Poor Us: The Great Depression 2.0

February 27, 2009

Wall Streeters want bonues? Give them toxic assets

Filed under: Reduced Circumstances, Uncategorized — debacled @ 6:33 pm

pirate nation by vhm_alex @deviantart.comRecession Hacking is a new blog with an optimistic, Yes-We-Can motto, “Where New Things Replace the Old,” that aims to use the collective intelligence of the online community to come up with a way out of this mess.  There’s even an  wiki to collect all the collaborative wisdom.

And so  far featured at least one excellent idea, williamtheliar’s   Hack for Wall Street Bonuses.  To my mind, it’s a most elegant solution to mitigate the off-with-their-heads fury inspired by comments such as Morgan Stanley’s CEO John Mack telling Charlie Rose that while he didn’t require a bonus the bank’s  top traders/fund managers needed their $100 million kick backs or they’d seek work elsewhere.

Okay, if they need outrageous fortune, let those Pirates of the Universe  spin this chafe  into gold:

Give them what they deserve.
It still amazes me the millions in bonuses that were given out on Wall Street this year. Sure, a lot of people lost their jobs and those that stay need to be incentivised. What I don’t understand is why they are given our money, rather than some of the bank’s worthless assets that they helped create and sell to our pension funds.

Here’s a hack that will fix the economic situation: The banks have billions of $ of assets that they cannot find buyers for – Sub prime mortgages, Asset Backed Securities and CDO’s. Why can’t these ‘toxic assets’ be off loaded to the Wall Street big wigs as bonuses at current market value? This gets the assets off the banks books, feeds the greed for bonuses within a broken industry and makes the fortunes of the ‘over-paid’ directly dependent on the financial future of the ‘over-loaned’.

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History in hock: Annie Leibovitz pawns photos

In 1975, photographer Annie Leibowitz and writer Hunter S. Thompson went on the road with the Rolling Stones

Photographer Annie Leibovitz kept the Baby Boom generation in sharp focus from their misspent youth to tapped-out middle age but no one ever pictured her getting caught up in their craziness.

Until now. Tuesday The New York Times reported that finding herself in a financial bind, Leibovitz “essentially pawned every snap of the shutter she had made or will make…”

“Leibovitz…borrowed $5 million from a company called Art Capital Group. In December, she borrowed $10.5 million more from the same firm. As collateral, among other items, she used town houses she owns in Greenwich Village, a country house, and something else: the rights to all of her photographs. Leibovitz secured two loans last year from a company calls Art Capital Group, which is essentially a pawn shop for the art elite. ”

For 75 million Baby Boomers who still dream of being shot by Lebovitz for the cover of Rolling Stone or Vanity Fair,  this may be the first time they  identify with the photographer more than the rock stars or Oscar winners in her pictures.  That’s because they’re all as broke as she is. CNN Money reported this the same day the pawned art story broke:

“The collapse of the housing bubble, which led to the current recession, has already destroyed almost $6 trillion dollars in housing wealth for homeowners,” said report co-author Dean Baker. “This reality is compounded by the recent collapse of the stock market. Many baby boomers will only have Social Security and Medicare to rely on in their retirement.”

So much home equity has been lost that should boomers need to sell their homes, 30% of those aged 45 to 54 would owe money at closing, according to ‘The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble,” a report released by the Center for Economic and Policy Research, a Washington, D.C.-based, non-partisan think tank. About 18% of boomers aged 55 to 64 are underwater and would have to bring money to the table.”

Source: Boom2Bust

February 25, 2009

Scholar sleuthes clues to financial crisis story

Filed under: Uncategorized — debacled @ 9:13 pm

detectiveFew screenplays feature research librarians in the hero role, but the sleuthing required to find the best sources of information is a little like a detective story, especially when the quest is focused on a fast-moving story like the financial meltdown.  University of Maine’s research librarian Steven Fadel gets a chance to tell how he pieced together the clues here.  Better yet, he provides links to all the well-vetted resources at his and other  libraries:

Enoch Pratt Free Library: American Money Crisis
San Diego Public Library: Hot Topic: Crisis on wall Street
Colorado State University Libraries:LibGuides: Financial Crisis

via Resource Shelf

February 24, 2009

Joad Test

Filed under: Harbinger — Tags: , , — debacled @ 2:48 pm

I wonder if the people who are doing the buying reported in the first story have read about the coming disaster mentioned in the second story and if so are they just way more optimistic than George Soros or have they added up their chances and come to a more pragmatic conclusion?

Bestselling cars for 2009 –the list might surprise you

The number one vehicle purchased in the United States thus far in 2009, is none other than Ford’s F150 pick-up truck. Although F-150 sales are off a little over 39% year on year, people still want them. Ford Motor Co has moved over 25,000 units so far this year.Holding a close second place on the 2009 best sellers list is Chevrolet’s Silverado pick-up truck. Sales of these trucks are off by a little over 33% year on year, but Chevrolet has moved nearly 24,000 of these units thus far in 2009. Not surprisingly, the Dodge Ram pick-up truck is holding third place on the 2009 best sellers list. Unit sales of Ram trucks has declined over 35% year on year, with Dodge moving almost 13,000 of these units to this point in 2009. (more via Wallet Pop)

PLUS

George Soros: World Financial System Has Effectively Disintegrated … Turbulence More Severe than Great Depression – More Like Demise of Soviet Union

Reuters has the following bombshell: Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

How could it be worse than the Great Depression? Because the bigger the speculative bubble, the bigger the crash. And the bubble from 2001-2007 was the biggest speculative bubble in history. (more via George Washington’s Blog)

EQUALSJoadmobile from The Grapes of Wrath

February 20, 2009

Reporters didn’t miss the meltdown; they read all about it

Filed under: Uncategorized, Who knew? — Tags: , , , , — debacled @ 7:17 pm

How did the business press miss the most important  story of their generation?  Who knows? But they weren’t the only ones. The then President of the United States stuck to his story that “the fundamentals of the economy were strong,”  his once vice president  recently commiserated with reporters that,  “I don’t think anybody saw it coming,” and even former Fed Chairman Alan Greenspan claims he had no idea that Wall Street was too greedy for our own good.  What were the poor reporters supposed to do if even their best sources didn’t know what was up?

Nonetheless, last month a former Wall Street reporter took his colleagues to task in a piece for Mother Jones How Could 9000 Business Reporters Blow It? Then Diane Tucker at Huffington Post answered with How 9,000 Business Reporters Blew the Mother of All Meltdowns.  So what were the watchdogs of democracy doing while they were supposed to be minding our business?  Maybe they were  reading:

We Didn't See It Coming

February 18, 2009

Chiconomicists window shop til they drop

Filed under: Harbinger — Tags: , , — debacled @ 9:26 pm

FlowerFashion week has inspired a couple of new buzzwords: “recessionista,” which describes fashion designers, trend-setters and icons setting out to weather the world economic crisis, and the much more eloquent “chiconomics,” defined as  “one in whom the drive to chicness remains strong though affected by economic crisis.”  I wanted to see what one of those looked like.

It took some Googling, but I finally discovered a Chiconomics think tank, Simply Lovely, where 50 like-minded bloggers had signed on to what can only be described as the Chiconomic Declaration of Independence, The Spending Hiatus, pledging  to swear off unnecessary purchases from January 10 to April 10.
While this may sound like an admirable austerity plan for these rough economic times, after browsing some of the participating blogs and calculating how much these formidible consumers didn’t purchase because of the pledge, and adding on the items that they did purchase when they suffered a lapse,  I predict that the economic downturn will not begin to recover until at least mid April, when the retail sector should experience a surge in pent up spending.

February 17, 2009

Uneasy reading: Bankers’ subprime motives in BusinessWeek

Filed under: Who knew? — Tags: , , , — debacled @ 7:15 am

Finance Sunday by mmystery via deviantart.comThe cover story of the Feb. 12 BusinessWeek is an expose of  how the banking industry is undermining efforts to keep people in their houses and how  politicians are lining their pockets with banks’ campaign contributions with one hand while shaking a sternly hypocritical finger at them with the other.

One memorable quote came after a gathering of top banking executives on Apr. 18, 2007.   Senator Chris Dodd (who, by the way, received more than nearly $6 million from the financial industry) was trying to get them to agree to adjust loan terms so borrowers would continue to make some payments, rather than stopping altogether.  The responses were all subprime, but this was one was the worst:

“Some from the industry denied a foreclosure problem existed, including Sandor E. Samuels, at the time chief legal officer of subprime giant Countrywide Financial. They vowed to continue selling loans with enticing introductory rates as well as those requiring minimal evidence of borrowers’ income. “We are going to keep making these loans until the last second they are legal,” Samuels later told a fellow participant. Read: How Banks Are Worsening the Foreclosure Crisis in BusinessWeek

February 16, 2009

OMG! Is that US in the Superpower Collapse Soup line?

Filed under: Who knew? — Tags: , , , , — debacled @ 4:19 am

In 1995, Russian/American engineer Dmitry Orlov discovered the recipe for dish he calls “Superpower Collapse Soup.”  Based on the ingredients that brought down the Soviet Union–a severe and chronic shortfall in the production of crude oil, a severe and worsening foreign trade deficit, a runaway military budget, and ballooning foreign debt–Orlov theorized that the U.S. was not far from completing their own economic disaster stew. By 2007, soup’s on! Come and get it!

So what’s for dessert?  Not much, it seems, since in the “absence of a functioning economy… commerce at a standstill… little or no access to imports… a population that is largely penniless” we can “forget growth, forget jobs, forget financial stability,”  according to the  “savagely humorous”  SALT talk Orlove presented on Friday the 13th  in San Francisco.  You can read the entire text of  “Social Collapse Best Practices”  here and decide for yourself if you agree that’s it’s “savagely humorous” or if it wipes any thought of a smile from your face perhaps forever. However sad a soup it is, Dr. Debacled suggests that you hold your nose and swallow every drop of this bitter bouillon.  That which doesn’t kill us makes us stronger (we hope). Here’s a sip to get you started:

“Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don’t have any idea what to do next. (more…)

February 14, 2009

Greenspan tells CNBC: Greed happens

Filed under: Who knew? — debacled @ 8:23 pm
Very Funny by italiansausage via DeviantArt

Send in the clowns: "House of Cards" showing 2-14, at 7 and 10; 2-15 at 9, check CBNC for more showings.

At the end of CNBC’s harrowing (as in “we’re doomed”) House of Cards, reporter David Faber tried to find out if Former Fed Chairman Alan Greenspan took any personal responsibility for the current fix we’re in.  As his troubling response (transcript after jump) shows, he didn’t see anything wrong with sub-prime lending, liar loans, credit default swaps and the other confidence games that now threaten global stability.  His only problem:  too bad his boys  got caught.

In absolving himself and his ilk Greenspan did ponder this rhetorical question: “Looking at the way we all behaved, how is it possible that this species built up such an extraordinary world standard of living that has drawn hundreds of thousands of people out of poverty?”  It begged the answer “because greed is good.”

Faber wisely gave Greenspan the last word, but yesterday on Jim Lehrer’s New’s Hour, Jared Diamond,  provided a much more plausible answer based on his book Collapse: How Societies Choose to Fail or Succeed.

“One of the predictors of a happy vs. an unhappy outcome (to the economic collapse) has to be with the rule of the elite or the decision makers or the (more…)

February 13, 2009

Goldman Sachs CEO made $35k per hour in 2007

Filed under: Uncategorized — debacled @ 4:20 am

They look like the Milquetoast Mafia, but yesterday when Barney Frank and members of the House Finance Committee tried to flame grill the C.E.O.s of eight major banks, they not only failed to fry, they didn’t even blush. Are these (former?) Masters of the Universe impervious to heat (and shame)?

Thanks to Recessionwire, the banksters’ heat-proof cocoons of cold hard cash  have been outed.  Reporter Sara Clemence figured out how much money each of them made during their hours rotating on the Capitol Hill spit by calculating their PER HOUR salaries  based on  2007 pay packages. She also provided the fake-sounding 2008 Mea-Culpa compensations they claim to be taking home now as a result of gorging on taxpayer TARP funds to bail out their sorry asses.

Goldman Sachs C.E.O. Lloyd Blankfein
2007 compensation: $73.72 million
Hourly pay: $35,104
Testimony total: $245,728
2008 compensation: $650,000
Hourly pay: $310
Testimony total: $2,170

J.P. Morgan C.E.O. Jamie Dimon
2007 compensation: $20.68 million
Hourly pay: $9,847
Testimony total: $68,929
2008 compensation: $1 million
Hourly pay: $476
Testimony total: $3,332

State Street C.E.O. Ronald Logue
2007 compensation: $20.57 million
Hourly pay: $9,795
Testimony total: $68,565
2008 compensation: $1 million
Hourly pay: $476
Testimony total: $3,332

Bank of America C.E.O. Ken Lewis
2007 compensation: $20.12 million
Hourly pay: $9,581
Testimony Total: $67,067
2008 compensation: $1.5 million
Hourly pay: $714
Yesterday’s total: $4,998

Morgan Stanley C.E.O. John Mack
2007 compensation: $17.65 million
Hourly pay: $8,405
Testimony tota: $58,835
2008 compensation: $800,000
Hourly pay: $381
Testimony total: $2,667

Bank of New York Mellon C.E.O. Robert Kelly
2007 compensation: $14.05 million
Hourly pay: $6,690
Testimony total: $46,830
2008 compensation: $1 million
Hourly pay: $476
Testimony total: $3,332

Wells Fargo C.E.O. John Stumpf
2007 compensation: $12.84 million
Hourly pay: $6,114
Testimony total: $42,798
2008 compensation: $1 million
Hourly pay: $405
Testimony total: $2,835

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