Thanks, for nothing »
Posted By JamesMarcus 5 months, 2 weeks ago in NewsThere is a new kind of queue in banking, and it is not formed of terrified depositors trying to withdraw their savings. Instead banks are lining up to repay the public capital they received during the depths of the crisis some six months ago. Having met regulators' stress tests, ten of America's stronger lenders, including JPMorgan Chase and Goldman Sachs, won approval on June 9th to buy back a collective total of $68 billion of government shares. In Britain, Lloyds Banking Group has begun to give the state some of its money back.
At the same time, however, a worryingly revisionist history of the credit crunch is being penned. It says that some banks did not really need government help and were bullied into accepting it last year as part of a wider bail-out of their flakier peers. Despite owning hundreds of billions of dollars of hard-to-value assets, banks seem now to regard as unnecessary the American government’s scheme to purchase toxic loans and securities. The message is clear: we never needed government help, and we don’t want it now.
Read Full Story at economist.com »
1000 Views Share Story 80 Comments Report
Submitted By:
JamesMarcus
James Marcus is a writer, translator, critic, and editor. He is the author of Amazonia: Five Years at the Epicenter of the Dot-Com Juggernaut and ...
RSS Join the Discussion
+ Add CommentComments So Far: 80 (view all)
-
100%
deathray5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
ultimately, the focus of the new regulatory regime should be about:
Reply
1. non bank holding financial companies;
2. regulating leverage;
3. size of the impact of a given company's leverage on overall market size.
as far as the turnamout on needing tarp funds, many of these companies used the capital not to ease the credit markets, but to tide them over, doing business as usual...-
-
100%
memestryker5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
James certainly jumped into the deep end!
Reply
This underscores the tendency of organizations to act in very human ways, complete with a display of defense mechanisms, focus on survival, and attempts to justify past behaviors. Of course, it's all about convincing us that their business model was superior all along, so customers should credit them with superior abilities to manage themselves and demonstrate insights. Very human to want to look good and appear to have a better handle on reality.
Notice that one of the first things they focus on, once they think they can demonstrate they are "out of the woods", is ratcheting executive salaries back up. A sleight of hand attempts to pull the curtain over the lack of focus on easing credit markets.
-
-
100%
deathray5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
fta:
Reply
"At the same time, however, a worryingly revisionist history of the credit crunch is being penned. It says that some banks did not really need government help and were bullied into accepting it last year as part of a wider bail-out of their flakier peers. Despite owning hundreds of billions of dollars of hard-to-value assets, banks seem now to regard as unnecessary the American government’s scheme to purchase toxic loans and securities. The message is clear: we never needed government help, and we don’t want it now."
apparently the banking industry doesn't seem to remember why they were given the money to begin with; the money was supposed to unclog the credit markets, allow the banks to lend again, so the economy would pick up steam...
as it stands, the toxic assets on the books still keep the bank holding companies leveraged, and the real deleveraging has not occurred. in fact, the use of these complex derivatives has enjoiyed a rebound.
people have short memories. -
rally-monkeyComment removed: Abusive12 Replies
-
100%
bubba25 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
Those 'revisionists' need to watch the Frontline story that aired on PBS on June 16, titled "Breaking the Bank".
Reply
http://www.pbs.org/wgbh/pages/frontline/breakingth...
"It all began on that fateful weekend in September 2008 when the American economy was on the verge of melting down. Then-Secretary of the Treasury Henry Paulson, his former protégé John Thain, and Ken Lewis, one of the most powerful bankers in the country, secretly cut a deal to merge Bank of America and Merrill Lynch.
The merger of the nation's largest bank and Merrill Lynch was supposed to help save the American financial system by preventing the imminent Lehman Brothers bankruptcy from setting off a destructive chain reaction. But it became immediately clear that it had not worked. Within days, the entire global financial system was collapsing." -
100%
CRYMTYPHON5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
I can have fun saying I predicted the crash;
Reply
for years I insisted that charging the occupation
of Messopotamia to the deficit while giving the rich tax cuts
to re-invest in china, would break our economy.
It sounded reasonable but I was bluffing;
I can not balance a checkbook.
So I have followed the crash the way I follow Quantum Physics; by learning a few basic buzz-words and nodding my head.
My point:
On economics, I can not tell when the experts are lying to me.
I suspect that is how most Americans are.
So they find someone like Paul Krughman that they
trust, or a source like NPR or PBS or, yes the WSJ,
and go with that.-
100%
Radiofreeeuropa5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
In a sense you are right, but in another honestly if it walks like a duck....etc.
Reply
The principles of economics still must make common sense. Like you, I've been saying for a long time the economy is poised for collapse. Simply put, trade is based on goods and services of some kind being exchanged. The idea that US businesses can simply all be bosses of 3rd world sweat shops or sell bundles of some BS junk bond type instruments instead of actually creating things of intrinsic discernible value is simply unfathomable to any reasonable person as a practicable system. You have to make stuff to sell, you have to make stuff that people need or want to buy. You have to especially ensure that people in the marketplace are making enough money to actually buy the goods or services you are selling.
(Remember Henry Ford famously was called a class traitor for paying his employees decently- his response= I want them to buy my cars, they have to be able to afford to do it)
After abandoning any investment in America for years in favor of quicker and larger profit margins in sweatshops unencumbered by environmental protections, decent wages, etc.
we are now at the point where the people with the jobs are in China, but they make 30 dollars a week...it's a huge market that the big capitalists have been drooling on for decades but they can't afford to buy the products they make can they? -
100%
AnteUp5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
I wish it were not so, Crymtyphon - but I'm right there with you.
Reply
Finding a source worthy of trust on cable is near impossible -
they are seldom invited to comment on the airwaves.
We're set to lose our PBS stations - so it will be online only
from here on out.
-
-
-
-
100%
Progressive5 months, 2 weeks ago
-
100%
flyonthewallzz5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
"Save for defense and space exploration it is hard to think of a privately run industry more dependent on the state."
Reply
This may be tangential but it "bugged" me:
What about the airline industry?
For comparison: (spending for 3 quarters this fiscal year)
DEPARTMENT OF STATE.....$13.136 Billion
FEDERAL AVIATION ADMINISTRATION....$9.712 Billion ($213 million from airlines included)
TRANSPORTATION SECURITY ADMINISTRATION.....$3,247 Billion
Interesting how folks seem to ignore how airport security has been "Nationalized".
I just checked USAspending.gov and learned that so far this year we have contracted with Boeing for $14 Billion ($36 billion last year). That is a Billion more than the State Department.
Boeing also gets grants from the government $193 million since 2000.
Compensation for Air Carriers $5.2 Billion since 2001, (These are direct Grants).
If I filter the federal budget for "Subfunction title" "Air transportation" I get a payout of $164 billion since 2001. That is real money and takes into account the industries contributions to the AIRPORT AND AIRWAY TRUST FUND.
I realize this has nothing to do with banking..but it does relate to our governments history of involvement with private business. -
100%
DarkWizard5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
This is a very good article as it illustrates the deeper issues within the financial system.
Reply
Even though only a few banks are vocally displaying an attitude of arrogance, I'm sure this sentiment runs rampant through the industry. I'm referring to their lack of contrition toward causing the collapse.
I now feel that we have gone beyond letting banks too big to fail being allowed to fail, but that it is paramount that they fail...and quickly.
My reasoning is that the cycles between each recession is shortening and we haven't even cleared this one. Yet, the banks are not only proclaiming themselves healthy, they say they were never ailing! Definitely a recipe for disaster and a portent of falling in to the economic abyss. -
100%
jimdoze5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
The problem with this bit of revisionist history is that it fails to take into account the government's role in creating conditions that led to the financial crisis in the first place.
Reply
The essence of markets is that they are equilibrium between greed and fear. For over 50 years, the federal government had, through various programs, progressively removed fear from the Real Estate/Mortgage market equilibrium. This is why charts of real estate prices showed a continuing and progressive divergence from the prices of everything else. Because of that progressive divergence over a very long period of time, the general population, and not just a few brilliant investors, were possessed of what they thought was fundamental belief that there was relative safety in real estate.
Financial institutions back-tested their risk models for 50 years and found "all was well". What they didn't see was that government programs had gradually, but progressively, removed the perception of risk from the equation. In the absence of risk, greed eventually overwhelms... in any market. And there is no amount of regulatory oversight that will prevent that. Regulatory oversight can and does delay it, but it will not prevent it. Risk will always be part of the equation and even though there are times it appears to be removed. Risk will eventually come roaring back... and when it does, it tends to reassert itself in a very big way!-
100%
AnteUp5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
I am fairly positive that I am not capable of understanding all you are saying -
Reply
not just a little financially challenged - but I don't see you mentioning DECEPTION
as a factor. That would be deception BY the industry. Why did they qualify people
who revealed their worth/income honestly and in no way, shape or form would have
qualified if the lenders had been looking out for their best interests?
Using a deceased spouses income to "help" qualify them? Out and out lying
and fudging figures on applications? It was a heartbreak for the buyer that the
lenders alone knew was coming - and for what? Short term gain - and then
they're out of Dodge!
Regulations sitting on the books with no one ENFORCING them are useless.
If, however, they had been enforced - if the business had experienced ANY
scrutiny.................well, this mess just could not have happened as it did. -
100%
flyonthewallzz5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
Well Jime Doze:
Reply
I am not sure if I can accurately define GREED.
But I do think the government does need to provide a role in containing fear.
Just to play devils advocate here:
Weights and measures: it would be a tough to do diligence if they where not reguated.
Patents: It is handy for the inventor to have his invention protected by the government
Product Safety: Folks would really have to be careful about what they buy.
The Civil Court system: Protects contract holders
FDIC: I do not think a bank would back out of that insurance if they had a choice.
Fire and Police departments: also reduce the fear of owning property.
The Military:
According to your thesis it appears to me that GREED is an inevitable volcano, which nothing but fear, can protect us from.
I think I get the Idea that only with great risk can one achieve great profit and that regulation reduces risk and therefor profits. But how many folks really want to risk the money they are saving for retirement? And it does cost less to live in a purchased home than to rent a comparable space.
My take: is that the massive amount of investor capitol that went into the market place reduced the supply of sound investments. So new ones had to be created to meet the demand.
I do not think cutting taxes on capitol gains and dividends helped, why would someone reinvest their earnings into their business, if their earnings from outside investment are taxed at a lower rate? And besides if they grew their business they would have to work harder.
Double taxation? Folks say why should people have to pay taxes on income earned from money already earned. Well if money does not "work": then Usury would still be considered a sin.
-
-
100%
AnteUp5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
Rachel Maddow mentioned an informative piece on Obama's
Reply
new regulation plan. I've been having the pits of a time with
my system - but I think this is the link:
http://www.mcclatchydc.com/227/story/70245.html
How Obama's regulation plan aims to fix what went wrong -
by Kevin G. Hall-
100%
Goppy5 months, 2 weeks ago
This comment is below the standard viewing threshold View It »
I'm not an economist ... and I don't even play one on Propeller ... but I have the feeling that much of Obama's effort to regulate banking will have a deleterious impact on small banks.
Reply
I hope this is addressed before any regulatory efforts are passed.
.
.
-
Add a Comment
Sign In With Your Propeller Account
Please keep your comments relevant to this story.
To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.