Quoting the Crisis

29/11/2009

“ Our merchants frequently complain of the high wages of British labour as the cause of their manufactures being undersold in foreign markets, but they are silent about the high profits of stock. They complain of the extravagant gain of other people, but they say nothing of their own. The high profits of British stock, however, may contribute towards raising the price of British manufactures in many cases as much, and in some perhaps more, than the high wages of British labour. „

Adam Smith, quoted by Eric Toussaint in RECRO ( restore ) - Adam Smith was closer to Karl Marx than those…

Quote posted at 15:17

27/11/2009

“ The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they can’t make all the excesses simply disappear. „

Arnab Das, London-based head of market research and strategy at Roubini Global Economics, quoted by David Merritt in Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar - Bloomberg.com

Quote posted at 11:13

“ No one seems to be able to resist a straight line equity curve even at the expense of lower returns. The straighter the equity curve the less questions people ask about how the returns were generated. Many strategies secretly contain non-linear payoffs such as risk arbitrage or selling options, or ponzi schemes. „

Quick Thoughts on Drawdowns and The Importance of Understanding Return Distributions of Strategies « CSS Analytics (via nonolet)

Quote posted at 09:11

23/11/2009

“

So, here’s a thought: A multibillion-dollar gift to the federal Bureau of the Public Debt, which accepts tax-deductible donations to reduce the national debt. The donation can come from the bonuses; that way, it would not harm shareholders, because they only get their cut after the bonuses are paid. Goldman’s tax savings from the donation could help finance the small-business initiative.

And a contribution might help Goldman ward off the alternative: serious calls for a windfall tax on bonuses, which would be justified since the profits they are based on are in large part the result of government efforts. One way or another, the taxpayers will demand their due, and one way or another, they just might get it.

„

Editorial - Goldman’s Non-Apology - NYTimes.com

Quote posted at 20:41

“ The structural logic is rather compelling. A company can discharge people—and turn around and “hire” them back under other arrangements, as contractors, say. In this process the employer (1) eliminates overhead (space, furniture), (2) no longer needs to pay half of the Social Security tax it pays to full-timers, (3) avoids health insurance contributions, and (4) no longer contributes to retirement plans. It takes a certain amount of finesse to accomplish this. Straight rehiring under contract is prohibited by law, but there are ways. And in this manner the furloughed or the terminated gain compensation once again—but, mind you, at a much lower rate than they enjoyed before. „

The Self-Employment Army « LaMarotte (via nonolet)

Quote posted at 17:58

recro:

Healthcare Industry Whistle-blower

Wendell Potter is a man of rare courage who gave up his handsomely compensated position as Vice President of corporate communications at CIGNA, the health insurance giant, because his conscience would no longer allow him to continue working as the chief spokesman for a company that, in his words, had “…hijacked our health care system and turned it into a giant ATM for Wall Street investors.”

What woke up his sleeping conscience was a spur-of-the-moment visit to a health “expedition” being held by a non-profit orginization called Remote Area Medical whose founder, Stan Brock, had invisioned an organization that would provide medical care to those without access to it after seeing the plight of the Amazonian indians. According to the RAM website, “He witnessed the near devastation of whole tribes by what would have been simple or minor illnesses to more advanced cultures.”

These days, 60% of RAM health care expeditions are held in the rural United States. This is what Wendell Potter says about the one he visited in Wise, Va., located fifty miles from his hometown in northeastern Tennessee:

“Nothing could have prepared me for what I saw when I reached the Wise County Fairgrounds, where the expedition was being held. Hundreds of people had camped out all night in the parking lot to be assured of seeing a doctor or dentist when the gates opened. By the time I got there, long lines of people stretched from every animal stall and tent where the volunteers were treating patients.

That scene was so visually and emotionally stunning it was all I could do to hold back tears. How could it be that citizens of the richest nation in the world were being treated this way?

A couple of weeks later I was boarding a corporate jet to fly from Philadelphia to a meeting in Connecticut. When the flight attendant served my lunch on gold-rimmed china and gave me a gold-plated knife and fork to eat it with, I realized for the first time that someone’s insurance premiums were paying for me to travel in such luxury. I also realized that one of the reasons those people in Wise County had to wait in long lines to be treated in animal stalls was because our Wall Street-driven health care system has created one of the most inequitable health care systems on the planet.”

Photo posted at 15:58

22/11/2009

“ A Senator’s average age is an elderly 63 years old, and most are wealthy millionaires. A famous 19th-century aphorism said, “It is harder for a poor man to enter the United States Senate than for a rich man to enter Heaven,” and things are hardly different today. The senescent Senators already have great health care benefits too, even while tens of millions of Americans do not. So this powerful legislative body debating health care for the entire country is a patrician gerontocracy more closely resembling the ancient Roman Senate than a New England town meeting. „

America’s House of Lords Debates Health Care (via azspot) (via robot-heart-politics)

Quote posted at 23:08

21/11/2009

“ This vividly shows the risk of entering into interest- rate swap agreements. The world’s got to see what stupidity even the sophisticated investors like the transportation fund can get into. „

Christopher Taylor, former executive director of the Municipal Securities Rulemaking Board in Alexandria, Virginia, quoted by Dunstan McNichol in Goldman Sachs Still Paid for Swaps on Redeemed Bonds (Update2) - Bloomberg.com

Quote posted at 21:08

“

So, maybe Blankfein is sorry that his company is so good at wrapping up garbage and selling it as a birthday present.

Or, maybe he’s sorry he didn’t tell everyone (or even the company’s clients) that while Goldman Sachs was selling $40 billion in securities backed by housing junk, the company secretly made a bet against the housing market. When the housing market started to collapse, Goldman Sachs’ profits soared. The company managed to avoid a total meltdown with good timing and excellent salesmanship.

„

Ilyce Glink in Goldman Sachs Says Sorry For The Housing and Credit Crisis - CBS MoneyWatch.com

Quote posted at 19:08

“ We participated in things that were clearly wrong and have reason to regret. We apologize. „

Lloyd Blankfein, CEO of Goldman Sachs, quoted by Simon Kennedy in Goldman apologizes, offers small businesses help - MarketWatch

Quote posted at 17:05

“ We cannot control ourselves. You have to step in and control the Street. „

John Mack, CEO of Morgan Stanley, quoted by Andrew Ross Sorkin in his tweeter feed.

Quote posted at 11:00

19/11/2009

» UC expected to raise student fees 32%

robot-heart-politics:

pinkpolkadots:

Regents are expected to approve yet another increase, arguing it’s needed to avoid further course reductions and staff furloughs. The plan draws statewide protests. Police arrest 14 at UCLA.

If they cut the salaries of higher level administrators across the board, including Pres. Mark Yudof (I thought the name was familiar—he used to work at UT) who makes over $900,000/year in pay and benefits, it would seriously help to fend off further furloughs and course cuts. You could cut Yudof’s salary alone by half and save the UC system almost half a million dollars. This site lists the salaries just of the chancellors of the various schools within the UC system. Not only have the salaries of administrators increased at a rate far beyond that of inflation, but the “perks” that go along with these salaries have increased as well. And by perks, I mean things like $125,000 relocation bonuses to move 70 miles.

Higher education “executives” (they used to be simply called administrators) have increasingly begun to use the universities as their own personal piggy banks, and this phenomenon is hardly limited to the UC system. I know how outraged I was when, year after year, tuition went up because the university supposedly couldn’t pay its professors or electricity bills or what have you, but on the coattails of these massive tuition hikes, there was often a pay raise included for administrators.

Public universities raised presidents’ pay an average of 7.6% in 2008. Tuition at public universities raised in kind: an average of 7.6%. When students are being told that these annual tuition increases that add hundreds of dollars to their bills every month are necessary to keeping university doors open, it seems unconscionable that the salaries and benefits packages of “executives” and higher level admins continues to go up.

But they do.

Humorously, the UC “executives” argued that their 5% pay cuts were helping them “share the pain” with their other employees and students. Nevermind that some employees experienced up to 10% pay cuts on far smaller salaries. Nevermind that they continue to jack up tuition prices on their students.

It’s offensive. I’m glad those students were out there protesting. More of us should be doing the same, if we are interested in seeing higher education become more affordable and reducing the absurd amount of debt so many students leave school with.

Link posted at 21:35

18/11/2009

“ The latest Goldman predatory practice is using contractual details (the deal equivalent of “gotchas” in credit card agreements) to undermine the well understood premise underlying ALL structured credits, namely, that bottom tranches take losses first. With two Abacus deals (and since these are Goldman programs, one has to assume it very knowingly planted these trap doors), Goldman is favoring the junior investors over the seniors. „

Yves Smith in Goldman Gives Preferential Treatment to Junior CDO Holders Over Senior « naked capitalism

Quote posted at 11:02

16/11/2009

“ Finally, though, what happens when you switch from a regime without carry-backs to a regime with carry-backs? In this case, you end up writing $33 billion of checks to a group of companies that are selected solely on the basis that they are losing money now but made money in the past five years. Of all of the ways that the government could spend money to (a) stimulate the economy or (b) help people, how did this one make the cut? „

James Kwak in Economics Puzzler of the Day « The Baseline Scenario

Quote posted at 23:32

15/11/2009

“ The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be corrected may very easily be prevented from disturbing the tranquility of anybody but themselves. „

Adam Smith, The Wealth of Nations (1776) (via axinomancy)