Daily Digest

Daily Digest - Apr 10

Friday, April 10, 2009, 11:03 AM
  • Elizabeth Warren: TARP Congressional Oversight Panel (Really good video)
  • It's a depression, alright
  • Nothing Changes 1934 vs 2009, Planned Economy or Planned Destruction?
  • Quelle Surprise! Bank Stress Tests Producing Expected Results!
  • Congressional Panel: Fire Managers, Liquidate Banks
  • CRE: Rents Fall 24% in San Francisco, Landmark Foreclosure in Atlanta
  • Mike Mayo: writedowns worse than the Great Depression (Video)
  • Marketing Consumerism in the Boom and Bust Economy: 4 Advertisements Showing the Shift in Consumer Buying Habits: Pizza, Airlines, Real Estate, Toxic Assets, and the Simpsons.
  • Resign Summers (H/T JoeManC, Video)
  • Job cuts needed to stop NY bankruptcy: mayor
  • Geithner's Stress Test "A Complete Sham," Former Federal Bank Regulator Says
  • Just 53 Percent Say Capitalism Is Preferable To Socialism
  • Pensions Facing a Cash Flow Collapse?

Economy

Elizabeth Warren: TARP Congressional Oversight Panel (Really good video)

It's a depression, alright

What Eichengreen-O'Rourke show, it seems to me, is that knowledge is the only thing standing between us and Great Depression 2.0. It's only to the extent that we understand these things a bit better than our grandfathers - and that we act on that knowledge - that we have any real reason to think this time will be better.

Nothing Changes 1934 vs 2009, Planned Economy or Planned Destruction?

Congressional Panel: Fire Managers, Liquidate Banks

Tee hee:

A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.

The Congressional Oversight Panel, in a report released yesterday, also said the Treasury may be relying on too rosy an economic scenario to guide its $700 billion bailout, and declared that the success of the program after six months is "mixed." Three of the group's members disagreed with at least some of the findings.

"All successful efforts to address bank crises have involved the combination of moving aside failed management and getting control of the process of valuing bank balance sheets," the panel, headed by Harvard Law School Professor Elizabeth Warren, said in its report.

Here's the actual report language:

CRE: Rents Fall 24% in San Francisco, Landmark Foreclosure in Atlanta

And from the Atlanta Journal-Constitution: Landmark Equitable building in foreclosure (ht jp, Bradford)

Downtown Atlanta's Equitable building, an iconic 30-plus story office tower that once dominated the city's skyline, has fallen into foreclosure.

A foreclosure notice said the 40-year-old skyscraper is scheduled to be auctioned on the Fulton County courthouse steps on May 5.

Mike Mayo: writedowns worse than the Great Depression (Video)

Marketing
Consumerism in the Boom and Bust Economy: 4 Advertisements Showing the
Shift in Consumer Buying Habits: Pizza, Airlines, Real Estate, Toxic
Assets, and the Simpsons (Videos)

Quelle Surprise! Bank Stress Tests Producing Expected Results!

The whole point of this charade exercise was to show the big banks weren't terminal but still needed dough, and I am sure it will prove to be lots of dough before we are done. But they now have the Good Housekeeping seal, so the chump taxpayer can breathe easy that the authorities are taking prudent measures to make sure his money is being shepherded wisely.

If you believe that, I have a bridge I'd like to sell you.

We said from the beginning the stress tests were a complete sham. Just look at the numbers. 200 examiners for 19 banks? When Citi nearly went under in the early 1990s, it took 160 examiners to go over its US commercial real estate portfolio (and even then then the bodies were deployed against dodgy deals in Texas and the Southwest). This is a garbage in, garbage out exercise. The banks used their own risk models to make the assessment, for instance, the very same risk models that caused this mess. And there was no examination of the underlying loan files.

Resign Summers (H/T JoeManC, Video)

Job cuts needed to stop NY bankruptcy: mayor

Sweeping layoffs of government employees are needed to prevent New York going bankrupt, Mayor Michael Bloomberg said Thursday.

Bloomberg, who is in tense negotiations with municipal workers' unions, said an extra 7,000 jobs would have to go unless major reductions are made in employee benefits.

"We cannot continue. Our pension costs and health care costs for our employees are going to bankrupt this city," he said in comments broadcast on NY1 television.

Geithner's Stress Test "A Complete Sham," Former Federal Bank Regulator Says (Video-Legacy Tim and Summers is the real problem)

Just 53 Percent Say Capitalism Is Preferable To Socialism

Here's a new Rasmussen Reports poll that could mean nightmares for Joe The Plumber: According to Rasmussen, just 53 percent of those asked say capitalism is a better system than socialism. Twenty percent, meanwhile, said socialism is better. The remaining 27 percent weren't sure. Among those under 30, the support for capitalism is even weaker. Thirty-seven percent prefer capitalism, 33 percent favor socialism, and 30 percent are undecided.

Pensions Facing a Cash Flow Collapse?

Most experts believe that the situation is even worse than these official funding figures suggest, because of the way the funds calculate returns and liabilities. Almost all funds base their funding levels on an assumption of an annual return of 8 per cent, but in the decade to 2004 the average return was only 6.5 per cent.

17 Comments

Davos's picture
Davos
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Re: Daily Digest - Apr 10

Summary of the news: Warren's video was a great watch. I could learn how to be less blunt if I watched that a few more times.

I'll pass on that.

Black, in my book, is really likable - he just tells it like it is. Turbo Timmy is a failed legacy regulator, using failed legacy policies, he has turbocharged them with his nothing can fail policy, but Larry is really the problem. Amazing how 2 idiots can get the ear of one man and jack up the entire economy.

Brilliant, and you taught where?

The cartoon of the 1934 mess and seeing what is going on today really struck a chord. Politically and economically we are just a brain dead a century later. Maybe if I had taken Sociology 101 they would have covered why this happens.

Maybe not.

The bank test stress article says the rest. More money for profitable banks and we won't release the results. Oooooooookay, we know where this is all headed. No doubts whatsoever.Make the banks healthy so they can loan to maxed out consumers, most of which who are unemployed and everything will be fine and don't mind the worthless dollar, special thanks to Ben.

As for the capilatism socialism pole - no wonder 30% are undecided. If you vote for capitalism - in todays form you'd really be voting for executive socialism. 

Please wake me up when the nightmare ends...

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SagerXX
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Re: Daily Digest - Apr 10


Davos -- thanks for the roundup (and the roundups each day).  Trenchant as always.

 

VIVA -- Sager 

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Jarhett
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Re: Daily Digest - Apr 10

Davos

I don't know if anybody else is having this problem, but everytime I click on the link for the Elizabeth Warren video, the link takes me to "It's a depression alright". 

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VeganDB12
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Re: Daily Digest - Apr 10

Thanks Davos

Larry Summers, the same guy who got fired from Harvard for being a sexist you know what....

what a surprise his judgment has not improved.

Happy Weekend

Denise

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suesullivan
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Re: Daily Digest - Apr 10

http://www.cnn.com/2009/US/04/09/hawaii.volunteers.repair/index.html

 I don't know whether this is just a sign of things to come in a world of cash-strapped local governments, or a scathing indictment of the bloated prices we pay for government-contracted work. Either way, I find it fascinating

 

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crash_watcher
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Re: Daily Digest - Apr 10

Jarhett, I also think that the provided link is incorrect. Try this instead:http://wallstreetblips.dailyradar.com/video/elizabeth_warren_introduces_cop_s_april_report/  "it possible, however, that the treasury's approach fails to acknowledge the depth of the current crisis"--Elizabeth Warren

 

 

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yoshhash
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Re: Daily Digest - Apr 10
Jarhett wrote:

Davos

I don't know if anybody else is having this problem, but everytime I click on the link for the Elizabeth Warren video, the link takes me to "It's a depression alright". 

me too.

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - Apr 10

Mexico City shuts down water supply

Authorities in Mexico City have shut down a main
pipeline that supplies fresh water to five million residents, because
reserves have fallen to record low levels.

Many residents across the city spent the last hours before their
taps ran dry filling bath tubs and containers with enough water to last
a weekend.

A huge pipeline supplying 20 per cent of the entire capital is being shut down for 36 hours.

Part of the reason is that after a particularly dry spell reservoirs are at dangerously low levels.

Another is that more than 50 per cent of the water carried by the pipeline leaks out before it reaches its destination.

Switching it off will enable vital repairs to be made.

- BBC

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allspike
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Re: Daily Digest - Apr 10

Where is Elizabeth Warren really?

DavidC's picture
DavidC
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Denszcz Re: Daily Digest - Apr 10

Denszcz,

"Larry Summers, the same guy who got fired from Harvard for being a sexist you know what.... 
"

I've just checked and it appears that Summers was not fired, he resigned. Please tell me if I'm wrong. Whether or not he IS a sexist you know what (and whether or not we agree with what he's done economically, and I don't), we do owe it to this forum to try and be as accurate with facts as we can; I always endeavour to do so before posting anything (and I'm always grateful if any errors on my aprt - sic! - are pointed out). This is NOT a criticism, just an observation.

DavidC

Davos's picture
Davos
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Re: Daily Digest - Apr 10

Hello:

The Warren video link is fixed, sorry for the lameness http://www.ritholtz.com/blog/2009/04/elizabeth-warren-tarp-congressional-oversight-panel/

My wife wasn't impressed with Summers remark http://www.boston.com/news/education/higher/articles/2005/01/19/harvard_womens_group_rips_summers/

And frankly, neither was I. Case in point: Warren has more brain matter. Summers has taken us down the wrong path. Having 11 trillion in debt and another 55++++ trillion in obligations and thinking that more debt is going to fix too much debt is beyond being brain dead. The guy is an absolute economic moron. President Obama is going to look just as dumb for listening to him.

Take care. 

 

db's picture
db
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Re: Daily Digest - Apr 10
suesullivan wrote:

http://www.cnn.com/2009/US/04/09/hawaii.volunteers.repair/index.html

 I don't know whether this is just a sign of things to come in a world of cash-strapped local governments, or a scathing indictment of the bloated prices we pay for government-contracted work. Either way, I find it fascinating

 

suesullivan,

Looks like it may be a sign of things to come...

 http://www.wbbm780.com/Residents-fix-their-own-potholes-/4166520

db

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - Apr 10
Paul Panckhurst, Beijing

April 11, 2009

CHINA'S exports fell for a fifth month in March, adding urgency to
government efforts to stimulate domestic demand to revive growth in the
world's third-biggest economy.

Overseas sales fell 17.1 per cent, the state-run Xinhua News Agency
reported, citing customs data. Imports dropped 25.1 per cent, leaving a
trade surplus of 127 billion yuan ($A25.8 billion).

Collapsing world trade and the nation's slowest economic expansion
in seven years have cost millions of factory workers their jobs and
prompted Premier Wen Jiabao to roll out a 4 trillion yuan stimulus
package. To spur consumption, China is subsidising rural purchases of
home appliances and plans a 29 per cent increase in welfare spending
this year.

"External demand is unlikely to recover any time soon and exporters
have no choice but to endure the difficulty," said Ma Jun, chief China
economist at Deutsche Bank in Hong Kong.

The median forecast in a Bloomberg News survey of 15 economists was for a 20 per cent drop in exports.

In February, shipments fell by a record 25.7 per cent from a year earlier as the global recession choked demand.

Impartial's picture
Impartial
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Re: Daily Digest - Apr 10
Davos wrote:

My wife wasn't impressed with Summers remark http://www.boston.com/news/education/higher/articles/2005/01/19/harvard_womens_group_rips_summers/

And frankly, neither was I.

I read the link and was not impressed, but my reasons may be different:

"His second point was that in math and science tests, more males earn
the very top scores, as well as the very bottom scores. He said that
while NO ONE knew why ..."

The above shows that he likes to talk about things without much knowledge on the topic. Actually, Russian scientist Vigen Geodakian explained the phenomenon at around 1965. His evolutionary theory of sex explains why and how the sexes are different without stating that one is better then the other (see more at http://www.geodakian.com/). Applying to the universities life, his theory could explain the needs for having both male and female professors.

Anyway, if Summers's knowledge on economic theories is on the same "NO ONE KNOWS" level, better not to have such an adviser.

DavidC's picture
DavidC
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Impartial Re: Daily Digest - Apr 10

Impartial

Re Vigen Geodakian's theory of sex explaining why and how the sexes are different
without stating that one is better then the other...

Hitting the nail on the head! That's PRECISELY why we need more women in positions of power! Men and women ARE DIFFERENT (and, sorry, got to say it, vive la diference!), NOT one better then the other.

I'd argue that if we'd had more women in such positions the likelihood of this economic mess might been mitigated, less of the male machismo that seems to have been exhibited by Fuld et al

DavidC.

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Aaron M
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Re: Daily Digest - Apr 10

Interesting that preference of Socialism is stronger amongst the younger entitlement generation.

Goes to show who controls the past controls the future, and who controls the present controls the past.

Thanks again Davos. These blogs give me a lot to think about.

Cheers,

Aaron

Damnthematrix's picture
Damnthematrix
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Re: Impartial Re: Daily Digest - Apr 10

You know David, I used to think that way too.....  trouble is, women who wnat power enough to get there all have balls.  Just look at Thatcher?

We have a woman State Premier here (every state in Australia has its own government, a complete waste of taxpayers/ money) and she totally ignores the will of the people when she knows doing this doesn't cost her and her party enough votes to lose the next election (she was just re elected last month - the area where I live has real issues with things she is doing around here).

Mike 

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