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CLICK TO ENLARGE & HOPEFULLY LAUGH
Anyone remember this clusterfuck of shitheads?THE FALL GUY, OR FIRST OF MANY?
Yesterday former BoA head Ken Lewis was brought up on fraud charges, along with former BoA CFO Joe Price:
According to the lawsuit, former CEO Ken Lewis and former CFO Joe Price hid more than $16 billion worth of losses at Merrill from shareholders in order to ensure their approval of the merger. But after shareholders voted to buy the ailing firm, the bank approached the government to demand an infusion of taxpayer cash. Without bailout funds, they told regulators, BoA would be unable to complete the merger. The government capitulated and funneled $20 billion of TARP money into the bank. excerpt @ HuffPo.
My prediction; more pr, more showboating - by both sides, Cuomo and Lewis - and then a slap on the wrist. Lewis will sail off into the sunset courtesy of his golden parachute, aka, truckloads of Benjamins, courtesy of you and I. He won't be as rich as Mikey Milken, but he won't be eating Taco Bell. Ever.
THE QUESTION
While I think Lewis - and plenty of others - deserves to be strung up and looted, my bet is this is just more of Uncle Scam's grandstanding. After all, it's kind of hard to take anything "he" does now seriously and without wondering about trickery. As the saying goes, once bitten, and we're bitten all over.
The ONE burning question I have about Lewis is; what really went down when BoA and Merrill were in m&a talks? Related, what were Bernanke's, Paulson's and Geithner's (let alone Summers' and Dodd's and Frank's) opinions and roles?
A BIGGER POINT
My point is that if you really want to get at the heart of fraud and corruption, then you must address the CRAs.
In regards to the mortgage debacle, one thing stands out: the credit rating agencies, such as Standard & Poor's and Moody's. In other words, the analysts, or referees, this time in the form of credit raters. Because while there are barely six AAA rated companies in America such as Microsoft, ADP and GE, many of these way over-leveraged mortgages (some of these "products" leveraged over TWENTY times!) that eventually blew up and caused the house of cards to collapse were being rated AAA.
I've been saying this for quite a while now, and a few, like Michael Lewis, get it. The truth of the matter is that there is too much money passed around; the banks, whose relationship with the CRAs is a clear conflict of interest, are simply way flush with our cash and buying Uncle Scam's silence. What else could it be if a putz like me sees through this obvious trickery...?
THE RECOVERY WILL BE TELEVISED
The following is a blog/post that I completely agree with. No more happy talk, as evidenced in October of last year.
A GOOD VOICE
So, from a blog that tells it like it is, The Economic Collapse Blog, with my "call and response" below.
Economic Black Hole: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover
Even though the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy. Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly. But this time around that is not the case. The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover.
The problem is debt. [jp: see point #1, here] Collectively, the U.S. government, the state governments, corporate America and American consumers have accumulated the biggest mountain of debt in the history of the world. Our massive debt binge has financed our tremendous growth and prosperity over the last couple of decades, but now the day of reckoning is here.
And it is going to be painful.
The following are 20 reasons why the U.S. economy is dying and is simply not going to recover....
#1) Do you remember that massive wave of subprime mortgages that defaulted in 2007 and 2008 and caused the biggest financial crisis since the Great Depression? Well, the "second wave" of mortgage defaults in on the way and there is simply no way that we are going to be able to avoid it. A huge mountain of mortgages is going to reset starting in 2010, and once those mortgage payments go up there are once again going to be millons of people who simply cannot pay their mortgages. The chart below reveals just how bad the second wave of adjustable rate mortgages is likely to be over the next several years....
[jp: See point #12 here.]#2) The Federal Housing Administration has announced plans to increase the amount of up-front cash paid by new borrowers
and to require higher down payments from those with the poorest credit. The Federal Housing Administration currently backs about 30 percent of all new home loans and about 20 percent of all new home refinancing loans. Tighter standards are going to mean that less people will qualify for loans. Less qualifiers means that there will be less buyers for homes. Less buyers means that home prices are going to drop even more.
[jp: Here we go - instead of punishing those who are responsible for pillaging and inflicting this misery on the world, the innocent and defenseless will be punished. Welcome to Bizarro World.]
#3) It is getting really hard to find a job in the United States. A total of 6,130,000 U.S. workers had been unemployed
for 27 weeks or more in December 2009. That was the most ever since the U.S. government started keeping track of this statistic in 1948. In fact, it is more than double the 2,612,000 U.S. workers who were unemployed for a similar length of time in December 2008. The reality is that once Americans lose their jobs they are increasingly finding it difficult to find new ones. Just check out the chart below....
#4) In December, there were also 929,000 "discouraged" workers who are not counted as part of the labor force because they have "given up" looking for work. That is the most since the U.S. government first started keeping track of discouraged workers in 1949. Many Americans have simply given up and are now chronically unemployed.
[jp: As a kid I worked my way through school. With teen unemployment now above 25%, the highest in history, yet another avenue of social climbing has been made more difficult for working class and poor people. Again, the innocent and poor will be punished...]
#5) Some areas of the U.S. are already virtually in a state of depression. The mayor of Detroit estimates that the real unemployment rate in his city is now somewhere around 50 percent.
[jp: Let's be frank; if it's a recession in general then it's a near or actual depression for poor folks, and disproportionately for poor people of color. Like the Katrina disaster, let's at least be honest about how EM08 is playing out along the demographics of race and gender. Then again, as the recently deceased, late great Howard Zinn showed in his seminal A People's History of the United States, when have we ever been honest in this country?]
#6) For decades, our leaders in Washington pushed us towards "a global economy" and told us it would be so good for us. But there is a flip side. Now workers in the U.S. must compete with workers all over the world, and our greedy corporations are free to pursue the cheapest labor available anywhere on the globe. Millions of jobs have already been shipped out of the United States, and Princeton University economist Alan S. Blinder estimates that 22% to 29% of all current U.S. jobs will be offshorable within two decades. The days when blue collar workers could live the American Dream are gone and they are not going to come back.
[jp: Localism is one of the weapons to fight the neo-colonization of the world. Michael Shuman makes a ton of sense to me, along with his org, BALLE.]
#7) During the 2001 recession, the U.S. economy lost 2% of its jobs and it took four years to get them back. This time around the U.S. economy has lost more than 5% of its jobs and there is no sign that the bleeding of jobs is going to stop any time soon.
#8) All of this unemployment is putting severe stress on state unemployment funds. At this point, 25 state unemployment insurance funds have gone broke and the Department of Labor estimates that 15 more state unemployment funds will likely go broke within two years and will need massive loans from the federal government just to keep going.
#9) 37 million Americans now receive food stamps, and the program is expanding at a pace of about 20,000 people a day. The United States of America is very quickly becoming a socialist welfare state.
#10) The number of Americans who are going broke is staggering. 1.41 million Americans filed for personal bankruptcy in 2009 - a 32 percent increase over 2008.
[jp: REMEMBER - The Bush 2 administration's call for re-structuring personal bankruptcy - a very important distinction - that went into effect in 2007 or thereabouts? Notice, corporations can still escape into bankruptcy and leave others holding the bag; look at what the auto companies did to thousands of suppliers recently when they filed. But when it comes down to YOU as an individual, forget it, you're jacked. There were real reasons that was done, most of it lobbying money, and in gambler's parlance, it's called hedging your bet, also insurance. EM08 is proof of the instance where this change in the personal bankruptcy laws are going to have repercussions on the working class.]
#11) For decades, the fact that the U.S. dollar was the reserve currency of the world gave the U.S. financial system an unusual degree of stability. But all of that is changing. Foreign countries are increasingly turning away from the dollar to other currencies. For example, Russia’s central bank announced on Wednesday that it had started buying Canadian dollars in a bid to diversify its foreign exchange reserves.
[jp: Uncle Scam's dollar devaluing isn't helping. The bigger questions though are; 1) What happens when no one wants to buy our bad paper, and 2) when we default on said bad paper? I agree with Peter Schiff; THAT is the Sergeant Pepper's of economic shitstorms that'll make this time look like A Hard Day's Night. And yes, I'm crowbarring in Beatles references. Ya gotta have a lil' bit o' fun when talking doom 'n gloom.]
#12) The recent economic downturn has left some localities totally bankrupt. For instance, Jefferson County, Alabama is on the brink of what would be the largest government bankruptcy in the history of the United States - surpassing the 1994 filing by Southern California's Orange County.
[jp: Shit flows downhill. LA's mayor Antonio Villaraigosa is facing massive record deficits that are engorging historic debt. There are over 30 states now on the brink, led by the world's #6 economy, California. No, that's not a typo. This is one of the elephants in the room that NO ONE - least of all the Governator, is talking about. Our press - what's left of responsible investigative journalism - is a sham and complicit in this regard, only adding to the bad probabilities. See points #7 & 8.]
#13) The U.S. is facing a pension crisis of unprecedented magnitude. Virtually all pension funds in the United States, both private and public, are massively underfunded. With millions of Baby Boomers getting ready to retire, there is simply no way on earth that all of these obligations can be met. Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management recently calculated the collective unfunded pension liability for all 50 U.S. states for Forbes magazine. So what was the total? 3.2 trillion dollars.
[jp: The Boomers, of which I am one, are going to have THE major role in EM08. Between retirement pensions and medical care, I believe this will have the largest economic impact, even beyond the trillions given and made available to the banks. The social costs, of course, will be historic.]
#14) Social Security and Medicare expenses are wildly out of control. Once again, with millions of Baby Boomers now at retirement age there is simply going to be no way to pay all of these retirees what they are owed.
#15) So will the U.S. government come to the rescue? The U.S. has allowed the total federal debt to balloon by 50% since 2006 to $12.3 trillion. The chart below is a bit outdated, but it does show the reckless expansion of U.S. government debt over the past several decades. To get an idea of where we are now, just add at least 3 trillion dollars on to the top of the chart....
#16) So has the U.S. government learned anything from these mistakes? No. In fact, Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $2 trillion to pay its bills, a record increase that would allow the U.S. national debt to reach approximately $14.3 trillion.
#17) It is going to become even harder for the U.S. government to pay the bills now that tax receipts are falling through the floor. U.S. corporate income tax receipts were down 55% in the year that ended on September 30th, 2009.
[jp: When it gets to the point where the interest on the debt cannot even be serviced, the party's over. Guess where we're at...?]
#18) So where will the U.S. government get the money? From the Federal Reserve of course. The Federal Reserve bought approximately 80 percent of all U.S. Treasury securities issued in 2009. In other words, the U.S. government is now being financed by a massive Ponzi scheme.
[jp: This is a MAJOR point that ALL Americans need to understand. Kudos.]
#19) The reckless expansion of the money supply by the U.S. government and the Federal Reserve is going to end up destroying the U.S. dollar and the value of the remaining collective net worth of all Americans. The more dollars there are, the less each individual dollar is worth. In essence, inflation is like a hidden tax on each dollar that you own. When they flood the economy with money, the value of the money you have in your bank accounts goes down. The chart below shows the growth of the U.S. money supply. Pay particular attention to the very end of the chart which shows what has been happening lately. What do you think this is going to do to the value of the U.S. dollar?....
#20) When a nation practices evil, there is no way that it is going to be blessed in the long run. The truth is that we have become a nation that is dripping with corruption and wickedness from the top to the bottom. Unless this fundamentally changes, not even the most perfect economic policies in the world are going to do us any good. In the end, you always reap what you sow. The day of reckoning for the U.S. economy is here and it is not going to be pleasant.
[jp: Agreed, one hundred percent. But in gambling terms, the probability of those responsible and with the power to turn out all the "wickedness" is a long shot at best. There's simply too much money being thrown around to buy out people. Therefore, one must hedge one's bets in other areas. If you listen to Gerald Celente, about as good a forecaster there is, you better get ready. Or pay the price.]
