to shit. They are children. They need to be taken by the hand and led very slowly and carefully across the street by someone responsible. They simply cannot be trusted.

No blank checks for criminals.

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Filed under Congress, Wall Street