Saturday, October 17, 2009

Da Yanks Ain't Nuttin'

Murderer's Row, EM08, or,
Shitheads Who Don't Care about YOU.
Face it, a Pimple on their Ass Gets More Attention than You.

(click to enlarge or open in a new tab)

NYT at:
Bailout Helps Fuel a New Era of Wall Street Wealth

[with my wise ass remarks, cogent commentary and always insightful views here added for entertainment]
Published: October 16, 2009

Even as the economy continues to struggle, much of Wall Street is minting money — and looking forward again to hefty bonuses.
[Christian Bale! Christian Bale! Paging Christian Bale!]

Many Americans wonder how this can possibly be. [Now THAT is indeed a tragedy, that "many Americans" don't even have a clue as to how we got here.] How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes?

It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth.

Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than in the ho-hum business of lending people money. They also are profiting by taking risks that weaker rivals are unable or unwilling to shoulder — a benefit of less competition after the failure of some investment firms last year.

[CUE: Christian Bale replete with dripping sarcasm meltdown voice, pumped through a pa and directed at Lloyd Blankfein and Jamie Diamond but for the public to hear - "Hey, everybody, the entire country's in a meltdown, but who receives a 'benefit'? The criminals! Oooooooh GOOD FOR YOU!!!!]

So even as big banks fight efforts in Congress to subject their industry to greater regulation — and to impose some restrictions on executive pay — Wall Street has Washington to thank in part for its latest bonanza. [Substitute "theft" for bonanza. Also, given these shitheads have raped the economy and then been monetarily rewarded, OF COURSE logic dictates that they should be less regulated.]

“All of this is facilitated by the Federal Reserve and the government, who really want financial institutions to get back to lending,” said Gary Richardson, a research fellow at the National Bureau of Economic Research. “But we have just shown them that they can have the most frightening things happen to them, and we will throw trillions of dollars to protect them. I have big concerns about that.”

[Welcome to slavery, EM08 style. Here's something for the geniuses in American mass media to ponder; why is it that when we give/lend bailout billions to auto companies, we OWN them, but if it's TARP bailout money somehow it's different and we don't own anything of the superbanks...? At least if the freshly conglomerated superbanks are going to be raking it in and able to do so with MY money, then I get a piece of it. Gamblers are all-too familiar with this principle that's as old as casinos - it's called "staking."]

Not all banks are doing so well. Giants like Citigroup and Bank of America, whose fortunes are tied to the ups-and-downs of ordinary consumers, are struggling to turn themselves around, as are many regional banks. [Citigroup deserves every bit of flame from hell it gets. Karma? My guess is that some kind of a deal will go down - possibly TARP Part Deux; Vegas has TARP 2 at 7 to 5, o&e's @ 3/31/09 cuz they wanna see how the Xmas season does - that will alleviate the pressure on BofA that the Merril fiasco brought. And I'm not just talking getting rid of John Thane's office accoutrement....]

But the decline of certain institutions, along with the outright collapse of once-vigorous competitors like Lehman Brothers, has consolidated the nation’s financial power in fewer hands. The strong are now able to wring more profits from the financial markets and charge higher fees for a wide range of banking services. [THERE'S THE BOTTOM LINE IN PLAIN ENGLISH - A BIT LATE BUT...]

“They are able to charge more for all kinds of services because companies need banks and investment banks more now, and there are fewer strong ones to help them,” said Douglas J. Elliott of the Brookings Institution.

[Huh. The country's on its knees, and you charge MORE. And how many puppies did you kill today?]

A year after the crisis struck, many of the industry’s behemoths — those institutions deemed too big to fail — are, in fact, getting bigger, not smaller. Why are you copying me...? Guess it's true what they say about flattery.] For many of them, it is business as usual. Over the last decade the financial sector was the fastest-growing part of the economy, with two-thirds of growth in gross domestic product attributable to incomes of workers in finance. [In all seriousness, that is an astounding figure]

Now, the industry has new tools at its disposal, courtesy of the government.

With interest rates so low, banks can borrow money cheaply and put those funds to work in lucrative ways, whether using the money to make loans to companies at higher rates, or to speculate in the markets. Fixed-income trading — an area that includes bonds and currencies — has been particularly profitable. [Courtesy of uncle scam, the superbanks not only have conglomerated, they go into action based upon a weakened market due to competitor elimination. They don't think about lending and investing in the sense of what's good for the economy, they think about it in terms of margin - strictly. Happy now?]

“Robust trading results led the way,” said Howard Chen, a banking analyst at Credit Suisse, describing the latest profits.

To prevent a catastrophic financial collapse that would have sent shock waves through the economy, [I'M CURIOUS, WHAT DO YOU CALL WHAT WE HAVE NOW, TEA AND CRUMPETS...?!?!?!] the government injected billions of dollars into banks. Some large institutions, like Goldman and Morgan, have since repaid their bailout money. [SEE: Christian Bale voice quote above] But most of the industry still enjoys other forms of government support, which is helping to stoke profits.

Goldman Sachs and its perennial rival Morgan Stanley were allowed to transform themselves into old-fashioned bank holding companies. That switch gave them access to cheap funding from the Federal Reserve, which had been unavailable to them. [Wow...]

Those two banks and others like JPMorgan were also allowed to issue tens of billions of dollars of bonds that are guaranteed by the Federal Deposit Insurance Corporation, which insures bank deposits. With the F.D.I.C. standing behind them, the banks could borrow the money on highly advantageous terms. While some have since issued bonds on their own, they nonetheless enjoy the benefits of their cheap financing.

[What a concept; raising capital while someone gives you 100% insurance. That's not even gambling, it's... a no-lose situation.]

Granted, banks are also benefiting from a stabilizing economy. Stocks, corporate bonds, even risky corporate i.o.u.’s — have all rallied from their bear market lows, some spectacularly so. The Dow Jones industrial average has soared 50 percent this year, and touched 10,000 this week for the first time since the crisis.

["Stabilizing." What kind of moron says this economy's "stabilizing???] The fear that gripped the markets earlier this year, when doomsayers predicted a second Great Depression, has largely dissipated. ["The markets." Listen, since when were "the markets" the key to figuring out economics? In fact, as we've seen with John Stossel's dart throwing monkey who beat the pundits, it's in some ways a very bad measure.]

Banks that had marked down the value of the assets on their books during the dark days of the crisis are now enjoying a rebound in the value of many of those assets.

[And the taxpayers who had their money stolen so that banks could even be in the position to enjoy a "rebound"... besides holding the bag and left in the dust, when's their rebound coming...?]

“Confidence has returned,” said Shubh Saumya, a financial services specialist at the Boston Consulting Group. “Some of the assets that bankers wrote down last year in the midst of the crisis, now they have got some of that back.”

[Substitute "confidence" for "rebound in the quote above, re-word to fit grammar, insert here.]

As the number of banks has dwindled, the survivors are moving into the void left by rivals that are either dead or limping and unwilling to take risks.

A big reason for Goldman Sachs’s blowout profits this year has been the willingness of its traders to take big risks — they have put more money on the line while other banks that suffered last year have reined in such moves. Executives say there are big strategic gaps opening up between banks on Wall Street that are taking on more risks, and those that are treading a safer path.

["Christian Bale! Paging Christian Bale!"]

Banks that have waded back into the markets have been able to exploit large gaps in the prices of various investments, a feature of the postcrisis financial markets. The so-called bid-ask spreads — the difference between the price at which banks are willing to buy things like bonds, and the price at which they are willing to sell — are roughly twice what they were two years ago.

Still, the newfound success is largely limited to the big securities houses on Wall Street. [WOW - WHAT A SHOCK...] This week, Citigroup and Bank of America reported losses from credit card delinquencies and mortgage defaults — a sign of the lingering pain on Main Street.