Tuesday, July 21, 2009

Wall Street still thinks Greed is Good.

The banks that control your money and your economic prospects for the future are apparently genuinely horrified at the thought that somebody might insist that their operations be transparent, ethical, and deal in actual money instead of computer sleight-of-hand. That or they are run by people who just don't give a rats rear end about you and are so rich from screwing you the last time that they can't see any good reason not to do it again. (Obviously, they don't care if it wasn't good for you.)

Forbes Online
Wall Street Learned Nothing
Michael Maiello, 07.20.09, 12:00 AM EDT
The big banks haven't changed a bit.

...It looks like the Goldman Sachs of 2009 is a lot like the Goldman Sachs of 2007 except that it calls itself a bank holding company. Goldman's Value-At-Risk, the amount of money its trading desk could lose in a single bad day is $245 million, up $5 million from the first quarter and up 33% from a year ago.

Is Goldman well capitalized enough to survive the next black swan? It doesn't matter. As Shanley says in her analysis of Goldman's bonds: "The company's debt spreads clearly benefit from the perception that it is too big to fail." So the price of Goldman's bonds mean that traders expect that the government will bail Lloyd Blankfein out of any serious trouble his traders get into...

So the bankers are back to where they started...

...That doesn't mean that Goldman isn't on the public dole, though. First, there's that widespread belief that Goldman will be bailed out again if it gets into trouble. Second, there's the matter of $28 billion in Goldman debt that's guaranteed by the Federal Deposit Insurance Corporation. TARP money or no, Goldman Sachs is still the richest welfare recipient you're likely to meet outside of the defense sector.

...JPMorgan's going back to the future too. Free from TARP, the company is lobbying hard against the Obama administration's plan to bring transparency to the derivatives market by moving trades onto exchanges. JPMorgan makes a nice sum in the over-the-counter market and wants to protect that.

...JPMorgan has exposure to derivatives contracts worth $81 trillion. If it so offends Dimon that we might want to see those contracts change hands on a regulated exchange, then maybe he should send a note to the Treasury pledging that his bank won't take a dime in taxpayer money if it gets into trouble again.

...Meanwhile, Morgan Stanley is packaging downgraded collateralized debt obligations together into new securities that are getting investment grade ratings from Moody's and Standard & Poor's. Some are even AAA rated. See because the lesson of 2008 was that if you take a whole bunch of bad loans and glue them together, everything's fine, right?

...Meanwhile, BofA, propped up by the public's generosity, beat expectations for the quarter. Business as usual could be around the corner.

...we're going to be reading a lot of "what have we learned?" articles and books in the coming years. A lot of it is going to say, perhaps not as artfully, exactly what Andersen said--that we have to adjust our expectations and modify our sense of what makes us happy and that above all we're going to have to learn to see the fun side of frugality. The American consumer is saving again and paying down debt, and we're seeing that in some cases even when credit is offered that people don't want it.

Maybe a new tempered consumerism is just what we need. But there are going to be sacrifices...

...[But] Nothing's changed on Wall Street. What's worse is that they think that if anything goes wrong that we'll bail them out again and their bondholders apparently agree. Perhaps they need to be bluntly told that we'll never rescue them again. It's the only way they'll learn.

Greed isn't good, but it is addictive.

And let's not forget, class, that this economic crisis would already be over if that "bailout" money had simply been divided between every citizen household in the US instead of being given to a handful of Robber Barons who have clearly squandered it to buy up each other and line their own pockets.

No one would have lost their home, because they could have paid their mortgage. They could have paid their medical bills. They could have paid their credit cards. They could even have paid their dayschool tuition in full. People could have used the money they used to use servicing their debt to - gasp! - shop and buy things.

This was the purpose of having the Schmitta Year (7th year release of all debts) in the first place - so that everyone could get a clean slate. Similarly, the Jubilee returned properties to families that had been forced to sell them due to debt. God never meant for his people to be trapped into perpetual indentured servitude to usurers. The US government had a wonderful opportunity to provide for the citizens of the US what no religious or civil authority in the West has ever done - act for the best interests of the people instead of the Robber Barons.

And Congress blew it.

And are still blowing it, giving the banks and financiers who bankrupted this country the best blow job ever - bailouts, get out of jail free cards, and bonuses, lots and lots of bonuses.

And we, the citizens, including the broke, the homeless, and the uninsured, get to pay for it.

Pitchforks, anyone? Or should we go straight to Uzis?

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