Quoting the Crisis

07/11/2009

“ 

Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009 as unit labor costs fell 5.2 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 13.6 percent while unit labor costs fell 7.1 percent…

Back in the 1930s there was a Polish Marxist economist, Michel Kalecki, who argued that recessions were functional for the ruling class and for capitalism because they created excess supply of labor, forced workers to work harder to keep their jobs, and so produced a rise in the rate of relative surplus-value.

For thirty years, ever since I got into this business, I have been mocking Michel Kalecki. I have been pointing out that recessions see a much sharper fall in profits than in wages. I have been saying that the pace of work slows in recessions—that employers are more concerned with keeping valuable employees in their value chains than using a temporary high level of unemployment to squeeze greater work effort out of their workers. I don’t think that I can mock Michel Kalecki any more, ever again.

 „

ZOMFG WTF!!!!! 9.5% THIRD QUARTER PRODUCTIVITY GROWTH NUMBER!!!! - J. Bradford DeLong’s Grasping Reality with All Eight Tentacles

pitchforks?

(via champagnecandy)

(via robot-heart-politics)

(via continuum)

Quote posted at 11:01

06/11/2009

“ Now maybe I am just hopelessly out of touch, or perhaps more accurately, the Fed has created such a ridiculously favorable environment for banks and traders that if you are moderately competent, making money is like shooting fish in a barrel. But a winning streak this consistent looks like a rigged game. Is this just, ahem, “information advantages”? Greater ease in pushing markets around that have fewer players? Just a function of those monstrously wide bid-asked spreads? I’m curious for a sanity check from people closer to the action. „

Yves Smith in Mirabile Dictu! Goldman Lost Money Only One Day in Last Quarter «  naked capitalism

Quote posted at 21:06

“ And an indication of just how much of a hedge fund Goldman has become instead of a client servicer, the firm’s Equities Commissions revenue for the quarter dropped to $930 million from $1.2 billion YoY, while prop Equities Trading skyrocketed from $354 million to $1.8 billion YoY! And just in case you were wondering someone, somewhere was motivated to destroy Fixed Income powerhouse Lehman and Bear, look no further than Goldman’s Fixed Income, Currency and Commodities which did a gentle jump from $1.6 billion in Q3 2008 to $6 billion last quarter. And that explains all you need to know about motivations and backstops. „

Absolute Perfection: Goldman Loses Money On Just One Trading Day In Q3 | zero hedge

Quote posted at 19:06

“ Goldman lost money on just one trading day in Q3, making money on all the other 64. As a reminder, even in Q2 Goldman lost money on two trading days. The statistical probability distribution of 1 out of 65 is something that not the SEC, but Richard Feynman should be looking into, as Goldman Sachs, after rewriting the lass of risk/return, is now set to redefine normal distributions and other Statistics 101 concepts. „

Absolute Perfection: Goldman Loses Money On Just One Trading Day In Q3 | zero hedge

Quote posted at 17:05

“ I’ve previously written about Goldman’s shift from an investment bank to a hedge fund, but hey at least they’re a VERY VERY profitable hedge fund. That said, with a 98% hit-rate while client orders are also flying about, the argument for front-running makes a lot of sense. „

AlphaNinja: Goldman’s q3 trading revenue down, hit-rate up (GS)

Quote posted at 13:02

“ The priority now is not to revitalise asset markets, but to transform a bloated and dysfunctional financial sector towards one that supports the real economy in a sustainable and cost-efficient way. „

Dirk Bezemer in FT.com / Comment / Opinion - Lending must support the real economy

Quote posted at 09:02

05/11/2009

“ Profit and capital gains may look much the same to the individual bank – a stream of revenues – but they have different macroeconomic consequences. Lending to the real sector is self-amortising: it creates a debt, but also the value-added to repay principal and interest. Such loans enlarge the economy in proportion to the debts created and are financially sustainable. By contrast, loans to create or buy financial assets and instruments are not, by themselves, self-amortizing. In a credit boom, successive owners may sell the asset at a profit, but their buyers will have to shoulder proportionally more debt in order to acquire the asset, balanced (for the time being) by the asset’s value. Asset trading may be individually profitable; but it is a zero sum game, sustainable only if the real economy furnishes enough money to support the rising debt burden. Beyond a point, the lure of capital gains diverts funds from real-sector investment, and households’ rising debt-service cuts demand for real-sector output. In both ways, excessive growth of financial asset markets is self-defeating. „

Dirk Bezemer in FT.com / Comment / Opinion - Lending must support the real economy

Quote posted at 21:05

“ In the 1980-2007 era of cheap credit and deregulation, banks had every incentive to move from real-economy projects, yielding a profit, towards lending against rising asset prices, yielding a capital gain. In the 1990s and 2000s, loan volumes rose to unprecedented levels, supporting global assets booms in property, derivatives and the carry trade. The share of lending by US banks to the US financial sector – instead of to the real economy – went from 60 per cent of the outstanding loan stock in 1980 (up from 50 per cent in the 1950s) to more than 80 per cent in 2007. „

Dirk Bezemer in FT.com / Comment / Opinion - Lending must support the real economy

Quote posted at 17:03

“ 

The Wall Street Journal reports today that Goldman Sachs is trying to arrange to buy tax credits from Fannie Mae. Obviously, it would buy them at a discount.

Goldman, you may recall, was saved with taxpayer money when the panic spread last year. A naïve person might think such a company would see a patriotic virtue in paying taxes.

Fannie Mae is currently a ward of the government. So this boils down to a proposal to pay Uncle Sam perhaps 15 cents to avoid paying 20 cents to Uncle Sam. The gall involved in even proposing such a thing is awesome.

 „

Floyd Norris in Worst Idea of 2009 - Floyd Norris Blog - NYTimes.com

Quote posted at 15:02

04/11/2009

» Wal-Mart's stingy sick-leave policy may contribute to swine flu's spread

robot-heart-politics:

thesmarttart:

So concludes a new report from the National Labor Committee that finds that employees of the Arkansas-based retail giant — even its food handlers — feel they have no choice but to work when they’re sick. That’s because the company gives workers demerits and deducts pay for staying home when they’re sick or caring for sick children. The report found that the only time the company is removing sick workers from the food section is when they are coughing too loudly or violently — and then the person is merely transferred to another department rather than being sent home. Wal-Mart’s sick-leave policy conflicts with recommendations for the federal Centers for Disease Control and Prevention, which calls on employers to advise workers to be alert for symptoms of flu-like illness and to stay home if they are ill. The CDC also asks employers to allow workers to stay home to care for sick family members
via Facing South

…because we all needed another reason to hate Wal-Mart.

Link posted at 21:14

02/11/2009

recro:

“Great Frontline last nite: How Wall St heist began w/ Rubin/Summers shutting down the woman who tried to stop them” - Michael Moore

watch it in it’s entirety above.

This is excellent.  An excerpt of the transcript:

MICHAEL KIRK: [Commodity Futures Trading Commission chairperson Brooksley] Born believed the lack of transparency left the [over the counter derivatives] market open to fraud.

Joe Nocera’s a reporter with the New York Times. He says fraud came up during Born’s first meeting with the Chairman of the Federal Reserve, Alan Greenspan.

JOE NOCERA: He said something to the effect that, “Well, Brooksley, we are never going to agree on fraud. You probably think there should be rules against it.” And she said, “Well, yes, I do.” He said, “You know, I think the market will figure it out and take care of the fraudsters.”

Instead of taking the hint, Born began investigating. She immediately ran up against opposition from the president’s Working Group on financial markets. She even got an angry call from Larry Summers, the Deputy Treasury Secretary.

BORN: They were totally opposed to it. That puzzled me. You know, what was it that was in this market that had to be hidden? So, it made me very suspicious and troubled.

Summers, his boss at the Treasury Robert Rubin, and Alan Greenspan were big believers in letting the markets look after themselves.

…And we all know how well that worked out.

brooklynmutt:

Video posted at 11:51

28/10/2009

“ For too long, individuals have taken advantage of the system by hiding money in accounts overseas, while millions of families and small businesses here at home pay the price. This legislation will reduce the amount of taxes lost through the illegal use of hidden accounts and is the next step in making sure that everyone pays their fair share. „

Treasury Secretary Timothy Geithner, quoted by Aaron Smith, in IRS says its ready to take on brave new world of tax cheats - Oct. 27, 2009

Quote posted at 13:02

“ 

In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.

Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter.

Among AIG’s bank counterparties were New York-based Goldman Sachs Group Inc. and Merrill Lynch & Co., Paris-based Societe Generale SA and Frankfurt-based Deutsche Bank AG.

[…]

Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.

 „

Richard Teitelbaum and Hugh Son in New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers - Bloomberg.com

Quote posted at 11:00

27/10/2009

“ What few people knew was that bank executives crafted a radical new business strategy in 2003 that was intended to boost profits. The new WaMu used huge sales commissions and misleading marketing to hawk risky and overpriced loans to borrowers. In short, WaMu became one of the nation’s biggest predatory lenders. „

David Heath in Business & Technology | Part two | WaMu: Hometown bank turned predatory | Seattle Times Newspaper

Quote posted at 19:07

“ So according to The Washington Post, dropping bombs on, controlling and occupying Afghanistan — all while simultaneously ensuring “effective governance, economic development, education, the elimination of corruption, the protection of women’s rights” to Afghan citizens in Afghanistan — is an absolutely vital necessity that must be done no matter the cost. But providing basic services (such as health care) to American citizens, in the U.S., is a secondary priority at best, something totally unnecessary that should wait for a few years or a couple decades until we can afford it and until our various wars are finished, if that ever happens. “U.S. interests in South Asia” are paramount; U.S. interests in the welfare of those in American cities, suburbs and rural areas are an afterthought. As demented as that sounds, isn’t that exactly the priority scheme we’ve adopted as a country? We’re a nation that couldn’t even manage to get clean drinking water to our own citizens who were dying in the middle of New Orleans. We have tens of thousands of people dying every year because they lack basic health care coverage. The rich-poor gap continues to expand to third-world levels. And The Post claims that war and “nation-building” in Afghanistan are crucial while health care for Americans is not because “wars, unlike entitlement programs, eventually come to an end. „

“America’s Priorities,” by the Beltway elite - Glenn Greenwald - Salon.com (via apsies) (via robot-heart-politics)

Quote posted at 15:07

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