I was listening to Morning Joe today and they spent a great deal of time again bashing Bankers and Wall St. about the bailouts and the come back of Bank and Wall St. profitability and bonuses, while Main St. has not recovered.
Of course, Main St. is recovering, if not as fast. I also noted that they didn't talk about how well most farmers have done with the rise in commodity demand and food prices, or how well Texas has done with soaring oil prices. Both farmers and oil companies get billions of dollars in direct subsidies from the taxpayer that, unlike the Bank bailouts, don't even have to be repaid.
No all they beat on was the surviving Banks that have returned to profitability and big bonuses. Naturally, they didn't mention the Banks that got wiped out like Lehman Brothers, Baer Stearns, Washington Mutual, Wachovia and all the scores of regional and community banks that went under; along with their executives who lost their jobs and savings.
They also never mentioned that those Banks have repaid all of the "bailout" funds along with a handsome returm to the taxpayers.
Nor did they mention that "recovered" Banks like Citi have a current stock price of $4 ,down from $50 before the crisis.
Since they were so unhappy that the Banks are profitable again and paying bonuses , I thought I'd re-post my post on this very subject back on January 12, 2010. It's truer and more relevant today than it was back then.
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HAPPY NOW?
Here's a future news story that should make the American public, pundits and politicians happy:
"Banks announce record losses today and cancellation of all bonuses.
The Dow Jones plunged to below 4,000 with resulting massive losses in all 401(k)s, employee pension funds and other pubic investment vehicles.
Housing prices dropped another 40% with complete shutdown of lending by weaken banks.
Jobless rate approaches 20%."
At last the public, pundits and politicians are happy because they really socked it to Wall St and those Bankers. Boy does that feel good.
Eric
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Posted By Eric Schiller to Meditations at 1/12/2010 12:15:00 PM
Monday, April 11, 2011
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?
Eric
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?
Eric
Thursday, March 10, 2011
Anomalies
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.
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?
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?
Tuesday, January 4, 2011
Back in time
We hear a lot abut how the Afghan War has been the longest war in US history. Why haven't we been able to win, and more pointedly, didn't we realize that no one since Alexander the Great has been able to militarily prevail there(and even he had to marry one of the local princesses).
Bush is justifiably criticized for not finishing the job and diverting attention to Iraq. Why did Bush neglect Afghanistan all those years. What went wrong?
Then I began to remember what actually happened in the beginning of the Afghan War.
Recall that the Bush Administration actually realized that we should not invade ourselves; but rather our strategy was to give air and special forces support to local anti-Taliban forces known as the Northern Alliance. It was the Northern Alliance who would, and did, defeat the Taliban. They were fierce and competent fighters ( no U.S. training required) and, most importantly, they had the support of the people.
What changed and why? I don't know the answer, but it's surprising to me that almost no one mentions the original strategy and how effective it was; without a massive US ground presence.
Why are the Afghans, who are born fighting and raised with a rifle in their hands, in such need of our training now? What happened to the fighters of the Northern Alliance? It's leader Massoud had been killed, but that was before the war began. Has our support been such a corrupting influence on the government to turn the people back toward the Taliban?
Why don't we just go back to the original strategy-- air support and, at most, special forces on the ground. The rest is up to the Afghans, as it was in the beginning.
Bush is justifiably criticized for not finishing the job and diverting attention to Iraq. Why did Bush neglect Afghanistan all those years. What went wrong?
Then I began to remember what actually happened in the beginning of the Afghan War.
Recall that the Bush Administration actually realized that we should not invade ourselves; but rather our strategy was to give air and special forces support to local anti-Taliban forces known as the Northern Alliance. It was the Northern Alliance who would, and did, defeat the Taliban. They were fierce and competent fighters ( no U.S. training required) and, most importantly, they had the support of the people.
What changed and why? I don't know the answer, but it's surprising to me that almost no one mentions the original strategy and how effective it was; without a massive US ground presence.
Why are the Afghans, who are born fighting and raised with a rifle in their hands, in such need of our training now? What happened to the fighters of the Northern Alliance? It's leader Massoud had been killed, but that was before the war began. Has our support been such a corrupting influence on the government to turn the people back toward the Taliban?
Why don't we just go back to the original strategy-- air support and, at most, special forces on the ground. The rest is up to the Afghans, as it was in the beginning.
Tuesday, December 21, 2010
Foreclosure is not the end
Foreclosure is not the end of a lender's rights with respect to defaulted home loans. In most states if the foreclosure's sale price doesn't fully repay the lender- and it never does- the borrower still owes the balance, known as the deficiency.
After all, the borrower did sign the note and got the money. As a matter of law, in most states, the borrower isn't off the hook for what they owe just because the lender got the inadequate collateral (in this case a house whose value is less than the debt) through foreclosure.
I point this out for two reasons.
First, most people probably aren't even aware of this continuing obligation of borrowers to the banks. Most people think foreclosure is the end; but they would be wrong, at least in theory.
Second, why haven't lenders pursued these deficiencies still owed personally by the borrower against the borrower and it's other assets? It's not because they are soft hearted I assume.
In addition, having not pursued their rights, for whatever reason, why haven't the banks gotten "credit" in the eyes of the public, press and politicians? The reasons are pretty obvious, given the current toxic atmosphere, the banks can do no right.
Conversely , aren't the bank's shareholders unhappy that they are not trying hard enough to recover the bank's (some would still say taxpayers) money? Apparently they are afraid as well.
There are basically two reasons why banks have not been pursuing borrowers personally for the amounts still owed. One good reason and the other somewhat problematic.
The good reason is that it is often not cost justified. The cost to sue the borrower personally and collect can be greater than the expected recovery. This would apply to most poorer people.
The problematic reason is more optics and fear. Just think what the media and the politicians would do if the banks, as is their right and perhaps their obligation, went after borrowers personally for these deficiencies? Pitchforks and torches anyone?
Many people (especially investor owners) can afford to pay these deficiencies. Why don't the banks go after them?
By the way, a lot of people have been gaming the system, living rent free for a long time; some of whom can pay, but have chosen not to because their houses are "underwater". Why hasn't that been reported? The banks probably never will go after them. Why hasn't that been reported as well.
So just losing a house in a foreclosure isn't really the end, but apparently that is only in theory.
Sorry for throwing out this "live grenade" but that's why blogs are fun.
Eric
After all, the borrower did sign the note and got the money. As a matter of law, in most states, the borrower isn't off the hook for what they owe just because the lender got the inadequate collateral (in this case a house whose value is less than the debt) through foreclosure.
I point this out for two reasons.
First, most people probably aren't even aware of this continuing obligation of borrowers to the banks. Most people think foreclosure is the end; but they would be wrong, at least in theory.
Second, why haven't lenders pursued these deficiencies still owed personally by the borrower against the borrower and it's other assets? It's not because they are soft hearted I assume.
In addition, having not pursued their rights, for whatever reason, why haven't the banks gotten "credit" in the eyes of the public, press and politicians? The reasons are pretty obvious, given the current toxic atmosphere, the banks can do no right.
Conversely , aren't the bank's shareholders unhappy that they are not trying hard enough to recover the bank's (some would still say taxpayers) money? Apparently they are afraid as well.
There are basically two reasons why banks have not been pursuing borrowers personally for the amounts still owed. One good reason and the other somewhat problematic.
The good reason is that it is often not cost justified. The cost to sue the borrower personally and collect can be greater than the expected recovery. This would apply to most poorer people.
The problematic reason is more optics and fear. Just think what the media and the politicians would do if the banks, as is their right and perhaps their obligation, went after borrowers personally for these deficiencies? Pitchforks and torches anyone?
Many people (especially investor owners) can afford to pay these deficiencies. Why don't the banks go after them?
By the way, a lot of people have been gaming the system, living rent free for a long time; some of whom can pay, but have chosen not to because their houses are "underwater". Why hasn't that been reported? The banks probably never will go after them. Why hasn't that been reported as well.
So just losing a house in a foreclosure isn't really the end, but apparently that is only in theory.
Sorry for throwing out this "live grenade" but that's why blogs are fun.
Eric
Tuesday, December 7, 2010
Finally
Whether you agree with what was done or not, it was good to see President Obama finally lead instead of having to clean up behind the mess made by the Dem. leadership. That's how I remember Presidents doing things--leading-- but somehow Barrack decided to defer to his party's congressional leadership instead of leading them. Didn't work out so well at the polls.
I didn't have a big problem with raising taxes on the rich, and even the so-called rich, but I didn't see how that was going to help the short term economic malaise and actually create jobs, and it was amusing hearing liberals talk like deficit hawks (I didn't think many of them even knew what the word deficit means).
Frankly I'm surprised and pleased the Republicans went along. Their policy of "Just Say No" was working pretty well and their efforts ( which I thought bordered on treason) not to agree to do anything that would make Obama look good and therefore more re-electable, even if it was in the best interests of the country, also seemed to be working. Maybe they, correctly, were worried about over playing their hand. However I won't give them that much credit.
Let the progressives scream (in truth they got what they wanted, but only didn't get to take away what others had), we finally got our President back.
I didn't have a big problem with raising taxes on the rich, and even the so-called rich, but I didn't see how that was going to help the short term economic malaise and actually create jobs, and it was amusing hearing liberals talk like deficit hawks (I didn't think many of them even knew what the word deficit means).
Frankly I'm surprised and pleased the Republicans went along. Their policy of "Just Say No" was working pretty well and their efforts ( which I thought bordered on treason) not to agree to do anything that would make Obama look good and therefore more re-electable, even if it was in the best interests of the country, also seemed to be working. Maybe they, correctly, were worried about over playing their hand. However I won't give them that much credit.
Let the progressives scream (in truth they got what they wanted, but only didn't get to take away what others had), we finally got our President back.
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