Thursday, March 31, 2011

For Foreign Eyes Only

I read in the Financial Times of London last week that the " Federal Reserve made a record contribution of $79.3 B to the US Treasury from investments in its large portfolio of mortgage bonds."

Today I read in the same foreign publication that the US Treasury is forecasting (on a very conservative basis) a profit of almost $24B from TARP and called it "a positive outcome for despised bail-outs that were once estimated to cost hundreds of billions of dollars."

I read the NYT and WSJ, both days, and saw nothing about this positive economic news. I guess good news about banks doesn't sell newspapers, at least in this country. I also didn't hear about it on Morning Joe, CNN, Fox, etc.

Despite what Neil Barofsky and Elizabeth Warren have said, and of course their views appear in our press regularly, the TARP not only saved this country from economic disaster, but made a tidy profit for the taxpayer to boot.

And as to moral hazard concerns , tell that to the shareholders of Lehman, Baer Stearns, WaMu, Merril Lynch, Wachovia, AIG and others, and all their former executives who lost their jobs and most of their fortunes. Even survivors like Citi saw the value of their stock go from $50 to $1( now back up to $4) and Bank of America's stock plunged as well, and their Chairman lost his job. I think there is plenty of moral hazard arising from this crisis.

As to "too big to fail", recall the words of Paul Krugman in his column about Canada. He noted that Canada was not suffering the same degree of financial distress and observed that "Canada has only 5 banks and they are all too big to fail", so that alone was not the cause of the financial crisis.

Why can't our press tell the American people about all this?


Thursday, March 10, 2011


The following was written in January but I just got around to posting it, so I apologize if these aren't very current; however the issues are still relevant.

I noticed several anomalies in the news lately, along with some really troubling news.

1. Nicolas Kristoff wrote about the negative societal affects of growing income inequality . He cited the increase in crime and unwanted teenage pregnancies as evidence of such negative societal affects . However while I agree that the growing gap in income equality is a very serious problem, I checked and confirmed that crime and teenage pregnancies have actually dropped significantly during this period of growing income inequality.

2. I recently read an article in the Chicago Tribune about the serious problem of lenders abandoning properties before finalizing foreclosure after the foreclosure had been filed and the owners moved out. By dropping the foreclosure before it was final, the lenders left the property vacant and an eyesore or worse for the neighborhood. If that wasn't bad enough ,the article went on to cite a government statistic that some lenders even had walked away from 60% of their defaulted loans before filing a foreclosure, which which the article implied, further exacerbated the vacant property problem.

I asked myself if those lenders never even filed foreclosure action, why did the owners move out? Indeed they could still be living there "rent free". I called one of the neighborhood organization referred to in the article and asked that question. He agreed my question was a good one and didn't have a good answer except to say that the report I questioned didn't come from them. He agreed that there would be no reason to leave if a foreclosure hadn't even been filed. Nevertheless I'm sure the Trib thought it made for good reading. The author of the article didn't answer my email.

3. Earlier one morning I heard a NPR report that studies showed that political assassins were motivated almost solely by desire for notoriety as opposed to political extremism. Why hasn't more been said about this report as part of the on going discussion on this issue?

4. Most troubling, a large number young urban lawyers in Pakistan are supporting the murder of a governor who advocated repeal of a blasphemy law. What hope is there for Pakistan when those who presumably are sworn to uphold the law, celebrate a cold blooded murderer.

Quck Hits- Contradictions

Contradictions abound:

1. How can we can we be for improving education and at the same time cut teacher compensation, benefits and rights?

2. Public employee unions -- if the right to bargain collectively is such a time honored embedded scared right supported by the President in Wisconsin, why don't his federal employees have those time honored sacred rights?

3. Why is what the Republican recently did in Wisconsin so undemocratic, but the Democrats fleeing the state to avoid a quorum on a vote is just fine?

4. How can Huckabee criticize Natalie Portman but not Bristol Palin?

5. How did we have a "no fly" zone in Iraq protecting the Kurds for many years before the war, but find it so difficult and dangerous to so in Libya?

6. How can we dramatically cut current spending at a time our economy has not yet recovered?

7. Why is it so unpalatable to our current seniors to raise the social security retirement age from 67 to 68 beginning 50 years from now?

8. Why did we create a bi-partisan commission to come up with ideas to deal with the deficit and then completely ignore its recommendations?