Beijing | November 6

Al Jazeera - China has described as protectionist new US anti-dumping duties on steel pipes and demanded Washington's recognition that it is a market economy.

The reaction came a day after the US imposed preliminary anti-dumping duties ranging up to 99 per cent on $2.63bn in Chinese-made pipes used in the oil and gas industry.

Where are my green shoots?

The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday.

Nonfarm payrolls dropped by a seasonally adjusted 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million. It was the 22nd straight decline in payrolls. Large losses were seen in manufacturing, construction and retail. Health care and temporary-help agencies added jobs.

10.2% is not, I repeat, is not a good number.

Greg Gordon | New York | November 3

McClatchy Newspapers -

Greg Norton interviewed on the Real News Network (Video)

NEW YORK — Inside the thick Goldman Sachs investment circular were the details of a secret, $2 billion deal channeled through a Caribbean tax haven.

One bond analyst who reviewed the 2006 Cayman deal dismissed it in a report to clients as "a not so cleverly disguised way for Goldman Sachs & Co. to unload its unwanted exposures to the subprime real estate market onto foreign investors."

Earlier this week, President Obama signed into law the $680 billion FY 2010 Defense Authorization Bill, the largest such budget since the end of World War II. If you missed that aspect of the story, you weren’t alone. Many news stories chose instead to focus on the hate crime provisions tacked onto the bill.

I’ve often quarreled with the inclusion of superfluous legislative riders, and the hate crime provision is more superfluous than most. (Indeed, as my Cato colleague David Rittgers has pointed out, it might be worse than superfluous.)

Here's a novel idea for the New York Times Editorial Board to consider: if it is too big to fail, it is too big to fucking exist. We don't need a systemic risk regulator. What we need is anti-trust enforcement:

Authored by the Treasury Department and Representative Barney Frank, the chairman of the committee, the proposal broaches a number of essential reforms. Chief among them is the creation of a systemic risk regulator to look for problems that could lead to cascading failures. The regulator would also have resolution authority — the power, if necessary, to seize and restructure critically ill bank holding companies and nonbank financial firms whose failure would pose a systemwide threat.

Why is it that little old me, a dirty fucking hippie in his pajamas sitting on a porch, sipping coffee can see the such an elegant and simple solution and the well-educated, credentialed and connected village folks can't?

What am I missing?

Linda Shen | Nov 2

Bloomberg - CIT Group Inc.’s decision to seek court protection probably will keep money flowing to bondholders and 1 million customers of the 101-year-old commercial lender. Shareholders and taxpayers won’t be as fortunate.

CIT’s Chapter 11 bankruptcy may give bondholders new notes at 70 cents on the dollar plus new common stock, and Chief Executive Officer Jeffrey Peek said clients will be able to get funds. Common stock owners could be mostly wiped out, and the U.S. Treasury Department said it won’t recoup much, if any, of the $2.33 billion of taxpayer money that went into CIT, the largest firm to go bankrupt after getting a federal bailout.

“It doesn’t look too good for the government preferred or any preferred holders,” Brian Charles, a debt analyst at New York-based brokerage RW Pressprich & Co., said yesterday. “It’s unlikely common shareholders realize any value.”

Nov 1

AFP - High US unemployment, which has lagged in an otherwise recovering economy, likely will begin rebounding early next year, US Treasury Secretary Timothy Geithner said Sunday.

"Economists say... that they think you'll start to see net jobs created at the beginning of the year," Geithner told NBC television, adding that the US economy could see jobs added "in the first quarter some time."

The US economy is suffering the deepest recession in decades with crushing unemployment of just under 10 percent.

Damn these guys are good. At fucking us over, that is. Remember when the public rose up and rejected the TARP bail-out? Congressmen were flooded with calls, did their duty and voted against the bill. Then the propoganda machine went to work. A few meaningless concessions were made, the bill was repackaged and passed.

Not only are you going to eat shit, you're going to like eating shit. Got it?

Now it appears Ron Paul's audit the fed bill is doomed to similar fate. Congress can't ignore public outcry for tranparency so they're busy removing teeth from the bill. They'll pass some meaningless drivel that allows the powers that be to continue fucking us over and claim victory on behalf of the American public.

Ain't democracy wonderful?

Nov 1

BBC - UK: Government to create bank chains

The government is to create three new High Street banking chains by 2015 as part of a major overhaul of the sector.

They will be set up by selling off parts of Royal Bank of Scotland, Lloyds and Northern Rock - the banks which had to be bailed out by the taxpayer.

Ministers and the European Competition Commissioner are in talks over the move, which would go some way to recoup the public money invested in the banks.

There is speculation that buyers might include Tesco and Virgin.

The new chains will be standard retail banks concentrating on deposits and mortgages.

In order to boost competition, they will only be sold to new entrants to the UK banking market and not to existing financial institutions.

Ministers say that creating more competitors on the High Street in this way will invigorate the mortgage market and ultimately lead to a better deal for customers.

Greg Gordon | Nov 1

McClatchy - In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers that it also was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting. Now, a five-month McClatchy investigation has found that Goldman's failure to disclose those secret bets may have violated securities laws.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

"The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Laurence Kotlikoff, a Boston University economics professor who's proposed a massive overhaul of the nation's banks. "This is fraud and should be prosecuted."

The point of an economic stimulus package is to grow the economy. There is no question in my mind that the stimulus enacted by Obama and the Congress succeeded in doing that. I've been pretty clear in giving credit where credit is due on that front. But the problem is this: it was the wrong kind of stimulus--too many tax cuts and not enough money to the states. Cash-for-clunkers? A beefed up subsidy for first time home buyers? Lots of military Keynesianism? Wasn't it this kind of free-for-all in credit what got us here in the first place?

Meanwhile, the states are still in the red, bloody oozing red that it is. And business spending, that engine of economic growth and employment? Where's that? One could go on and on.

As Krugman says, "we’ve gotten the big boost, and it’s clearly far short of what we really need."

Do you feel stimulated? Or are you still personally retrenching?

To repeat: the stimulus was good, but it wasn't enough and was targeted correctly. And we'll see the results of a committee designed stimulus plan soon enough.

Do you work to live, or live to work? There was a time when I asked myself that question on a regular basis. But now that I'm a complete and total corporate drop-out not so much. I think Joe Bageant sums it up nicely in this graf:

It may be my bias, or my imagination, or my distaste for toil, but from here America looks like one big workhouse, "under God, indivisible, with time off to shit, shower and shop." A country whose citizens have been reduced to "human assets" of a vast and relentless economic machine, moving human parts oiled by commodities and kept in motion by the edict, "produce or die." Where employment and a job dominates all other aspects of life, and the loss of which spells the loss of everything.

Read the whole post, Bageant captures the tedium and ennui that I feel for contemporary American life quite well.

GDP was up in the third quarter, 3.5%. Barry has an analysis of the numbers, here.

Washington | Oct 28

AFP - Financial companies with more than 10 billion dollars in assets will have to pay for rivals' failures or rescues, under draft legislation which has been released by the US Treasury and lawmakers.

The plan to address systemic risk in the financial sector will wind down failing institutions and end "too big to fail" bailouts that have been borne by taxpayers, the Treasury and the House Financial Services Committee said Tuesday.

The proposed Financial Stability Improvement Act "provides for the orderly wind-down of failing firms and ends 'too big to fail' to ensure that industry and shareholders absorb the risks and costs of failure, not taxpayers," they said in a statement.

The measure would be a cornerstone of President Barack Obama's commitment to reform financial regulation and avert costly taxpayer bailouts of banks and other financial firms.

"The Financial Services Committee and the Obama administration are committed to ensuring that the taxpayers are never again called upon to take responsibility for Wall Street's business decisions," the bill's sponsors said.

TODAY, OCTOBER 27, 2

HedgeCO Net - In a discussion with Jim Puplava, FS Radio, Jeffrey Brown described his analytical work with Dr. Samuel Foucher, also part of logi Energy, where they determined that annual production in Saudi Arabia has never exceeded the production in 2005 and believe it never will.

Jeffrey went on to discuss his land export model and the ramifications of depleting oil fields and increasing demands within exporting countries by their own citizens. He and Dr. Foucher have determined, through deep analytics, that the exports from the top 5 exporting countries has peaked and half of all oil ever to be exported after 2005 by these countries will be exported within 4 years, by 2013.

I'm not really sure what the subtext of this story about Maurice Greenberg really is. Do you?

Update: I think this graf--among many others--is the most disturbing bit of the story:

After he was pushed out, Mr. Greenberg fought bitterly with A.I.G. over how to untangle assets that they both laid claim to. Over the summer, he won, earning the rights to $4.3 billion in A.I.G. stock that he had removed from an unusual offshore retirement plan. The company had argued that he had improperly cashed out the stock and used the money to finance new business ventures that were competing with his former company.

If I read that correctly he basically stole $4.3 from AIG. The money was frozen but subsequently released to him that he might build a firm to compete with AIG?

Guy Tridgell | Alsip, IL | Oct 25

southtownstar.com -
The Rev. Dan Willis is passing the collection plate in reverse. He will give you money to go to church.

For the last three weeks, his Lighthouse Church of All Nations in Alsip has raffled a combined $1,000 to attendees at the three Sunday services.

Big surprise, but attendance has shot through the chapel roof.

"It is gimmicky. It is totally gimmicky. I make no bones about that," Willis said. "But if I could get someone who would not normally come to church, why not?"

If the lure of free money has you breaking out the Sunday best, be prepared for some testimony from the preacher on how to spend that money.

You will hear of the glory of paying down debt, the revelation that comes with living on a budget and the miracle of compound interest.

For Willis, the cash is a mere carrot to get you through the doors. By sowing the seeds of the responsible personal finance, he hopes to create a few converts.

"I was worried how people were going to respond," Willis said. "I thought they might be, 'Oh, yeah, a classic preacher.'

"We've been blown away by the response. (read the rest)

Simon Johnson over at Baseline Scenario has this to say about the consensus surrounding regulating the banks to big to fail, versus breaking them up:

Volcker may not have the ear of the President (as the NYT points out), and Alan Greenspan – also arguing for bank breakup, but along different lines – might also be ignored. But watch Mervyn King closely.

Mervyn King is governor of the Bank of England and a hugely influential figure in central banking circles. Time and again he has proved to be not only ahead of his peers in terms of thinking about the latest problems, but also the person who is best able to frame an issue and articulate potential solutions so as to draw support from other officials around the world.

Johnson goes on to quote from a speech King gave recently. I'm not convinced. First, as I commented over at Ian Welsh's blog a few days ago:

Actually, Greenspan’s “conversion” was hedged by his typically obscurantist language. But he hasn’t changed his stripes at all.

Here's what the Time's wrote about Greenspan:

Alan Greenspan, the only other former Fed chairman still living, favored the repeal of Glass-Steagall a decade ago and, unlike Mr. Volcker, would not bring it back now. He declined to be interviewed for this article, but in response to e-mailed questions he cited two recent public statements in which he suggested that the nation’s largest financial institutions become smaller, so that none would be too big to fail, requiring a federal rescue

How does one go about making them small without breaking them up is beyond me, but I digress. I don't see this as a consensus shattering development in the least. But Johnson does have a point, in a sense. If King can convince Gordon Brown of his views, then yes, the consensus will break down and then real reform might be possible. Why? Well, Brown really did lead the way in the early days of the financial crisis and if he threw his weight around in favor of something like this in London then policy-makers in the US would have to take note. Until then just because Volcker is getting press doesn't mean a thing.

If Wall Street bankers are so smart, how can they be so dumb when it comes to paying out bonuses?

Don’t these people read newspapers? Don’t they watch Dylan Ratigan on CNBC or Glenn Beck on FOX News, castigating bankers for their greed and ingratitude to the taxpayers who saved their firms? Haven’t they sat through one speech too many by President Obama insisting that they stop giving million dollar and multi-million dollar bonuses? Have they no idea what it means for the average worker to struggle in an economy with 10% unemployment and another 8% underemployed?

And yet Goldman Sachs is on schedule to give out record bonuses this year totaling nearly $20 billion, or half a million dollars on average per employee. Morgan Stanley is not far behind, and the investment bankers and traders at Merrill Lynch (now wholly owned by Bank of America) and Bear Stearns (now wholly owned by JP Morgan Chase) are going to be treated royally as well. What is it about these people who are supposedly so smart in figuring out the markets but dumb as posts when it comes to judging the larger world in which they operate?

Berlin | October 23

BBC - A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany's economic recovery.

Ashley Seager, Julia Kollewe & Kathryn Hopkins | London | October 23

The Guardian - The British economy is mired in its longest recession on record, as government figures out this morning showed a shock 0.4% drop in gross domestic product (GDP) in the third quarter of the year.

The figures confounded widespread hopes that the economy had returned to growth after five consecutive quarters of recession.

City economists had almost unanimously expected a small increase in GDP. Quarterly records go back to 1955 and show there has never until now been six quarters of contraction in a row.

Lot's of hyperventilating today about tens of thousands of people who cheated on their taxes and defrauded the US government in order to buy new homes:

Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.

So, here are the facts: Goldman Sachs and other big banks perpetrated the largest fraud in history against the American tax-payer and what does the IRS do? Goes after the little guy.

Fuck yeah!

I meant to write about this yesterday but never got around to it, as I am working on a deadline right now. But here goes. Ian makes a point I have long tried to make about why resuming Glass-Steagall era restrictions on investment banks and commercial banks is so critical:

Splitting banks into retail and investment banks, keeping brokerages and insurance companies separate as well is part of a solution set which kept major financial crises like the recent one from happening for most of the second half of the 20th century. It was put in place by people who were experiencing the Great Depression and had learned the lessons of the roaring 20s.

The idea that this is somehow a 30s-style solution as Ian notes, as well, is balderdash. It worked in the past and it will work again. Ian of course is correct in analysis that the reason such a solution is a non-starter is 'cupidity.' The government of the UK and the US are damn near wholly-owned subsidiaries of modern-finance.

I've long liked to motto 'keep it simple stupid.' And it's obvious corollary, at least in my own life, that when I needed to learn something, or needed help in business, etc. . I went to an old-timer and asked for advice. "How did you do it," I asked frequently in my years at Morgan Stanley. Without fail I always got good advice. Why? Because the old-timers were still around; they had survived; and they had thrived.

We ignore the advice of our elder statesmen like Paul Volcker at our own peril. And as Ian notes, "By not making another financial crisis impossible, they are making another financial crisis inevitable, and next time it will be even worse."

Rex Nutting | Washington | October 21

MarketWatch - The government has spent trillions to rescue the banking system from the brink of disaster, but the biggest cost may be the loss in the government's credibility from an understandably distrustful and angry public, according to a quarterly report released Wednesday by the congressional watchdog over the bank bailout.

"The anger, cynicism and distrust created must be chalked up as one of the substantial, albeit unnecessary costs" of the Troubled Asset Relief Program, said Neil Barofsky, the special inspector general for the TARP, in a report to Congress. Read the report.