Weekend Economists Go For Broke This Weekend May 21-23, 2010

I bet you thought I had drowned. I thought I had, too. It's raining like crazy and I'm wet to the knees. But instead of changing out of them, my wet pants have planted me here to bring you the good news: COMEDY TONIGHT!

http://www.youtube.com/watch?v=T-hZhr2k2hk

It's Zero Mostel Appreciation Weekend. Nobody like him brings on a smile and a belly laugh. Zero Mostel was larger than life, and he reveled in it.

Of course, it helps that he had Sondheim's book, and most of the golden vaudevillians still living when Forum was filmed costarred with him.

Of course, we have Bernanke, Dimon, Summers, and little Timmy trying to surpass the hysteria, pandemonium and slapstick of those veterans of stage and screen. But they are only also-rans. Frankly, if I could, I'd advise them to KEEP running, before the public catches up with them.

Let us compare the two groups tonight: vaudeville vs. Wall St. And may the better team win!

Post anything you want here--it's all good.

http://www.youtube.com/watch?v=l1bVX8twwyw&NR=1&feature=fvwp

Pinehurst Bank, St. Paul, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Coulee Bank, La Crosse, Wisconsin, to assume all of the deposits of Pinehurst Bank.

The sole branch of Pinehurst Bank will reopen on Saturday as a branch of Coulee Bank...As of March 31, 2010, Pinehurst Bank had approximately $61.2 million in total assets and $58.3 million in total deposits. Coulee Bank will pay the FDIC a premium of 1.33 percent to assume all of the deposits of Pinehurst Bank. In addition to assuming all of the deposits of the failed bank, Coulee Bank agreed to purchase essentially all of the assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6.0 million. Coulee Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Pinehurst Bank is the 73rd FDIC-insured institution to fail in the nation this year, and the sixth in Minnesota. The last FDIC-insured institution closed in the state was Access Bank, Champlin, on May 7, 2010.

MAYBE THE FDIC BLEW ITS BUDGET EARLIER IN THE MONTH...AFTER ALL, THEY AREN'T GOING TO CLOSE ANYTHING NEXT WEEKEND...

Oops...
If I Were A Rich Man:

http://www.youtube.com/watch?v=mJLZkxqtPVk

Next week, there is going to be a "debate" in Congress on yet another war funding bill. The bill is supposed to pass without debate, so no one will notice.

What George Orwell wrote about in "1984" has come true. What Eisenhower warned us about concerning the "military-industrial complex" has come true. War is a permanent feature of our societal landscape, so much so that no one notices it anymore.

But we're going to change this. Today, we're introducing a bill called 'The War Is Making You Poor Act'. The purpose of this bill is to connect the dots, and to show people in a real and concrete way the cost of these endless wars. We're working to get co-sponsors in Congress, but, we need citizen co-sponsors as well. Become a citizen cosponsor today at TheWarIsMakingYouPoor.com. Act Now.

http://www.TheWarIsMakingYouPoor.com

Next year's budget allocates $159,000,000,000 to perpetuate the occupations of Afghanistan and Iraq. That's enough money to eliminate federal income taxes for the first $35,000 of every American's income. Beyond that, leaves over $15 billion to cut the deficit.

And that's what this bill does. It eliminates separate funding for the occupation of Iraq and Afghanistan, and eliminates federal income taxes for everyone's first $35,000 of income ($70,000 for couples). Plus it pays down the national debt. Does that sound good to you? Then please sign our petition in support of this bill, and help us build a movement to end our permanent state of war.

http://www.TheWarIsMakingYouPoor.com

The costs of the war have been rendered invisible. There's no draft. Instead, we take the most vulnerable elements of our population, and give them a choice between unemployment and missile fodder. Government deficits conceal the need to pay in cash for the war.

We put the cost of both guns and butter on our Chinese credit card. In fact, we don't even put these wars on budget; they are still passed using 'emergency supplemental'. A nine-year 'emergency'.

Let's show Congress the cost of these wars is too much for us.

http://www.TheWarIsMakingYouPoor.com

Tell Congress that you like 'The War Is Making You Poor Act'. No, tell Congress you love it.

http://www.TheWarIsMakingYouPoor.com

All we are saying is "give peace a chance." We will end these wars.

Together.

Courage,

Alan Grayson

Anything dealing with the turmoil of the Common Market gets its place.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aqoWwUFYsLR0&pos=3

...Each 10 cent drop in the currency adds 1 billion euros ($1.26 billion) to operating profit at Airbus, according to Chief Operating Officer John Leahy. Pernod increases earnings before interest and tax by 12 million euros with each 1 percent fall, Finance Director Gilles Bogaert said in an interview.

As Greece’s fiscal crisis leaves politicians scrambling to halt the slump in confidence in the euro, European executives are totting up the gains. Two years ago, the currency shot to an all-time high of $1.60 as the U.S. economy sank into recession, squeezing margins on European goods sold overseas.

“Because of massive growth in markets like the U.S. and China, we have a strongly growing currency exposure,” Daimler Chief Executive Officer Dieter Zetsche said in an interview in Stuttgart, Germany. “The fall of the euro is a benefit.”

The 16-nation currency has dropped 13 percent since the start of the year and traded close to a four-year low of $1.2509 in New York yesterday. A 10 percent decline in the euro boosts profit at companies in the region by an average of 3 percentage points, estimates Stefan Hofrichter, chief economist at Allianz Global Investor’s RCM unit in Frankfurt....

THINGS THAT MAKE ME WANT TO GO HMMMM.....SOMEBODY PLAYING THE CHINA OFFENSE?

http://www.google.com/hostednews/ap/article/ALeqM5j-kqWx8TQsPPEyoUDN9CwJhhx2fQD9FQPR0O1

Europe's debt crisis poses serious risks to the unfolding economic recoveries in the United States and around the globe, a Federal Reserve official said Thursday.

Federal Reserve Governor Daniel Tarullo, in remarks to a House subcommittee, said the timing of Europe's problems on the heels of the global financial crisis is a "potentially serious setback."

If the crisis were to crimp lending and the flow of credit globally, triggering more financial turmoil, that would endanger both the U.S. and global recoveries, he said.

"Although we view such a development as unlikely, the swoon in global financial markets earlier this month suggests it is not out of the question," said Tarullo.

As he testified, Wall Street took another nosedive on European debt fears. The Dow Jones industrial average was down 376 points when the market closed.

In a worst case scenario, financial turmoil "could lead to a replay of the freezing up of financial markets that we witnessed in 2008," he said. That contributed to the worst global recession since the 1930s.

For now, Tarullo said there are good reasons to believe U.S. banks and financial institutions can withstand some fallout from European financial difficulties.

In the past year, the Fed has pressed the biggest U.S. banks to raise additional capital, giving them a stronger cushion against potential losses in the future. The direct effect on U.S. banks of losses stemming from exposure to overextended governments in Greece, Portugal, Spain, Ireland and Italy "would be small," he said.

Almost all of the U.S. exposure is held by 10 large bank holding companies, Tarullo said. Their balance sheet exposure of $60 billion accounts for only 9 percent of the core capital that regulators value the most, known as Tier 1 capital. He didn't identify those banks.

However, if problems were to spread more broadly through Europe, U.S. banks would face larger losses as the value of traded assets dropped and loan delinquencies mounted. U.S. money market mutual funds and other institutions, which hold a large amount of commercial paper and certificates of deposit issued by European banks, would likely also be affected, he said. Commercial paper is an important short-term financing mechanism companies rely on to pay for salaries and supplies. It practically dried up during 2008 financial crisis.

Tarullo said a moderate economic slowdown across Europe would slow export growth, weighing on the U.S. economy "by a discernible, but modest extent." However, a deep contraction in economic activity in Europe — along with severe financial problems — "would have the potential to stall the recovery of the entire global economy."

To contain the European crisis, the Fed on May 9 agreed to supply European central banks — and the Bank of Japan — with much-in-demand dollars in return for foreign currencies. The "swap" arrangements were aimed at easing short-term financing strains.

European banks need dollars to lend to companies across the continent. European companies that have operations in the U.S. pay their employees in dollars and buy raw materials with the U.S. currency. Also, oil and other commodities are priced in dollars around the world.

Under the swap program, Tarullo said the European Central Bank will repay a $9.2 billion loan to the Fed on Thursday. Tarullo said the ECB requested a new $1 billion loan and the Bank of Japan wanted $200 million. That makes $1.2 billion outstanding under the swap program. Federal Reserve filings haven't yet been updated to reflect the new figures, a Fed spokeswoman said.

Tarullo said the Fed isn't considering taking other relief actions.

However, a growing number of economists now believe that the Fed will keep interest rates at record lows well into next year, or possibly into 2012, to help protect the United States from fallout due to the European crisis.

AND SOMEBODY LOST THEIR CRACK AT THE WHEEL...

http://www.youtube.com/watch?v=MZp9YHbf5fE

It looks like I've got the WHOLE THING here! One and a Half hours of control fraud. Gene Wilder and Zero Mostel and Mel Blanc!

It's on my list of the funniest movies I've ever seen. I thought that I was going to die the first time I saw it.

Another relatively obscure comedy I have liked is "The Wrong Box" (meaning the wrong coffin) from England. Dudley Moore plays a supporting role and there is a wild and very unique chase scene.

Frankly, if we don't stop spending all our money out of the Pentagon, as a country, we'll be in the wrong box ourselves.

I was very tired when I did that--still am, for that matter. Real life has been interesting.

I loved "the Wrong Box", and wish they had made a series of them. "The Assassination bureau", with Oliver Reed and Diana Rigg, is very similar in effect.

Maybe it's on the web.

Sorry that you're living in more interesting times than the rest of us.

I'm off to western Michigan on Tuesday for the annual cemetery visits. My Mom and I hit six cemeteries with flowers. Three on my late father's side and three on hers. I'll also see as much as I can of her brother, who never married and has no children. He's in a very high skilled nursing facility in Fremont. It's the original home of Gerber baby food, and when Gerber was bought out, many, many locals made a killing and donated a lot of money to the community foundation. The hospital, EMS and nursing homes are big beneficiaries and are of very high quality. My uncle is receiving excellent care, but I wish that I could find a job closer.

http://www.economist.com/daily/chartgallery/displayStory.cfm?story_id=16173466

THE decline of the euro is often treated as a matter for exporters alone. A weaker currency allows German manufacturers to grab market share. But nations used to prefer fixed currencies because they were attractive to creditors and investors. And, as the chart shows, an international (dollar-based) investor is probably regretting his exposure to European markets right now. Whereas a US stockmarket portfolio is flat this year, thanks to the euro a European portfolio is down 18%. If they think that the euro decline will continue, international investors may think twice about investing in European companies...

http://uk.reuters.com/article/idUKTRE64G2HV20100521

Germany's parliament approved on Friday a $1 trillion (696 billion pound) safety net to stabilise the euro as fears swirled that Europe's debt crisis and tougher financial regulation may choke economic recovery.

Business

European Union finance ministers, meeting in Brussels, backed a German call for tougher sanctions in future against states that flout the bloc's budget rules, to prevent any repeat of Greece's debt crisis, which required a euro zone/IMF bailout.

Worries persisted that Greece's debt troubles would spread to other indebted nations, dragging down Europe's economy and curtailing trade to the United States and Asia.

"The Greek debt crisis and its ripple effects are bad news for all corners of the world and there is a strong collective interest in containing the problem," said Eswar Prasad, senior fellow at the Brookings Institution in Washington.

European officials were eager to show they were committed to bringing down deficits without smothering a still-fragile recovery. European Central Bank President Jean-Claude Trichet sought to calm nervous markets by declaring the euro was not in danger.

Both chambers of parliament approved Berlin's contribution of up to 148 billion euros (129 billion pounds) in loan guarantees, deeply unpopular with voters, on top of an equally divisive 22.4 billion euros in bilateral loans for debt-ridden Greece.

The bill passed the lower house by 319 votes to 73 with 195 abstentions after the opposition Social Democrats and Greens abstained and 10 members of Chancellor Angela Merkel's centre-right coalition rebelled, highlighting the domestic pressure she faces.

The vote was not enough to stop the fall in European shares, which lost a further 0.5 percent on the day after Asian stock markets slid again. Japan's Nikkei average closed 2.5 percent down for a loss of 6.5 percent on the week, mostly due to worries about the euro zone.

"It doesn't make any difference what Germany does. It doesn't make any difference what the financial reform is. Traders and investors are frightened here, and they just want out," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

But Wall Street rebounded, led by financial shares, after the Dow Jones industrial average briefly fell below the symbolic 10,000 point level following U.S. Senate adoption on Thursday of a sweeping financial reform bill after months of fierce debate....

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7744093/EC-internal-markets-chief-Michel-Barnier-to-unveil-new-derivatives-regime-this-summer.html

Michel Barnier's announcement comes days after Germany surprised markets and European neighbours with tough curbs on trading in derivatives blamed for exacerbating the crisis such as debt-default insurance or credit default swaps.

"This summer we will make proposals to reduce counterparty risk - the issue that caused the failure of Lehmann Brothers," the former French foreign minister told an audience at a conference hosted by the German finance ministry.

"We will require compulsory clearing by central clearing counterparties for eligible, standardised contracts," he said, referring to plans to push more trading in derivatives through warehouses similar to an exchange.

"For transparency, we will propose the use of trade repositories to collect all information on all transactions. And we have to make sure that this information is available to all European supervisors," Mr Barnier said in the text of an embargoed speech.

Europe's internal market commissioner also called on European countries to agree to set up new super watchdogs for the 27-country bloc by next year.

Britain has campaigned to water down the influence of the new authorities because it is worried it will lose power over London's financial centre.

"We must have strong and independent supervisory authorities in place in 2011 to show that we are serious about strengthening supervision in the EU," Barnier said.

A Greek former European commissioner has accused the country’s central bank of encouraging naked short selling of Greek bonds by altering regulations last year on its electronic bond trading platform
Read more >>
http://link.ft.com/r/QM42II/LQPG12/RP6QL/XTA4D2/A7W4LH/50/t

ET TU, BRUTE?

author compares recent events in Germany and Greece to Martin Luther's Reformation.

The thought alone makes me cheerful!

http://dharmajoint.blogspot.com/2010/05/merkel-does-mahathir-and-martin-luther.html

They subsidize the weaker countries, but get a very favorable exchange rate out of it.

Airbus is going to cream Boeing, and German machinists will be working ot. If only our guys could get themselves hired in Germany to keep up their skills.

http://www.nakedcapitalism.com/2010/05/germanys-short-selling-bans-populism-or-bank-protection.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Some commentators on the surprising and not terribly well received unilateral move by Germany to ban naked credit default swaps on sovereign debt and shorting of bank stocks assumed it was intended to placate domestic voters. Merkel’s move to join the Eurozone rescue effort was wildly unpopular at home; taking a tough line with speculators looks like a desperate gesture to restore a semblance of cred.

And indeed, Wolfgang Schäuble, Germany’s finance minister, offered a credible-sounding defense in an interview in the Financial Times….if you were living on Mars and hadn’t witnessed the market’s raspberry:



Yves here. These are all sound objectives. Unfortunately, the unexpected move of unilaterally banning certain types of shorts does not appear central to these bigger aims, and may have served to undercut progress towards Schauble’s goals.

But the “what you see is what you get” assessment seems more plausible, that the Germans are worried about speculators….because they legitimately feel vulnerable. The US and UK also implemented bans on short selling financial stocks during the financial crisis. Now these bans are ham handed and appear to be not terribly effective (but the inability to run experiments in parallel universes makes it difficult to reach definitive conclusions).

Now why do the Germans in particular feel a tad nervous? Well, Germany, like the UK and Switzerland, has a banking system so large relative to its economy that it cannot credibly backstop it if it goes seriously off the rails. The problem is more acute in Germany because it does not control its own currency (as it cannot simply throw whatever it takes at the banks and if need be, “print” later; by contrast, the risk to the UK and Swiss banking system comes from its banks’ foreign currency exposures).

Bloomberg gives tonight’s sighting of rising nervousness in interbank markets:



Yves here. German banks, particularly the clueless Landesbanken, were major stuffees for toxic US mortgage paper. Eurobanks in general are behind US banks in cleaning up their balance sheets (yes, Virginia, we are not number one in extend and pretend). Ambrose Evans-Pritchard argues that the German banks are behind their EU peers (hat tip reader Swedish Lex):



Yves here. We are still getting some remarkable whistling in the dark from other analysts. From a different Bloomberg story:



Yves here. Um, the more accurate characterization is that Europe has committed itself to a deflationary course of action and currency depreciation will serve to export it. With US growth less than robust, and China in a tough spot (its expansion is dependent on increasingly ineffective borrowing), the global
“growth” story is fragile.

And if the European financial system starts wobbling, all bets are off. More cheery information from Evans-Pritchard:



Yves here. The bailout plan shifted risk from the periphery to the core of Europe, and the core, upon examination, does not look too solid. Prepare yourself for a rough ride.

http://www.nakedcapitalism.com/2010/05/schama-are-the-guillotines-being-sharpened.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


Simon Schama tonight warns in the Financial Times that revolutionary rage is close to the boiling point in Europe and the US :



Schama knows this terrain cold; his chronicle of the French Revolution, Citizens, made clear what a bloody affair it was. Even so, his account in the Financial Times in some key respects understates the degree of dislocation suffered by many in advanced economies. Schama depicts the crisis-induced change as merely the end of rising expectations, but the shock is deeper than that.

Severe financial crises result in a permanent decline in the standard of living. For some citizens, that has come through contracts being reneged, in particular, pension cuts. Other people see their savings in tatters and have no realistic prospect for being able to fund their retirement. And for many of these individuals, the odds of finding continuing, reasonably paid work are low. Even before unemployment soared, people over 40 face poor job prospects. The idea that the middle aged cohort can earn back losses to their nest eggs is wishful thinking. And the young are not much better off. New graduates also face a hostile job market. Worse, students often went into debt to finance their education, believing the mantra that it was an investment.

And many of the societies suffering these financial shocks have already suffered a great deal of erosion of their underlying support structures. Even before the crisis, in the US and other advanced economies, social bonds have eroded in a remarkably short period of time, roughly a generation and a half. Job tenures are short; employees and employers have little loyalty to each other. Ties to communities are weak. Many families have two working parents, so career and parenting demands leave little time to participate in local organizations. Advanced technology frequently offers an easier leisure outlet than trying to coordinate schedules with time (or financially) stressed friends. But marriage and families are also not the haven they once were, given high divorce rates.

One oft unrecognized factor is that alienation and social stress are directly related to income inequality. This is hardly a new finding, but it seldom gets media coverage in the plutocratic US. And it has concrete, measurable costs. As Michael Prowse explained in the Financial Times:

http://en.wikipedia.org/wiki/Zero_Mostel

Samuel Joel “Zero” Mostel (February 28, 1915 – September 8, 1977) was an American actor of stage and screen, best known for his portrayal of comic characters such as Tevye onstage in Fiddler on the Roof, Pseudolus onstage and onscreen in A Funny Thing Happened on the Way to the Forum, and Max Bialystock in the original, film version of The Producers. He was blacklisted during the 1950s, and his testimony before the House Un-American Activities Committee was well-publicized. He was a Tony Award and Obie Award winner.

Early life

Mostel was born as Samuel Joel Mostel to Israel Mostel, an Eastern European Jew, and Cina "Celia" Druchs, also from a Jewish family, who was born in Poland and raised in Vienna. The two immigrated to the United States (separately: Israel in 1898 and Cina in 1908), where they met and married. Israel already had four children from his first wife; he had four more children with Cina. Samuel, later known as Zero, was Israel's seventh child.

Initially living in the Brownsville section of Brooklyn, the family moved to Moodus, Connecticut, where they bought a farm. The family’s income in those days came from a winery and a slaughterhouse. The farm did not do well. When, according to Zero, an unyielding bank president with fierce mustache and long whip foreclosed the mortgage on the farm, the ten Mostels trekked back to New York and settled on the Lower East Side of Manhattan, where the boy attended public school, his character was shaped, and his father was employed as a wine chemist. While not at poverty level, the family had to struggle financially. As a child, Mostel was described by his family as outgoing and lively, and with a developed sense of humor. He showed an intelligence and perception that convinced his father he had the makings of a rabbi; however, Mostel preferred painting and drawing, a passion he was to retain for life. According to Roger Butterfield, his mother made a practice of dressing the boy in a velvet suit and sending him to the Metropolitan Museum of Art to copy masterpieces. Zero had a favorite painting, John White Alexander’s Study for Woman in Black and Green, which he copied every day, to the delight of the gallery crowds. One afternoon, while a crowd was watching over his velvet-clad shoulder, he solemnly copied the whole painting upside down, delighting his audience.

Already at a young age he developed the duality of character that baffled critics years later: when alone he was studious and quiet, but when observed he felt he had to be the center of attention, which he invariably did through use of humor. The fact that at home he spoke English, Yiddish, Italian and German helped him reach out to audiences of many ethnicities in New York.

He attended Public School 188, where he had been an A student (this is in contrast to his later claim that he was nicknamed Zero after his grade average). He also received professional training as a painter through The Educational Alliance. He completed his high school education at Seward Park High, where, interestingly, his yearbook voiced the following prophesy: "A future Rembrandt… or perhaps a comedian?".

Mostel attended the City College of New York, a public college that allowed many poor students to pursue higher education. Mostel belonged to the swimming team and the R.O.T.C., where he distinguished himself by clowning. The story goes that at the College’s Charter Day exercises, the R.O.T.C. unit held a review in honor of the occasion. When he was commanded by the captain to stand at attention, the future comedian "started to crumple like an airless accordion." "Attention!" barked the officer, "not at ease." “Mon capitaine", Zero replied, "it's not me at ease, it's my uniform." Legend also has it that the R.O.T.C. situation became so critical that on inspection days the staff officers tried to get the youth out of sight. They attempted to detail him on special duty. "Private Mostel, would you be so good as to go to the gymnasium with a message for Corporal S?" they would demand uneasily. "I gotta drill", Zero, professing not to understand, is supposed to have said. "But we excuse you from drill", pleaded the staff. "I gotta drill", persisted Zero. "I gotta get hard. I gotta get strong. I gotta get ready to die for dear old City College."<1>

As only beginner classes were available in art, Zero took them repeatedly to be able to paint and receive professional feedback. During that time he worked odd jobs, and graduated in 1935 with a bachelor’s degree. He then continued studying towards a masters in arts, and also joined the Public Works of Art Project (PWAP), which paid him a stipend to teach art.

In 1939 he married Clara Sverd, and the couple moved to an apartment in Brooklyn. The marriage did not last, however, since Clara could not accept the many hours Mostel spent in his studio with his fellow artists, and he did not seem to be able to provide for her at the level to which she had been accustomed. They separated in 1941 and divorced in 1944, Clara only agreeing to the divorce in return for a percentage of Mostel's earnings for the rest of his life.

The whole point is people have different ideas of what winning is. The problem is not winning, it is what some think winning is. In the open, many will explain what winning is and is not, and secrecy is only needed to hide worse ways that people think is winning.

So the point is to show there is more then what some think is winning, not to tell people what to do, but so they know what the consequences are.

People are not corrupted to do bad and evil for their gain, their gain is the buy off, so that they will hurt others, and when some people get hurt they turn to hurting other people. Or they are trained to hurt.

In the same way people do good and are kind to try and let people feel kindness.


On the note of movies and songs, first off they were made by many people that are both good and bad, but more importantly, they do not have to defeat bad by using bad methods, if they did that it would not be defeating bad but joining it.

So again kindness and not obeying what you feel and think is wrong is the better ways.


What is winning, many think it is where they are in life. If that was true, how can you explain the existence of the supernatural that does not only exist in mortal life spans.

What is winning, ask yourself that. What cost of your soul is paid for what a person has.

I get to think and feel as I want, I know that, both happiness and some unhappiness, part of being a person, but I also know I do not hurt people, nor wish others harm.

What kind of world do you want to live in? Any type of world is available in my view, and people have to choose that world. Not just a few people, but all people. If a few choose then because all people are part good and part bad, they will hide that fact because it is unjust, then once in hiding they will have the temptation to corruption.


If you can live in love then do.
When you feel not in complete love use laws of justice to protect you.

And the effect of both of those ideals is loving and justice for many people.


And keep things real enough, and simple enough that they can be understood so you can check and think and feel on your actions.


In my view I like many of the tv movies and comedies, but my points are made in the typing of my posts, and again if they are not argued against then people have to admit they know what they do, and then they make a choice. And I believe people should be able to make a free will choice on what there future will be. I am glad many movies and songs were made by people.

This must be how Obama gets his briefings....

http://www.youtube.com/watch?v=wBuDGHd2Qkg

Sorry, no economic content in this post. Humor is what I know and like best....

yet completely different somehow:

http://www.youtube.com/watch?v=XiDmMBIyfsU

Toyota has agreed to invest $50m in Tesla, the Californian builder of battery-powered cars, as it seeks to extend the dominance it has build in petrol-electric hybrids into the next generation of green vehicles
Read more >>
http://link.ft.com/r/P75VYY/FXSTDG/204L2/40XS68/KEJRC3/36/t

http://www.usnews.com/money/blogs/flowchart/2010/05/20/why-startups-surged-during-the-recession.html

Here's the good news: Americans aren't lazy.

With more than 15 million Americans unemployed, many for six months or longer, it's easy to stereotype the jobless as dropouts who have lost hope and motivation. But a new study of entrepreneurship suggests that the unemployed are quite industrious, helping spur the pace of new-business startups to a record level in 2009.

See which states are the most and least entrepreneurial: http://www.usnews.com/money/blogs/flowchart/2010/05/20/the-best-and-worst-states-for-entrepreneurs.html

The annual index of entrepreneurial activity published by the nonprofit Kauffman Foundation shows that the pace of new-business creation last year was the highest since the index began 14 years ago. It's not clear why there would be so many startups in the midst of a brutal recession, but it stands to reason that many new business owners these days are "necessity entrepreneurs"—people laid off from conventional jobs, with few other opportunities. "Either these people can't find jobs, or they're incredibly motivated to start businesses," says Bob Litan, vice president for research and policy at Kauffman. "I suspect it's a combination of both."

Entrepreneurial activity often rises when traditional jobs disappear, but the past two years have been notoriously tough on small businesses. So it's too early to declare that a new army of entrepreneurs will save the American economy. Consumers have curtailed spending, for one thing, hitting businesses from dry cleaners and nail salons to Silicon Valley tech startups. But the biggest problem has been the credit crunch. Banks essentially stopped lending during the 2008 financial crisis, and while big companies can now get loans, many small businesses—often financed with personal loans or credit cards—still can't. White House economic advisor Larry Summers said a few weeks ago that "there's a Great Recession everywhere. There's a quiet depression in small business."

See 6 things missing from the recovery: http://www.usnews.com/money/blogs/flowchart/2010/05/12/6-things-missing-from-the-recovery-.html

But entrepreneurs may know something that Summers doesn't. The Kauffman data, based on Census surveys, shows that entrepreneurs created about 558,000 new businesses each month in 2009, a sharp rise from historical averages. Put another way, about 340 people out of every 100,000 started a business each month in 2009, compared with a rate of 320 people in 2008 and 270 people in 2000. Those new businesses aren't necessarily the next Google, but to qualify, individuals must consider the business their main job and work at it at least 15 hours per week. So selling tomatoes from the summer garden probably doesn't qualify.

One factor luring do-it-yourselfers may be the relative ease of starting a business these days. Servers and computers are cheaper than ever. The Web allows business owners to reach customers and promote their companies without expensive marketing campaigns or even a sales staff. With unemployment high, it's cheaper to hire help. And rents have been tumbling, making commercial space more affordable.

The Kauffman data suggests that many newbie entrepreneurs are in fact refugees from hard-hit areas of the economy. Between 2006 and 2009, for instance, there was a spike in new businesses in the construction industry, which came at the same time the housing bubble burst and employment related to housing collapsed. So it's likely that many tradespeople laid off by contractors opened their own one-man shops. In terms of age, the 35-to-44 and 55-to-64 age groups showed the biggest surge in entrepreneurial activity in 2009, which might reflect laid-off or bought-out workers starting consulting or contracting gigs.

Ray Nowak of Holland, Mich. fled the troubled auto industry in 2008, taking a buyout from Johnson Controls at the age of 52—with no idea what to do next. After a few months of research, he decided to start a Fast-Teks franchise, offering onsite computer support to families and businesses. The learning curve was steep, as he plunged into accounting, marketing, advertising, and a bunch of other things he never learned in his engineering work for Johnson Controls. Cash flow came in below projections for a few months, as he spent more than expected on advertising. But after a year, Nowak is turning a profit and thinking of expanding. "It seemed like a time to take a risk and do something different," he says. "It's not too often you get a buyout and a chance to discover what you can do."

If the bulk of new entrepreneurs are all-in like Nowak, it could signal a major boost for the economy down the road. Small businesses account for about 65 percent of the jobs in America, and with big companies more likely to invest in new technology before they hire new workers, Mom and Pop could do more to juice a recovery than Wal-Mart or ExxonMobil. Still, the failure rate for new businesses is about 50 percent, and if many of the recent startups are simply filling a void until corporate hiring picks up, the surge in entrepreneurship could be fleeting. At least there will be a lot more people who know what it's like to be the boss, even if they end up working for somebody else.

http://www.youtube.com/watch?v=Nnjkb4q6FKU

Too bad they put fairy tales in formerly serious news media.

New claims for jobless benefits surged in the US last week, as the pace of job cuts picked up, casting doubt over the labour market’s nascent recovery
Read more >>
http://link.ft.com/r/VKY5JJ/A7YNA5/Z87P0/QF8ZEE/BMXKTG/CM/t

bilge water goes here.

http://www.nytimes.com/2010/05/21/business/21regulate.html?ref=business

...The vote was 59 to 39, with four Republicans joining the Democratic majority in favor of the bill. Two Democrats opposed the measure, saying it was still not tough enough.

Democratic Congressional leaders and the Obama administration must now work to combine the Senate measure with a version approved by the House in December, a process that is expected to take several weeks.

While there are important differences — notably a Senate provision that would force big banks to spin off some of their most lucrative derivatives business into separate subsidiaries — the bills are broadly similar, and it is virtually certain that Congress will adopt the most sweeping regulatory overhaul since the aftermath of the Great Depression.

“It’s a choice between learning from the mistakes of the past or letting it happen again,” the majority leader, Harry Reid of Nevada, said after the vote. “For those who wanted to protect Wall Street, it didn’t work.”

The bill seeks to curb abusive lending, particularly in the mortgage industry, and to ensure that troubled companies, no matter how big or complex, can be liquidated at no cost to taxpayers. And it would create a “financial stability oversight council” to coordinate efforts to identify risks to the financial system. It would also establish new rules on the trading of derivatives and require hedge funds and most other private equity companies to register for regulation with the Securities and Exchange Commission...

http://online.wsj.com/article/SB10001424052748703559004575256352143175906.html?mod=dist_smartbrief

...The controversial measure, supported by the Obama administration, sets up new regulatory bodies and restricts the actions of banks and other financial firms. It is designed to try to make order of the cascading regulatory chaos that ensued in 2008 when mammoth banks and some unregulated financial firms collapsed, and public funds were used to save them. Among other things, the legislation would:

• Establish a new council of "systemic risk" regulators to monitor growing risks in the financial system, with the goal of preventing companies from becoming too big to fail and stopping asset bubbles from forming, such as the one that led to the housing crisis.

• Create a new consumer protection division within the Federal Reserve charged with writing and enforcing new rules that target abusive practices in businesses such as mortgage lending and credit-card issuance.

• Empower the Federal Reserve to supervise the largest, most complex financial companies to ensure that the government understands the risks and complexities of firms that could pose a risk to the broader economy.

• Allow the government in extreme cases to seize and liquidate a failing financial company in a way that protects taxpayers from future bailouts.

• Give regulators new powers to oversee the giant derivatives market, increasing transparency by forcing most contracts to be traded through third-parties instead of only between banks and their customers. Derivatives, which are complex financial instruments, are often used to hedge risk. Speculative trading in the contracts led to losses at many banks in the 2008 crisis...

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/20/AR2010052003503.html

..."When this bill becomes law, the joy ride on Wall Street will come to a screeching halt," Majority Leader Harry M. Reid (D-Nev.) said after the vote...


SURE HARRY, ANYTHING YOU SAY.

more here:
http://www.commondreams.org/view/2010/05/20-3

on edit: meant to add the only off note here is comparing it to the Kentucky Derby - which at least is run by honest horses, even if nothing else much is honest. The horses are the workers - drugged, exploited, and still giving their all. So...I guess maybe not such an off-note after all

http://www.ft.com/cms/s/0/6798fb4a-6429-11df-8618-00144feab49a.html

This spring, a curious type of underground banking is proliferating in parts of China. Called minjian jeidai, it enables Chinese companies to borrow short-term money from wealthy households, rather than banks, via a broker armed with a mobile phone.

On paper, the practice seems almost logical. Many small and medium sized companies in China are currently finding it hard to get loans from banks; and many Chinese households desperately need somewhere to put their money (other than the overheated property sector or falling stock market).

But there is a catch. Since the practice is illegal, lending rates are very high; moreover nobody knows how large this practice might be. In the City of Qingdao, which I visited the other day, some bankers and officials “guessed” that minjian jeidai accounts for more than 10 per cent of local finance, a huge sum. “But nobody really knows,” one official hastily added; officially, this practice does not even exist...

2/4/07
an older video about a tanker that the front fell off and 20,000 tons of crude oil spilled
appx 2 minutes
http://www.youtube.com/watch?v=WcU4t6zRAKg


edit: for our comedy weekend theme
:)

5/20/10 Clarke and Dawes ask the million dollar questions
another comedy routine
:)
http://www.abc.net.au/news/video/2010/05/20/2905304.htm

transcript
http://www.abc.net.au/7.30/content/2010/s2905304.htm

Do they do that often?

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6IBD.XM8Xhc&pos=4

THEY ALL PLAYED THE SAME GAME--THEY SHOULD ALL FACE THE SAME CONSEQUENCES. GOLDMAN JUST WAS THE BIGGEST, BADDEST HOG...

Citigroup Inc. sold a series of mortgage-linked securities without disclosing that Morgan Stanley helped shape them while betting they would fail, two people with knowledge of the matter said.

Marketing documents for the $205 million Jackson Segregated Portfolio, underwritten by Citigroup in 2006, don’t say who picked the underlying mortgage bonds. A Morgan Stanley unit helped select the bonds, the people said, speaking anonymously because the deal was private. Six of the seven series of Jackson bonds later defaulted, costing investors more than $150 million of losses, data compiled by Bloomberg show.

“Failure to identify that there was a third party participating who would take a short position would have been extremely relevant to the purchaser of this product,” Duke University law professor James Cox said.

Regulators have been scrutinizing Wall Street firms’ sales of subprime mortgage securities that later defaulted and contributed to the worst credit crisis since the Great Depression. They include some of the more than $500 billion of collateralized debt obligations, created by pooling mortgage bonds and other debt and packaging them into new securities, sold by Wall Street from 2005 through 2007.

Citigroup did say in the Jackson marketing documents that its interests in the deal “may be adverse” to those of investors in the CDO’s bonds.

SEC Vs. Goldman

“We expressly disclosed in marketing the Jackson CDOs that the collateral selection may have included factors adverse to investors,” said Citigroup spokeswoman Danielle Romero-Apsilos. “Having said that, we remain committed to enhancing the transparency of all financial transactions in which we are involved.”

Morgan Stanley spokesman Mark Lake said he couldn’t comment. Both banks are based in New York.

The Securities and Exchange Commission last month accused Goldman Sachs Group Inc. of misleading investors by failing to disclose hedge fund Paulson & Co.’s role in picking collateral it bet against. Goldman Sachs calls the claims unfounded.

Citigroup hasn’t been publicly accused of any violations tied to the Jackson deals. In a quarterly filing this month, Citigroup said it’s cooperating with “various formal and informal inquiries” into subprime-mortgage-related activities and is in talks to resolve some of them.

$60 Billion of CDOs

Citigroup sold $59.3 billion of CDOs from 2005 to 2007, according to a November 2008 report by Sanford C. Bernstein analyst Brad Hintz. In late 2008, the bank had to get a $45 billion bailout, partly because of losses on mortgage-backed securities that it kept for itself. Citigroup lost almost $30 billion in 2008 and 2009 before reporting a $4.43 billion profit in the first quarter.

Citigroup sold the Jackson CDOs in August and September of 2006, data compiled by Bloomberg show, just as delinquency rates on U.S. subprime mortgages began to climb.

The Jackson deal was a synthetic CDO, in which derivatives linked to mortgage bonds were pooled together and packaged into new bonds that could be sold to investors. On the other end of the derivatives was a “short” investor who would get paid if the underlying bonds soured.

To get the deals done, most underwriters of synthetic CDOs initially took the short positions, sometimes with a plan to sell them off later. When Citigroup set up Jackson, it arranged with Morgan Stanley to take over the short positions once the deal closed, the people said. Citigroup allowed the firm to help select the bonds linked to the derivatives because Morgan Stanley would have a stake in the performance of the securities, they said.

80 Bonds

There were 80 mortgage-backed bonds that in turn were underwritten by firms including Citigroup, Morgan Stanley, Lehman Brothers Holdings Inc., Bank of America Corp., JPMorgan Chase & Co. and Wachovia Corp., according to the marketing documents.

Citigroup’s Citibank NA banking subsidiary was the initial short counterparty to the Jackson derivatives, according to the documents.

The Jackson marketing documents said Citigroup might have information about the bonds or business relationships “that may or may not be publicly available or known to the other parties to the transaction,” and that the lender had no obligation to disclose “any such relationship or information.”

The documents go on to say, “In no event will Citibank or any of its affiliates be deemed to have any fiduciary obligations to the holders of the notes.”

Slashed to Junk

Morgan Stanley was named in the Jackson marketing documents only as a currency-hedge provider for $35 million of euro- denominated securities.

In April 2007, all seven series of the Jackson bonds were cut to junk grade by Moody’s Investors Service. Six of the seven later defaulted, wiping out 76 percent of investors’ principal, according to Bloomberg data. There’s no public data on the buyers of the securities, or on the performance of the Morgan Stanley unit that shorted the Jackson deals.

In its suit against Goldman Sachs, the SEC said the bank’s disclosures for the Abacus 2007-AC1 CDO were misleading because they omitted Paulson’s role in selecting the underlying bonds. Goldman Sachs told investors that an independent manager, ACA Management LLC, picked the bonds.

Goldman Sachs “misled investors by representing that ACA selected the portfolio without disclosing Paulson’s significant role in determining the portfolio and its adverse economic interests,” according to the SEC suit. Paulson wasn’t accused of wrongdoing.

http://www.nakedcapitalism.com/2010/05/why-is-the-deepwater-horizon-oil-spill-an-information-dead-zone.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


It isn’t hard to see that the lack of decent information about how serious the Deepwater Horizon oil spill is is almost certainly due to obfuscation on the part of BP. The puzzling part is how BP can fantasize that it ultimately gains from this conduct, and why the Obama Administration tolerates it.

The frustration with continued BP stonewallling has finally produced serious pushback. The scientific community has ramped up its criticism not simply of BP’s role but of the failure of the National Oceanic and Atmospheric Administration and other federal bodies to make their own assessment of the severity of the leak and resulting damage. From the New York Times:

Tensions between the Obama administration and the scientific community over the gulf oil spill are escalating, with prominent oceanographers accusing the government of failing to conduct an adequate scientific analysis of the damage and of allowing BP to obscure the spill’s true scope….

The scientists point out that in the month since the Deepwater Horizon oil rig exploded, the government has failed to make public a single test result on water from the deep ocean. And the scientists say the administration has been too reluctant to demand an accurate analysis of how many gallons of oil are flowing into the sea from the gushing oil well.

Yves here. For a more vivid sense of the stakes, watch the testimony of Sylvia Earle, former chief scientist of the NOAA : SEE LINK


Now the cynically minded might wonder, what good does trying to hide the truth do? Ultimately, ex post facto, it should be feasible for scientists to come up with an total for how much oil has spewed from the well, between the surface spread and the extent of the recently-discovered underwater plumes. So this obfuscation isn’t about ultimate reputation damage or cleanup costs.

It seems utterly implausible that BP does not have a well informed idea as to how much oil is coming out of its well. And the evidence is compelling that the 5.000 barrel per day figure BP keeps presenting is an utter canard, considerably lower than the real outflow. But BP refuses to put measurement equipment near the leak, arguing it might interfere with remediation efforts. Huh? How can you possibly ascertain whether what you plan to do to plug the hole (which is what these first round efforts have all consisted of) has a snowball’s chance of hell in working if you don’t have a good idea of the volumes coming out of the leak?

In other words, the only reason for BP NOT to want to have this information is that:

1. Its remediation efforts to date have some reasonable odds of success only if the outflow is not that much above its 5000 barrel a day estimate

2. Higher outflows and pretty much zilch odds of success of current public-placating dorking around would lead to much greater pressure to Do Something Now.

3. The effective Do Something Now options (like the radical one of using a nuclear weapon to collapse the ocean floor into the leak) would likely also result in making it difficult for BP to ever get oil from that site

4. The BP strategy is thus very likely all about trying to maximize oil extraction by minimizing the appearance of damage and buying time while it drills a relief well

Now let us get to part 2: why is Team Obama enabling this nonsense? I come up with two possibilities:

1. Team Obama believes the BP BS

2. Obama does not want to look impotent. Revealing that the leak is really bad and not having a quick solution is an Obama PR disaster. Obama has to work through BP unless he can implement an action plan using only government resources or by working with another oil company with deep ocean expertise. Given the lead times for government contracting, this would take quite a while.

If the leak is as serious as I fear, this is environmental equivalent of the Iran hostage crisis. Team Obama recognizes this, and therefore wants to create the impression as long as possible that everything that could possibly be done is being done. Note that the Administration is behaving with BP exactly as it did vis as vis the banksters in early 2009: believing that the problem is too complex and scary for them to assert control, casting its lot in with the people who caused the problem in the first place (while calling them bad names often enough to create plausible deniability). And enabling BP’s coverup of how bad the leak means, as Obama did with the financial services industry, of having to support, or at least not undermine too much, its PR efforts.

Now of course, as information keeps surfacing (no pun intended) that the leak is probably much worse than the BP party line. Reports of underwater oil plumes are the most dramatic example. Note that NOAA pooh poohed them two days ago. Per the New York Times today, the government was “surprised” even though this sort of damage had been anticipated in the scientific literature back in 2003, and it now appears to be scrambling to get a better understanding of the plumes.

As official information continues to be slow to be released and maddeningly incomplete, partially founded or unfounded speculation runs rampant on the Internet. For instance, one reader provided a guest post with an detailed and thoughtful analysis of how much oil might be coming from the leak, but it was based on an inaccurate yet widely reported factoid, that the pipe was five feet wide (as our resident expert Glenn Stehle said, “There is no pipe ‘5 feet in diamater’ used in well design—-that is nonsensical.”). Today, we have a report of a “blob” (shades of horror movies!). The problem is that the story contains so much sensationalism and exaggeration that it undermines its credibility, particularly when real experts like Earle stress how little is known about the real state of affairs at the wellmouth. We can only hope that the powers that be come to recognize that footdragging and obfuscation serve no one other besides BP.

far, far away....

http://www.nakedcapitalism.com/2010/05/no-criminal-charges-against-aig-execs.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


Hhhm, are investigations disappearing into the night just like FDIC resolutions, Friday night massacres so as not to upset the great unwashed public?

Joe Cassano, head of AIG’s Financial Products Group and individual most responsible for the insurer’s collapse, will not be prosecuted. Per the Wall Street Journal:



Yves here. Now how could this possibly have come to pass? Wellie, if you rope your advisors like your accounting firm into signing off on your stupid or possibly even criminal behavior, then you get off scot free:



Yves here. Now why hasn’t the bright spotlight been turned on PwC? They are too big too fail. Now that there are only four accounting firms deemed capable of auditing Fortune 500 companies, no one in the officialdom is about to launch an action against them that might lead to their demise, no matter how well deserved it might be. Francine McKenna has written at considerable length about the fact that PwC was auditor to both Goldman and AIG, and was clearly signing off on valuations of the SAME instruments at DIFFERENT prices at each firm:

Why didn’t PwC speak up, act more strongly to match mismatched valuations between entities like AIG and Goldman Sachs, raise their hand and shout fire, or at least warn of suffocating black smoke obscuring woefully inadequate risk management and of pricing “models” strung together like so many holiday lights electrical cords, faulty wiring and all, ready to blow the circuits?

Was it the fees?

Well, there’s certainly $230 million plus reasons in 2008 to play nicey-nice between the two clients. But that explanation would be too simple.

Another little problem which has been completely missed in our rush to get Potemkin financial reforms in place is that prosecutors often cannot pursue lawyers and accountants even when they play a key role in perpetrating dubious or even criminal conduct. As we wrote in ECONNED:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aAsmKM5QcSuc&pos=10

Analysts predict Goldman Sachs Group Inc. will pay $1 billion or more to settle a Securities and Exchange Commission fraud suit that triggered a 26 percent drop in the firm’s stock. Extracting such a record-setting penalty may be easier said than done.

When it comes to presenting a settlement for court approval, the SEC will have to “have a good explanation and justification for the number,” said Donald Langevoort, a former SEC attorney who teaches securities law at Georgetown University in Washington.

Looming over negotiations between the SEC and Wall Street’s most profitable investment bank is a reminder from Judge Jed Rakoff that courts can reject settlements -- even when the SEC’s adversary is willing and able to pay. Rakoff, a U.S. district court judge in Manhattan, refused to sign off on a $33 million accord with Bank of America Corp. in September, noting that the SEC didn’t adequately explain how it came up with the dollar amount.

A sanction in the range of $1 billion would be hard to support based on the allegations in the Goldman Sachs complaint, according to James Coffman, a former SEC enforcement official who retired in 2007. That figure would be more than double what any Wall Street firm has agreed to pay as part of a civil settlement with authorities.

Under one formula outlined in securities laws, the SEC could impose a maximum $15 million penalty on the bank to resolve fraud allegations that it misled buyers of mortgage- backed investments. That formula has been routinely ignored in enforcement cases and the SEC will seek more from a firm depicted as an icon of Wall Street greed at congressional hearings, Coffman said.

$1 Billion ‘Goalpost’

The SEC’s April 16 complaint accused Goldman Sachs of defrauding investors in a collateralized debt obligation linked to home loans. The firm concealed the fact that Paulson & Co., a New York-based hedge fund, picked components of the CDO and bet it would collapse, the agency said. Goldman Sachs, which underwrote and marketed the product in 2007, collected about $15 million in fees and Paulson reaped a $1 billion profit. The remaining investors lost more than $1 billion, according to the complaint.

Goldman Sachs, led by Chief Executive Officer Lloyd Blankfein, 55, has denied wrongdoing. Paulson hasn’t been accused of any impropriety and the firm’s founder, John Paulson, has said it didn’t market the transaction or have authority to select securities in the CDO.

The $1 billion loss for investors has become the minimum “goalpost” that the public expects the SEC to reach, according to James Cox, a securities law professor at Duke University in Durham, North Carolina.

‘Whatever it Takes’

A settlement would cost the firm “at least $1 billion, if not more, which they can easily pay,” Matt McCormick, an analyst at Bahl & Gaynor Inc. in Cincinnati, which manages about $2.8 billion, said in an April 30 Bloomberg Television interview. The firm “will do whatever it takes to get this away, or at least they should.”

As the agency’s first effort to punish a bank for creating and selling securities tied to subprime mortgages, the Goldman Sachs case will be dissected by the industry, in Congress and in the media, Coffman said.

“There’s been a lot of attention paid to this on Capitol Hill and in the press,” said Coffman, who predicts Goldman Sachs will pay about $100 million. The SEC will consider “how much public interest there is in sending a strong message and coming up with a settlement that shows the cops are on the beat.”

SEC spokesman John Nester and Goldman Sachs spokesman Michael Duvally declined to comment.

Softening Its Tone

Public statements from Goldman Sachs have softened in the month since the SEC announced its case as the firm’s image and stock price have taken a beating.

In an April 16 press release, Goldman Sachs called the suit “completely unfounded” and pledged to “vigorously” defend its reputation. Four days later, co-General Counsel Greg Palm broached the idea of resolving the case, saying on a conference call with investors that “you always have the option” of settling if both sides forge an agreement.

In the days following an April 27 Senate hearing where Goldman Sachs managers were accused of putting the firm’s interest ahead of clients, two executives at the firm who spoke on condition of anonymity said the company was eager to settle the SEC case in an attempt to contain the reputational damage.

Ramifications of Accord

The subject of how much money the firm may pay hasn’t been raised during early discussions between the SEC and Goldman Sachs, according to a person briefed on the matter, speaking anonymously because the talks were private.

Negotiations are more likely to stall over the way the SEC ultimately describes the firm’s conduct, rather than the size of any fine, said two people familiar with Goldman Sachs’s thinking. Goldman would resist agreeing to a settlement that includes an allegation of fraud, because doing so could hurt the firm’s business, they said.

Settling a fraud case would restrict Goldman Sachs and its employees from managing investment companies registered with the SEC, unless the bank got an exemption from the agency.

Goldman Sachs’s asset management unit currently oversees mutual funds, money-market funds and bond funds, according to its website. Goldman Sachs would also risk losing its ability to raise money quickly through securities sales without meeting certain regulatory burdens.

The SEC and New York-based Goldman Sachs will have to litigate if they can’t agree on an accord.

‘Pecuniary Gain’

The SEC suit cites the Securities Act of 1933 and the Securities Exchange Act of 1934. Both laws limit their most severe fines to either $650,000 per violation or the “pecuniary gain” reaped by the defendant.

SEC investigators don’t have to follow those limitations if they can persuade companies to pay more, a majority of agency commissioners vote to approve the settlement and a judge signs off on the accord, said former SEC Commissioner Paul Atkins.

“It’s basically what the two sides hammer out,” he said.

Goldman Sachs argues the $15 million in commissions it received for putting the CDO together were offset by more than $90 million the firm lost on its own stake in the transaction.

ABN Amro Bank NV lost more than $840 million and Dusseldorf, Germany-based IKB Deutsche Industriebank AG lost most of its $150 million investment, according to the SEC.

The SEC typically requires defendants in a settlement to pay a fine and return ill-gotten profits to victims.

Citigroup’s 2003 Settlement

Citigroup Inc. paid $400 million in 2003 to settle SEC and state allegations that its analysts hyped telecommunications stocks that its researchers privately thought were underperformers.

The SEC said in its complaint that Citigroup made $790 million in revenue from underwriting telecom securities from 1999 through 2001, relying on analysts to “generate substantial profits” for the company’s investment bankers.

Citigroup agreed to a $150 million fine, returned $150 million of ill-gotten gains, and paid $100 million to provide clients with independent research and investor education.

Bank of America, in the second-biggest agreement between the SEC and a bank in the past decade, paid $375 million in 2004 to settle claims the company didn’t disclose that some of its mutual funds allowed clients to make trades detrimental to other investors.

Charlotte, North Carolina-based Bank of America paid a $125 million fine and $250 million in disgorgement. Its fine was 10 times the $12.5 million in revenue the SEC said it received from one of the hedge funds making improper trades.

Prudential’s Choice

Prudential Securities Inc. agreed in a 1993 settlement with the SEC and state regulators to pay $371 million in restitution and fines, and to fully compensate all investors who lost money in oil, gas and real estate partnerships it sold without disclosing the risks. Over time the company paid more than $1 billion to resolve claims dating back to the 1980s.

Goldman Sachs remains the most profitable firm in Wall Street history. It earned $13.4 billion in 2009 and an additional $3.5 billion in the first three months of 2010.

“Money hurts but limitations on business can hurt in a lot more ways and that can be the hurt that keeps on giving,” Coffman said.

http://ftalphaville.ft.com/blog/2010/05/21/239976/of-reform-us-bank-ratings-and-repo/


Sweeping US finance reform is on the verge of being enacted into law, after Senate approval of a final bill. Which means further curbs on too-big-to-fail banks…

…and that is likely to mean ratings danger for large US financial institutions.

As Moody’s er, somewhat vaguely announced on Friday:



But how much lift has there been, and what might happen if this is removed?

According to a note by Joseph Abate of Barclays Capital on Friday, possessing TBTF status has lifted banks’ debt by three to four notches more than their balance sheets would suggest.

So losing that status could give a bank’s access to short-term money markets a bit of a nasty squeeze, as the note explains (emphasis and link FT Alphaville’s):



Which might pose a problem for Goldman Sachs, Citigroup, Bank of America and Morgan Stanley, which are most at risk of downgrade, according to Abate.

Nor is there an easy workaround. Funds are allowed some leeway to lend to Tier 2 counterparties by ‘looking through’ to the underlying collateral posted, but they’ve their own AAA ratings to safeguard — and rating agencies are strict in their review when it comes to this practice.

In that case, as Abate writes:



Which is quite a hefty amount of assets to suddenly drop from the secured funding markets, giving funds a dilemma — wait for the Fed to offer reverse repos when it starts its liquidity exit strategy, or relinquish their AAA ratings.

Rather tricky. As Abate concludes:



Reform could lead to an even more complicated repo market. Great.

http://blogs.reuters.com/felix-salmon/2010/05/21/the-shorebank-rescue/



There’s a lot of conspiracy-theorizing going on around the high-level rescue of Chicago’s ShoreBank by Goldman Sachs, Citigroup, JP Morgan, Bank of America, and General Electric. The founder of the bank is BFF with BHO, and Chicago politics being what it is, everybody is assuming that the banks involved are expecting some kind of political quid pro quo down the road, for rescuing one of Chicago’s most-loved financial institutions.

I daresay they are. But on the other hand, it’s not nearly as implausible as everybody seems to think that America’s largest banks would step in to rescue ShoreBank. And to see why, it’s worth looking at what one of ShoreBank’s biggest critics, Tom Brown, has written on the subject:



I don’t know where Brown is getting his figures, but I went to the FDIC’s website (it’s not easy to navigate, I’m warning you, but this link might be a good starting point), and got a bunch of numbers for ShoreBank for the 12 months ending March 31, 2010. Here’s the balance sheet, the performance and condition ratios, and the income statement; if you want the full 69-page call report, it’s here. The numbers are certainly bad. Noncurrent assets and REO accounts for 14.6% of total assets, but the Tier 1 capital ratio is at least positive, at 2.05%, with the bank having $26.2 million in Tier 1 capital remaining. And the total loss for the most recent fiscal year was $17 million, not $106 million.

Certainly, with hindsight, a lot of loans have gone bad. But it took them a while to go bad: it didn’t happen immediately “once the credit crackup started”, as Brown would have you think. Indeed, Dan Gross, in November 2008, held up Shorebank as a great example of a bank where the loans were not going bad — along with Lower East Side People’s, where I’m on the board, and where we’re doing fine without any kind of bailout at all. Not all community development financial institutions are financially dubious things which should only be funded by non-profits like the Ford Foundation, and America’s largest bankers agree that the underbanked deserve non-predatory financial services, rather than the check cashers, payday lenders, and similar institutions which lend only at usurious rates.

This, I think, is the real reason why the biggest banks in the US are stepping up to rescue ShoreBank. If someone pointed to LES People’s as an example of successfully serving the underbanked, that would carry only a certain amount of weight: our total assets are a fraction of what Lloyd Blankfein got paid in 2007 alone, and we’re in a unique situation, in Manhattan, which doesn’t apply to similar institutions nationwide.

ShoreBank, by contrast, is about 100 times larger than LESPFCU, and if the big banks can make it work, can stand as real-world proof that community lending really is a viable business model, and can scale successfully into becoming a profitable multi-billion-dollar institution. In the best-case scenario, the investors will help to turn ShoreBank around, will learn how to do what it does, and will then themselves become much friendlier towards their low-income customers, because they’ll know how to make money from them the good way — by helping them improve their finances and ultimately to become higher-income customers — rather than the bad way, which is to bleed them dry in a predatory manner.

All of the investors in ShoreBank will get a lot of CRA credit for their investment, which makes it very low-cost for them. By rescuing this storied institution they will help a lot of Chicagoans who need all the help they can get; they will learn how to improve their own products for lower-income customers; and they will help to transition the underbanked part of the US population into becoming banked, which is ultimately good for everybody. So while the cynical take on the deal is understandable, I’m not jumping to any conclusions quite yet.

Part of Mostel’s PWAP duty was to give gallery talks at New York’s museums. Leading groups of students through the many paintings, Mostel could not suppress his comedic nature, and his lectures became famous not so much for their artistic content as for his sense of humor. As his reputation grew, he was invited to entertain at parties and other social occasions, earning three to five dollars per performance. Labor Union Social Clubs followed, where Mostel mixed his comic routine with social commentary. These performances would play a large role in his eventual blacklisting in the next decade.

In 1941, the Café Society—a downtown Manhattan nightclub—approached Mostel with an offer to become a professional comedian and play a regular spot. Mostel accepted, and in the next few months he became the Café Society’s main attraction. It was at the Café Society that he adopted the stage name Zero (Zee to his friends). The press agent of the night club prevailed upon Mostel to adopt this stage name, hoping that it would inspire the comment: “Here’s a man who made something out of nothing.” Thus, at the age of 27, Mostel dropped every other job and occupation to start his show business career.
Rise

Mostel’s rise from this point on was rapid. In 1942 alone his salary at the Café Society went up from US$40 a week to US$450; he appeared on radio shows, opened in two Broadway shows (Keep Them Laughing, Top-Notchers), played at the Paramount Theatre, appeared in an MGM movie (Du Barry Was a Lady), and booked into La Martinique at US$4,000 a week. He also made cameo appearances at the Yiddish theatre, the style of which influenced his own. In 1943, Life magazine described him as “just about the funniest American now living.”

In March 1943, Mostel was drafted by the Army. His length of service is hard to determine as conflicting accounts exist—some say that he was released after six months due to colitis, others that he served to the end of the war. At any rate it is apparent that he was honorably discharged and gave the troops many months of free entertainment through the USO until 1945.

Mostel married Kathryn (Kate) Cecilia Harkin, a Chez Paree club chorus girl, on July 2, 1944, after two years of courtship. The marriage was shaky at times, again mostly due to Mostel’s spending most of his time in his art studio. Their relationship was described by friends of the family as complicated, with many fights but mutual adoration. The couple stayed together until Mostel's death and had two children: film actor Joshua (Josh) in 1946 and Tobias (Toby) in 1948.

After Mostel’s discharge from the army, his career took off again. He appeared in a series of plays, musicals, operas and movies. In 1946 he even made an attempt at serious operatic acting in The Beggar's Opera, but received lukewarm reviews. Critics saw him as a versatile performer, who was equally adept at a Molière play as he was on the stage of a night club.

Meanwhile, the choice of political causes Mostel was supporting earned him surveillance by the FBI. According to his FBI file, he was seen at many Communist Party meetings in 1941 and was active in support of Free Earl Browder Movement.

http://www.youtube.com/watch?v=Z2twluaMUfY

Song: Crime Of The Century
Artist: Supertramp
Visuals: End The Fed

Well, now that TPTB have rolled out the "Only the guys who caused the problem can solve it" talking point/meme... I'm going to take a few days off from teh DU. It's become stifling around here of late.

BP the only one who can patch the plume?!?! Man! That one could have been taken right out of the RW playbook.

:puke:

WTF have we been paying these Billions for all of these years?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x537538

:hi:

the Kid is doing her sick thing again, and I got no sleep. The papers were an hour and a half late, and it's 100% humidity and wilted my pansies. And finally, I have to do an internal audit of the condo and coop books for the past 6 years to find out what else the batty soon-to-be ex-president, her mother the ex-treasurer, and her daughter the ex-recording secretary have been up to.

Not to mention that I am totally unequipped and untrained to undertake such a task, as well as having no time to do it. Fortunately, tere are a few here that can be leaned on for assistance.

I never knew about Zero Mostel and the HUAC. All the more reason to honor him here.

Zero Mostel was a true mensch, and we are richer for his stay with us, and poorer for losing him so young.

With growing popularity and many excellent reviews, Mostel’s career nonetheless came to a complete halt during the 1950s. Seeing many of his show business friends blacklisted and forced to name names of supposed Communists, it came as no surprise to him that he was named, too. On January 29, 1952, Martin Berkeley identified him to the House Committee on Un-American Activities (HUAC) as having been a member of the Communist party (Berkeley had named 160 people in all—more than any other witness). This was enough to stifle Mostel's career even before he was subpoenaed to appear before HUAC, which happened on August 14, 1955.

The committee was presided over by chairman Clyde Doyle. Mostel, who could not afford to hire a lawyer, testified before the committee on his own. Frank Wilkinson recalled the proceedings thus:

"It began with the committee's counsel immediately launching his attack. 'Mr. Mostel, are you or are you not a Communist?' Zero leaped out of his chair behind the counsel's table, knocking the microphones to the floor, and reached for the throat of HUAC's attorney while shouting, 'That man called me a Communist! Get him out of here! He asked me if I'm a Communist! Get him out of here!'

"The committee was roaring with laughter. They were delighted. Here they had Zero Mostel all to themselves, on stage, in a private dining room. Zero went on playing and parlaying with them for at least twenty minutes, responding to their questions by reciting each amendment in the Bill of Rights.

"Finally, HUAC's lawyers cautiously said, 'Mr. Mostel, we know all about those amendments. We simply want to know are you, or are you not, claiming the Fifth Amendment'.

"He didn’t ask Zero, 'Are you or are you not a Communist.' He asked him, 'Are you or are you not claiming the Fifth Amendment.' What they wanted him to say was 'Yes'. After another ten minutes of sparring, Zero said, 'Yes, I'm claiming the Fifth Amendment'.

"The hearings were stopped right there. The committee's PR guy goes to the door and opens it. He doesn't say a word to the crowd of reporters. He just holds up five fingers, and the press dashes off to the telephones there in the hotel. The headlines the next morning: 'Zero Mostel Pleads Fifth Amendment at HUAC Meeting.'"

Thus Mostel refused the opportunity to ingratiate himself by giving the committee more names, choosing instead not to answer any question that may incriminate himself (a direct refusal to name names would have allowed the committee to find him in contempt). His testimony had won him admiration in the blacklisted community, as in addition to not naming names he also confronted the committee on ideological matters, something that was rarely done. Among other things, he referred to Twentieth Century Fox as “Eighteenth Century Fox” (due to their collaboration with the committee), and manipulated the committee members to appear foolish.


Segment of Zero Mostel’s testimony before HUAC

The admiration he received for his testimony did nothing to take him out of the blacklist, however, and the family had to struggle throughout the 1950s with little income. Mostel used this time to work in his studio. Later he would say that he cherished those years for the time it had afforded him to do what he loved most. Mostel’s appearance before HUAC (as well as others') was incorporated into Eric Bentley's 1972 play Are You Now or Have You Ever Been…?

In 1957, Toby Cole, a New York theatrical agent who strongly opposed the blacklist, contacted Mostel and asked to represent him. The partnership was to have the effect of reviving Mostel’s career and making him a household name. Mostel accepted the role of Leopold Bloom in Ulysses in Nighttown, a play based on the novel Ulysses, which he greatly admired in his youth. It was an Off-Off-Broadway play produced in a small Houston Street theater, but the reviews Mostel received were overwhelmingly favorable. Most notably, Newsweek’s Jack Kroll compared him to Laurence Olivier, writing, “Something unbelievable happened. A fat comedian named Zero Mostel gave a performance that was even more astonishing than Olivier’s.” Mostel received the Obie award for best Off-Broadway performance of the 1958–59 season.

After the success of Ulysses, Mostel received many offers to appear in classic roles, especially abroad. However, artistic differences with the directors and the low salaries he was offered prevented these from ever materializing. By this time the blacklist was beginning to crumble, and in 1959, appeared twice on TV's The Play of the Week.

1960s and height of career

On 13 January 1960, while exiting a taxi on his way back from rehearsals for the play The Good Soup, Mostel was hit by a number 18 (now the M86) 86th Street crosstown bus, and his leg was crushed. The doctors wanted to amputate the leg, which would have effectively ended his stage career. Mostel refused, accepting the risk of gangrene, and remained hospitalized for four months. The gamble paid off, but for the rest of his life the massively-scarred leg gave him pain and required frequent rests and baths. After incurring his injury he retained the famous Harry Lipsig (the 5'3" self-described, "King of Torts"). The prospect of having Harry Lipsig, a Brooklyn street lawyer and spitfire of a man who was renowned for his schmaltzy renderings of depredation to NY juries looking to roast the insurance companies, combined with the prospect of the injured party being none other than Zero Mostel must have terrified the MTA counsel, because the case was settled for an undisclosed sum. Shortly thereafter the Mostels were able to leave the rented apartment on 86th Street for a co-op apartment they bought at The Dakota. From this time forward Mostel would carry a cane when he attended the Metropolitan Opera, to go along with the cape that he also favored.

Later that year Mostel took on the role of Estragon in a TV adaptation of Waiting for Godot. In 1961, he played Jean in Rhinoceros to very favorable reviews. The New Republic’s Robert Brustein said that he had “a great dancer’s control of movement, a great actor’s control of voice, a great mime’s control of facial expressions.” His transition onstage from man to rhinoceros became a thing of legend; he won his first Tony Award for Best Actor, even though he was not in the lead role.

In 1962 Mostel began work on the role of Pseudolus in the Broadway musical A Funny Thing Happened on the Way to the Forum, which was to be one of his best remembered roles. The role of Pseudolus was originally offered to Phil Silvers, who declined it, saying he did not want to do this "old shtick." Mostel did not originally want to do the role either, which he thought below his capabilities, but was convinced by his wife and agent. The reviews were excellent, and, after a few slow weeks, the show became a great commercial success, running 964 performances and conferring on Mostel a star status (he also won a Tony Award for Best Actor in a Musical for this role). It was also produced as a movie version in 1966, also starring Mostel (and Silvers).

On September 22, 1964, Mostel opened as Tevye in the original Broadway production of Fiddler on the Roof. Mostel’s respect for the works of Sholem Aleichem made him insist that more of the author's mood and style be incorporated into the musical, and he made major contributions to its shape. He also created the cantorial sounds made famous in songs such as “If I Were a Rich Man”. In later years, the actors who followed Mostel in the role of Tevye invariably followed his staging. The show received rave reviews and was a great commercial success, running 3242 performances, a record at the time. Mostel received a Tony Award for it and was invited for a reception in the White House, officially ending his political pariah status.

In 1967, Mostel appeared as Potemkin in Great Catherine, and in 1968 he took on one of his most famous roles, that of Max Bialystock in The Producers. Mostel refused to accept the role at first, but director Mel Brooks convinced him to show the script to his wife, who then talked Mostel into doing it. His performance received mixed reviews, and was not a great success at first, but the film has achieved cult status since.

He lived in The Belnord on the Upper West Side of Manhattan.

In his last decade, Mostel showed little enthusiasm for artistic theatrical progress. Rather than choosing roles that would bring him critical acclaim or that he wanted to do, he seemed to be available for any role that paid well. The result was a succession of movies for which, for the first time since he had established himself as a performer, reviews were mixed at best. Such endeavors were The Great Bank Robbery, The Angel Levine, Once Upon a Scoundrel, and Mastermind. This caused the devaluation of his star power: once a top-billing actor, he now had to make do with featured billing, and his appearance in a movie or play no longer guaranteed success.

There have been a few exceptions, however: the movie version of Rhinoceros, The Front (where he played Hecky Brown, a blacklisted performer whose story bears a similarity to Mostel’s own, and for which he was nominated for a BAFTA Award for Best Supporting Actor), and theatrical revivals of Fiddler and Ulysses in Nighttown. He also made memorable appearances in children’s shows such as Sesame Street, The Electric Company (for which he performed the Spellbinder in the Letterman cartoons), and gave voice to the boisterous seagull Kehaar in the animated film Watership Down. He also appeared as a guest star during Season 2 of The Muppet Show, filmed during the summer of 1977. Mostel would have the distinction of being the only guest in the show's history to die before his appearance was broadcast.

In the last four months of his life, Mostel took on a nutritionally unsound diet (later described by his friends as a starvation diet) that reduced his weight from 304 to 215 pounds. During rehearsals for the new play The Merchant (in which Zero played a re-imagined version of Shakespeare's Shylock) in Philadelphia, he collapsed in his dressing room and was taken to Thomas Jefferson University Hospital. He was diagnosed with a respiratory disorder and it was believed he was in no danger and would be released soon. However, on September 8, 1977, Mostel complained of dizziness and lost consciousness. The attending physicians were unable to revive him, and he was pronounced dead that evening. It is believed that he suffered an aortic aneurysm. The play's author, Arnold Wesker wrote a book chronicling the out-of-town tribulations that beset the play and culminated in Zero's death called The Birth of Shylock and the Death of Zero Mostel.

In accordance with his final requests, his family did not stage any funeral or other memorial service to mark his death. Mostel was cremated following his death; the location of his ashes is not publicly known.

another weekend learning things I should already have learned.
Thanks Dememter!